Introduction to retailing

By
Raveendra Rao.K.
SOM, Manipal
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What is retailing?
Retail is the sale of goods and services
from individuals or businesses to the
end-user.
A retailer purchases goods or products
in large quantities from manufacturers
or directly through a wholesaler, and
then sells smaller quantities to the
consumer for a profit. Retailing can be
done in either fixed locations or online.
Retailing
includes
subordinated
services, such as delivery. The term
"retailer" is also applied where a service
provider services the needs of a large
number of individuals, such as a public
utility, like electric power. . wikipedia

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..(Cont)
Shops may be on residential
streets, streets with few or no
houses or in a shopping mall.
Shopping streets may be for
pedestrians only. Sometimes
a shopping street has a
partial or full roof to protect
customers from precipitation.
Online retailing, a type of
electronic commerce used for
business-to-consumer (B2C)
transactions and mail order,
are forms of non-shop
retailing.
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10. Target
(Ranking as per CNBC,
2012)
Country of Origin: US
Countries of operation: 1
2009 Revenue: $65.35 billion
2009 Profit Margin: 3.8 percent
Target was No. 10 among global retailers this year,
but in Deloitte's breakdown by product sector,
Target came in second among diversified retailers,
only behind Germany's Metro AG.
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9. The Home Depot

Country of Origin: US
Countries of operation: 5
2009 Revenue: $66.17 billion
2009 Profit Margin: 4.0
percent
Home Depot dropped two
places on this year's list,
reflecting the collapse of the
US housing market and
continued slide in home
improvement sales

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8. Aldi Einkauf GmbH & Co.

Country of Origin: Germany
Countries of operation: 18
2009 Revenue: $67.70
2009 Profit Margin: n/a
Hard discounter Aldi was
one of only three retailers
to make the top-10 list that
also managed to outpace
the top 250's 1.3 percent
composite growth rate. The
German retailer had 3.8
percent sales growth.

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7. Costco Wholesale Corp.

Country of Origin: US
Countries of operation: 9
2009 Revenue: $71.42
billion
2009 Profit Margin: 1.5
percent
Costco moved up one
place in this year's top-10
list, and also climbed to
third place on the top-10
North American retailers
list.

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6. The Kroger Co.

Country of Origin: US
Countries of operation: 1
2009 Revenue:$76.73 billion
2009 Profit Margin: 0.1
percent
Food retailers showed
resilience over the
recessionary times and
Kroger was no exception.
The sector increased both
its share of companies in
Deloitte's top 250 list and
also its share of sales. In
2009, the sector
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5. Schwarz Unternehmens
Treuhand KG
Country of Origin: Germany
Countries of operation: 25
2009 Revenue: $77.22
billion
2009 Profit Margin: n/a
Germany's Schwarz was
among three top-10
retailers to outpace the top10 250's 1.3 percent
composite growth rate by
the skin of its teeth at 1.4
percent.

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4. Tesco
Country of Origin: UK
Countries of operation: 13
2009 Revenue: $90.43
billion
2009 Profit Margin: 4.1
percent
Like Schwarz and Aldi, this
British retailer also saw
greater sales growth (the
highest among the top 10
at 4.8 percent) than the
top 250's 1.3 percent
composite growth rate.

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3. Metro AG
Country of Origin:
Germany
Countries of operation: 33
2009 Revenue: $91 billion
2009 Profit Margin: 0.8
percent
The German retail giant
was the top ranking
company among the five
German retailers to make
the top-10 list, but one of
only four of the top-10
retailers to see decreased
sales growth in 2009.
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2. Carrefour
Country of Origin: France
Countries of operation: 36
2009 Revenue: $122
billion
2009 Profit Margin: 0.5
percent
French retailer Carrefour
was one of only four of
the top-10 retailers to see
declining sales in 2009 in
spite of its presence in 36
countries and its No. 1 slot
among European retailers.

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1. Wal-Mart
Country of Origin: US
Countries of operation: 16
2009 Revenue: $404 billion
2009 Profit Margin: 3.6
percent
Wal-Mart is the undisputed
retail leader in North
America and tops the
global list of retailers, but
the company's international
operations in 15 countries
outside the United States
generate just under 25
percent of annual sales.

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Franchising
Definition: The Federal Trade Commission defines a franchise as a
business relationship
in which an individual owner:
1. Uses a Common Name (such as Burger King or Dunkin' Donuts);
2. Receives Training/Assistance/Guidance (from the Parent
Company);
3. Pays a Fee to the Parent Company ($500 or more within the first six
months of operation).
If a business arrangement includes these 3 elements, it's a franchise. It
could
be called a license, dealership, distributorship, or association but it's
still a
franchise and must comply with the rules of the Federal Trade
Commission
and certain state regulatory authorities.

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A franchise is the agreement or license between

two legally
independent parties which gives:
a person or group of people (franchisee) the right
to market a product or service using the trademark
or trade name of another business (franchisor)
the franchisee the right to market a product or
service using the operating methods of the
franchisor
the franchisee the obligation to pay the
franchisor fees for these rights
the franchisor the obligation to provide rights
and support to franchisees

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Examples:
1. Subway (sandwiches and salads) | startup costs $84,300 $258,300
(22,000 partners worldwide in 2004)
2. McDonald's | startup costs in 2010, $995,900 $1,842,700 (37,300
partners in 2010)
3. 7-Eleven Inc. (convenience stores) | startup costs in 2010 $40,500$775,300, (28,200 partners in 2004)
4. Hampton Inns & Suites (midprice hotels) | startup costs in 2010
$3,716,000 $15,148,800
5. Great Clips (hair salons) | startup costs in 2010 $109,000 - $203,000
6. H&R Block (tax preparation and now e-filing) | startup costs $26,427
- $84,094 (11,200 partners in 2004)
7. Dunkin' Donuts | startup costs in 2010 $537,750 - $1,765,300
8. Jani-King (commercial cleaning) | startup costs $11,400 - $35,050,
(11,000 partners worldwide in 2004)
9. Servpro (insurance and disaster restoration and cleaning) | startup
costs in 2010 $102,250 - $161,1501
10.MiniMarkets (convenience store and gas station) | startup costs in
2010 $1,835,823 - $7,615,065
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Types of Franchise
1. PRODUCT DISTRIBUTION (Coca cola,
Goodyear, Ford Motor Company)
2. BUSINESS FORMAT FRANCHISE

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Indian Scenario
The franchising of goods and services foreign to India is in
its infancy. The first International Exhibition was only held
in 2009. India is, however, one of the biggest franchising
markets because of its large middle-class of 300 million
who are not reticent about spending and because the
population is entrepreneurial in character. In a highly
diversified society, McDonald's is a success story despite
its fare's differing from that of the rest of the world.
So far, franchise agreements are covered under two
standard commercial laws: the Contract Act 1872 and the
Specific Relief Act 1963, which provide for both specific
enforcement of covenants in a contract and remedies in
the form of damages for breach of contract.
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