INTRODUCTION TO RETAILING

RETAILING

The sale of goods or commodities in small quantities directly to

consumers.

It is a activity ensures that customers derive maximum value from the

buying process.

Retailers provides the accessibility of location and convenience of timing

, size, information and life style support.

RETAILING IN INDIA

Fastest growing industry in the world.

Retail industry in India is expected to grow to US$ 1.3 trillion by 2020,

Registering a Compound Annual Growth Rate (CAGR) of 16.7 per cent over 2015-20.

India is the fifth largest preferred retail destination globally.

The country is among the highest in the world in terms of per capita retail store availability.
RETAILING IN INDIA

The online retail market is expected to grow from US$ 6 billion to US$ 70

billion during FY15-FY20.

The government has approved 51 per cent FDI in multi-brand retail and

increased FDI limit to 100 per cent (from 51 per cent) in single brand retail.
Since at present 60% of the Indian grocery basket consists of non- branded

items.
IN INDIA..
IN INDIA..
UTILITIES OF RETAILING

Retailing provides several utilities to customer. These utilities described

as distribution service output.

Better product availability

Waiting time

Lot size

Variety
CUSTOMERS TEND TO CHOSE A PARTICULAR
RETAILER BASED ON EIGHT ATTRIBUTES.

Product information

Product customization

Product quality

Lot size

Assortment

Availability

After sale service

logistic
 MANAGING VALUES IN RETAIL

Functional values: are related to economic need

Emotional values: are related to psychological needs

Social values: satisfy the need for belongingness

Epistemic values: address the need for ego satisfaction.

Conditional values: satisfy the need arising out of the specific

condition.
THEORIES OF RETAIL DEVELOPMENT

The theories developed to explain the process of retail

development revolve around the importance of competitive pressure, the
investments in organizational capabilities and the creation of a
sustainable competitive advantage .this requires the implementation of
strategic panning by retail organizations
THEORIES OF RETAIL DEVELOPMENT

No single theory can be universally applicable & acceptable

Theories very from market to market based on maturity & socio-

economic conditions
Explain process of
retail development,
importance of competitive pressures,
investments in organizational capabilities &
creation of sustainable competitive advantage etc.
THEORIES OF RETAIL DEVELOPMENT

Theories of retail of retail development can broadly be classified as:

1) Environmental where a change in retail is attributed to the change in

the environment in which the retailers operate.

2) Cyclical where change follows a pattern ad phases can have definite

identifiable attributes associated with them.

3) Conflictual the competition or conflict between two opposite type of

retailers leads to a new format being developed.
ENVIRONMENTAL THEORY

Darwinian approach survival of the fittest

Change in retail is attributed to change in the environment in which retailers
operate
Core of the theory - ability to adapt to change successfully

Those retailers that successfully adapt technology, economic, demographic

and legal changes are the ones that are most likely to grow and prosper.

The ability to adopt to change, successfully, is at the core of this theory.

ENVIRONMENTAL THEORY

In this a change in retail attributed to change in environment in which

retailer operates.
Retail institutions are economic entities and retailers confront an

environment, which is made up of customer, competitors, changing

technology.
The birth, success or decline of different forms of retail enterprise is

many a times attributed to the business environment.

2. CYCLICAL THEORY

The Wheel of Retailing Theory by McNair

Retail innovators (RI) low-price operators, low cost structure, low profit margin

requirements, offer real advantages, take customers away from competition

RI prosper developed & established. Business, lose focus on what was

important earlier (trade-up), give space for new entrants to repeat process

(discounters & low cost structures).

Theory does not explain development Of retail of all markets.

2.CYCLICAL THEORY- THE WHEEL OF RETAILING

Vulnerability
Entry Phase
Phase

Trading-up Phase

Source: http://www.emeraldinsight.com/fig/0701030703001.png
2. CYCLICAL THEORY

This method is considered to be one of the oldest methods for explaining the

patterns of competitive development and changes in retailing over the ages.

The Wheel of Retailing explains in simple terms retail marketing process

whereby original low-price discounters upgrade their services and gradually

increase prices.
As they evolve into full-line department stores, a competitive opportunity

develops for new low-price discounters to develop, and the process

continues with the next generation.
2. CYCLICAL THEORY

It also speaks about the fact that how new businesses and firms tend to enter
the market as fairly low status, low margin and low price operators, thereby
continue with this limited positioning and strategies to compete successfully
with the larger and well established firms.
With the course of time, these new arrivals acquire sophisticated technologies
and facilities to gain better market shares.
Finally they emerge as successful retailers with greater foreign investments,
subsequent rise in the retail's operating costs eventually rising prices and
operating margins.
2. CYCLICAL THEORY

One best example of this may be a beauty salon opened in the locality.

The salon will offer initially introductory rates to attract business and build its client base, usually starting off in a

temporary site (minimum service) with the intent to build a bigger, state-of-the-art facility beauty salon.

Once the salon is complete the available services increase along with the price for those services along with better

customer services, ambiances.

After a while than a competitor opens down the street another beauty salon, offering a lower rate, causing the

previously established salon to lower its pricing again to stay competitive as well as to continue to grow its business.
RETAIL ACCORDION

The retail accordion aspect of cyclical theory suggests that some

businesses go from outlets that offer an array of products to
establishments providing a narrow selection of goods and services.
3. CONFLICT THEORY

Exists b/w operators of similar formats or broad retail categories

Retail innovation leads to development of more formats & does not reduce

no. of formats available to consumer.

Retail - dialectic process blend two opposites develop new format

Thesis Individual retailers

Antithesis Department stores (opposite of thesis)

Synthesis Supermarkets & Hypermarkets (blending of thesis & antithesis)

3. CONFLICT THEORY

Thesis: Individual retailers as corner shops across the country

Antithesis: A position opposed to the thesis develops over a period of time. These are the department

stores. The antithesis is a challenge to the thesis.

Synthesis: There is a blending of the thesis and antithesis. The result is a position between the thesis

and antithesis. Supermarkets and hypermarkets thrive. This synthesis becomes the thesis for the next
round of evolution.
CONFLICT THEORY

Conflict always exists between operators of similar formats or within braid retail

categories.
It is believed that retail innovation does not necessarily reduce the number of formats

available to the consumer, but leads to the development of more formats.

Retailing thus evolves through a process, i.e. the blending of two opposites to create a

new format.
RETAIL MANAGEMENT PROCESS

Retailing is a complex business as it involves the detailing and precision

involved in implementing each of the decisions
The core of the framework is the Retail Value Proposition.
The proposition is derived keeping in mind the market profile and
expectations, opportunities present in the market, competitive stances and
activities and the retailers objectives and resources
Based on the proposition, retailers decide the formats, merchandise,
location, supply chain, pricing, promotion and other aspects of retailing
mix.
RETAILING DECISION

1. Which Market to enter?

2. Shoppers expectation

3. Shoppers profile

4. Competition

5. Value positioning

6. Merchandise category, items, brands

7. Supply chain suppliers, logistics, turnover

RETAILING DECISION

8. Format physical store, online store

9. Location trading area, store choice, traffic

9. Layout customer flow, ease of purchase, prime categories

10. Pricing competition, traffic building, margin protector.

12. Promotion increase bill size, increase bill value, in store and out store.

13. HRM serviced/self, motivation, recruitment and development.

RETAIL MANAGEMENT DECISION PROCESS

1. Understanding the World of Retailing

The first step in the retail management decision process is understanding

the world of retailing. Retail managers need to understand their

environment, especially their customers and competition, before they can
develop and implement effective strategies.
RETAIL MANAGEMENT DECISION PROCESS

Developing a Retail Strategy:

The next stages in the retail management decision-making process,
formulating and implementing a retail strategy,
The target market, or markets, toward which the retailer will direct its
efforts
The nature of the merchandise and services the retailer will offer to
satisfy needs of the target market
How the retailer will build a long-term advantage over competitors.
RETAIL MANAGEMENT DECISION PROCESS

Implementing the Retail Strategy

To implement a retail strategy, management develops a retail mix that satisfies the needs
of its target market better than its competitors. The retail mix is the combination of
factors retailers use to satisfy customer needs and influence their purchase decisions.
Elements in the retail mix include the types of merchandise and services offered,
merchandise pricing, advertising and promotional programs, store design,
merchandise display, assistance to customers provided by salespeople, and
convenience of the stores location.
 STRUCTURE OF INDIAN RETAILING INDUSTRY

Unorganized Retail Sector

Organized Retail Sector

STRUCTURE OF INDIAN RETAILING INDUSTRY

Retail Formats in India

The retail formats in India can be categorized into the traditional and
the modern forms. The traditional format includes Kiranas, street markets,
kiosks and multiple brand stores.
The modern format, on the other hand includes supermarkets,
hypermarkets, department stores and specialty chains.
In discussing about the structure of the retail sector in India we cannot
forgo forecourt retailing and trade parks.
STRUCTURE OF INDIAN RETAILING INDUSTRY

Unorganized Retail Sector

The unorganized retail sector basically includes the local kiranas, hand
cart, the vendors on the pavement etc.
This sector constitutes about 98% of the total retail trade.
Foreign Direct Investment in the retail sector is expected to shrink the
employment in the unorganized sector and expand that in the organized
one.
STRUCTURE OF INDIAN RETAILING INDUSTRY

Organized Retail Sector

In the organised sector trading is undertaken by the licensed retailers
who have registered themselves to sales as well as income tax.
The organised retail sector have in their ambit, corporate backed
hypermarkets and retail chains.
The private large business enterprises are also included under the
organised retail category.
STRUCTURE OF INDIAN RETAILING INDUSTRY

Organized Retail Sector

The organised retail sector can be further subdivided into:
Instore Retailers
This type of retail format is also known as the brick and mortar format. These retail
stores are in the form of fixed point sale outlets. They are specially designed to lure the
customers. There are different types of stores through which the instore retailers operate.
Branded Stores appear in the form of exquisite showrooms. Here the total range of a
particular brand is available and the quality of the product is certified by the government.
There are also multi brand specialty stores that sell a series of brands so that the
consumer can choose from the wide array of brands.
STRUCTURE OF INDIAN RETAILING INDUSTRY

Organized Retail Sector

The organised retail sector can be further subdivided into:
Instore Retailers
Department stores have a large number of brands and products catering to all basic needs to
luxurious items as well.
Supermarkets are basically self service retail stores. Discount Stores offer commodities at
reduced prices. In Hyper Marts customers have wide variety of products to choose from and
they are also available at discounted rates.
Convenient stores are located in prominent places within the reach of majority of the
customers and do not operate in stringent work hours.
Shopping Malls are a storehouse of a large variety of retail shops situated close to each other.
TRADE PARK

Trade parks are basically business complexes that promote international

trade.
The global players here have access to the top Indian exporters.
To the buyers this would prove to be a boon since they do not have travel
to far off towns to enter into business deals with the exporters, especially in
places where infrastructure is very poor.
By this the exporters not only enhance their visibility but they also enjoy a
host of other advantages. They can design libraries, studio etc, in order to
attract potential customers.
FORECOURT RETAILING

This type of retailing is done by the oil companies in order to increase

their revenue.
They not only deliver fuel but also offer other services to its customers.
DRIVERS OF GROWTH

Spending Pattern

Customer Expectation

Consumer life style

Changing attitudes

Increased spending of rural consumers.

KEY CHALLENGES

Retail Demand Depends on the Economy

Industry Concentration

Seasonal Cash Flow

Crime-Related Losses

Protecting Customer Information

Trends Affect Demand

High Worker Turnover