Chapter

20

Retail Manageme nt

20-1

Marketing Management

text and cases, Indian Context

Tapan K Panda

Excel Books

Retail Management

Retail Management
At the end of this chapter, you will be able to understand:        The History and Evolution of Modern Retailing Importance of Retailing in Modern Business The Changes, Sweeping through Retail Industry An Environmental Analysis How Retailers are Responding to Demographic Trends Various Theories of Retail Management Various Retail Formats.

20-2

Marketing Management

text and cases, Indian Context

Tapan K Panda

Excel Books

Retail Management

Retailing: An overview

 Retailing  Worlds largest private industry An overview  US$ 6.6 trillion sales annually

 Indian retailing  Largest employer after agriculture - 8%* of population  Highest outlet density in world  Around 12 mn outlets  Still evolving as an industry  Long way to go

20-3

Marketing Management

text and cases, Indian Context

Tapan K Panda

Excel Books

Retail Management

Retailing: An overview

An overview

 Wal-Mart  Topmost global Fortune 500 company(3 Consecutive Years)  Annual Sales of over US$ 250 bn  Indias two largest retail player turnover around US$ 158 mn (Bata) and US$ 102 mn (Shoppers Stop)  Fortune 100  9 Retailers  Carrefour, Ahold, Home Depot, Kroger, Metro, Kmart-Sears, Target, Albertsons

*Fortune List of worlds top companies **Euromonitor India Retail Survey

20-4

Marketing Management

text and cases, Indian Context

Tapan K Panda

Excel Books

Retail Management

Agenda
Retailing : An Overview Indian Retail The change factor FDI in Indian Retailing Why FDI ? How FDI ? Case study : Chinese Retail Recommendations

20-5

Marketing Management

text and cases, Indian Context

Tapan K Panda

Excel Books

Retail Management

Evolution of Indian Retail

Historic/Rural Reach Traditional/Perva sive Reach Government Supported Modern Formats/ International Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls PDS Outlets Khadi Stores Cooperatives Convenience Stores Mom and Pop/Kiranas Weekly Markets Village Fairs Melas Source of Entertainment 20-6 Neighborhood Stores/Convenience Availability/ Low Costs / Distribution Shopping Experience/Efficiency
Tapan K Panda

Marketing Management

text and cases, Indian Context

Excel Books

Retail Management

Evolution of Indian Retail

 Informal Retailing Sector  Typically small retailers.  Evasion of taxes  Difficulty in enforcing tax collection mechanisms  No monitoring of labor laws Formal Retailing Sector  Typically large retailers  Greater enforcement of taxation mechanisms  High level of labor usage monitoring

Indian retail 

20-7

Marketing Management

text and cases, Indian Context

Tapan K Panda

Excel Books

Retail Management

Categories of Indian Retail

Indian retail

  

Corporate Houses  Tatas: Tata Trent  RPG group: Food World, Health and Glow, etc  ITC: Wills Life Style  Rahejas(ShoppersStop), Hiranandani(Haiko), DLF(DT cinemas) etc. Dedicated brand outlets  Nike, Reebok, Zodiac etc Multi-brand outlets  Vijay Sales, Viveks etc Manufacturers/ Exporters  Pantaloons, Bata, Weekender

20-8

Marketing Management

text and cases, Indian Context

Tapan K Panda

Excel Books

Retail Management

Classifying Indian Retail

 Modern Format retailers  Supermarkets (Food world)  Hypermarkets (Big Bazaar)  Department Stores (S Stop)  Specialty Chains (Ikea)  Company Owned Company Operated (COCO)  Company Owned and Dealer Operated (CODO) Traditional Format Retailers  Kiranas: Traditional Mom and Pop Stores  Kiosks  Street Markets  Exclusive /Multiple Brand Outlets

Indian retail

20-9

Marketing Management

text and cases, Indian Context

Tapan K Panda

Excel Books

Retail Management

Large Indian Retailers

Indian retailers

Hypermarket  Big Bazaar  Giants  Shoprite  Star Department store  Lifestyle  Pantaloons  Piramyds  Shoppers Stop  Trent Entertainment  Fame Adlabs  Fun Republic  Inox  PVR
text and cases, Indian Context Tapan K Panda

20-10

Marketing Management

Excel Books

Retail Management

The Changing Indian Consumer

 Greater per capita income  Increase in disposable income of middle class households  20.9%* growth in real disposable income in 99-03. Indian consumer  Growing high and middle income population  Growing at a pace of over 10%* per annum over last decade  Affordability growth  Falling interest rates  Easier consumer credit  Greater variety and quality at all price points

From Euromonitor Retail Survey

20-11 Marketing Management
text and cases, Indian Context Tapan K Panda

Excel Books

Retail Management

The Changing Indian Consumer

 The urban consumer    Indian consumer    Getting exposed to international lifestyles Inclined to acquiring asset More discerning and demanding than ever Shopping is a family experience Increasing tendency to spend Post Liberalization children coming of age  100 mn 17-21 year olds*. Tend to spend freely.  Greater levels of education

 No longer need-based shopping  Changing Mindset

*Data from NCAER

20-12 Marketing Management
text and cases, Indian Context Tapan K Panda

Excel Books

Retail Management

Anticipated Growth

 Anticipated growth

Market size  Current market size is roughly US$ 286 bn*  96% of the 12 Million stores are less than 500 Sq. ft.  Forecast Growth Rate for the retailing industry is roughly 8.3% for 2003-2008  Sales from large format stores would rise by 24-49%**  Formal and modern format retailing would enjoy rapid growth

*From ICICI Retail Report **From Euromonitor Retail Survey

20-13

Marketing Management

text and cases, Indian Context

Tapan K Panda

Excel Books

Retail Management

Industry Dynamics

Low domestic competition  Because of fragmented nature of industry Lack of exposure to global best practices  Low entry barriers for unorganized retailing  Moderate entry barriers for organized retailing Wholesale system under-invested leading to 20-40% wastage Non level playing field issues  Wide differences in treatment of small and large retailers

 Industry dynamics

 

20-14

Marketing Management

text and cases, Indian Context

Tapan K Panda

Excel Books

Retail Management

Real Estate Issues

RE issues

 Highly distorted real estate market  Pro-tenant laws  Zoning laws  Zoning laws also vary from state to state  Non-availability of government land, and fragmented private holdings makes it difficult for retailers to acquire land  Government is largest property owner in country  Urban Land Ceiling act is archaic  Stamp Duty and registration charges at high levels. Also vary from state to state

20-15

Marketing Management

text and cases, Indian Context

Tapan K Panda

Excel Books

Retail Management

Growth Factors

Growth factors

 Growth determining factors  Government Policy  Infrastructure Development  GDP Growth  Employment Generation and Job Creation  In several new sunrise industries  Implies greater purchasing power

20-16

Marketing Management

text and cases, Indian Context

Tapan K Panda

Excel Books

Retail Management

The Indian Advantage

Advantage India

 India ranked 5th in the Global A.T Kearney Retail Development Index  Second only to China in Asia  Least saturated of all global markets studied  The least competitive of all global markets studied  Implies lower barriers of entry for global players  Considering tremendous market size, excellent potential for foreign players  India ranked 3rd in the Global A T Kearney FDI Confidence Index in 2004  Improved from Rank 6 in Year 2003

20-17

Marketing Management

text and cases, Indian Context

Tapan K Panda

Excel Books

Retail Management

Number of Retail Outlets

Number of Outlets (in 000) Area 1993 2693 5364 8057 1996 3,074 6,633 9,707 1997 3200 7200 10,400 1998 3400 7200 11,100 1999 3500 8400 11,900 2000 3700 9000 12,700 2001 3800 9800 13,600

Urban Rural Total

Source: Euromonitor, based on ORG and AIMS estimates

20-18

Marketing Management

text and cases, Indian Context

Tapan K Panda

Excel Books

Retail Management

Urban Outlets Food/Non-Food

Types of Products Sold Number (000) 824 1430 820 3074 Percentage (%) 26.8 46.5 26.7 100
Source : Euromonitor

Food Other FMCG Non-food Total

20-19

Marketing Management

text and cases, Indian Context

Tapan K Panda

Excel Books

Retail Management

Distribution of Stores by Shop Classification Index

Type of Retail Outlets Small Medium Large Very Large Total Proportion 64 25 8 3 100

20-20

Marketing Management

text and cases, Indian Context

Tapan K Panda

Excel Books