all factors influencing pakistani retail industry

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RETAIL MARKETING Influencing factors to Retail industry in Pakistan

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Influencing factors to Retail industry in Pakistan

Table of Contents ABSTRACT...................................................................................................................3 Dynamic Nature of Retailing.......................................................................................4 The influencing changing environments.....................................................................4 Economic factors:....................................................................................................4 Retailing affected by inflation and floods.............................................................5 Political/Legal factors..................................................................................................6 Sociological & Cultural factors:...................................................................................7 The evolution of the Pakistani consumer.................................................................8 A risk averse culture in Pakistan .............................................................................8 Changes with the changes in class system.............................................................9 Brand consciousness ..............................................................................................9 Technological/Educational/Managerial factors..........................................................11 A fragmented market...............................................................................................13 Competitive factors:.................................................................................................13 Competition is fragmented; foreign retailers boost modern retailing....................15 Ethical factors:..........................................................................................................15 The outlook for retailing is positive, but uncertainties remain..................................16 Conclusion................................................................................................................ 17 Trends that are touching the future of retailing....................................................17

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Influencing factors to Retail industry in Pakistan

ABSTRACT The revolution in retailing industry has brought many changes and also opened door for many Pakistani as well as foreign players. In a market like Pakistan there is a constant clash between challenges and opportunities but chances favor those companies that are trying to establish themselves. So to sustain in a market like Pakistan companies have to bring innovative solutions. Pakistani market has potential to accommodate many retail players, because still a small proportion of the pie is organized. We have tried in this report to discuss the factors affecting retailing like social, technological, legal, competitive, economic and environmental etc. It tries to describe the different segments in which retailing could have tremendous opportunity as well. Liberalization and communications revolution has also brought the global corporate culture to Pakistan; the habits of people are changing rapidly with changing life styles, changing ways of living, customer pattern and buying behavior. All the things are changing. These corporate sectors promoted activities and the glamour and pomp that surrounds in Pakistan is in sharp contrast to the physical and social conditions in lower and lower-middle income settlements. There is an introduction of fast-food chain stores, garments stores and international branded stores of different consumer items is available everywhere, they have opened up their branches in all the big cities of Pakistan. It is the emergence of new aspirations related to consumerism, and the desire for belonging to contemporary world as portrayed by the media. As the societal culture is changing so do the purchasing pattern of people. To meet their demands there is an advent of new shopping stores that have a new look now the shopping is not the matter like of old days.

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Influencing factors to Retail industry in Pakistan

Dynamic Nature of RetailingThe dynamic nature of retailing has never been demonstrated, experienced and seen better than now. Changes in environments Economic, Political/Legal, Socio-cultural, Technological, Ethical and Competitive within which retailers of all kinds must operate, force adjustments in policies, methods and managerial strategies. The retailer has to be very familiar with the environmental factors. Also, he has to remain watchful of the continuous change taking place in the environments since the change in these factors has and will always have vital impact on survival, growth, profit making and ultimate success of the business. Therefore, as far as possible, all plans, objectives, strategies, policies have to be formulated and implemented, catering for and considering the changing environments.

The influencing changing environmentsEconomic, Political, Legal, Social, Cultural, Technological, Ethical and Competitive Environment significantly influence the conduct of retail enterprises and for each factor, as already emphasized, the retailer not only has to be familiar with them but also has to keep a close watch on the likely changes which may occur. The following forces under each factor need consideration at all times.

Economic factors:The economy has a significant impact on the viability of a retail strategy. A micro level assessment considers the industry and market in which a company competes, the customers who purchase its products, the competitors, and competition who threatens it and the suppliers on which retailer depends. Pakistan is a developing country and its economy is the worlds 27 th largest economy based on its purchasing power. However, the country remained impoverished due to internal political disturbances and negligible foreign investment, since independence. With rise in development spending by Islamabad, the countrys poverty levels reduced by 10% from the year 2001 to 2007. The economy grew between 2004-07 due to rise in GDP from 5 to 8%. The growth of the economy was affected once again during the last three years due to global economic recession and mismanagement by the current democratic government. 4

Influencing factors to Retail industry in Pakistan

Retailing affected by inflation and floods Pakistans economy improved during 2010 in line with the global recovery. However, retailing sales in current value terms grew less in 2010 than that in 2009. This is because consumer spending was affected by other factors such as the large scale floods which hit Pakistan in July 2010 and high inflation. There was a lack of foreign entrants into retailing in 2010 due to foreign investors adopting a wait-andsee approach amid the economic uncertainties. Following economic factors are of great importance while drafting a retail strategy 1) Basic Economic System Basic economic system in Pakistan is a mixed type system. The Pakistani economic system provides ample opportunities for private retailers to enter grow and earn handsome profits from the growing market. 2) Economic Stability Economic stability is one factor that has affected the business scenario more than any other factors during last four years. Direct foreign invest is continuously decreasing from 2007 to onwards. Pakistani economy has been struggling miserably to show some sustainable growth in last few years which has disappointed the foreign investors gradually. 3) Market Size Pakistan market size is large and provides wide range of options for retailers to earn. According to an estimate Pakistani population is near 180 million now. This shows the potential for growth and development in retail sector in economy 4) Social Overhead Capital Social overhead capital is defined as Capital spent on social infrastructure, such as schools, universities, hospitals, libraries. As government spends on social overhead capital opportunities are available for public to grow that indirectly increases their purchasing power and in this way economy grows and prospers 5) Personal Disposable Income

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Influencing factors to Retail industry in Pakistan

The amount of income left to an individual after taxes have been paid, available for spending and saving. Due to inflation, unemployment and unfair system of wealth distribution most of Pakistani have meager level of disposable income. 6) Distribution of Income In economics, income distribution is how a nations total economy is distributed amongst its population.[ The distribution of income lies at the heart of an enduring issue in political economythe extent to which government should redistribute income from those with more income to those with less. 7) Inflation In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects erosion in the purchasing power of money a loss of real value in the internal medium of exchange and unit of account in the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.the current inflation rate in Pakistan is upto 14 % as per governmental resources but in reality it is more than 20% which has adversely affected the purchasing power of people in general and of middle class in special. In this scenario many of the new opened small retail outlets have faced irregular difficulties and set backs. Many businesses have shut down and many investors have withdrawal and transferred t

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