Retailing -Rohita Dwivedi

What is Retail? The word retail is derived from a

French word retaillier meaning to cut off a piece or to break bulk.

Retailing can hence be considered as the last stage in the movement of goods/ & services to the consumer

Retail Philosophy — “By The People, For The People and Of The People”

Retailing involves selling products and services to consumers for their individual or family use.

As the final link between consumers and manufacturers, retailers are a vital part of the business world.

 Retailers add value to products by making it easier for manufactures to sell and consumers to buy. 

WHY STUDY RETAIL??

•Impact of Retailing on economy•Retail Boom in India•Career Opportunities

India – Retail Perspective Overview

Population of 1.21 billion people India will rank no 1 in population by

2030 Domestic Private Consumption-60%

of GDP growing at 7.7% Real per capita income rises from

Rs.5089 in 2001-02 to Rs.10810 in 2011-12

India – Retail Perspective Overview…

Household Annual Income CAGR 1-5lakhs-9% 5-10 lakh- 12% Above 10 lakh- 15%

50% of population is below 24 years 62% population in working age group Household size reduced from 5.57-5.08 Urban household size reduced – from 4.79

– 4.77

India – Retail Perspective Overview…

Plastic money spend growing at CAGR 26%

Rate of urbanization in last 10 years – 2.7% total 27.7%

Rural consumption(3750 billion) outpaced urban(2994 billion) in 2011-12

India – Retail Perspective Overview… Affordability growth

Falling interest rates Easier consumer credit

Non food expenditure – 59%

Indian Retail-An Overview

Second largest industry after agriculture- Rs.2,23,572 crore

GDP contribution-10% Contribution to employment-8% Overall retail growth-16% Organized retail growth-26.8% Organized retail penetration -8%

Indian Retail-An Overview…

GRDI index rates India 14th in 2013 2nd largest growing economy 3rd largest economy in terms of

GDP 4th largest economy in PPP Rated among top 10 FDI

destinations

The Changing Indian Consumer The urban consumer

Getting exposed to international lifestyles Inclined to acquiring asset More discerning and demanding than ever

Internet Explosion No longer need-based shopping

Shopping is a family experience Changing Mindset

Increasing tendency to spend Post Liberalization children coming of age

100 mn 17-21 year olds*. Tend to spend freely.

Greater levels of education

Retail Realities: Beyond Urban Boundaries

638,691 villages 128 million households 3 times the urban population 41% of Indian middle class and 58%

of the total disposable income ITC’s e-choupal, HUL’s

project Shakti

The Indian Retail Sector Can Be Broadly Classified Into—

Unorganized Retail in India Currently captures 92% of total retail

market Mainly a family owned business Mostly mom-pop stores Consumer familiarity-USP Low cost structure Very low real estate and labor

cost Low taxes to pay

Weekly MarketsVillage FairsMelas

Convenience StoresMom and Pop/Kiranas

PDS OutletsKhadi StoresCooperatives

Exclusive Brand OutletsHyper/Super MarketsDepartment StoresShopping Malls

Traditional/Pervasive Reach

Government Supported

Historic/Rural Reach

Modern Formats/ International

Evolution of Indian retail

Source of Entertainmen

t

Neighborhood Stores/Convenie

nce

Availability/ Low Costs / Distribution

Shopping Experience/Efficie

ncy

Industry Evolution Traditionally retailing in India can be traced to

The emergence of the neighborhood ‘Kirana’ stores catering to the convenience of the consumers

Era of government support for rural retail: Indigenous franchise model of store chains run by Khadi & Village Industries Commission

1980s experienced slow change as India began to open up economy.

Textiles sector with companies like Bombay Dyeing, Raymond's, S Kumar's and Grasim first saw the emergence of retail chains

Later Titan successfully created an organized retailing concept and established a series of showrooms for its premium watches

The latter half of the 1990s saw a fresh wave of entrants with a shift from Manufactures to Pure Retailers

Industry Evolution…cont… For e.g. Food World, Subhiksha and Nilgiris in food

and FMCG; Planet M and Music World in music; Crossword and Fountainhead in books.

Post 1995 onwards saw an emergence of shopping centers, mainly in urban areas, with facilities like car parking targeted to provide a complete destination

experience for all segments of society Emergence of hyper and super markets trying to provide

customer with 3 V’s - Value, Variety and Volume Expanding target consumer segment: The Sachet

revolution - example of reaching to the bottom of the pyramid.

At year end of 2000 the size of the Indian organized retail industry was estimated at Rs. 13,000 crore

Stages of Lifecycle of Industry Introduction:

Country that has just entered GRDI Retailers plan their entry strategies India in 1990s Kazakhastan in 2007 Lasts for around 10 years depending on the

market attractiveness Example: African markets

Strategy suggested: A rapid penetration strategy: low price, high

promotion, limited distribution, advertises for awareness

Stages of Lifecycle of Industry.. Growth:

Market is developing quickly and is also ready for modern retailing

Retailers have a good chance of long term success

Retailers should enter through local representation, sourcing offices and new stores

Lasts for approx. 15-25 years Example: Indian market

Strategy suggested: strength against competitor, stronger distribution channel, shift of advertising from product awareness to product preference

Stages of Lifecycle of Industry..

Maturity: Market is still big and growing but the space for

new entrant will become tighter Margins for error is thin Competition from international retailers Generally lasts for 5-10 years Example: South Asian markets

Strategy suggested: enter new market segments and innovative products and offers

Stages of Lifecycle of Industry.. Decline:

Window of opportunity is closing fast and organised retail is at 40 to 60 percent

Existing retailers can enter through discount formats or non food formats such as consumer goods and apparels

Lasts for around 5 to 10 years before reaching saturation

Example: Developed country markets Strategy suggested: identify weak

segments, maintaining investment levels selectively, controlled advertising

Challenges In The Industry 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

Challenges In The Industry…

Real Estate low Availability and high cost Supply Chain Inconsistency Poor Infrastructure Lack of Skilled Manpower Complex tax Structure Heavy Stamp Duties

FDI in Indian retailing Current Indian FDI Regime

FDI is now permitted in retail trade sector: Private labels – 100% Single Brand Retailers – 100% Multibrand Retailers – 51%

Why FDI? Improve competition Develop the market Greater level of exports due to increased

sourcing by major players Sourcing by Wal-Mart from China improved

multifold after FDI permitted in China Similar increase in sourcing observed for Metro

in India Provides access to global markets for Indian

producers

Why FDI?... Investment in technology

Cold storage chains solve the perennial problem of wastage

Greater investment in the food processing sector technology

Better operations in production cycle and distribution Better lifestyle

Greater level of wages paid by international players usually

More product variety Newer product categories Economies of scale to help lower consumer price Increased purchasing capacity of consumers

Careers In Retailing

Career opportunities in Retailing is extremely dynamic, some idea can be gathered knowing:•Pantaloons plans to hire 7000 people in the next 2 years•Shopper’s Stop plans to take 3000 people in the next 3 years•Reliance retail is expected to take 42,000 people in the next 2-3 years•500 people are required to man a single mall•250 malls expected to be functional in the next 5 years

Careers In Retailing….

Retail organization can be divided into various functional departments, to understand this clearly let us look at a organization chart of a typical retailer:

Aditya Birla Pantaloon Retail

Careers In Retailing…. Operations:

Zonal managers Area managers Store managers Asst. Store managers Floor managers Department managers

Category management Category managers Buyers Asst category managers Asst. Buyers

Information Technology Software development managers Hardware maintenance managers

Careers In Retailing…. Business development: Online retail managers Project managers Asst. Manager- projects Corporate sales manager Asst. Manager- corporate sales

Supply chain management: Manager- supply chain Asst. Manager- supply chain Warehouse managers Asst manager- warehouse

Customer service: Customer relationship managers Customer facilitators

Careers In Retailing…. Marketing and advertising: Retail marketing managers Pr manager Asst manager- pr Pr executives

Human resource development: Manager training Manager recruitment Hr manager

Commerce: Manager- finance Manager- audit Manager- collections CAs, CSs

THANK YOU!!!!