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What is Retailing
The
Retailing
Breaking
It comprises of 4 elements:
(i)
setting objectives
Customer orientation
First
Manufacturer
or
Agent/Distributor
C2
Third
Manufacturer
or
Agent/Distributor
Manufacturer
or
Agent/Distributor
Retailer 2
Retailer 1
C1
Second
C3
C4
Retailer 4
Retailer 3
C5
C6
C7
C8
C9
C10
Channel Power
Channel power refers to the extent to which retailers
influence marketers decisions like pricing, promotion
and product strategy. This emanates from the point of
customer contact (the retailers), which is the onepoint source of information feedback from customers
to the marketer/ manufacturer. Because of its
communication capabilities, the channel is in a
position to influence customers decisions.
2007). The first wave took place in the early to mid-1990s in South America
(e.g., Argentina, Brazil, and Chile), East Asia outside China (South Korea,
Malaysia, Philippines, Thailand, and Taiwan), North-Central Europe (e.g.,
Poland, Hungary, and Czech Republic) and South Africa.
The second wave happened during the mid to late 1990s in Mexico, Central
America (e.g., Ecuador, Colombia, and Guatemala), Southeast Asian countries
(e.g., Indonesia), Southern-Central Europe (e.g., Bulgaria).
The third wave has just begun in the late 1990s and early 2000s in parts of
Africa (e.g., Kenya), some countries in Central and South America (e.g.,
Nicaragua, Peru, and Bolivia), Southeast Asia (e.g., Vietnam), China, India,
and Russia.
Thus, the third wave countries which include China, India and Russia are late
comers in the diffusion of modern retail. According to the authors, the main
reason why they lagged behind was the severe restrictions on foreign direct
investment (FDI) in retailing in these countries. The demand side features of
these countries, such as income, size of the middle class, urbanization, and
the share of women in workforce, etc., have been similar to countries in the
second wave. In China and Russia these restrictions were progressively
relaxed in the 1990s and in India partially in the 2000s. In January 2006, India
allowed foreign companies to own up to 51 per cent in single-brand retail joint
ventures (JVs), but multiple-brand foreign firms are still barred in retail
Department
Store
Discount Store
Clothing Store
Specialty Store
Convenience Store
Grocery Store
Drug Store
Home Furnishing Store
Auto Retails
Market Overview
14
Rising Incomes
Over the past decade, Indias middle and highincome population has grown at a rapid pace of
over 10% per annum.
Explosion of Media
There has been an explosion in media as well
during the past decade.
Change in Consumer Behaviour
The urban woman today is literate and, in many
cases, employed. There is greater work pressure
and increased commuting time. And with a shift in
the family structure, nuclear families have become
a significant component of urban markets.
New Entrepreneurs
The growing attractiveness of the retail trade has
begun to attract new entrepreneurs with ideas, and
venture capitalists with funds.
Building Chains around Brands
Apparel, footwear and consumer durable brands have
driven the growth of specialty chains and upgraded
existing multi-brand outlets. Some like Reebok claim to
have entered retailing because of the paucity of
suitable multi-brand retailing options. However, many
of these are emerging as large retailers (Titan, Madura
Garments, Raymonds) today, and appear to be
committed to developing their retail businesses. Thus
there is an extension of consumer brand-seeking
(promise, trust, comfort, image) from products to
stores.
Technological Impact
Technology is probably the most dynamic change agent
in the retailing industry. The computerization of the
various operations in a retail store including inventory
management, billing and payments as well as database
(of customers) management widespread use of bar
coding, point-of-sale terminals and Management
Information System (MIS) has changed the face of
retailing drastically.
The
The second
expectations.
gear
is
about
meeting
customer
Barista in coffee, Pizza Hut and McDonalds in quickservice formats, Swarovski in crystal, Swatch in
watches, THS in home, Agrani Switch in technology
products, Apollo pharmacy and The Medicine Shoppe in
pharmaceuticals and Ceat Shoppe in tyres.
Furthermore, the third gear involves efficient backend management. Retailers exploit economies of scale
and offer the best prices to their customers. The focus
is on customer acquisition and category management.
The fourth
consolidation.
and
last
gear
is
period
of
Retailers in North America and Europe like WalMart, Tesco, M&S and Carrefour are in gear four,
where they are looking for cross-border movement.
34
witnessing
migration
from
traditional
Source: Datamonitor
explosive
proliferation
of
malls
and
branded outlets.
Organized retail segment contributes to over USD
12.9 billion of retail revenues, with penetration
growing from 3% in 2004-05 to 4.15% in
2005-06.
Share of organized retail is projected to grow to
USD 43.8 billion out of the total retail sector
revenues projected at USD 460.6 billion in
2010-11.
Modern retailing outlets are increasingly matching
up to global standards and witnessing intense
competition.
Source: Crisil
Research
35
kirana
stores,
push-cart
number
of
domestic
and
36
retail dominates
food,
grocery and
37
Increasing Penetration of
Organized Retail
foreign
brands,
and
increasing
has
the
highest
penetration,
organized
primarily
due
to
wide
distribution
network
and
customer confidence.
Source: Crisil Research
38
Future Outlook
billion by 2010-11
Organized retail
Technology
Adoption,
Leveraging
Traditional
Formats for
Modern Retail
Entry,
Growth,
Expansion,
Top Line
Focus for
Organized
Retail
Un-organized formats
converging to
organized formats, in
mushrooming village
malls
2000
the form of
Ist Phase
2nd Phase
a
rc
Pe
2008
Range,
Portfolio,
Format
Options,
Beginning of
the RuralUrban Retail
Merge
2005
Modern retail is
Growth
3rd Phase
ce
pa
lS
i
a
et
aR
pit
2011
projected to grow to
M&A,
Consolidation,
High
Investments,
Confluence of
Indian Retail
4th Phase
39
Key Players
40
Key
Players
Pantaloons Retail India Limited
Pantaloon Retail India Limited (PRIL), a Future Group venture started its operations with
Pantaloon Shoppe in 1993 and has since emerged to be the retailing giant of India with over
5 million square feet of retail space spread over 450 stores across 40 cities in India.
Pantaloons Retail has many firsts to its name in the Indian market, with discounted store
formats like Brand Factory etc. setting benchmarks for new players entering the market.
Innovative store formats like Hometown- a one stop shop for all the home requirements,
Sports Bar- a sports theme restaurant complete with game courts and screens for match viewing,
Health City- a value segment targeted spa and beauty care venture etc., are hitting the market,
consolidating the market position of PRIL.
The unique selling proposition of Pantaloon Retail is the dual approach to tap both the value
segment and lifestyle and luxury segment consumers, by establishing retail formats in
each segment like Big Bazaar, Fashion Station etc. aimed at value retailing while Central,
Pantaloons captures the lifestyle segment consumers.
41
Key
Players
Shoppers Stop Limited
Shoppers Stop, established in 1991 with its flagship store- Shoppers Stop, has now expanded to
over 100 retail outlets spread across 1.1 million square feet of built-up area, spanning the
entire spectrum of retailing verticals and formats.
Private labels account for more than 21% of their retail revenues, with Shoppers Stop
clocking impressive total number of transactions to customer footfalls ratio (conversion
ratio) of 27%.
Strategic partnerships with international retailing players like Mothercare Plc of Britain and
Leisure & Allied Industries of Australia, are aiding Shoppers Stop in catering to niche markets.
Aggressive expansion plans are in pipeline for formats like Timezone, a leisure and
entertainment format venture and Brio- the coffee bar located strategically in their Crossword
bookstores.
42
Key Players
Tata Trent Ltd.
RPG Enterprises
Landmark Group
Established in 1998
43
Key Players
Madura Garments
Vivek Group
Globus
Established in 1988
Established in 1965
Established in 1998
44
Current outlets: 21
Key Players
Subhiksha Trading Services
Nilgiris Ltd.
Established in 1997
Established in 1904
45
Key Players
Provogue Ltd.
Archies Ltd.
Established in 1997
46
Footwear
47
Electronics
Beauty Care
48
International Retailers
International retailers are fast expanding their business in India to tap the large consumer base.
Reebok has set up its largest store in the world in Hyderabad, Tommy Hilfiger and Levis
have over 20,000 square feet of retail space and stand-alone stores across major metros.
The fast-food giants like Pizza Hut, McDonalds, Subway etc are expanding at a fast pace, with these
emerging Tier II and Tier III cities
49