RETAIL MANAGEMENT

RETAIL BUSINESS ENVIRONMENT

PRESENTED BY:
G. SRILEKHA 32001

M. CHANDAN RAJU 32003

P. SIVA KUMAR 32004
WHAT IS RETAIL ENVIRONMENT?

• The retail industry is everywhere.

But just like every other industry, the retail sector is affected by the six principles of
PESTEL/PESTLE analysis, i.e.:
1. POLITICAL
2. ECONOMIC
3. SOCIO - CULTURAL
4. TECHNOLOGICAL
5. LEGAL
6. ENVIRONMENTAL
POLITICAL ENVIRONMENT

• Each country must abide by their political regulations.

• The regulations affect which products can be imported, exported, and sold in stores.
• Stores offering food products must comply with health guidelines proposed by the
government.
• When retail stores branch into other countries, they need to abide by the policies in that
country too.
• In some cases, this can be beneficial. But if the country’s political parties are fickle, it can
easily turn into a problem.
ECONOMIC ENVIRONMENT

• Economic environment refers to the stage of economic development of the country like
developed or developing, state of agriculture, industry and service sectors, level of
national income, its composition or source-mix, i.e., percentage of national income
derived from agriculture or industry and the service sector.
• A stronger economy allows consumers to buy products they want. Rather than just
buying products they only need. It also means more investors are becoming interested in
the profitability offered by retail stores.
• The retail industry was able to hold itself up even during the recession. It’s one of the few
industries who managed to scrape through.
ECONOMIC INFLUENCE : THE 5 FORCES MODEL
SOCIO-CULTURAL ENVIRONMENT

• Consumer preferences are the main social factors affecting the retail industry. For
instance, people enjoy buying products in bulk.
• Retailers who offer products online can collect data provided by their customers. They
can easily see which products people are buying, leaning towards, or completely ignoring.
Then, they shape their offerings based on this data. It’s a never-ending process.
• Companies set targeted ads to customers most likely to visit their stores and buy from
them.
• Larger retailers can achieve this easier than mom and pop shops. But even smaller shops
can benefit from offering discounts and sales on products.
SOCIO-CULTURAL ENVIRONMENT

• Dual income families are on the increase. A dual income family can spend more but has
little time for shopping.Therefore speed and convenience will become critical dimensions
in the retail business, in the years to come. The increase in population will also accentuate
an increase in per capita spending.
• Urbanization is another factor contributing to the unprecedented growth in retailing.
Rural-Urban mobility has led to high customer density areas, which enables retailers to
target a larger number of customers with lesser number of stores, thus resulting in
economies of scale for the retailer.
• An overall improvement in transportation structure and increased number of
automobiles, covering distances has become much easier. Now a customer can travel a
long distance to reach a particular shop if he/she sees value in shopping there.
TECHNOLOGICAL ENVIRONMENT

• Retail stores use a variety of technology everyday. Like a point of sales system, as well as
cash registers to manage money after a sale.
• As technology advances, stores are adopting new systems, software, and hardware.
• The retail industry has greatly benefited because of the internet. Not only to streamline
services, but also to reach audiences worldwide.
• Most companies have a business website. It’s basically a digital catalogue for their
products. Big name companies are able to offer a selection online.
• The products are either shipped to the customers’ home or the closest store for pickup.
TECHNOLOGICAL ENVIRONMENT

• Technological conditions determine the development of an organization by increasing the

efficiency, production and competitiveness.
• The adaptation to new technology can be in three ways:
1. Inventing or creating a new product
2. Introducing the products and processes in use
3. Diffusing the technology that cannot be used first
TECHNOLOGICAL ENVIRONMENT

Technological conditions that may have impact in an organization include:

1. Effectiveness of infrastructure, including roads, ports, airports, rolling stock, hospitals,
education, healthcare and communication.
2. Productivity of the organization.
3. New manufacturing processes.
4. New products and services of supply chain partners.
5. New technology that could impact the company.
6. Cost and accessibility of resources such as electrical power, water supply, fuel etc.
LEGAL ENVIRONMENT

• A retail store needs to meet legislative conditions before opening the shop. These
conditions are often standard. It includes abiding by taxation laws, labour laws, and more.
• Legal factors become trickier once the company expands overseas or offers products
online. Then the international laws come into play. As does data and copyright laws.
• Not following these laws exactly as outlined will lead to legal troubles like bankruptcy
and foreclosure.
• It’s important to understand the laws long before the store is open for business. And as
the retailer grows, new legislative laws come into effect.
LEGAL ENVIRONMENT

• The government rules and policies are must to be followed for existing in the market.
The basic legal conditions considered in environmental appraisal are:
1. Anti-trust regulation
2. Protection laws
3. Environmental laws
4. Tax laws
5. Foreign trade regulations
• Market economy in India is much more inclined towards the central, state and local
governments.
• Changes in government rules have been major effect to the future of many organizations.
ENVIRONMENTAL FACTORS

• More retail shops are offering food products. The state of the environment affects the
quality of the product and the selection. It also means having to abide by more economic
and political factors.
• For instance, corporations fear a “soda” tax; it’s an increased tax for selling soda in stores.
Likewise, some shops in other countries have to pay a tax for offering fatty foods.
Example: In India, Excise Duty is paid for liquor sale.
• We also can’t forget about environmental issues inside of the stores either. All retail
stores need to meet the environmental requirements for consumer and employee safety.
This is set by the government. It’s non-negotiable.
THANK YOU!
We are open for any Q&A’s.