RETAILING: ROLE, RELEVANCE AND TRENDS

What is retailing?Retailing: a conclusive set of activities or steps used

to sell a product or a service to consumers for their personal or family use

Retailer: a person, agent, agency, company or organization instrumental in reaching the goods, merchandise, or services to the ultimate consumer

Countries that have enjoyed the greatest economic and social progress have been those with a strong retail sector

Over the last decade there have been sweeping changes in the general retailing business

Retail industry and economy

Retail business is the largest private industry Retail is ahead of finance and engineering and

contributes over 8 per cent of GDP in the western countries

Over 50 of the Fortune 500 and about 25 of the Asian Top 200 companies are retailers

Today, in some developed countries, retail businesses have shares as large as 40 per cent of the market

The significance of the retail business has increased with the fast growth in the service sector

Retail industry in IndiaRetail forecasts in India:

- the business in India is expected to reach Rs. 25,000 billion in 2008

- growth of organized retailing in both food and non-food segments

- proportion of sales through organized retailing estimated, increase by 8% in 2010 Emergence of organized retailing: -India to have over 700 shopping malls by 2015 (400 operational malls in 2010)

- land developers rushing to cash in on the booming retail business

Contd…

50 million square feet of total mall space in India, expected to sprout in six metros (Delhi and Mumbai) and seven non-metros in 2008

40 per cent of the total mall space to be concentrated in the National Capital Region

Characteristics of retailing

Direct end-user interactionSole point in the value chain to provide platform for

promotionsSales at the retail level is generally in smaller unit sizesLocation is a critical factor for retail businessRetail services are as important as core productsA larger number of retail units as compared to other

members present in the value chain

Functions of retailingSortingBreaking bulkHolding stockAdditional servicesChannel of communicationTransport and advertising functions

Activities performed by retailers

Arrange for assortment of offeringsBreaking quantityHolding stockExtending services

Categorizing retailers

Number of outletsMargin vs Turnover Location Size

Trends in retail formats

Mom and Pop Stores and traditional kirana storesE-commerceDepartment StoresDiscount StoresCategory KillersSpecialty StoresE-tailers

Relationships between retailers and suppliers

The retail sector is critically dependent on its suppliers for effective operation and the profitability of its business

Several socio-economic and demographic factors are considered by manufacturers for identifying the ideal retail format mix for its products

This is illustrated by the washing soap category in India and the resultant retail format preferences

Retail format mix adopted by manufacturers for soaps

Soap is targeted towards women as they are the chief decision-makers in soap purchase. Medicated positioning like germ killing and anti-bacterial are marketed to families.About 75% of the soaps are bought through these following types of outlets.

Kirana storesPan-beedi shopsDepartment stores

Retail strategy

Define the business of the firm in terms of orientation towards a particular sector

Set short-term and long-term objectives with regard to image and profitability

Identify the target market and direct efforts on the basis of the customers characteristics and needs

Decide the broad direction the company must take in future

Implement an integrated plan that encompasses all aspects of retailing like pricing, location, and channel decisions

Evaluate and revise the plan depending on the nature of the internal and external environment

Retail concepts

An essential part of the retailing strategy, the retailing concept is essentially a customer-centred, company-wide approach to developing and implementing a marketing strategy. The retailing concept covers four broad areas:

Customer orientationGoal orientationValue driven approachCoordinated effort

The changing face of retailingRole of the Internet- Does the size of the retail organization play a big part in

adapting easily to the Internet? - Is the product/service offering also a prime determinant of

cyber retailing? Branding through retailers- How do retailers choose which brands to display? - Why do many new products fail in the marketplace- How can manufacturers maximize the brand opportunity in

a given retail outlet? - What is future of Lifestyle Clustering?- Vertical retail concepts are increasing in popularityConsumption related mega trends

Drivers of success in the retail sector

Customers are the driving force in change Re-evaluating the marketing planAdvanced education for retailers is critical for growthStrong visual recognitionThe workplace challengePlanning for success