final retailing
TRANSCRIPT
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“Managing Retail Stores”
RETAILING
…An Introduction
Retailing is the set of business activities that adds value to the
products and services sold to consumers for their personal or family use.
Often people think of retailing only as the sale of products in stores.
However, retailing also involves the sale of services: overnight lodging in
a motel, a doctor’s consultation, a haircut, a video tape rental, or a home
delivered pizza.
When countries grow, they buy
more things. More products become
available. They need more shelf space.
The result: a retail revolution. That’s
what’s happening in India today. A new
generation of retail outlets is emerging,
which will change the landscape of the
countries cities.
With 12 million retail outlets, India can claim the distinction of truly
being a nation of shopkeepers. Yet, unlike the USA, which has 1 million
shops, India can hardly be called shopper’s paradise. The unorganized
sector that comprises of the retail sector ranges from grocery stores to
the corner shops and stalls that stock soaps and sweets and are spread
across six lakhs villages and thousands of small towns. The organized
sector, on the other hand, comprises largely of chain stores limited mainly
to major metropolitan cities. Only 2% of India’s retailing sector is
organized.
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History of RETAILING
Beginnings of Retail Trade
1. Early Trade
When man started to cultivate and harvest the land, he would
occasionally find himself with a surplus of goods. Traditionally Mom & Pop
run the retail business having Shop in the front & house at the back. More
than 99% retailers function in less than
500Sq.Ft of area.
Thus markets were formed. These early
efforts to swap goods developed into
gatherings that are more formal. When
a producer who had a surplus could
not find another producer with
suitable products to swap, he may have
allowed others to owe him goods. Thus early credit terms would have
been developed. This would have led to symbolic representations of such
debts in the form of valuable items and eventually money.
2. Early Markets
After, the Industrial Revolution, there was a change in the pattern of
production of goods and services. Handmade articles were replaced by
machine made ones and were made in bulk. Marketing this bulk
production was a challenge that was faced. Slowly, small-scale retailing
developed into medium and then large-scale retailing.
The basic chain of distribution that was operational in the olden days
remained unchanged. The producers produced in bulk, the wholesalers
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purchased goods from them and sold them to retailers in small quantities.
The retailers sold these to the end consumers as per their requirements.
3. The First Shops
Eventually, markets would become permanent fixtures i.e. shops.
These shops along with the logistics required to get the goods to them
were, the start of the Retail Trade.
How Retail Developed
1. Peddlers and Producers
The Retail Trade is rooted in two groups, the peddlers and producers.
Peddlers tended to be opportunistic in their choice of stock and
customer. They would purchase any goods that they thought they could
sell for a profit. Producers were interested in selling goods that they had
produced.
2. General Store
This division continues to this day with some shops specializing in
specific areas, reflecting their origins as outlets for producers and others
providing a broad mix, known as General Store. Although specialist shops
are still with us, over time, the general store has increasingly taken on
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specialist products. Customers have found this to be more convenient
than having to visit many shops - thus the term “Convenience Store”
has also been applied to these shops. As the popularity of general stores
has grown, so has their size. This combined with the advent of Self-
Service has lead to the Supermarket, or malls
3. Self-Service Stores
Up until the introduction of self-service stores, customers would
simply ask the shopkeeper for their goods. The shopkeeper would price
them (weighing them if necessary), pack them in a bag or other container
(often supplied by the customer), tot up the bill and receive payment.
There was a personal one-to-one relationship between customer and
shopkeeper.
Now scenario has changed, this new type of shopping was more
efficient and many customers preferred it. Although personal service
stores remain to this day, this new concept started a rapid growth of self-
service stores in the United States, India etc... Other countries were slow
to take up the idea, but there has been a steady rise in the global amount
of self-service stores ever since.
Retailing includes all the activities involved in selling goods of services of the final consumers for
personal, non-business use. A retailer or retail store is any business enterprise whose sale
volume comes primarily from retailing.
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Definition OF RETAILING
The word retail is derived from the French word retailer, which means to
cut off a piece or to break bulk. A retailer may be defined, as a
“Dealer or trader who sells goods in small quantities”
or one who repeats or relates’.
PHILIP KOTLER
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NATURE OF RETAILING
Retailing includes all transactions in which the ultimate consumers
are the buyers. The buyer intends to consume the product through
personal, family or household use. A retailer is a business entity that
purchases product for reselling them, to the ultimate consumer. Retailing
often takes place in stores or service establishments, but it also occurs
through direct selling, direct marketing and vending machines outside the
stores.
Retailing is important to the national economy of any country. The
number of retailers has remained relatively constant for the past twenty
years. But the sales volume has increased.
Retailing may include subordinated services, such as delivery.
Purchasers may be individuals or businesses. In commerce, a retailer
buys goods or products in large quantities from manufacturers or
importers, either directly or through a wholesaler, and then sells
smaller quantities to the end-user but now there are various in retail
industry. As we know “that change is what, which is permanent in
nature”. Retailers add value, provide services and assist in making
product selections. Retailer image can enhance the value of the product
through the shopping experience, availability or convenience such as
home shopping. Through its location, a retailer can facilitate comparison-
shopping. Product value is also enhanced as retailers offer services such
as technical advise, delivery, credit and repair services. Retail sales
personnel can also demonstrate to customers how a product can help
address their needs or solve a problem.
The value added by retailers is significant for both producers and
ultimate consumers. Retailers are the critical link between producers and
ultimate consumers because they provide the environment in which
exchanges with ultimate consumers occur. Ultimate consumers benefit
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through retailers’ performance of marketing functions that result in the
availability of broader arrays of products. Retailers play a major role in
creating time, place and possession utility.
Leading retailers such as Wal-Mart, The Home Depot, Macy’s and
Toys “R” Us, big bazaar, hyper mart offer consumers a place to browse
and compare merchandise to find just what they need. Such traditional
retailing is being challenged by direct marketing channels that provide
home shopping through catalogues, television and internet. Traditional
retailers are responding to this change in the retail environment in various
ways. Wal-Mart has joined forces with fast-food giants like McDonald’s and
PepsiCo to attract consumers and offer them added convenience of eating
when they shop.
New store formats and advances in information technology are
making the retail environment highly dynamic and competitive. The key
to success in retailing is first to have a strong customer focus
with a retail strategy that provides the appropriate level of
service, product quality and innovativeness that consumers
desire. Partnership among non-competing retailers and other marketing
channel members are providing new opportunities for retailers.
Retailers are also finding global opportunities. Toys “R” Us is now
opening more international units than domestic stores, a trend that is
likely to continue for the near future.
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IMPORTANCE OF RETAILING
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 a consumer to buy.
The need for increased customer focus in a global competition has
led to growing popularity of retailing. This is because the corporate have
started realizing the significant role that retailing plays:
Sorting: Manufacturers sell their entire lot to retailers and
consumers prefer to choose in small quantities from a wide range of
products. Thus the retailer ‘sorts’ out a wide variety of goods and provides
convenience to consumers in the form of ‘one-stop shopping’.
Dissemination of Information to consumers and other channel
members: Retailing enables more consumer awareness of new products,
product differentiation and new categories introduced in the market. Also
manufacturers can be informed about sales forecast, delays in shipping,
consumer complaints, defective parts, inventory turnover etc. In fact,
many goods are developed in consultation with the retailers.
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SCOPE OF RETAILING
As with most other business activities, retailing is extremely
competitive, and the mortality rate of retail establishments is relatively
high. The basic competition is price competition, but this is moderated
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somewhat by such non-price forms of competition as convenience of
location, selection and display of merchandise, attractiveness of the retail
establishment itself, and intangible factors such as reputation in the
community.
Competition for sales has led to a blurring of traditional product
lines in retailing, and many establishments offer a much wider variety of
merchandise than their basic classification would indicate (e.g.,
drugstores may carry food, clothing, office supplies, hardware, etc.
The diversity of retailing
is evident in he many forms
this commercial activity now
takes, including vending
machines, hawkers door-to-
door sales, telephone sales,
mail-order houses, specialty
stores, department stores,
supermarkets, discount
houses, and consumer
cooperatives. Whatever forms
it takes, however, the essence
of good retailing remains the
same: attractive, appropriate
merchandise offered for sale
in an attractive, eye-catching
manner at a reasonable price
at a convenient location.
TYPES OF RETAILING
Retailing involves a direct interface with the customer and the
coordination of business activities from end to end- right from the concept
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or design stage of a product or offering, to its delivery and post-delivery
service to the customer. The industry has contributed to the economic
growth of many countries and is undoubtedly one of the fastest changing
and dynamic industries in the world today.
TYPES OF RETAIL OPERATIONS:
Retail operations enable a store to function smoothly without any
hindrances. The significant types of retail operations consist of:
• Department store
• Specialty store
• Discount/Mass Merchandisers
• Warehouse/Wholesale clubs
• Factory outlet
Retail Management System targets small and midsize retailers
seeking to automate their stores. The package runs on personal
computers to manage a range of store operations and customer
marketing tasks, including point of sale; operations; inventory control and
tracking; pricing; sales and promotions; customer management and
marketing; employee management; customized reports; and information
security.
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CLASSIFICATION OF RETAIL SECTOR
The Indian retail sector can be broadly classified into:
a) FOOD RETAILERS
There are large number and variety of retailers in the food-retailing
sector. Traditional types of retailers, who operate small single-outlet
businesses mainly using family labour, dominate this sector .In
comparison, malls account for a small proportion of food sales in India.
However the growth rate of super malls sales has being significant in
recent years because greater numbers of higher income Indians prefer to
shop at super stores/malls due to higher standards of hygiene and
attractive ambience.
classification of retail sector
health &beauty products
clothing and footwear
home furniture & household goodsdurable goods
leisure & personal goods
food retailers
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b) HEALTH & BEAUTY PRODUCTS
With growth in income levels, Indians have started spending more on
health and beauty products .Here small, single-outlet retailers dominate
the market. However, in recent years, a few retail chains specializing in
these products have come into the market. Although these retail chains
account for only a small share of the total market , their business is
expected to grow significantly in the future due to the growing quality
consciousness of buyers for these products .
c) CLOTHING & FOOTWEAR
Numerous clothing and footwear shops in shopping centers and
markets operate allover India. Traditional outlets stock a limited range of
cheap and popular items; in contrast, modern clothing and footwear
stores have modern products and attractive displays to lure customers.
However, with rapid urbanization, and changing patterns of consumer
tastes and preferences, it is unlikely that the traditional outlets will
survive the test of time.
d) HOME FURNITURE & HOUSEHOLD GOODS
Small retailers again dominate this sector. Despite the large size of this
market, very few large and modern retailers have established specialized
stores for these products. However, there is considerable potential for the
entry or expansion of specialized retail chains in the country.
e) DURABLE GOODS
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The Indian durable goods sector has seen the entry of a large number
of foreign companies during the post liberalization period. A greater
variety of consumer electronic items and household appliances became
available to the Indian customer. Intense competition among companies
to sell their brands provided a strong impetus to the growth for retailers
doing business in this sector.
f) LEISURE & PERSONAL GOODS
Increasing household incomes due to better economic opportunities
have encouraged consumer expenditure on leisure and personal goods in
the country. There are specialized retailers for each category of products
(books, music products, etc.) in this sector. Another prominent feature of
this sector is popularity of franchising agreements between established
manufacturers and retailers.
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THE RETAILING BOOM
In the past years, a lot has been written about the so-called
revolution in the Indian retail sector and the boom it has supposedly been
experiencing.
Magazines of all genres have routinely come out with cover stories
on this subject though most of the time, their coverage has been almost
unanimously based on the growth of a few leading retail businesses e.g.
Shoppers Stop, Trent (Westside), RPG Group (Food world, Music world,
Giant), Pantaloon/Big Bazaar, Landmark Group (Lifestyle) and a handful of
others.
Again, most of the time, the euphoria has been largely been based
on the metro, upwardly mobile consumer. No wonder, despite all the
about the retail revolution in India, the share of the "organized" retail
remains an insignificant 2 per cent or so of the total consumer spending in
India.
Is it, therefore, a wasted effort to write one more column on this
subject? It is believed that this time, there are some very interesting signs
of fundamental change in the consumer and retail business environment
in India that are likely to give an unprecedented momentum to the growth
of modern retailing in India.
First significant change is that in all the cities where modern retail
formats have made some presence, the average Indian consumer has
given them a big "thumbs up" by and large. Giant and Big Bazaar are
some of the more recent examples that are drawing in consumers across
a wide swath of socio-economic classification.
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The rapid growth of Big Bazaar (soon to be joined in by expansion of
Giant, and a likely entry of Trent/Tata Group later this year in a similar
format) testifies this, and in turn, this will lead to many other major
business houses in this sector very shortly. The consumer appreciation
has not only been limited to the national players.
Specialty players like Loft (footwear retailing), Vijay Sales and Vivek
(consumer durable retailing), Fab India (clothing/accessories) and even
local players (e.g. Bombay Selection and Mehrasons in Delhi) have been
able to draw consumers from the traditional high streets to new swanky
malls and/or modern, large footprint stand-alone stores.
Hence, the growth in organized retail is no longer determined only
by the growth plans of the existing national players -- new entrants as well
as local/regional players making rapid expansion beyond their traditional
markets will be actually driving the growth now.
The second significant change is that from the end of 2004 and
through almost 2007, India will see the coming to market of new, large
shopping malls almost every week. Next year alone is likely to have at
least 50 new malls ready for opening, and 2006 seeing opening of as
many as 150!
The year 2006 may see another 100 or more ready for possession. This
makes entry into retailing far easier for almost all kinds of entrants, for
almost all kinds of formats and scale of operations. The rentals are likely
to settle down at about Rs 40 -- Rs 60 per sq ft per month making most
retail businesses financially very viable. Scaling up will also is easy for the
new entrants once they have got their initial business models right and
resources (financial and human) put in place. The easier availability of
space will therefore encourage retail start-ups in high potential categories
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such as food and grocery, consumer durables, furniture and furnishings,
jewellery etc.
Financial resources themselves would be very easy from 2004 itself.
The forthcoming IPO of Shoppers Stop is likely set very encouraging
benchmarks for raising capital from the primary markets, and thereby
attracting adequate interest of various categories of investors including
VCs to look at funding retail ventures at various stages.
The fourth significant change is the likely entrance of many leading
international brands/retail businesses in India initially through the
franchising route, and subsequently through direct retailing route when
the FDI policy on retail is liberalized (hopefully soon after the next general
elections).
With the increased
attractiveness of India,
many top international
brands are reportedly poised
to make an entry into India
this year. These may include
Calvin Klein, Tommy Hilfiger,
Athlete's Foot, Tiffany,
Bvlgari etc. More are
evaluating options, and
should make their presence
in 2005 and beyond,
creating a multiplier effect in
various formats and product
categories giving further
stimulus to growth of organized retailing.
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At last, therefore, we can rightly say that Indian retail sector may well see
an onset of a revolutionary phase and very rapid growth can be forecast
in the immediate future.
RETAIL MARKETING BRINGS MODERNIZATION IN THE PEOPLE’S LIFE
Its have everything what everyone want and have fun for some time
you feel bore when you can have window-shopping too. Everyone feel
comfortable and regarding budget all are well calculated everything is
displayed and itemized there will be a effect but this is minimized by the
way he has done shopping because shopping at bazaars makes
purchasers mind something like a person are going to buy something
modern, stylish, safer, you can ask for replacement, worthy and no
irritating at the time when you want to buy anyone can choose from
multiple items so no one feel this won’t show any effect may be 2 or 3
% but it feel that is not a effect and now way days everything in kirana
and big mall are almost same but mall are more always safer and
satisfied its almost something like coming for shopping and having
short picnic with family or
friends.
It is arguably the most
glamorous store in the world; it’s
also an instantly recognizable
global brand universally
associated with luxury and
quality.
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Shopping MallsThe new shopping malls that have been expanding their footprint
across Indian cities are well designed, built on international formats of
retailing and integrated with entertainment and restaurants to provide a
complete family experience. Over 300 malls are expected to be built over
the next two years and most Indian cities with over a million populations
will be exposed to this modern method of retailing.
Shopping malls have existed in India since several decades but were
designed and built to house several shops in a single facility. These malls
also known as Shopping Arcades offered only rows of shops, most of
which were small stores that promised bargains for their various wares.
These Shopping Arcades tried to maximize on their store space and did
not offer any areas for recreation and entertainment.
The present day malls are a creation of the past few years post
2000. They are designed professionally using a lot of international
experience and combine
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shopping with a lot of brand building, recreation, food and
entertainment. Malls also have a large format store that serves as their
anchor for shopping and a prominent restaurant that anchors the food
needs of visitors.
Most malls also feature a multiplex cinema that offers entertainment
to the visitors of the mall. Finally, the mall has large atria and open spaces
to allow visitors and families to hangout.
These new format malls are coming up in all the major cities of
India. The cities that are seeing the first rush of malls are New Delhi,
Noida, Gurgaon, Chandigarh, Mumbai, Pune, Bangalore, Ahmadabad,
Chennai, Kochi, Hyderabad, and Kolkata.
The next run-up of the malls will be the second level cities of India that
includes Visakhapatnam, Coimbatore, Trivandrum, Raipur, Bhopal, Surat,
Jaipur, Kanpur, Luck now, Ranchi, and Dehra Dun.
The new malls are air-
conditioned and have spacious
areas and accesses, which
make them a true breath of
fresh-air from the earlier
arcades and shop line streets
that used to be the available
options for Indian customers.
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Definition
A mall is defined in the
Webster Dictionary as
"a large self-service
grocery store selling
groceries, food
products, and
household goods".
It was also defined in a
court ruling at the
State of New York
Court of Appeals in 1971
as
"A Retail Market that sells foods, convenience goods, and
household merchandise arranged in open mass display."
Malls: The new face of retail
market
Robust GDP growth,
stronger currency reserves and
ever-improving market and
operating environments are
propelling the Indian market
through a period of stellar
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growth - and the retail community is responding with newer formats and
innovative products. The economy of India has shown a remarkable
increase driven by overall political and social stability.
The decade-old economic reforms have engendered a new, shop-till-
you-drop breed of middle class Indians who, having tasted the shopping
experience of big cities overseas, have fuelled a demand that was
inevitable -- the rise of the shopping malls. Centrally air-conditioned malls
with piped music, high-speed lifts and escalators, underground parking
space, a multiplex movie theater, multi-cuisine restaurants and a host of
national and international brands, these malls generates approximately
25,000 footfalls each, per day, with figures doubling on weekends.
Sobha Group has set its eyes on launching the largest retail mall in
the country. Retail Biz tracks the unprecedented move that is ready to
add a new chapter in the history of Indian retailing. It is estimated that
there are 450 malls in various stages of development across India, 60 in
the greater Delhi area alone. This trend has attracted several major global
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retail players to India. International style shopping has finally come to
India - and with a splash.
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WALK FROM TRADITIONAL MARKETS TO
SHOPPING MALLS...
A new idea whose time has come when arrives cannot be bunged by
anyone. Especially when it proposes an essentially finer monetary and
behavioral value scheme to its clientele, it gradually takes over the old
way, and other stakeholders have no option but to acknowledge and
transform accordingly. Modern retailing is one such inevitable reality,
which has started taking a spin in the traditional retail scenario and is
soon liable to capture the retail sector and further enhance its compass.
All elements in the delivery chain better accept it and prepare, rather than
trying to rob the customers of a superior way of life by promulgating
fallacy and protecting stakes.
The question, which then arises in the face of this foreseeable
change, is the future of the traditional outlets (Kiranas) with a network so
intense that most of us have a kirana store within five minutes of our
residence. The Kiranas also operate on a low-cost model with family-
owned properties (an extension of the house), with most of the family
working in the store itself. They cater to impulse needs at short notice,
and early opening and late closing times, which suit many families. The
supermarkets on the other hand propose an elite ambience with economy
for all sectors of the society.
This paper deals with the dilemma of calling this confrontation -
competition or conflict. Both rivalries have competitive advantages. The
kirana will have a low cost structure, convenient location and customer
intimacy. Modern trade large outlets will have product width and depth,
disintermediation and technology. Like in any competitive market, the
smartest survives and the consumers win.
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Indian retailing is unorganized and due to its feudal structure and
inefficiency need for Organized
Retailing is being felt day by
day. Organized retailing not
only provides better customer
services but also facilitates
easy and smooth handling for
the government. At the same
point of time if FDI is also
approved in Indian Retailing, it
would not only streamline the
retailing of India, but would
further accelerate expansion of
markets. There is enormous
scope for foreign players in
Indian economic conditions,
and if somehow FDI be
extracted, it would supplement not only the customers by better services
but also the government by capital inflow, generating employment and by
becoming big source of tax revenue.
The Transformation…
In the last five years, (2001-2006) Indian retailing industry has seen
exceptional augmentation. Where the country was in the dominance of
unorganized retailing, the organized retailing sector has now emerged in a
momentous way and is contributing significantly to the growth of Indian
retail sector. It is predicted that organized retail will form 10% of total
retailing by the end of this decade (2010). Cultural and regional disparity
in India is the major challenge in the face of retailers. Therefore, there is a
scope for a variety to formats to co-exist in India.
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EXAMPLE Every person wants changes in their life. From this example, it is
clear that how person has changed their mind according to the life style.
The example:
Absolutely, without any
doubt the mall culture has
gripped Indians and they
seem love every bit of it. In
the early, no one has thought
that our every need will be
satisfied under – one- roof
mall in. there is various
numbers of people that had
thronged the place. It seemed
to be some kind of a huge people procession out there.
In earlier days (about a decade back), if you wanted to do any kind
of shopping, one had couple of places to go (or should I say streets) like
Laxmi Road or Main street (every city has shopping streets like these,
especially in the downtown area), where small shoppers line up across the
roads. Bargaining to extract the best price was common place- and it had
its own charm too.
However, everything has
changed now. The younger and
older generation alike prefers
buying stuff from huge malls
where one not only gets variety,
but also quality too at moderate
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prices. Even for your everyday grocery, buying superstores have come up
at every nook and corner
Supply chain and logistics
management: key to
success in RETAILING
"Interdependence is a higher
value than independence"
As rightly said by Stephen Covey, the
value of interdependence is as much
important in the business of Retail as it is
important in the business of life. Standing on the threshold of a retail
revolution and witnessing a fast changing retail landscape, the retail
sector is poised for a big leap.
Currently retail sector in India accounts for Rs. 55,000 crore ($12.4
billion) business at current prices in the calendar year 2006, increasing its
share to 4.6% of the total Indian Retail Value that stood at Rs. 12,00,000
crore ($270 billion). With the potential of crossing Rs 2, 00,000 crore ($45
billion) business by the Year 2010, generating employment for some 2.5
million people in various retail operations and over 10 million additional
workforce in retail support activities including contract production &
processing, supply chain & logistics, retail
real estate development & management
etc.; the retail sector is growing at a
scorching pace of about 37 percent in
2007 and expected to grow by 42 per cent
in 2008. With this enormous growth, the
retail sector is also facing challenges on
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the fronts of escalating real estate cost, scarcity of skilled workforce and
structured supply of merchandise.
FUTURE GROUPFuture Group is the country's leading retail
business group that caters to the entire
Indian consumption space. It operates
through six verticals: Future Retail
(encompassing all lines of retail business),
Future Capital (financial products and
services), Future Brands (all brands owned or
managed by group companies), Future Space
(management of retail real estate), Future Logistics (management of
supply chain and distribution) and Future Media (development and
management of retail media spaces).
Some of its leading retail formats include, Pantaloons, Big Bazaar,
Central, Food Bazaar, Home Town, etc…
Future Group is working on the vendor network as well as the
logistics network. The company has identified up to 40 anchor vendors,
each with turnovers of US$45 million, to achieve economies of scale. The
group is also keen to ensure that its smaller vendors are able to reach
turnovers of around US$1 million and a growth rate of 40% annually, to be
able to pass on the benefits of scales. The company is also working
towards bringing its 1,200 vendors online, like Wal-Mart.
Going further in this direction, the Future Group has also launched
Future Logistics initially aimed at handling the supply chain logistics of the
group. However, sensing immense opportunity in this area, the company
is now looking to offer its services to its 1000-odd vendors, spread across
consumer related goods, to reach a targeted turnover of about Rs.700
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crore by 2010.The thrust at present will be on modes of surface transport
like roads and rail only. However, at a later stage, sea and air modes
might also be considered as per the requirement, said sources.
In India, Future group derives significant economies of scale in
managing their supply chain. With more than 170000 products, the
company maintains a strong supplier relationship in a partnership mode,
avoiding the exploitative supplier – buyer transactional philosophy. The IT
enabled back-end operations and supply chain management increases the
reliability and efficiency of the business.
As part of the operation, Future Group is also undertaking to reduce
its warehousing costs through a consolidation process. In a country like
India, where most retail stores are located in the heart of the city—where
rents are high and storage space is scarce—supply chain management
has even more serious business implications. Future Logistics now handles
two-and-a-half million SKUs (or stock keeping units) a day across the
Future Group's various retail formats around the country. By 2010, this
number is expected to increase to more than 30 million SKUs a day. Even
with 98% accuracy, some 600,000 pieces will not be delivered correctly,
resulting in an estimated sales loss of more than Rs 4 crore a day.
The biggest driver in consumer logistics is going
to be zero defects in managing the
supply chain. While infrastructure,
technology, automation, processes
and people will all play an important
role, zero defects can only be achieved
through vertical integration across the
entire supply chain—from raw material
supply, production, wholesale and
retail. Here is an attempt to simplify the
analysis of a retailing company.
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“Managing Retail Stores”
COMPETITIVE FORCES
In an attempt to understand the retail industry in India, an analysis
of the industry has been done using the five competitive forces as started
by Michael porter. The five forces model is a strategic tool that is used to
analyze the attractiveness of the industry structure. The five fundamental
of competitive forces:
Entry of competitors: The case of entry for competitors to enter
the market and to start competing and the barriers to entry which may
exist.
Threat of substitutes: The ease, with which a product or a
service can be substituted, especially made cheaper.
Bargaining power of buyers: The position of the buyers, can they
work together to gain efficiencies buying.
Bargaining power of supplier: The position of the sellers. Do
many suppliers exist or is there a existence of only a few suppliers.
Rivalry among the existing players: the level of competition
between the existing players, the size and the strength of the players in
the industry.
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“Managing Retail Stores”
Threat of new entrants:
In the case of retail sector, there exists a high
threat of new entrants as the sector itself is in a nascent stage
and is growing. Limited barriers to entry exist. Government
regulation of FDI in the country can be seen as a barrier to
entry. Other barriers to entry may be the inability to build
economies of scales, substantial capital requirements in
terms of investment in store location , high costs in terms of
supply chain efficiencies etc… product differentiation or the
lack of product differentiation could also be seen as a threat
to entry.
Threat of substitutes:
The presence of substitute products can lowers the
attractiveness and profitability because they limit price levels. The
Industry competitiors
rivalry among existing
firms
Potential Entrants
Buyers Subsitutes
Suppliers
Bargaining power of suppliers
Threat of new entrants
Bargaining power of buyers
Threat of substitute profits or services
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“Managing Retail Stores”
threat of substitute products is a function of the buyer’s willingness
to buy a substitute product and is influenced by the relative price
and performance of substitutes and the cost of switching to
substitutes.
In Indian retail, the threat of substitutes is very high.
The unorganized retailing in India is still the largest wherein cheaper
versions of products are available this still services most of the
middle and poor income families in the country.
Bargaining power of suppliers:
The price at which the product is available to the
retailer for selling to the end consumer is very important in retail, as
it plays a large role in the actual profitability. If suppliers have high
bargaining power over a company, then the company’s industry is
less attractive.
The suppliers to the retailing industry are the
companies who provide the finished products to make various retail
products. The bargaining power of suppliers varies from the
products suppliers. The bargaining power of suppliers is low because
there are large numbers of potential suppliers in the market.
Therefore, the prices become competitive. The emergence of
private labels in apparel and food has infact played role in
controlling the bargaining power of supplier.
Bargaining power of buyers:
The bargaining power of buyers I greater when there
are few dominant buyers and many sellers in the industry, the
products are standardized and the suppliers do not threaten to
integrate forward into the buyers industry.
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“Managing Retail Stores”
In retail, the bargaining power of buyers is fast increasing
and can be termed as a moderate to high, depending on the product
or service. The buyers are most powerful in the retailing industry. In
an age of informed consumers, meeting the buyer’s expectation in
terms of product, price and service is increasingly becoming
difficult.
Intensity of rivalry:
The intensity of rivalry between competitors in an
industry depends on the structure of competition – for example,
rivalry is more intense where there are many small or equally sized
competitors; rivalry is less when an industry has a clear market
leader.
In case of the retail sector in India as is in many parts of
the world, is a highly fragmented sector. Retailer’s need to take
these factors into consideration and work towards creating
economies of scale. The time span needed to achieve the critical
mass will be crucial in the ability to build a competitive edge over
competitors. Retailer will also need to focus on recognizing industry
trends early and building the ability to covert them in the market
place. Standardization of needs and wants of the consumer in divers
market like India.
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“Managing Retail Stores”
Life cycle in RETAIL
The concept of product life cycle as explained by “PHILIP KOTLER” is
also applicable to retail organizations. This is because the retail
organizations pass through identifiable stage of innovation, development,
maturity and decline. This is what is commonly termed as the “Retail Life
Cycle”.
Attributes and strategies change as institutions mature. The “Retail
Life Cycle” is a theory about the changes through time of the retailing. It
is claimed that retail institutions how an S-shaped development curve’
through their economic life. The S-shaped development curve’ has been
classified in to four main phases:
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“Managing Retail Stores”
Innovation:
A new retail organization is born; it improves the convenience or
creates other advantages for the final customers, which differ
sharply from those offered by other retailers. This is the stage of
innovation, where the organization has few competitors. Since it is a
new concept, The rate of growth is fairly rapid and the management
fine-times its strategy through experimentation. Levels of
profitability are moderate and this stage can last up to five years,
depending on the retailer.
Accelerated growth:
The retail organization faces raped increases in sales. As
the organization moves to stage two of growth which is the stage of
development, a few competitors emerge. Since the company has
been in the market for while, it is now in a position to pre-empt the
market by establishing position of leadership. Since the growth is
imperative, the investment level is also high, as is the profitability.
This stage can last from five to eight years. However towards the
end of this phase, cost pressures tend to appear.
Innovation
Growth
MaturityProfit
Decline
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Maturity:
The retailing still gores, but competitive pressures are felt
acutely form newer forms of retailing that tend to arise. Thus, the
growth rate tends to decrease. Gradually, as markets become more
competitive and direct competition increases, the rate of growth
slows down and profits also start declining. This is the time when
the retail organization needs to rethink its strategy and reposition
itself in the market. A change may occur not only in the format but
also in the merchandise mix offered.
Decline:
The retail organization losses its competitive edge and
there is a decline. In this stage, the organization needs to decide if it
is still going to continue in the market. The rate of growth is
negative, profitability, declines further and overheads are high.
The retail business in India has only recently seen the emergence of
organized, corporate activity. Traditionally, most of the retail
business in India was constituted of small owner-managed
businesses. It is hence difficult to identify a retail organization which
has passed through all the four stages of the retail life cycle.
Bit a few years ago, most cities in India had a few independent
retailers in the private sector.
Example: Mumbai had sores like Akbar ally’s, premsons.
Amarson, big bazaar etc… the store initially offered apparel,
imitation, jewellery, cosmetic perfumes and home fashion. It also
had a customer loyalty programme, place, which many stores at
that time did not offer.
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“Managing Retail Stores”
A retailer can succeed in moving back to the growth phase
after reaching it stage of maturity with a certain format and a
certain mix of products.
RETAIL marketing mix
The basic function of retail is to provide the right goods to
the consumer, at the right place and time, however, in today’s
competitive world.
How does a retailer inform the customers about the
product that he has an offer?
How does he lure them to visit and hop at his store?
How does he achieve the sale stages?
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“Managing Retail Stores”
The marketing tools that a retail organization uses to
pursue its marketing objectives are termed as the retail marketing
mix. Let see the components of the retail marketing mix:
Product:
One of the main elements of the retail marketing mix is the products
or the services that the store offers to the customer.
Products are also termed as merchandise. The different
products that the store offers are together termed as the
merchandise mix.
A merchandise line consists of a group of products that are
closely related because they are intended for the same end
users are sold to the customer group or fall within the same
price range. For example, if It considers the menswear
section at a department store, the merchandise line would
comprise of formal wear, casual wear, accessories etc…
39
Product price
Place/locationCustomer service
Presentation
People
Promotion
“Managing Retail Stores”
Retail marketing mix
The variety of the merchandise mix refers to the number of different
merchandise lines that the retailer stock in the store. Thus, the
merchandise lines in department store would be menswear, ladies
wear, children’s wear, home fashion, jewellery etc… the same in
case of a grocery retailer would comprise of cereals, pulses,
personal care products, ready-to-serve foods, packaged goods like
biscuits, snacks etc…
Price:
Pricing is an integral part of the retail marketing mix. The
price policy that the organization decides to follow depends on
the customer which the target audience for its range of products.
It also depends on whether the product of ten is unique or has
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“Managing Retail Stores”
other substitutes available. The various pricing policies that a
retail firm can adopt, which deals with retail merchandise.
Place:
For a very long time, the location of the retail store was
considered to be the most important elements of the retail
marketing mix. However, with the advances in technology and
the advent of television shopping.
Promotion:
The advertising budget, sales promotion, publicity and
public relation play a very important role in the competitive world
of retailing. Retailers need to develop a communication strategy
includes with their target market and the products that they
stock in the store.
Presentation:
The manner in which the merchandise is presented
at the store level is very important. This aspects not only deals
with the store layout and the ambience created, but also with
visual merchandising, visual merchandising is the orderly,
systematic and intelligent way of putting stock on display in the
retail store. Many large retail organizations employ visual
merchandisers to aid the store in the function.
Customer service:
The support services that a retailer offers have
become very important today. The credit policies and the product
returns policies need t5obe clear not only the sales staff, but also
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the end customers. Relationship marketing, customer
relationship management are the new buzzwords in the industry
today and all these are aimed at enhancing the customer service.
People:
Retailers operate in a unique environment. The retail
industry is characterized by a large number of inexperienced
workers, ho need to put or long hours of work. Most of the time,
these employees are in direct contact with the customers and
they face irate or unreasonable customers.
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“Managing Retail Stores”
The people who work at the front-end of a retail organization are
very important, as they are the face of the origination for the
customers. Their attitude, behavior, manners and product
knowledge plays a very important role in building long-term
relations with the customers.
CUSTOM RETAIL DISPLAY STANDS
Successfully displaying collectibles or merchandise comes down to
one variable: location! Whether you are trying to effectively arrange a
retail store or simply show off a collection of valuable coins, where the
display case is situated will make or break your efforts. Working hand in
hand with location to appeal to an onlooker is the specific type of display,
meaning the materials used, the size, and the overall aesthetic value to
the exhibit.
Those in the retail business understand that dressing up a product is
often the difference in a slow day and selling out. Customers should be
impressed with the product from the moment they set eyes on it. This
same concept can be applied to unique collectibles at home too. The key
is showing off the product with an appropriate display. It can be difficult
finding the perfect fit for whatever you are trying to show off. In order to
get the most attractive setup for their product some retailers often use
custom made display stands.
No matter your needs, display cases should meet the standards of
size, materials, general aesthetics, and overall harmony of the pre-
existing room and its décor. Typical manufactured display stands are
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“Managing Retail Stores”
produced in large quantities that are designed to fit a general theme, but
rarely are a perfect match. In the retail world and in our homes this is just
not good enough. Decorating styles within a home are well thought out
and most times consistent throughout in order to reinforce a theme or
common tie among the décor.
The best store designs that make people feel comfortable, reinforce
the store branding, and show products well are done with custom display
fixtures using matching colors and materials. The lighting on products can
also be critical. Custom display fixtures allow specific supplemental
lighting or many times spot lighting to show off merchandise in with
dramatic flair.
Additionally, custom display cases and custom retail stands can be
designed for exact space requirements so the maximum amount of
merchandise can be displayed per square foot.
Custom displays are made according to the exacting needs of the
store owner. One can indicate the exact dimensions, material, finish, and
color they would like. A good custom retail display company will work with
its customer in designing the best fit for their desired location and product
to display. Many of these displays will be manufactured from scratch and
provide exactly the unique look you are in search of. If you are artistically
inclined it is even possible to provide a sketch to the display maker and
they will be able to produce what you have envisioned for the store or for
showcasing at home.
There are hundreds of reasons why we would want to display a
product or collectible. Many have perfected their methods by using
custom display cases at a show, in a retail store, and often in their home.
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“Managing Retail Stores”
Regardless of where they are used, the results from using custom retail
displays speak for themselves; give them a shot.
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“Managing Retail Stores”
THE CUSTOMER IS ALWAYS RIGHT...
AND OTHER MYTHS
For too many years there have been some
"accepted truths" in business. The belief in
these "accepted truths" and the dogged
determination by some "experts" to defend
and cling to them have caused no end of
problems in the workplace. Businesses
have started and failed at an alarming
rate.
Why do they fail? The problem most of the time
is that they are working hard on the wrong things. They are following the
ratings of high paid "experts" who are building sand castles at low tide.
They have bought into systems of "excellence" that don't work.
Myth #1: The customer is always right
WRONG! We know more about our own products and services than 90%
of our customers can ever expect to understand. The customer seldom
understands their needs as well as a salesperson might.
Many years ago, a travel agent refused to book a customer’s family into a
hotel an acquaintance had recommended—a hotel where the customer
could "save some money." Jim explained, "You are already spending a lot
of money on this trip. I won't book you into a cheap hotel that might wreck
your vacation." Now the cynical will say, "Oh, he wanted the extra
commission." But we drove by the original hotel and I can tell you we were
glad Jim insisted we spend an extra $20 per night. Jim knew his business
better than we knew what we wanted. Jim was just doing his job.
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“Managing Retail Stores”
Your employees already know that the customer is not always right. They
have to deal with them every day. One of the quickest ways to hurt
yourself is to adopt a policy that the customer is always right.
Myth #2: "The customer is #1"
WRONG! Your employees are #1! If you believe that your employees are
not the most important people who step through the doors of your
organization each day you are in trouble. If you are not letting your
employees know that they are #1, you are doomed to failure!
Bob Gee, a long time V-P of a major appliance distributor in Arkansas, tells
the story of a retailer who explained that, "We can have the best products
in the world, the most knowledgeable and best salespeople, the best price
and credit policy in five states, but if our delivery guy gets grease on the
customer's carpet and doesn't handle the situation right, we may never
see her again. "Meanwhile the customer is being assaulted with choruses
of "That's not my department" or "I'm sorry but company policy will not
allow that." Employees at the same time are being trained to smile and
listen carefully while the customer is exploding and spewing outrage all
over the showroom floor. And I still hear managers and owners tell me
"You just can't get decent help these days."
Myth #3: Quality customer service is "Knowing what the customer
wants and giving it to them"
WRONG! Quality customer service is understanding the customers'
expectations and then gaining a reputation for exceeding those
expectations. If we assumed that the customer always knew what they
wanted our world would look significantly different. We have to
understand the customer's expectations and their perceptions of our
business. If the industry expectation is that we can deliver a pizza in 20
minutes and we fail to do that, then the customer perception is that we
don't take seriously our commitment to service..
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“Managing Retail Stores”
Myth #4 "Our mission is to make a profit”
WRONG! Our mission is to grow and survive. To paraphrase, Peter
Drucker "Profits are like food, we need them to live but they are not our
reason for living." Making a profit is far too shallow an incentive to be the
mission of our organization.
Try to draw a mental picture of your employees leaping from bed each
morning with one enthusiastic thought in their mind, "Oh Boy, another
opportunity to go to work and make my bosses company a good profit!".
Serve the customer first, then the profits will come. Customers and profits
will come in direct proportion to our capacity and desire to give the
customer more than they expect.
Myth #5 "I need more satisfied customers "
WRONG! "You want missionaries!" George owns and manages George's
Distinctive Men's Wear in a prominent location in a major shopping mall.
George is proud of his 12 years of success, he has many satisfied
customers and his sales increase each year. George, however, is in
trouble, his market share is going down and he can track a down turn in
normal sales volume whenever his four major competitors in the mall
have major sales events.
George's customers are satisfied, but they are not necessarily loyal. They
depend on George to give them quality at a fair price and them come
back when it is convenient and when they need him. But they shop
elsewhere when they think the prices will be better. Satisfied customers
are fickle. If the customer only feels satisfied, he or she will likely continue
buying from us until a competitor offers better price. Satisfied customers
leave us all too often and for reasons we consider, unreasonable. That's
why George needs to go past earning satisfied customers. He needs
missionaries. Customers that not only shut out competitors but who also
bring us more customers with their praise of our services cleaners. Ask
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yourself what they do to earn your respect. Now offer your customers the
same level of service.
RETAILING business scenario
Retail is such a part of everyday life that people often take it for
granted, but it is one of the fastest changing, most dynamic industries
in the world today. Today, perhaps more than ever before, retailing is a
mirror of society. The diversity, variety & change in society offer an
opportunity for retailers to respond and succeed. Retail today is a
combination of revolution and evolution.
The retail industry will continue to evolve and change. With
increasing interest in non-store retailing (catalogue shopping, online
shopping, home delivery), companies will have to redefine and plan
new shopping environments that make shopping experience as
enjoyable as possible. While unique displays add flavor to the store's
interior, merchandising displays help the customer learn about a
product and to promote an impulse purchase and is much more
preferable.
In order to survive in today's tough retail climate, companies must
continually innovate in ways to create stronger, more direct links with
their customers. At the same time retailers must focus on the most
demanding customers who want customization, value and service. New
store designs must assault the consumer's sense of sight, sound,
Taste, touch and smell-preferably all at the same time. In this
environment, merchandising and especially displays is more important
than ever, as being top-of-mind will keep the brand growing.
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“Managing Retail Stores”
RETAIL STORE management tips
The job of a retail store manager is overseeing the everyday running
of a retail store. Some of the key retail services performed by a retail
store manager are: Meeting sales and personal targets as well as
customer satisfaction via maximizing the shopping experience of
customers; Managing all aspects of the operations of the store in order to
ensure maximum sales as well as profitability. Retail management also
includes focusing on key initiatives in business, daily cost control in
operations, risk management, payroll management, loss prevention,
inventory management, marketing execution, and store presentation.
Retail store
managers should have
organizational skills which
includes the ability of
paying attention to detail
as well as following-up
matters. The job also
involves the capability of
managing multiple
priorities along with
management skills like
communication, recruiting, training, and coaching. Here are some tips
that can help you to become a successful retail store manager:
The customer is always right: Yes, that age-old saying holds true even
today. The customer is the most important facet of any business. Hence,
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as a retail store manager you need to ensure that the whole team
comprehends that, and behaves as if they do.
Make the customer feel special: Everybody likes feeling special. So,
when you are with a customer, give him or her your exclusive attention,
listening closely to whatever they may be saying to you. During that time
don’t let anything else interrupt you.
Please the customer: Although this is touted often, it is seldom
practiced. As a retail store manager, see to it that the sales staff does that
extra bit to make the customer feel pleased, especially as a measure of
calming their displeasure about something. For instance, some special
store giveaways can be packed with their purchases.
Promise less and deliver more: You have heard of the old saying
‘Don’t promise what you cannot deliver.’ Well, by giving more than
whatever you may have promised, you can build a strong customer
rapport, both inside as well as outside the retail store.
Appearances do matter: Although you may dismiss it as a superficial
aspect of a superficial consumerist society, however, there is no escaping
the fact, that the first impressions of the store, including the staff – how
they are dressed and how they behave – do matter. People do care about
the ambience of where they shop.
Display merchandise attractively: A vital part of retail store
management is seeing to it that the merchandise is displayed properly. If
the items are not displayed or seen properly, they won’t be sold in the
numbers that they ought to be. Merchandise should look crisp and new at
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all times. If the items are shop-worn, they should be put in the bargain
section. Items that are usually bought on impulse should be placed on
display close to the cash out area. Also, appropriate sections should be
made for merchandise, and the items should be placed in the correct
sections. Items that are similar in nature should be placed in the same
area.
Items should be shown to advantage: Apart from displaying
merchandise attractively, as a retail store manager, you should also make
sure that the items are placed in such a way that they draw the
customer’s attention. Hiding or stacking merchandise will not attract the
attention of the customer. When thinking about how to display items, try
to imagine what the customers will view with the display. Placing
merchandise at eye level, or a little lower than that, is the best way to
display specials. Placards and signs are also another method of grabbing
the eye of the customer.
Get rid of unsold merchandise: The bottom 10 to 20 percent of the
product lines should be gotten rid of every year to be replaced by new
products. The product lines that are not selling well should be marked
down to half their price in order to sell them off fast.
Clear up shopping areas: While making racks and other display areas
full, clear up other areas. According to studies it has been shown that
having easy shopping areas results in more sales rather than having more
racks and tables cluttering up the store.
Timely ordering of inventory: This is another important aspect of a
retail store manager’s duties. The levels of inventory should be monitored
and kept in adequate amounts at all times. If customers do not find what
they are looking for, they will just go to another store. Hence, the store
manager must keep track of the inventory constantly.
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Hire the right people: A retail manager’s success is largely dependent
on the kind of people he/she helps to hire. The staff that is hired has to
have the ability of making a quantifiable and meaningful contribution to
the store’s performance. In order to be able to rise in the organization, the
store manager has to draw the attention as well as the recognition of the
top management. The correct people will help in showcasing their talents
while they achieve their objectives. In order to get the best out of the rest
of the team, the store manager has to be able to keep them motivated.
Training the staff: However, hiring the right kind of people and keeping
them motivated is just a part of a retail store manager’s path to success.
Part of a retail store manager’s job is to train the staff so that they are
aware of what is expected of them. This will ensure that all the people
involved in the success of the store move in the same direction.
Incorporating time management skills: After hiring the right people,
training them fully, and getting them ready to achieve success, the next
thing a retail store manager has to take care of is managing their time
along with the changing priorities they have to deal with each day.
Long range planning: Therefore, a retail store management job involves
long range planning so that every hour of every day in a week is managed
effectively. The skill of long range planning is what will be appreciated by
the top management, for they look for people who have the ability of
looking forward, and creating concrete plans, in order to increase the
business. A retail manager who can accomplish this will rise in the
organization.
Retail software: These days, there are many retail software that are
available which provide scalability, data integrity, stability, and speed
offering a complete retail management solution, which can be adapted
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“Managing Retail Stores”
according to each type of doing business. From inventory management to
Point of Sale (POS) ticket entry to customer tracking, integrated
purchasing, and monitoring the movement of merchandise, retail software
provides all the capabilities required to run a retail store business more
effectively and efficiently.
Top 10 RETAILERS in India
Miss D'souza rubs her nose as her specks annoy her; she calls out to
Shanta Bhai. “I am leaving for work; please make sure you do the
vegetable shopping today, as I will be getting late.”
Shanta Bhai mutters & just nods. “Oh god, I will have to go and
bargain with these bhajiwala’s because madam is so particular about the
price.” Then she realized actually it’s not such a bad thing, a new
supermarket is open nearby. “I’ll go there, roam in the mall and also shop
in convenience of AC and no bargaining also. Grocery shopping will
actually be fun!”
In the supermarket, she realized they had good price bargains and
was thrilled. She was going to earn some brownie points with Ms D'souza
for purchasing at such cheap rates.
Our very own Shanta Bhai signifies the Indian consumer of today
who wants the right price, ambience and good quality all under one roof.
The lifestyle and mindset-change of the Indian customer has led to a spur
in the retail industry with the total private consumption in 2006 clocking
Rs.20,000 billion according to the Indian Retail Report 2007. Cities like
Mumbai, Bangalore, New Delhi, Hyderabad, and Pune have around 40
malls as of today, which is expected to touch 250 by 2010 (KPMG report).
The Indian retail industry is valued at $270 billion, with organized
retail cornering 4.5 %. The organized pie is expected to see a growth at a
CAGR of 37 % (India Retail Report 2007).
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Source: India Retail Report
Top players:
1. Pantaloon Retail:
It is headquartered in Mumbai with 450 stores across the country
employing more than 18,000 people. It can
boast of launching the first hypermarket
Big Bazaar in India in 2001. An all-India
retail space of 5 million sq. ft. which is
expected to reach 30 mn by 2010. It is not
only the largest retailer in India with a
turnover of over Rs. 20 billion but is present
across most retail segments - Food &
grocery (Big bazaar, Food bazaar), Home
solutions (Hometown, furniture bazaar,
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“Managing Retail Stores”
collection-i), consumer electronics (e-zone), shoes (shoe factory), Books:
music & gifts (Depot), Health & Beauty care services (Star, Sitara and
Health village in the pipeline), e-tailing (Futurbazaar.com), entertainment
(Bowling co.)
One of their recent innovations include e-commerce’ hybrid format
of ’small’ shops , the area for these stores will be 150 sq. ft. fitted with 40
digital screens. Customers will be encouraged to browse through the
entire range of products on digital screen. They will be able to place the
order, the delivery of which will be arranged by the shop to their homes
within a few hours
2. K Raheja Group
They forayed into retail with Shopper’s Stop, India’s first
departmental store in 2001. It is the only retailer from India to become a
member of the prestigious Intercontinental Group of Departmental Stores
(IGDS). They have signed a 50:50 joint venture with the Nuance Group for
Airport Retailing. Shoppers Stop has 7, 52, 00 sq ft of retail space with a
turnover of Rs 6.75 billion.
The first Hyper city opened in Mumbai in 2006 with an area of 1,
20,000 sq. ft. clocking gross sales of Rs. 1 bn in its first year.
Crossword brand of book stores, Homes stop a store for home
solutions, Mother care a concept stocking merchandise related to
childcare are also owned by them. Recently, Raheja’s have signed an MoU
with the Home Retail Group of UK to enter into a franchise arrangement
for the Argos formats of catalogue & internet retailing.
The group has announced plans to establish a network of 55
hypermarkets across India with sales expected to cross the US$100
million mark by 2010.
3. Tata group:
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Established in 1998, Trent - one of the subsidiaries of Tata Group -
operates Westside, a lifestyle retail chain and Star India Bazaar - a
hypermarket with a large assortment of products at the lowest prices. In
2005, it acquired Landmark, India's largest book and music retailer. Trent
has more than 4 lakhs sq. ft. space across the country. Westside
registered a turnover of Rs 3.58 mn in 2006.
Tata’s has also formed a subsidiary named Infiniti retail which
consists of Croma, a consumer electronics chain. It is a 15000-17000 sq.
ft. format with 8 stores as of September 2007.
Another subsidiary, Titan Industries, owns brands like “Titan”, the
watch of India has 200 exclusive outlets the country and Tanishq, the
jewellery brand, has 87 exclusive outlets. Their combined turnover is Rs
6.55 billion.
Trent plans to open 27 more stores across its retail formats adding
1.5 mn sq ft of space in the next 12 DLF malls.
4. RPG group:
One of the first entrants into organized food & grocery retail with
Food world stores in 1996 and then formed an alliance with Dairy farm
International and launched health & glow (pharmacy & beauty care)
outlets. Now the alliance has dissolved and RPG has Spencer’s Hyper,
Super, Daily and Express formats and Music World stores across the
country.
RPG has 6 lakhs sq. ft. of retail space and has registered a turnover
of Rs 4.5 billion in 2006.
It is planning to venture into books retail, with the launch of its own
bookstores “Books and Beyond” by the end of 2007. An IPO is also in the
offering, with expansion to 450+ Music World, 50+ Spencer's hyper
outlets covering 4 million sq. ft. by 2010.
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5. Landmark group:
It was launched in 1998 in India. Lifestyle is spread across six cities,
covering 4.6 lakhs sq. ft. with a turnover of Rs 3.5 billion in 2005. A new
division named Lifestyle International has emerged for their international
brands business comprising Bossino, Kappa and Springfield in their
portfolio.
Their retail mix includes Home solutions (Home centre), fashion
(lifestyle, landmark International), value retailing (max retail),
hypermarkets & supermarkets (Max), kids entertainment (Fun city).
They plan to invest Rs. 300 crores in the next two years to expand
on Max chain, and Rs 100 crores on Citymax 3 star hotel chain. They have
already instituted a separate company christened Citymax Hotels (India).
6. Piramal Group
In September 1999, Piramal Enterprises
announced their arrival into retail with the
launch of three retail concepts: India's first true
shopping mall of international standards, called Crossroads; a lifestyle
department store named Piramyd Megastore; and a family entertainment
centre known as Jammin. Piramyd Megastore and Jammin were anchor
tenants for Crossroads (recently sold to Pantaloon for Rs 4 billion). In
2001, the group entered the business of food & grocery retail with the
launch of TruMart supermarkets in Pune.
They have around 18 TruMart stores covering 1.90 lakh sq. ft.
registering a turnover of Rs 37.6 mn in 2005. Piraymd Megatsore’s
contributes more than 70 % to their retail mix with a turnover of Rs 112.8
mn. They plan to open 150 stores covering 75 mn sq ft of retail space in
the next 5 years.
7. Subhiksha
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Subhiksha is a Chennai-based, decade old, no frills, food, grocery,
pharma and telecom, discount retail chain. ICICI Venture Capital holds
24% in the equity capital of Subhiksha. It has more than 500 stores across
the country covering a retail space of more than 1 million sq ft with a
registered turnover of Rs 3.34 bn in 2006. It has a planned investment of
Rs.300 crores to ramp up its operations to 1200 stores by 2008.
New but potential BIG players
8. Bharti-WalMart
Their plans include US$ 7 bn investment in creating retail network in
the country including 100 hypermarkets and several hundred small stores.
They have signed a 50:50 percent joint venture agreement with Walmart.
Wal-Mart will do the cash & carry while Bharti will do the front-end.
9. Reliance
India’s most ambitious retail plans are by reliance, with investments
to the tune of Rs. 30,000 cr ($ 6.67 bn) to set up multiple formats with
expected sales of Rs 90,000 crores ($20 bn) by 2009-10.
There are already more than 300 Reliance Fresh stores and the first
Reliance Mart Hypermart has opened in Ahmadabad. The next ones are
slated to open at Jamnagar, followed by marts in Delhi / NCR, Hyderabad,
Vijayawada, Pune and Ludhiana.
10. AV Birla Group
They have a strong presence in apparel retailing through Madura
garments which is subsidiary of Aditya Birla Nuvo Ltd. They own brands
like Louis Phillipe, Van Heusen, Allen Solly, Peter England, Trouser town.
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In other segments of retail, AV Birla Group has announced
investment plans of Rs 8000 - 9000 crores in the first 3 years till 2010.
The acquisition of Trinethra (food & grocery) chain in the south has
moved their tally to 400 stores in the country. Their “More” range of 15
supermarkets are slated to open at Nashik, Pune and other tier II cities in
Western India in 2007.
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Impact of RETAIL INDUSTRY
Retailing is a `technology-intensive' industry. It is quoted that
everyday at least 500 gigabytes of data are transmitted via satellite from
the 1,200 point-of-sales counters of JC Penney to its corporate
headquarters. Successful retailers today work closely with their vendors to
predict consumer demand, shorten lead times, reduce inventory holding
and thereby, save cost. Wal-Mart pioneered the concept of building a
competitive advantage through distribution and information systems in
the retailing industry. They introduced two innovative logistics techniques
- cross-docking and electronic data interchange.
Today, online systems link point-of-sales terminals to the main
office where detailed analyses on sales by item, classification, stores or
vendor are carried out online. Besides vendors, the focus of the retailing
sector is to develop the link with the consumer. `Data Warehousing' is an
established concept in the advanced nations. With the help of `database
retailing', information on existing and potential customers is tracked.
Besides knowing what was purchased and by whom, information on softer
issues such as demographics and psychographics is captured.
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Retailing, as discussed before, is at a nascent stage in our country.
Most organized players have managed to put the front ends in place, but
these are relatively easy to copy. The relatively complicated information
systems and underlying technologies are in the process of being
established. Most grocery retailers such as Food World have started
tracking consumer purchases through CRM. The lifestyle retailers through
their `affinity clubs' and `reward clubs' are establishing their processes.
The traditional retailers will always continue to exist but organized
retailers are working towards revamping their business to obtain strategic
advantages at various levels - market, cost, knowledge and customer.
With differentiating strategies - value for money, shopping
experience, variety, quality, discounts and advanced systems and
technology in the back-end, change in the equilibrium with manufacturers
and a thorough understanding of the consumer behaviour, the ground is
all set for the organized retailers.
It would be important to note, however, that the retailing industry in
India is still a `protected industry'. It is one of the few sectors which still
has restrictions on FDI. Given the current trend in liberalization, it will not
be long before the retailing sector is also thrown open to international
competition. This will see a further segregation of the international
retailing brands and the domestic retailers, thereby injecting much
greater dynamism into the market. That will be when the real action will
begin.
Major retailers in India
• India’s top retailers are largely lifestyle, clothing and apparel stores.
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• This is followed by grocery stores.
• Following the past trends and business models in the west retail giants
such as Pantaloon, Shoppers’ Stop and Lifestyle are likely to target metros
and small cities almost doubling their current number of stores.
• These Wal-Mart wannabes have the economy of scale to be low –
medium cost retailers pocketing narrow margin.
RETAILING SCENARIO-INDIA:
The retail scenario in India is unique. Much of its is in the
unorganized sector, with over 12 million retail outlets of various sizes and
formats. Almost 96% of these retail outlets are less than 500 sq.ft. In size,
the per capita retail space in India being 2 sq.ft. Compared to the US
figure of 16 sq.ft. India’s per capita retailing space is thus the lowest in
the world. With more than 9 outlets per1,000 people , India has the
largest number in the world. Most of them are independent and contribute
as much as 96% to total retail sales.
Because of the increasing number of nuclear families, working
women, greater work pressure and increased commuting time,
convenience has become a priority for Indian consumers. They want
everything under one roof for easy access and multiplicity of choice. This
offers an excellent opportunity for organized retailers in the country who
account for just 2% (and modern stores 0.5%) of the estimated US $180
billion worth of goods that are retailed in India every year.
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The growth and development of organized retailing in India is
driven by two main factors – lower prices and benefits the consumers
can’t resist. According to experts, economies of scale drive down the cost
of the supply chain, allowing retailers to offer more benefits offered to the
customer.
The retail business in India in the year 2000 was Rs.400,000 crore
and is estimated to go to Rs.800,000 crore by the year 2005, an annual
increase of 20%.The contribution of the organized retail industry in the
year 2000 was Rs.20,000 crore and is likely to increase to Rs.160,000
crore by 2005.
GROWTH OF RETAIL OUTLETS IN INDIA:
India is rapidly evolving into a competitive marketplace with potential
target consumers in the niche and middle class segments. The market
trends indicate tremendous growth opportunities. Global majors too are
showing a keen interest in the Indian retail market. Over the years,
international brands like Marks & Spencer, Samsonite, Lacoste,
McDonald’s, Swarovski, Domino’s among a host of others have come into
India through the franchise route following the relaxation of FDI (foreign
direct investment ) restrictions. Large Indian companies – among them the
Tata, Goenka and the Piramal groups – are investing heavily in this
industry.
Organizations ready to take on this challenge can leverage the
opportunities offered by a population of more than a billion. The prospects
are very encouraging. Buying behaviour and lifestyles in India too are
changing and the concept of “Value for Money” is fast catching on in
Indian retailing. This is evident from the expansion of the pantaloons
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chain into a large value format, Big Bazaar, and the entry of new discount
stores in food retailing in the South, namely, Subhiksha and Margin Free.
TRENDS IN RETAILING:
The single most important evolution that took place along with the
retailing revolution was the rise and fall of the dotcom companies. A
sudden concept of `non-store' shopping emerged, which threatened to
take away the potential of the store. More importantly, the very nature of
the customer segment being addressed was almost the same. The
computer-savvy individual was also a sub-segment of the `store'
frequenting traffic.
Internationally, the concept of Net shopping is yet to be proven. And the
poor financial performance of most of the companies offering virtual
shopping has resulted in store-based retailing regaining the upper hand.
Other forms of non-store shopping including various formats such as
catalogue/mail order shopping, direct selling, and so on are growing
rapidly.
However, the size of the direct market industry is too limited to deter the
retailers. For all the convenience that it offers, electronic retailing does
not suit products where `look and see' attributes are of importance, as in
apparel, or where the value is very high, such as jewellery, or where the
performance has to be tested, as of consumer durables. The most critical
issue in electronic retailing, especially in a country such as ours, relates to
payments and the various security issues involved.
Recent trends include:
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• Retailing in India is witnessing a huge revamping exercise.
• India is rated the fifth most attractive
emerging retail market: a potential
goldmine.
• Estimated to be US$ 200 billion, of
which organized retailing (i.e. modern
trade) makes up 3 percent or US$ 6.4
billion.
• As per a report by KPMG the annual
growth of department stores is
estimated at 24%.
• Ranked second in a Global Retail
Development Index of 30 developing countries drawn up by AT Kearney.
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Opportunities in Indian organized
RETAIL SECTOR
The opportunities in Indian organized retail sector are many for this
sector is witnessing a boom.
The retail industry in India amounted to US$ 200 billion in 2006, and
out of this amount the Indian organized retail sector amounted to US$ 6.4
billion. The opportunities in India organized retail sector can be judged
from the fact that by 2010 it is expected to rise to US$ 23 billion.
The various opportunities in the organized retail sector in India are
mainly there for the Indian consumers behavior pattern has changed. Now
the Indian consumer gets more hefty pay- packages, is younger, a large
number of women are working, western influences, and more disposable
income have opened a lot of opportunities in Indian organized retail
sector. The Indian consumer wants to shop, eat and get entertainment in
one place and is have also given Indian organized retail sector an
opportunity to grow.
The Indian government in 2005 allowed foreign direct investment (FDI) in
single brand retail to 51%. This have opened up a lot of opportunities in
India organized retail sector. In fact 325 departmental stores, 300 new
malls, and 1500 supermarkets are being built which shows the
tremendous opportunities in the organized retail sector in India.
Many Indian companies seeing the various opportunities in organized
retail sector in India have entered it. Pantaloons have decided to
increase its retail space to 30 million square feet with an investment of
US$ 1 billion. Reliance Industries Limited is targeting for annual sales of
US$ 25 billion by 2011. It is planning to invest US$ 6 billion in order to
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open 1,500 supermarkets and 1000 hypermarkets. Bharti Telecoms is
planning a joint venture with Telco a global retail giant worth £ 750
million.
The opportunities in the organized retail sector in India have also
increased with the desire of many global retail giants to set up shop here.
The global retail giants who are entering the Indian organized retail sector
are:
Tesco
Wal- Mart
Metro AG
Carrefour SA
The opportunities in Indian organized retail sector are varied and it must
be fully exploited by the Indian retailers.
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BIG BAZAAR {Detail Story}
India's answer to global
hypermarkets like Wal-Mart and Carrefour
is right here in Big Bazaar - India's first
hypermarket chain in the lines of global
discount chains. BIG BAZAAR, the
hypermarket chain was introduced in
India by Pantaloon Retail (India) Ltd in
the year 2001 in Calcutta and was
followed by stores in Hyderabad and Bangalore in
a short span of 22 days. Today there are more than 20 Big Bazaars all
over India with an average of 40,000 Sq. ft. area (1, 40,000 Sq. ft. in
Malad)
“Jo bazaar mein milta hai, who sab yahan milta hai, is how
Rakesh Biyani, Director, Pantaloon Retail (India) limited describes Big
Bazaar. The Bazaar is a term commonly used for the market or
marketplace. Whenever any of us need anything, the simplest way to go
is to go to the Bazaar. Big Bazaar represents a location where a customer
can shop for anything that he needs, for which he would normally visit a
bazaar or the market.
Findings:
Big Bazaar is very well positioned.
One of the successful ventures of big bazaar – Food Bazaar is also
very successful.
Big Bazaars annual income is more than that of Pantaloons.
Big Bazaars annual promotional expense is almost double to that of
Pantaloons.
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In addition, the stores are very well maintained where as the
cleanliness is considered and Big Bazaar also has a customer help
desk at the entrance of the store.
In addition, customers can find many sales executive willing to help
during their shopping.
CUSTOMERS FEEDBACK
THIS SURVEY DONE BY BIG BAZAAR
1. How often do you go for shopping?
Regularly
Monthly
Half- Yearly
Yearly
2. What do you generally buy?
Clothing
Jewellery
Leather Articles
Cosmetics
Gift Articles
Others (please specify)
3. Where do you normally go for shopping?
Shoppers Stop
Pantaloons
Linking Road
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Big Bazaar
4. What makes you visit all this stores or place?
Product Range
Service
Quality
Ambience
Price
Brand Name
5. Have you ever tried Bargaining at this Branded Retail outlet?
6. If not (why?)
7. DO you think collection changes according to fashion? (please specify)
8. Do you think Branded retail gives you value for your hard earned
money?
Yes
No
9. Any suggestions/improvements for any particular Retail outlet
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“Managing Retail Stores”
Customers Feedback
The following Feedback big bazaar has got is form 20 people almost all of
whom have visited all the stores. This will give you a general public’s
perception of the stores and also retailing at these stores.
1) How often do you go for shopping?
People were not really sure whether they did go for shopping monthly or
yearly. Majority of them said it all depends on the mood or even on some
special occasions.
2) Where do you normally go for shopping?
Panta
loons
Shopp
ers S
top
Lifes
tyle
Akbar
allys
Big Baz
aar
Wes
tside
0
5
10
15
20
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“Managing Retail Stores”
This was a multiple choice question. What I conclude from the graph is
that people do visit all the stores. But the graph clearly shows that largely
people like to visit Pantaloons for their shopping. The major competition is
between Pantaloons, Lifestyle
3) What do you generally buy?
clothing Jewellery Leather Ar-ticles
Cosmetics Gift Articles0
2
4
6
8
10
12
14
16
18
20
All the stores being exclusive brands in clothing most of the people go to
the store to buy the same. Along with that, things such as cosmetics, gift
articles and leather articles also had a reasonable but less demand.
4) How do you rate the following: (for each store)
Ambience
Price
Quality
Variety
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Salesmen behavior
In this question customers rated the shopping experience at all the stores
according to the following five criterions:
a). Ambience got a rating of an average 7 which clearly shows that it is
quite well maintained in all the stores. Akbar ally’s got the least rating and
big bazaar, pantaloons, lifestyle and Shoppers Stop all are very close to
each other.
b). Price is a very discouraging factor at all the stores. An average rating
of just 2 makes obvious the expensive nature of all the stores. Only Big
Bazaar got the best rating.
c). Quality got an extensive high around of 8.5 which shows that the
standards maintained at the store are quite high. Pantaloons got the best
rating followed by Shoppers Stop, Lifestyle and Westside
d). Variety getting a rating of 7.5 illustrates that the customers has
ample range of products to choose from.
e). Salesmen Behaviors was rated as low mean of 4 which indicates
that the customer-employee relationship is quite undeveloped. In this
category again Akbarallys and Westside losing out badly with rating of just
1 and 3 respectively, big bazaar has got good rankings
5) DO you think collection changes according to fashion in all the
stores?
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“Managing Retail Stores”
Panta
loon
s
Shopp
ers
...
Life
style
Akbar
allys
Big B
azaa
r
Wes
tsid
e02468
1012141618
6) DO you think Branded retail gives you value for your money?
A) Considering the review, 75% of the total customers agreed that, Yes,
the store did give them the value for their hard earned money. But the
rest 25% did not feel so.
7) Any suggestions/improvements for any particular Retail outlet?
A) All the stores except for Big Bazaar should compromise on pricing,
provide better guarantee on products and also improvement in the
exchange policies.
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Conclusion
After analyzing the retail industry, I can conclude that Retailing has
come to occupy a prominent position in today’s modern society.inspite of
the Indian are still through traditional trade.nevertheless, modern
organized retail format is slowly gaining acceptance and can easily be
said to be emerging as a sturdy contender among consumers. Typically,
the evolution of the retail trade can be studied by having a look at four
key components-consumers behaviour, trade structure, the retailer-
manufacturer relationship and competition. it is said that organized
modern retail has altered t he first paradigm of consumer behaviour the
profile of the modern format shopper can easily be described as an
affluent one with higher and more disposable income, although they face
the paucity of time to explore a detailed shopping experience .however,
such consumers have also revealed a willingness to pay a premium,
provided they receive better service quality at retailed outlet
Today the market sees more of organized retailing mainly due to
the following reasons-increase in per capita spending by consumers,
rapidly growing middle class and double income households, rising
workforce with global trade, exposure of international taste and lifestyle
though media, increase in the usage of credit and debit cards.
Some of the factors attracting global retailers to India could be :
improved living standards and continuing economic growth increase in
India’s GDP,growth of retailing industry sheer size and potential on India’s
consumer market, friendly business environment, growing spending
power and brand conscious customers aspiring to own quality and
branded products.
The factors which have played a key role in the development and
growth of the organized retailing industry are consumer pull, changes in
social structure and consumer behaviour, retailers proximity to
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consumers, evolution of family owned establishments, emerging rural
markets, changes occurring in retail scenario, global retailers call for FDI
and corporate interest in retailing.
“Big is beautiful. Malls are all very good for shopping, but the kirana store is for the odd
quantities in life. Like when you need one-fourth of a packet of rice.”