A PROJECT ON

ENTERPRINERSHIP DEVELOPMENT

CCA1008 – A1

Evaluation of Small Retail Shop

(With Reference from Vellore)

Bachelor of Commerce

By:

PG SURESH (15BCC0041)

SAMARTH SINGH (15BCC0071)

KC ARUN KUMAR (15BCC0097)

HARISH VENKATRAM (15BCC0119)

Under the supervision and guidance of

Dr. MUTHUMEENAKSHI

Assistant professor

School of Sciences and Languages (SSL)

May - 2016

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INDEX

CHAPTERS TITTLE PAGE NO.

Chapter I Introduction and Research Design

3 - 9

Chapter II Analysis and Data Interpretation

10 - 24

Chapter III Findings and Conclusion

25 - 27

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CHAPTER – I

INTRODUCTION AND RESEARCH DESIGN

RETAIL CONCEPT

The distribution of consumer products begins with the producer and ends at the ultimate consumer. Between the producer and the consumer there is a middleman---the retailer, who links the producers and the ultimate consumers. Retailing is defined as a conclusive set of activities or steps used to sell a product or a service to consumers for their personal or family use. It is responsible for matching individual demands of the consumer with supplies of all the manufacturers. The word ‘retail’ is derived from the French work retailer, meaning ‘to cut a piece off’ or ‘to break bulk’.

A retailer is a person, agent, agency, company, or organization which is instrumental in reaching the goods, merchandise, or services to the ultimate consumer. Retailers perform specific activities such as anticipating customer’s wants, developing assortments of products, acquiring market information, and financing. A common assumption is that retailing involves only the sale of products in stores. However, it also includes the sale of services like those offered at a restaurant, parlour, or by car rental agencies. The selling need not necessarily take place through a store. Retailing encompasses selling through the mail, the Internet, door-to-door visits---any channel that could be used to approach the consumer. When manufacturers like Dell computers sell directly to the consumer, they also perform the retailing function.

Retailing has become such an intrinsic part of our everyday lives that it is often taken for granted. The nations that have enjoyed the greatest economic and social progress have been those with a strong retail sector. Why has retailing become such a popular method of conducting business? The answer lies in the benefits a vibrant retailing sector has to offer—an easier access to a variety of products, freedom of choice and higher levels of customer service.

As we all know, the ease of entry into retail business results in fierce competition and better value for customer. To enter retailing is easy and to fail is even easier. Therefore, in order to survive in retailing, a firm must do a satisfactory job in its primary role i.e., catering to customers. Retailers’ cost and profit vary depending on their type of operation and major product line. Their profit is usually a small fraction of sales and is generally about 9-10%. Retail stores of different sizes face distinct challenges and their sales volume

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influences business opportunities, merchandise purchase policies, nature or promotion and expense control measures.

Over the last decade there have been sweeping changes in the general retailing business. For instance, what was once a strictly made-to-order market for clothing has now changed into a ready-to-wear market. Flipping through a catalogue, picking the right colour, size, and type of clothing a person wanted to purchase and then waiting to have it sewn and shipped was the standard practice in the earlier days. By the turn of the century some retailers set up a storefront where people could browse, while new pieces were being sewn or customized in the back rooms. Almost all retail businesses have undergone a similar transition over the years.

CHARACTERISTICS OF RETAILING

Retailing can be distinguished in various ways from other businesses such as manufacturing. Retailing differs from manufacturing in the following ways:

There is direct end-user interaction in retailing. In is the only point in the value chain to provide a platform for

promotions. Sales at the retail level are generally in smaller unit sizes. Location is a critical factor in retail business. In most retail businesses services are as important as core products. There are a larger number of retail units compared to other members of

the value chain. This occurs primarily to meet the requirements of geographical coverage and population density.

DIRECT INTERACTION WITH CUSTOMERS

Retail businesses have a direct interaction with end-users of goods or services in the value chain. They act as intermediaries between end-users and suppliers such as wholesalers or manufacturers. Therefore, they are in a position to effectively communicate the response and changing preferences of the consumers to the suppliers or sales persons of the company. This helps the manufacturers and markets to redefine their product and change the components of its marketing strategy accordingly. Manufacturers require a strong retail

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network both for reach of the product and to obtain a powerful platform for promotions and point-of-purchase advertising. Realizing the importance of retailing in the entire value chain, many manufacturers have entered into retail business by setting up exclusive stores for their brands. This has not only provided direct contact with customers, but has also acted as advertisement for the companies and has provided the manufacturers with bargaining power with respect to other retailers who stocked their product. Retailing provides extensive sales people support for products which are information intensive, such as in the case or consumer durables.

FUNCTIONS OF RETAILING

Retailers play a significant role as a conduit between manufacturers, wholesalers, suppliers and consumers. In this context, they perform various functions like sorting, breaking bulk, holding stock, as a channel of communication, storage, advertising and certain additional services.

ACTIVITIES PERFORMED BY RETAILERS

Retailers undertake various business activities and perform functions that add value to the offerings they make to their target segments. Retailers provide convenient location, stock and appropriate mix of merchandise in suitable packages in accordance with the needs of customers. The four major activities carried out by retailers are:

1) Arrange for assortment of offerings2) Breaking quantity3) Holding stock4) Extending services

FOUR BASIC LEGAL FORMS OF OWNERSHIP FOR RETAILERS:

1) Sole proprietorship: - The vast majority of small businesses start out as sole proprietorships. These firms are owned by one person, usually the individual who has the day-to-day responsibility for running the business.

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2) Partnership: - A partnership is a common format in India for carrying out business activities (particularly trading) on a small or medium scale. In a partnership, two or more people share ownership of a single business.

3) Joint venture: - A joint venture is not well defined in the law. Unless incorporated or established as a firm as evidenced by a deed, joint ventures may be taxed like association of persons, sometimes at maximum marginal rates. It acts like a general partnership, but is clearly for a limited period of time or a single project.

4) Limited liability Company (public and private):- The Limited Liability Company (LLC) is a relatively new type of hybrid business structure that is now permissible in most states. The owners are members, and the duration of the LLC is usually determined when the organization papers are filed

TRENDS IN RETAIL FORMATS

Retail industry is continuously going through changes on account of liberalization, globalization and consumer preferences. While multinational retail chains are looking for new markets, manufacturers are identifying, redefining, or evolving new retail formats. The existing retail houses are also gearing up to face the emerging competition from the organized sector and the changing outlook of the consumers. For example, consumer spending is shifting from goods to services. Accordingly the retailers too are fast adjusting to the changing consumer preferences.

Consumers are not only looking for the core products or functional benefits from the retailers but also the non-functional benefits, which need to be compatible with their lifestyles. For example, most of the traditional eating joints in India such as Haldiram, Bikaner and Sagar Ratna have revised their product offerings and atmospherics on the lines of the multinational chains to compete with them and to serve changed expectations of the consumers.

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MOM-AND-POP STORES AND TRADITIONAL KIRANA STORES

The retail sector is changing as new store categories have started dominating the marketplace. Mass merchandisers (Wal-Mart, Big Bazaar), discount clubs (Subhiksha), so-called category killers (Home Depot, Vishal chain), and speciality retailers (Time Zone, Tanishq) have all developed a successful retail models. At the same time, the small mom-and-pop stores and the traditional department stores, are finding the competition intense. In 2002, while Wal-Mart and Target saw revenues grow (by 12% and 10%, respectively), department stores such as Saks and Federated experienced declining revenues (down 3% and 1% respectively). But even in the mass-merchandising segment, the competition is fierce, as is evidenced by Kmart’s bankruptcy announcement in 2002. Small independent stores, across product categories, is a very common retail formats they are also undertaking large scale renovations to appeal and attract their target consumer segments.

OBJECTIVES OF RETAIL BUSINESS:

Customer Satisfaction: 

Retailers know that satisfied customers are loyal customers. Consequently, retailers must develop strategies intended to build relationships that result in customers returning to make more purchases.

Acquiring the Right Products:

A customer will only be satisfied if they can purchase the right products to satisfy their needs. Since a large Percentage of retailers do not manufacture their own products, they must seek suppliers who will supply products demanded by customers. Thus, an important objective for retailers is to identify the products customers will demand, and negotiate with suppliers to obtain these products.

Product presentation:

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Once obtained, products must be presented or merchandised to customers in a way that generates interest. Retail merchandising often requires hiring creative people who understand and can relate to the market.

Traffic Building: 

Like any marketer, retailer’s must- use promotional methods to build customer interest. For retailers a key measure of interest is the number of people visiting a retail location or website. Building “traffic” is accomplished with a variety of promotional techniques such as advertising, including local newspapers or Internet, specialized promotional activities, such as coupons.

Layout:

For store-based retailers, a store’s physical layout is an important component in creating a retail experience that will attract customers. The physical layout is more than just deciding in what part of store to locate products. For many retailers designing the right shopping atmosphere (e.g., objects, light, and sound) can add to the appeal of a store. Layout is also important in the online world where site navigation and usability may be deciding factors in whether a retail website is successful.

Location: 

Where to physically locate a retail store may help or hinder tore traffic. Well placed stores with high visibility and easy access, while possibly commanding higher land usage fees, may hold significantly more value than lower cost sites that yield less traffic. Understanding the trade-off between costs and benefits of locations is an important retail decision.

Keeping Pace With Technology: 

Technology has invaded all areas of retailing including customer knowledge (e.g., customer relationship management software), product movement (e.g., use of RFID tags for tacking), point-of-purchase (e.g., scanners, kiosks, self-serve

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checkout), web technologies (e.g., online shopping       carts,   purchase recommendations) and many more.

RESEARCH METHODOLOGY:

Primary Data:

Primary research consists of a collection of original primary data collected by the researcher. It is often undertaken after the researcher has gained some insight into the issue by reviewing secondary research or by analyzing previously collected primary data. In this project we collected the primary data in the form conducting survey from 20 respondents with the help of preparing questionnaires.

Secondary Data:

Secondary data refers to data that was collected by someone other than the user. Common sources of secondary data for social science include censuses, information collected by government departments, organizational records and data that was originally collected for other research purposes. No secondary data was collected.

The size of the sample depends on a number of factors and the researchers have to give the statistical information before they can get an answer. The Sample size of our survey conducted was 20 because we had to cover the areas in and around VIT University.

The sampling technique which was used in our project was Simple Random Sampling.

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Chapter – 2

ANALYSIS AND INTERPRETATION

In this chapter the researcher analyzed the collected data and interpreted. The resultsare depicted here.

TABLE 2.1

SOURCE OF IDEA TO THIS BUSINESS

SOURCE OF IDEA NO OF BUSINESS

Ancestral business 12

Own idea 5

Idea from sources 3

GRAPH – 2.1

Ancestral business Own idea Idea from sources0

2

4

6

8

10

12

Series1

Analysis: from the above table and graph we infer that the ancestral type of business is more when compared to others. By this way we conclude that the business is starting traditionally from their ancestors is more in case of small retailers.

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TABLE 2.2

INITIAL INVESTMENT

INITIAL INVESTMENT NO OF BUSINESS

below 20000 7

20000-30000 8

Above 30000 5

GRAPH – 2.2

below 20000

20000-30000

Above 30000

0 1 2 3 4 5 6 7 8 9

NO OF BUSINESS

NO OF BUSINESS

Analysis: by observation of above table we infer that the intial investment remains small in major extent is around 20000 only. Thia literally reflects that the shop itself is not their major source of income.

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TABLE 2.3

OPERATIONAL COST PER DAY

Operational cost No of business

below 500 6

500-750 11

750 above 3

GRAPH – 2.3

No of business

below 500500-750750 above

Analysis: from the above table we can clearly understand that their operational cost per day in most of the cases remain the new stock that has literally cleared the previous day.

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TABLE 2.4

WORK PER DAY

Work per day No of business

4 hours and above 5

6 hours and above 7

10 hours and above 8

GRAPH – 2.4

No of business

4 hours and above6 hours and above10 hours and above

Analysis: The above data clearly states the amount of time the small retailer literally works. In most of the cases it is around 8-10hrs among that their interest doesn’t really care about their shop’s sale.

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TABLE 2.5

CUSTOMER VISIT

Customer visit No of business

Below 100 5

100-200 12

200 above 3

GRAPH – 2.5

No of business

Below 100100-200200 above

Analysis: The above graph infers that in most of the cases per day customer visit varies from 100-200. More members visit the shop but remain to deal with some other business.

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TABLE 2.6

CUSTOMER SATISFACTION

Customer satisfaction No of business

yes 16

no 4

GRAPH – 2.6

yes no0

2

4

6

8

10

12

14

16

No of business

No of business

Analysis: The above table infers that in most of the cases the job satisfaction is high due to less work load and their dependency on other business field.

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TABLE 2.7

PLAN OF EXPANDING YOUR BUSINESS

Plan of expanding your business No of business

Yes 18

no 2

GRAPH – 2.7

Yes

no

0 2 4 6 8 10 12 14 16 18

No of business

No of business

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TABLE 2.8

SATISFIED WITH YOUR OWN BUSINESS

Satisfaction obtained No of business

yes 12

no 8

GRAPH – 2.8

yesno

0

2

4

6

8

10

12

No of business

No of business

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TABLE 2.9

SPECIAL THING ABOUT YOUR BUSINESS

Special thing No of business

good quality 8

sufficient quantity 5

services provided 7

GRAPH - 2.9

good quality sufficient quantity services provided012345678

No of business

No of business

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TABLE 2.10

HEAVY COMPETITION

competition No of business

yes 16

no 4

GRAPH – 2.10

No of business

yesno

Analysis: The above table infers that the competition usually remains high due to the inclusion of other shops in large extent around that area.

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TABLE 2.11

PROFIT MARGIN

Profit margin No of business

5% 5

5% - 10% 13

10% - above 2

GRAPH – 2.11

5%5% - 10%

10% - above

02468

101214

No of business

No of business

Analysis: The above table infers that the retail shops have a margin of 5-10% profit and that is high with low sales and lower work and interest.

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TABLE 2.12

TYPE OF BUSINESS

Type of business No of business

Sole proprietor 4

Labour intensive 7

Capital intensive 3

Partnership 6

GRAPH – 2.12

Sole proprietorLabour intensive

Capital intensivePartnership

01234567

No of business

No of business

Analysis: the above table infers that their income doesn’t not necessarily limit to the shop but in extension have business on bases of Partnership in major extent.

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TABLE 2.13

WHOLESALE ANYTHING TO OTHER BUSINESS CUSTOMERS

wholesaler No of business

yes 7

No 13

GRAPH 2.13

No of business

yesNo

Analysis: the above table infers that in most of the cases wholesale business is not experienced by the small retail shopkeepers.

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TABLE 2.14

CUSTOMERS VISIT

Customers visit No of business

Labours 6

Student 8

Strangers 7

GRAPH 2.14

LaboursStudent

Strangers

012345678

No of business

No of business

Analysis: the above table infers that most of the customers are in random since the placement of the retail shops are in and around bus stands in most of the cases.

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TABLE 2.15

AGE GROUP OF CUSTOMERS MOSTLY VISIT

Age of customers

10 to 15 year 4

15 to 20 year 7

20 to 30 year 5

30 to 50 year 4

GRAPH – 2.15

Age of customers10 to 15 year15 to 20 year20 to 30 year30 to 50 year

Analysis: the table confirms that the age group of customers remains mainly between 15-20 years since the most sold product remains cigarettes.

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CHAPTER – IIIKEY FINDINGS AND RECOMMENDATIONS:

The key finding of the research is as follows:

i. Unorganized vicinity of organized retailers have been adversely affected in terms of their volume of business and profit. Unorganized retail has maintained employment levels perhaps as a result of competitive response,

ii. The adverse impact on unorganized retailers tapers off over time,

iii. The major factors that attract unorganized retailers to consumers are proximity, goodwill, credit sales, bargaining, loose items, convenient timings, and home delivery,

iv. There is clear evidence of a competitive response from traditional retailers who are gearing up to meet the threat from traditional retailers who are gearing up to meet the threat from organized retailers’.

v. Consumers have generally gained with the emergence of organized outlets through the availability of better quality products, lower prices.

vi. The consumers who in most case visit remain as the student since the product sold is necessarily that attracts the students and the youth.

vii. Most of the Small retail shopkeepers hold on to someother business as their main source of income and held this one to rotate their free time productively.

viii. The retailers in most of the cases spend their time in their shops from 8-10 hrs in wideextent dealing their external business activities from this.

ix. There main concentration vests in their retail business and doesn’t really very much concentrate on wholesale as a medium of income.

x. The job satisfaction is high since it is ancestral and the work load remains low.

xi. The retail shopkeepers doesn’t really mind about the business on retail basis since their main source of income remain in someother business like “finance”.

xi. The mode of development of their business doesn’t really grabs their attention and there progress of development remains slow.

xii. Some retailers run their life on basis of income from their business i.e., shop suffer a lot with low income.

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CONCLUSION:

By the survey we had took from the street sellers of small retail shops from in and around the bus stops of Vellore and Chittoor, we got to know that, many started their business out of the ancestral influence with low initial investment but with having other source of income. People who started out of their own idea have financial crisis even after working everyday without taking any leave. We also get to know that most of them have started this business because that is what their families have been doing for a very long period of time. Many of them have not faced financial problems while starting the business since that was their family business, but a few who have started the business with their own idea got the finance on great difficulty from either friends, loans or from their own money. The difference remains in two types of retailers one with ancestral background runs the shop with free of tension since its not the main source of income for him, he side-by-side runs “finance”. The other type is thje sufferer who invests the money with the intention to survive as the shop as his only source of income.

This remains our final mode of conclusion.

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