Retailing Management

• Michael Levy, Barton A. Weitz and Ajay Pandit

Retail

Retail may be defined as the first point of customer contact.

Retailing•According to Philip Kotler “ Retailing includes all the activities involved in selling goods or services to the final consumers for personal, non-business use.

• Retailing is the set of business activities that’s add value to the products and services sold to consumers for their personal or family use.

Retailer

• Retailer is a business that sells products and services to consumers for their personal and family use. Retailers are the final business in a distribution channel that links manufactures to consumers.

The retailer is the final business in a distribution channel that links manufacturers with consumers.

Distribution ChannelIs a set of firms that facilitate the movement of products from the point of production to the point of sale to ultimate consumer.

The Distribution ChannelDistribution Channel

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Manufacturing, Wholesaling and RetailingVertical Integration – firm performs more than one set of

activitiesEx: retailer invests in wholesaling or manufacturing (Wal-Mart)

Backward Integration – retailer performs some distribution and manufacturing activities

Ex: Westside

Forward Integration – manufacturers undertake retailing activities

Ex: Bata, Raymond's, Titan Watches

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How Retailers Add Value• Providing Assortment - Enables customer to choose from a wide selection of brands, designs, sizes, colours, and prices in one location.

• Breaking Bulk - Buy in large quantities then offer to consumer in smaller quantities.

• Holding Inventory - Keep inventory so that products will be available when consumers want them.

• Offering Services - Provide services that make it easier to buy and use products.

Significance of Retailing

• 12-15 million outlets.• Contributes over 9-10% to India’s GDP• Largest employer after agriculture, with over 18 million

people employed.• Generates 8% of country’s employment.• India is the third-most attractive retail market for global

retailers among the 30 largest emerging markets, according to US consulting group AT Kearney’s report published in June 2010..

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Economic Significance

• (1). Retail Sales:An aggregated measure of the sales of retail goods over a stated time period, typically based on a data sampling.

• Retailing affects every part of life. Just think of how many daily contracts you have with retailers when you eat meals, furnish your apartment, have your car fixed, and buy clothing for a part or job interview.

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• The total retail sales in India will grow from US$ 395.96 billion in 2011 to US$ 785.12 billion by 2015, according to the BMI India Retail report for the third quarter of 2011.

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BMI : BUSINESS MONITOR INTERNATIONAL

Business Monitor International (BMI) was founded in 1984 by Richard Londesborough and Jonathan Feroze, the company's joint CEOs, who both continue to play a full role within the company.

BMI's customers and clients span more than 140 countries worldwide, including more than 400 of the Global Fortune 500 companies. Businesses, banks, financial service companies, governments, academia and research centres have all come to rely on BMI's analysis, data and forecasts – and have done so for 25 years. The company was awarded the Queen's Award for Export Achievement in 1997.

BMI is a wholly independent company, headquartered at Blackfriars, London, with foreign offices in Singapore and New York.

BMI's corporate mission is to become the world's No.1 Independent Information Provider in its field (Country Risk & Industry Research).

(2). EMPLOYMENT•Retailing also is one of the nation largest industries in terms of employment.•Largest employer after agriculture, with over 18 million people employed.•Generates 8% of country’s employment.

(3). GLOBAL RETAILERS

With worldwide retail sales estimated at $8 Trillion, the 20 largest retailers represent a 12 percent share of the world market.

(4). Support for Community:

Retailers are also responsible for developing many innovative products and services.

Examples of Service Retailers

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Type of Service Service Retail Firms

Hotels and motels Hyatt, Sheraton, Marriott,

Insurance LIC, Tata AIG

Internet access/Elec info. Sify, Airtel Broadband

Movie theaters PVR, Fun, Big Cinemasl

Real estate DLF, Ansals

Restaurants TGI Friday’s, Pizza Hut

Investment Sharekhan, India Bulls

Home entertainment Dish TV, Tata Sky

Telecom BSNL, Airtel, Tata Indicom

India Retail IndustryRetailing is one of the pillars of the economy in India and accounts for 13% of GDP.

The retail industry is divided into organised and unorganised sectors. Over 12 million

outlets operate in the country and only 4% of them being larger than 500 sq ft in size.

Organised retailing refers to trading activities undertaken by licensed retailers, that is,

those who are registered for sales tax, income tax, etc. These include the corporate-

backed hypermarkets and retail chains, and also the privately owned large retail

businesses. Unorganised retailing, on the other hand, refers to the traditional formats

of low-cost retailing, for example, the local kirana shops, owner manned general

stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc.[

Most Indian shopping takes place in open markets and millions of independent

grocery shops called kirana. Organized retail such supermarkets accounts for just 4%

of the market as of 2008. Regulations prevent most foreign investment in retailing.

There are taxes for moving goods to states, from states, and even within states.

Major Indian Retailers• Next retail India Ltd (Consumer Electronics)• Vivek Limited Retail Formats: Viveks, Jainsons, Viveks Service Centre, Viveks Safe Deposit Lockers • PGC Retail -T-Mart India , Switcher , Respect India , Grand India Bazaar ,etc., • REI AGRO LTD Retail-Formats:6TEN Hyper & 6TEN Super • RPG Retail-Formats: Music World, Books & Beyond, Spencer’s Hyper, Spencer’s Super, Daily & Fresh • Pantaloon Retail-Formats: Big Bazaar, Food Bazaar, Pantaloons, Central, Fashion Station, Brand Factory, Depot, aLL, E-

Zone etc. • Marks & Spencer: Clothing, lifestyle products, etc. • The Tata Group-Formats: Westside, Star India Bazaar, Steeljunction, Landmark, Titan Industries with World of Titans

showrooms, Tanishq outlets, Croma. • K Raheja Corp Group-Formats: Shoppers Stop, Crossword, Hyper City, Inorbit Mall • Lifestyle International-Lifestyle, Home Centre, Max, Fun City and International Franchise brand stores. • Pyramid Retail-Formats: Pyramid Megastore, TruMart • Nilgiri’s-Formats: Nilgiris’ supermarket chain • Subhiksha-Formats: Subhiksha supermarket pharmacy and telecom discount chain. • Trinethra- Formats: Fabmall supermarket chain and Fabcity hypermarket chain • Vishal Retail Group-Formats: Vishal Mega Mart • BPCL-Formats: In & Out • Reliance Retail-Formats: Reliance Fresh • Reliance ADAG Retail-Format: Reliance World• German Metro Cash & Carry • Shoprite Holdings-Formats: Shoprite Hyper • Paritala stores bazar: honey shine stores • Aditya Birla Group - more Outlets • Kapas- Cotton garment outlets

Opportunities in Retailing•Management Opportunities: To cope with a highly competitive and challenging environment, retailers are hiring and promoting people with a wide range of skills and interests. Students often view retailing as a part of marketing because the management of distribution channels is part of a manufacturer's marketing function. But retailers operate businesses and, like manufacturers, undertake most traditional business activities. Retailers raise capital from financial institutions; purchase goods and services; develop accounting and management information systems to control operations; manage warehouses and distribution systems; design and develop new products and undertake marketing activities such as advertising, promotions, sales force management, and market research.

•Entrepreneurial Opportunities: Retailing also provides opportunities for people who wish to start their own business. Some of the world's richest people are retailing entrepreneurs.

Innovative Retail Entrepreneurs

•Kishore Biyani (CEO, Future Group)

Kishore Biyani, born in a middle class marwari trading family, was not satisfied with family business. While in college, he noticed one of his fashion conscious friend wearing trousers made out of a new material called ‘Stonewash’ fabric, which looked fashionable, simply because it was so different. This gave him an idea and he started selling ‘Stonewash’ fabric to small shops in Mumbai. It was a big success and he made his first profit. Thereafter, nothing could stop his entrepreneurial instincts and he ventured to redefine the retailing business in India with the launch of Pantaloons, Big Bazzar and many more retail formats.

Today, Kishore Biyani’s Future Group, with 3550 crore turnover, is one of the country’s leading business groups present in retail, consumer finance insurance, retail media, retail spaces and logistics.