PESTL ANALYSIS ON RETAIL INDUSTRY

Submitted byNitin tripathi 10FLUHH010115 Faculty of law- IFHE

PESTL Analysis
PESTEL is an acronym that stands for Political, Economical, Social, Technological and Legal. It is used to describe an analysis that is used for determining the opportunities and risks of global expansion. Sometimes it is described as a PEST or PESTLE analysis. Political, Economical, Social, Technological and Legal issues often differ domestically and even more so internationally. As a company looks to leverage the advantages that the democratization of technology, information and finance, and grow beyond the national borders that previously confined them, it is imperative that they consider a PESTL analysis to accompany their SWOT analysis. The PESTL analysis provides a strong framework used by global and multinational corporations to set the stage to develop specific tactics to mitigate the risks involved in executing their vision in unfamiliar environments. Below is a bulleted list of some things to consider when writing a PESTL Analysis. Political

Bureaucracy Corruption Environmental Law Freedom of the Press Government Type Government Stability Labour Law Political Change Political Stability Regulation/Deregulation (NTB) Social/Employment Legislation Tariffs Tax Policy Trade Restrictions

Economic

Business Cycle Stage Consumers Disposable Income Economic Growth Exchange Rates GDP Growth Globalisation GNP Growth Interest Rates Inflation Rate (cost of capital) Labor Costs Labor Supply Likely Economic Change Unemployment Rate

Social

Health Consciousness Population Growth Rate Age Distribution Career Attitudes Perception of Safety. Educational Infrastructure Social Mobility Employment Patterns Attitudes to work Cultural Taboos

Technological

Degree of Automation Emerging Technologies

Impact of Internet, Reduced Communication Costs Rate of Technological Change R&D Activity (SEZs) Technology Incentives Technology Transfer

Legal

Antitrust Law Consumer Law Discrimination Law Employment Law Health and Safety Laws

Retail Industry in India

Indian Retail Industry is standing at its point of inflexion, waiting for the boom to take place. The inception of the retail industry dates back to times where retail stores were found in the village fairs, Melas or in the weekly markets. These stores were highly unorganized. The maturity of the retail sector took place with the establishment of retail stores in the locality for convenience. With the government intervention the retail industry in India took a new shape. Outlets for Public Distribution System, Cooperative stores and Khadi stores were set up. These retail Stores demanded low investments for its establishment. The retail industry in India gathered a new dimension with the setting up of the different International Brand Outlets, Hyper or Super markets, shopping malls and departmental stores. Key Players in the Indian Retail Sector:The untapped scope of retailing has attracted superstores like Wal-Mart into India, leaving behind the kiranas that served us for years. Such companies are basically IT based. The other

important participants in the Indian Retail sector are Bata, Big Bazaar, Pantaloons, Archies, Cafe Coffee Day, landmark, Khadims, Crossword, to name a few.

PASTL Analysis of Retail Industry

Political1. Strong opposition of FDI in India- The Indian government in 2005 allowed FDI in single brand retail to 51% this have opened up a lot of opportunities in India organized retail sector. But allowing FDI as 51% in multi brand retailing is strongly opposed by people of the country and so many agitation took place. 2. Taxation policy- Indian government charges 12.5% VAT on the goods and services, sold and served by retailed by retail sector which makes retail sector as unattractive.

Economical1. The Indian consumers bahaviour pattern has changed. Now the Indian consumer gets more hefty packages, is younger, a large number of women are working, western influences and more disposable income have opened a lot of opportunities in organized retail sector. 2. The Indian consumer wants to shop, eat and get entertainment in one place and is have given Indian organized retail sector.

Social1. Corporate Social Responsibility- A retail company should have some CSR, because a company also have some fundamental duties which are suppose to be performed. In CSR a company can conduct certain activities ex- donation and cause related marketing. the direct objective of CSR is not to make an immediate profit. Rather, CSR activities aim to build store image and trust, which hopefully contributes to long-term profits. 2. Health and safety- Now people are more concerned about their health, they prefer those product which healthier instead of cheap. So, it is a duty of a retail company to provide

more safe and healthy product to the consumer and to check carefully about the adulteration of food products.

Technological1. The availability of supply chain management, customer relationship management & merchandising software can help much while performing activities such as ordering & tracking inventory items, warehousing, transportation & customer profiling. It is tool that has been used by retailers ranging from Amazon.com to mall system. 2. Information technology played a vital role in the field of retail industry, now people can purchase products by only one click on shopping sites. Credit card system is slowly replacing the cash system in retail industry, customer prefers purchases on credit instead of cash payment because they find it more safer.

Legal1. On the proposal of making multi brand FDI legal in India, the small vendor agitated allot on this proposal. Small level vendor contended that it amounts to the violation of their fundamental right 19(1)(g) provided by Indian constitution, which gives them freedom to practice any trade and commerce in India. They argued that the big retail companies will totally capture the market and it will become difficult for them to survive.