Managing Retailing Project

Submission I: Fitness & Wellness Specialty Retail Store

Key Trends in Indian Retail Sector:

Overview:
The Indian retail industry has emerged as one of the most dynamic and fast-paced industries due to the entry of
several new players. It accounts for over 10 per cent of the countrys Gross Domestic Product (GDP) and around
8 per cent of the employment.
Indias retail market is expected to grow at a CAGR of 10 per cent to US$ 1.6 trillion by 2026 from US$ 641 billion
in 2016. While the overall retail market is expected to grow at 12 per cent per annum, modern trade would
expand twice as fast at 20 per cent per annum and traditional trade at 10 per cent.
The long-term outlook for the industry is positive, supported by robust demand (rising incomes), favourable
demographics, policy support (entry of foreign players), and increasing investments.

Evolution:
While barter is considered to be the oldest form of retail trade, retail in India has evolved to support the unique
needs of our country given its size and complexity. The next major change was the public distribution of grains
which emerged as the single largest retail chain in India via rationing system introduced by the British. Over the
years, traditional retail channels have been developing giving rise to millions of mom and pop store. Categorising
the last two decades following are the major developments:
Pre 1990s- Manufacturers opened their own outlets
1990-2005- Pure Play retailers enter into market(Apparel)
2005-2010- Entry by large corporate into modern retail (Departmental, Multi-Brand Retail, Convergence retail)
2010 onwards- FDI liberalisation, Entry of international brands, Ecommerce, Supermarkets

Organised Retail Sector:

Departmental stores, hyper markets, Convenience stores, Specialty stores and Cash & carry stores form some of
them. Different retailers have adopted different strategies for sales maximization: offering discounts, lowering
prices or giving value adding services, joint ventures with international brands or partnerships with financial
services firms, or maintaining profit margins through strong supply chain networks, have proved useful to some
FMCG and apparel retailers constitute the major part of this sector. Indian retail sector currently suffers with lower
gross margins and lower sales throughput and higher rentals as compared with international counterparts. Hence
focus on improving economics, both on demand side through leveraging consumer purchasing power in pricing
and promotion and on supply side, by increasing bargaining power and reducing supply costs is required.

Key Trends:
Current industry highlight a shift towards digital, with increased proliferation of smartphones and internet usage,
the E-Commerce market is expected to quadruple to $70 billion in the next five years. This makes an Omni-
Channel presence not just a competitive advantage, but a necessity in the coming years. This calls for an
evolution of business for the traditional brick and mortar retailers, in terms of business model and supply chain
efficiency, to counter the disruptive growth of online retailers. Also, the retail industry is still majorly un-organized
(90%), and this tier 3-4 and rural markets offer significant growth potential.
Virtual Reality and Augmented Reality have also been picking up momentum in the recent past. E-commerce
giants like Amazon are using these technologies to deliver improved experience. Overall the sector has been
moving towards an experience based shopping format.

Road Ahead:
E-commerce is expanding steadily in the country. Customers have the ever increasing choice of products at the
lowest rates. E-commerce is probably creating the biggest revolution in the retail industry, and this trend would
continue in the years to come. Retailers should leverage the digital retail channels (e-commerce), which would
enable them to spend less money on real estate while reaching out to more customers in tier-2 and tier-3 cities.
Both organised and unorganised retail companies have to work together to ensure better prospects for the overall
retail industry, while generating new benefits for their customers.

SWOT Analysis for Fitness and Wellness Specialty Store:

Strengths:
Expertise in a particular product line/ category (health products) leading to more customer loyalty and
customer lifetime value.
High diversity in merchandise assortment in the product line offered (almost comprehensive)
Better understanding of niche market demands and inventory management.
Greater sales pitch delivery by providing better buying experience and increased conversion.
Ability to attract category enthusiasts whose demands cannot be satisfied by general retailers
Expert staff needs to learn about a specific product/category greatly amplifying their capabilities.
Weakness:
Possibly highly seasonal or susceptible to high variations in financials
Limited customer visits due to high specialised nature
High labor cost due to specialised nature
Opportunity:
Possibility of building customer base based on experience and expertise
Demand for fitness equipment and nourishment supplements is rising coupled with changing lifestyle
First mover advantage in Indian/Emerging markets
Expanding the overall size of the industry and seizing the major portion of it
Threat:
Entry of international brands, new players entering the market would target customers and indulge in
predatory pricing
Modern Retail channels like E-Commerce might offer better deals

Key Competencies Required

Expert Guidance:
Trained Professionals to understand consumer dietary patterns, lifestyle and recommend best
nourishment/fitness options
Reduce Fixed Cost and Capex:
Optimal store area in a suitable location to engage all customers
Energy saving store interiors so as to reduce energy overheads
Efficient Forecasting and inventory management:
Need to develop accurate demand forecasting (since demand could be highly variable) so as to reduce
ordering and inventory holding cost
Effective marketing campaign:
Since the product offered is not an essential requirement, marketing has to be top notch so as to attract
all possible prospects