What is Retailing?

Retail comes from the French word retaillier, which refers to "cutting off, clip and divide" in terms of tailoring (1365). It first was recorded as a noun with the meaning of a "sale in small quantities" in 1433 (French) Retailing involves selling products and services to consumers for their personal or family use 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 consumers to buy.

Store Formats by Location

a) Chain store Multi-locational Operates multiple outlets under common ownership Engages in some level of centralized or coordinated purchasing and decision making b) High street format: A retail chain that seeks to locate itself in busy shopping areas (generally less than 2,000 sft, with no parking facilities and focused merchandise categories) c) Destination format: Independent retail stores located specifically in an area with alluring propositions (usually large in size, with ample concessions, huge parking space, wide merchandise categories) d) Convenience store format: Accessible carrying wide array of consumable goods (less than 5,000 sft, extended hours, parking for few vehicles, convenience merchandise)

Store Formats by Ownership

a) Independent Generally higher level of independent retailers exists 50% of these are run by owners and their families Why so many? Ease of entry b) Franchise: A contractual agreement between a franchisor and a retail franchisee, which allows the franchisee to conduct business under an established name and according to a given under an established name and according to a given pattern of business Franchisee pays an initial fee and a monthly percentage of gross sales in exchange for the exclusive rights to sell goods and services in an area

Store Formats by Merchandise Category

a) Family store Store dealing in all categories of related item (For e.g. apparel store offering merchandise to suit the wardrobe of a family) b) Specialty format: Narrow product lines with good depth. Specializing in a given type of merchandise, offering attentive customer services. c) Department store format: Large in size having several departments working as SBUs d) Super market format: Departmentalized, specializing in foodstuff, grocery and limited non-food categories, free access displays so that customers can pick from shelves. e) Emporium: Selling a variety of a particular group of merchandise (sari emporium).

Store Formats by Size

a) Superstore format Single-level large store, twice the size of a supermarket, offers nontraditional goods and services like pharmacy, flower shop, bookstore, salad bar, bakery etc. b) Shopping Mall: Spread over a large area, arrangement of retail stores and places for leisure activities. c) Shopping Center: Plaza combining five or more tenant spaces developed under one building. d) Hypermarket: Wide variety, offering in large quantities in each category selling huge volumes at low margins.

Store Formats by Price

a) Discount format Bazaar format, believing in discounts more often. b) EDLP format: Specialize in a particular merchandise line, assuring consistently low prices. c) Category killer format: Large specialty store having enormous selection of its product category at relatively low prices. d) Factory-outlet format: Owned and operated by the manufacturer e) Warehouse format: Large sale of discontinued merchandise, has large width and depth in many categories it retails. f) Single-price denomination format: Scrambled merchandise at just one price point, generally at a low one.

Retailing formats in India

Malls: The largest form of organized retailing today. Located mainly in metro cities, in proximity to urban outskirts. Ranges from 60,000 sq ft to 7,00,000 sq ft and above. They lend an ideal shopping experience with an amalgamation of product, service and entertainment, all under a common roof. Examples include Shoppers Stop, Piramyd, Pantaloon.

Department Stores: Departmental Stores are expected to take over the apparel business from exclusive brand showrooms. Among these, the biggest success is K Raheja's Shoppers Stop, which started in Mumbai and now has more than seven large stores (over 30,000 sq. ft) across India and even has its own in store brand for clothes called Stop!.

Specialty Stores: Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer Crossword, RPG's Music World and the Times Group's music chain Planet M, are focusing on specific market segments and have established themselves strongly in their sectors. Discount Stores: As the name suggests, discount stores or factory outlets, offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left over at the season. The product category can range from a variety of perishable/ non perishable goods Department Stores: Large stores ranging from 20000-50000 sq. ft, catering to a variety of consumer needs. Further classified into localized departments such as clothing, toys, home, groceries, etc.

Hypermarts/Supermarkets: Large self service outlets, catering to varied shopper needs are termed as Supermarkets. These are located in or near residential high streets. These stores today contribute to 30% of all food & grocery organized retail sales. Super Markets can further be classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets ranging from of 3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personal sales. Convenience Stores: These are relatively small stores 400-2,000 sq. feet located near residential areas. They stock a limited range of highturnover convenience products and are usually open for extended periods during the day, seven days a week. Prices are slightly higher due to the convenience premium. MBOs : Multi Brand outlets, also known as Category Killers, offer several brands across a single product category. These usually do well in busy market places and Metros.

Global Retailing Facts

GLOBAL RETAIL (Source: CSO, MGI Study) Worlds largest private industry Above US $ 8 trillion sales worldwide annually Accounts for almost 10% of GDP in most countries Major employer in most economies 16% 15% 12% 7% in US in Brazil in Poland in China

Generates competition which results in reduction of prices

product and service innovation

enhanced customer experience Major driver for real estate and urban development

Biggest retail Sales countries of the world

U.S E.U JAPAN
market)

U.S $ 4 tn (13 times of Indian U.S $ 2 tn U.S $ 1 tn

CHINA
U.K

U.S $ 750 bn
U.S $ 444 bn

INDIA
RUSSIA

U.S $ 300 bn
U.S $ 200 bn

Evolution of Indian retail

Historic/Rural Reach Traditional/Pervasiv e Reach Government Supported Modern Formats/ International

Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls

PDS Outlets Khadi Stores Cooperatives

Convenience Stores Mom and Pop/Kiranas Weekly Markets Village Fairs Melas
Source of Entertainment
Neighborhood Stores/Convenience

Availability/ Low Costs /

Shopping Experience/Efficiency

Current Scenario

Market size Current market size is roughly US$ 300 bn Only 3% is through organized retailing 96% of the 12 Million stores are less than 500 Sq. ft. Forecast Growth rate for the retailing industry is roughly 8.3% for 2003-2008 Sales from large format stores would rise by 24-49% Formal and modern format retailing would enjoy rapid growth

 No FDI is allowed in multiple brand retailing 100% FDI allowed in cash & carry format(e.g Walmart-Bharti) 51% FDI allowed in single brand retailing(Nike,Gucci,Versace,Mcdonal d)