1. Retailing – An Overview

2. Objectives of the Chapter
Retailing : Definition and Scope
Retailers Role in Distribution
Channels
Benefits of Retailing
Evolution of Retailing
Retailing Environment
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3. Introduction
 One of the largest industries in India
 One of the biggest sources of
Employment
 Present value of retail market is $ 180
million. Only 2% in organized sector.
 Should employ 250,000 people directly
and 2.5 million people indirectly
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4. Retailing: Definition
 Retailing is derived from the French word retailier, which
means, "to cut a piece off.”
 A set of business activities that adds value to the products and
services sold to the final consumers for their personal, family or
household use.
 From a marketers point of view, retailing can be defined as a set
of marketing activities designed to provide satisfaction to the
end consumer and profitably maintain the customer base by
continuous quality improvements across all areas concerned
with selling goods and services.
 A retailer is any business establishment that directs its
marketing efforts towards the end users for the purpose of
selling goods and services. Retailers comprise street
vendors, local kirana stores, supermarkets, food
joints, saloons, airlines, automobile showrooms, video
kiosks, direct marketers, vending machine operators, etc.
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5. Retailing: Scope
Retailing involves:
 Understanding the needs of consumers
 Developing good assortment of
merchandise
 Displaying the merchandise in an
effective manner so that consumers find
it easy and attractive to buy.
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6. Retailer role in Channel of
Distribution
An organization qualifies to be a retailer only when it derives a
major chunk of its revenues from its transactions with end users.
Thus, a seller is said to have conducted a retail transaction when
he sells goods to the end customer while a wholesale transaction
is conducted when the seller sells goods to a business concern.
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7. Benefits of Retailing
Retailers deliver many benefits to
customers, manufacturers, wholesalers, and the
economy in the process of transfer of goods
and services from the manufacturer to the end
consumer.
 Benefits to Customers
 Benefit to Manufacturers and
Wholesalers
 Benefits to the economy
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8. Benefits of Retailing to Customers
Retailers act as buying agents for consumers.
They perform various activities that increase
the value of goods and services they sell to
the end consumer. The various activities are:
 Breaking Bulk
 Providing Assortment
 Holding Inventory
 Providing after sales service
 Providing Information
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9. Activities of Retailer benefiting
Consumer – Breaking Bulk
 Retailers buy goods in bulk from manufactures and
divide them into smaller sellable units according to
consumption patterns of the end consumer.
Benefits:
1. Quantity discounts from manufactures
2. Lower freight rates for large shipment of goods.
3. Availability of products in smaller units enables
customers to buy products in quantities, which suit
their consumption patterns.
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10. Activities of Retailer benefiting
Consumer – Providing Assortment
 Retailers evaluate the products of various
manufactures and offer the best collection of
products from which the customer can select
the product of his/her choice.
 Retailers select the product assortment
depending on the tastes and needs of their
target customers.
 The variety in assortment offered makes the
buying process easier for customers.
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11. Activities of Retailer benefiting
Consumer – Holding Inventory
 Make the products available to consumers at
a convenient place and time through
inventory held.
 Makes it possible for consumers to make
instant purchases.
 Reduces the cost of storage and enables the
consumer to invest his money profitably.
 Spontaneous shopping by customer is
possible only because retailers stock the
goods.
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12. Activities of Retailer benefiting
Consumer – Providing Services
Valued added services provided by Retailers
are:
 free home delivery,
 accepting credit cards,
 accepting payments on installment basis,
 arranging loans, etc.
These services make it easier for customers to
buy and use products.
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13. Activities of Retailer benefiting
Consumer – Providing Information
 Retailers play a major role in providing
product related information to their
consumers.
 Retailers use advertising and in-store
salespersons to provide product
information, which helps the consumer to
simplify his purchasing process.
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14. Benefits of Retailing to Manufacturers
and Wholesalers
 Manufacturers and wholesalers consider retailing as
a channel for delivering their products/services to the
end customer.
 Retailers provide the manufacturer with greater
revenues, which could be reinvested in production.
 Retailers play a major role in smoothing out the
variation between the production and sales of the
manufacturer's products.
 Retailers function as the sensory organs of
manufacturers.
 They provide feedback and information on tastes and
preferences of customers for designing new products
or upgrading an existing product.
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15. Benefits of Retailing to Manufacturers
and Wholesalers (Cont…)
 Retailers also share some of the risks of the manufacturer.
 A retailer is exposed to three types of obsolescence risks:
Physical obsolescence
 Technological obsolescence
 Fashion obsolescence
 Physical obsolescence risk arises from the damage or wear out
caused to the products while they are stored in the retail outlet.
Eg: handicrafts, books, greeting cards, gift items etc.
 Technical Obsolescence risk: Risk of technology getting
outdated resulting in severe losses for the retailer.. Eg:
Computers, Mobile phones, etc.
 Fashion obsolescence risk is very common for apparel retailers
who deal in merchandise of varying style, design or color.
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16. Benefits of Retailing to the economy
 Employment generated
 Contribution to the management of the
economy
 Contribution to the production cycle of the
industries
 Ensures the success of the economic
enterprises.
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17. Evolution of Retailing
 Early Eighties
 'Retailing' in India was synonymous with
peddlers, vegetable vendors, neighborhood kirana stores
(small grocery stores) or sole clothing and consumer
durable stores in a nearby town.
 These retailers operated in a highly unstructured and
fragmented market. Very few retailers operated in more
than one city.
 Before 1990
 Organized retailing in India was led by few manufacturer
owned retail outlets, mainly from the textile industry.,Ex:
Bombay Dyeing, Raymonds, S Kumar's, and Grasim.
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18. Evolution of Retailing
 Nineties:
 Liberalization of the Indian economy led to the dilution
of stringent restrictions.
 Entry of few multi-national players like Nanz into the
Indian market.
 Changing profile of the Indian consumers,
 Increasing wages of the employees working in
Greenfield sectors with higher purchasing power.
 Setting up of retail chains by domestic retailers like
Cotton World (Mumbai), Nirula's (Delhi) and the Viveks
and Nilgiris in the South.
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19. Factors behind the change of Indian
Retailing Industry
 Economic growth
 Urbanization
 Consumerism
 Brand Profusion
 Availability of Real Estate
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20. Retailing Environment
 Constituents of External Environment
 Economic Environment
 Legal Environment
 Technological Environment
 Competitive Environment
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21. Economic Environment
 Nature of the economic system
(capitalism, socialism)
 Gross domestic product,
 Rate of inflation,
 Purchasing power,
 Interest rates,
 Tax levels,
 Employment growth and others
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22. Legal Environment
 Governments use various laws and
regulations to ensure that retailers do not
indulge in unfair trade practices
 Foreign direct investment (FDI) restrictions
 Lack of industry status
 Property regulations
 Real estate
 Labor Laws
 Complex taxation System
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23. Advantages of permitting FDI in
Retail
Opening up of FDI in the retail sector would:
 bring in valuable foreign exchange
 bring about organization of the sector
 provide employment to thousands of Indians
 provide a wider choice of products at reduced
prices to the customer
 improve the shopping experience.
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24. Technological Environment
 Technology is one of the most important
drivers of change in the retail industry.
 The computerization of various retail store
operations have bought a sea change in the
way retailing is conducted in India.
 Technology being used to improve the
shopping environment and to provide a
pleasant shopping experience to the
customer.
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25. Competitive Environment
 Severe competition among the existing
players
 Attractive factors for entry into business.
 Stiff Competition from Unorganized sector.
The competition among retailers varies
depending on the way the retail operations
are carried out and which entity of the
distribution channel carries out these retail
operations.
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26. Summary of the Chapter
 Retailing : Definition and Scope
 Retailers Role in Distribution Channels
 Benefits of Retailing
 Evolution of Retailing
 Retailing Environment
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