Retail is how producers of goods and services get their products to the consumer.

Retailers often get

their goods directly from the manufacturer. That is when a commodity becomes a finished product.
Retailers can also buy products from a middleman, known as a wholesaler or distributor. The
wholesaling company consolidates the products from around the world. It repackages them for easier
marketing and distribution. Retailers are the last stop on the supply chain before the products end up
in your shopping cart.
Importance of the Retail Industry to the U.S. Economy
In 2017, the U.S. retail industry generated $1.14 trillion in value-added. That’s 5.9 percent of
U.S. gross domestic product. The largest category within retail is automotive, at $212 billion. Grocery
stores are $167 billion and general merchandise is $161 billion.
Since retailing provides a way for products to get to consumers, it also supports the $1.15 trillion
wholesaling industry. It contributes to the $2.2 trillion U.S. manufacturing industry.
Retailers create 4.8 million jobs. Many of these are entry-level positions, paying around $10 an hour.
Despite the low pay, they provide solid training on dealing with the public. These positions also teach
employees math skills.
The most important time of the year in retailing is the holiday shopping season. It starts the day after
Thanksgiving. Almost 20 percent of annual retail sales occur between Black Friday and
Christmas. This season includes Cyber Monday, the biggest day of the year for online sales. It also
includes Green Monday. It's the last day to order online to make sure you receive your gifts before
Christmas.
How Retail Works
Retailers make money by raising prices well above their cost of labor, equipment, and distribution.
Everyone along the supply chain does the same thing. Retailers can sometimes make more money if
they bypass the wholesaler and purchase directly from the factory. Some large retailers often
manufacture best-selling items themselves. This is called vertical integration.
This price increase is known as a markup or the retailer's profit margin. It's typically 100
percent (double the cost) at each stage. That's called "keystone markup." It's needed to cover costs and
provide enough profit to pay stockholders or private owners.
Internet Retailing
Internet retailing is the fastest-growing segment. By 2020, it is expected to reach $523 billion, at a
growth rate of 9.32 percent each year until then.
Mobile devices, especially cell phones, are becoming the biggest source of internet traffic By 2020,
270 million shoppers will use their mobile devices to research and buy products. That’s up from 244
million customers in 2015. Tablet use has been declining, while iPhone and Android phone use have
been growing.
In 2017, people in 16 countries said that 60 percent of their “everyday transactions” occurred in a
digital form instead of a store. This included the United States, the United Kingdom, and Canada.
The Future of Brick and Mortar Stores
The popularity of online retailing is destroying shopping malls. In 2018, former J.C. Penney CEO
Mike Ullman said that only 25 percent of America's 1,200 shopping malls will survive over the next
five years. Those that survive will have enough financing to transition to a new style of retail. They
must also be in a location that serves the highest-earning 20 percent. He added that malls that can
attract an Apple or Tesla store will probably survive.
In 2018, retailers filed for bankruptcy at record-high rates. Well-known brands such as Nine West,
Claire's, and Toys R Us announced bankruptcy in the first four months of the year.
An emerging online trend may become even more devastating for the industry. Websites such as
Wish.com, AliExpress, and LightintheBox allow U.S. consumers to purchase directly from Chinese
manufacturers. This eliminates the retailer completely. It also allows consumers to purchase goods at a
deep discount. Wish.com is worth $8.5 billion. It's the same as Macy's, J.C.Penney, and Sears
combined.
But the U.S. Supreme Court removed a competitive advantage for some online retailers. On June 21,
2018, it ruled that states have the right to collect sales taxes on online retail sales. Some retailers, such
as Wayfair.com and Overstock.com, did not pay state sales taxes. Amazon did for its own products,
but not for smaller online retailers that use its site. States will now be able to collect up to $33.9
billion annually in uncollected sales taxes. It also removes a disadvantage previously imposed on
brick-and-mortar stores.
Examples of Retailers
The most common examples of retailing are the traditional brick-and-mortar stores. These include
giants such as Best Buy, Wal-Mart and Target. But retailing includes even the smallest kiosks at your
local mall.
Examples of online retailers are Amazon, eBay, and Netflix. Even though they are growing the fastest,
they still only represent 15 percent of the total retail industry.
Many retailers focus on home sales. These include Schwan's food and Casper mattresses. Others sell
through home-based parties. The most well-known are Avon, Pampered Chef and Cocoa Exchange. A
small group relies on TV channels like QVC, the Home Shopping Network and Evine.
Retailers don't just sell goods, they also sell services. Restaurants, hotels and bars are all included in
retailing.
Many retailers combine different distribution methods. An example is Kroger, which offers both
brick-and-mortar stores and online delivery. Large stores often also provide food services, like a
restaurant. This lower cost and increased consumer appeal is an example of economies of scale.
Introduction
The Indian retail industry has emerged as one of the most dynamic and fast-paced industries due to
the entry of several new players. Total consumption expenditure is expected to reach nearly US$
3,600 billion by 2020 from US$ 1,824 billion in 2017. It accounts for over 10 per cent of the country’s
Gross Domestic Product (GDP) and around 8 per cent of the employment. India is the world’s fifth-
largest global destination in the retail space.
Market Size
Retail market in India is projected to grow from an estimated US$ 672 billion in 2017 to US$ 1,200
billion in 2021F. Online retail sales are forecasted to grow at the rate of 31 per cent year-on-year to
reach US$ 32.70 billion in 2018.
India is expected to become the world’s fastest growing e-commerce market, driven by robust
investment in the sector and rapid increase in the number of internet users. Various agencies have high
expectations about growth of Indian e-commerce markets.
Luxury market of India is expected to grow to US$ 30 billion by the end of 2018 from US$ 23.8
billion 2017 supported by growing exposure of international brands amongst Indian youth and higher
purchasing power of the upper class in tier 2 and 3 cities, according to Assocham.
Investment Scenario
The Indian retail trading has received Foreign Direct Investment (FDI) equity inflows totalling US$
1.66 billion during April 2000–March 2019, according to the Department of Industrial Policies and
Promotion (DIPP).
With the rising need for consumer goods in different sectors including consumer electronics and home
appliances, many companies have invested in the Indian retail space in the past few months.
India’s retail sector investments doubled to reach Rs 1,300 crore (US$ 180.18 million) in 2018.
Walmart Investments Cooperative U.A has invested Rs 2.75 billion (US$ 37.68 million) in Wal-Mart
India Pvt Ltd.
Government Initiatives
The Government of India has taken various initiatives to improve the retail industry in India. Some of
them are listed below:
 The Government of India may change the Foreign Direct Investment (FDI) rules in food
processing, in a bid to permit e-commerce companies and foreign retailers to sell Made in
India consumer products.
 Government of India has allowed 100 per cent Foreign Direct Investment (FDI) in online
retail of goods and services through the automatic route, thereby providing clarity on the
existing businesses of e-commerce companies operating in India.
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. India's e-commerce industry is
forecasted to reach US$ 53 billion by 2018. 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.
It is projected that by 2021 traditional retail will hold a major share of 75 per cent, organised retail
share will reach 18 per cent and e-commerce retail share will reach 7 per cent of the total retail
market.
Nevertheless, the long-term outlook for the industry is positive, supported by rising incomes,
favourable demographics, entry of foreign players, and increasing urbanisation.
Importance of Retailing
Retailing has a tremendous impact on the economy. It involves high annual sales and employment. As
a major source of employment retailing offers a wide range of career opportunities including; store
management, merchandising and owning a retail business.
Consumers benefit from retailing is that, retailers perform marketing functions that makes it possible
for customers to have access to a broad variety of products and services. Retailing also helps to create
place, time and possession utilities. A retailer’s service also helps to enhance a product’s image.
Retailers participate in the sorting process by collecting an assortment of goods and services from a
wide variety of suppliers and offering them for sale. The width and depth of assortment depend upon
the individual retailer’s strategy.
They provide information to consumers through advertising, displays and signs and sales personnel.
Marketing research support is given to other channels, members.
They store merchandise, mark prices on it, place items on the selling floor and otherwise handle
products; usually they pay suppliers for items before selling ,,them to final customers. They complete
transactions by using appropriate locations, and timings, credit policies, and other services e.g.
delivery.
Retailing in a way, is the final stage in marketing channels for consumer products. Retailers provide
the vital link between producers and ultimate consumers.
Retailers create value in below ways

Providing Assortments
Supermarkets typically carry 20,000 to 30,000 different items made by more than 500 companies.
Offering an assortment enables their customers to choose from a wide selection of products, brands,
sizes, and prices at one location. Manufacturers specialize in producing specific types of products. If
each of these manufacturers had its own stores that sold only its own products, consumers would have
to go to many different stores to buy the groceries needed to prepare a single meal.
Breaking Bulk
To reduce transportation costs, manufacturers and wholesalers typically ship cases of frozen dinners
or cartons of blouses to retailers. Retailers then offer the products in smaller quantities tailored to
individual consumers’ and households’ consumption patterns—an activity called breaking bulk.
Breaking bulk is important to both manufacturers and consumers. It enables manufacturers to
efficiently make and ship merchandise in larger quantities and enables consumers to purchase
merchandise in smaller, more useful quantities.
Holding Inventory
A major value-providing activity performed by retailers is holding inventory so that the products will
be available when consumers want them. Thus, consumers can keep a smaller inventory of products at
home because they know local retailers will have the products available when they need more. This
activity is particularly important to consumers with limited storage space.
Providing Services
Retailers provide services that make it easier for customers to buy and use products. For example,
retailers offer credit so that consumers can have a product now and pay for it later. They display
products so that consumers can see and test them before buying. Some retailers employ salespeople in
stores or maintain Web sites to answer questions and provide additional information about products.
Evolution of retail
With revolutionary changes taking place in the worldwide economy and the growing importance of
24/7 operation of the business, the retail sector has been undergoing a paradigm shift across the world.
The world of today has turned into a global village; consumerism is having a huge impact on the
contemporary retail business, and technological advancements have created opportunities as well as
several challenges for the retail industry. With the advent of the internet, the growth in the retail
industry has been impressive due to the benefits of the economies of scale and also the expansion of
business across the geographical boundaries at B2B (Business to Business) and B2C (Business to
Consumer) levels.
Several studies have proven that the Indian Retail Market is one of the top emerging markets in the
world. For Indian Economy, the retail sector is one of the pillars, which contributes towards a
growth rate of approximately 10% of the total GDP and towards the total employment around
8%. According to the latest studies, Indian retail market is ranked amongst the top 5 retail
markets worldwide estimated around 600 Billion US Dollars.
Indian Retail industry is expected to have a bright future and offers numerous opportunities for
progress and growth. According to GRDI reports, some favorable factors which support the growth of
retail business are: rise in fashion loving and brand conscious young population, extensive
urbanization, and expansion of opportunities for new investment in retail sector. As per the report of
FICCI (2011), a positive trend in the Indian retail sector can be attributed to a sharp rise in the
Middle-Income segment and growth in domestic consumption. Moreover, studies suggest that with
changes in the consumer buying preferences, demographics composition and increasing preference for
mall culture, there has been a transition from the traditional retail formats to a more organized form of
retailing, as a result of which the Indian Retail market is expected to witness an optimistic trend in
future as well.
The retail sector in Indian context can be subdivided into Organized and Unorganized retail sectors.
Organized retailing constitutes licensed retailers registered under sales and income tax, involved in
carrying out their day-to-day trading functions. This may include large hypermarkets, large-scale
owned retail ventures owned privately or the retail chains as well. On the other hand, unorganized
retailing comprises of a sizeable proportion of small retailers operating their own Kirana, paan, beedi
shops, general stores, chemists, hawkers, etc. In developed economies, organized retail enjoys a
predominant share of around nearly 75-80% as against traditional retailing, while in developing
economies; unorganized sector enjoys a predominant share in the retail market.

The retail sector in India is highly fragmented or distributed. Unorganized retail constitutes a
significant share of over 90%, while the organized retail segment is just in a start up stage and has
witnessed an impressive growth over last few years. Retail in India originated with the Mom and Pop
Stores and Kirana Stores, which used to cater to the requirements of the local population. Over a
period, the government encouraged rural retail and provided support for establishing Khadi & Village
industries. During 1980’s, the retail scene in India changed further with the opening up of the
economy, as a result of which leading retail chains in textile sector were established like Raymond’s,
S Kumar’s and Bombay Dyeing. Subsequently, Titan launched its retail showroom, and the organized
retailing started strengthening its grip in the Indian market. By 1995, major retail outlets such as Food
World, Music World, and Planet M, Crossword entered the Indian retail market. Large retail formats
and stores like shopping malls, hypermarkets and supermarkets came into operation for providing best
of the class experience to the customers. The retail sector evolution witnessed improvements in the
distribution set up, supply chain management, technological innovations, back end operational
support and excellence and increase in business alliances in the form of collaborative ventures,
mergers, acquisitions, joint ventures, etc.
Major players in the retail industry like Tata Group, Future Group, Bharti, and Reliance, etc. have
stepped forward with aggressive and ambitious investment plans in the retail sector as a part of their
business expansion strategy across various verticals. Moreover, with the introduction of retail reforms
by the Government of India which allows FDI of 51% in multi brand stores in India, organized retail
sector is expected to capture a major share of the market in the upcoming future. According
to Assocham study, factors such as globalization and liberalization of economies, increase in the
purchasing power of the consumers, changing lifestyle and infrastructural developments, have
revolutionized the Indian retail market. Studies reveal that organized retail market which was just at
7% of the total retail market share in 2011-12, is expected to attain a total share of over 10% across
the retail sector by 2016-17. The estimated growth rate of traditional retail is expected to be around
5% while for organized retail it is expected to be around 25% by 2020.
Food & Grocery is the major contributor in the entire retail market in India with a total contribution of
almost around 60% of the total retail sector in 2012. This is followed by Clothing (8%) and Telecom
& Mobile (6%) and many others. In organized retailing, Apparels is the major contributor which
accounted for a total contribution of 33% in 2012 to the retail industry followed by food and grocery
(11%). Though, the share of Food & Grocery segment in organized retailing has shown an impressive
growth since last few years. E Commerce and E Tailing in recent years have redefined the retail
landscape and offer a lot of opportunities to various stakeholders.
Challenges Faced by the Indian Retail Sector
Even though the retail sector in India has a lot to offer regarding opportunities and prospects of
business growth, still it is susceptible to various impediments/bottlenecks which may slow down the
pace of growth. Several challenges such as infrastructural limitations, rigid or stringent regulations,
political uncertainties, etc, may restrict the growth prospects and pose a lot of hurdles. Some of the
major challenges which Indian retail industry is faced with are:
 Competing with the international standards
 Indian retail industry is exposed to several systemic inefficiencies and problems with the
supply chain framework.
 Indian retail outlets operate in a constrained space of below 500 sq. ft., which is too small as
per the international retail outlet space standards.
 Growth in the retail industry has given rise to real estate related problems with increasing
requirements for setting up hypermarkets and supermarkets across various locations in large
scale.
 Problems related to the shortage or lack of availability of trained or skilled manpower.
  Frauds in the form of thefts, vendor frauds or administrative loopholes in the retail industry,
are a major cause of worry and this has posed several challenges before the management.
 Infrastructural and logistics related issues.

n the fast changing globalized and a technology-driven business world, Retail industry over last few
decades has witnessed a sea change. World’s largest retail giant of the present times Walmart is
operating worldwide by establishing hypermarkets in various countries by taking the help of
sophisticated means of communication as well as information systems technology.
A careful analysis of the trends reveals that in the Fortune 500 list of organizations, 50 are from retail
industry and the top rank is occupied by the world’s No. 1 retail giant Walmart. The statistics
convincingly reveal how fast the retail industry has grown and paved the path for expansion of
business as well as employment opportunities.
Characteristics of a Retailer
 In the entire distribution chain, a retailer is considered to be the final link, who deals directly
with the customer.
 A retailer purchases in bulk from the wholesalers and sells the products to the customers in
small quantities.
 A retailer essentially maintains a variety of merchandise.
 The aim of a retailer is to achieve maximum satisfaction by exceeding their expectations and
delivering exceptional services.
Key Functions Performed by a Retailer
 A retailer performs the dual functions of buying and assembling of goods. The responsibility
of a retailer is to identify the most economical source for obtaining the goods from the
suppliers and passing on the advantages to the consumer.
 The retailers perform the functions of warehousing and storing. They store the goods in bulk
and make them available as per the requirement of the consumer. Warehousing and store
keeping helps in ensuring uninterrupted availability of the goods to the consumers.
 The primary function of a retailer is selling the products to the customers for which various
techniques or business practices are being adopted by the retailer to achieve the strategic
goals.
 The prime focus of a retailer is on maximizing customer satisfaction by delivering quality
products and services both on cash as well as credit basis. As a result of which, retailer always
runs the risk of accumulating bad debts on account of non-payment of the amount from the
consumer.
 A retailer needs to have robust risk management capabilities. Various kinds of risks can be
involved in a retail business which a retailer should be well prepared with like loss or damage
of the products due to deterioration in quality, perishability or spoilage. A change in
customer’s buying preferences or tastes can also affect the retail business to a great extent, or
even the products may be damaged due to the natural calamities or vagaries of nature.
  A retailer performs the crucial function of grading for all those goods which at times are
either left ungraded by the wholesalers or manufacturers so that the customers readily accept
the goods. The retailer is responsible for the packing of goods in small packages or small
containers for the customer’s convenience.
 The retailers are the direct point of contact or communication with the customers; hence they
gather information regarding the changing tastes and preferences of the consumers, pass on
the customer feedback to the manufacturers for continuous improvement in service delivery.
 Retailers act as a vital channel for the launch of new products in the market as they are the
direct interface with the consumers and can communicate directly with the targets consumers
about the new product features and advantages.
 The retailers are responsible for the product promotion and advertisement by planning the
product displays and visual merchandising for attracting the customers.
Services Provided by a Retailer
To Customers:
 A Retailer ensures ready stock availability of goods for the customers in sufficient quantities
and sells the goods to the customers as per their quantity specifications.
 A retailer ensures availability of a wide variety of choices of products for the customers by
keeping different varieties at various prices and also different brands as well.
 A retailer can provide credit facilities and heavy cash discounts on the purchase of different
products to the customers.
 Retailers can provide customized services and pay personalized attention to the customers for
achieving a higher level of satisfaction with the delivery of product or service.
 Retailers introduce new products to the customers and also guide them with the usage of the
products.
 Retailers can provide additional services like free home delivery or after sales services.
 Retailers purchase and maintain a stock of those products which are mostly demanded by the
customers. They aim at catering to the requirements of all kinds of customers with varied
buying capacities.
To Wholesalers:
 Retailers are a valuable source of information and feedback for the wholesalers who in turn
pass on the same information to the producers of the products. Crucial information related to
the changes in the buying preferences of the customers, their experience with the usage of the
products, feedback on the prices and quality of the products is passed on to the wholesalers.
This helps in improving the existing services and in customizing the product solutions as per
the requirements of the customers.
 A retailer absorbs most of the burden of the wholesaler and also of the manufacturer by
selling the goods in small quantities to the customers. The wholesalers are relieved from the
burden of maintaining direct touch with the customers and managing the entire gamut of
activities involved in convincing the customers for purchasing their products.
 Retailer supports the wholesaler by acting as a channel for distributing the goods to the
customers.
  Retailer acts as the point of contact between the customer and the wholesaler. Retailers are
responsible for creating and improving the demand for various products by taking care of the
display and merchandising activities.
 Retailers act as a major source of funding for the wholesale trade by placing the orders and
making payments in advance to the wholesalers for those goods.

Classification of Retail Formats, Key Features, Advantages and Disadvantages

Retail Formats can be classified into the following categories:
Store Based: Store based formats can be further classified into two formats based on the basis of
Ownership or Merchandise offered.
Non Store Based Classification: Non Store retail organizations focus on establishing direct contact
with the consumer. This may be both personal (direct personal selling) and nonpersonal TV, the
Internet, mail, catalog or phone).
Service Based Classification: Such retailers specialize in providing different kinds of services to the
end consumer. The services can be classified as Banking Services, Rentals, Electricity, cooking gas,
etc. Various factors like quality of service, how much customization can be provided for meeting the
client specific requirements, the uniqueness of the service and delivery within the timelines, usage of
innovative technology, etc, are given importance for determining the success of service.
Classification of Retailers on the Basis of Ownership
1. Sole Proprietorship: This constitutes the majority as many small business ventures start on a
sole proprietorship basis only. In the case of sole proprietorship, the ownership of the business
exists with a single person, usually the one who is responsible for the day to day affairs of
running the business.
2. Partnership: This is also one of the most common business formats in India. In Partnership
form of business, the ownership is shared between two or more people for running the
business.
3. Joint Venture: A Joint venture involves the creation of a third or a new entity due to
collaboration between two or more than two parties, with an agreement to manage the
business operations in a particular area by combining their resources and sharing their profits
as per the well-defined terms and conditions of the contract.
Key Features of Chain Stores: When 4 or more than four stores manage the same merchandise
under the central ownership and usually receive their supplies from a central warehouse. The Chain
stores in Europe are equally called as Multiple Shops, unlike America where it is regarded as Chain
Stores. The main objective of Chain Store system is to approach the maximum number of customers
by expanding operations across a larger territory, but with a concentration on selling the same
merchandise.
In Indian context organizations such as BATA and Usha Lexus operate chain stores across the country.
These organizations offer varieties or various model variants of a single product, and the buying is
centralized, but selling is decentralized.
Salient Features are given below
  A retail system to be considered as a Chain store should have more than 1 retail store engaged
in the same merchandise and being operated with a moderate degree of centralization.
 The focus is on horizontal expansion by establishing multiple stores for reaching maximum
customers across various geographies.
Advantages of Chain Stores
 Chain Stores enjoy cost advantages due to the economy in purchase operations, low
advertisement expenditures and low selling prices of the products.
 The risks are distributed as a result of which the possibility of losses is minimized.
 Delinquency, bad debts and the complexities in the processes of accounting can be avoided
since the chain stores operate on the basis of cash.
 Chain stores need not be established in costly or prime locations and enjoy flexibility in their
style of operation.
Limitations of Chain Stores
 The claim that the products in chain stores are sold at lower prices is false.
 Practically chain stores are inflexible as the chain stores specialize in offering standardized
products only.
 Chain stores face a lot of personnel issues due to the complexities of a large-scale business
operation.
 Chain stores run a perennial risk of losing the brand image because various customer-centric
initiatives are not being given that much importance. But the customers in the present
scenario look for several other benefits regarding services.
 Chain Stores enjoy cost advantages due to the economy in purchase operations, low
advertisement expenditures and low selling prices of the products.
 The risks are distributed as a result of which the possibility of losses is minimized.
 Delinquency, bad debts and the complexities in the processes of accounting can be avoided
since the chain stores operate on the basis of cash.
 Chain stores need not be established in costly or prime locations and enjoy flexibility in their
style of operation.
Features of Departmental Stores
Departmental Stores can be either classified on the ownership basis or income groups. The key
features of Departmental Stores are given below:
Drivers of Retail Change in India
Retail is the new buzzword in India. Buying ritual has become shopping experience. It is a celebration
and entertainment. Lifestyle is changing rapidly. The concept of value for money is gaining
importance. The information that the Indian consumer has access to is immense which leads to the
freedom of choice and in turn the demand for the differently organized retail formats. The traditional
way of retailing is also organized but differently organized. The changing income profiles, change in
consumption patterns, changing demographics, diminishing difference between rural and urban India
demand the change in the way the retail business is carried out in India.
We all witness to the change in retail in the country. The local Bania has gradually transformed
himself into a small supermarket. This change is not only restricted to metros but has rapidly spread
over to a smaller cities and towns. The reason for this change is due to the most important element in
the whole process i.e. the Indian consumer.
Population
The size of population in India has always made it a large market. 1.10 billion People and almost 40
% of the population is youth which makes it more lucrative market. Aspiration, wants of these people
thought are different but it definitely creates the opportunities for the retail trade which keep growing
every day. One more aspect of this population is that the 26 % of the population is still below the
poverty line but still catering to the basic needs of these people (As per the Maslow’s Hierarchy of
Needs) is daunting task which creates enormous opportunities for retail.
Changing Income Profiles
The definition of income classes vary from one study to another. According to NCAER the average
middle class family’s disposable income rose by more than 20% from 1993 to 2006. The middle
income and the upper income categories are likely to witness the most significant expansion in the
coming decade. The upper and middle class are likely to increase their share in the population from
19.6% in 1995 – 1996 to 42.6% in 2009 – 2010. , a substantial increase, while the middle income
group likely to witness an increase from 32.9% to 39.8% in the same period.
Diminishing difference between Rural and Urban India
Rural India amounts to 70 % of India’s population and this itself offers a tremendous opportunity for
generating volume driven growth. It is interesting to note that LIC sold 50% of its policies in Rural
India in year 2005-06. Of the over two million BSNL mobile phone connections more than 50 % are
in small towns and villages. This kind of phenomenon is evident in all type of products and services.
So the diminishing difference between the Rural and Urban India is pretty evident. This makes it
easier for the marketer to develop and market new goods and services for the Indian consumer.
The rise of the self-employed
Rural India has always been largely self-employed. But now the proportion of the self-employed in
urban India has risen to 40% plus, replacing the employed salary earner as the new 'mainstream
market'. A Hansa Research Group (HRG) study shows that even in the 'creamy layer', comprising the
top two social classes in towns of 10 lakh plus population in urban India, 40% of chief wage earners
of households are shopowners, petty traders, businessmen and self-employed professionals.
Unlike the salary earner, the self-employed use products much more to signal success and are also fast
adopters of any productivity tools, like cellphones and two-wheelers, that can help them earn more.
Striving
Most Indian consumers, whether rich or poor, want to get ahead in a hurry. From being destiny-driven
and resigned, they are now destination-driven and striving to grasp opportunities to earn more in order
to construct a better life for themselves and their children. If one were to segment the country into the
Arriving, the Striving and the Resigned, the proportion of Resigned has definitely decreased and
become geographically concentrated, rather than well-dispersed, as it was earlier.
The rise of the woman
Like the self-employed, women too are saying "I can and I will," and emerging as partners in family
progress. Not so much from earning the second income (a mere 23% of Indian households have
working wives and that proportion decreases as incomes increase) but by being CEOs of households
and intellectual nurturers of their children.
Organised retailing
Organised retailing is running a business in a systematic and scientific manner (Fig. 1.2). Organised
retailing has remarkable benefits for consumers and has potential for employment generation and
overall growth of the country’s GDP. In organised retailing, all the items are kept under a single roof
and a large number of brands and variety of products are also available in one place. Organised retail
deals with multiple retail formats, which is typically a multi-owner chain of stores run by a
professional management group. Today, organised retailing is characterised by comfort, style and
speed. It offers the customer more variety, convenience and comfort, along with retailing.
Unorganised retailing
Unorganised retailing is run as a small family business like kirana stores . The features of small family
business are: • Lack of adequate infrastructure • Lack of modern technology • Lack of funding Lack
of skilled manpower Unorganised retailing includes retail units which are not registered by any legal
or statute body and which are not maintaining accounts on a regular basis. The unorganised sector is
small in size and mostly scattered. It has no fixed place for operations. The unorganised sector
includes traditional units like haats, mandis, melas or kiranas and paanwalas, others, such as fruit
sellers, vegetable sellers, cobbler, etc

In India, a variety of retail stores exist to deliver different products to the end consumers. Retailing
can be classified as store and non-store retailing.
Store retailing
Store retailing When the goods and services are sold from a physical place or store, it is called store
retailing. The basis of classification of store retailing is ownership and merchandise offered.

On the basis of ownership

1.Independent retailer
Independent retailer: A person who owns and operates with family members or assistants.
He/she has direct contact with the customers. For example, the local baniya/ kirana store owner
and the paanwala. He/she decides the retail strategy depending on the store location and
product mix.
2.Chain retailer or corporate retail chain
Chain retailer or corporate retail chain : When a significant number of outlets are operated by a
single owner, it is called a retail chain (Fig. 1.4). Chain retailers are offered the same type of
products, store environment, and sales promotions. For example, Reliance, Bata, Arrow, Louis
Philippe, Food World, etc

3 Franchising: A franchise (Fig. 1.5) is a legal contract between a company (franchiser) and the
store owner (franchisee), which allows the store owner to conduct business under an established
name. For example, McDonald’s, Pizza Hut, Van Heusen, etc.
4.Consumer cooperatives: A consumer cooperative is a retail store operated by member
customers. This type arises largely because of dissatisfied consumers whose needs are not
fulfilled by existing retailers For example, Apna Bazaars in Mumbai, etc.
Based on merchandise offered
1.Convenience stores: These are small-sized stores located in residential areas (Fig. 1.7). They
are open for long hours and offer a limited line of convenience products like eggs, bread, milk,
vegetables, etc.
2.Supermarkets: Supermarkets are large retailing stores selling a huge variety of consumer
products, mostly food, items of household use and grocery with a low marginal gain. It operates
on a self-service style, but has a high turnover. It offers minimum services and operates on the
cash and carry basis.
3.Hypermarkets: A hypermarket is a combination of a supermarket and a general merchandise
store. It is a very large store typically at destination locations. They are designed to attract
customers from a significantly large area with their low price offers, unique range and other
offers. It follows the self-service style.

4.Specialty stores: A store specialising in one type of products (merchandise) or single line of
goods (furniture, jewellery, household,consumer electronics, sports, domestic appliances, etc.) is
termed as a specialty store.
5.Departmental stores: Departmental stores (Fig. 1.11) are those stores offering a variety of
goods under a single roof, located in central places or a busy locality. It requires capital to
maintain different departments and huge stock of goods. The profit or loss is calculated on the
entire stock. It is a combination of decentralised buying and centralised selling. They establish
restaurants inside these stores and also provide home delivery services.

6.Catalogue showrooms: Catalogue retailers (Fig. 1.12) usually specialise in hard goods
(houseware, consumer electronics, etc.). A customer visits the showroom and makes his/her
choice of the products using the catalogue mentioning the code number of the item.
Non-store retailing
Non-store retailing When the goods and services are sold without a physical place or store, it is
called non-store retailing. Non-store retailing adopts a direct relationship with the consumer.
The classification of non-store retailing is direct personal contact and direct response
marketing.

1.Direct personal contact Direct selling is making a face-toface (direct) contact with the end
consumer (Fig. 1.13). For example, cosmetics, jewellery, home appliances, educational materials,
nutritional products, etc. This type of retailing follows the party plan or the multilevel network.
They display and demonstrate on inviting to a party or customers act like master distributors
appointing their customers on commission basis.
2.Direct response marketing The customer becomes aware of the products/services offered
through non-personal media such as mail, catalogues, phones; television or the Internet is called
direct response marketing. It includes various forms of communication with the consumers like
-Mail order retailing: In retailing customer database is used to develop target catalogues to
customers.
-Television shopping: In this kind of retailing, the product is promoted on television with the
product features, price, and guarantee or warranty. Phone numbers are provided for different
cities where the products can be ordered from, and home-delivered. For example, Telebrands, a
programme which usually presents fitness and health products.

-E-shopping : This format allows the customer to evaluate and purchase comfortably from
his/her home through the websites using the Internet (Fig. 1.15). The products are delivered
after online payment.
-Telemarketing: Telemarketing (Fig. 1.16) is the communication with customers through
telephone, to promote products or services. The company executive contacts customers at a time
that is convenient to them. Most companies give their tollfree numbers for customers to contact
them. For example, banks selling credit cards, educational institutions seeking admissions.

Food Based Retailers – 4 Categories

After the launch of New Industrial Policy, 1991 the Indian economy has re-energized itself in terms of
capital invested and number of new ventures started. One such development that has become topic of
each debate and conferences is the organized food retailing. India is not only the country of ‘kirana’
stores but has a biggest population of working middle class. For every thirty families, there is a store –
no matter big or small, grocery or soft drink corner. But this trend is not to continue in the years to
come as big business houses like Reliance, Tesco, Walmart-Bharti, and Birla are opening shops
throughout the country. This would replace the traditional ‘kirana’ or department store.This already
has created fears in the mind of unorganized ‘kirana’ stores and small type shop keepers. Food stores
are becoming popular as even better quality goods (when compared to local stores) they are offering
in low cost under hygienic and attractive ambience outlets with dining arrangements.
Food stores in India are divided into four categories as under:
1. Convenience Store
2. Conventional Super Markets
3. Food Based Super Stores
4. Combination Store
Convenience Stores:
There are small retailers that offer a limited variety of merchandise at small scale but convenient
locations ranging from 2,000 – 3,000 sq. ft. These outlets /stores are modern versions of the
traditional ‘kirana’ stores. The future of this category is better as they enable shoppers to shop quickly
with a speedy checkout. The convenience stores are becoming popular in metro cities where generally
both husband and wife are employed and have no spare time to shop.
Secondly, convenience stores as per their name are located alongside busy roads, parking areas or at
petrol filling stations. In metros, one can find these outlets at railway stations, bus stands and near
residential areas. These stores usually have long shopping hours and are spreading near densely
populated colonies and residential societies. As compared to other types of stores like supermarket,
convenience stores usually charge higher prices.
2. Conventional Super Market:
A conventional supermarket is a departmentalized grocery store with a wide range of dairy products
and household items such as soft and hard drinks (wherever allowed to be sold), household cleaning
products, shampoos, soaps, clothes, medicines and plastic items. A supermarket offers a large retail
facility with huge range of merchandise under same roof at low prices by shrinking margins.
Supermarkets usually rely on high inventory turnover and built either near a residential area or on the
outskirt of the city.
Customers in supermarkets use ‘trolleys’ or ‘baskets’ for collecting their desired products and pay for
the same at the checkout counters (billing sections) near exits. Due to cost effective and consumer
savvy, conventional supermarkets are facing intense competition from traditional ‘kirana’ stores and
other types of food outlets.
Supermarket in India is one of the fast growing segments but so far there is no standard criterion that
makes a supermarket format. Even many traditional ‘kirana’ stores are refurbishing their shops/retail
outlets and advertising themselves as supermarkets. They use Every Day Low pricing (EDLP) selling
policy to build store traffic and provide a one-stop shopping.
3. Food Based Superstores:
In India, food retailing is the buzzword today. There is a large variety of food stores operating in food
retailing. This is not surprising as the Indian middle class income is increasing rapidly and therefore
they prefer to shop at supermarkets for its hygienic environment, convenience and attractive
ambience.
This ‘value’ and ‘feel good’ perspective offered by food retailers stimulate customers to try new and
different things. Though food retailing in India is becoming popular very fast but with a population of
more than one billion and a middle class population of over four hundred millions, food retailing is
still in its nascent stage. With the entry of corporate houses like Bharti, Walmart, Reliance Fresh,
Vishal Mega Mart, Aditya Birla group, and the existing Big Bazaar, Spencer, and Food Mart outlets
are making foray in the so called untapped market. The pace with which these food companies are
spreading throughout the country, the net of the organized retail outlets is going to reach soon the
small populations towns of one lacs to over five lacs after covering all small, medium and big cities.
Superstores are usually large supermarkets that have space area ranges from 20,000 to 50,000 sq. ft.
These stores as the very name implies, sell grocery items and offer customers the ability to buy fill-in
general merchandise.
Features:
(i) Offer one-stop shopping experience
(ii) Stimulate impulse purchase
(iii) The concept of EDLP (Everyday Low Price) is usually followed
(iv) Large, low margin and self service stores
Advantage:
It is easy to convert super markets into food-based stores than combination stores.
4. Combination Stores/Super Centres:
Combination stores basically are food-based retailers that combine their supermarket and general
merchandise sales at one place. While in India, there is as such no standardization on the parameters
of what makes a supermarket, is one of the fastest growing retail formats.
In a combination store, general merchandise sales usually accounts for 30-40% of total store sales. As
economies of scale are higher in a combination store, therefore, these stores offer low pricing policy
and make profits on account of impulse sales. Combination stores provide one-stop shopping
experience, and therefore, customers do not consider distance factor to come to these stores.
Non-food retailing is the selling of goods and services outside the confines of a retail facility. It is a
generic term describing retailing taking place outside of shops and stores (that is, off the premises of
fixed retail locations and of markets stands). The non-store distribution channel can be divided
into direct selling (off-premises sales) and distance selling, the latter including all forms of electronic
commerce. Distance selling includes mail order, catalogue sales, telephone solicitations and
automated vending. Electronic commerce includes online shopping, internet trading platforms, travel
portals, global distribution systems and teleshopping. Direct selling includes party sales and all forms
of selling in consumers' homes and offices, including even garage sales.
Non-store retailing, sometimes also labelled home shopping, is consistently achieving double-digit
growth, and slowly taking a bigger share of overall retailing. In the first quarter of 2014 online sales
in the US represented over 6% of all sales. [1] However, in product niches such as travel, books, and
media, the share is significantly higher. As of March 2014, 19.5% of all book sales made by Amazon
are for their Kindle e-book reader.[2] Fashion and lifestyle brands have entered the non-store retailing
space including Everlane, Dollar Shave Club and Tieks. According to Eurostat, 38% of European
consumers consider the internet as the most important source of information about travel [3] and 42%
of consumers purchased travel services over the internet in 2008. [4]
The non-store distribution channel is marked by low entry thresholds. Compared to store retailing that
requires a retail outlet, inventory, cash flow to hire staff and advertising, non-store retail start-ups
usually have to invest little to reach out to potential buyers of the goods and services they offer. Non-
store retailing is therefore not only used by established brick and mortar business retailers who
develop an online bricks and clicks business model presence, but also by the individual pure play,
often him- or herself a consumer, to create an online store or to run sales parties. The rise of social
media helps to connect sellers to potential buyers.

Factors Affecting Buying Decision of the Customers at the Store

There are several factors which affect the buying decision of the customers. Let us go through them
one by one:
1. Store Display and Presentation of Products
The store display plays an important role in influencing the buying decision of the customers. It
is the display of the store which attracts passing individuals into the store. The store must have an
attractive display to entice the customers. Shopping may be the last priority for an individual but a
creative display encourages him to spend on shopping.
 A retailer must intelligently display the latest trends on mannequins to prompt the
customers to buy the same.
 Make sure the products are kept on their respective racks. The merchandise should
not fall off the shelves.
 Since most of us are right handed; we tend to go towards the right side of the store,
the moment we step inside. The retailer must thus display expensive and unique
merchandise on the right side of the store.
 Remove old stock from the shelves.
 2. Ambience of the Store
The store ambience plays an important role in attracting new customers and retaining existing
ones.
 A customer would never purchase anything from a store which is not clean. Foul
smell irritates individuals and thus they leave in no time.
 Play soulful music for a positive effect on the customers.
 The store should be well lit and ventilated for the customers to enjoy their shopping.
3. Customer Treatment
Warm customer treatment is an effective way to pull the customers into the store. It is essential for the
retailers to treat the customers like kings to expect loyalty from them.
 Understand your customers well. Try to find out what they expect from the store.
 The sales representative must greet the customers with a warm smile. It makes a
difference.
 Assist them in their shopping.
 Never oversell.
 The retailer must never lie to the customers. If something is not looking good on
them, be honest and give them a correct feedback.
 If a customer comes for an exchange, don’t be rude; instead help him with an
alternative.
4. Store Design and Layout
A customer would never prefer shopping from a store which gives a cluttered look.
 There should be ample space in the store for the customers to move and shop freely.
 Put stickers and labels (size, colour, FS (Full sleeves), HS (Half Sleeves) and so on)
on the shelves and racks.
 Don’t stock unnecessary furniture and fixtures in the store.
 Classify the complete range of merchandise into small groups (categories) comprising
of similar and related products. Categories help the customers to locate the products
easily.
 A store must have a trial (change) room.
 Individuals avoid places where there is a parking hassle. The store should have an
adequate parking space.
5. Other Factors
 Discounts and rebates influence the customers to shop more. A customer might not
need a product, but a discount will encourage him to purchase the same as he would
now get it at a lower price.
 Promotional schemes like free gifts also affect the buying decision of the customers.
A Free T Shirt with a pair of jeans would definitely prompt the customers to shop
more.
  Customers also indulge in shopping to redeem their coupons and avail discounts.

why do people shops

There are various reasons and vary person to person:

 Usually, a person shops whenever there is a need of something. Or, if a thing catches his eye,
he purchases it, with the thought of using it in the future.
 Some people buy expensive goods and gadgets just because it gives them a good feeling and
makes them feel rich.
 People having low self esteem shop because it gives an impression that they are doing well in
life.
 Also, shopping gives a calming influence to some people. After a hectic day, it distracts the
person from negative feeling.
 Some people buy anything given at a huge discount, believing they’ll never get such a deal.

Consumer Decision Making Process

Consumer decision making process involves the consumers to identify their needs, gather
information, evaluate alternatives and then make their buying decision. The consumer behavior may
be determined by economic and psychological factors and are influenced by environmental factors
like social and cultural values.
The consumer decision making behavior is a complex procedure and involves everything starting
from problem recognition to post-purchase activities. Every consumer has different needs in their
daily lives and these are those needs which make than to make different decisions. Decisions can be
complex, comparing, evaluating, selecting as well as purchasing from a variety of products depending
upon the opinion of a consumer over a particular product. This renders understanding and realizing
the basic problem of the consumer decision making process for marketers to make their products and
services different from others in the marketplace.
5 Stages of Consumer Decision Making Process
The buying behavior model is one method used by marketers for identifying and tracing the decision
making process of a customer from the start to the end. The process is categorized into 5 different
stages which are explained as follows:
Need Recognition
Need recognition occurs when a consumer exactly determines their needs. Consumers may feel like
they are missing out something and needs to address this issue so as to fill in the gap. When
businesses are able to determine when their target market starts developing these needs or wants, they
can avail the ideal opportunity to advertise their brands. An example who buys water or cold drink
identifies their need as thirst. Here; however, searching for information and evaluating alternatives is
missing. These consumer decision making steps are considered to be important when an expensive
brand is under buying consideration such as cars, laptops, mobile phones, etc.
Information Search
The information search stage in the buyer decision process tends to change continually as consumers
require obtaining more and more information about products which can satisfy their needs.
Information can also be obtained through recommendations from people having previous experiences
with products. At this level, consumers tend to consider risk management and prepare a list of the
features of a particular brand. This is done so because most people do not want to regret their buying
decision. Information for products and services can be obtained through several sources like:
 Commercial sources: advertisements, promotional campaigns, sales people or packaging of a
particular product.
 Personal sources: The needs are discussed with family and friends who provided product
recommendations.
 Public sources: Radio, newspaper and magazines.
 Experiential sources: The own experience of a customer of using a particular brand.
Evaluation of Alternatives
This step involves evaluating different alternatives that are available in the market along with the
product lifecycle. Once it has been determined by the customer what can satisfy their need, they will
start seeking out the best option available. This evaluation can be based upon different factors like
quality, price or any other factor which are important for customers. They may compare prices or read
reviews and then select a product which satisfies their parameters the most.
Purchase Decision
When all the above stages have been passed, the customer has now finally decided to make a
purchasing decision. At this stage, the consumer has evaluated all facts and has arrived at a logical
conclusion which is either based upon the influence from marketing campaigns or upon emotional
connections or personal experiences or a combination of both.
Post Purchase Behavior
The purchase of the product is followed by post-purchase evaluation which refers to analyzing as to
whether the product was useful for the consumer or not. If the product has matched the expectations
of the customer, they will serve as a brand ambassador who can influence other potential consumers
which will increase the customer base of that particular brand. The same is true for negative
experiences; however, it can halt the journey of potential customers towards the product.
Definition of Online Buying Behaviour
Behavior is the apparent, noticeable response in a given situation with respect to a given target. Use
of the Internet for retail shopping has expanded immensely in recent years and has had a profound
influence on the shopping process for many consumers. Online buying behaviour is a type of
behaviour which is exhibited by customers while browsing websites of an e-tailer in order to search,
select and purchase goods and services, in order to fulfill their needs and wants. It’s basically a
behaviour which is reflected by the purchaser during the process of buying through the internet.
While shopping online, every customer desires convenience, speed, price benefits, product
comparison facility etc. It is not that these features are not available in traditional shopping methods.
But due to changes in life style, the notions of these features have changed among the buyers. Now
individuals are finding it difficult to shop from traditional channels due to their changed lifestyle. As a
result of all these issues along with the technological advancements, a new mode of shopping i.e
online shopping also called as electronic shopping has emerged. The Internet, in the field of shopping,
has brought sea changes in the mindset of customers with reference to convenience, speed, price,
product information and services associated with online shopping. The internet has provided
marketers with a completely new way to create value for customers and build relationships with them'
in the form of online shopping. Online shopping is the process whereby consumers directly, without
an intermediary service, buy goods or services from a seller in real-time over the Internet. One way of
doing electronic commerce is online shopping. In online shopping, electronically the sale or purchase
of transaction takes place. It is also referred to as e-shopping where’re’ stands for Electronic
Shopping. Electronic shopping is defined as a computer activity/exchange performed by a consumer,
via a computer-based interface, where the consumer's computer is connected to and can interact with,
a retailer's digital storefront to purchase the products or services over the internet.

An e-shop allows the customer to browse entire range of product or service offered by e-vendor, view
pictures of the products, along with the complete description of the product specifications, including
features and prices. On online stores with the help of “search” features e-shoppers can easily search
out specific models, brands or items 2 . An online shop is also referred to as , e-shop, e-store, internet
shop, webshop, webstore, online store, or virtual store. In present time almost all the big retailers are
now offering their online shops. These are also known as e-tailers and their online retail shops are
sometimes known as e-tail.