INTRODUCTION TO RETAIL

SMITU MALHOTRA

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 WHAT IS RETAIL?

• RETAIL – DERIVED FROM THE FRENCH WORD

“RETAILLIER”, WHICH MEANS TO BREAK BULK.

• RETAILING – A SET OF BUSINESS ACTIVITIES

THAT ADDS VALUE TO THE PRODUCTS AND
SERVICES SOLD TO CONSUMERS FOR THEIR
PERSONAL OR FAMILY USE.

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 FUNCTIONS

• PHYSICALLY DELIVER THE PRODUCT

• PRODUCT INFORMATION
• BULK BREAKING
• ASSORTMENT
• AFTER SALES SERVICE
• INFORMATION FLOW TO THE CO.

• AND NOW
• EXPERIENCE
• CONVENIENCE

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 The Marketing – Retail Equation

Manufacturer Manufacturer Manufacturer

Wholesaler

Retailer

Feedback
Retailer

Consumer Consumer Consumer

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 THE RISE OF THE RETAILER-THE POWER SHIFT

• PROXIMITY TO THE CUSTOMER

• TECHNOLOGY- BARCODE
• THE RISE OF CONSUMERISM
• INTRODUCTION OF THE PRIVATE LABEL

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 A typical retail Business: functions,
merchandise flow and stakeholders

Store Manager
Buyer Zonal /
Vendors Regional
Warehouses
Retail
Stores
Vendors Company DCs
Zonal /
Regional
Warehouses
Vendors Merchandiser
Retail
Stores
The movement of merchandise across the channel
Is regarded as the supply chain.
 MAIN RESOURCES AT THE DISPOSAL OF
THE RETAILER ?

• SPACE
• INVENTORY
• PEOPLE

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Strategic Management Tasks
Performed in a Retail Firm
Merchandise Management Tasks
Performed in a Retail Firm
 Store Management Tasks
Performed in a Retail Firm

Recruit Motivate
Prevent Shrinkage Maintain Facilities

Sell Merchandise Train Employees

Provide Services Take Inventory

Plan Schedules Hire Personnel

Evaluate Performance Display Merchandise

Administrative Management Tasks Performed
in a Retail Firm

Promote the Firm, its Merchandise and

its Services
Manage Human Resources
Distribute Merchandise
Establish Financial Control
Assignment of Responsibility for Tasks

• Strategic – Top Management, Board of

Directors
• Merchandise Management – Merchandise
Division
• Store Management – Stores Division
• Administrative – Corporate Specialists
 TOP 10 RETAILERS -- FORTUNE 500 list 2013

% change in the % change in

Revenue Profit
Fortune Rank Corporation revenue profit from
$ million $ million
from 2011 2011

Wal-Mart
1 Stores 469,162 5 16,999 8.3
40 CVS Caremark 123,133 14.3 3,877 12
59 Carrefour 105,996 -12.9 1,585 207.2
63 Tesco 104,425 0.6 197 -95.6
Costco
67 Wholesale 99,137 11.5 1,709 16.9
72 Kroger 96,751 7.1 1,497 148.6
87 Metro 85,768 -7.5 4 -99.6
106 Home Depot 74,754 6.2 4,535 16.8
113 Target 73,301 4.9 2,999 2.4
120 Walgreen 71,633 -0.8 2,127 -21.6

From the May 20, 2013 issue

Key players in the world of retail 13

 2018 FORTUNE 500 LIST

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Source: https://www.patentlyapple.com/patently-apple/2019/05/the-2018-fortune-500-list-published-today-ranks-apple-3.html
Here’s the top 10 with projected global retail sales for 2019:

1. Walmart US $517.7 billion

2. Amazon US $213.8 billion
3. Costco US $144.3 billion
4. Schwarz Group Germany $130.3 billion
5. Kroger US $124.3 billion
6. Walgreens Boots Alliance US $114 billion
7. Aldi Germany $109.5 billion
8. Home Depot US $108.9 billion
9. Carrefour France $101.1 billion
10. JD.com China $94.4 billion

https://www.producebluebook.com/2019/06/01/kantars-top-50-world-retailers-for-2019/
 Geographi
c Analysis

Source: https://www.thebalancesmb.com/worlds-largest-us-retail-chains-2892856
 •Seven U.S. retail chains have
been included in the list’s top 10
with four of the them leading in
the top four rankings.

•Walmart, Costco, and Kroger

remained the top three with
Walmart leading revenue at
$500.3 billion.

•Amazon jumped two spots to

move into fourth place with
revenue of $118.6 billion.

Source: https://www.thebalancesmb.com/worlds-largest-us-retail-chains-2892856
Indian Retail Sector:

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 Potential untapped market
15 Mn outlets in India, 96% of which are smaller than 500 sq ft

Indian retail density of 6% is highest in the world

100% 10%
20% 20%
30%
80% 40% 36%
55%

60% 81%
85%

40%

20%

0%
US Taiwan Malaysia Thailand Brazil Indonesia Poland China India

Traditional Channel Modern Channel

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 COMPETITIVE LANDSCAPE IN INDIAN RETAIL SECTOR- 2017-18

Source: https://www.ibef.org/download/Retail-Report-2018.pdf
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 Organized retail definition

• The Parliamentary Committee Report defines organized retail

as,
• -- “Organized retailing refers to trading activities
undertaken by licensed traders, that is, those who are
registered for sales tax, income tax, etc. These include
corporate backed hypermarkets and retail chains, and also the
privately owned large retail businesses. Unorganized retailing,
on the other hand, refers to the traditional formats of low-cost
retailing, for example, the local kirana shops, owner operated
general stores, paan/beedi shops, convenience stores, hand
cart, pavement vendors, etc.” (Page 1-2)

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 Organized retail definition

• While a regulatory framework is certainly desirable, the first

two recommendations are somewhat problematic. The first
problem with the Standing Committee Report is the
definition of organized retail. The ICRIER survey defines
organized retail as follows,
• - “Organized retail or modern retail is usually chain
stores, all owned or franchised by a central entity, or a single
store that is larger than some cut-off point. The relative
uniformity and standardization of retailing is the key attribute
of modern retail. The size of each unit can be small so that a
chain of convenience stores is modern retail. A single large
department store is also modern retail.”

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 Riding the robust e-commerce growth wave, the e-retail market is expected to rise
from $5 billion in 2015 to over $130 billion by 2025.

Source: https://www.thehindu.com/business/Economy/new-age-indians-to-spur-retail-market-to-12-trillion-by-2025/article7211132.ece
Indian Retail Market Size – Organised Vs Unorganised

Unorganised Kirana Stores Control 90% of the Indian Retail Market

Source: https://marketinglessons.in/indian-retail-market-size-organised-unorganised/
 NEW GOODS AND SERVICE TAX (GST) WOULD
SIMPLIFY TAX STRUCTURE
▪ Introduction of Goods and Service Tax ▪ Elimination of tax cascading is expected
(GST) as a unified tax regime would to lower input costs and improve
lead to a re-evaluation of procurement profitability
and distribution arrangements ▪ Application of tax at all points of supply
▪ Removal of excise duty on products chain is likely to require adjustments to
would result in cash flow improvements profit margins, especially for distributors
and retailers

Goods and
Service Tax
(GST)
▪ Tax refunds on goods purchased for ▪ Changes need to be made to
resale implies a significant reduction in accounting and IT systems in order to
the inventory cost of distribution record transactions in line with GST
requirements
▪ Distributors are also expected to
experience cash flow from collection of ▪ Appropriate measures need to be taken
GST in their sales, before remitting it to to ensure smooth transition to the GST
the government at the end of the tax- regime through employee training,
filing period compliance under GST, customer
education and inventory credit tracking

Source: Aranca Research

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Source: https://www.ibef.org/industry/retail-india/infographic
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Retail Ecommerce sales Worldwide

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Source: https://www.emarketer.com/content/global-ecommerce-2019
RISING PROMINENCE OF ONLINE RETAIL
▪ Online retail business is the next generation format which has Revenues of the Indian E-commerce industry (US$ billion)
high potential for growth in the near future. After conquering
140
physical stores, retailers are now foraying into the domain of e-
retailing 120
100
▪ With growth in the e-commerce industry, online retail is
80
estimated to reach US$ 60 billion by 2020. 120
60
▪ The government plans to allow 100 per cent FDI in e-
40
commerce, under the arrangement that the products sold must be 22 30
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manufactured in India to gain from the liberalised regime

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2015

2016
0

2020 F
▪ In 2016, online retail industry of the country registered a growth
of 12 per cent, over the previous year, with the revenue reaching
US$ 14.5 billion.
▪ The key drivers of online retail are a young population aided by Online retail in India (US$ billion)
easier access to credit and payment options, increasing internet
penetration and speed, 24-hour accessibility and convenient and 70
secured transactions 60
▪ Online retailers continue promotional prices in the market, 50
offering a significant boost to e-retailing in consumer durable 40
60
sector 30
▪ Options like cash-on-delivery and manufacturers’ warranty add 20
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fuel to this rage. Cash-on-delivery is the most preferred payment 10
option with over 30 per cent of buyers opting for it in India

2015

2016

2020 E
0
▪ The computer peripherals, cameras, mobiles and lifestyle
segments account for a majority of total purchases

Source: MasterCard Worldwide Insights 4Q 2010, PWC e commerce in India report, ASSOCHAM, UN Report 'The power of 1.8 billion'
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Source: https://wearesocial.com/blog/2020/01/digital-2020-3-8-billion-people-use-social-media
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Source: https://dazeinfo.com/2015/01/07/retail-ecommerce-sales-in-india-growth-2014-2018-report/
Retailing-Two Career Paths

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