MBA III SEMESTER (MBA MM-01) DR. TABASSUM ALI RETAIL MANAGEMENT MBA III SEMESTER (MBA MM-01) DR. TABASSUM ALI

Introduction to Retailing Retailing consists of the activities involved in selling directly to the ultimate consumers for personal, non-business use. Retail consists of the sale of physical goods or merchandise from a fixed location, such as a departmental store or by mail, in small or individual lots for direct consumption by the purchaser. In the supply chain, retail is at the final stage of movement of goods to the consumers. Retail establishments are often called Shops or Stores. Generally, retailing follows a B2C business format.

Features of Retailing Selling to ultimate consumers Selling in small quantities Selling different varieties of goods Personal contact with the customers Shop display and assortment Providing information Provide services to the customers Last link of the distribution network

Who is a Retailer? A Retailer is a merchant, an agent or a business enterprise, whose main business is selling directly to the ultimate consumers for non- business use. The term Retailer is also applied where a service provider caters to the needs of a large number of individuals, such as a public utility like electric power or telecommunication services. To be classified as a retailer, a firm’s retail sales must equal or exceed 50 percent of its total revenues. Retailers are the final business in a distribution channel that links manufacturers to consumers. Since the retailers are directly selling to the final consumers, their success depends on the consumer satisfaction.

Activities performed by a Retailer Buying and assembling goods from various sources Stocking goods for ready supply to buyers Undertaking physical movement of goods Grading, i.e. arranging the goods in steps or series Risk-trading, i.e. facing the possibility of loss Selling to the ultimate consumers Providing services to the customers such as home delivery, after sales services etc. Extending credit facility to the customers Creating demand by window display

Organized vs. Unorganized Retailing Organized Retailing refers to the trading activities undertaken by licensed retailers who register themselves for sales tax, income tax, etc. Organized retailing means running a business in an organized and scientific manner. In organized retail sector, the business unit are generally retail chains owned by big corporate giants The capital requirement is very high and does not enjoy perpetual succession. The size of the retail outlet is generally large and stores layout and design are very attractive and comfortable to the customers. The various forms of organized retailing are Departmental Stores, Supermarkets, Hypermarkets, Speciality Chains etc.

Organized vs. Unorganized Retailing Unorganized retail sector is the one where the retail businesses are not registered with the government the employment terms are not fixed and regular. Unorganized retailing is characterized by poor infrastructure, inefficient processes, lack of modern technology, inadequate funding and absence of skilled manpower. This sector is characterized by small and scattered units which sell products or services out of a fixed or mobile location. In unorganized retailing, the capital requirement is very low and the business enjoys perpetual succession. Small retailers consisting of the local kirana shops (mom and pop stores) owner-manned general stores, chemists, footwear shops, apparel shops, etc. together make up the unorganized retail sector.

Place of Retailing in Marketing Mix It is very important for the marketer to ensure that the product reaches its final consumers at the right time. Deciding where and how the products will reach its consumers is a part of the PLACE STRATEGY of the marketer, since retailers are a part of the distribution channel for the product. Retailers are a part of the Place Strategy

Role of a Retailer How Retailers Create Value? Retailers undertake important functions that increase the value of the products and services they sell to the consumers and facilitate the distribution of those products and services for the manufacturers by: Providing an assortment of products and services Breaking bulk Holding inventory Providing services

Social and Economic Significance of Retailing Offer variety of goods and services to the customers Act as a link between the manufacturer and the customer Provide support to businesses Undertake product promotion Create demand for products in the market Provide employment opportunities Act as an economic indicator of consumers’ spending Undertake socially responsible marketing

Retailing: An Emerging Sector in India The India Retail Industry is the largest among all the industries, contributing about 10 per cent to country’s GDP and about 8 per cent to the employment. In India, the unorganized sector holds the larger share of the retail market as compared to the organized retail sector, with the unorganized and fragmented retail stores holding about 95-96 percent share of the total retail industry. The Retail Sector in India is going through the phase of tremendous transformation, with considerable growth in the organized retail sector in recent years. India’s retail market is expected to grow at a Compound Annual Growth Rate (CAGR) of 10 per cent from US$ 641 billion in 2016 to US$ 1.6 trillion by 2026. The overall retail market is expected to grow at 12 percent per annum. India’s e-commerce market is expected to reach US$ 700 billion by 2020. The Online retail is expected to be at par with the physical stores in the next five years.* *India Brand equity Foundation Report, September, 2017.

Drivers of Organized Retail Sector Growth in India Social changes with rapid economic growth like fast modernization, change in family structure, change in lifestyle, increased urbanization, growing consumer awareness etc. Increase in per capita income which, in turn, has increased the household consumption. changes in consumption patterns and availability of low-cost consumer credit. Improvements in infrastructure, technology intervention and enhanced availability of retail space. Entry of multinationals through joint ventures and franchising, post Liberalisation and allowance of 51 percent FDI in multi-brand retailing. Fast emergence of the rural market in India as the rural consumers are becoming quality conscious.