Retailing practice of accumulation of various marketing practices directed towards giving the best merchandise available and it consists of the sale of goods or merchandise, from a fixed location such as a department store or kiosk, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, a retailer buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy.
Shops may be on residential streets, or in shopping streets with few or no houses, or in a shopping center or mall, but mostly found in the central business district. Shopping streets may or may not be for pedestrians only. Sometimes a shopping street has a partial or full roof to protect customers from precipitation. Retailers often provided boardwalks in front of their stores to protect customers from the mud. Online retailing, also known as e-commerce is the latest form of non-shop retailing (cf. mail order).Shopping generally refers to the act of buying products. Sometimes this is done to obtain necessities such as food and clothing; sometimes it is done as a recreational activity. Recreational shopping often involves window shopping (just looking, not buying) and browsing and does not always result in a purchase.Most retailers have employees learn facing; a hyperreal tool used to create the look of a perfectly-stocked store (even when it's not).
Concerns of Retailers
Retailers are faced with many issues as they attempt to be successful. The key issues include:
Customer Satisfaction:Retailers know that satisfied customers are loyal customers. Consequently, retailers must develop strategies intended to build relationships that result in customers returning to make more purchases.
Ability to Acquire the Right Products:A customer will only be satisfied if they can purchase the right products to satisfy their needs. Since a large percentage of retailers do not manufacture their own products, they must seek suppliers who will supply products demanded by customers. Thus, an important objective for retailers is to identify the products customers will demand and negotiate with suppliers to obtain these products.
Product Presentation:Once obtained products must be presented or merchandised to customers in a way that generates interest. Retail merchandising often requires hiring creative people who understand and can relate to the market.
Traffic Building:Like any marketer, retailers must use promotional methods to build customer interest. For retailers a key measure of interest is the number of people visiting a retail location or website. Building “traffic” is accomplished with a variety of promotional techniques such as advertising, including local newspapers or Internet, and specialized promotional activities, such as coupons.
Layout:For store-based retailers a store’s physical layout is an important component in creating a retail experience that will attract customers. The physical layout is more than just deciding in what part of the store to locate products. For many retailers designing the right shopping atmosphere (e.g., objects, light, sound) can add to the appeal of a store. Layout is also important in the online world where site navigation and usability may be deciding factors in whether of a retail website is successful.
Location: Where to physically locate a retail store may help or hinder store traffic. Well placed stores with high visibility and easy access, while possibly commanding higher land usage fees, may hold significantly more value than lower cost sites that yield less traffic. Understanding the trade-off between costs and benefits of locations is an important retail decision.
Keeping Pace With Technology:Technology has invaded all areas of retailing including customer knowledge (e.g., customer relationship management software), product movement (e.g., use of RFID tags for tracking), point-of-purchase (e.g., scanners, kiosks, self-serve checkout), web technologies (e.g., online shopping carts, purchase recommendations) and many more.
Retailing in India
Retailing in India is in the process of getting more organised and professional. Large retail formats - hypermarkets, warehouse clubs, and discount superstores - are set to take over the retail scene. Medium-scale retail formats such as department stores and supermarket chains have already made an appearance and are slowly changing the face of retailing in the country.
The retail industry is large. Retail is the country’s largest source of employment after agriculture, has the deepest penetration into rural India , and generates more than 10% of India ’s GDP With close to 12 million retail outlets, India has the highest retail outlet density in the world.
Market liberalization and an increasingly assertive consumer population is now sowing the seeds of a retail transformation that has started bringing in bigger Indian and multinational operators on to the scene. With the advent of these players, the Indian consumer is on his way to become the King of the market place as what his counterparts in the more developed countries of the world have been for decades. Consumers have started demanding a better shopping experience as global media exposes them to different lifestyles. Consumer research shows that households in metropolitan cities are gravitating towards supermarkets and other modern retail channels.
The Indian retail sector is worth roughly $292 Billion, and roughly 2% of this is classified as organized retail. Of the 12 million stores in India almost 95% are less than 500 sq. ft in area. The retailing sector in India is expected to grow at roughly 8.3% during the next 5 years, with organized retailing growing at rates anywhere between 24 to 49%.
India is among the top five emerging retail market in the world and is growing at a scorching pace. The key drivers of India ’s retail industry are a number of structural - social and demographic and macro-economic factors. These are:
Rising income levels
A large segment of young population
Nuclear family structure
A rapidly expanding middle class
Increasing number of working women
Growing urbanization increasing media penetration and
Exposure to international brands
Growing consumer acceptance of modern retail formats, changing lifestyles of the Indian households resulting from these factors have raised aspiration levels of population, resulting in demand for better shopping experience and larger variety of goods.
There has been vigorous opposition to foreign direct investment (FDI) in retailing from small traders who fear that foreign retailing companies would take away their business, lead to the closure of many small trading businesses and result in considerable unemployment. Given the political clout of the small trading community, because of their enormous numbers, the government has barred FDI in retailing since 1997. Hence, at present, foreign retailers can only enter the retailing sector through franchising agreements.
There are a large variety of retailers operating in the food retailing sector. This is not surprising considering the enormous size of the market for food. Traditional types of retailers, who operate small single outlet businesses mainly using family labour, dominate this sector. In comparison, supermarkets account for a minuscule proportion of food sales. This is because of the strong competitive strengths that traditional retailers possess. These include low operating costs and overheads, low margins, proximity to customers, long opening hours, and additional services to customers (such as home delivery). Nevertheless, supermarket sales expanded at a much higher rate than other retailers. This is because greater numbers of higher income Indians prefer to shop at supermarkets because of convenience, higher standards of hygiene and the attractive ambience.
Health and Beauty Products Retailers
With growth in incomes, Indians have been spending more on health and beauty products. As in the case of other retailing sectors, small single-outlet retailers also dominate sales of health and beauty products. However, in recent years, a couple of retail chains specialising in health & beauty products have sprung up. At present, they account for only a tiny share of sales of these products. However, as Indians spend more on such products in future, their business will undoubtedly expand substantially. There is also scope for entry of more such chains.
Clothing and Footwear Retailers
Numerous clothing and footwear shops are to be found in Indian cities and towns, especially in shopping centres and markets. These are a mix of traditional and modern stores. Traditional outlets are small and cramped with little emphasis on alluring displays. They basically stock a limited range of cheap and popular items. In contrast, modern clothing and footwear stores are spacious with sample products attractively displayed in windows, sometimes with mannequins. Just as in the case of food retailing, there are also a huge number of retailers selling clothing and footwear in makeshift stalls or on footpaths. Because of their rock-bottom prices, which are much lower than prices of branded products, they attract a large number of customers.
Home Furniture and Household Goods Retailers
The home furniture and household goods retailing sector in India is dominated by small retailers. Despite the large size of this market, very few modern and large retailers have established specialised stores for these products. However, there is considerable potential for the entry or expansion of specialised retail chains and it is likely that this will happen during the next few years.
Durable Goods Retailers
The entry of a large number of foreign consumer durable companies into the Indian market during the 1990s after the government liberalised its foreign investment and import policies transformed this sector dramatically. A much larger variety of consumer electronic items and household appliances became available to the Indian customer. Competition among companies to sell their brands provided a strong impetus to the growth for retailers operating in this sector.
Leisure and Personal Goods Retailers
Rising household incomes due to economic growth spurred consumer expenditure on leisure and personal goods in India. There are specialised retailers for each category of products in this sector. A few retail chains also emerged particularly in the retailing of books and music products. Another key feature of this sector is the popularity of franchising arrangements between established manufacturers and retailers. Alternative selling channels
Sales through most alternative selling channels are tiny or non-existent. The only exception was direct selling, which grew rapidly over the review period. The main reason for this was that direct selling companies could easily attract a huge number of "distributors", who constitute the key element for the success of any direct selling company. Many of these are unemployed Indian housewives who welcomed this opportunity to earn additional income for their households. The low start-up costs meant that they could easily start this business.
Forecast Total Retail Sales
Retail sales (in real terms) are predicted to rise more rapidly than consumer expenditure during 2003-2008. The forecast growth in real retail sales during 2003-2008 is 8.3% per year (compared with 7.1% for consumer expenditure). Inevitably, modernisation of the Indian retail sector will be reflected in rapid growth in sales of supermarkets, department stores and hypermarkets. This is because of the growing preference of the affluent and upper middle classes for shopping at these types of retail stores, given the conveniences they offer such as shopping ambience, variety and a single-point source for purchases. Hence, sales from these large format stores are predicted to expand at growth rates ranging from 24% to 49% per year during 2003-2008. However, such rapid growth is from a small base. Hence, they will continue to account for only a small share of total retail sales in 2008.