2.Retail Presentation

8/7/2019 2.Retail Presentation

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Percentage of Organized Retail

85 81

55

40 3630

20 20

4.6

0

20

40

60

80

100

U S A

T a i w

a n

M a l a y

s i a

T h a i l a

n d

B r a

z i l

I n d o n e

s i a

P o l a

n d

C h i n a

I n d

i a



Highly evolved US market has Wal-Mart taking only 8%market share

UK market has Tesco with only 13.4% market share

China market still does not have a clear leader

USA = US$ 2,350 Bn UK = US$ 406 Bn China = US$ 313 Bn



Total retail contribution in World GDP is 27%

Organized retail in US accounts for 22% of GDP

Share of organized retail in developing markets ranges

between 20% to 55%

Retail markets are organizing faster

In developed markets, dominant player (Wal-Mart in US, Tesco

in UK) has a significantly higher share; enjoying up to 8-13%market share

Departmental stores growth is declining while ‘All-under-one-

roof’ & ‘neighborhood’ convenience is gaining strength



Indian Retail - dominated by unorganized sector

Approximately 2 million Mom and Pop Shops

Share of organized retail sector is only 4.6%

FDI in the retail sector not permitted to protect local

retailers (excepting for single brand & cash and carry

formats. In this FDI is 51%.)

Indian retail sector is one of the least concentrated in

the world.

The top five companies hold a combined market share

of less than 2%

India is third largest market in Asia and Oceania,

behind Japan and China.



In India, clothing retail accounts for 36% of organised retail business.

According to a report global apparel, accessories & luxuries market is likely togrow by 4.5% annually and Asia Pacific region is anticipated to acquireleadership position by 2011.

Apparel sector in India poses a lot of challenges to a marketer.

So far India’s share in world apparel trade has been insignificant (less than 3%).

World garment trade is estimated at around 195 Billion US$ annually.

The Biggest manufacturer & supplier is China producing over 50 billion $,

followed by Mexico which produces over 8 billion and followed by manycountries like India, Sri Lanka and Bangladesh, being the third place countriesmaking and exporting garments worth 5 - 6 billion $ annually.



Describes how new types of retailers enter themarket as low-status, low-margin, low-priceoperators;

As they meet with success, they gradually acquiremore sophisticated and elaborate facilities, and thusbecome vulnerable to new types of low-margin retailcompetitors who progress through the same patter.



Entry Phase-Low prices-Limited facilities-Limited service

Vulnerability Phase-High prices-Excellent facilities-Excellent service-Declining ROI

Trading-up Phase-Moderate to high prices-Elaborate facilities-Increase in skills



Wide Assortment

Wide Assortment

NarrowAssortment

Time



Describes how retail institutions evolvefrom outlets that offer wide

assortments to specialized stores andcontinue repeatedly through thepattern.



Describes four distinct stages that aretail institution progresses through:

Introduction

Growth

Maturity Decline



Begins with an aggressive, boldentrepreneur who is willing and able todevelop a different approach to retailing of

certain products.

During this stage profits are low, despite

increasing sales levels.



Sales and profits explode, validating theentrepreneur’s good idea.

New retailers enter the market and begin

to copy the retailers idea.

Late in this stage both market share and

profitability, approach their maximumlevels.



Market share stabilizes and profits decline because:

• managers use to managing simple small retailoutlets must now manage large complex firms,

• industry has over expanded, and

• competitive assaults by new retail

formats.



The once promising idea is no longerneeded in the marketplace.

As a result, market share and profitsfall.



Introduction

E-tailing(1990’s)Recyclers(2000’s)

GrowthFood Courts

(1980’s)Airport-basedretailers(1980’s)Supercenters (2000’s)

MaturityWarehouseclubs(1970’s)Department stores(1860’s)Supermarkets(1930’s)

Convenience stores(1960’s)

DeclineVariety

Stores(1890’s)Factoryoutlet malls(1970’s)Department

stores’

The Retail Life Cycle



A

retail unit could be owned by:

M

anufacturer (e.g., company owned retail outlets)

W

holesaler (e.g., Vastra outlet in Rajouri in New Delhi)

In

dependent retailer (Chanakya Sweet Shop near Hazratganj in Lucknow)

C

onsumer (consumer owned grocery stores in man y residential societies)

Co-operative society (e.g., Mother Dairy milk booths in Delhi)

G

overnment (e.g., Cottage Emporia)

O

wnership shared among franchiser and franchisee (e.g., Archies Gallery)



ClassificationClassificationof of

RetailersRetailers

ClassificationClassificationof of

RetailersRetailers

OwnershipOwnership

Operational StructureOperational Structure

Retail LocationRetail Location



Sole ProprietorshipSole Proprietorship

PartnershipPartnership

Joint venture

OwnershipOwnershipOwnershipOwnership

Limited Liability CompanyLimited Liability Company



Joint venture: –

• A joint venture is not well defined in the law.

• Unless incorporated or established as a firm as evidenced by a deed, joint ventures may be

taxed like association of persons, sometimes at maximum marginal rates.

• It acts like a general partnership, but is clearly for a limited period of time or a single project.

Limited liability Company (public and private):-

• The Limited Liability Company (LLC) is a relatively new type of hybrid business structure that

is now permissible in most states.

•

The owners are members, and the duration of the LLC is usually determined when theorganization papers are filed.



are classified on the basis of their operational andorganizational structure

Operational structure defines the key strategicdecision of retail entity,

› whether to hire employees and manage the distributed salesfunction internally or

› to reach customers though franchised outlets owned and

operated by local entrepreneurs.



• Independent retail unit: –

• The total number of retailers in India is estimated to be over 5

million in 2003.

• About 78% of these are small family businesses utilizing only

household labour.

• An independent retailer owns one retail unit.

• Retail Chain: –

• A chain retailer operates multiple outlets (store units) under

common ownership;

• it usually engages in some level of centralized (or coordinated)

purchasing and decision making.



• Franchising: –

• involves a contractual arrangement between a franchiser

(which may be a manufacturer, a wholesaler, or a servicesponsor) and a retail franchisee, which allows the franchisee to

conduct a given form of business under and establishments

name and according to a given pattern of business.

• Leased Department or Shop-in-shop:-

• It refers to department in a retail store that are rented to an

outside party.

• Usually this is done in case of department and specialty stores

and also at times, in discount stores.



Co-operative Outlets: –

› Co-operative outlets are generally owned andmanaged by co-operative societies.

› In this context the detailed example of Kendriya

Bhandar in India.



Retailers can locate their stores in anisolated place and attract thecustomers to the store on their ownstrength—such as a small grocery storeor paan shop in a colony, whichattracts the customers staying close by



Retailers in a free-standing location

Retailers in a Business-associated Location

Retailers in Specialized Markets

Airport Retailing:



• Retailers in a free-standing location: –

•

Retailers located at a site which is not connected to otherretailers depend entirely on their sore’s drawing power and

on the various promotional tools to attract customers.

•

This type of location has several advantages including nocompetition, low rent, better visibility from the road, easy

parking and lower property costs.



• Retailers in a Business-associated Location:-

• In this case, a retailer locates his store in a place where a group

o retail outlets, offering a variety of merchandise, work together

to attract customers to their retail area, and also compete

against each other for the same customers.



• Retailers in Specialized Markets: -

• in India-retailers who prefer specialized markets,

particularly traditional independent retailers or

chain stores.

• Most of the cities have specialized markets

famous for a particular product category. For

example, in Chennai, Godown Street is famous forclothes,



Large groups of prospective shoppers

Captive audience

Strong sales per square foot of retail space

Strong sales of gift and travel items

Difficulty in replenishment

Longer operating hours

Duty-free shopping possible.



Regardless of the particular type of retailer (such as a supermarket or adepartment store), retailers can be

categorized by› (a) Ownership,

› (b) Store strategy mix, and

› (c) Non store operations.



A retail business like any other type of business, can be owned by

› a sole proprietor,

› partners or

› a corporation

A majority of retail business in India are soleproprietorships and partnerships



Independent

Chain

Frachising

cooperative

Operates one outlet , offers personalized

service, a convenient location and closecustomer contact.

Roughly 98% of all the retail businesses in

India, are independents

retailing is easy, requires low investment

and little technical knowledge

high degree of competition

Most fail because of the ease of entry,

poor management skills and inadequate

resources



Owned Stores / Exclusive Brand Outlets

•Advantages

–direct medium of selling apparel

–high realization for the garment sold

–end-user feedback and knowledge of their

preferences

•Disadvantages –requires greater advertising expenditure

–greater fixed costs

•Some of the Players following this channel

»Provogue»Raymonds

»Madura Garments

»Arvind Brands

»Zodiac Clothing

»Century Textiles



Independent

Chain

Frachising

cooperative

It involves common ownership of multiple units

with centralized purchasing and decision making

have been successful, due to the opportunity totake advantage of “economies of scale” in

buying and selling goods

can maintain their prices, increasing their

margins, or they can cut prices and attractgreater sales volume

can also take advantage of computers and

information technology

Examples in India are :Shoppers stop; West side

and IOC



Independent

Chain

Frachising

cooperative

Is a contractual arrangement between a

“franchiser” (which may be a

manufacturer, wholesaler, or a service

sponsor) and a “franchisee” or

franchisees, which allows the latter to

conduct a certain form of business

under an established name and

according to a specific set of rules

In exchange for fees, royalties and a

share of the profits, the franchiser offers

assistance and very often supplies aswell



Independent

Chain

Frachising

Retailcooperative

Is a group of independent retailers, that have

combined their financial resources and their expertise in order to effectively control their

wholesaling needs

They share purchases, storage, shopping

facilities, advertising planning and other

functions.

The individual retailers retain their

independence, but agree on broad common

policies.



Conveniencestore

Conventional

supermarket Departmental stores

Speciality store

Combination store/Hyper market

store strategy mix, which is an integrated combination of hours, location, assortment,

service, advertising, and prices etc

Is generally a well situated,

food oriented store with

long operating house and a

limited number of items.



Convenience store

Conventionalsupermarket

Departmental stores

Speciality store

Combination store/Hyper market

a diversified store that sells

a broad range of food andnon food items

it typically carries small

some apparel items,



Convenience store


Departmental stores

Speciality store

Combination store/ Hyper

market

Usually sells a general line

of apparel for the family,household linens, home

furnishings and appliances.

Large format appareldepartment stores include

Pantaloon

Shoppers Stop and

Westside



Convenience store


Departmental stores Speciality store

Combination store/

Hyper market

:Is a special kind of combination

store which integrates an

economy super market with a

discount department store.

has an ambience which attractsthe family as whole.

Pantaloon Retail India Ltd.

(PRIL) through its hypermarket“Big Bazar”, offers products at

prices which are 25% – 30%

lower than the market price.



In Home Retailing Telesales/Telephone

Retailing

Catalog Retailing

Direct ResponseRetailing

Automatic Vending

Electronic Retailing/E-Tailing

customers do not go to a

store to buy

This type of retailing is

growing very fast

the ability to buy

merchandise not available

in local stores,

the increasing number of

women workers,

the presence of unskilled

retail sales persons



In Home Retailing

Telesales/TelephoneRetailing

Catalog Retailing


Automatic Vending


This involves contact

between the prospect

and the retailer over the

phone

A large number of mobile

phone service providersuse this method



In Home Retailing

Telesales/Telephone Retailing

Catalog Retailing


Automatic Vending

ElectronicRetailing/E-Tailing

basic attraction for shoppers is

convenience

retailers offers the merchandise in a

catalogue, which includes ordering

instructions and customer orders by

mail.

lover operating costs, lower rents,

smaller sales staff and absence of

shop lifting.



In Home Retailing


Catalog Retailing


Automatic Vending


is the ultimate in non

personal, non storeretailing

Products are sold directly

to customers/buyers frommachines



In Home Retailing


Catalog Retailing


Automatic Vending


retailers communicate with

customers and offer productsand services for sale, over the

internet

Amazon.com, E-bay .etc, aresome of the many e-tailers

operating today

Multi-Brands Outlets’ or Shopping Malls



pp g

•Organization sells apparels to multi-brand outlets, which in turn sell

them through large retail space

•MBO’s are located in prime locations of the various cities and towns

ensuring maximum reach

•MBO’s are chain of shopping malls having a presence in more thanone location

•Realization from this channel is lower than those earned by selling to

the retailers; as MBO’s keep

higher margins because their costs are higher

•Some of the major players in this channel of distribution:-

»Shopper’s Stop

»Pantaloon Retail

»Westside (Trent)

»Globus

»Pyramid Retail

»Reliance Retail



TC’s Lifestyle retailing business division established a chain of exclusive

specialty stores, in July 2000

Offering to the premium consumer with

› –Wills Classic – range of Formal Wear

»Launched in 2002, provides the consumers a distinct product offering› –Wills Clublife – range of Evening Wear & designer accessories

»Launched in 2003,

› –Wills Sport – range of Relaxed Wear

ITC launched its brand ‘John Player’ in December 2002

–With this brand the company offers a complete wardrobe of Casuals, Party, Work wear andDenims

–The brand is available across the country through a nation-wide network of exclusive storesand multi-brand outlets



Shopper’s stop

Business strategy

–Primarily catering to the Lifestyle Retailing segment through DepartmentalStores

•Offers a gamut of products – apparels, accessories, footwear, cosmetics,

music, books, leather products, furnishing etc.

–Ventured to the Value Retailing segment with inception of‘HYPERCITY’

–Apart from these stores, the company also has presence in Niche

Retailing format With the brands such as:

–Crossword – a lifestyle bookstore; these are run in 3 formats – ‘

Corner Store’, ‘Brand Stores’and ‘Flagship Stores’.

–MAC – it’s atie-up with a cosmetic major, Estee Lauder

–HomeStop – it’s a specialty store, caters exclusively to homefurnishings and furniture

–Mother Care - it’s a franchise agreement with a UK-based

Mothercare marketing baby clothes, toys, baby

care products and maternity clothes

Tata Trent ltd



Tata Trent ltd

Background

•established in 1998 as a part of Tata Group

•started operations by acquiring the UK-based Littlewoods

departmental stores in Bangalore

•the company owns a chain of department stores across the country & is also

increasing its foothold in the high volume hypermarket sector

•The company has initiated a new retail venture called ‘Infinity Retail Limited’

dealing primarily in electronic consumer durables

Westside stores –Primarily apparel stores comprising a mix of clothes, footwear, and

accessories for men, women and children

–Established its outlets in Mumbai, Pune, Bangalore, Hyderabad, Chennai,

New Delhi and Kolkata

–Primarily apparel stores comprising a mix of clothes, footwear, and accessories for

men women and children



men, women and children

–Established its outlets in Mumbai, Pune, Bangalore, Hyderabad, Chennai,

New Delhi and Kolkata

•Landmark

–Company acquired a 79 per cent stake in this Chennai basedbooks and music retail chain

–The chain has its presence in Bangalore, Mumbai, Vadodara and Chennai

•Star India Bazaar

–First store opened in Ahmedabad (Gujarat) with which company entered the Value

retailing

segment –Store offers wide range of products like staples, perishables, health and beauty

products

–The company is planning to open such stores in Mumbai and Bangalore as well

•Infinity Retail Limited

–The company has set up a new store ‘Croma’ which sells electronic consumer durables

–For this a sourcing agreement has been signed with the Australian retailer –

‘Woolworths‘

–Company plans to set up around 100 more such stores in comin



Murjani Group



Background:

• Founded in 1930, by Mr. B. K. Murjani, the group based its initial success on full

vertical integration in the apparel industry.

• In 1966, the group commenced its transition from manufacturing to designer

lifestyle brand development and marketing.

Strategy:

• The India strategy for Murjani, revolves around the creation of a unique Multi-

Brand Retail Platform, with world renowned, premier international brands.

• In the first phase, Murjani opened eight free standing Tommy Hilfiger stores,

across six cities

• In the second phase of its India strategy, in 2005, Murjani identified several major international brands, to add to its brand portfolio and secured exclusive, long term

rights to India, for 6 world renowned, premier brands: Gucci, Jimmy Choo, Calvin

Klein, French Connection, Tumi & Build A Bear



Shoppers’s stop

Background

Established in 1991 by the K. Raheja Group -a Public Limited Company

Principal Fascia – Shopper’s Stop, Crossword, HomeStop, Mother Care,

MAC

Retail sector activity – Departmental Stores, Specialty Stores (books, home

products, cosmetics, F&B, Baby Care)

–Business Area

–The store offers a wide variety of international and Indian brands

–Stocks private labels like Stop, Kashish, Vettorio Fratini, Elliza Donatein

–The store also offer concessionaire space to brands, whereby the counters

are arranged by the employees of the concessionaire

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