Services Chap 11 RETAILING

8/14/2019 Services Chap 11 RETAILING

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CHAPTER11

RETAILING IN INDIA AND AROUND

THE WORLD

Presented By:

Khushboo Bharati

Lawi Anupam

Mishal Kr. Jaiswal

Pushpdev RaiGITAM INSTITUTE OF INTERNATIONAK

BUSINESSVISAKHAPATNAM


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SKILLS NEEDED FOR ORGANISED

RETAILING

Deciding on stock levels

Deciding on product mix

Deciding on brand mix

Human relations

Customer and employee management

Dealing with regulatory authorities and cost control

Merchandising and supply chain management

Customer service


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RETAIL SECTOR IN INDIASource: IBFE Indian Retail Sector, April 2009.

5th largest retail destination

Ranked 2nd in a GRDI

Estimated to grow from US $ 511 billion

in 2008 to US $ 833 billion in 2013

Retail Industry - CAGR 10 %

Organized Retail - CAGR 40 %

Employs over 8% of workforce

Contributing to over 10% of the country'sGDP

Thoroughly unorganized - 95 %

Organized Retail - 14 to 18 % by 2015

Concept of discount stores catching on

Retail Sales in India


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WeeklyMarketsVillage FairsMelas

ConvenienceStoresMom andhawkers,grocers, Pop /Kiranas

PDS OutletsKhadi StoresCooperatives

Exclusive BrandOutletsHyper/SuperMarketsDepartment StoresShopping Malls

TraditionalReach

GovernmentSupported

Historic/RuralReach

Modern Formats/International

EV LUTI N F INDIANRETAIL

Source ofEntertainmen

t

NeighborhoodStores/Convenie

nce

Availability/Low Costs /Distribution

ShoppingExperience/Efficie

ncy


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MODERNISATION IN INDIAN RETAILING

Experimentation with formats

Store design

Emergence of discount stores

Unorganized retailing is getting organized

RETAIL DEVELOPMENT IN NICs

THAILAND

GREECE

BRAZIL


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Factors Underlying Modernization in Retailing

1. Economic development

2. Improvements in civic situation

3. Changes in consumer needs, attitudes and behaviour

4. Changes in government policies

5. Increased investment in retailing

6. Rise in power of organised retail


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Small is Beautiful : The Case of the

Bookstore that Shrank

Crossword Size Decreased from 5000-10000 sq.ft to

300-1000 sq.ft.

Innovative strategies :

Introduced value-added services like home delivery, with Dial

a-book, Fax-a-book and Email-a-book programmes.

Pioneered the concept of an in-house cafe.

Organises Innovative events

Offers a platform to literary-minded people.

First of the retail bookstores to invest in an ERP.


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Barista Coffee Aims at Number 2 Slot in World

Aims to be the no. 2 retail globally over the next decade.

Strategies implemented :

eDynamic - a Web Solutions partner & expert that had created

a scalable Web Strategy for them.

Effective Supply Chain :

- Use of strategic forecasting techniques.

- Complete SCM in Barista is SAP enabled which helps in

overcoming many complex challenges.


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Perspectives on Retailing from Kishore Biyani,

One of Indias Leading Retail Magnates

Hypermarket concept.

Dirt cheap prices.

FDI in retail :

- Allowed after sometime so that the local players can grow and

be in a position to compete.- International players cannot offer better prices unless they

adopt predatory pricing. ( short term advantage)

- In the long run, customers will pay more.

North is a different and more difficult market than south.

Improve Inventory management.


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Impulsive Buyers: The First 15 Seconds, and

Other Tips for Retailers

Position impulse products at the entrance.

Impulse buying decisions is taken in the first 15 seconds of

entering a retail outlet.

Optimise the sales by the right placement of impulse products.

Differentiate or Die:The New Retail Mantra

Retail Model must be different and difficult to replicate.

Speciality malls would make for a good differentiator.

General format in smaller towns as they are still at a young

stage as far as organised retail is concerned.

Concept must be execution based.


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Developing Profitable Shopping Mall

1. Consumer Needs

2. Site Development

3. Positioning

4. Mall Economics


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Understanding Customer Needs

Defining Target Customer

Very specific & Homogeneous

Taking Demographic & Psychographic Factors

Product/s they Buy & Why Volume & Value of Products

Which Places they visit for buying & When

Mall & Product Selection and Buying Process

Perfect alignment of Mall Concept with Target Segment


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Site Development

Market Potential

Per capita consumption of each product category

Consumer Spends on product categories

Catchment Area (Driving Time) Population of Section A & B % of Population willing totravel

Primary (0 10 min) 50,000 90

Secondary (10 30 min) 1,50,000 60

Tertiary (> 30 min) 5,00,000 25

Location A Location B Location c

Market Potential (1) Rs. 260 mn Rs. 220 mn Rs. 200 mn

Existing Malls (2) 1,00,000 sq. ft. 75,000 sq. ft. 50,000 sq. ft.

Proposed Mall (3) 50,000 sq. ft. 50,000 sq. ft. 50,000 sq. ft.

Expected Sales [1 / (2+3)] Rs. 1733 / sq. ft. Rs. 1760 / sq. ft. Rs. 2000 / sq. ft.


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Site Development (contd.)

Consumer Perspective Lifestyle, Convenience,

Merchandise needs, Ambience

Parking, Accessibility & Timings

Level of service & security etc.

Classification of consumers

The Price / Value Seeker

The Affinity Consumer

The Quality / Service Consumer


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The Role of Competition

Co-Opetition: A Synergistic effect of Coming Together

Stores that build High Customer Traffic

Stores that deal in High Margin Products

Stores that deal in wide range of Products, normally Bought

Together

Stores having Newest and Latest Products / Categories

Stores dealing in FMCG which bring Cash Flows

Category Management:

Site Development (contd.)

Category Location Brand


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Positioning

The positioning of the mall should focus upon:

1. what the mall thinks about its customers.

2. value proposition that it offers.

3. what kind of promise it holds for the customer involved.

4. how to go about achieving what it professes.

The mall is a collection of stores that have a highly focused product /

consumer profile satisfying a narrowly defined need of the consumer.


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Mall identity and image

A clear and concise identity and image of the mall is to

be built in the minds of the consumer.

The mall developer should focus upon :

1. The mall cannot attend to all the needs of all the consumers.2. Site development of the mall.

3. Tenant and trade mix.

4. Anchor store.

Change is the only constant in the world.

Customer is the most unpredictable entity in the business.


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A Successful Mall

1. High level of occupancy.

2. The appropriate market positioning- its about unique

identity and image.

3. Good retail planning and design.

4. Ideal merchandise and tenant mix.

5. Quality tenants and low risk.

6. High rental income and strong growth.


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Mall Economics(2.5 lakh sq.ft)

Cost per Sq. Ft. = Rs. 4,000 (land + construction + int.)

Total Investment = Rs. 100 crores

Selling cost = Rs. 6,500 / sq.ft.

Revenues = Rs. 24 cr p.a. (monthly rental @ 1.25% of SC)

Break Even in 6.5 years

At 80 % occupancy with 30% goes to Anchor Stores

rent from Anchor Stores

Annual revenues = 15.6 crores

Break Even = 13 to 14 years


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Q1. With organized retailing posed to touch 15% - 18% of Indian Retail Industry in

the next decade, what would be the scope for supply chain in retailing ?

Ans: Fierce competition is forcing retailers to respond to changes in the market quickly. This

highlights the growing importance of SCM in managing stock availability. Class products and

brand power no longer guarantee success in the aggressive battles for market share. Thus, it

is important to get closer to customers by understanding what it is they want, when they want

it, where they want it and at what price they want it.

However, SCM in India continues to be perceived as a low value added activity of managing

transportation and warehousing. It is time Indian corporates started thinking about SCM from

a strategic perspective rather than just as an operational issue. We are now moving into anera where supply chains will compete with each other, rather than there being competition

between products and marketing

techniques alone, to ensure that the right goods are available at the right place at the right

time, in the right quantities and at the right cost.


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Q2. growth rate of malls in India is 20 % & with 600+ malls already operating, how

the future malls would position themselves?

Ans. The fast growing and nascent retail industry in India has been a witness to the

introduction of a surfeit of malls across the country in recent years. However, only a few of

them have been a runaway successes; because positioning is the one issue which has not

been given much attention to, which has turned out to be one of the biggest mistakes of the

mall developers.

The positioning of the mall should aim at fulfilling the needs and aspirations of the target

consumers in a way that is superiors to the competitors. A mall should view itself not as a

physical alternative to the regular channels of retail outlets but an experience that goes much

beyond the simple joys of shopping. An overall unified and enriching experience at a price

which the customer is willing to pay should be the objective of the mall. It must strive to gain

the mindshare and the heartshare of the customer.


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Thank You

Services Chap 11 RETAILING

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