Industry Profile - Retail Sector 2014

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INDUSTRY PROFILE

Retail industry, being the fifth largest in the world, is one of the sunrise sectors with huge growth potential and accounts for 14-15% of the country’s GDP. Retail is the sale of goods and services from individuals or businesses to the end-user. Retailers are part of an integrated system called the supply chain. A retailer purchases goods or products in large quantities from manufacturers directly or through a wholesale, and then sells smaller quantities to the consumer for a profit. Retailing can be done in either fixed locations like stores or markets, door-to-door or by delivery. In the 2000s, an increasing amount of retailing is done using online websites, electronic payment, and then delivered via a courier or via other services.

Retailing includes subordinated services, such as delivery. The term "retailer" is also applied where a service provider services the needs of a large number of individuals, such as for the public. Shops may be on residential streets, streets with few or no houses or in a shopping mall. Shopping streets may be for pedestrians only. Sometimes a shopping street has a partial or full roof to protect customers from precipitation. Online retailing, a type of electronic commerce used for business-to-consumer (B2C) transactions and mail order, are forms of non-shop retailing.

Retail comes from the Old French word tailler, which means "to cut off, clip, pare, divide" in terms of tailoring (1365). It was first recorded as a noun with the meaning of a "sale in small quantities" in 1433 (from the Middle French retail, "piece cut off, shred, scrap, paring") Like in French, the word retail in both Dutch and German also refers to the sale of small quantities of items.

TYPES OF RETAIL OUTLETS

Department store: Department stores are very large stores offering a huge assortment of "soft" and "hard goods; often bear a resemblance to a collection of specialty stores. A retailer of such store carries variety of categories and has broad assortment at average price. They offer considerable customer service.

Discount store: Discount stores tend to offer a wide array of products and services, but they compete mainly on price offers extensive assortment of merchandise at affordable and cut-rate prices. Normally, retailers sell less fashion-oriented brands.

Warehouse store: Warehouses that offer low-cost, often high-quantity goods piled on pallets or steel shelves; warehouse clubs charge a membership fee.

Variety store: Variety stores offer extremely low-cost goods, with limited selection.

Mom-And-Pop: A small retail outlet owned and operated by an individual or family. Focuses on a relatively limited and selective set of product.

Specialty store: A specialty (BE: specialty) store has a narrow marketing focus - either specializing on specific merchandise, such as toys, shoes, or clothing, or on a target audience, such as children, tourists, or oversize women.  .

General store: A general store is a rural store that supplies the main needs for the local community;

Convenience store: A convenience store provides limited amount of merchandise at more than average prices with a speedy checkout. This store is ideal for emergency and immediate purchases as it often works with extended hours, stocking every day.

Hypermarkets: Provides variety and huge volumes of exclusive merchandise at low margins. The operating cost is comparatively less than other retail formats.

Supermarket: A supermarket is a self-service store consisting mainly of grocery and limited products on nonfood items. The supermarkets can be anywhere between 20,000 and 40,000 square feet.

Mall: A shopping mall has a range of retail shops at a single outlet. They can include products, food and entertainment under one roof

"Category killer" or specialist: By supplying wide assortment in a single category for lower prices a category killer retailer can "kill" that category for other retailers. For few categories, such as electronics, the products are displayed at the center of the store and sales person will be available to address customer queries and give suggestions when required. Other retail format stores are forced to reduce the prices if a category specialist retail store is present in the vicinity.

E-trailer: The customer can shop and order through the internet and the merchandise is dropped at the customer's doorstep or an e-trailer. Here the retailers use drop shipping technique. They accept the payment for the product but the customer receives the product directly from the manufacturer or a wholesaler. .

Global top five retailers

·         Wal-Mart

·         Tesco

·         Costco

·         Carrefour

·         Kroger

Retail pricing

The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup amount (or percentage) to the retailer's cost. Another common technique is suggested retail pricing. This simply involves charging the amount suggested by the manufacturer and usually printed on the product by the manufacturer.

In Western countries, retail prices are often called psychological prices or odd prices. Often prices are fixed and displayed on signs or labels.

Competition

Retail stores may or may not have competitors close enough to affect their pricing, product availability, and other operations. A 2006 survey found that only 38% of retail stores in India believed they faced more than slight competition. 

Sales techniques

One way to cope with competition is to hire a merchandising solutions company to design custom store displays that will attract more customers in a certain demographic. The nation's largest retailers spend millions every year on in-store marketing programs that correspond to seasonal and promotional changes. As products change, so will a retail landscape. Retailers can also use facing techniques to create the look of a perfectly stocked store, even when it is not.

Retailing in India

Retailing in India is one of the pillars of its economy and accounts for 14 to 15 percent of its GDP. The Indian retail market is estimated to be US$ 500 billion and one of the top five retail markets in the world by economic value. India is one of the fastest growing retail markets in the world, with 1.2 billion people.

As of 2013, India's retailing industry was essentially owner manned small shops. In 2010, larger format convenience stores and supermarkets accounted for about 4 percent of the industry, and these were present only in large urban centers. India's retail and logistics industry employs about 40 million Indians (3.3% of Indian population).

Until 2011, Indian central government denied foreign direct investment (FDI) in multi-brand retail, forbidding foreign groups from any ownership in supermarkets, convenience stores or any retail outlets. Even single-brand retail was limited to 51% ownership and a bureaucratic process. 

In November 2011, India's central government announced retail reforms for both multi-brand stores and single-brand stores. These market reforms paved the way for retail innovation and competition with multi-brand retailers such as Wal-Mart, Carrefour and Tesco, as well single brand majors such as IKEA, Nike, and Apple.  The announcement sparked intense activism, both in opposition and in support of the reforms. In December 2011, under pressure from the opposition, Indian government placed the retail reforms on hold till it reaches a consensus.

Retailing in Kerala

Retailing in Kerala is a subject too subtle and relevant; as Kerala is known of more as a consumer state rather than a producer state. The introduction of Margin Free Markets has turned out to be grand success resulting in it becoming one of the largest retail chains in the country.

Margin Free Markets

Margin Free Markets is the largest retail chain in the state of Kerala and one of the leading retail chains in India. The first outlet of this chain started functioning on 26th January 1994 at Thiruvananthapuram. There are currently more than 275 franchisees of Margin Free Markets spread all over south India. The outlets are franchises and are not actually owned by the chain. The Consumer Protection & Guidance Society currently control margin free markets, which is a registered charitable institution that started functioning in 1993. The consumers are assured of quality, quantity and the fair price of the goods sold through the Margin Free Markets.

Supply Co

The Kerala State Civil Supplies Corporation (Supplyco), is a statutory body established in 1974. It procures rice, wheat products, sugar, pulses, vegetables and a range of consumer goods independently from the open market and distributes them through a network of 663 retail outlets called Maveli Stores, 11 supermarkets in district headquarters and 21 mobile Maveli vans operating on designated routes.The Government decides the price of articles sold by Supplyco through these shops, and has used it as a highly effective mechanism, cutting out middlemen and controlling prices in the open market.

Jewelry

Jewellery retail is another major part of the retailing business in Kerala. The leaders in this business include, Allappat Jewelers, Allukas Jewellers, Josco Fashion Jewelers, and Trissur Jewelers among many others. Each of these Jewelers can be considered as retail chains as they have outlets in different parts of the State, the neighboring states and some even in the Middle East.

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