Retail Industry

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INTRODUCTION: RETAIL INDUSTRY Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, 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 t
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  INTRODUCTION: RETAIL INDUSTRY Retail consists of thesaleof physical goods or merchandise from a fixed location, such as adepartment store,boutiqueorkiosk,or bymail,in small or individual lots for direct consumptionby the purchaser. Retailing may include subordinated services, such as delivery.Purchasers may be individuals or businesses. Incommerce,a retailer buys goods orproductsin large quantities frommanufacturersorimporters,either directly or through a wholesaler,and then sells smaller quantities to theend-user.Retail establishments are often called shops or stores. Retailers are at the end of thesupply chain.Manufacturingmarketers see the process of retailing as a necessary part of their overalldistributionstrategy. The term retailer is also applied where a service provider services the needs of a large number of individuals, such as apublic utility,likeelectric power.  Shops may be on residential streets, shopping streets with few or no houses or in ashoppingmall.Shopping streets may be forpedestriansonly. Sometimes a shopping street has a partial or fullroof to protect customers fromprecipitation.Online retailing, a type of electronic commerceused forbusiness-to-consumer(B2C) transactions andmail order,are forms of  non-shop retailing.Shoppinggenerally refers to the act of buyingproducts. Sometimes this is done to obtain necessities such as food and clothing; sometimes it is done as arecreationalactivity.Recreational shopping often involves window shopping (just looking, not buying) andbrowsing and does not always result in a purchase. Retail comes from the Old French word tailer  (compare modern French  retailler  ), which means tocut off, clip, pare, divide in terms of tailoring (1365)It was first recorded as a noun with the meaningof a sale in small quantities in 1433 (from the Middle French retail , piece cut off, shred, scrap,paring ). Like the French, the word retail in both Dutch and German ( detailhandel and  Einzelhandel ,respectively) also refers to the sale of small quantities of items.  Types of retail outlets Amarketplaceis a location where goods and services are exchanged. The traditionalmarket squareis acity squarewhere traders set up stalls and buyers browse the merchandise. This kind of market is very old, and countless such markets are still in operation around the wholeworld.In some parts of the world, the retail business is still dominated by small family-run stores,but this market is increasingly being taken over by largeretail chains. Retail is usually classified by type of products as follows:    Food products    Hard goods ( hardline retailers ) - appliances, electronics, furniture, sporting goods,etc.    Soft goods - clothing, apparel, and other fabrics.There are the following types of retailers by marketing strategy:    Department stores- very large stores offering a huge assortment of soft and hardgoods; often bear a resemblance to a collection of specialty stores. A retailer of suchstore carries variety of categories and has broad assortment at average price. Theyoffer considerable customer service.    Discount stores- tend to offer a wide array of products and services, but they competemainly on price offers extensive assortment of merchandise at affordable and cut-rateprices. Normally retailers sell less fashion-oriented brands.    Supermarkets- sell mostly food products;    Warehouse stores- warehouses that offer low-cost, often high-quantity goods piled onpallets or steel shelves;warehouse clubscharge a membership fee;    Variety stores- these offer extremely low-cost goods, with limited selection;    Demographic - retailers that aim at one particular segment (e.g., high-end retailersfocusing on wealthy individuals).    Mom-And-Pop : is a retail outlet that is owned and operated by individuals. The rangeof products are very selective and few in numbers. These stores are seen in localcommunity often are family-run businesses. The square feet area of the store dependson the store holder.    Specialty stores:A typical speciality store gives attention to a particular category andprovides high level of service to the customers. A pet store that specializes in sellingdog food would be regarded as a specialty store. However, branded stores also comeunder this format. For example if a customer visits a Reebok or Gap store then theyfind just Reebok and Gap products in the respective stores.    General store- a rural store that supplies the main needs for the local community;    Convenience stores:is essentially found in residential areas. They provide limitedamount of merchandise at more than average prices with a speedy checkout. Thisstore is ideal for emergency and immediate purchases.    Hypermarkets:provides variety and huge volumes of exclusive merchandise at lowmargins. The operating cost is comparatively less than other retail formats.     Supermarkets:is a self service store consisting mainly of grocery and limited productson non food items. They may adopt a Hi-Lo or an EDLP strategy for pricing. Thesupermarkets can be anywhere between 20,000 and 40,000 square feet (3,700 m 2 ).Example: SPAR supermarket.    Malls:has a range of retail shops at a single outlet. They endow with products, foodand entertainment under a roof.    Category killersor Category Specialist: By supplying wide assortment in a singlecategory for lower prices a retailer can kill that category for other retailers. For fewcategories, such as electronics, the products are displayed at the centre of the store andsales person will be available to address customer queries and give suggestions whenrequired. Other retail format stores are forced to reduce the prices if a categoryspecialist retail store is present in the vicinity.    E-tailers:The customer can shop and order through internet and the merchandise aredropped at the customer's doorstep. Here the retailers use drop shipping technique.They accept the payment for the product but the customer receives the productdirectly from the manufacturer or a wholesaler. This format is ideal for customerswho do not want to travel to retail stores and are interested in home shopping.However it is important for the customer to be wary about defective products and nonsecure credit card transaction. Example: Amazon, Pennyful and Ebay.    Vending Machines:This is an automated piece of equipment wherein customers candrop in the money in machine and acquire the products.Some stores take ano frillsapproach, while others are mid-range or high end , dependingon what income level they target.Other types of retail store include:    Automated Retailstores are self service, robotic kiosks located in airports, malls andgrocery stores. The stores accept credit cards and are usually open 24/7. ExamplesincludeZoomShopsandRedbox.     Big-box storesencompass larger department, discount, general merchandise, andwarehouse stores.    Convenience store- a small store often with extended hour, stocking everyday orroadside items;    General store- a store which sells most goods needed, typically in a rural area;Retailers can opt for a format as each provides different retail mix to its customers based ontheir customer demographics, lifestyle and purchase behaviour. A good format will lend ahand to display products well and entice the target customers to spawn sales.   Challenges To achieve and maintain a foothold in an existing market, a prospective retail establishmentmustovercome the following hurdles:     Regulatory  barriers including o   Restrictions on real estate purchases, especially as imposed bylocalgovernmentsand against big-box chain retailers;  o   Restrictions on foreign investment in retailers, in terms of both absoluteamount of financing provided and percentage share of voting stock ( e.g. ,common stock)purchased;    Unfavorabletaxation structures,especially those designed to penalize or keep out bigbox retailers (see Regulatory above);    Absence of developed supply chain and integrated IT management;    High  competitiveness  among existing market participants and resulting lowprofitmargins,caused in part by o   Constant advances in product design resulting in constant threat of productobsolescence and price declines for existinginventory;and    Lack of properly educated and/or trained work force, often including management,caused in part by o   Lack of educational infrastructureenabling prospective market entrants torespond to the above challenges. Retailing in India Retailing is one of the pillars of the economy inIndiaand accounts for 13% of GDP.The retailindustryis divided into organised and unorganised sectors. Over 14 million outletsoperate in the country and only 4% of them being larger than 500 sq ft (46 m 2 ) in size.Organised retailing refers to trading activities undertaken by licensed retailers, that is, thosewho are registered for sales tax, income tax, etc. These include the corporate-backedhypermarketsand retail chains, and also the privately owned large retail businesses.Unorganised retailing, on the other hand, refers to the traditional formats of low-costretailing, for example, the localkiranashops, owner manned general stores,paan/ beedi shops, convenience stores, hand cart and pavement vendors, etc.Most Indian shopping takes place in open markets and millions of independent grocery shopscalled kirana. Organized retail such supermarkets accounts for just 4% of the market as of 2008. Regulations prevent most foreign investment in retailing. Moreover, over thirtyregulations such as signboard licences and anti-hoarding measures may have to becomplied before a store can open doors. There are taxes for moving goods to states, fromstates, and even within states.
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