This word has come from a French word Retaillier which means to cut off a piece.Retailing includes all activities involved in selling the products and services to the ultimate consumers. So this is said to be the last person in the channel of distribution.
Retail consists of the sale of physical goods or merchandise from any 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.
1.1 INTRODUCTION
Retailing is the world’s largest private sector contributing to 8% of the GDP and it employs one sixth of the labor force. The estimated retail trade is expected to be 7 trillion US $. Many countries have developed only due to retailing and presently we see there is a vast change in the retail industry. As far as India is concerned it contributes to 14% of our GDP and it is the second largest sector next to agriculture which provides employment to more number of persons. Now according to a survey, India is classified in to the fifth most attractive retail destination and second among the countries in Asia. Worldwide it is ranked as fifth most attractive retail destination. Before proceeding further, let me tell you the functions of retailing
1.2 FUNCTIONS OF RETAILING
Retailing is supposed to provide:
• Product Utility
• Place utility
• Time Utility
• Ownership Utility
I have already told you, it includes all activities involved in providing goods and services to the
ultimate consumers. So it provides final end products to the consumers, not raw materials, end
products in usable form to the consumers. Thereby it creates product utility.
Second one, it is given in the place where it is required by the consumer. That is, retailing
outlets are open in the places according to the convenience of the customer and also based on
the demand of the consumer.
Third One, it creates Time Utility. In the sense that, the shops are open as per the requirement of
the consumer that is between 10 and 8 or 10 to 5. Whenever the consumers want to go and shop
they can go and shop at a particular period convenient to the customer.
Next one, when the product is sold finally it creates Ownership Utility.
So, we can conclude that retailing is a marketing intermediary which creates Product Utility,
Place Utility, Time Utility and Ownership Utility in providing goods and services to the
consumers
1.3 CLASSIFICATION OF RETAIL INDUSTRY
Retail Sector can basically be classified in to two segments. One is organized segment and
another one is unorganized segment. As far as India is concerned this organized segment
contributes only to 3% of the retail trade and the unorganized segment contributes to remaining
97% of the retail trade.
Why is it so?? Because all these days we have been purchasing only from the street vendors and
from the local shops and organized retailing was not in vogue in India. Only after 1991, after
opening up of economy and due to liberalization, this organized sector has come to light and
presently it exists in various formats.
• Supermarkets
• Hypermarkets
• Departmental stores
• Speciality stores
First one is, presently there are Supermarkets. Eg. Carrefour,Spencers, Nilgiris, Reliance. Basically they operate on low cost and low margin basis. These are called as Supermarkets.
The next important one, which is coming up in a very big way is Hyper Markets. Big Bazaar is
one example for Hyper Markets. The important characteristic of Big Bazaar is they provide a
variety of things right from food and non food things and they provide them in a very large area.
The third format in which it exists is Departmental stores. These are large scale retail outlets.
Pantaloons, Globus are some of the examples for this Departmental kind of retail outlets.
Next type of outlet is, they exist as speciality stores for sales of books and sales of music
cassettes. We all know that in previous years we have never heard of Music world or some
stores selling especially books. But presently we have Landmark, Music World, and Planet M
which are these speciality kinds of stores selling respective things, either books or cassettes.
Now under this unorganized sector we have, Mom and Pop stores and Street Markets, these are
sometimes called as Kiosks. All these days, until economic liberation, all the shops were in the
form of mom and pop stores, street markets and kiosks. Now also along with this organized
sector most of the stores in retailing are unorganized and they exist in these formats. With all
these unorganized and organized sectors, retail industry has seen a phenomenal growth in the
last 5 years.Now our discussion will be on the reasons why such revolution has taken place.
The next important one, which is coming up in a very big way is Hyper Markets. Big Bazaar is
one example for Hyper Markets. The important characteristic of Big Bazaar is they provide a
variety of things right from food and non food things and they provide them in a very large area.
The third format in which it exists is Departmental stores. These are large scale retail outlets.
Pantaloons, Globus are some of the examples for this Departmental kind of retail outlets.
Next type of outlet is, they exist as speciality stores for sales of books and sales of music
cassettes. We all know that in previous years we have never heard of Music world or some
stores selling especially books. But presently we have Landmark, Music World, and Planet M
which are these speciality kinds of stores selling respective things, either books or cassettes.
Now under this unorganized sector we have, Mom and Pop stores and Street Markets, these are
sometimes called as Kiosks. All these days, until economic liberation, all the shops were in the
form of mom and pop stores, street markets and kiosks. Now also along with this organized
sector most of the stores in retailing are unorganized and they exist in these formats. With all
these unorganized and organized sectors, retail industry has seen a phenomenal growth in the
last 5 years.Now our discussion will be on the reasons why such revolution has taken place.
The first reason, I would state is Greater Per Capita Income. We all know pretty well that Indian
economy is growing at a very great speed at 8 – 9 % rate .With double salaries and nuclear
families, disposable income in the hands of middle income group people is high and that is one
reason why retail revolution has taken place.
The second one is a very interesting feature. Now there is a customer called New Age Customer.
That is customer in the age group of 20 – 30. Actually in India 53% of the population are in this
age group. As we all know pretty well, that since economy is growing, service industry is
growing and due to the revolution in the IT sector lot of youngsters are able to get placement
immediately after their studies. And they earn a lot.Nearly 20 – 30 thousand immediately at the
age of 22. So there is a lot of discretionary income. Discretionary income is the income left with
a person apart from providing for his basic facilities. So this discretionary income he can utilise
in any manner as he wants. So he is one person who is being aimed at by the retail industry, who
is being trapped by the retail industry for purchases.
We know pretty well that the banks were very stringent earlier. Before 1990 banks were very stringent. Now banks are liberally giving credit to the consumers and cash is giving way for credit cards. We can get anything by credits. Actually we don’t feel as if we are spending but indirectly we are spending by making use of Credit Cards. Apart from that we are able to get credit from the banks and other financial institutions. This is one other major reason is why there is retail revolution.
The next important factor is the changing mindset of the consumer. We can very well compare ourselves with our parents, with our elders. Presently we don’t mind spending. We have lost the saving spree and we have got exposure to the international standards and have adapted to the international practices. Hence we don’t save anything, instead we encourage spending. We have to accept the fact, because there are so many avenues available. The mindset of the consumer has changed, specially in the urban areas.
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