Retail and Social Marketing

Prof. Vidhya Srinivas

What is retail?

 Retaillier- to cut a piece off or to break

bulk
 Marketing mix- place
The Marketing Mix
Place
Retailing involves…

A direct interface with the customer and

the coordination of business activities
from end to end.
Industry evolution
 Traditionally retailing in India can be traced to
 The emergence of the neighborhood ‘Kirana’ stores
catering to the convenience of the consumers
 Era of government support for rural retail: Indigenous
franchise model of store chains run by Khadi & Village
Industries Commission

 1980s experienced slow change as India began to open up

economy.
 Textiles sector with companies like Bombay Dyeing,
Raymond's, S Kumar's and Grasim first saw the
emergence of retail chains
 Later Titan successfully created an organized retailing
concept and established a series of showrooms for its
premium watches
Contd…
 The latter half of the 1990s saw a fresh wave of entrants
with a shift from Manufactures to Pure Retailers.
 For e.g. Food World, Subhiksha and Nilgiris in food and
FMCG; Planet M and Music World in music; Crossword and
Fountainhead in books.
 Post 1995 onwards saw an emergence of shopping centers,
 mainly in urban areas, with facilities like car parking
 targeted to provide a complete destination experience
for all segments of society
 Emergence of hyper and super markets trying to provide
customer with 3 V’s - Value, Variety and Volume
 Expanding target consumer segment: The Sachet
revolution - example of reaching to the bottom of the
pyramid.
 At year end of 2000 the size of the Indian organized retail
industry is estimated at Rs. 13,000 crore
 Global Retail: facts & figures

1999 2002 2005

Total Retail (US$ 150 180 225

Billion)

Organised Retail 1.1 3.3 7

(US$ Billion)

% Share of Organised 0.7 1.8 3.2

retail
Top List…

Ra Retailer Home Country

nk

Wal-Mart
1 U.S.A.
Stores, Inc.
2 Carrefour France
Group
3 The Kroger U.S.A.
Co.
4 The Home U.S.A.
Depot, Inc.
5 Metro Germany
Retailing formats in India…
 Malls:

The largest form of organized retailing today. Located mainly in

metro cities, in proximity to urban outskirts. Ranges from
60,000 sq ft to 7,00,000 sq ft and above. They lend an ideal
shopping experience with an amalgamation of product, service
and entertainment, all under a common roof. Examples include
Shoppers Stop, Piramyd, Pantaloon.
Retailing formats in India…
 Specialty Stores:

Chains such as the Bangalore based Kids Kemp, the Mumbai books
retailer Crossword, RPG's Music World and the Times Group's
music chain Planet M, are focusing on specific market segments
and have established themselves strongly in their sectors.

 Discount Stores:

As the name suggests, discount stores or factory outlets, offer

discounts on the MRP through selling in bulk reaching economies
of scale or excess stock left over at the season. The product
category can range from a variety of perishable/ non perishable
goods
Retailing formats in India…
 Department Stores:

Large stores ranging from 20000-50000 sq. ft, catering to a

variety of consumer needs. Further classified into localized
departments such as clothing, toys, home, groceries, etc.

 Hypermarts/Supermarkets:
Large self service outlets, catering to varied shopper needs are
termed as Supermarkets. These are located in or near
residential high streets. These stores today contribute to 30%
of all food & grocery organized retail sales. Super Markets can
further be classified in to mini supermarkets typically 1,000 sq
ft to 2,000 sq ft and large supermarkets ranging from of 3,500
sq ft to 5,000 sq ft. having a strong focus on food & grocery
and personal sales.
Retailing formats in India…
 Convenience Stores:
These are relatively small stores 400-2,000 sq. feet located near
residential areas. They stock a limited range of high-turnover
convenience products and are usually open for extended
periods during the day, seven days a week. Prices are slightly
higher due to the convenience premium.

 MBO’s :
Multi Brand outlets, also known as Category Killers, offer
several brands across a single product
category. These usually do well in busy market places and
Metros.
 Recent Trends

Retail Sales in India

 Retailing in India is witnessing a
huge revamping exercise as can
be seen in the graph
 India is rated the fifth most
attractive emerging retail market: a
potential goldmine.
 Estimated to be US$ 200 billion, of
which organized retailing (i.e.
modern trade) makes up 3 percent
or US$ 6.4 billion
 As per a report by KPMG the
annual growth of department
stores is estimated at 24%
 Ranked second in a Global Retail
Development Index of 30
developing countries drawn up by
AT Kearney.
 Recent Trends contd.

Traditionally three factors have plagued Recent changes:

the retail industry:

Unorganized
Unorganized :: VastVast majority
majority of of the
the twelve
twelve million
million stores
stores are
are Experimentation
Experimentation with with formats:
formats: Retailing
Retailing in in India
India isis still
still evolving
evolving
small
small "father
"father and
and son"
son" outlets
outlets and
and the
the sector
sector isis witnessing
witnessing aa series
series ofof experiments
experiments across across the the
Fragmented country
country with
with new
new formats
formats being
being tested
tested out.
out. Ex.
Ex. Quasi-mall,
Quasi-mall, sub- sub-
Fragmented :: Mostly
Mostly small
small individually
individually ownedowned businesses,
businesses, urban
urban discount
discount stores,
stores, Cash
Cash andand carry
carry etc.
etc.
average
average size
size of
of outlet
outlet equals
equals 50 50 s.q.
s.q. ft.
ft. Though
Though IndiaIndia has
has the
the
highest
highest number
number of of retail
retail outlets
outlets perper capita
capita in in the
the world,
world, the
the retail
retail Store
Store design
design :: Biggest
Biggest challenge
challenge forfor organised
organised retailing
retailing to to
space
space per
per capita
capita at
at 22 s.q.
s.q. ftft per
per person
person is is amongst
amongst the the lowest.
lowest. create
create aa “customer-pull”
“customer-pull” environment
environment thatthat increases
increases the the amount
amount
Rural of
of impulse
impulse shopping.
shopping. Research
Research shows
shows that
that the
the chances
chances of of
Rural bias:
bias: Nearly
Nearly twotwo thirds
thirds ofof the
the stores
stores areare located
located inin rural
rural senses
senses dictating
dictating sales
sales are
are upto
upto 10-15%.
10-15%. Retail
Retail chains
chains likelike
areas.
areas. Rural
Rural retail
retail industry
industry has has typically
typically two two forms:
forms: "Haats"
"Haats" andand MusicWorld,
“Melas".
“Melas". Haats
Haats are
are the
the weekly
weekly markets
markets :: serveserve groups
groups of of 10-50
10-50 MusicWorld, Baristas,
Baristas, Piramyd
Piramyd andand Globus
Globus are are laying
laying major
major
villages emphasis
emphasis & & investing
investing heavily
heavily inin store
store design.
design.
villages and
and sell
sell day-to-day
day-to-day necessities.
necessities. Melas Melas areare larger
larger in
in size
size
and
and more
more sophisticated
sophisticated in in terms
terms of of the
the goods
goods sold
sold (like
(like TVs)
TVs) Emergence
Emergence of of discount
discount stores:
stores: They
They are
are expected
expected to to
spearhead
spearhead thethe organised
organised retailing
retailing revolution.
revolution. Stores
Stores trying
trying to to
emulate
emulate the
the model
model of of Wal-Mart.
Wal-Mart. Ex. Ex. Big
Big Bazaar,
Bazaar, Bombay
Bombay
Bazaar,
Bazaar, RPGs.
RPGs.
Unorganized
Unorganized retailing
retailing is is getting
getting organized:
organized: To To meet
meet the the
challenges
challenges ofof organized
organized retailing
retailing such
such asas large
large cineplexes,
cineplexes, and and
malls,
malls, which
which are
are backed
backed by by the
the corporate
corporate house
house such such asas 'Ansals'
'Ansals'
and
and 'PVR‘
'PVR‘ the
the unorganized
unorganized sector sector is
is getting
getting organized.
organized. 25 25 stores
stores
in
in Delhi
Delhi under
under the
the banner
banner of of Provision
Provision mart
mart areare joining
joining hands
hands to to
combine
combine monthly
monthly buying.
buying. Bombay
Bombay Bazaar
Bazaar and and Efoodmart
Efoodmart formed formed
which
which are
are aggregations
aggregations of of Kiranas.
 Recent Trends contd.
 Multiple drivers leading to a consumption boom:
 Favorable demographics
 Growth in income
 Increasing population of women
 Raising aspirations : Value added goods sales
 Food and apparel retailing key drivers of growth
 Organized retailing in India has been largely an urban phenomenon with affluent classes and
growing number of double-income households.
 More successful in cities in the south and west of India. Reasons range from differences in
consumer buying behavior to cost of real estate and taxation laws.
 Rural markets emerging as a huge opportunity for retailers reflected in the share of the rural market
across most categories of consumption
 ITC is experimenting with retailing through its e-Choupal and Choupal Sagar – rural
hypermarkets.
 HLL is using its Project Shakti initiative – leveraging women self-help groups – to explore the
rural market.
 Mahamaza is leveraging technology and network marketing concepts to act as an aggregator
and serve the rural markets.
 IT is a tool that has been used by retailers ranging from Amazon.com to eBay to radically change
buying behavior across the globe.
 ‘e-tailing’ slowly making its presence felt.
 Companies using their own web portal or tie-sups with horizontal players like Rediff.com and
Indiatimes.com to offer products on the web.
 
Major Retailers

            
 India’s top retailers are Leading Retailers
largely lifestyle, clothing
and apparel stores
                    
 This is followed by grocery
stores
             Following the past trends
and business models in
the west retail giants such
as Pantaloon, Shoppers’
Stop and Lifestyle are
likely to target metros and
small cities almost
doubling their current
number of stores
 These Walmart wannabes
have the economy of scale
to be low –medium cost
retailers pocketing narrow
margin
INDIAN RETAIL INDUSTRY -
insights
INDIA – A Vibrant Economy & Resplendent Market ·
 4 th Largest economy in PPP terms after USA, China & Japan
 To be the 3 rd largest economy in terms of GDP in next 5 years.
 2 nd fastest growing economy in the world.
 The US $ 580 billion economy grew 8.2 percent in the year 03-04
 Among top 10 FDI destinations
 Stable Government with 2 nd stage reforms in place
 Growing Corporate Ethics (Labour laws, Child Labour regulations,
environmental protection lobby, intellectual and property rights,
social responsibility).
 · Major tax reforms including implementation of VAT.
INDIAN RETAIL INDUSTRY -
insights
 US $ 130 billion investment plans in infrastructure in next 5 years
· 2 nd Second most attractive developing market, ahead of China
· 5th among the 30 emerging markets for new retailers to enter

 A country with the largest young population in the world- over 867
million people below 45 years of age!
More English speaking people in India than of in the whole of
Europe
300 million odd middle class - the Real consumers - is catching the
attention of the world
With over 600 million effective consumers by 2010 India to emerge
as one of the largest consumer markets of the world by 2010.
Retailing in India

 Total Consumer Spend in the Year 03-04 – INR 9300

billion ( USD 375 billion) growing over 5% annually

 Retail sales – 55% at INR 280 billion (USD 205 billion)

Organised Retail – Only 3% but growing at 30%


Organised retail to cross INR 1000 billion mark by 2010
INR 200 billion investment in the pipeline

 Top 6 cities account for 66% of total organized retailing.

Overwhelming acceptance of modern retail formats.
Fashion drives organized retail.

2004 figures :
 Organized retail : Rs. 280 billion
Clothing, Textiles & Fashion accessories: 39%
Footwear 9%
Jewelry & watches 7%
Mobile hand sets & accessories 3%
Health & Beauty (including services) 2%
Food & Grocery 18%
Durables 13%
Books, Music & Gifts 3%
Home 3%
Pharma 2%
Entertainment 1%
Modern Retail In India : Share Of
Categories

Source: Technopak Analysis

Growth Of Indian Retail …

*Projected

Source: Technopak Analysis, CSO & Other Sources

Indian Retail expected to grow by over 9% p.a. in the next 10 years

Rapid Transformation Anticipated
Current Size & Future Projections for Indian Retail Market
900 800
25% share
800
700
600 16% 530
US$ Billion

486 share
500 3.5% share 445
373 408
400 342
300
200 200
100 87
26 39 59
0 12 18
2007 2008 2009 2010 2011 2012 2017

Total Retail Organized Retail

Source: Technopak Analysis

And may reach a share of 25% by 2017