39 RETAIL MANAGEMENT –DEVELOPMENT OF RETAILING, METHODS, SMALL AND LARGE SCALE RETAILING

Sarasvathi. V

Introduction:

Retailing provides a crucial link between producers and consumers in a modern market economy. The performance of this sector has a strong influence on consumer welfare. Retailers not only provide consumers with a wide range of products , but also wide range of complementary services, which lead to more informed choice and greater convenience in shopping. They also provide producers with much needed information on consumers demand pattern. Productivity and efficiency in retail operations lowers price levels and reduces distortions in the price structure. Through backward and forward linkage, performance of retailing services affects the performance of interlinked sectors such as tourism, recreational, cultural services, manufacture of consumer goods agro-good producing industries etc.

Retail Management –Development of Retailing, Methods, Small and Large Scale Retailing

The word retailing comes from French word “RETAILER” which means, “to cut a piece off”. This set of business activities adds the value to the products and services given to the consumers. The retailing sector in India has undergone significant transformation in the past ten years. Traditionally, an Indian retail sector is been characterized by the presence of large number of small-unorganized retailers. However, in the past decade there has been development of organized retailing, which has encouraged large private sector players to invest in this sector. Many foreign players have also entered India through different routes such as test marketing, franchising, and wholesale cash and carry operation. With high GDP growth, increased consumerism and liberalization of the manufacturing sector, India is being portrayed as an attractive destination for foreign direct investment (FDI) in retailing, however, at present this is one of the few sectors.

David Gilbert defines retailing as, -Any business that directs its marketing efforts towards satisfying the final consumer based upon the organization of selling goods and services as means of distribution”.

Retailing involves all the activities related to direct selling of products or services to the ultimate consumers or users of the product for personal, non-business purpose. Any organization it may be a wholesaler, manufacturer etc. Retailing business if it sells products or services to the final customers or consumers through any method like direct, mail, telephone, vending machine etc.

FUNCTIONS OF RETAILERS

1.    Retailers provide personal services to all consumers.

2.    They facilitate standardization and grading of goods.

3.    They undertake physical movement and storage of goods.

4.    They assemble goods from different suppliers and wholesales.

5.    They keep ready stock of goods to supply to consumers.

6.    They extend credit facilities to the consumers.

7.    They create demand by presenting window display, events etc.

8.    They also understand sales promotional activities.

Retailing in India provides employment to about7% of total work force in the country and contributes about 14% of GDP to India. It took 10years for the first 2500 organized retail stores to emerge in India. The next 2500 could easily get added in the next 5 years. Formats new to India market place have emerged rapidly over the past 10years.

EVOLUTION OF RETAILING IN INDIA

Every retailing should have brands for retailing and merchandise be effectively displayed. The distribution channel starts from the manufacturers to the wholesalers then to the retailers and finally to the consumers. Money is not stagnant at a particular point.

Retailers are the benefiters from the consumers and the manufacturers. Difference in the flow of money and there is increase in the value of the goods and services. Breakage of the bulk of the product, it is easy to compare between brands that are possible with retailing (provides assortment). After buy, overhauls like that of service and maintenance where the retailer gives the complete information about the product.

The origins of retail are old as trade itself. Barter was the oldest form of trade. For centuries, most merchandise was sold in market place are by peddlers. Medieval markets were dependent on local sources for supplies of perishable food because journey was for too slow to allow for long distance transportation. The peddler, who provided people with basic good and necessities that they could not be self-sufficient in, followed one of the earliest forms of retail trade. Even in pre-historic time, the peddler traveled long distances to bring products to locations that were in short supply. “They could be termed as early entrepreneurs who saw the opportunity in serving the needs of the customer at a profit”.

Later retailers opened small shops, stocking them with such produce. As towns and cities grew, these retail stores began stocking a mix of convenience merchandise, enabling the formation of high street bazaars that became the hub retail activity in every city. In 1991 we had 12-14 million retail stores were run by families, two-third of the stores were in the rural area.

Traditional Retail Format In India

It is important that for centuries now, India has been operating within her unique concept of retailing. Retailing in its initial period was a witness at the weekly haats or gathering in a market place where vendors put on displays, they produce. Then the market saw the emergence of the local banias and his neighborhood kirana shop.

While barter would be considered as the oldest of the retail trade, since independence, retail in India has evolved to support unique needs of our country, given its size and complexity. Haats, mandis and melas have been a part of India’s landscape. They will continue to be present in most part of the country and form essential part of life and trade in various areas.

Emergence of Organized Retail In India

The emergence of the first phase of organized retail in retailing in India can be traced back when a shopping centre came into existence in the year 1869 with Mumbai Crawford market. After that, in the year 1874 hogg market, popularly and better known as New market came into existence in Calcutta, this shopping centre was designed by east Indian railways co. Architect R.R.Banya and was named after the municipal commissioner of Calcutta Sir Stuart Hogg.

The tenant mix of this first shopping centre is unique as it has a large number of 200 stalls which are organized in an order of merchandise. There are rows of stalls dealing with one particular line of goods. Tracing the emergence of the new market, a retail researcher Christine Furedy has observed in her article on 24th dec.1979 as “the most complex retail business of late nineteenth centuarycalcutta”, which were to dominate the modern retail sector, were the departmental stores

The earliest seed of the so-called specialty malls can be traced to shopkeepers who stocked goods of the same product category in a particular locality. If one were to go back to the early 80’s, it can be said that organized retail, to a great extent was visible in the functioning of stores such as ‘Nilgiris’ and ‘Spencers’ in Chennai. These stores later evolved into multi-chain outlet and were the first to bring on the “onset of organized retail” in India.

The evolution of PDS (Public Distribution System) of grains in India having its origins in the rationing system introduced by the british during the world war II was example for the single largest retail chain in the country, the canteen stores department and the post offices in India are also among the largest network of outlets in the country. The khadi and village industries (KVIC) was set during the post independence and today it has more than 7000 stores across the country.

While independence retail stores like Vivek’s and Nallis have existed in India for a long time, Reliance, Garden silk mills, Madhura garments ,Arvind mills etc have set up showrooms for retail sales of their branded products. During the past two years, there has been tremendous amount of interest in the Indian retail trade from global majors as well as over the years international brands like McDonalds , Swarovski, Locoste, Domino’s, Pepsi Benetton among a host of others have come in and thrived in India.

Retail Formats in India

Evolution of retailing is mainly classified into 3 stages which was started in early 80’s and before 90’s. Retailing was synonymous in those stages by the peddlers, vegetable vendors, kirna stores, small grocery stores- one person running a small store. Consumer durable stores in nearby towns, fragmented marketing and people were also much unstructured.

More of organized retailing was when the manufactures started owning the retailing outlet like that of Bombay dyeing, Raymond ,s-kumars. the profile of the consumers changed in 1990’s.

In India, at present, retailing activities are being carried through wide varieties of formats ranging from ”pheriwala” in streets to modernized malls in metro cities. However, from study point of view these formats can easily classified into following three groups.

FORMATS OF RETAILING

TRADITIONAL

Itenerant Salesman: It is a type of direct selling which stated centuries ago. It is an example of door-to-door, office-to-office delivery or marketing. Morning milkman is the famous example of this category. This type of format has been very popular throughout India in coping with daily needs.

Haats:   Haats are the unique examples of traditional malls in India. Just like malls,

different seller’s sells different types of items along with the sale of vegetables, fruits, sweets, chaat etc. Some entertainment arrangements are also made in these haats. There was tendency in rural as well as semi-urban area in India for visiting these haats with family members as a part of picnic cum purchasing programmes. In fact hats are periodic markets at a particular place and time organized once in a week or fortnight. In other words the term haats refers to locations which witness a public gathering of buyers and sellers at fixed time and fixed location.

Melas: Melas are fairs and they can range from commodities fairs to religious fairs. Virtually every state in India has melas for which it is known. It is estimated that more than 2500 melas are held annually in the country. It is estimated that the average outlets in every mela would be more than 800 and the average sale per mela would be Rs.143 lac.

At government level a member of fairs such as book fair, trade fair and specific Commodity Fair are Organized by Trade Fair Authority of India.

Mandis: Mandis are markets set up and regulated state government for the sale of agricultural produce directly from the farmers. At present the number of such markets stand at 7521.these mandis are playing significant role in providing better prices to farmers.

ESTABLISHED FORMATS

Kiosks: A kiosk is a small freestanding pavilion or stall often open on one or more sides ans used for information sales and promotion. Generally a kiosks is placed in a shopping centre, a bus stand or near by the prospective customers.

Kirana Shop And Independent Stores: This is one of the important and popular established formats of retailing in India. These shops are usually shops with a very small area, stocking a limited range of products, varying from region to region according to the need of the clientele or the wimps of the owners.

Co-Operative Shops/Government Organization: Co-operative stores in India are the result of the co-operative movement that can be traced to the pre-independence period. They emerged as a reaction to the feudal system and to place the fruit of labor in the hands of the producer himself to make himself relevant.

A consumer co-operative is generally formed either because if dissatisfied consumers whose needs are not fulfilled by the existing retailers or an account of initiative by enlightened consumer.

EMERGING STORES

Super Markets/ Hyper Markets: These are large (90,000 sq.feet plus) self-service stores selling a variety of products at discounted price. Supermarkets tend to be located in key residential markets and malls and offer competitive prices due to economics of scale in logistics and purchasing. The format is new to India and some important players in this field are food world, big bazaar. Indian super markets are smaller than other countries.

Departmental Stores: These large stores primarily sell non-food items as apparel, footwear, household products. They stock multiple brands across product categories, though some of them focus as their own store labels. Some departmental stores chains were opened in India. Example- shopper’s stop, Westside, ebony.

Speciality Chains: These outlets focus on a particular brand as product category, usually non-food items and are located on high streets and in shopping malls. The most famous specialty chains include GAP, Levi’s and Benetton.

Discount Store: A general merchandise retailer offers a wide variety of merchandise limited service and low prices. Margin free markets are operating in this format in India. Is limited service in exchange for lower prices. They occupy an area between 80,000 to 1, 50,000 sq.ft.

Innovative discount operations

1.Off- price stores: sell at lowered prices mainly to satisfy man psychologically for consumer surplus and sovereignty. These retailers buy goods at prices well below the original whole sale rate and sell them to the customers at lower than the regular price.

2.Close-out stores: feature manufacturer’s left over.

3.Warehouse clubs: only members of the club are allowed to enter the vast shopping arena, which deal mainly with non- food merchandise. Here the consumers can make only bulk purchases. As they do not offer any customer service, the customers even have to do self packing (say, in reliance you pack your own vegetables/ fruits etc) . The payment is also always in cash.

Wholesale “Cash And Carry”: The wholesale cash and carry operation is defined as any trading outlets where goods are sold at the wholesale rate for retailers and business to buy. The transactions are only for the business purpose and not for any personal consumption. Metro, cash and carry, GMPH of germany entered India in this format.

Flea markets: are temporary shops which spring up in parking lots, roadsides etc; so, they can be internal or external. A shop selling Van Heusen shirts for three days is a flea market.

Swap marts: Those shops near a bus stand or parks, may combine shop plus entertainment..

Branches: are representative shops of a parent shop, say an additional unit started away from cities.

Spin offs (twig stores): They are like branch shops. They are geared to the needs of the community in which it is located. They are small units of a departmental store, but unlike the branch, carry only one classification of merchandise. Eg: Kannan – special for vegs and fruits)

Convenience Store: It is a retail business of less than 5000 sq.feet with primary emphasis on providing the public a convenient location to purchase quickly an assortment of food, gasoline and other consumable products. They are usually open seven days a week for extended hours.

PDS/Fair Price Shop: The PDS or public distribution system would easily emerge as the single largest retail chain existing in the country. The evolution of the PDS of grains in India has its origin in the rationing system introduced by the british during the world war II. This system began in 1939 in Bombay and subsequently extended to other cities and towns. By the year 1946, as many as 771 cities/ towns were covered.

The system however continued to remain an essential urban oriented activity. In fact towards the end of the first five year plan (1956) the system was closing its relevance due to comfortable food grains availability. Thus, by the end of second 5 year plan, PDS had changed from the typical rationing system to a social safety, making available food grains at a “fair price” so that access of the household to food grain could be improved and such distribution could keep on a check on the speculative tendencies in the market. The PDS has been functioning for more than 4 decades now and its greatest achievement lies in preventing famines in India.

Specialty Shops: A specialty shops in a retail shop displaying merchandise which have narrow product line, specializing in a particular type of merchandise and offering specialized services to customers. Generally, these shops concentrate on specific items such as apparel, jewelry, fabric, sporting goods, furniture etc. specialty shops are classified into degrees of narrowness in their product line. Eg: a clothing stock would be a single line shop, a men’s clothing shop would be a limited time shop and a men’s shirt store would be a super specialty shop. Such shop would always have a significant role in relating consumer durables throughout the country but particularly in urban and sub-urban areas.

Rural Malls Have Made A Beginning: Rural retailing is an important segment of the retail industry and it is only lately that companies are making investments in this area. ITC launched ChaupelSagar, the first rural mall with a variety of products offering farmer’s tools to adapt new technologies and methods of farming and selling their production. Godrej has opened Adhaar, a one-stop shop for farmers focusing on farm related products. Escorts and Tata chemicals are also in the process of setting up agri stores targeting the rural market.

Neighborhood stores: From trading post and limited line stores developed neighborhood or convenience stores that do maximum retail business

Chain organization: Belong to first venture large scale retailing. It is defined as two or more stores, similar in nature and having common ownership. They are of two types:

a. Voluntary  chain: organized by a wholesaler who enters  into contractual arrangements with the individual retailers, requiring that all purchases be made from that wholesaler.

b. Cooperative chain: Here retailers join together and operate their own warehouse.

Departmental stores: It is a departmentalized retail store which brings many limited line operations under one roof, with common ownership. They deal with convenience and shopping goods. Eg: Bloomingdale’s, Macy’s, Sears, Roebuck, Kannan. The uniqueness of this store includes

• Many types of merchandise (clothing, furnishings, small wares etc)
• Orderly arrangement and One-stop shopping
• Segregation of merchandise – Men/women, kids, furniture, cosmetics, but depends upon the site of the store
•  May also have ‘leased’ departments – opticals, beauty salon jewellery, religious articles, meat/poultry, bakery, silverware.
• Leased departments: They are altered by independent retailers/ chain owners because the nature of the goods and services warrant unusual specialized ability. Therefore, the department is usually leased.
• Specialty of departmental stores: Free delivery, gift wrapping, charge accounts, return privileges, extended credit plans etc.
• Unusual ones. include personal shoppers ( surrogate friends), baby sitting while parents shop, procurement of tickets for theatrical and sporting events etc
• Such specialty stores deal only with shopping goods, unlike neighbourhood stores that deal with convenience goods. Sub specialization: offer one narrow classification – the Knot shop, exclusively for ties.
• Super markets: They are large departmentalized food stores — all foods under one roof- grocer, butcher, baker etc.

What is their Uniqueness?

• Customers have to use trolley, collect and pay in the counter.
• These markets will have ample parking space, lesser employees and insist on self service
• Emphasis is on lower prices,
• parking facilities for customers and the
• luxury of one-stop food shopping
•  Many of them also offer personal services and customer amenities

Retailers are classified according to:

(a).Merchandising activities (The activities in the buying- selling Cycle)

(b). Merchandise they carry — convenience goods, staple goods, impulse goods etc

(c). Their currency volume

(d). Number of people they employ

1. Small retailers and Large retailers

1. Small retailers: general stores, specialty stores, flea markets, boutiques, swap stores, food specialists, kiosk and push carts (no high rents and fixturing).

1. Large retailers: departmental stores, leased departments, Specialty stores, branches, and spin offs, supermarkets, direct marketing retailers, catalogue stores, off- price stores, manufacturer outlets, warehouse clubs and general merchandise discounters

Conclusion:

The retail landscapes of the country are changing at a rapid pace with malls and multiplexes mushrooming in all major cities. Retail has clearly been witnessing a transformation from neighborhood shopping to the concept of malls and family entertainment centers. Entertainment and experience are becoming integral parts of shopping. Global industry analysts have often confirmed the country’s potential as one of the most attractive emerging retail destinations in the world.

Web links

1. https://dictionary.cambridge.org/dictionary/english/consumer
2. https://www.investopedia.com/terms/f/fdi.asp
3. https://www.thebalance.com/what-is-gdp-definition-of-gross-domestic-product-33060
4. https://www.thebalance.com/what-is-merchandising-2892230
5. https://economictimes.indiatimes.com/definition/public-distribution-system
6. https://www.merriam-webster.com/dictionary/retailing
7. www.businessdictionary.com/definition/supplier.htm
8. www.businessdictionary.com/definition/wholesaler.html