Retail and Social Marketing

8/7/2019 Retail and Social Marketing

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Retail and Social MarketingProf. Vidhya Srinivas


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What is retail?

Retaillier- to cut a piece off or to break

bulkMarketing mix- place


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The Marketing Mix


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Place


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Retailing involves

A direct interface with the customer andthe coordination of business activities

from end to end.


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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 upeconomy.

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 itspremium watches


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Contd

The latter half of the 1990s saw a fresh wave of entrantswith a shift from Manufactures to Pure Retailers.

For e.g. Food World, Subhiksha and Nilgiris in food andFMCG; Planet M and Music World in music; Crossword andFountainhead 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 Vs - Value, Variety and Volume

Expanding target consumer segment: The Sachetrevolution - example of reaching to the bottom of thepyramid.

At year end of 2000 the size of the Indian organized retailindustry is estimated at Rs. 13,000 crore


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1999 2002 2005

Total Retail (US$

Billion)

150 180 225

Organised Retail

(US$ Billion)

1.1 3.3 7

% Share of Organised

retail

0.7 1.8 3.2

Global Retail: facts & figures


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Rank

Retailer Home Country

1Wal-Mart

Stores, Inc.U.S.A.

2 CarrefourGroup

France

3 The Kroger

Co.

U.S.A.

4 The Home

Depot, Inc.

U.S.A.

5 Metro Germany

Top List


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Retailing formats in India

Malls:

The largest form of organized retailing today. Located mainly inmetro cities, in proximity to urban outskirts. Ranges from

60,000 sq ft to 7,00,000 sq ft and above. They lend an idealshopping experience with an amalgamation of product, serviceand entertainment, all under a common roof. Examples includeShoppers Stop, Piramyd, Pantaloon.


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Specialty Stores:

Chains such as the Bangalore based Kids Kemp, the Mumbaibooks retailerCrossword, RPG's MusicWorld and the Times

Group's music chain Planet M, are focusing on specific marketsegments and have established themselves strongly in theirsectors.

Discount Stores:

As the name suggests, discount stores or factory outlets, offerdiscounts on the MRP through selling in bulk reachingeconomies of scale or excess stock left over at the season. Theproduct category can range from a variety of perishable/ non

perishable goods


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Department Stores:

Large stores ranging from 20000-50000 sq. ft, catering to avariety of consumer needs. Further classified into localizeddepartments such as clothing, toys, home, groceries, etc.

Hypermarts/Supermarkets:Large self service outlets, catering to varied shopper needs aretermed as Supermarkets. These are located in or nearresidential high streets. These stores today contribute to 30%

of all food & grocery organized retail sales. Super Markets canfurther be classified in to mini supermarkets typically 1,000 sqft to 2,000 sq ft and large supermarkets ranging from of 3,500sq ft to 5,000 sq ft. having a strong focus on food & groceryand personal sales.


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Convenience Stores:These are relatively small stores 400-2,000 sq. feet located nearresidential areas. They stock a limited range ofhigh-turnoverconvenience products and are usually open for extendedperiods during the day, seven days a week. Prices are slightly

higher due to the convenience premium.

MBOs :Multi Brand outlets, also known as Category Killers, offerseveral brands across a single productcategory. These usually do well in busy market places andMetros.


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Recent Trends

Retailingin Indiais witnessingahuge revampingexerciseas canbeseeninthegraph

Indiais ratedthe fifth mostattractiveemerging retailmarket:apotentialgoldmine.

Estimatedto be US$ 200 billion, ofwhich organized retailing (i.e.moderntrade)makes up 3 percentor US$ 6.4 billion

Aspera report by KPMG theannualgrowth ofdepartment

storesisestimatedat 24% Rankedsecondina GlobalRetail

Development Index of 30developing countriesdrawn up byAT Kearney.

Retail Sales in India


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Unorganized : Vastmajority ofthetwelvemillionstoresaresmall"fatherandson" outletsFragmented : Mostly smallindividually owned businesses,averagesize of outletequals 50 s.q. ft. Though India hasthehighestnumber of retail outletsper capitainthe world,the retailspaceper capitaat 2 s.q. ftperpersonisamongstthelowest.Rural bias: Nearly two thirds ofthestoresarelocatedin ruralareas. Rural retailindustry hastypically two forms: "Haats" andMelas". Haatsarethe weekly markets:servegroups of 10-50villagesandsellday-to-day necessities. Melasarelargerinsizeandmoresophisticatedinterms ofthegoodssold (likeTVs)

Unorganized : Vastmajority ofthetwelvemillionstoresaresmall"fatherandson" outletsFragmented : Mostly smallindividually owned businesses,averagesize of outletequals 50 s.q. ft. Though India hasthehighestnumber of retail outletsper capitainthe world,the retailspaceper capitaat 2 s.q. ftperpersonisamongstthelowest.Rural bias: Nearly two thirds ofthestoresarelocatedin ruralareas. Rural retailindustry hastypically two forms: "Haats" andMelas". Haatsarethe weekly markets:servegroups of 10-50villagesandsellday-to-day necessities. Melasarelargerinsizeandmoresophisticatedinterms ofthegoodssold (likeTVs)

Traditionally three factors have plaguedthe retail industry:

Traditionally three factors have plaguedthe retail industry:

Experimentation with formats: Retailingin Indiaisstillevolvingandthesectoris witnessingaseries ofexperimentsacrossthecountry with new formats beingtested out. Ex. Quasi-mall,sub-urbandiscountstores, Cash and carry etc.Store design : Biggest challenge for organised retailingto createa customer-pullenvironmentthatincreasestheamount ofimpulseshopping. Research showsthatthe chances ofsensesdictatingsalesare upto 10-15%. Retail chainslike MusicWorld,Baristas, Piramydand Globusarelayingmajoremphasis &investing heavily instoredesign.Emergence of discount stores: They areexpectedtospearheadthe organised retailing revolution. Storestryingtoemulatethemodel of Wal-Mart. Ex. Big Bazaar, Bombay Bazaar,RPGs.Unorganized retailing is getting organized: To meetthechallenges of organized retailingsuch aslarge cineplexes,andmalls, which are backed by the corporate housesuch as 'Ansals'and 'PVRthe unorganizedsectorisgetting organized. 25 storesin Delhi underthe banner of Provisionmartarejoining handstocombinemonthly buying. Bombay Bazaarand Efoodmart formedwhich areaggregations of Kiranas.

Experimentation with formats: Retailingin Indiaisstillevolvingandthesectoris witnessingaseries ofexperimentsacrossthecountry with new formats beingtested out. Ex. Quasi-mall,sub-urbandiscountstores, Cash and carry etc.Store design : Biggest challenge for organised retailingto createa customer-pullenvironmentthatincreasestheamount ofimpulseshopping. Research showsthatthe chances ofsensesdictatingsalesare upto 10-15%. Retail chainslike MusicWorld,Baristas, Piramydand Globusarelayingmajoremphasis &investing heavily instoredesign.Emergence of discount stores: They areexpectedtospearheadthe organised retailing revolution. Storestryingtoemulatethemodel of Wal-Mart. Ex. Big Bazaar, Bombay Bazaar,RPGs.Unorganized retailing is getting organized: To meetthechallenges of organized retailingsuch aslarge cineplexes,andmalls, which are backed by the corporate housesuch as 'Ansals'and 'PVRthe unorganizedsectorisgetting organized. 25 storesin Delhi underthe banner of Provisionmartarejoining handstocombinemonthly buying. Bombay Bazaarand Efoodmart formedwhich areaggregations of Kiranas.

Recent changes:Recent changes:

RecentTrends contd.


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RecentTrends contd.

Multipledriversleadingto a consumption boom: Favorabledemographics Growth inincome Increasingpopulation of women Raisingaspirations:Valueaddedgoodssales

Foodandapparel retailing key drivers ofgrowth

Organized retailingin India has beenlargely an urbanphenomenon with affluent classesandgrowingnumber ofdouble-income households. Moresuccessfulin citiesinthesouth and west of India. Reasons range fromdifferencesin

consumer buying behaviorto cost of realestateandtaxationlaws. Ruralmarketsemergingasa huge opportunity for retailers reflectedintheshare ofthe

ruralmarketacrossmost categories of consumption ITC isexperimenting with retailingthrough itse-Choupaland Choupal Sagar rural

hypermarkets.

HLL is usingits Project Shaktiinitiative leveraging womenself-helpgroups toexplorethe ruralmarket. Mahamazaisleveragingtechnology andnetwork marketing conceptsto actasan

aggregatorandservethe ruralmarkets. ITisatoolthat has been used by retailers ranging fromAmazon.comto eBay to radically

change buying behavioracrosstheglobe. e-tailing slowly makingitspresence felt. Companies usingtheir own web portal ortie-sups with horizontalplayerslikeRediff.com

and Indiatimes.comto offerproducts onthe web.


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MajorRetailers

Indiastop retailersarelargely lifestyle, clothingandapparelstores

Thisis followed by grocerystores

Followingthepasttrendsand businessmodelsinthe west retailgiantssuchas Pantaloon, ShoppersStopand Lifestylearelikely to targetmetrosandsmall citiesalmost

doublingtheir currentnumber ofstores These Walmart wannabes

havetheeconomy ofscaleto below medium costretailerspocketingnarrowmargin

LeadingRetailers


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INDIAN RETAIL INDUSTRY -insights

INDIA A Vibrant Economy & Resplendent Market 4 th Largest economy in PPP terms afterUSA, China & Japan

To be the 3 rd largest economy in terms ofGDP 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.


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INDIAN RETAIL INDUSTRY -insights

US $ 130 billioninvestmentplansininfrastructureinnext 5 years 2 nd Secondmostattractivedevelopingmarket,ahead of China 5th amongthe 30 emergingmarkets fornew retailersto enter

A country with thelargest youngpopulationinthe world- over 867millionpeople below 45 years ofage!More English speakingpeoplein Indiathan ofinthe whole ofEurope300 million oddmiddle class - theReal consumers - is catchingthe

attention ofthe worldWith over 600 millioneffective consumers by 2010 Indiato emergeas one ofthelargest consumermarkets ofthe world by 2010.


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Retailing in India

Total Consumer Spendinthe Year 03-04 INR 9300billion ( USD 375 billion)growing over 5% annually

Retailsales 55% at INR 280 billion (USD 205 billion)

OrganisedRetail Only 3% butgrowingat 30%

Organised retailto cross INR 1000 billionmark by 2010

INR 200 billioninvestmentinthepipeline

Top 6 citiesaccount for 66% oftotal organized retailing.Overwhelmingacceptance ofmodern retail formats.


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Fashion drives organized retail.

2004 figures : Organized retail:Rs. 280 billion

Clothing,Textiles & Fashionaccessories: 39%

Footwear 9%Jewelry & watches 7%Mobile handsets & accessories 3%Health & Beauty (includingservices) 2%Food & Grocery 18%Durables 13%

Books, Music & Gifts 3%Home 3%Pharma 2%Entertainment 1%


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ModernRetail In India: Share Of

Categories

Source: Technopak Analysis

CDIT

9%

F&G

17%

Apparel

20%

Entertainment

2%

Misc Products andServices

9%

Pharmacy

5%Home improvement

1%

Jewellery and Watches

7%

Non store

7%

Restaurant

9%

Furniture

3%

Footwear

9%

Books and Music2%


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Growth Of IndianRetail

i e of IndianRetail

342

530

800

0

100

200

300

400

500

600

700

800

900

2007 2012* 2017*

US$

IndianRetailexpectedto grow by over9% p.a. inthenext10 years

*Projected

Source: Technopak Analysis, CSO & Other Sources


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RapidTransformationAnticipated

Curre e & uture Projections for Indian Retail Marke

342 373408 445

486530

800

12 18 26 3959 87

200

0

100

200

300

400500

600

700

800

900

2007 2008 2009 2010 2011 2012 2017

$

iion

Tota Retai Organi edRetai

25% share

Source: Technopak Analysis

Andmay reach ashare of 25% by 2017

16%

share3.5% share

Documents

Retail and Social Marketing