Chapter 1

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Introduction to Retail

Chapter 1

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Objectives

• Defining retail• The functions of a retailer• The marketing – retail equation• The significance of retail as an industry• The new role of the retailer• The global retail scenario• Key issues facing global retailers• Retail as a career

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What is retail?• Retail – derived from the French word “retaillier”,

which means to break bulk.• Retailing is the last stage in the movement of

goods and services to the consumer.• Retail therefore consists of all activities involved

in the marketing of goods and services directly to the consumers for their personal, family or household use.

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Functions of a Retailer• Form utility

• Time utility

• Place utility

• Ownership utility

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The Marketing – Retail Equation

Manufacturer

Retailer

Consumer

Manufacturer

Consumer

Manufacturer

Wholesaler

Retailer

Consumer

Feedback

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The Changing Retail Landscape

• Proximity to the customer

• The Rise of consumerism

• Introduction of the Private Label

• Technology

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The Global Retail Market

Year $ billion % growth

2009 (E) 12,104.0 4.70 %

2008 ( E) 11,561.5 4.80 %

2007 ( E) 11,029.1 5.10 %

2006 ( E) 10,496.3 5.20 %

2005 (E) 9,981.1 5.10 %

2004 9,498.5 5.5 %

2003 9,005.4 4.50 %

2002 8,620.1 3 %

2001 8,366.0 2.7 %

2000 8,144.2 --

Source: Global Retailing, Datamonitor, May 2005

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Key players in the world of retail

Fortune Rank 2004

Fortune Rank 2003

Corporation Revenues $ mn

% Change in Revenues

1 1 Wal-Mart Stores 287,989 9.50

22 22 Carrefour 90,381.7 13.3

34 34 Home Depot 73,094 12.8

42 41 Metro 70,159.3 15.7

49 37 Royal Ahold 64,675.6 1.9

54 60 Tesco 62,458.7 21.1

67 56 Kroger 56,434.4 3.7

82 71 Target 49,934 3.7

86 88 Costco Wholesale 48,107 13.1

105 111 Albertson’s 40,052 13

Source: Fortune, July 25,2005

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Share of retailing in Total Empl. In select countries

Country Share of retail in total empl

India 6 – 7 %

China 6 %

Poland 12 %

Brazil 15 %

U.S.A. 11.7 %

Korea 18 %

U.K 11 %

Malaysia 7 %

Source: FDI In Retail Sector in India, ICRIER publication

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The World’s Biggest Employers

Global Rank Retailer # of Employees

1 Wal - Mart 1,700,000

314 McDonald’s 438,000

22 Carrefour 430,000

82 Target 292,000

67 Kroger 289,000

34 Home Depot 273,000

132 Sears Roebuck 247,000

54 Tesco 242,980

105 Albertsons 241,000

42 Metro 208,616Source: Fortune, July 25, 2005

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Challenges facing Global Retailers

• The emergence of new markets

• The empowered consumer

• Technology enabled efficiencies

• The rise of the e-age

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Retail as a career• Buying & Merchandising• Marketing• Store Operations• Sales• Finance• Human Resources• Technology & e-commerce• Visual Merchandising• Supply Chain Management & Logistics