Meaning and Definition of Retailing

The term 'retailing' refers to the sale of goods or commodities in small quantities directly to the
consumers. It includes activities of marketing and selling products or services to end users for
their own household or personal use. Retailing is the final step in the distribution of
merchandise for consumption by the end consumers. It includes not only the goods but also the
services that may be provided to the end user.
According to William Stanton, "Retailing consists of the sale and all activities directly related
to ultimate consumers for personal, non business use."
Michael Levy and Barton A Weitz define retailing as "the set business activities which adds
value to the products and services sold to of consumers for the personal or family use."
CONCEPT OF ORGANISED AND UNORGANIZED RETAILING
The Indian retail industry is divided into two: organized and the unorganized sectors.
Organized retailing
Unorganised retailing

Organized retailing
Organized retailing has seen a significant growth in the past few years. Organized retailing
refers to trading activities undertaken by licensed retailers. It includes the corporate backed
retail chains and also privately owned large retail businesses. Organized retail typically means
large scale chain stores which are corporatized and which apply modern management
techniques.
Organised retailing is characterised by large retailers, greater enforcement of taxation
mechanisms and better labour law monitoring system. In India, organised retailing constitutes
a very little share i.e. around 8-10% of the total retail market.
Due to factors such as cutting down middlemen, removing the bottlenecks along the supply
chain, efficiency in the processes etc., the end user i.e, the consumer is benefited with better
products at cheaper price as against unorganized retail sector.
Unorganized retailing
The unorganized or traditional retail comprises of the local baniya or kirana shop, paanbidi
shops and other owner manned general stores.
Unorganized retailing refers to "that part of retailing where the retailer is not providing a
standardized bill to the customer or filing returns for income tax purpose and operates more at
the local level with customized offerings."
Unorganized retail can also be defined as "an outlet which is run locally by the owner or the
caretaker of a shop who lacks the technical and accounting standardization. The supply chain
and the sourcing are also done locally to meet the local needs."
Thus, unorganized retail includes :
• Native kirana shops
• Paanbeedi retailers
• Owner-manned general stores
• Convenience stores
• Handcart hawkers
• Pavment vendors
• Small footware shops, apparel shops etc.
• Small medical shops
Unorganised sector is mainly characterised by small retailers. It is more prone to tax evasions
and lack of labour law monitoring system. Further, it requires low skilled labour, has negligible
rental costs and operates with low overheads. India is one of the biggest unorganized retail
markets in the world. Around 90-92% of the retailers indulge in unorganized retailing.

TRENDS IN RETAILING
1. FDI in retailing
Until 2011, Indian central government denied FDI in multi-brand retail, forbidding foreign
groups from any ownership in any retail outlets. Even single-brand retail was limited to 51%
ownership. However, on 14th September 2012, the government approved FDI upto 51% in
multi-brand retail. On 20th September 2012, the Government of India formally notified the
FDI reforms for single and multi brand retail, thereby making it effective under Indian law. It
now permits 51 per cent FDI in Multi-Brand Retail Trading and 100 per cent in Single-Brand
Retail Trading.
2. Entry of corporate sector into retailing
The last few years have witnessed tremendous growth in the retail sector. Many big players are
already operating in this sector. Some of these include:
• Pantaloons Retail Ltd, a future group venture
• Shoppers Stop Ltd
• Spencer Retail, RPG enterprises
• Lifestyle, Landmark Group Venture
Large business houses like the Tatas, Reliance, ITC, Bharti Retail, Aditya Birla, Rahejas etc.
have entered the retail sector in a big way. These corporate groups have invested huge funds in
retail. This will further boost organized retailing in India.
3. Entry of foreign retailers
The retail sector in India has drawn the interest of many global retailers. Due to liberalization
policies adopted by the government, many multinational companies have entered our country
in retail through joint ventures, franchising or even self-owned stores. Further, the government
has allowed upto 51% FDI in single brand retail. Some of the international players already
present in the Indian market include fast food chains like McDonalds and Pizza Huts; Dominos;
Levis; Lee; Nike; Adidas; Benetton; Sony; Sharp; Kodak; etc. Others include :
• Carrefour in New Delhi, which launched its first cash and carry store here.
• British retailer TESCO Plc entered into joint venture with Trent, retail segment of TATA
group.
• Marks & Spencer joint venture with Reliance Retail.
4. Technology in retailing
Revolution has taken place in information technology. There is a growing trend of the use of
technology in retailing. Use of computers is made in almost all operations in the organized
sector such as billing, preparation of documents, accounting, inventory management etc.
Payments can be made by customers through debit/credit cards, online banking etc. Technology
helps to control costs, enhance supply-chain efficiencies and provide better service to
consumers.
5. Online retailing
As Online shopping has gained popularity amongst large number of people especially
youngsters, online retailers are flourishing as important sales medium for various consumer
brands. In the initial years, only the travel tickets were being sold online by the IRCTC (Indian
Railway Catering & Tourism Corporation). However the scene has changed today. Everything
ranging from apparels to accessories for all the age groups is available online these days.
Further, a consumer can shop online 365 days a year, 24 hours a day and 7 days a week. The
online retail industry is growing due to availability of broadband services and increasing
internet penetration.
6. Contribution of retailing in GDP and employment
The Indian retail sector accounts for over 15% of the country's Domestic Product (GDP) and
contributes to around 8-10% of the total employment. With growth in organized retailing and
entry of several players in the market, this contribution is likely to increase in the near future.
7. Training to retail personnel
Till 2000, there was hardly any emphasis on training in the retail sector. With the entry of
organized retailers, emphasis is now placed on training and development of retail personnel.
Such training is necessary due to specialization in jobs and extensive use of modern technology.
Trained personnel are required in the areas of merchandize management, store management,
administrative management, strategic management, public relations and so on. Career
opportunities in the retail sector are now increasing. Many institutes have been set up in India
to provide training facilities.
8. Rural retailing
Rural retailing is another area of prime focus for many retailers. Retailers are devising
strategies especially for the rural consumers. Organized retail is increasingly taking off in India
and as more than 65% of India's population is living in rural areas, retailers are fast penetrating
rural markets with different models to serve the shoppers of rural and semi-urban India.
SURVIVAL STRATEGIES FOR UNORGANIZED RETAILERS
In order to survive, it is necessary for small retailers to distinguish themselves from the larger retail
businesses that surround them. These large retail businesses usually have a greater resource base to
support widespread advertising, volume buying, better locations and more impressive facilities.
To counter such advantages, smaller retailers must find their niche and offer products and services that
can be uniquely identified with them. Some of the survival strategies for unorganized retailers are
discussed as under:
[Link] existing stores
Traditional retailers must make use of modern technology. For instance, accepting debit and credit cards
by installing swiping machine. Computerized billing, scanning, bar coding, accounting and inventory
control can also be practiced. Retailers can use electronic weighing machines as many consumers trust
the old practices of weighing and measuring products.
2. Forming cartels
Small retailers can unite to effectively counter the competition posed by moden retailers. They can
consolidate buying of products from manufacturing companies which can build economies in their scale
of operations. The benefit thus obtained can be passed on to the final consumers and thereby match the
prices offered by organized retailers.
3. Pricing strategy
In a middle class dominated, price sensitive market, offering products at discounted price can attract
large number of customers to the retail outlet. Unorganized retailers can use this as a weapon to counter
the competition of big retailers. They may pass on a part of their retail margin or the benefit of low cost
of operations to the customers. Such a pricing strategy will not only attract customers but also help in
retaining them.
4. Services delivery mechanism
Consumers in today's marketplace are more concerned with "value". Value includes price and other
parameters such as good quality, convenient, consistent and continuous service. Small stores should
focus on personalized service to customers. They should personally attend to the customer and should
try their best to satisfy him.
5. Customer relationship
In this era of competition, it is extremely important to maintain good relations with the customers.
Customers must be treated more as individuals with increased attention given to their respective needs.
The traditional retailers have an advantage to establish good relations with their customers. Apart from
proper service, they can provide personalized services to their customers. Maintaining good customer
relationship helps in not only attracting and retaining customers but also in generating customer loyalty.
6. Customer research
Unorganized retailers must conduct customer research to find out their preferences and reactions
towards the retail outlet. They can gather such information through interviews, surveys and focus
groups. The information collection can then be utilized by the retailers to provide better service to their
customers.
7. Additional services
Small retailers must provide better and more services than their larger competitors. Unique services
such as free home delivery, accepting order on phone, replacement of defective items or unfit items,
exchange offers, customized packaging, credit facilities etc. must be offered. By providing such
services, the retailer can gain customer trust and confidence and the store turnover may increase.
8. Loyalty programmes
The unorganized retailers must offer special schemes to loyal customers. They can launch frequent
shopper rewards. Loyal customers must be given special benefits. For instance, the retailers may give
them special gifts during festive occasions, send seasons' greetings, complimentary offers etc.
9. Proper stock
Unorganized retailers must maintain proper stock of goods. Customers these days. insist on fresh stock.
Hence, the retailers must maintain proper level of stock to ensure customer satisfaction. They can make
use of computers to monitor the level of stock.
10. Sales promotion strategy
Just like organized retailers, the small retailers must also offer sales promotion schemes. For example,
special discounts or gifts during festivals such as Diwali, Christmas, Holi and also on occasions such
as New Year, Navratri, Ganesh and so on. Such schemes can increase the store turnover.