RETAIL MANAGEMENT

INTRODUCTION

The retail industry secures the fifth position as an industry and is the second largest employer
after agriculture, providing bright and exciting job opportunities in India. Retail business is
undergoing rapid transformation in its marketing practices. Till a few years ago, we bought most
of the daily use products from small shops in our neighbourhood or a nearby market. Generally,
the shopkeepers sell goods—either individually as a sole proprietor or with the help of a few
assistants. In the last few years, however, the concept of large departmental stores and malls
has come up, which also provide the same products.

Today, supermarkets, departmental stores, hypermarkets, malls and non-store retailing like
multilevel marketing and telemarketing, have replaced or co-exist, transacting with the
traditional retail businesspersons, such as hawkers, grocers and vendors, etc. There are various
levels at which retail businesses operate—ranging from small, owner operated and independent
shops to those in the national and international market. An increase in income levels and the
need for new products and services, a rise in standard of living, competition in the market and
increasing consumption patterns of customers have contributed to the demand for creation of
these type of stores.

“Retailing includes all activities involved in selling goods or services to the final
consumers for personal, non-business use.” - Phillip Kotler

Retail is a business deal in which the seller sells small quantities of goods to the customers as
per their needs. A retail store is a retail business enterprise which primarily deals with sales
volume in retailing. In easy terms, the function of retailing is to sell products to final consumers
by an individual or a firm.

The Indian population’s purchasing power is increasing with an increase in income, and this has
led to an increase in the number of retail outlets. There is a great opportunity for retail players,
such as Tatas (Tata Trent), RPG Group (Food World, Music World and Health & Glow), ITC (Life
Style), Rahejas (Shoppers Stop), Hiranandani (Haike) in various urban and semi-urban areas.

Theories of Retail Development

Retail development can also be looked at from the theoretical perspective. No single theory can
be universally applicable or acceptable. The application of each theory varies from market to
market, depending on the level of maturity and the socio-economic conditions in that market.

The theories developed to explain the process of retail development revolve around the
importance of competitive pressures, the investments in organizational capabilities and the
creation of a sustainable competitive advantage, which requires the implementation of strategic
planning by retail organizations Growth in retail is a result of understand in market signals and
responding, to the opportunities that arise in a dynamic manner. Theories of retail development
can broadly be classified as:

1. Environmental- where a change in retail is attributed to the change in the environment in

which the retailers operate.

2. Cyclical- where change follows a pattern and phases can have definite identifiable attributes
associated with them.

3. Conflictual- where the competition or conflict between two opposite types of retailers, leads
to a new format being developed

4. Accordion- where retail institutions go from outlets with wide assortments to specialized
narrow line store merchants and then back again to the more general wide assortment institution.

The future of retail

The pattern of future retail development in emerging markets is uncertain and yet is crucial to
the continued development of those economies. Economic turbulence in the global economy
and its worldwide impact on retailing is not a new and unique phenomenon. The resultant retail
change has not occurred overnight and the transition has not been dramatic either. modern
retailing is the accumulation of incremental steps over time. The state of retailing at any given
point in time is not only dependent on the cyclical nature of the overall economy in a country or
region, but also on specific factors endemic to retailing That retailing is not revolutionary, but
evolutionary has been demonstrated widely in the retailing literature. If one were to take into
account that modern retailing is an accumulation of incremental steps over time then retail
theories such as the retail life cycle, the wheel of retailing, the scrambled merchandising/retail
accordion all remain as valid and useful in the study of retailing in emerging markets as they are
for mature markets.

The universality of theories of retail change have been questioned for several reasons – the
universality of the ‘wheel of retailing’ has been questioned on the grounds that it was developed
in the context of US retailing and other culturally different contexts. The causality implicit in the
‘wheel of retailing’ whereby retail institutions commencing as low cost, cut price, narrow margin
operations evolve into high-cost, conservative, top heavy organisations assumes that the
demand for the products and services offered by retailers naturally follow a similar pattern.
Other cyclical theories such as the retail life cycle and retail accordion have been criticised on
account of being limited to the remit of inter-institutional strife without any consideration for
broader environmental issues such as culture and demand structures. Conflict theories of retail
change also ignore the broader environment as they focus primarily on change as the outcome

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of inter- and intra-institutional strife. Organisational change is seen as the function of dialectical
theory where retail evolution follows patterns of thesis, anti-thesis and synthesis i.e. one form
of organisational orthodoxy replaces another, the new one then initiates a new round of change.
In all these theories, the influence of the broader environment is seen as external to the
organisational context and pertinently points out that the dynamic interplay between retailers
and the environment has been largely ignored in the literature. Another glaring omission in the
cyclical and conflict theories is the absence of consumption activities and the impact that
consumer behaviour may have on retail activity. Existing literature on consumption activity often
assumes that the consumer is passive and easily manipulated and completely disregards the
consumers’ ability to interact with and influence organisational strategy. Change in retail
structures needs to consider that the active and knowledgeable consumer has to be an integral
part of the retail change process.

Cultures of consumption play a significant role in retail change. Within cultural realms,
‘legitimate’ tastes are defined and very often are used as social demarcations for class and
standing in society. With economic development and rising levels of income, the so called lower
status groups begin to emulate or usurp the tastes of higher income groups which then causes
the latter to respond by adopting new tastes which re-establish them and maintain the original
distance. As a result, elite goods get massified and popular goods get anesthetised. In this
context, consumers of all classes become increasingly active, critical and creative people. This
also holds true in the case of emerging markets where modernity is seen as a mark of
development and new identities are created with the symbolic world of consumption rather than
through a direct relationship with the material world.

In the case of India which is at the cusp of liberalising the entire retail sector, the relevance of
consumer behaviour is manifold. Consumer demand has increased in India owing to the
economic growth. This has led to more choice of products, and the traditional over-the-counter
service is under pressure from time-pressed consumers, who favour a faster self-service format.
There is uncertainty as to whether consumers will abandon old ways of shopping, add new ones
to a spectrum with various known inherent advantages and disadvantages, or induce innovation
in the retail formats available. The challenge to retail development is exacerbated by the fact
that the Indian market is multifaceted and multi-cultured, where tradition and modernity exist
in parallel, poverty and affluence exist alongside one another, and socio-demographics continue
to experience a rapid shift.

According to me, all of the above theories of retail have their pros and cons, but the future of
retail cannot be decided by just one theory, a combination of theories combined will lead to the
evolution of retail. The past is known to be the prologue for the future, so let us consider the
past instances where certain theories of retain were proved wrong, to determine what is in store

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for the future. There were certain brands that, in the past, were at the top of their game but
now they are nowhere to be seen. So, this rules out the environmental theory about “survival
of the fittest”, because even the fittest die out.

I think a combination of the cyclical theory and the environmental theory is what will work in
the future of retail, because the environmental theory takes into account the entire business
environment including the consumers and the competition and the cyclical theory fundamentally
describes the different phases in a company. This takes care of all the three factors of retail –
consumers, competitors and the company itself. The wheel of retailing helps understand retail
changes, and also the cause of these changes. Once the retailer or retailing company understand
how to effectively change with the changing environment and also how to adapt to change
successfully, along with going through the wheel of retailing and not ending in absolution or
decline, the retailer/company will be successful in maintaining as well as growing in this ever-
evolving population.

The retail industry in India has begun its journey, transforming its existence into mature
behaviour and tenuous co-existence. This is emerging as one essential trend that has the
potential to revamp the retail industry in India. From the murky waters of price wars and survival
threats, the sector had been plagued by several other things as well over the last few years.
The Indian retail industry is currently in its youngest avatar despite Indian well known for being
one of the finest traders in the world. The fine skills of negotiation, innovation, customer service,
reliable delivery, and ingenuity were honed at the altar of foreign lands spanning from Indonesia
and Malaysia in far-east right up to the farthest stretches of Africa in the west.

There are various factors that have highly contributed to the rapid growth and evolution of the
Indian retail industry. The highly developed naval capabilities followed by the fertile lands are
effectively contributing towards the growth of this industry. These factors are also rewarding
the local farmers currently present in the country. Therefore, the retail industry in India is
developing at the global level, creating an eco-system that is spawning the largest number of
retail outlets as compared to any other nation worldwide.

As the business industries are rapidly growing in India, the rise of digitalization and technologies
have proved to be major elements for transforming the industry. As the Internet of Things is
connecting over 11 billion products every day, retailers could collect data, providing context
about their customers' product usage. The Internet of Things is making the shopping experience
easier and cheaper, satisfying the new age customers. According to a report, the people are
expected to possess twice as many smart devices till 2020 that would hugely affect the Indian
retail market. Therefore, the Indian retail industry is assumed to grow at breakneck speed,
nurturing and modifying the retail scenario worldwide, including India.