Page 296 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Unit 14: A Review of Retailing: Environment and Operations

The catchments for retailers are shrinking, as most of them have been crowding the same areas. Notes
Consumers do not like to travel long distances for shopping. Poor road infrastructure and poor
car density are impediments for growth. Retailers are forced to set up stores near the city
centers, which increases their costs. Some retailers have started experimenting with the business
model of having stores away from busy areas and offering free transport to consumers



Caselet Hyper city Retail in Thane

yper city Retail opened its fifth hyper mart at Ghodbunder Road near Thane. It is
a 0.1msf store, with 350 car parking spaces. The store is 4-5km away from the
Hprimary catchments. It provided consumers free car parking, which otherwise
would cost ` 40-50. Also, for the first time in India’s retailing history, the company offers
a free bus service for the consumers. The experiment seems to be going well.
The store is receiving consumers from as far as 8-9km as against the initial target of
drawing customers from catchment areas in a 4-5km radius. It is currently experiencing
footfalls of 3,000 during weekdays and 7,000-10,000 during weekends.
Regulatory bottlenecks need to be addressed to encourage inclusive growth
Other issues: Organized retail also suffers from regulatory issues at the state and local levels, the
resolution of which can reduce lead time and costs, and improve profitability
 Labor laws: Labor laws place restrictions on employing women for jobs that require them
to work after 8:00 pm. The cost of employing women as store executives is lower, but the
prevalent labor laws discourage retailers from doing so
 Too many regulatory approvals: Organized retailers require more than 40 approvals
from various authorities for opening a store. Delay in getting the approvals increases the
gestation period, inventory carrying cost (purchased in anticipation of store getting ready)
and manpower cost (staff is recruited in advance for training)

Self Assessment

Fill in the blanks:
1. ……….......…….. environment change have great impact on the performance of companies
2. ……………………… development takes place in a political organizational environment
that is influenced by a series of stakeholders,
3. …………………… influences the pattern of living, of consumption, of decision-making by
individuals.
4. ……………………………………….. are tempting the Indian consumers to shop.
5. Indian ……………………… retail follows the lease rental model due to high real estate
costs and paucity of quality malls.
6. ……………………….. farming is not prevalent and this limits the capacity of retailers to
source products of uniform quality or products that are in great demand.
7. Marketing of agricultural products is governed by respective state …………………………
Acts, which have created marketing monopolies.
8. Direct sourcing can reduce the consumer price by ……………………… organized retailers’
own distribution.

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