Page 63 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Retail Business Environment

Notes Measuring Retail Structures

So what do us actually means by the term retail structure, and how do we measure it in order to
compare markets? The structure of the retail environment generally refers to the nature and
characteristics of the market: for example, the type of retail operations, the variety of retail
offers, store location and nature of ownership.
In terms of measuring the retail environment, levels of market concentration are often used.
Higher levels of concentration are associated with more developed markets. For example, the
top three retailers of each country account for 58 per cent of all sales through food retailers in
Germany and 47 per cent in the UK and in France, indicating that these are highly developed
retail environments. Compare this with concentration levels of just 22 per cent for Italy and 8
per cent for Poland, illustrating their less-developed retail industries (Retail Intelligence, 2001b).
This is explained by the fact that, as retail industries develop, so multiple organizations begin to
take market share from traditional independent and co-operative retailers; thus a smaller number
of larger organizations are taking a greater proportion of the market.

The level of retail structure development can be measured not just by the member of retail
organizations, but also by the number of stores (Davis and Whitehead, 1995). As a demand-led
retail market begins to develop, so the number of stores, and also the number of retail companies,
increases. As the market becomes more structured, the number of retail organizations begins to
drop off due to the dominance of fewer but larger multiple organizations. The number of stores
begins to decrease because the size of individual shops increased in order to gain scale economies
and efficiencies, and so one store can serve a larger group of the population. In the developed
retail market of the UK there are some 185 inhabitants per retail outlet, this compares to just 66
people in Greece, implying that stores in Greece are much smaller (Retail Intelligence, 2000).

Task Choose a selection of markets from around the world. Using a matrix where
international market boundaries are listed down the vertical axis and the markets are
listed across the horizontal axis, try to identify which markets share common characteristics
and which do not.

Caselet Starbucks’ Expansion into the Indian Territory

tarbucks aims to open 50 outlets in India by 2012 end, through a 50-50 joint venture
Swith Tata Global Beverages, the companies said Monday.
Tata Starbucks Ltd., as their venture is known, hopes to capitalize on the rising aspirations
– and fattening wallets – of many Indians, who are eager to partake of the global latte life.

“What we are seeing is an evolution in lifestyles,” said R.K. Krishnakumar, vice chairman
of Tata Global Beverages. “In some ways the distinctions between the developed world
and the developing world are blurring.”
He said the partners would initially invest 4 billion rupees ($80 million), with the first
outlet to open in Mumbai or New Delhi by September.

Long known as a nation of tea drinkers – despite a rich tradition of coffee in the south –
India has embraced coffee house culture with a vengeance.
Contd...

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