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Unit 1: Introduction to Retail Environment

Notes

Caselet Industry Status for Retail Sector?

arely recovering from the slump in the economy, organised retailers in the country
demand that the sector should be given industry status, besides easing foreign
Binvestment norms in the forthcoming Budget. “Industry status has been a long
standing demand of the retail sector. Besides we also want a relaxation in the foreign
direct investment (FDI) norms,” Retailers Association of India chief executive officer Kumar
Rajagopalan said. Sharing similar views, Koutons Retail India chairman D P S Kohli said:
“Industry status has been a recurring demand of the retail sector for many years since only
then will the retailers be able to fully enjoy the benefits of organised financing, insurance
and fiscal incentives.”

According to industry figures, only around five per cent of the estimated over USD 450
billion Indian retail sector is currently organised. Calling for easing of FDI norms,
Rajagopalan said, “No industry in India has grown without FDI participation and for
retail to emerge as a big player, more FDI should be allowed.” Besides, he said even if FDI
norms are not relaxed in the Budget, the government must give a clarification on FII and
foreign PE funding route as there is a lot of ambiguity.
Kohli said clarity on the issue will help Indian retailers raise funds from abroad as the
global liquidity condition is showing improvement. At present, the government allows
51 per cent FDI in single brand retailing and prohibits any foreign investments in the
multi-brand segment.
Source: indianrealitynews.com

Self Assessment
State whether the following statements are true or false:
1. Retailing is the last link in the supply chain that delivers goods to the final consumers.

2. Retailing is concerned with selling of goods only to the final consumers.
3. Retailing is a part of manufacturer’s overall distribution strategy.

1.2 Functions of Retailing

Retailers are crucial players in the emerging market scenario. Large brands are running first to
get into the desired retail formats to cater to the growing middle class of India. Retailers perform
various functions like providing assortments, sorting, breaking the bulk, rendering services,
bearing risk, serve as a channel of communication, transportation, advertising and holding
inventory. They significantly contribute towards increasing the product value and satisfying
the consumers. Following are the functions of a retailer/retailing:
Providing assortments: Offering an assortment enables customers to choose from a wide
selection of brands, designs, sizes, colors, and prices in one location. Manufacturers
specialize in producing specific types of products.

Example: Kellogg’s makes breakfast cereals, Knorr makes soups.
If each manufacturer had its own stores that only sold its own products, consumers would
have to go to many different stores to buy groceries to prepare a single meal. Retailers
offer assortment of multiple products and brands for consumer convenience.

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