Page 20 - DMGT552_VISUAL_MERCHANDISING

Unit 1: Introduction to Retail

 Shift in consumer demand to foreign brands like McDonald, Sony, Panasonic, etc. Notes
 Consumer preference for shopping in new environs
 The Internet revolution is making the Indian consumer more accessible to the growing
influence of domestic and foreign retail chains. Reach of satellite T.V. channel is helping in
creating awareness about global products for local markets

 About 47% of India’s young population, which is technology savvy, watch more than 50
TV satellite channels and display the highest propensity to spend, will immensely
contribute to the growth of the retail sector in the country by 2015

 Availability of quality real estate and mall management practices foreign companies
attraction to India is the billion-plus population

1.5.5 Key Challenges of Indian Retail Industry

The major challenges of Indian Retail Industry include:
(i) Location: Right Place, Right choice “Location” is the most important ingredient for any
business that relies on customers, and is typically the prime consideration in a customer’s
store choice. Locations decisions are harder to change because retailers have to either
make sustainable investments. When formulating decision about where to locate,
the retailer must refer to the strategic plan: (i) Investigate alternative trading areas.
(ii) Determine the type of desirable store location (iii) Evaluate alternative specific store sites
(ii) Merchandise: The primary goal of the most retailers is to sell the right kind of merchandise
and nothing is more central to the strategic thrust of the retailing firm. Merchandising
consists of activities involved in acquiring particular goods and services and making
them available at a place, time and quantity that enable the retailer to reach its goals.
Merchandising is perhaps, the most important function for any retail organisation, as it
decides what finally goes on shelf of the store.
(iii) Pricing: Pricing is a crucial strategic variable due to its direct relationship with a firm’s
goal and its interaction with other retailing elements. The importance of pricing decisions
is growing because today’s customers are looking for good value when they buy
merchandise and services. Price is the easiest and quickest variable to change.

(iv) Target Audience: “Consumer the prime mover “”Consumer Pull”, however, seems to be
the most important driving factor behind the sustenance of the industry. The purchasing
power of the customers has increased to a great extent, with the influencing the retail
industry to a great extent, a variety of other factors also seem to fuel the retailing boom.

(v) Scale of Operations: Scale of operations includes all the supply chain activities, which are
carried out in the business. It is one of the challenges that the Indian retailers are facing.
The cost of business operations is very high in India. To become a truly flourishing
industry, retailing needs to cross the hurdles:
 Automatic approval is not allowed for foreign investment in retail.

 Taxation, which favours small retail businesses.
 Absence of developed supply chain and integrated IT management.
 Lack of trained workforce.

 Low skill level for retailing management.
 Intrinsic complexity of retailing – rapid price changes, constant threat of product
obsolescence and low margins.

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