X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Retail: Classifying the formats - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Apr 18, 2007

    Retail: Classifying the formats

    Retailing is the final step in the distribution of merchandise - the last link in the supply chain (connection between the bulk producers of commodities to the final consumers). Retailing covers diverse products such as food, apparel, consumer goods, financial services and leisure. The Indian retail market, pegged at US$ 350 bn and accounting for 10% of the country's GDP, is large but highly fragmented (Source: IBEF). Organised retail in India constitutes approximately 2% of the total retail industry. The concentration of organised retail players is mainly in the top 10 cities, which account for 96% of the organised retail market. The growth in organised retail is being led by changes in consumer behaviour and is being driven mainly by the increased availability of shopping opportunities provided by the retailers.

    There has been a transition from the traditional retail sector to organised retailing, from small kiranawalas to big super markets over the years. Given the time constraint, convenience of shopping with multiplicity of choice under one roof is what consumers are looking for these days. And this has been the driving factor for organised retailing in the country.

    Formats like kiranas, traditional mom and pop stores, kiosks, street markets, exclusive/multiple brand outlets are traditional formats. While company owned and company operated supermarkets (Food world), hypermarkets (Big Bazaar), department stores (Shoppers' Stop), specialty chains (Ikea), entertainment (Inox) are modern formats. In this article, we have discussed the various retail formats and the value proposition that they offer.

    Retail formats can be broadly be classified into two types viz., a) Store format and b) Non-store format.

    Store formats: Store formats are formats based on the physical store where the vendor interacts with the customer. A super market, convenience store, department store, discount store, category specialist and malls are few examples of the store formats.

    • Department stores: A department store is a large store with a wide variety of products organised into departments such as clothing, house wares, furniture, appliances, toys and the like. The value proposition of this store is that it provides a one stop shop catering to varied consumer needs.

    • Super market: Super markets are extremely large self-service retail outlets with the same value proposition as delivered by the department stores - one stop shop catering to varied consumer needs. For example: Food world.

    • Hyper-mart: It is larger than a super market, sometimes with a warehouse appearance and generally located in quieter parts of the city. These stores offer vast choice at low prices and also include services such as cafeterias. For example: Big Bazaar.

    • Discount stores: These types of stores offer discounts on the retail price by selling high volumes and reaping the economies of scale. The value proposition attached to these types of formats is in the name itself - low prices or at a discount.

    • Convenience stores: Convenience stores are small self-service formats located in crowded urban areas. The value proposition attached to these type of formats is convenient location and extended operating hours.

    • Branded stores: The exclusive showrooms either owned or franchised out by a manufacturer are termed as branded stores. They offer complete range for a given brand with certified product quality. For example: Shoppers' Stop.

    • Speciality stores: This type of store focuses on a specific consumer need and caters to most of the available brands. These types of stores provide greater choice to the consumers and also enable brand comparison. For example: Ikea

    • Shopping malls: An enclosure having different formats of in-store retailers, all under one roof is termed as a shopping mall. This type of a format is gaining importance these days. The benefit of this type of format is that different shops are located close to each other, thus enabling convenience of shopping.

    Non-store: Non-store formats are those forms of retailing where end users are served without meeting them in the physical store. Non-store formats are represented by catalogue and direct mail retailing, telemarketing, television home shopping, direct personal selling, vending machine selling and internet selling. Here, we focus on two such formats namely vending machines and electronic retailing.

    • Vending machines: A vending machine is a retailing format involving the coin or card operated dispensing of goods (such as beverages) and services (such as life insurance sales at airports). It eliminates the use of sales personnel and allows for round the clock sales. Machines can be placed wherever they are most convenient to the consumers i.e. inside or outside a store, at a station, airport or a street corner.

    • Electronic retailing: Electronic retailing (also called e-tailing and Internet retailing) is a retail format in which the retailer and customer communicate which each other through an interactive electronic network. The customer places orders directly through the interactive network or by telephone, after which the goods are then delivered to the customer's address.

    Looking ahead...
    As per our estimates, the retail sector as a whole, grew by 9.7% in FY06 as against the real GDP growth rate of 8.4% and GDP per capita growth of around 7%. But organised retailing grew at more than 3 times real GDP growth in FY06 and we expect this trend to continue in the next three to five years. Going forward, we believe that accretion to income levels of the rising Indian middle class (represented by the financially independent young population) and the consequent rise in disposable incomes will fuel the growth of the retailing sector.

     

     

    Equitymaster requests your view! Post a comment on "Retail: Classifying the formats". Click here!

      
     

    More Views on News

    Titan: Jewellery Business Lights up the Quarter (Quarterly Results Update - Detailed)

    Aug 10, 2017

    However, growth at these levels are unlikely to be sustainable.

    Avenue Supermarts Ltd. (IPO)

    Mar 7, 2017

    Equitymaster analyses Initial Public Offering (IPO) of Avenue Supermarts Limited.

    Titan: Beating the Demonetisation Blues (Quarterly Results Update - Detailed)

    Feb 14, 2017

    Titan Industries declared its results for the third quarter of financial year 2017 (3QFY17). While topline growth was 14.7% YoY, net profit grew by 13.1% YoY during the quarter. Here is our analysis of the results.

    Titan: Margin Improvement Saves the Day (Quarterly Results Update - Detailed)

    Nov 16, 2016

    Titan Industries declared its results for the second quarter of financial year 2017 (2QFY17). While topline growth was flat, net profit grew by 23.5% YoY during the quarter. Here is our analysis of the results.

    Titan: High Gold Prices Spoil the Show (Quarterly Results Update - Detailed)

    Aug 9, 2016

    Titan Industries declared its results for the first quarter of financial year 2017 (1QFY17). The company reported 3.3% YoY increase in sales, while net profit fell by 16.3% YoY during the quarter.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    COMPARE COMPANY

    MARKET STATS