Lesson-3
Trends in Retailing
Objectives:
After studying this lesson you will be able to understand:
Retailing trends in India, Asia and generally World.
Structure:
2.1 Introduction
2.2 Trends in India
2.3 Trends in Asia
2.4 Summery
2.5 Questions
2.6 References
2.1 Introduction:
The general direction of a market or of the price of an asset. Trends can vary in length from short, to intermediate, to long term. If you can identify a trend, it can be highly profitable, because you will be able to trade with the trend. A trend can also apply to interest rates, yields, equities and any other market which is characterized by a long-term movement in price or volume. For example: “There is an upward (downward, level) trend in XYZ sales,” or “There is a trend toward increased computerization of trading on Wall Street.”
2.2 Retailing In India:
India’s retail sector appears underdeveloped not only by the standards of industrialized countries but also in comparison with several other emerging markets in Asia and elsewhere. There are only 14 companies that run department stores and two with hypermarkets. While the number of businesses operating supermarkets is higher (385 in 2003), most of these had only one outlet. The number of companies with supermarket chains was less than 10. In a developing country like India, a large chunk of consumer expenditure is on basic necessities, especially food related items. Hence, it is not surprising that food, beverages and tobacco and non-food items.
2.3 Trends in Retail in ASIA:
Asia as a region is significantly different from the rest of the world in terms of culture, food habits and lifestyles. Geographic proximity goes hand-in –hand with great diversity in language, tradition, culture, preferences and behaviours. There are certain characteristics of individual Asian cultures that are more or less common across national societies. In an attempt to understand how retail may evolve in India in the years to come, this section looks at retail in select Asian countries in an attempt to understand the key formats that exist and the legislations and economic factors that have enabled the development of the formats.
One of the first names that comes to the mind when we consider shopping in the Asian region is Singapore. Singapore is considered to be a shopper’s haven today. The retail trade in the country comprises of establishments dealing in general merchandise, transport equipment, personal goods, household equipment and other retail trade which includes the sale of fruits and vegetables, health food, etc., Singapore today, has evolved to becoming a mature retail market where rents are stable and the infrastructure attracts many foreign players.
The Urban Renewal Authority (URA), a government statutory board, has been instrumental in the development of retail and it looked into the development of planned shopping centres and mixed-use developments in the central areas of the city. From 1986 to 1991, retail space increased by an average of 286,000 sp.ft. a year. In 1992, new supply of retail space increased it by about 2.5 times to 689,000 sq.ft. and in 1993, new supply made a quantum leap to hit about two million square feet in just one year. The development of the Mass Rapid Transport System further enabled the development of retail in the country.
While the country does welcome foreign investment, it has also enforced laws like the Competition Act 2004 and the GST to regulate the trade. NTUC Fair price Co-Operative is the largest retailer in the country of operates supermarkets and 24 hour convenience stores. Cold Storage Singapore, Robinson Group and Takshimaya Singapore are the other key retailers in the country. A well-developed retail infrastructure has played a key role in the retail development of the country.
The other nation known for shopping in the region is Hong Kong. Over the years, retail in Hong Kong has evolved from street side stores and wet markets and a handful of traditional department stores, to a retail destination. In the mid-1960s, the creation of the Ocean Terminal, at the tip of the Kowloon Peninsula, one of the first shopping centers in Hong Kong, changed the scene forever.
Since the 1970s, the continuous expansion of the transport infrastructure across the island, and the development of new towns by both te public and private sectors, has led to the growth of retail in the country.
In the midst of all this is what is termed as Asia’s richest market – Japan. Japan has the world’s second largest economy; it also has the world’s most rapidly aging population. The Japanese retail market is highly fragmented, with a majority of the stores run by small business owners. Post World War II, economic recovery began in Japan with the reconstruction of cities centered around railway stations, as trains were the most important means of connecting cities with rural areas and delivering cargo. The railway stations thus became distribution centers and community gathering places. That made them desirable sites for commercial complexes.
Among Japanese retailers, convenience stores have been the forerunners in trying to integrate e-commerce into their business strategies. Japan has about 36,000 convenience stores, which play an indispensable role in people’s daily lives. The biggest is Seven Eleven, which has 8,000 stores. Japanese convenience stores are noteworthy for their ability to introduce technical innovations. There were among the first to introduce a point-of-sale system to analyse sales trends and encourage manufacturers to develop new products, stimulating consumer demand.
Japan regulates its retail environment with the “Large-scale Retail Store Law”, which has been applied to control and adjust the hours of large-scale retail stores. Apart from this, there exists the Anti Monopoly Law, which prohibits private Monopolies, unreasonable trade restraints and other unfair business practices. It is also regulates international agreements and contracts that restrict competition.
An Asia’s fatest growing economy over the past 20 years, China saw a six-fold increase in GDP from 1984 through 2004. China is expected to emerge as the second-largest market in household consumption by the year 2014, said a study carried out recently by Credit Suisse First Boston (CSFB), recorded in the Shanghai Daily. It is predicted that retail sales in the country would reach RMB 6.1 trillion in the year 2005. A 13% jump from the previous year.
In Australia, the retail trade division comprises three main categories – food, personal and household goods and motor vehicles. The recent introduction of online retailing has broadened the medium of sale for operators. It is important to note that business who operate as cafes, restaurants, hotels and motels are excluded from this division. Businesses engaged in retail trade include department stores or other shops, motor vehicles retailers and service outlets, stalls, mail order houses, hawkers, door-to-door seller’s milk vendors, vending machine operators and consumer co-operatives. Units mainly sealing goods on a commission basis to final consumers for personal or household consumption are included.
In Malaysia, the wholesale and retail sector falls under the supervision of the Ministry of Domestic Trade and Consumer Affairs 9MDTCA), through the Committee on Wholesale and Retail Trade. It restricts foreign involvement in certain retail formats, depending on the size, and its lays down specific parameters on selling and the size and location of the stores.
In is interesting to note that region with an extreme climate such as the Middle East has emerged as a shopping destination of the world. With an estimated number of sixty thousand shoppers every day and nearly $2 billion in investment, the stakes are high for retail in Dubai. The past seven years have seen a 200 per cent growth in capacity and a total investment of nearly $1 billion.
A survey by Retail International found that 10 countries in the Middle East shared 4.4 million square meters of shopping space, and a fresh supply of 2.2 million square meters is still in the pipeline, which would take the total space available to over 6.5 million square meters in three years. Retail international predicts that growth in Dubai will continue until the year 2025, even if the growth rates start to sap after 2005.
Thus, retail in Asian economies continues to be a mix of traditional and modern formats. The growth of the Asian economies in recent times has given birth to a better educated, better travelled, more informed and more demanding middle class. The shift in the share of trade is now becoming evident. In North Asia, nearly two-thirds of all grocery sales are now made through modern trade over the last three yeas, there has been a near 10 per cent shift n business, away from the traditional trade, led by the continued rapid development of the market in China. In India, there are now over 2,400 supermarkets which account for 10 per cent of total grocery sales, within the 28 urban towns under modern trade.
2.4 Summary:
Retail sector appears underdeveloped not only by the standards of industrialized countries but also in comparison with several other emerging markets in Asia and elsewhere. There are certain characteristics of individual Asian cultures that are more or less common across national societies. Singapore is considered to be a shopper’s haven today. Singapore today, has evolved to becoming a mature retail market where rents are stable and the infrastructure attracts many foreign players. Retail in Hong Kong has evolved from street side stores and wet markets and a handful of traditional department stores, to a retail destination. The Japanese retail market is highly fragmented, with a majority of the stores run by small business owners. Among Japanese retailers, convenience stores have been the forerunners in trying to integrate e-commerce into their business strategies. China is expected to emerge as the second-largest market in household consumption by the year 2014. Retail in Asian economies continues to be a mix of traditional and modern formats. The growth of the Asian economies in recent times has given birth to a better educated, better travelled, more informed and more demanding middle class. In India, there are now over 2,400 supermarkets which account for 10 per cent of total grocery sales, within the 28 urban towns under modern trade.
Key Terms:
Trend: The general direction of a market or of the price of an asset.
2.5 Questions:
1. What are the recent trends in retailing business?
2. How the trends influence the status of Indian retailing?
3. Is India moving with the global place in retailing – comment?
2.6 References:
Swapna Pradhan, Retailing Management. Tata McGraw-Hill Publishing Company Limited New Delhi, 2nd Edition.
www.Wekipedia.org
