Introduction

In a consumer-driven industry like retail, the global economic turmoil affecting many nations has created a challenging environment. While competition increased, consumer spending in many parts of the world dipped. New giants emerged and erstwhile leaders faded. Entire industry segments emerged only to make way for new ones once again. Mergers, acquisitions, and bankruptcies hastened consolidation. Technological advances transformed business practices. New leaders re-engineered business models and invested in new infrastructure.

The emergence of the 24 x 7 culture has had a very strong impact on the changes occurring in many industries. Each passing year has new and far reaching effects on the retail industry, and this is not surprising considering that retail is an industry which is all about change. In the years to come, retailers will have to focus on the long-term horizon and also deal with pressures on margins, market saturation, the aging of populations and the emergence of newer channels of reaching the consumer. The next ten years will undoubtedly hold even more changes than the last decade.

What is retail?

Retail is the final stage of any economic activity. By virtue of this fact, retail occupies an important place in the world economy. In an attempt to understand the scope of the term retail, various definitions of the term have been examined.

Kotler states that “Retailing includes all the activities involved in selling goods or services to the final consumers for personal, non-business use. A retailer or retail store is any business enterprise whose sale volume comes primarily from retailing. Any organisation selling to final consumers whether it is a manufacturer, wholesaler or retailer – is doing retailing. It does not matter how the goods or services are sold (by person, mail, telephone, vending machine or internet or where they are sold – in a store, on the street or in the consumer's home).

Berman and Evans state that “Retailing is said to encompass the business activities involved in selling goods and services to consumers for their personal, family or household use.

The North American Industry Classification System (NAICS) specifies that the retail trade sector comprises establishments primarily engaged in retailing merchandise, generally without transformation, and rendering services incidental to the sale of merchandise.

The word retail is derived from the French word retaillier, which means to cut off a piece or to break bulk. Retail may be defined, as a 'dealer or trader who sells goods in small quantities or one who repeats or relates.'

Retailing thus may be understood as the final step in the distribution of merchandise for consumption by the end consumers. Put simply, any firm that sells products to the final consumer is performing the function of retailing. It thus consists of all activities involved in the marketing of goods and services directly to the consumers for their personal, family or household use.

The Role of the Retailer

A common thought which emerges from the definitions of retail mentioned in the earlier section is that it is the retailer who is the final contact point with the consumer in the market. A market may be termed as a physical place where buyers and sellers gather to buy and sell goods. In today's dynamic world, retailers exist in marketplaces in the physical environment like a retail store, and also in the digital market space for those who shop on the internet.

It is necessary to understand that in the complex world of trade today, retail would include not only goods but also services, which may be provided to the end consumer. In an age where the customer is the king and marketers are focusing on customer delight, retail may be redefined as the first point of customer contact. In doing so, a retailer performs many functions which are illustrated in following diagram

a. The Retailer as a Link between the Producer and the Consumer

From the customers' point of view, the retailer serves him by providing the goods that he needs in the required assortment, at the required place and time. From an economic standpoint, the role of a retailer is to provide real added value or utility to the customer. The first utility provided by the retailer is that of the form of a product that is acceptable to the customer. The retailer does not supply raw materials, but offers finished goods and services in a form that customers want. The retailer performs the function of storing the goods, and providing us with an assortment of products in various categories. He creates time utility by keeping the store open when the consumers prefer to shop. By being available at a convenient location, he creates place utility. Finally, when the product is sold ownership utility is created.

All these are real benefits, which retailers offer by getting close to potential customers. It is, therefore, necessary for retailers to fully understand the motivations that drive their customers. The retailer serves the consumer by functioning as a marketing intermediary and creating time, place and ownership utility for the consumer.

b. The Retailer as a Channel Member

The retailer serves the manufacturer by performing the function of distributing the goody to the end consumer, and thus forming a channel of information to the consumer. He is the final link in the distribution chain and very vital too, For several product categories where brand loyalty is not very strong or for unbranded products, the retailer's recommendation is vital.

With the growth of industrialization and urbanization, the distance between the manufacturer of a product and the actual consumer has increased. Presently many products are manufactured in one country and sold to a market in another. Most producers no longer sell their products or services directly to the consumer. Instead, they use intermediaries to get their product reach the final consumer. The marketing channel design is largely based on the level of service desired by the target consumer. Here, the retailer provides valuable inputs to the manufacturer on the products and the consumers. In India, companies like Hindustan Unilever Limited and Dabur which primarily deal with the fast moving consumer goods (FMCG) sector are too beginning to acknowledge the gradual increase in the power of modern trade with its contribution between 6 - 8% of sales. FMCG giant Hindustan Unilever expects this figure to increase to 25% by the year 2025.

Manufacturers or suppliers that offer products for immediate consumption are known as direct manufacturers or suppliers, e.g. Eureka Forbes, whose door-to-door salesmen offer its products directly to customers is an example of a company which offers its products directly to the consumers. The Direct Mail order business companies are another example.

More traditional manufacturers or suppliers are associated with delayed consumption. Companies, which deal primarily with immediate consumption, are known as service providers, while those deal with delayed consumption are retailers. An example of a service provider under this definition would be a cinema, while a retailer in the same sector would be a video shop.

c. The Retailer as an Image Creator

An image is a mental picture in the mind of the consumer. It is what the store stands for. Thus, it is important for the retailer and also for the producer/manufacturer whose products are being sold in the store to first determine what the store stands for and accordingly work around the merchandise and the marketing aspects. The image of a discount store will be different from the image of a high-end fashion retailer and everything within the store - which includes merchandise.

Every retailer needs marketing. The marketing efforts of a multibrand retailer like Food World and Shopper's Stop are different from those of an own brand retailer like Westside. However, the basic principles of marketing are no different for a retailer than for any other supply organization. What is different is the immediacy of many retail-marketing exchanges, and the range of activities that can be undertaken by the retail marketer in a profitable exchange with a customer.

While modern marketing theory may have stemmed from producers of the FMCG manufacturers, more recent developments such as relationship marketing and interactive marketing have evolved from the needs of service providers. These 'new' marketing activities focus on the dynamic link between a specific supplier and their immediate customer. It is coincide with the domain of marketing.

There are two specific dimensions to retail marketing, first how to attract customers into the retail environs - shop, restaurant, supermarket or the ‘virtual’ internet store for instance and second how to persuade those customers to make a purchase from the store. Both are necessary to achieve success.

Importance of Retail Marketing

Retailing has mirrored the increasing prominence of the retail industry. Retailing provides necessary service and a positive contribution to the economy. The importance of retailing is given below:

1. Retailing shapes the lifestyle of the people

Retailing is an integral part of the modern society. It shapes the way of life. In the past, trading of goods was a part of a traditional society. But in recent times, buying and selling of goods have become a brand dominated activity.

2. Retailing contributes to the economy

The importance of retail sector is reflected in its contribution to the growth of an economy. Its contribution is much more visible in the modern era than it was in the past. As the retail sector is linked to the significant portion of the economy, its contribution to GDP is substantial. Retailing is the driving force of the economy. It aims at promoting its sustained growth.

3. Retailing dominates the supply chain

Goods and service flow from manufacturers or service providers to consumers. Where consumers are large in number and are widely distributed, the role of retailers becomes crucial. Retailers serve as a connecting link between the wholesalers and consumers. Due to its dominant position in the supply chain, the retail structure has steadily developed over the years.

Now-a-days, retailing is characterized by large multiple chains rather than small scale independent retailers. The formalization and growing importance of retailing has made it powerful in the distribution channel. Now, retailers are compared with manufacturers which indicates the growing dominance of retailers within the supply chain.

Besides, the annual turnovers achieved by the retailers can be compared with the largest companies in other service industries.

4. Retailing is interdisciplinary

The pace of growth within retailing is accelerating. Retailing has emerged from a number of interrelated disciplines such as geography, economics, management and marketing.

5. Retailing is acknowledged as a subject area in its own right

Potter has described the academic study of retailing as the “Cinderella of the social sciences“. Retailing is an accepted area of academic debate, such as marketing and management, developed fully as an area of study. University research centres focus on retailing and professional appointments in retailing have been made. Academic journals focusing on retailing are being published worldwide.

6. Retailers enjoy status as major employers

In today’s society, retailers are the major employers. It is estimated in developed countries that retail industry employs one in nine of the workforce. Retailers employ a significant proportion of the overall workforce.

More than two thirds of the retail force are women. Also, more than half of retailing employees are employed on a part-time basis. This, highly flexible workforce is capable of adapting to the differing labor demands In the past, retailing employees got lower pay and had longer working hours. But now, the retail sector is becoming more organized with better pay scale.

7. Retailers are gatekeepers within the channel of distribution

Retailers are becoming increasingly important in their role as gatekeepers within the channel of distribution. In the past, suppliers were dominant. Retailers supplied the merchandise that was on offer and consumers selected from them. As retailers have become significantly powerful, they are able to influence suppliers and stock only the brands they wish to sell. So, consumers are able to buy only what is stocked and offered to them by the retailers. Retailers are thus considered as shaping consumer demand.

8. Retailing has scope for expanding internationally

Retailing offers scope for shifting retail operations outside the home market. Retailers who focus on luxury goods markets are expanding their business internationally. Retailers are moving into more geographically and culturally distant markets.

Understanding retail formats

Every business has its own distinctive way of organizing many activities that are involved in delivering its product or service to the end consumer. The retail format is the store package that the retailer presents to the customer. The retailer uses the store to give out messages to the customer about the products that will be available, the prices that the consumer can expect to pay and the additional services that the retailer may offer to the customer.

Various retail models exist in the world of retail. A business model is the manner in which a business chooses to serve its customers and stakeholders. In retail, a business model would dictate the product and/or services offered by the retailer, the pricing policy that he adopts the communication that he follows to reach out to his customers and the size, look and the location of his retail store. This is termed in retail as a format in which the retailer operates.

It has to be borne in mind that a retail model is relevant with reference to particular time frame and the critical factors, which affect the retail model, are:

• Trends in market positioning

• Competition

• The organizational capabilities

These three factors jointly enable the understanding of the contexts and strategies adopted by retailers over a period of time.

In this section one attempt to classify the existing retail models/formats. Retailers range in size from small, independent, owner-operated shops like the local florist, dry cleaners, or barber, to national and international giant category killers. The basic classification followed by this text is store based retailers, non-store retailers and service retailers. The store-based retailers can be further classified on the basis of the product mix that they offer, or by the age for the products sold in the stores. This is illustrated in Diagram 3.2. This section discusses some of the prominent retail formats under each classification.

The primary basis of classification of retail formats is:

1. Store based formats

2. Non-store based formats

3. Service retail

1. Store Based Retail Formats

The store based formats are the ones that primarily operate from a physical brick and mortar environment. They can further be classified on the basis of

1. The product mix that they offer, or

2. The price of the products sold by them store selling mainly

We first start by understanding stores classified on the basis of the product mix that they offer.

A. Classification on the basis of the product mix offered

If retailers are to be classified on the basis of the product mix that they offer to their customers, they may be very broadly be classified as the food oriented and the general merchandise retailers. Within this classification, we can further classify them on the basis of the target market that they cater to. Specialty stores, department stores and convenience stores cater to a very specific target market. They are hence many a times referred to as product/service retailers. In contrast, the supermarkets, discount stores, hypermarkets, off price retailers cater to a mass market and are often called traditional product retailers.

a. Convenience Stores

     These are relatively small stores located near residential areas; they are open for long hours, seven days a week and offer a limited line of convenience products like eggs, bread, milk, etc. The evolution of this format of retail has been dealt with in the section covering the evolution of retail formats.

The Food Marketing Institute defines this format as a small local groceries open until late at night or even 24 hours per day and sometimes abbreviated to c-store. The store size ranges from 3,000 to 8,000 sq ft and they are targeted at customers who want to make their purchases quickly. Though convenience stores per se, do not exist in India, the retail stores that have started coming up at petrol pumps in major Indian cities like HP Speed Mart, In & Out can be termed as convenience stores. A point to be pondered upon in the Indian context is whether our local baniya is similar to a convenience store. International examples of retailers who operate convenience stores include 7-Eleven, Circle K, Albert Heijn, and SPAR.

Retail Snapshot 1: The story of Convenience Shopping

7-Eleven pioneered the convenience store concept way back in 1927 at the Southland Ice Company in Dallas, Texas. In addition to selling blocks of ice to refrigerate food, an enterprising ice dock employee began offering milk, bread and eggs on Sundays and evenings when grocery stores were closed. This new business idea produced satisfied customers and increased sales, and convenience retailing was born!

The company's first convenience outlets were known as Tote'm stores since customers "toted” away their purchases, and some even sported genuine Alaskan totem poles in front. In 1946, Tote'm became 7-Eleven to reflect the stores' new, extended hours 7 a.m. until 11 p.m., seven days a week. The company's corporate name was changed from The Southland Corporation to 7-Eleven, Inc. in 1999.

Today, 7-Eleven is the undisputed leader in convenience retailing. Based in Dallas, Texas, the company operates, franchises and licenses close to 7,100 stores in the U.S. and Canada. Of the 6,000 stores, the company operates and franchises more than 4,700 stores in the United States.

7-Eleven master franchisees, licensees and affiliates operate more than 32,000 7-Eleven and other convenience stores in other countries including Japan, Taiwan, Thailand, South Korea, China, Hong Kong, Malaysia, Mexico, Singapore, Australia, Philippines, Indonesia, Norway, Sweden and Denmark.

Each store focuses on meeting the needs of busy shoppers by providing a broad selection of fresh, high-quality products and services at everyday fair prices, along with speedy transactions and a clean, safe, friendly shopping environment.

Source: http://corp. 7-eleven.com, accessed on 09/02/11

b. Supermarkets

These are large, low cost, low margin, high volume self-service operations designed to meet the needs for food, groceries and other non-food items. This format was at the forefront of the grocery revolution, and today controls more than 30% of the grocery market in many countries.

The most widely used definition is that of a store with a selling area of between 400 sqm and 2,500 sqm, selling at least 70% foodstuffs and everyday commodities. Internationally , the size of these stores varies from 8,000 to 20,000 square feet. ASDA, Safeway, Kroger, Tesco are some of the large international players.

While there is no standardization on the parameters of what makes a supermarket in India, it is one of the fastest growing business formats in the country. Examples of supermarkets in the Indian market scenario are Nilgiri's, Foodworld, Food Bazaar, more. for you and Reliance Fresh.

Over the years, variations in this business model have also emerged – these include the superstore and the combination store. A superstore is larger than a conventional supermarket with at least 25,000 items and more non-foods, such as general merchandise and health and beauty care (GM/HBC) items while a Combination Store is a superstore and full-line pharmacy with GM/HBC products accounting for at least 15 per cent of sales.

Retail Snapshot 2: More in India

With a vision to be among the leading retail players in India, Aditya Birla Retail launched its first supermarket, more. for you in May, 2007. Since its launch, the more. for you has had an aggressive roll out, reaching a total count of over 640 stores across India till 2011.

‘More. for you' is a neighborhood supermarket which takes care of the everyday household needs and more. Spread across a wide range of products of food and nonfood items, ranging from basic necessities such as, fruits and vegetables, staples, personal care, home care, household care products, general merchandise, and dairy products, more. for you provide a one stop solution for the consumers grocery shopping needs. Also in store are essentials such as, innerwear, kids essentials, and a pharmacy, bakery and a mobile store. With a range of over 4,000 products, it aims at fulfilling the daily shopping needs all under one roof, at a convenient location.

The more. for you promises a world class shopping experience, with a modern store layout, easy to shop with friendly staff at hand to provide assistance, electronic billing facilities and a colourful ambience. more. for you hosts a range of private label brands across various categories that follow stringent quality norms, and are available in attractive prices and packaging. The premium products give the customer the opportunity to enjoy the difference and quality that is equal to or better than the market's leading brands, but at competitive prices.

Source:http://www.morestore.com/supermarket.html, accessed 13/02/11.

c. Hypermarket

The word 'hypermarket is derived from the French word “hypermarche” which is a combination of a supermarket and a department store. This retail business format has evolved since its invention by retailer Carrefour in Sainte Genevieve des Bois near Paris in the year 1963."

A retail store with a sales area of over 2,500 sqm, with at least 35% of selling space devoted to non-grocery products is termed as a hypermarket. The stores occupy an area which ranges anywhere between 80,000 and 2,20,000 sq ft and offer a variety of food and non-food products like clothes, jewellery, hardware, sports equipment, cycles, motor accessories, books, CD's, DVD's, videos, TV's, electrical equipment, computers and combine supermarket, discount & warehouse retailing principles.

Hypermarkets are today synonymous with one stop shopping. The cheapest prices will normally be found in these stores. Across the world hypermarkets are usually part of a retail park with other shops, cafeterias and restaurants. They almost always have their own Petrol Station on the site. Other facilities on the site include banks with cash machines, Photo processing shops, and Pharmacies. A key element of differentiation between the hypermarket and the other retail formats is they are typically destination locations. The hypermarkets are designed to attract customers from a significantly large area with their low price offers, unique range and offers.

A store that satisfies the following characteristics has been defined by the IGD12 hypermarket: as a

• A selling area between 5,000 sqm and 15,000 sqm

• A wide range of products including food and non-food

• Discounted prices

• A destination offer

Key retailers who operate in this business model are Carrefour, Wal-Mart (the Wal-Mart Supercenters), Meijer, Target (Super Targets), Tesco (Tesco Extra Stores), Asda (Asda Wal-Mart Supercentres). Examples of hypermarkets in India include Giant, Big Bazaar and Star India Bazaar.

Retail Snapshot 3: Carrefour - The first hypermarket

Carrefour is the largest hypermarket chain in the world in terms of size, the second largest retail group in the world in terms of revenue and third largest in profit after Wal-Mart and Tesco, Carrefour not only operates in Europe, Argentina, Brazil, China, Colombia and in the Dominican Republic, but also has shops in North Africa and other parts of Asia. Carrefour means "crossroads" in French.

The first Carrefour store opened on June 3, 1957 in suburban Annecy near a crossroads (carrefour in French). The group was created by Marcel Fournier, Denis Defforey and Jacques Defforey and grew into a chain from this first sales outlet. In 1999, it merged with Promodès, known as Continent, one of its major competitors in the French market.

Marcel Fournier, Denis Defforey and Jacques Defforey had attended several seminars in the United States led by The Pope of modern distribution” Bernardo Trujillo, who influenced other famous French executives like Édouard Leclerc (E.Leclerc), Gérard Mulliez (Auchan), Paul Dubrule (Accor), and Gérard Pélisson (Accor). Their slogan was “No parking, no business.”

The Carrefour group pioneered the concept of a hypermarket, a large supermarket and a department store under the same roof. They opened their first hypermarket on June 15, 1963 in Sainte-Geneviève-des-Bois, near Paris in France.

In December 2010, the Carrefour Group announced the opening of its first cash & carry store in India in New Delhi under the name “Carrefour Wholesale Cash&Carry.” With a sales area of 5200 sqm, this store located in the east of New Delhi in the Shahadra neighbourhood offers more than 10,000 SKUs in food and non-food to professional businesses, institutions, restaurants and local retailers.

This opening is in line with the group's strategy to be present in major emerging markets that offer significant expansion and medium- and long-term growth opportunities. According to Indian regulations Cash & Carry is today the only format the foreign groups are authorised to develop solely.

Source: www.carrefour.com, accessed 15/02/11.

d. Speciality stores

A store specializing in a particular type of merchandising or single product of durable goods (that is, home furniture and household goods, consumer electronics and/ or domestic electrical appliances) or a range of normally complementary durable goods product categories is termed as a speciality store. Such a business model is characterized by a high level of service or product information being made available to customers.

These are characterised by narrow product line with deep assortments in that product line. Speciality stores usually concentrate on apparel, jewellery, fabrics, sporting goods, furniture, etc. They have a very clearly defined target market and their success lies in serving their needs.

Internationally most speciality retailers would operate in an area under 8,000 sqft. Examples of international retail chains, which are speciality retailers, include The Gap, Ikea, High & Mighty, Big & Tall, etc. In India, speciality stores is one of the fastest emerging formats.

         Retail Snapshot 4: America's premier pharmacy

Walgreen's is the largest drugstore chain in the United States of America with fiscal 2010 sales of $67 billion. The company has 244,000 employees. Walgreen's was named in Fortune magazine's list of Most Admired Companies in America for the 17th consecutive year. Fast Company magazine ranked Walgreen's as the 6th most innovative healthcare company for leadership in healthcare services.

Walgreen's was founded in Chicago, Illinois in 1901, and has since expanded throughout the United States of America to become one of the most respected American corporations. Walgreen's provides access to consumer goods and services and pharmacy, health and wellness services in America through its retail drugstores, Walgreen's Health Services division and Walgreen's Health and Wellness division. Walgreen's Health Services offers pharmacy patients and prescription drug and medical plans through Walgreen's Health Initiatives Inc, (a pharmacy benefit manager), Walgreen's Mail Service Inc., Walgreen's Home Care Inc., Walgreen's Specialty Pharmacy LLC and Senior Med LLC (a pharmacy provider to long-term care facilities). Walgreen's Health and Wellness division includes Take Care Health Systems,

The company is uniquely positioned to meet the health and daily living needs of today's consumer. The “center of gravity” is more than 7,500 Walgreen's drugstores. With nearly 75% of Americans living within five miles of a Walgreen's, it provides convenient access to goods and services across thousands of communities. From expanded grocery offerings in an urban “food desert," with limited or no ad access to fresh food, to prescription and healthcare services in a medically underserved community, "My Walgreens” is there.

With a network of drugstores in all 50 states and Puerto Rico, including 116 hospital on-site pharmacies, more than 700 retail clinics and worksite health centres, and 70,000 health care service providers, Walgreen's is truly on the frontline of healthcare.

Source: http://www.walgreens.com, accessed on 15/02/11 and Wal-Green Annual Report 2010

 e. Category Killers

A category killer is a speciality retailer, which offers a very large selection in the chosen product category and economical prices. Category Killers are successful because they focus on one category, they stock deep (e.g. Toys “R” Us has 10,000 toy items in a store as compared to 3,000 in a department store), they buy and sell cheap and finally dominate the category. Internationally the size of category killers ranges from 20,000 square feet to 120,000 square feet. Toys R Us, Staples is a good example of an international category killer. Nalli's in Chennai can be termed as category killer in sarees, as also the Chandana Bros saree chain in Andhra Pradesh and Toys Kemp in Bangalore. Mumbai has one such category killer - The Loft, a 15,000 sq ft store catering to footwear alone.

Retail Snapshot 3.5: Toys"R"Us, Inc.

Toys“R”Us, Inc. is the world's leading dedicated toy and juvenile products retailer, offering a differentiated shopping experience through its family of brands. It currently sells merchandise in more than 1,570 stores, including 858 Toys“R”Us® and Babies“R”Us® stores in the United States, and more than 510 international stores and 200 licensed stores in 33 countries and jurisdictions. In addition, it exclusively operates the legendary FAO Schwarz® brand and sells extraordinary toys in the brand's flagship store on Fifth Avenue in New York City.

   With its strong portfolio of e-commerce sites including Toysrus.com, Babiesrus. com, eToys.com, FAO.com and babyuniverse.com, Toys“R”Us, Inc. provides shoppers with a broad online selection of distinctive toys and baby products. The company also operates Toys.com, which offers customers exclusive deals from the company's e-commerce sites. Headquartered in Wayne, NJ, Toys"R"Us, Inc. employs approximately 70,000 employees worldwide. The company is committed to serving its communities as a caring and reputable neighbour through programmes dedicated to keeping kids safe and helping them in times of need.

Source: www.toysrus.com, accessed on 15/02/11

f. Department stores

Aristide Boucicaut, the son of a successful hat maker founded the first department store Bon Marche' in Saint-Germain, Paris in the year 1838.13 The store offered lured shoppers by selling different types of goods all under one roof. In the United States A.T. Stewart established the Marble Dry Goods Palace, where he offered retail merchandise at fixed prices on a variety of dry goods, and advertised a policy of providing “free entrance” to all potential customers. Similar developments were under way in London and in other parts of the world.

By 1890, a new world of retailing had been created as department stores had a clear market position as universal providers. General stores eventually became department stores as small towns became cities. The most prominent department stores emerged from small shops. The department store is also largely responsible for the standard store design seen today. The store layouts made shopping easier for consumers irrespective of their social or economic background. The department store also offered new customer services never before seen such as restaurants, restrooms, reading rooms, home delivery, wrapping services, store hours, new types of merchandise displays, and so forth. This format of retailing is popular in many parts of the world.

In broad terms, a department store is a large-scale retail outlet, often multi-levelled, whose merchandise offer spans a number of different product categories. Traditionally, department stores can be defined as averaging 7000 sqm, selling at least fashion clothing, accessories, cosmetics, household goods and often a much broader assortment, from more or less separate departments on several floors.

    Department stores are defined as those establishments depending on food, clothing and home related items for at least 10%, but less than 70% of their sales. Furthermore, these stores have at least 50 employees and a self service ratio of less than 50%.

While department stores have been around in India for a long time, this format of retailing has seen a fair amount of action over the past few years. The size of an average Indian departmental varies from 20,000 to 40,000 sqft and stocks anywhere between 50,000 to 1,00,000 SKU's. Some of the national players are Shopper's Stop, Globus, Westside, and Lifestyle. Some of the well-known international players in this format are Marks & Spencer, Sears, J.C.Penny, Harrods, Selfridges, etc.

Retail Snapshot 3.6: The world's largest department store

The coastal city of Busan in South Korea has a prestigous world record to sit proudly alongside its beautiful beaches. The brand-new Shinsengae Centumcity Department Store is now officially recognised by Guinness World RecordsTM as the largest department store in the world. The architecturally impressive building has a huge 293,905 sqm (3,163,567 sq ft) of retail space. This beats the previous record holder, the famous Macy's store in New York City, by over 95,000 sqm (1,022,571 sq ft). The Shinsegae structure contains floor upon floor of designer names representing everything from fashion to books and from kitchenware to toys. It also contains a beautiful spa, a relaxing roof garden and an impressive 60-tee golf driving range.

Europe's Biggest Department Store

         Officially, continental Europe's largest department store, the KaDeWe or Kaufhaus des Westens celebrated 100 years of business and is one of the finest monuments and representations of the last century of German history. Opened at the beginning of 1907 by businessman Adolf Jandorf, the KaDeWe initially comprised of 24,000 sqm set over five floors, but quickly rose to fame as Berlin's premier shopping spot.

         In 1927, the KaDeWe was acquired by the Herman Tietz and became part of the Hertie group. First on the agenda was the modernisation and expansion of the store with two further floors being added in 1931. Between the end of the war in 1945 and 1950, the KaDeWe lay inactive while the city struggled to come to terms with its post-war existence. On 3rd July 1950, the KaDeWe celebrated its re-opening with 180,000 visitors. In 1956, the KaDeWe was entirely rebuilt with the inclusion of a foodhall on the 6th floor, thus marking a new beginning of the store in the post-war period, just five years before the erection of the Berlin Wall.

         In 1996, within the framework of united Germany and the thriving city of Berlin, the KaDeWe was once again, completely renovated and re-opened boasting over 60,000 sqm of shopping space, officially making it continental Europe's largest department store. This latest renovation included the upgrading of the food hall with an additional floor being added purely dedicated to providing visitors with gastro-satisfaction. Now, both the 6th and 7th floors are dedicated to food, with the penultimate floor acting as a delicatessen while the final floor has been converted into a winter garden restaurant.

Source: www.kadewe.de/en, accessed 15/02/11

B. Classification on the basis of price of the merchandise offered to the end customer

Consumer co-operatives Consumer co-operatives aim at providing essential commodities at reasonable prices. As a national policy, consumer cooperatives have been encouraged and developed as a democratic institution owned, managed and controlled by its members for protection of the interest of the common consumers. The presence of consumer cooperatives has been working as a force of market for the common man. To some extent, it has been successful in protecting the interest of the common man and stabilizing the prices. Examples of co-operatives in India are the Sahakari Bhandar and Apna Bazaar shops in Mumbai and Super Bazaar in Delhi.

Snapshot 3.7: Co-operatives in India

The Central Govt. Employees Consumer Cooperative Society Ltd. popularly known as Kendriya Bhandar was set up in 1963 in pursuance of Union Cabinet decision as a welfare project for the benefit of Central Govt. employees and public at large. It functions under the aegis of Ministry of Personnel, Public Grievances & Pensions, Govt. of India and was registered with Delhi Registrar of Cooperative Societies. Subsequently, it was registered with Central Registrar of Cooperative Societies, Govt. of India as a Multi-State Consumer Cooperative Society in September, 2000. Kendriya Bhandar is into the following business activities:

• Retailing and institutional sales of grocery, consumer and household items

• Sales of stationery items

• Sales of medicines and allied items

• It is the largest consumer cooperative society in the country.

With 77,000 members (inclusive of associate members), Kendriya Bhandar has the unique distinction of being the country's largest consumer cooperative in terms of membership. It has today approximately 119 stores spread nationwide.

 The cooperative retails groceries, stationery, office equipment and other consumer open market goods and items of daily use at margins that are lower than the With government support, it grew into a 119-store and 42-Fair Price Shop network spread widely across Delhi, Mumbai, Hyderabad, Mumbai, Chennai, Hyderabad Bangalore, Trichy, Cochin, Tirupati, Daman, Gwalior, Jaipur, Mussoorie, Lucknow Faridabad, Kapurthala, Noida, Manesar and Chandigarh. It also started a fleet of four Mobile Shops in Delhi to cater to customers staying in regions with no shops.

  Sahakari Bhandar is a cooperative chain of 23 retail stores, located strategically in and around Mumbai; it retails in consumer goods, grocery and other general purpose items. With its origin going back to 1968, Sahakari Bhandar stores gained in popularity for their affordability, self-service convenience, discounted pricing and convenience of location.

  In recent years, however, these stores, plagued with the usual problems of funds and stock-outs due to bad debts, began to lose their sheen, looked run-down and started to lose their popularity, more so, with the deluge of modern retail formats in Mumbai.

Revival came in the form of Reliance Industries Ltd. when RIL's group company Retail Concepts & Services saw the inherent prime location potential that lay in these early supermarkets of Mumbai, inked a deal with the cooperative in April 2006, to handle their complete supply chain requirement; wherein, Reliance does the sourcing for Sahakari Bhandar, directly from its suppliers, and in turn, is paid for the goods by the cooperative at a later agreed point of time.

This arrangement has come as a boon for the beleaguered cooperative, and some of the stores have already been renovated, and the newly revamped stores have been given an attractive, modern façade; the aisles are well laid out, the ambience is pleasant and with well-stocked shelves and prices competitive as ever, sales have risen dramatically. Adding to it is the fact that stores are now open all seven days of the week and for longer hours in a day.

Apna Bazar cooperative store chain was set up by the Mumbai mill workers to ensure timely availability of essential goods to them at fair prices. Established in 1948, Apna Bazar grew into a 80-store chain, with stores across Mumbai and other parts of Maharashtra, even Goa. Today it is a multi-format chain, consisting of a network of department stores, supermarkets, food stores and chemist stores.

In the wake of emerging competition and falling sales, the management of the cooperative has had to take proactive steps like raising of funds: through customer friendly fixed deposit schemes, opening of a number of franchisee outlets, revamping of its existing stores, enhanced training programmes for the sales staff aimed towards improving customer service, and the introduction of new product categories across ranges to suit the tastes of the new generation customer.

Source: http://pib.nic.in/feature, http://nccf-india.com/industries.php, accessed on 08/02/11

a. Off price retailers

Here the merchandise is sold at less than retail prices. Off-price retailers buy manufacturers seconds, overruns, off seasons at a deep discount. The merchandise may be in odd sizes, unpopular colors or with minor defects. Off price retail stores may be manufacturer owned or may be owned by a specialty or departmental store. These outlets are usually seen by the parent company as a means of increasing the business. The factory outlets in case the manufacturer owns them may stock only company merchandise. Examples of these include Pantaloon Factory Outlets, Levi's Factory Outlets, etc. On the other hand off price retailers owned by the specialty or departmental store may sell merchandise from the parent company as well as merchandise acquired from other retailers. This format largely depends on volume sales to make money.

b. Discount department stores

Discount department stores, ranging from 80,000 sqft to 130,000 sqft, offer a wide variety of merchandise including automotive parts and services, house wares, home furnishings, apparel and beauty aids.

c. Outlet stores Outlet stores

Ranging from 20,000 sqft to 80,000 sqft, are typically the discount arms of major department stores such as Nordstrom Rack and J.C. Penny Outlets. Warehouse clubs Warehouse clubs, ranging from 104,000 sqft to 170,000 sqft, offer a variety of goods, in bulk, at wholesale prices. However, warehouse clubs provide a limited number of product items (5,000 or less). This group includes retailers such as Costco Wholesale, Pace, Sam's Club.

d. Super warehouse store

A hybrid warehouse/superstore with 50,000-plus items and the full range of service departments, featuring high-quality perishables and reduced prices. Limited assortment store A low-price outlet with minimal service and fewer than 2,000 items. It features numerous private label products and is popular among food stamp recipients seeking to stretch their limited dollars.

e. Supercenter

A large food-drug combination store and mass-merchandiser. These average more than 170,000 sqft and typically devote up to 40 per cent of the store to grocery items, which are often sold at loss-leader prices.

f. Wholesale club

A retail/wholesale hybrid that offers consumers and small business a limited and economical selection of food and non-food products. These measure about 120,000 sqft; 60-70 per cent of the space is devoted to bulk sizes of both grocery and GM/ HBC products.

g. Dollar stores

A traditional format that not sells 20-80 per cent of groceries and other consumables products at discounted prices.

2. Non-store and Non-traditional Retail Formats

    The ultimate form of retailing directly to the consumer is non-store retailing. A direct relationship with the consumer is the basis of any kind of non-store retail venture. It may be broadly classified as direct selling and direct response marketing. While direct selling involves direct personal contact, in direct response marketing the customer becomes aware of the products/services offered through a non-personal medium like mail, catalogues, phone, television or the internet.           

The non-store retailer sub-sector may be said to comprise of retailers which sell merchandise by using methods, such as the broadcasting of infomercials, the broadcasting and publishing of direct-response advertising, the publishing of paper and electronic catalogues, door-to-door solicitation, in-home demonstration, selling from portable stalls and distribution through vending machines. Establishments in this sub-sector include mail-order houses, vending machine operators, home delivery sales, door-to-door sales, party plan sales, electronic shopping, and sales through portable stalls (e.g. street vendors, except food). Establishments engaged in the direct sale (i.e. non-store) of products, such as home heating oil dealers and newspaper delivery are included in this subsector. Some of the prominent formats in the non-store sector are explained below.

a. Catalogue showrooms

Catalogue retailers usually specialize in hard goods such as house ware, jewellery, and consumer electronics. A customer walks into this retail showroom, goes through the catalogue of the product/s that he would like to purchase. Some stores require the customer to write out the product code number and hand it over to the clerk, who then arranges for the product to brought out from the warehouse for inspection and purchase. Some of the popular catalogue showroom retailers in the world include Argos, Service Merchandise and Best Products. India's most exciting retail store, Hyper City, has joined forces with Argos, the UK best loved high street name, to bring a new shopping experience to the customer. With over 680 stores and 34 years’ experience, Argos offers what customers want, when they want it, and has built a reputation on providing exceptional value and convenience.

b. Direct selling

Direct selling involves making a personal contact with the end consumer at home or at the place of work. Cosmetics, jewellery, food and nutritional products, home appliances and educational materials are some of the products sold in this manner. An interesting aspect of direct selling in India is that women comprise up to 70 per cent of all sales people in India, couples account for 20 per cent and male's account for 10 per cent.

Direct selling may follow the party plan or the multilevel network. In the party plan, the host invites friends and neighbours for a party. The merchandise is displayed and demonstrated in the party atmosphere and buying and selling takes place.

In the multi level network, customers act like master distributors. They appoint other people to work with them as distributors. The master distributor earns a commission on the basis of the products sold and distributed by the distributors.

Retail Snapshot 2.8: Amway India

Amway is an abbreviation for "American Way" and was coined in 1959 by company founders, Jay Van Andel and Richard DeVos. In the following decades, Amway Corporation successfully established itself as a leading multilevel marketing business, built on strong values and founding principles that continue to sustain our company today. The business is built on the simple integrity of helping punde lead better lives. Today their life goals. , Amway is a multibillion dollar international business representing freedom and opportunity to millions of people in more than a cuminen und territories around the world. Amway generates US$ 9.2 billion Wanuary ) in sales at estimated retail through this global product distribution network The company offers over 3 million business owners the inspiration to grow thema businesses, and works hard to provide new and better ways for them to achieve

Amway India is a wholly owned subsidiary of US$ 7.2 billion Amway Corporation, Ada, Michigan, USA, Established in 1996, Amway India commenced its commercial operations in May 1998 and has emerged as the largest Direct Selling YMCO Company. Amway has invested in excess of US$ 36 million (Rs. 161 crore) in India of this; US$ 6 million (Rs. 26 crore) is in the form of direct foreign investment, Amway India has 400 full time employees and has generated indirect employment for 1,650 persons at all the contract manufacturer locations. The company has provided income generating opportunity to over 4,50,000 active independent, Amway business owners.

In ten years of commercial operation, Amway India has established a nationwide presence in over 125 offices and 55 city warehouses and four regional mother warehouses. The distribution and home delivery network set up with the support, of independent logistics partners is spread across over 3,000 locations.

Almost all Amway India products are manufactured in the country through 7 third party contract manufacturers. To bring the identified contract manufacturers' production facilities and skills to international standard, Amway has invested in excess of US$ 4 million (approx. Rs. 17 crore). The transfer of this state-of-the-art, world-class technology, has been free of cost.

Amway India offers over 105 products in four categories. They are Personal Care category, Home Care category, Nutrition & Wellness category and Cosmetics category. The products match Amway's global quality standards. They carry a tamper-proof seal and a '100% Money Back Guarantee'. If not completely satisfied with the product, the consumer can return it for a refund. Amway products are environment friendly, and are not tested on animals. Amway encourages the return of its used product bottles for re-cycling and to prevent their misuse.

Source: www.amway.in, accessed 15/02/11

c. Direct Marketing

Direct marketing includes various non-personal form of communication with the consumer and this includes:

• Mail order

• Television retailing

d. Mail Order Retailing

This form of retailing eliminates personal selling and store Appropriate for specialty products the key is using customer databases to develop targeted catalogs that appeal to narrow target markets. The basic characteristic of this form of retailing is convenience.

e. Television shopping

Asian Sky Shop was among the first to introduce television shopping in India. In this form of retailing the product is advertised on television, details about the product features, price and things like guarantee/warranty are explained. Phone numbers are provided for each city, where the buyer can call in and place the order for the product. The products are then home delivered.

f. Electronic Shopping

It allows the customer to evaluate and purchase the products from the comfort of their home. The success of this form of retailing largely depends on the products that are offered and the ability of the retail organization to deliver the product on time to the customer. Strong supply chain and delivery mechanisms need to be in place for this to be a success. Many retailers are opting for click and mortar, where while having a brick and mortar retail store they also sell some of their products or ranges on the internet. Though most of the large retail organizations in the world have already adopted this model, it is yet to catch on in India.

g. Automated Vending/Kiosks

This form of retail provides convenience to the customers, as they have access to the products round the clock. It is a popular form of retailing abroad and is used to sell routinely purchased items like soft drinks, candy, cigarettes and newspapers. While tea and coffee vending machines are a popular sight at the airports in India, the Automated Teller Machines operated by banks are perhaps the most successful example of automated vending in India. The tea and coffee machines are rarely completely automated and unattended as in India the cost of labour is still cheap.

Kiosks have their applications in different areas of retail like within the retail environment as I-kiosks, which aim to provide access to far more products that the physical store can stock. Applications can also be seen across the government sector, banking and tourism, where not only information is provided but may allow for other facilities like transit routes, and the ability to create personalized itineraries. Large retailers like McDonald's are using kiosks to let customers key in orders at some restaurants.

h. Airport Retailing

The past two decades have witnessed rapid changes in the air travel industry. Retail is becoming increasingly important for airport operators. Gone is the age where airports were passenger processors, the time when travelling was just a hassle with passengers moaning and complaining about long waits, dull surroundings. We are now in the era where airports are focusing on retail to convert airports into exciting, energised business and retail/entertainment centers—as well as transportation hubs.

Airports in many cities of the western world, the Far East and Middle East serve as mini shopping plazas for the traveller, while the trend is yet to catch on in India. Dramatic changes swept airport retailing when long-term, 20-to-30-year concession contracts began expiring. It made airports realize more and more that with capital investment, good customer service and good pricing, plus a little imagination, they could generate some attractive revenue.

Across the world, major airports that are upgrading or adding terminals are equipping them with copious amounts of retail and restaurant space. Many attribute this to the success of British Airports Authority (BAA) managed Airmall at Pittsburgh International Airport in late 1992. The Airmall concept, practiced street pricing, and featured airport store firsts for such national retailers as Brookstone, Creative Kidstuff, Gap, Johnston & Murphy and Timberland, as well as some of the more creative local vendors, quickly caught on at other airports. As a result of the effective pricing, Pittsburgh more than tripled airport retail revenues in a relatively short span.

While airport retailing isn't the same as mall retailing, it is not uncommon for many international airport stores to enjoy a lofty sales average of about $1,100 per square foot - about triple that of traditional malls, there is no single mantra for assured success. Airport stores are also much smaller than those in conventional malls, storage space is nonexistent and the profiles of the customer vary as the profile of the traveller varies. For the employees it may often mean a long commute to work, heavy security and remote parking. The logistical exercise of getting goods to the airport store is also complex, as airports are typically ruled by fixed and limited hours of delivery. Despite these encumbrances, retail has become an important element of the airport experience and the reasons for the same can be summarized as given below:

• Increase in the number of air travellers

• Deregulation and liberalization of trade and air travel across America and Europe

• Decline of state control of the airports

• Increased airport congestion

Retail Snapshot 9: Duty Free Catching on!

Dubai Duty Free, currently the single largest airport retailer in the world began the new year on a high note announcing double digit sales growth for 2010 with turnover reaching a record Dhs 4.66 billion (US$ 1.27 billion), representing a 14% increase over 2009 figures. With 21.5 million sales transactions recorded at Dubai Duty Free last year, an increase of 11% over 2009, the statistics continue to make interesting reading.

Once again, the No.1 selling category for 2010 was perfumes which notched up sales of Dhs 658 million (US$ 180.3 million), a 16% increase over 2009. Liquor and gold retained the No. 2 and No. 3 positions with increases of 13% and 11%, respectively. Other big category increases were seen in Watches, which rose by 26% and Cosmetics, which were up by 23%, while sales of Cameras rose by 19%.

Delhi Duty Free Services (DDFS), a joint-venture company DIAL (Delhi International Airport Limited), IDFS (Indian Duty Free Services) and ARI (Aer Rianta International) has successfully opened some 30,000 sq ft of retail space at the new Terminal 3 at Indira Gandhi International Airport in Delhi. It is now the single largest duty free retailer in India. T3 ranks as the sixth-largest airport in the world with a 34-million passenger handling capacity.

Delhi Duty Free offers an extensive range of products across all categories, including perfumes, cosmetics, liquor, tobacco, confectionery and Indian products, the latter housed in a destination merchandise section called Discover India at DDF. The company described the offer as an "unmatched retail environment in India."

Another first for India is the launch of walk-in humidors, offering premium cigars from Cuba, Honduras and Dominican Republic, available at both arrivals and departures.

Operating at T3, DDFS expects huge footfall and sees enormous scope for the growth of airport retailing in India. With this footfall, DDFS aims to convert Delhi into a much sought-after duty free shopping destination.

Source: www.dubaidutyfree.com and www.delhidutyfree.co.in, accessed on 23/02/11

i. Methods of Operation

A retail store can be an independent retailer, a chain retailer or a corporate retail chain, a franchise or a consumer co-operative. An independent retailer is one who owns and operates only one retail outlet. They essentially feature the owner and proprietor and a few other local hands or family members working as assistants in the shop. Many independent stores tend to be passed on from generation to generation.

In India, a large number of retailers who operate are independent retailers. Stores like the local baniya/kirana store, paanwala, are examples of independent retailers as are stores like Benzer, Instyle, Premsons, Amarsons, etc. The ease of entry into the retail market is one of the biggest advantages available to an independent retailer. Depending on the location and product mix that he chooses to offer he can determine the retail strategy. The independent retailer often has the advantage of having a one to one rapport with most of his customers. However, on the flip side the advantages of economies of scale and the bargaining power with the suppliers are limited.

Typically, when two or more outlets are under a common ownership, it is called a retail chain. These stores are characterised by similarity in merchandise offered to the consumer, ambience, advertising, and promotions. Examples in India include Wills Sports (ITC), Louis Phillippe, Van Heusen, (Madura Garments), Arrow (Arvind Mills), and department stores like Globus, Westside, Shopper's Stop, are also examples of chain retailers.

The biggest advantage that a chain retailer has is the bargaining power that he can have with the suppliers. Cost effectiveness is also possible in advertising and promotions. Since chains expand across cities and regions, it may not always be possible to take into account regional, or rural and urban preferences. The ability to give attention to each of the stores becomes fairly restricted.

j. Franchising

A franchise is a contractual agreement between the franchiser and the franchisee, that allows the franchisee to conduct a business under an established name as per a particular business format in return for a fee or compensation. Franchising may be for the following:

• A product or trade mark franchise – where the franchisee sells the products of the franchiser and/or operates under the franchiser's name. Archie's stores, which have come up across India, are an example of product franchising.

• A business format franchise - McDonald's is perhaps one of the best examples of business format franchising.

Under both the mentioned methods of franchising, the franchise may be for a single store, a multiple number of stores or for a region or country. While outlets of Van Heusen, Louis Phillippe, Arrow, and Benetton are examples of individual franchises in India, McDonald's operates at the level of two regional franchises. Pizza Hut, Domino's, Subway are also franchises operating in India.

k. Leased Departments

Leased departments are also termed as shop-in-shops. When a section of a department in a retail store is leased/rented to an outside party it is termed as a leased department. A leased department within the stores is a good method available to the retailer for expanding his product offering to the customers. In India, many large department stores operate their perfumes and cosmetics counters in this manner. A new trend emerging in Indian retail is that of larger retail chains setting up smaller retail outlets or counters in high traffic areas like malls, department stores multiplexes and public places like airports and railway stations. These stores display only a fraction of the merchandise/ products sold in the anchor stores. Their main aim is being available to the consumer near is place of work or home.

l. The Cash & Carry

The term “Cash & Carry” means that customers do their own order vicking, pay in cash and carry the merchandise away. The cash and carry is a wholesale ormat that aids small retailers and businessmen. The advantages that this format has over ne traditional wholesale operations are:

• It offers a wide assortment of goods, food and non-food items, thus providing for one stop shopping and allowing the customers to save time.

• Given the permanent availability of goods in the store, the customer can always purchase goods he needs and is able to store and finance them in the short term. Thus, despite the principle of cash payment, cash & carry largely takes over the function of financing and stockholding on behalf of its customers.

• Longer business hours per week enabling the customer to do his shopping at a convenient time, seven days a week.

This format has been featured in this section on retail formats as two of the largest groups, which operate under the cash and carry format, viz., Metro AG, Germany and Shoprite of South Africa, have started their operations in India as has Bharati Walmart.

Retail Snapshot 10: Bharti Walmart in India

Bharti Walmart Private Limited is a joint venture between Bharti Enterprises, one of India's leading business groups with interests in telecom, agri-business, insurance and retail, and Walmart, the world's leading retailer, renowned for its efficiency and expertise in logistics, supply chain management and sourcing. The joint venture is establishing wholesale cash-and-carry and back-end supply chain management operations in line with Government of India guidelines. Under the agreement, Bharti and Walmart hold a 50:50 stake in Bharti Walmart Private Limited

The first wholesale cash-and-carry facility named “Best Price Modern Wholesale” opened in Amritsar in May 2009, the second in Zirakpur (near Chandigarh), the third in Jalandhar and the fourth in Kota. The JV in India expects to open 10 to 12 Best Price Modern Wholesale stores and employ approximately 5,000-6,000 people over the next two years.

Best Price Modern Wholesale store is a one-stop shop that meets the day-today needs of restaurant owners, hoteliers, caterers, fruit and vegetable resellers, kiranas, other retail store owners, offices and institutions. The store offers an assortment of approximately 6,000 items, including food and non-food items, which are available at competitive wholesale prices, allowing retailers and business owners to lower their cost of operations. More than 90 per cent of these goods and services are being sourced locally, thereby helping keep costs to a minimum, adding to the growth of the local economy and creating job opportunities, with the cash and carry store directly employing more than 200 local people.

Walmart has been sourcing a variety of products from suppliers in India for more than 20 years. Walmart's office in Bangalore serves as Walmart's Global Procurement (GP) hub for the sourcing of merchandise from India and Sri Lanka to Walmart stores and Sam's Clubs globally. GP India also manages Global Procurement from Sri Lanka, including quality control/assurance audits and ethical sourcing factory compliance audits in Sri Lanka.

Major categories sourced from India include home textiles (including towels, shower curtains, bath mats, accessories, bedding sheets, and kitchen linens), apparel (including woven, knitwear and leather footwear), leather accessories, fine jewellery and house wares (including fine dining ware, home décor and tabletops). The main categories sourced from Sri Lanka are apparel, textiles and gifts.

Source: www.walmartstores.com, India fact sheet, accessed on 23/02/11.

3. Service Retail

Retailers of service have been classified by Lucas on the basis of the following parameters:

1. By the degree of intangibility

2. By the recipient of the service

3. By the manner in which the service is delivered

Services unlike products are intangible; however, the level of intangibility varies from one service to another. For example, laundering of clothes, car rentals offer a service, which is tangible. On the other hand life insurance, investments in securities are intangible in nature. Providers of various services like electricity, gas, and service contracts which may be entered into for services of consumer durables like maintenance of water filters, computer systems, etc also falls into the retail of services.

A key area within services retail is retail banking. Retail banking refers to the dealing of commercial banks with individual customers. The retail banking products would include fixed, current savings accounts on the liabilities side; and mortgages, loans (e.g., personal, housing, auto, and educational). Related ancillary services include credit cards, or depository services.

Retail banking in India is not a new phenomenon. The typical products offered in the Indian retail-banking segment are housing loans, consumption loans for purchase of durables, auto loans, credit cards and educational loans. While new generation private sector banks have been able to create a niche in this area of loans and financing, the public sector banks have not lagged behind. Leveraging their vast branch network and outreach, public sector banks have aggressively forayed to garner a larger slice of the retail pie.

While retail banking offers phenomenal opportunities for growth, the challenges are equally daunting. There is a need of constant innovation in retail banking. In bracing for tomorrow, a paradigm shift in bank financing through innovative products and mechanisms involving constant upgradation and revalidation of the banks' internal systems and processes is called for. Banks now need to use retail as a growth trigger. This requires product development and differentiation, innovation and business process reengineering, micro-planning, marketing, prudent pricing, customization, technological upgradation, home/electronic/mobile banking, cost reduction and cross-selling.

Retail Snapshot 11: The business of growth

The fact that Tesco's position amongst the leading global retailers hasn't happened by chance. For well over a decade, its long-term strategy has been delivering strong and consistent growth which has, in turn, come through diversification into new geographies, new product areas and new services, and a flexible range of formats. The company operates different store formats, each tailored to the customers' needs and one trial format called Homeplus.

The formats operate as: Express (up to 3,000 sq ft)

The company has over 960 Express stores offering customers great value, quality and fresh food close to where they live and work. It opened its first Express store in 1994. The stores sell a range of up to 7,000 products including fresh produce, wines and spirits and in-store bakery.

Metro (approx. 7,000-15,000 sq ft)

The first Metro opened in 1992, bringing the convenience of Tesco to town and city centre locations, and now has over 170 stores. Metros cater for thousands of busy customers each week and offer a tailored range of mainly food products, including ready-meals and sandwiches.

Superstore (approx. 20,000-50,000 sq ft)

The company began opening superstores in the 1970s and during the 1980s and 1990s built a national network, currently totaling around 450. It has an ongoing programme of extending and refreshing the superstores to improve the overall experience for customers. In recent years the company has introduced a number of new non-food ranges into superstores such as DVDs and books.

Extra (approx. 60,000 sq ft and above)

The first Extra opened in 1997, the one-stop destination store has proved extremely popular and now there are more than 175 Extra stores. Extra stores offer the widest range of food and non-food lines, ranging from electrical equipment to homewares, clothing, health and beauty and seasonal items such as garden furniture.

Homeplus (approx. 35,000-50,000 sq ft)

The Homeplus stores are dedicated to non-food, including clothing. These 10 stores offer the widest range of non-food products in store, with more available through their Tesco Direct order and collection points. The latest, largest stores have their Tesco Direct catalogue ranges on display, with most products available to take home on the same day.

The year 2000 saw the launch of Tesco.com, which has now emerged as the largest internet based grocer and the year 2007 saw Tesco expand to the United States of America with a new format called Fresh & Easy.

In the year 2010, Tesco opened the world's first zero-carbon supermarket in Ramsey, Cambridgeshire and its first ‘Lifespace' mall in Qingdao, China.