Structure Of Retailing And Distribution Channels Around The World
The nature of retailing and distribution channels in the United States is quite unique
.
Some critical difference among U.S., European, and Japanese retailing and distribution systems are summarized in below given exhibit.
The U.S. distribution system has the greatest retail density and the greatest concentration of large retail firms. Some people think that the United States is over stored. Many U.S. retails firms are large enough to operate their own warehouses, eliminating the need for wholesalers. The fastest growing types of U.S. retailers sell through larges stores with over 20,000 square feet. The combination of large stores and large firms results in a very efficient distribution system.
In contrast, the Japanese distribution system is characterized by small stores operated by relatively small firms and a large independent wholesale industry. To make daily deliveries to these small retailers efficient, merchandise often might pass through three distributors between the manufacturer and retailer. This difference in efficiency results in a much larger percentage of the Japanese labor force being employed in distribution and retailing than in the United States.
The European distribution system falls between the U.S. and Japanese systems on this continuum of efficiency and scale, but the northern, southern, and central parts of Europe have to be distinguished, with northern European retailing being the most similar to the U.S. system. In northern Europe, concentration levels are high; in some national markets, 80 percent or more of sales in a sector such as food or home improvements are accounted for by five or fewer firms. Southern European retailing is more fragmented across all sectors. For example, traditional farmers market retailing is still important in some sectors, operating alongside large, big box formats. In central Europe, the privatization of retail trade has resulted in a change from a previously highly concentrated, government-controlled structure to one of extreme fragmentation characterized, by many small, family-owned retailers.
Some factors that have created these differences in distribution systems in the major markets are (1) social and political objectives, (2) geography, and (3) market size. First, an important priority of the Japanese economic policy is to reduce unemployment by protecting small businesses like neighborhood retailers. The Japanese Large Scale Retail Stores Law regulates the locations and openings of stores of over 5,000 square feet. Several European countries have also passed laws protecting small retailers.
Second, the population density in the United States is much lower than in Europe or Japan. Thus, Europe and Japan have less low-cost real estate available for building large stores.
Third, the U.S. retail market is larger than that of Japan or any single European country. In Europe, distribution centers and retail chains typically operate within a single country and are therefore not able to achieve the scale economies of U.S. firms, which serve a broader customer base. Even with the euro and other initiatives designed to make trade among European countries easier and more efficient, barriers to trade still exist that are not found in the United States.
2 Research Methodology
The present study is descriptive in nature and secondary data have been used.
3 Findings of the Study
3.1 Retail Formats in India
For Indian retailing things started to change slowly in the 1980s.Textiles sector like Bombay Dyeing, Raymond's, S Kumar's and Grasim was the first to see the emergence of retail chains.
Later on, Titan, maker of premium watches, successfully created on organized retailing concept in India by establishing a series of Elegant Showrooms.
Although, the co-operative stores like Super Bazar, Kendriya Bhandar and CSD were already established by that time.
For long, these remained the only organized retailers, but the later half of the 1990s saw a fresh wave of entrants in the retailing business. This time around it was not the manufacturer looking for an alternative sales channel. These were pure retailers with no serious plans of getting into manufacturing. These entrants were in various fields like-Food World, Subhiksha and Nilgiris in food and FMCG;
Planet M and Music World in music; Crossword and Fountainhead in Books.
3.1.1 The Traditional Retail Formats-
Indian retail sector is pre-dominantly controlled by traditional and unorganized formats of retailing. These formats have emerged and developed with the growth of population in the country in rural and semi urban areas, the haats/weakly bazaars exist since long time. The traditional "kirana "or "Baniya ki Dukan" still enjoy the leadership and commanding position in retail trade. In smaller towns and urban areas we may see the power of small family run independent 'mom and pop' store offering a wide range of merchandise mix. These store formats are traditional and do not enjoy professionalism. A large number of these stores are family business involving more than one generation. These retailers have developed a rapport and goodwill among customers and popularly known as" Dukan Wala bhaiya "
Mostly these stores are managed by family members and in some cases even involve the services of one-two hired workers which depend upon the turnover. Traditional distribution channel of above retailing sector includes following factors-
Fig3.1-Distribution channel
3.1.2 Organized formats of retailing-
The last decade has witnessed dynamism in Indian retail sectors. Various urban areas have been the center of attraction wit emergence of different kinds of organized retail formats gaining momentum. It is largely due to rising Income, increase purchasing power credit facilities, changing patter of consumer behavior, increased consumer awareness etc. Although the share of organized retailing is mere 3% of the total retail till 2004,and it has expected to be 9% till 2010.
Retailing has emerged as one of the most important sector of Indian economy since 1990s.A large number of retail model retail formats have come in force offering a wide spectrum of merchandise and services. The professional orientation and incorporation of various technology-enabled softwares has offered these retailers better customer relationship management, merchandise offering, store atmosphere and inventory management etc.
Various new and improved formats of Retailing like departmental stores, supermarket, hypermarket, Discount stores, convenient stores and even up-market specialty stores are no longer a dream.
We have seen the mushrooming growth and proliferation of these formats of retailing in various metro cities of India
by: Piers kelvin
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