The word "retail" appeared in the Russian language quite recently, however, the market for products has existed for a long time, and it has its own specifics, its technologies, its own history. We will tell you that the food retail market, what are its characteristic features and differences, what is its condition and development prospects.
Retail concept
The term “retail” came into Russian from English and means retail. Although the word "retail" literally means "retelling." But today it is mainly used in marketing terms. This concept covers all trade supplying products to final consumers, i.e. those who buy goods to meet their own needs and for their households, and not for resale or business organization. The large retail market includes several segments, including grocery retail. Retail exists by its own rules, uses special technologies and tools to promote goods.
Types of Retail
All types of retail can be classified by products sold on them. In this case, food retail and trade in non-food products are distinguished. You can also classify retail by the method of distribution of goods. In this case, allocate:
- Street retail. These are familiar shops located in the lower floors of residential buildings or in separate buildings on the city streets.
- Online retail. This is a new format of trading over the Internet.
- Network retail. In this case, the goods are distributed through a network of representatives who themselves organize the trade, promotion, storage and delivery of goods to the consumer.
- Mobile retail. The emerging trading market through mobile applications in phones. This market has similarities with online trading and often uses the same channels for the delivery of goods.
Retail goals and specifics
The grocery retail market exists to achieve two main goals: to satisfy consumers' food needs and maximize profits from trade in products.
The main features of the retail market are:
- Availability. All products in retail can be bought by any consumers. The only limitation is the requirements of the law in relation to certain goods, such as tobacco products or alcohol.
- A large regulatory and regulatory framework. This market is subject to the laws “On Trade”, “On the Protection of Consumer Rights”, “On Retail Markets”.
- Special pricing. Retail prices are formed depending on demand, and they are always higher than wholesale prices, since they include a trade margin for organizing trade and delivering goods to consumers.
- A large assortment. The market is filled with a large number of different products.
- The presence of different formats of trade. Retail delivers goods to consumers in various ways, and the formats are constantly being improved in order to better satisfy the needs of customers.
The concept of "food retail"
One of the oldest forms of trade is the retail sale of food products. Today, this market is called food retail. The peculiarities of this market are that the seller offers the consumer products to meet his needs, as well as related services. For example, home delivery of products, ordering products on a list. Relations between the consumer and the seller are regulated by the law "On the rights of consumers". According to this law, the seller must provide quality goods and sell them under conditions that meet established requirements. Also in the food market, a trading company is engaged in the advertising of goods, their promotion. The seller receives the main profit from the difference between the purchase and retail prices. He buys products in bulk and sells to the consumer in any quantity, starting from one unit of goods. The seller studies the needs of consumers, generates demand for certain products, stimulates the consumer to buy. Thus, food retail is a complex field of activity related to the sale of food products to the final consumer.
Product Retail Evolution
Food trade is one of the oldest forms of this type of activity. The first organized forms of food trading were the shops of merchants. Initially, they opened the point of mixed trade, but gradually specialization began to take shape. Along with bench trading, trading in bazaars and markets is very popular. With the advent of industrial production, grocery stores open for the first time. Retail is constantly striving to develop new forms of trade, looking for additional opportunities to increase sales. This leads to the emergence of new product sales formats. As in all trade markets, food retail is constantly searching for new opportunities to increase sales and increase customer satisfaction, as well as consolidation of the business.
It is in food retail that network companies are becoming increasingly important. By the end of the 20th century, grocery retailers were taking over much of the market. Trade is becoming more civilized. The 21st century has brought many new technologies that have become popular in the trade in products. Today you will not surprise anyone with a self-service store, but gradually it is replaced by stores without sellers and online stores. A feature of this market is that the ancient forms of selling products, undergoing changes, do not go away, but continue to be in demand. So today, some buyers prefer to purchase food products in the markets, although the latest formats find their consumers.
Features of the grocery retail market
Food trade is considered the most stable type of commercial activity. Therefore, many players flock to this market. Increased competition leads to the search for new forms of trade, as well as to lower profits. Grocery retail is a low-margin market, so all players are trying to increase sales. Since only large volumes allow you to get tangible profits. Today, food retail market shares are divided between the following groups:
- large networks;
- small networks;
- markets and bazaars;
- offline modern retail of new formats;
- traditional points of sale.
There is a big war between competitors in this market. It presents international, national, regional and local companies. Also, this market has many trading formats.
The main players in the Russian market
The food retail market is characterized by increasing integration. Network retailers occupy more and more shares, squeezing small traders from the market. Today, Russia's largest grocery retailers occupy almost 30% of the entire market and continue to make tremendous efforts to increase this figure. The largest players in the Russian grocery retail market include:
- X5 Retail Group. The company with the stores Pyaterochka, Karusel and Perekrestok confidently holds leadership in this market, its share is estimated at about 9.5%.
- The magnet. The network has difficulties in competing with its competitors, but is trying to keep its share. About 16 thousand stores operate under the Magnit brand in Russia.
- Auchan. The French retailer is actively exploring the Russian market, opening stores of various formats. In total, about 300 stores of this network are currently operating in Russia.
- The tape. Domestic network developing the formats of hypermarkets and supermarkets. In recent years, the chain has shown significant growth, and today it has 328 stores across the country.
- Dixie. The network is represented by stores under the brands "Dixie" and "Victoria." It covers mainly the European part of the country. Today, this seller has 2700 stores open.
- Metro Cash & Carry. Another foreign network conquering the Russian market. The company's last year was not brilliant, but the seller is trying to keep his share, developing the format of a small wholesale and retail hypermarket and the Fasol convenience store. In total, the network in Russia now has a little less than 100 stores.
Also on this market are such networks as Okay Group, Aniks, Monetka, Maria Ra, Globus, which also declare their desire to increase their share. In total, the food retail market is about 25 trillion rubles.
Food market trends
In recent years, the situation in the grocery retail market has become increasingly tense. Experts record a decrease in growth, which is no more than 2-3% per year, and the forecast for food retail is far from rosy - the growth rate will slow down. A decrease in the amount of the average check is also noted, which is also an indicator of a slowdown in market development. The main trends in the development of the food market in Russia are:
- Further consolidation of networks. Each network does a great job of developing all market segments, while squeezing out small traders.
- Mastering the format of online trading. Large and small players understand that there are great opportunities for trading through the Internet, so gradually competition is growing in this segment.
- Retail branding. Today, the consumer is used to the fact that sellers establish constant communications with him, he no longer wants to go to an unknown store with an incomprehensible level of service. Major players pay a lot of attention to brand formation, work on the quality of service, recognizability of stores, their internal design.
- New services. Grocery stores offer more and more new opportunities for the buyer. Sale of hot bread, ready-made meals, take-away coffee have already become familiar services of the grocery store. Also today, the buyer can warm up the purchased food, order delivery or preparation of the grocery set.
- Emphasis on healthy food. The segment of natural and healthy food is growing, and this trend, according to experts, will continue in the coming years.
Market technology
Food retail trends keep up with the development of technology. Therefore, trade today is undergoing changes, and they will only increase. In the near future, in retail stores, more and more consumers will have to communicate with robots. First of all, this will affect cashiers: now self-service cash registers are becoming the norm, and then this will become a universal practice. The display of goods in stores will be based on an analysis of consumer behavior. Today, experts are talking about the formation of computer vision, and this phenomenon will be used in the presentation of goods to the buyer. Not only cash, but also bank cards will gradually go out of retail. Connecting cards and all services to the phone is already a global trend. In the near future, using a telephone, you can not only pay for goods, but also get advice on it, arrange delivery, receive special offers from the seller at the entrance to the store. The global trend of the food retail market is an increase in an individual approach to each customer, and new technologies contribute to this.
Product Innovation
Trade does not disregard the achievement of technological progress. Therefore, innovation in food retail is another major trend. Key innovations in this market include the following trends:
- The development of mobile shopping. As the young generations that grew up “with a mobile phone in their hands” become more solvent, the market for mobile commerce is growing. Young people are not ready to spend time going to the market and choosing meat or potatoes. They will calmly order all this from a trusted seller through the mobile application.
- Development of delivery and other related services. The modern buyer wants everything to be delivered to his house quickly. He does not want to waste time shopping in the store, so grocery delivery services are some of the fastest growing in this market.
- An individual approach to the buyer. Today, digital technology allows you to collect a large amount of information about the buyer and his behavior, this is used in establishing communications with him. Today, the online store makes individual offers for customers based on their requests and consumer history, and this trend will only increase.
Trading Product Market Formats
Today, the market retains ancient and modern forms of trade. The most common retail formats are:
- kiosks and pavilions:
- offline stores at home;
- supermarkets;
- hypermarkets;
- markets.
Food retail chains are represented mainly by formats of convenience stores, supermarkets and hypermarkets.