GDP and Retail Sector

Part
01
of three
Part
01

Government Role In Retail Sector Promotion

The process of promoting processed items export zone, processed Agricultural-products Export Zones (AEZs) and food parks, training retail entrepreneurs on record keeping, storage techniques as well as merchandising, provide and enforce fixed timelines for retail export clearance, as well as favorable legislation can help in promoting or developing a country's retail sector in other countries. A methodology showing how we arrived at selecting the above listed actions and a brief explanation of how they promote and develop a country's retail sector in other countries is as follows.

METHODOLOGY

In order to unearth the actions that governments can take to promote and develop a country's retail sector in other countries, our research team scoured through industry reports, journals, market surveys for precompiled information. Unfortunately, there was no precompiled list of actions needed to promote or develop a country's retail sector in other countries. We only unearthed several case studies on measures taken to improve or establish a country's retail sector in other countries.

Next, we researched through credible databases such as American FactFinder, Retail in Europe database, Retail Tenant Database, among other databases for the analysis or review of past actions as well as the results of government or agency efforts to promote or develop a country's retail sector in other countries. Unfortunately, there were no reviews that rated a government or agency actions aimed at improving or establishing a country's retail sector in other countries. We only unearthed an All Franchise publication analyzing USAID franchising funding programs that occurred in former Russian Republics.

We then tried to research for pieces of information such as ideas from case studies that have helped some governments in promoting and developing their country's retail sector in other countries. We unearthed several case studies such as those of India among other countries. We have reported on significant findings discovered in the course of our research as follows.

1. ESTABLISHING/PROMOTING EXPORT ZONES

According to the Journal Of Army Institute Of Management Kolkata, India has increased it's FDI by 27.9% yearly for the period between 2016 to 2017. This increase in FDI is due to the establishment of 60 well-equipped Agricultural-products Export Zones (AEZs) and food parks. The export zone boosts India's agricultural as well as processed food exports.

2. TRAINING GLOBAL RETAIL ENTREPRENEURS

Governments and their agencies across the globe can engage in educating small scale entrepreneurs operating in the global retail industry. For a country such as Pakistan to benefit from having it's retail sector in other countries, it needs to have more professionals available to manage the affairs of the retail industry. The first line of duty should be for the government or it's agencies to support the adequate training of existing small scale entrepreneurs and workforce. This training will make the retail sector organized in a real sense. Training in this sector can be formal covering record keeping, storage techniques as well as merchandising.

3. ENFORCING FIXED TIMELINES FOR CLEARANCE

Retail exporters are usually required to adhere to some strict timelines to meet the expectations of customers. Courier exports originating from India are processed manually. Even for small parcels/consignments, customs often insist on a No Objection Certificate (NOC) and this delays the process of shipment. In the absence of clear guidelines to help in such cases, small scale exporters only have the option of waiting for long and tracking their consignment through the websites of courier companies. Governments and their agencies can provide and enforce fixed timelines for retail export clearance for cases where exporters must meet strict deadlines in order to meet/exceed customer expectations.

4. Programs and Incentives

The United States Export Assistance Centers (USEACS) operates in over 100 locations throughout the United States and across the globe. USEACS has about 75 international offices. USEACS and some other agencies/specialists advice companies on the procedures involved in exporting. They also help in assessing product export potential, identifying markets, locating potential overseas partners, and resolving customs clearance as well as other issues related to trade. Government agencies can follow similar procedures to promote and develop their retail presence in other countries.

5. POSITIVE LEGISLATIONS

Improvements such as favorable legislation on franchise regulations, as well as establishing supportive organizations, trade associations/organizations and franchise education programs can help a country promote and develop it's retail sector in other countries. In some cases, foreign governments have participated in funding programs that encourage economic development via retail franchising in some emerging economies. An example of an agency that has combined these actions is the USAID programs in the defunct Russian Republics.

Part
02
of three
Part
02

Singapore Government Role In Retail Sector Promotion

The Singapore government has various initiatives, innovations, projects and plans such as the Retail Industry Digital Plan, Network Trade Platform (NTP) and Tech Depot that promote the country's retail sector in other countries. According to the Singapore government, the retail sector contributed 1.4 percent to the country's GDP with revenue of S$33 billion (US$24 billion). The three main government agencies that support the retail sector in Singapore are the Ministry of Trade and Industry, Singapore Economic Development Board (EDB)
and Enterprise Singapore.

The MINISTRY OF TRADE AND INDUSTRY

The Ministry of Trade and Industry is the primary government agency in Singapore that attracts foreign investments and promotes the growth of the retail sector in the country. With the aim of promoting the retail sector in the global market, the Ministry of Trade and Industry launched the "Retail Industry Digital Plan".

RETAIL INDUSTRY DIGITAL PLAN

This plan seeks to promote digitization of small and medium retail business by facilitating their in-store and online shopping platforms and enabling them to utilize omni-channel and digital marketing platforms. Besides this, the plan will also provide basic and specialized advisory and consultancy services through the agency's SME Centres. The plan is divided into three stages.

  • In Stage 1, the plan focuses on helping the retail businesses digitize their operations through the implementation of processes such as e-payment, integrated point of sales, e-commerce and inventory management.
  • In Stage 2, the plan focuses on helping the retail businesses capture new markets in other countries through digital platforms such as mobile-enabled payment, mobile-enabled store, and self-checkout.
  • In Stage 3, the plan focuses on helping the retail businesses expand to a global market by utilizing various omni-channel platforms, intelligent concierge robots, collaborative digital advertising and global e-marketplaces.

SINGAPORE ECONOMIC DEVELOPMENT BOARD (EDB)

Singapore Economic Development Board (EDB) is a government agency under the Ministry of Trade and Industry that is responsible for the positioning of retail businesses in the global market. The agency has many e-commerce initiatives, projects, innovations and plans to support retail businesses.

  • Retail Industry Transformation Map (ITM): Created under the 2020 vision, this plan helps omni-channel retailers establish their e-commerce infrastructure and promote in a global market by harmonizing cross-border e-commerce regulations.
  • Action Community for Entrepreneurship (ACE): This is an e-commerce platform created for retailers who want to promote in a global market but lack the initial capital cost. This platform provides retailers with various logistic services such as integrated warehouse functions, inventory management solutions and order fulfillment capabilities.
  • Network Trade Platform (NTP): This is a trade information platform that helps local retailers streamline their global shipping process. Retailers would be easily able to create an electronic bill of lading, get access to sea freight e-commerce and leverage data analytic.
  • SkillsFuture Skills Framework for Retail: This is a collaboration between Workforce Singapore and SkillsFuture Singapore to help employees working in the retail sector develop their e-commerce and omni-channel skills. This initiative helps workers prepare to operate in a global market.

ENTERPRISE SINGAPORE

Enterprise Singapore is a government agency responsible for boosting the growth of startups and facilitating global trade. The agency has various initiatives, projects and plans aimed at supporting the retail sector.

  • Tech Depot: This is a program platform that supports the e-commerce adoption process of small and medium-sized retailers. The program features more than 25 technology solutions such as the Enterprise Resource Planning (ERP) Software that automate the back office functions of a retail business.
  • Digital Tech Hub: Under this program, the agency organizes various workshops and seminars for retailers on new technologies such as data analytic and cybersecurity.
  • Retail Best Practices Masterclass: Under this program, the agency provides classes to retail businesses on decision sciences and data analytic. This is a collaboration between the Boston Consulting Group (BCG), the Singapore Productivity Centre (SGPC), Workforce Singapore (WSG) and Enterprise Singapore.
  • Start Digital: Created in collaboration with Infocomm Media Development Authority of Singapore (IMDA), this plan seeks to support the adoption of digital technologies by new retailers.
  • SkillsFuture SME Mentors Programme: To enable retailers to operate in a global market, the agency provides a nine-month mentoring programme that helps retailers enhance their front and back office functions, create developmental plans, and upgrade the training capability of their supervisors.
Part
03
of three
Part
03

GDP Formula

The formula used to calculate the retail sector's contribution to GDP is:[(Retail industry revenue/Total GDP) x 100]

METHODOLOGY

We began our search by looking in reputable business websites such as Forbes, WallStreet Journal, CNN Market and Financial Times but we did not get a direct formula on how to calculate the retail sector's contribution to GDP. Instead, we found the definition and formula for calculating a country's GDP.
Next we looked into trusted financial blogs such as Investopedia, New Economics and Economic's View but unfortunately we still did not find a direct formula to solve this problem. Instead, we found a detailed report on the retail sector's impact on the economy.
Finally, we expanded the research criteria to include finding the formula to calculate any sector's GDP but came up short. We then attempted to triangulate this formula based on the information we had gathered throughout our search. Below are our findings.

KEY FINDINGS

This report indicates that in 2017, the retail sector generated $1.14 trillion in revenue and this represents 5.9% of the economy. We then calculated the total GDP using this formula.
If 5.9% = $1.14 trillion, what about 100%?
[(100 x 1.14 T) /5.9] = 19.32 T

Before we proceeded, we confirmed from Trading Economics that this figure was close to the actual GDP in 2017. We then worked backwards in order to find out how they calculated the retail sector's contribution to the GDP and found that they used the following formula:
[(Retail industry revenue/total GDP) x 100]
(1.14 T/ 19.32 T) x 100 = 5.9%
Therefore, we concluded that the formula used to calculate the retail sector's contribution to GDP is: [(Retail industry revenue/total GDP) x 100].

Sources
Sources

From Part 01
Quotes
  • "Stanworth, Price and Purdy (2001) deemed retail franchising as a means of technology-transfer for developing economies. Their article explored the background inherent in the internationalization of retail franchising, including favorable factors to growth, benefits to developing economies, other consequences to developing economies, advantages and risks to franchisors, as well as government action to encourage retail franchising. "
  • "The benefits to developing countries were identified as managerial, marketing and consumer know-how. Other consequences to developing countries with the entry of retail franchising were cultural homogeneity by exposure to Western tastes, loss of economic diversity, possible displacement of existing local businesses, repatriation of fees and profits, and notions of control from a distance. "
  • "The authors used the example of Indonesia and China to illustrate the government‟s action to encourage retail franchising. The paper closes with the call for development of models, theory and research in emerging franchise markets. "
  • "Welsh (2001) updated a study conducted by Falbe and Welsh in 1988 that was the first to examine the effect, if any, of the North American Free Trade Agreement (NAFTA) on franchisor perceptions of characteristics associated with franchisee success and failure in Canada, Mexico, and the United States. The original research addressed two key issues in franchising. First, was to examine the extent of the franchisee study‟s success and failure by analyzing franchise executives‟ perceptions of the importance of a number of characteristics associated with franchisee success and failure. "
Quotes
  • "The FDI inflows in India are increased at the rate of 27.9 per cent per annum during the period 2016 -2017. It is observed that there is a steep increased because the Government has been providing transparent and investor friendly climate. Last five years FDI inflows in India were observed highly fluctuated."
  • "Government has established 60 fully equipped Agro -Export Zones (AEZs), in addition to food parks, to provide a boost to agricultural and food processing exports. Hence, it may be concluded from the aforesaid data findings and discussions that FDI has a good impact on Indian economy as it shows economic growth and it leads to increase the foreign reserves of the country. The case study of Dominos pizza attached with this paper also speaks in support of the said conclusion."
  • "CASE STUDY ON DOMINOS PIZZA (F&B SECTOR) Overview and Objectives of The Study Dominos pizza is one of the world‟s biggest pizza chain with 8773 stores across 60 countries employing approximately 170,000 people across the globe as of December 2017. In spite of the global financial meltdown in 2017, Domino's stood out as one such company that reported a strong growth in its international retail segment in the fiscal 2017 Analysts attributed the reasons"
Quotes
  • "Since the modernization of global retail industry in 1990s, the international chains are exploring opportunities in turning this most impressive economic component of modern business cycle, a key participant of retail sector."
  • "On the other hand, the role of government in retail sector needs to be reviewed since it manages, mostly directly, thousands of retail grocery stores and mini super markets through entities like Utility Stores Corporation (USC) and Canteen Stores Department (CSD)."
  • "Pakistan needs more professional people to manage affairs of retail sector. First challenge is to provide adequate training to existing small scale entrepreneurs and work force if we have to move to organized retail format in true sense. Any FMCG company which take the lead in providing basic but formal training in, say record keeping, storage techniques and merchandising, may be able to develop loyalty among retailers. Further, it will lessen the workload on trade marketing teams of companies selling the products at the outlets."
Quotes
  • "NEW DELHI: The MSME ministry has established an export promotion cell to create a sustainable ecosystem for micro, small and medium enterprises (MSMEs), Parliament was informed Monday. The benefits likely to accrue from the setting up of the cell include integration MSMEs into global value chain, evaluation of readiness of MSMEs to export their products and services, and recognition of areas where improvements are required in order to be able to export effectively and efficiently."
  • "The current status of exports from the MSME sector as per the information received from the Directorate General of Commercial Intelligence and Statistics (DGCIS), the value of MSME-related products is USD 147,390.08 million and share of MSME-related products in the country's exports was 48.56 per cent during 2017-18, Minister of State (Independent Charge) for MSME Giriraj Singh said in a written reply in Lok Sabha."
Quotes
  • "According to the Global B2C E-Commerce Report, 2016 by the E-Commerce Foundation, in 2015 China accounted for the largest volume of B2C e-commerce sales, followed by the United States of America (USA) and the United Kingdom (UK). Online retail has become a common practice in developed countries contributing towards 10 percent to 13 percent of the retail transactions."
  • "This brings an unequivocal opportunity for Indian MSMEs, both for existing as well as potential start up export units, to capture a portion of the rapidly expanding B2C e-commerce via marketplace giants such as eBay, Amazon and Alibaba. Although, B2C e-commerce sales in India stood at USD 25.5 billion, "
  • "The overall export potential arising out of MSME products amounts to USD 302 billion, contributed by 93 product categories and is exported to 159 countries. There are numerous clusters in India that hold promising potential for MSME products that can be exported to various countries in North America (USA), Europe (UK, "
  • "1. Uniform guidelines. Courier exports in India are is still done on a manual mode. For clearance of the small consignments, Customs sometimes requires a No Objection Certificate (NOC) of organizations like Wildlife Department, which delays the whole process of sending shipments. In absence of any clear guidelines for such cases, a small exporter is left with the only option to wait and track their consignment on websites of courier companies. Such agencies should have fixed time lines for clearances as exporters are required to meet strict timelines to meet customer expectations. Exemption for NOCs from Textile Committee may also include key markets of readymade garments i.e. USA and Hong Kong."
  • "The study will help to put special emphasis on creating synergies with numerous export promotion programs and schemes by the government and their agencies. This will help in on-boarding of a large number of sellers and more exports per seller. "
Quotes
  • "The U.S. Commercial Service (USCS), a part of the International Trade Administration at the U.S. Department of Commerce, offers companies a full range of expertise in international trade, marketing, and finance at every stage of the exporting process. "
  • "Companies can find local assistance at U.S. Export Assistance Centers (USEACS) in more than 100 locations across the United States and globally in 75 international offices. These trade specialists counsel companies on the steps involved in exporting, help assess product export potential, identify markets, locate potential overseas partners, and resolve customs clearance and other trade-related issues. "
  • "The U.S. federal government offers a range of services and programs for companies that operate in the United States – from general workforce development and energy efficiency grants to industry-specific incentives. State, territorial, and local governments are often the primary source of specific assistance to help business investors get new ventures off the ground or expand their existing operations."
Quotes
  • "Governments have increasingly become aware of the benefits to their country that franchising has to offer. As a result, many governments are in the process of improving their country’s business environment to attract high quality franchises. The improvements have included positive legislation for franchise regulations, establishing support organizations, trade associations and franchise education programs. In many cases, foreign governments have funded programs to encourage economic development through retail franchising in emerging economies, such as the USAID Programs in the former Russian Republics."
From Part 02
Quotes
  • "To promote economic growth and create good jobs, to enable Singaporeans to improve their lives. Together with our statutory boards, we will ensure that Singapore’s economy continues to be competitive, is able to attract investments, and nurture a deeper base of global Singapore enterprises."
Quotes
  • "SME Retailers can tap on pre-approved digital solutions to automate operations, enhance customer experiences, and facilitate in-store and online shopping. The plan also enables SME retailers to exploit advanced platforms like omni-channel and digital marketing to extend their reach and grow their brand."
  • "SMEs that wish to have a more comprehensive review of their business can approach the SME Centre business advisors for a free business diagnosis and advice on the relevant digital solutions. "
Quotes
  • "The Singapore Economic Development Board (EDB), a government agency under the Ministry of Trade and Industry, is responsible for strategies that enhance Singapore’s position as a global centre for business, innovation, and talent. "
Quotes
  • "Contributing 1.4 per cent to Singapore’s Gross Domestic Product (GDP) with S$33 billion (US$24 billion) in operating receipts and employing 170,000 employees nationwide, retail is a key sector in Singapore’s economy."
  • "The 2020 vision of the Retail ITM is for Singapore to have a vibrant retail industry. This comprises a mix of highly productive omni-channel retailers and local brand owners with global footprints, all supported by a professional and skilled workforce."
  • "With the Retail ITM, retailers can look to strengthen their enterprise capabilities to increase their productivity, and make their presence felt in the global arena with a more vibrant sector supported by a skilled workforce."
Quotes
  • "This e-commerce platform will benefit SMEs looking to enter e-commerce but are unable to afford the initial capital costs. The platform, designed to get them into the online marketplace, will offer support such as integrated warehouse functions, inventory management solutions and order-fulfilment capabilities, allowing the streamlining of the logistics chain, increasing efficiency by up to 45 percent."
  • "The NTP will help businesses boost productivity by streamlining work processes, reducing inefficiencies of manual trade document exchange, and leveraging data analytics for insights from their trade data, so as to be well-equipped for the digital economy. It also enhances the competitiveness of local SMEs in the field of e-commerce with regards to international trade and promotes Singapore as a strategic destination of choice for traders, shippers, logistics and trade finance companies around the globe."
  • "The Skills Framework is a SkillsFuture initiative developed for the Singapore workforce to promote skills mastery and lifelong learning, and is an integral component of the Retail Industry Manpower Plan."
Quotes
  • "Enterprise Singapore is the government agency championing enterprise development. We work with committed companies to build capabilities, innovate and internationalise. We also support the growth of Singapore as a hub for global trading and startups. "
  • "Enterprise Singapore was formed with this in mind. Growing Singapore companies (either locally or overseas) has always been at the heart of the work of both International Enterprise Singapore and SPRING Singapore. Together, we will work with businesses – from startups to SMEs and high-growth companies – as a single agency to support your growth. "
Quotes
  • "If you require support to go digital or adopt e-commerce, you can turn to Tech Depot, a centralised platform (under the SME Portal) that supports mid-sized companies to access technology and digital solutions. The Tech Depot features more than 25 technology solutions such as the Enterprise Resource Planning (ERP) Software to integrate and automate back office functions, and product promotion and analytics."
  • "Build up your company’s digital capabilities with the Digital Tech Hub. The workshops and seminars offered at the hub include digital transformation workshops for retail businesses. Experts will provide you with information in areas like data analytics, data protection, cybersecurity and internet-of-things (IOTs), as well as guidance on using advanced technologies. "
  • "Capitalise on market opportunities through the Retail Best Practices Masterclass Series, which provides you with access to world-class tools in decision sciences, data analytics, and insights to solve challenges more efficiently. This is a collaboration between the Boston Consulting Group (BCG) and the Singapore Productivity Centre (SGPC), with the support of Workforce Singapore (WSG) and Enterprise Singapore."
  • "Start Digital is an initiative, in collaboration with IMDA, under the SMEs Go Digital programme to help SMEs adopt digital solutions right from the start."
Quotes
  • "The Skills Framework aims to create a common skills language for individuals, employers, and education and training providers. This facilitates skills recognition and the design of training programmes for skills and career development."
  • "Developed by Enterprise Singapore and Workforce Singapore following a study with seven pilot companies and workshops involving over 70 retailers, the Retail Job Redesign Framework guides retailers in reviewing their employees’ job scopes, enabling them to improve productivity and efficiency, optimise workforce, and improve employee attraction and retention."
  • "Companies in the retail sector can groom and retain suitable talent for retail-specific roles (such as retail supervisor and retail manager) through the Earn and Learn Programme (ELP). This is a work-study programme designed to help fresh graduates from the Institute of Technical Education (ITE) and polytechnics have a career head start in the retail industry."
  • "The SkillsFuture Study Awards for Retail supports early to mid-career Singaporeans in their efforts to deepen skills related to the sector. Study Award recipients will receive S$5,000 to defray course-related fees. Supportable courses include: e-commerce, digital marketing, data analytics, logistics, supply chain management and retail management."