Retail Sector in India

Description
A detailed case study about the pros & cons, majoy players, various types of retailer sector in India.

UNIVERSITY OF MUMBAI PROJECT REPORT ON RETAIL SECTOR IN INDIA

In the partial fulfilment for Bachelors of Management Studies (BMS)

SUBMITTED BY: RUTUJA SANJAY HARSHE TYBMS SEM- V (2011-12)

UNDER THE GUIDANCE OF Prof. Ms. Deepa Makkad

Vishweshwar Education Society?s Western College of Commerce and Business Management Sanpada, Navi Mumbai 400705.

DECLARATION

I, Rutuja Harshe, studying in TYBMS of Western College of Commerce & Business Management, Sanpada, hereby declare that I have completed this project on “Retail Sector in India” in the academic year 2011-2012 as per the requirement of the Mumbai University as a part of BACHELOR MANAGEMENT STUDIES (BMS) programme. The information presented through this project is true and original to the best of my knowledge.

Signature

ACKNOWLEDGEMENT

I wish to express my gratitude to our Principal Dr. Mr. G. K. Gupta for his support. I wish to thank Prof. Deepa Makkad, HOD BMS Department, for giving me the opportunity to work on this project.

I am grateful to my project guide Prof. Deepa Makkad, without her prompt responses, feedback and support this project would not have been possible.

My appreciation also goes to the following people for their suggestions, support and help.

Prof.Shruthi Jayprakash

I am also thankful to my family and my friend Arjun Gunasekaran. Without their support and conviction this project would not have been possible.

INDEX 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

Introduction To The Retail Word Industry Evolution Benefits Of Retail Sector Problems Faced By Retail Sector & Its Solutions Classification Of Retailers 4P?s Of Retail Challenges In Retail Sector Retailing Trends FDI?s Role In Indian Retail Current Scenario Of Indian Retail Sector Major Indian Retailers Company Profile India V/S World Rural Retailing SWOT Analysis Of Retail Sector Findings Bibliography

PREFACE

The Indian retail industry one of the fastest growing industries in the country over the past couple of years is no exception.

Mumbai city has experienced and after a lukewarm response the project has gained better acceptance and brands are now reporting better conversions. Mumbai, which houses the first Mall in the country, has a total organised retail stock of 8.72 mn.sq.ft. And will witness 11.26 mn.sq.ft. Of new retail development over the next 3 years. The city is home to some of the most prominent and successful malls in the country and the retail rentals are amongst the most expensive in the world.

Retail and commercial projects of the city were on a negative list of the institutional lenders which made situation worse for commercial real estate segment.

While the situation has improved since mid 2009, the retail space vacancy across the city still remains high.

Many mall projects have been marred because of poor design and also high concentration of malls in particular catchment area. Taking cognizance of the poor demand situation, some malls with high vacancy have started leasing space to office occupiers instead of waiting for retailers.

Overview towards the retail sector…. Introduction to the word “Retail”:-

The word retail means the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct
consumption by the purchaser.

Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses.

In commerce, a "retailer" buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy. The term "retailer" is also applied where a service provider services the needs of a large number of individuals, such as a public utility, like electric power.

Role of retailer in Supply chain:-

Manufacture r

supplier

wholeseller

retailer

consumer

industry wise impact
80 70 60 50 40 30 20 10 0

Retail Sector in various Industries
3% 13% 3% 2% 1% Clothing, textiles & fashion accessories Footwear 39% Jewellery and watches Mobiles handset and accessories 7% 2% 9% Health and beauty (including services) Food & groceries Durables

18%

3%

INDUSTRY EVOLUTION

•

Traditionally retailing in India can be traced to the emergence of the neighbourhood „Kirana? stores catering to the convenience of the consumers

•

Era of government support for rural retail: Indigenous franchise model of store chains run by Khadi & Village Industries Commission

• •

1980?s experienced slow change as India began to open up economy. Textiles sector with companies like Bombay Dyeing, Raymond's, S Kumar's and Grasim first saw the emergence of retail chains

•

Later Titan successfully created an organized retailing concept and established a series of showrooms for its premium watches

•

The latter half of the 1990?s saw a fresh wave of entrants with a shift from Manufactures to Pure Retailers.

•

For e.g. Food World, Subhiksha and Nilgiris in food and FMCG; Planet M and Music World in music; Crossword and Fountainhead in books.

•

Post 1995 onwards saw an emergence of shopping centres mainly in urban areas, with facilities like car parking

• •

Targeted to provide a complete destination experience for all segments of society. Emergence of hyper and super markets trying to provide customer with 3 V?s - Value, Variety and Volume.

•

Expanding target consumer segment: The Sachet revolution - example of reaching to the bottom of the pyramid.

•

At year end of 2000 the size of the Indian organized retail industry is estimated at Rs. 13,000 crore.

BENEFITS OF RETAILING

Retailers play a major role in the transfer of goods and services from the manufactures to the end users. In this process retailer delivers many benefits to customers, manufactures, wholesalers, and the economy. Benefits to Customers Retailers act as a buying agent for consumers. They perform various business activities that increase the value of the goods and the service they sell to the end users. As buying agents a retailer performs various activities to satisfy the end consumers. These activities include • • • • • Breaking bulk Providing assortment Holding inventory Providing after sales services Providing information

Benefits to Manufactures and Wholesalers Manufactures and wholesalers consider retailing as a channel for delivering their product /services to the end consumer. By selling services retailers provide the manufactures great revenue, which could be reinvested in production. Thus retailers play major role in smoothing out the variation between the production and sales of the manufactures product. Benefits to the Economy The retailing business is the largest privet industry in the world with turnover of US $6.6 trillion. Retailing plays a crucial role in the management of world economy and retailers constitute a tenth of the fortune 500 companies. In INDIA retailing accounts for over 10% GDP and around 8% of the employment only next to the agriculture industry.

PROBLEMS ANALYZED IN RETAILING

Lack of bargaining power: An individual will not be in a position to demand or bargain for his realistic requirements. The theme "Customer is King" is purely theoretical in nature. Customer the king is not a real life concept. The seller still enjoys the domination power as he finds it as a right. Labour intensive operation: India retail environment is lab our abundant and economic scarce. But still overstaffing is major problem, which is taxing and vexing the retail customer. Directly or indirectly it affects the affordability of retail customers. Once affordability is affected it will have a bad reflection on purchasing power of an individual. Over dependent on owner: Decentralization is always good, but it is not free from drawbacks. Here owner will be overburdened with many pitfalls. It affects his profitability. In the world of "Generation of Profit" he will find very difficult to keep his body and soul together. Limited long range planning and perspectives: Planning is the core of success. But today's organizations believe in too much discussion and not in decisions. Lack of proper planning is yet another common handicap in retail marketing. A retail marketer can cross all the hurdles in a smooth way if proper planning is there. A retail marketer always try to solve his temporary problems, but later on it will become an unshakeable mountain, where he will be so late to make an effective come back .

RECOMMENDATIONS

The above-mentioned problems are common with all the retailers. But it can be rectified if the retailer put his mind and hands together. Some of the recommendations to scan out the problems are depicted here under. Design long-term plans: In the organization will be loosely organized without plans. Planning and decision making is the crux of effective retail market management. Planning should be done timely and things have to be planned according to circumstances and situations. Implement the plans; Only designing the plan is like a tyre without tube. The success lies in enforcing the plan. In other words the plan, which is decided, should be implemented. More over timely implementation is of great significance.
Good HRD practices:

It is easy to handle machines. Man cannot be compared with machines. Human beings cannot work like machines and it is here good HRD practices come to picture, it is not simply managing human resources; it includes nourishing and cherishing of human resources. Remove unnecessary conflict: "Customer the king" is theoretically correct but in practical sense it is next to impossible. The retailer should always get an edge and then only he can survive. He should not be cornered always and in all always.

CLASSIFICATION OF RETAILERS

Ownership
• Sole Proprietorship • Partnership • Joint Venture Limited • Liability Company

Operational Structure
• Independent Retail Unit • Retail chain • Co-operative Outlets • Franchising • Leased Department or Shop-in-shop

Retail Location
• Retailers in a freestanding location • Retailers in a Business associated location • Retailers in specialized markets • Airport retailing

Variety Of Marchandise Mix
• Department stores • Discount stores • Specialty stores • Supermarkets and Hypermarkets

Conceptual classification of a business unit provides the marketers with strategic guidelines, useful in the design of retailing strategy. Besides, retail businesses are extremely diverse and there are quite a few types of retail units. Therefore, retail units are classified on multiple of ownership, geographical locations, kind of customer interaction level of services provided etc.

RETAILERS CLASSIFIED ON THE BASIS OF OWNERSHIP One of the first decisions that the retailer has to make as a business owner is how the company should be structured. This decision is likely to have long-term implications, so it is important to consult with an accountant and attorney to help one select preferred ownership structure. There are four basic legal forms of ownership for retailers: • Sole Proprietorship They vast majority of small businesses start out as sole proprietorships. These firms are owned by one person, usually the individual who has day-to-day responsibility for running the business. • Joint Venture A Joint Venture is not well defined in the law. Unless incorporated or established as a firm as evidenced by a deed, joint ventures may be taxed like association of person, sometimes at maximum marginal rates. It acts like a general partnership, but is clearly for a limited period of time or a single project. • Partnership A partnership is a common format in India for carrying out business activities (particularly trading) on a small or medium scale. In a partnership, two or more people share ownership of a single business. • Limited Liability Company (Public And Private) The Limited Liability Company (LLC) is a relatively new type of hybrid business structure that is now permissible in most states. The owners are members, and the duration of the LLC is usually determined when the organisation papers are filed.

CLASSIFICATION OF RETAILERS ON THE BASIS OF OPERATIONAL STRUCTURE Retail businesses are classified on the basis of their operational and organizational structure. Operational structure defines the key strategy decision of retail entity, whether to hire employees and manage the distributed sales function internally or to reach customers though outlets owned and operated by local entrepreneurs.

Retail firms can be classified into 5 on the basis of their respective operational structures: • Independent Retail Unit The total number of retailers in India is estimated to be over 5 million in 2003. About 78% of these are small family business utilizing only household labour. An independent retailer owns one retail unit. • Co-Operative Outlets Cooperative outlets are generally owned and managed by co-operative societies. • Retail Chain A chain retailer operates multiple outlets (Store units) under common ownership; it usually engages in some level of centralized (or coordinated) purchasing and decision making. • Franchising Franchising involves a contractual arrangement between a franchiser (which may be a manufacturer, a wholesaler, or a service sponsor) and retail franchisee, which allows the franchisee to conduct a given form of business under and establishments name and according to a given pattern of business. • Leased Department Or Shop-In-Shop It refers to department in a retail store that is rented to an outside party. Usually this is done in case of department and specialty stores and also at times, in discount stores.

CLASSIFICATION OF RETAILERS ON THE BASIS OF RETAIL LOCATION Retailers have also been classified according to their stores in an isolated place and attract the customers to the store on their won strength-such as a small grocery store or paan shop in a colony, which attracts the customer staying close by.

Classification of retailers on the basis of location is discussed below: • Retailers In A Free-Standing Location Retailers located at a site which is not connected to other retailers depend entirely on their store?s drawing power and on the various promotional tools to attract customers. This type of location has several advantages including no competition, low rent, and better visibility from the road, easy parking and lower property costs. For example the Haldiram?s outlet on the Delhi-Jaipur highway and McDonald?s outlet on Delhi-Ludhiana highway. • Retailers In A Business-Associated Location In this case, a retailers locates his store in a place where a group of retail outlets, offering a variety of merchandise, work together to attract customers to their retail area, and also complete against each other for the same customers. • Retailers In Specialized Markets Besides the above location-based classification, we also have in India-retailers who prefer specialized markets, particularly traditional independent retailers or chain stores. In India, most of the cities have specialized markets famous for a particular product category. For example, in Chennai, Godown Street is famous for clothes, Bunder Street for ready-made garments, Govindappan Naicleen Street for stationery products, Usmaan Street for jewellery, T Nagar for ready-made garments, Govindappan Naicleen Street for grocery, Poo Kdadia for food and vegetables.

•

Airport Retailing For quite some time, duty-free shops and newsstands dominated the small amount of commercial space provided at airports. Serious efforts are being made to design new airport facilities in order to incorporate substantial amounts of retail space. The key features of airport retailing are: • • • • • • Large groups of prospective shoppers Captive audience Strong sales per square foot of retail space Difficulty in replenishment Longer operating hours Duty-free shopping possible

CLASSIFICATION OF RETAILERS ON THE BASIS OF VARIETY OF MERCHANDISE MIX The retail merchandising has come a long way in India since the days when general stores that stocked everything from groceries to stationery and small shops that sold limited varieties of products (such as clothes, furniture, medicines) reigned supreme. There are many different retail stores, brad stores and discount stores characterized by the variety of merchandise mix offered by a respective retail format. The consumer can choose between different stores for different needs. Retail units, on account of variety of merchandise mix, can be classified as follows: • Department Stores It is a large retail store organized into a number of departments, offering a broad variety and depth f merchandise, commonly part of a retail chain large stores ranging from 20000-50000 sq.ft. Catering to a variety of consumer needs. Further classified into localized departments such as clothing, toys, home, groceries, etc. Departmental Stores are expected to take over the apparel business from exclusive brand showrooms. In India there are few department stores and the key players are Shoppers Stop, Ebony, Pyramid, Westside, Lifestyle, Globus etc. All of them are multiproduct stores, Ebony has 7 stores, Globus has 4 stores, and Lifestyle has 3 stores.

•

Discount Stores Retailers offering a broad variety of merchandise mix, limited or no service and low prices are characterized by low margins, heavy advertising, low investments on fixtures, limited support from sales people etc. Discount stores or factory outlets, offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left over at the season. The product category can range from a variety of perishable / non perishable goods. In India the concept is quite new however there are few players like The Loot, My Dollar Store, and Max Retail etc.

•

Specialty Store These stores concentrates on one type of merchandise and offer it in a manner that makes it special. Some are very high end (LOUIS VUITTON) while others cater to the priceconscious masses (OLD NAVY). Many are so successful that department stores have started to predict growth in this segment, particularly in home furnishings and home improvement, and it seems to attract many of the best and the brightest retail. Promotion and responsibility come quickly to those willing to work hard, and in many of those stores the hand of bureaucracy is not heavy. Examples of specialty stores chains in India are Planet M, Music World, and Crossword etc.

•

Supermarkets & Hypermarkets Large self service outlets, catering to varied shopper needs are termed as Supermarkets. These are located in or near residential high streets. These stores today contribute to 30% of all food and grocery organized retail sales. Super Markets can further be classified in to mini supermarkets typically 1000 sq.ft. To 2000 sq.ft. And large supermarkets ranging from 3500 sq.ft to 5000 sq.ft. Having a strong focus on food and grocery and personal sales. A hypermarket is a very large unit offering merchandise at low prices. Hypermarkets are characterized by large store size, low operating costs and margins, low prices and comprehensive range of merchandise.

4P’S OF RETAIL

Product

Price

4P's Of Retail

Place

Promotion

RETAIL PRODUCT

Product and merchandise management is a key activity in the management of retail business. It drives the business strategy of the retailer and has immense cost and profit implications. A related issue is also the management of retail brands and the decision to offer retailer?s private labels along with or instead of national and local brands. While product management deals with issues related to the kind of products sold by the retailer, merchandise management concerns itself with the selection of the right place and time. This involves a careful planning of merchandise mix and its financial implications are reflected in the merchandise budget.

PRODUCT MANAGEMENT

Products are critical to a retail firm?s existence and profitability. They constitute the basis of exchange transactions between retailers and customers. Products, in retailing context, are defined as anything sold and purchased in a retail transaction. Hence, it could constitute goods, service, places, events, ideas. A product could be tangible or intangible.

Product management, in the context of retailing, may be defined as a set of decisions related to the selection and removal of products from the retailers? portfolio, along with the related product and market analysis. Product management is critical to the successes of retail business. Identification of the products to be retailed forms the core component of the retailer?s business plan. Hence, it determines business profitability to a large extent. There are different cost implications in sourcing various kinds of products. Besides, there are varied demand patterns and competitive factors for product categories.

RETAIL PRICING Setting the right price can influence the quantities of various products or service that consumers will buy, which in turn determines the total revenue and the profit of the retail store, in the end, the right price for the product or service is the price that the consumer is willing to pay it. Therefore, sound pricing decisions are important to successful retail business. Systematic and informed decisions regarding pricing strategies must be made while considering a wide range of issues.

Profitability of retail unit is subject to selling of merchandise for more than it has cost a retailer. The difference between the cost of the merchandise and the retail price is called the mark-up profitability is a prime objective of any retail firm. Profitability covers the cost of buying merchandise, costs of running business (rent, salary, maintenance cost), and finally the cost of investment for further expansion of the retail business.

Profitability of retail business is influenced by 2 factors: one, the profit margin on the offerings that are sold and second, the cost involved in the selling of merchandise. These 2 factors directly influence the pricing of the merchandise sore, which in turn influences profitability of the store.

Competitors

Government

Pricing Strategy

Suppliers

Consumers

.

CUSTOMERS A retailer needs to understand the price sensitivity of the customers that from his target segment. The price sensitivity of customers is based on various personal, social or geographical factors and presents a major challenge for retailers while setting price.

•

SUPPLIERS It may happen that retailers and manufacturers have different objectives, which leads to conflict between the two. Generally, the cause of this conflict is the final prices set by the retailer. Both the retailer and the supplier (manufacturer) like to have control and want to price the product or services according to their own image, goals, and objectives. With the advent of Internet, manufacturers are selling goods directly to the final customer.

•

COMPETITORS In most cases, competitors are the most influential factor in determining the price. The competitive environment affects the freedom of a retailer to fix prices to a great extent. Competition can range from being perfect competition to a monopoly. A perfectly competitive market is the most competitive market imaginable.

•

GOVERNMENT In the Indian context, various government agencies exercise a strong influence on the price through legal and policy directives.

RETAIL PRICING OBJECTIVE

Retail pricing objectives or goals provide direction to the whole pricing process. Retailers are supposed to determine their objectives as the first step in pricing. When deciding on pricing objectives a retailer need to consider:

• • • •

The overall financial, marketing and strategic objective of the retail business The characteristics of product and brand Consumer price elasticity and price points The resource available

Broadly, there could be various pricing objectives such as market penetration, market skimming, return on investment and early recovery of investment. Within these broad objectives a regular may also try to fulfil the following specific objectives.

•

Profit Objective The retail store may price its products with the objective of maximizing profits in the short run or long run or both. The objective of profit maximization must be studied carefully because it may lead to unethical practices such as overcharging or deceiving the customers. At other times, the marketer may price his products with the objective of obtaining only a target rate of return of his investment. This is particularly s with products in the maturity stage of life cycle.

?

Product Oriented Objectives The retailers or marketer, at time, make their offerings more „visible? by means of pricing. Customers are usually attracted by the advertisements in newspaper highlighting special offers and discount. This is especially true in an inflationary economy, which has made people very price-conscious. With a lower price, the retail store can therefore catch the attention of buyers and this will help him to introduce new offerings increase the sale of weak products or reduce his stock at the end of a season. Many of the retail stores in India such as Big Bazaar are using these pricing techniques. Products can also be made visible by means of a high price. This was practiced in the cosmetics and jewellery trade, where people tend to associate high prices with better quality products and a higher status or image.

•

Market Share Objective The retailer or marketer may also price his product with the intention of increasing his market share or stabilizing his market share. He can set the price of his product lower than that of his competitors.

•

Competitor- Oriented Objective The retailer or marketer may rice his product to counter any existing or prospective move by his competitors. A retailer may deliberately price its merchandise low to: • • • • Discourage potential retailers from entering the market Expedite the exit of the potential competitors from the market Hasten the exit of the marginal firms, and Spoil the market of retail competitors with an eye on getting future benefits. With a low price, the marketer can prevent price-cutting by range.

•

Buyer-Oriented Objective Another pricing objective adopted by a retailer may be buyer-oriented. The aim of such pricing is to maintain socially acceptable prices and be fair to customers. The prices of goods at super bazaars such as Margin Free can be considered.

RETAIL PROMOTION STRATEGY

1. Retail promotion is broadly defined as all communication that informs, persuades and reminds the target market or the prospective segment about marketing mix of the retail firm. The retailers seek to communicate with customers to achieve a number of objectives. These objectives includes increasing store traffic by encouraging new shoppers to visit the store, increasing shareof-wallet for all shoppers of specific groups among them, increasing sale of a given product or category and developing the store image or the retail brand.

2. Advertising sales promotions and personal selling are example of paid impersonal communications. The responsibility of personal selling predominantly lies with the sales personnel and in case of small retail outlets, with the owner himself. Personal selling is the cornerstone of the promotion strategy for the Indian retail industry, especially in the unorganized sector. Advertising is a form of paid communication and it uses impersonal mass media like newspapers, magazines, TV, radio, direct mail, etc.

3. A sales promotion is another form of paid impersonal communication, which offers additional value and incentives to the customer. It not only encourages the customers to visit the store but also promotes trail and repeat purchases. Some of the popular sales promotion activities are special events-in-store demonstration, coupons and contests. Publicity is an un-paid form of communication that provides information about retailer through the media.

POPULAR MEDIA VEHICLES USED IN THE INDIAN RETAIL SECTOR While selecting a particular set of materials for the publicity, retailers have to consider factors such as cost of the selected material, compatibility with their objective and the rest of the communication strategy. • Posters / Calendars Retailer use posters to promote specific activities and events or as free gift to other channel members, especially their loyal customers. • Leaflets Or Flyers Retailer to promote specific activities and events use leaflets or flyers. They have a short life, so they are most useful for marketing specific activities such as opening of a new outlet or off-season sale. • Booklets Retailers form the organized sector can afford this costly mode of communication. It is effective in case of products or services which are intense on information, such as banking, real estate practitioners, fashion designers and insurance services. • Direct Mail Retailers can opt to send out regular, targeted letters as part of their communication strategy. Direct mail advertising includes postcards, catalogues, brochures, email and single letters. This technique is considered to be effective at the time of introducing new product and informing about prospective sales and or special discounts. • Magazines Magazines are considered to be and effective medium to advertise to the target segment. For example, a retailer selling baby products could put an ad in Parenting or Health and Nutrition.

?

Local Cable Chain With the advent of the local cable TV channel, most of the small retailers, basically located in central business districts, use this medium to communicate about their offerings and promotions to their target segment more effectively.

RETAIL LOCATION (PLACE) STRATEGY

Location is the most important ingredient for any business that relies on customers. It is also one of the most difficult to plan for completely. Location decisions can be complex, costs can be quite high, thee is often little flexibility once a location has been chosen and the attributes of location have a strong impact on a retailer?s overall strategy. This make the location decision even more critical. Choosing the wrong set can lead to poor results and in some cases insolvency and closure.

IMPORTANCE OF LOCATION DECISION DUE TO THE FOLLOWING

Location is a major cost factor because it • • • Involves large capital investment Affects transportation costs Affects human resources cost, e.g. salaries

Location is a major revenue factor because it • • Affects the amount of customer traffic Affects the volume of business

The traditional inclination of Indian retailers to own property further increases capital investment and this along with the penchant of Indian retailers to continue their business at the same location decisions even more important. The terms „location? and „site? are often used interchangeably but there is a distinct difference between the two. „Location? is a broader concept, which denotes the store and its trading area from where a majority of its customers originate, while a site refers to the specific building or part of the building where a store is located. For example, a designer men?s store located in an up market shopping centre or a mall near posh residential colonies, housed in an attractive building with adequate parking facilities.

LEVELS OF LOCATION DECISION AND ITS DETERMINING FACTORS A retailer has to take the location decision, basing on 3 aspects: • • • SELECTION OF A CITY SELECTION OF AN AREA OR TYPE OF LOCATION WITHIN A CITY IDENTIFICATION OF A SPECIFIC SITE

The factors which influence these decisions are shown in a diagrammatic presentation given below.

Level Of Location Decision

Selection Of City

Area Within City

Site Selection

Size of the city?s trading area.

Customer attraction of shopping district e.g. Colaba in Mumbai.

Adequacy and potential traffic.

Population and growth trends.

Quantitative and qualitative nature of competitive stores.

Complementary nature of adjacent store.

Purchasing power and its distribution.

Nature of the zoning regulation.

Adequacy of parking.

Trade potential.

Availability of access route.

Number, size, quality of competition.

Direction of the spread.

Development cost.

TYPES OF RETAIL LOCATION A retailer has to choose among alternate types of retail locations available. It may locate in an isolated place and pull the customer to the store on its own strength, such as a small grocery store or paan shop in a colony which attracts the customers staying close by.

The various options available to a retailer in India are show below:

Free Standing Location 1. Neighborhoods Stores. 2. Highway Stores

Unplanned BUSINESS Districts / Centres
1. Neighborhoods Business District 2. Downtown Or Central (CBD) 3. Secondary-business-district 4. Suburban Business District

Types Of Location

Planned Shopping Centres 1.Regional Shopping Centers Or Malls 2.Specialist Market 3.Periodic Markets / Weekly

?

FREE-STANDING LOCATION Where there are no retail outlets in the vicinity of the store and therefore, the store depends on its own pulling power and promotion to attract customers. This type of location has several advantages including no competition, low rent, and often better visibility form the road, easy parking and lower property costs.

•

Neighbourhood Stores They are located in residential neighbourhoods and serve a small locality. For e.g. Kemp Fort and Lifestyle stores are free standing stores in Bangalore away from major markets of the city.

•

Stores They are Highway located along highways and attract customers passing through these highways. For e.g. Ebony Store in Ludhiana

•

UNPLANNED BUSINESS DISTRICTS / CENTRES It is a type of retail location where two or more retail stores locate together on individual considerations rather than on the basis of any long-range collective planning.

•

Neighbourhood-Business-District Stores located in a NEIGHBOURHOOD BUSINESS DISTRICT form a small cluster and serve the neighbourhood trading area.

?

Downtown or Central-Business-District (CBD) It is the hub of retailing activity in a city. Stores located in CBD usually have a trade area that varies according to the size of the city or town. For example, Connaught Place in Delhi, Colaba in Mumbai.

•

Secondary-Business-District These are composed of an unplanned cluster of stores often located on a major intersection of a city. They attract customers from a large part of the city. Some of the major Secondary business districts include Dadar in Mumbai, Lajpat Nagar, and Kamla Nagar in Delhi.

•

Suburban Business Stores located on the town?s periphery have lower rents, often rely on traffic generated by the downtown, and may sometimes offer parking facilities. The malls located in Gurgaon near Delhi are good example. In Mumbai, Bandra-Andheri is a major suburban business district.

•

PLANNED SHOPPING CENTRES It consists of a group of architecturally owned or managed stores, designed and operated as a unit, based on balanced tenancy, and surrounded by parking facilities.

•

Specialist Market In India most of the cities have specialized markets famous for a particular product category. For example, Ibbbn Chennai, Godown Street is famous for clothes, Bunder Street for stationery products, Usmaan Street for Jewellery.

•

Regional Shopping Centres of Malls They are the largest planned shopping centres; often they are anchored by two or more major departmental stores. For example, Crossroads in Mumbai, Spencer Plaza in Chennai.

•

Periodic Markets/Weekly The retailers in these markets have mobile set-ups which they move from one place to another depending on the day of the week. For example, a market organized on the Monday would be called SOM BAZAAR (Some means Monday).

SITE SELECTION ANALYSIS A retailer has to consider the following factors while selecting a site: • • • • • • Kinds of products sold Cost factor Competitor?s location Ease of traffic flow and accessibility Parking and major through fares Market trends

CHALLENGES IN RETAILING

Despite the proliferation of malls and departmental stores in the metros, retailing in India is still in its infancy. It has a long way to go before it can be compared with countries like UK and France where organized retailing takes a relatively higher proportion of market space. India is most certainly one of the most challenging environments for retailing. THE CHALLENGES FOR RETAILERS: Impulsive Pricing Systems. : One of the key issues in retailing is impulsive pricing system, which is a speedily converting value product into commodities. Price is certainly an important factor in the customers' decision-making criteria while going for purchase. But it will be self-defeating to believe that all customers are looking for price & price alone. There are segment of customers who look beyond price, for other factors like service after sale, product reliability and a shopping experience including ambience, cordiality at the counter, and adherence to commitments. Quality of Human Resources. Another big challenge would be the quality of human resources. At wal-martthey say their people make the difference. In India retailing industry the number one priority to deal with these challenges would be training and development of our teams at all levels. Training should be an ongoing part of business. Culture: Another key issue is culture. This issue has two facets to it. On the one hand retailers have to learn to accept and deal with people coming from very diverse backgrounds and working under the company corporate culture and on the other hand they have to understand the culture of the multinationals who not only are entering this country and producing top quality goods but also the multinationals who are entering the field of retailing.

Technology: Technology would have a big role in retailing, in future than it has today. Survival in the emerging market scenario will call for anticipating customer expectations and fulfilling them effectively. Secondly, deflation will impact, the world retail environment prices are coming down, led by china and India will follow, china leads in almost all categories of goods and its price drops will see closure of industries elsewhere. Corporate and retailers need to seize the initiative and sort out issues such as expensive real estate, fine tuning the supply chain mechanism, its right use in the retail business and making retail an attractive employment proposition. If it happen, the customer would, indeed be delighted. Customers are changing day to day. Their expectations are rising. Their intangible needs have to be taken care of. The four important things that need to be done: • There has to be a constant interaction with customers, so as to understand their changing needs and satisfaction levels. •

Brands, products and services need to be placed or replaced or displaced as per customers? needs.

•

Regular training needs to be imparted to the Sales and service staff to be sensitive towards the need of the customers.

•

It is important to be vigilant about competition, and seek better ways of serving customers.

TECHNOLOGIES USED IN RETAIL SECTOR
Over the years as the customers demand increased and the retailers geared up to meet this increase, technology evolved rapidly to support this growth. The hardware and software tools that have now become almost essential for retailing can be into 3 broad categories.

Customer Interfacing Systems. Bar-coding and scannersoint of sale systems use scanners and bar-coding to identify an item, use pre-stored data to calculate the cost and generate the total bill for a client. Tunnel scanning is a new concept where the consumer pushes the full shopping cart through an electric gate to the point of sale. In a matter of seconds, the items in the cart are hit with laser beams and scanned. All that the consumer has to do is to pay for the goods.

Paymentayment through credit cards has become quite widespread and this enables a fast and easy payment process. Electronics cheque conversion, a recent development in this area, processes a cheque electronically by transmitting transactions information to the retailer and consumer?s bank. Rather than manually process a cheque, the retailer voids it and hands it back to the consumer along with a receipt, having digitally captured and stored and image of the cheque, which makes the process very fast.

Internet:Internet is also rapidly evolving as a customer interface, removing the need of consumer physically visiting the store.

ERP system:Various ERP vendors have developed retail specific systems which help in integrating all the functions from warehousing to distribution, front and back office store systems and merchandising. An integrated supply chain helps the retailer in maintaining his stocks, getting his supply on time, preventing stock outs and thus reducing his costs, while servicing the customer better.

CRM systems:The rise of loyalty programs, mail order and the internet has provided retailers with real access to consumer data. Data warehousing and mining technologies offers retailers the tools they need to make sense of their consumer data and apply it to business. This, along with the various available CRM (customer relationship management) systems, allows the retailers to study the purchase behaviour of consumers in detail and grow the value of individual consumers to their business.

Advanced planning and scheduling systems:APS systems can provide improved control across the supply chain, all the way from raw material supplier?s right through to the retail shelf. These APS packages complement existing (but often ltd.) ERP packages. They enable consolidation of activities such as long term budgeting, monthly forecasting, weekly factory scheduling and daily distribution scheduling into one overall planning process using a single set of data.

RETAILING TRENDS IN MUMBAI
As the Indian retail market is getting more and more organized there are many retailers who are trying out different formats to cater different segments of people. Retail industry is continuously going through changes on account of liberalization, globalization and consumer preferences. While multinational retail chains are looking for new markets, manufacturers are identifying, redefining, or evolving new retail formats. The existing retail houses are also gearing up to face the emerging competition from the organized sector and the changing outlook of the consumers. For example, consumer spending is shifting from goods to services. Accordingly the retailers too are fast adjusting to the changing consumer preferences. Consumers are not only looking for the core products or functional benefits from the retailers but also the non-functional benefits, which need to be compatible with their lifestyles. For example, most of the traditional eating joints in India such as Haldiram?s, Bikaner and SagarRatna have revised their product offerings and atmospherics on the lines of the multinational chains to compete with them and to serve changed expectations of the consumers.

•

MOM AND POP STORES AND TRADITIONAL KIRANA STORES Mom and Pop stores deal in both branded and non branded products. They usually buy in small quantities. Mom and Pop stores in India have survived for the last 60 years on the basis of the customer relations they manage to leverage. This gives them a certain competitive advantage over a retailing giant. Mom and Pop stores usually are the places where a customer finds intimacy, ubiquity and neighbourliness in the way the shopkeeper interacts. The Shopkeeper is more of a friend to the customer than a mere service provider. He knows the name of the customers and is willing to have a conversation with the customers without giving a fabricated smile. The shopkeeper usually offers monthly credit to his regular customers. Further he is willing to deliver Rs. 5 worth of medicine to a home at midnight. The retail sector is changing as new store categories have started dominating the market place. Small independent stores, across product categories, is a very common retail formats they are also undertaking large scale renovations to appeal and attract their target consumer segments.

•

DEPARTMENT STORES The first department store was set up by Aristide Boucicault in 1838 at Paris and today the department stores and the key players are Shoppers Stop, 4Piryamd, Westside, Lifestyle, Globus etc. Large stores ranging from 20000-50000 sq.ft. Catering to a variety of consumer needs. Further classified into localized departments such as clothing, toys, hoe, groceries, etc. Departmental stores are expected to take over the apparel business from exclusive brand showrooms. Among these, the biggest success is K Raheja?s Shoppers Stop, which started in Mumbai and now has more than seven large stores (over 30,000 sq.ft.) across India and even has its own in store brand for cloths called Stop!.

•

DISCOUNT STORES As the name suggests, discount stores or factory outlets, offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left over at the season. The product category can range from a variety of perishable/non perishable goods. Wal-Mart is the world largest discount store opened in USA (1962), offering a wide variety of commodities in a competitive price. In India the concept is quite new however there are few players like The Loot, my Dollar Store, Max Retail etc. where once mom-and-pop and department stores dominated retail, now the discount retailers and category killers are at the top of the heap and where once shopping malls, anchored by at least one major department store, used to be the dominant retail presence lining the nation?s roads, now it is the behemoth Wal-Marts and Home Depots.

•

CATEGORY KILLERS Category Killers, also known as Multi Brand outlets, offer several brands across a single product category. These usually do well in busy market places and Metros. These are the giant retailers that dominate one area of merchandise (e.g. Home Depot, Vishal chain, Office Depot, Tower Records and The Sport Authority). They are able to buy bathroom tiles, file cabinets electronic goods or pet food in such huge volumes that they can then sell them at prices even fairly large competitors cannot match. The future of this category is better than that of many of the more general discounters, but the same employment caveats apply.

•

SPECIALTY STORES Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer Crossword, RPG?s Music World and the Times Group?s music chain Planet M, are focusing on specific market segments and have established themselves strongly in their sectors. These stores concentrates on one type of merchandise and offer it in a manner that makes it special. Some are very high end (LOUIS VUITTON) while others cater to the priceconscious masses (OLD NAVY). Many are so successful that department stores have started to predict growth in this segment, particularly in home furnishings and home improvement, and it seems to attract many of the best and the brightest retail.

•

E-RETAILERS While most retailers have online store fronts, strictly online purveyors with no bricks and mortar counterparts are hoping to snare a percentage of the retail profit. Major players, such as Amazon.com & Ebay.com have generated enough business to cause top brick and mortar competitors to come up with their own Internet sites. Traditional retailers like Wal-Mart and Starbucks hugely successful in their own right, have also set up online stores so as not to miss out on the revenue opportunities that the Internet offers.

•

SUPERMARKET A supermarket is a departmentalized self-service store offering a wide variety of food and household merchandise. It is larger in size and has a wider selection than a traditional grocery store and it is smaller than a hypermarket. The supermarket typically comprises meat, produce, dairy and baked goods departments along with shelf space reserved for canned and packaged goods as well as for various non food items such as household cleaners, pharmacy products, and pet supplies. Most supermarkets also sell a variety of other household products that are consumed regularly, such as alcohol (where permitted), household cleaning products, medicine, clothes, and some sell a much wider range of non-food products. The first supermarket was opened in New York (1930) by Michael Cullen with 6,000 square feet of and was named as King Kullen. Nilgiri was the first supermarket and thereafter was supermarket promoted by government of India named Apna Bazaar later on came Food World, Sabkar Bazaar, Fabmall, Subhiksha etc.

•

HYPERMARKET Hypermarket or multi-department store is a superstore which combines a supermarket and a department store. The result is a very large retail facility which carries an enormous range of products under one roof, including full lines of groceries and general merchandise. When they are planned, constructed, and executed correctly, a consumer can ideally satisfy all of his or her routine weekly shopping needs in one trip. Hypermarkets, like other big-box stores, typically have business models focusing on high-volume, low-margin sales. In India, Reliance Retail and Big Bazaar are the major hypermarket chains, though the recent opening up of the retail sector to foreign investors is likely to increase the numbers exponentially. Also V Mart in Ernakulum, Big Bazaar of Pantaloon Retail, Star India Bazaar of Trent India, Hyper city of K Raheja?s Group, Choupal of ITC Group and Reliance has also entered in this segment.

•

CONVENIENCE STORES These are relatively small stores 400-2000 sq.feet located near residential areas. They stock a limited range of high-turnover convenience products and are usually open for extended periods during the day, seven days a week. Prices are slightly higher due to the convenience premium. These are those stores which are open entire day i.e. 24 x 7 and few players in this segment are My Mart, In & Out, Red Shops, and DHL Service Point etc.

FDI IN INDIAN RETAIL SECTOR
The Government of India was initially very apprehensive of the introduction of the Foreign Direct Investment in the Retail Sector in India. The unorganized retail sector as has been mentioned earlier occupies 98% of the retail sector and the rest 2% is contributed by the organised sector. Hence one reason why the government was fearing the surge of the Foreign Direct Investments in India was the displacement of labour. The unorganized retail sector contributes about 14% to the GDP and absorbs about 7% of our labour force. Hence the issue of displacement of labour consequent to FDI is of primal importance. There are different viewpoints on the impact of FDI in the retail sector in India. According to one viewpoint, the US evidence is empirical proof to the fact that FDI in the retail sector does not lead to any collapse in the existing employment opportunities. There are divergent views as well. According to the UK Competition Commission, there was mass scale job loss with the entry of the hypermarkets brought about by FDI in the UK retail market. According to another school of thought, there is undoubtedly labour displacement associated with FDI, but employment generation will occur in different dimensions. Varied skills would be specialised. Taking into consideration the pros and cons of introducing FDI in India, ICRIER has recommended 49% of FDI. The opening up of FDI in India is also expected to be gradual so that the domestic industries can tailor themselves according to the changes. At the formative stage, the idea was to start with 26% of FDI in this sector. But soon the idea changed as China's FDI moved up from 49% to 100% in the retail sector.

While the government is continuing its plans to liberalise FDI in the retail sector in India, foreign companies like Wal-Mart are waiting on the threshold. They basically wish to enter into partnership with various multinational chains. FDI would bring about modern infrastructure that would help to boost the productivity of the organised retail sector in India. Malls have mushroomed in various locations. They are the centres of entertainment for the new generation. FDI is not allowed in the retail sector and this is the reason why many prominent global players like Dominos, Levis, Lee, Nike, Adidas, TGIF, Benetton, Swarovski, Sony, Sharp, and Kodak etc are entering the retail market via licensee or franchisee.

The opening up of the economy to FDI in the retail sector is also expected to generate employment. FDI can be a blessing instead of curse only if it produces backward linkages relating to production and manufacturing. It may also, in the process help to push up domestic production as well as exports. In the present scenario, 51% Foreign Direct Investment is permitted in India only through single brand retailing. The international retailers are entering the market through licensees just as WalMart has entered through the franchisee, Bharti Enterprises.

Recent News on FDI in India
• • • • Metro AG and Shoprite are already in operation. Foreign retailers are in search of investing in wholesale. Wal-Mart as we have mentioned has already joined the retail market of India. Giant is also expected to start its retailing operations soon in India hence we may conclude that FDI in retailing in India would require the creation of additional jobs to compensate the resulting job loss. • • • It would result in the reduction in the Kirana shops and Retail Stores. The consumers can benefit from such exposures; it would enhance quality, improve on the supply chain, increase exports, so on and so forth. There are certain other issues that have discouraged FDI in India and they are discussed as under.

Bottlenecks to FDI in Retail Industry
• According to the Land and Property laws only the Indians have the right to land and property in India and this law has in a way inhibited the entry of the foreign players in India. •

Again the labour laws are so designed that the store workers can be protected, quite contrary to the requirements of the modern formats.

• •

The tax structure of India is also unfavourable for the foreign players.

The corporate tax rate for the domestic companies is 36.59% whereas it is 41.82% for the foreign companies.

•

The changing sales tax as well as the Value Added Tax is also not favourable in the case of international companies.

CURRENT SCENARIO OF RETAIL SECTOR IN INDIA

• • • • • • •

The Indian population is whooping 1 billion with 75% of the people living in villages and small towns. It is only natural that the Agriculture sector is the biggest employer with its contribution to GDP pegged at 26.7%. Retail is the India?s largest industry after agriculture with around 20% of the economically active population engaged in it and generates 10% of our country?s GDP. The growth of the efficient small store culture can be attributed to the 6 million villages distributed across the length and breath of the country. The 12 million retail outlets in India are the highest in the world, and cater to the purchase need of its pole. It is interesting to note that the Urban Population although just 25% of the total, is an astounding 250 million in size and is growing at the healthy rate of 7% per annum. The chief driver of growth in the retail sector has been the customer, with spending increasing at an average of 11% per annum. The core and the lower middle have increased their share in the growth.

•

The Indian consumer?s shopping needs are traditionally have been fulfilled by Kirana store (corner stores), Kiosks, street vendors, weekly bazaars and high street shops for consumers durables and luxury goods.

•

To cater to this, each city developed its own identity and shopping cluster, for instance in Pune there is MG Road, Bangalore has Brigade Road and Commercial Street, Delhi has Connaught Place, Karol Bagh and South Extension.

•

India will have 358 shopping malls by 2007. Droves of middle-class Indian have broken off their love of traditional stand-alone shops that have no ACs, organized parking lots and other public amenities, according to a study by fashion magazine Image.

• •

At present, in India we have 96 malls, covering an area of 21.6 million sq.ft. And by year end the count will shoot up to 158 malls. It will cover 34 million sq.ft. Area. Currently estimated at $205 billion to grow to $400-500, over the next 2-3 years.

• • • • • • • • • •

Smaller cities will have about 12.8 million sq.ft. Of mall space by 2007. Ludhiana to account for 2.5 million sq.ft. Ahmadabad about 3.4 million sq.ft. Delhi and Mumbai now have maximum number of shopping centres. Gurgoan saw the largest development in terms of retail outlet. North region has 39% of India?s retail share. East region has 10% of India?s retail share. West region has 33% of India?s retail share. South region has 18% of India?s retail share. Government and co-operative sector is also making their steps in retailing. For example, Kendriya Bandar, Apna Bazaar, Mother Diary, Super Bazaar etc.

FACTS OF RETAILING

•

Even though India has well over 5 million retail outlets of all sizes and styles (or nonstyles), the country sorely lacks anything that can resemble a retailing industry in the modern sense of the term. This presents international retailing specialists with a great opportunity.

•

It was only in the year 2000 that the global management consultancy AT Kearney put a figure to it: Rs. 400,000 crore (1 crore = 10 million) which will increase to Rs. 800,000 crore by the year 2005 – an annual increase of 20 per cent.

•

Retailing in India is thoroughly unorganized. There is no supply chain management perspective. According to a survey by AT Kearney, an overwhelming proportion of the Rs. 400,000 crore retail markets are UNORGANIZED. In fact, only a Rs. 20,000 crore segment of the market is organized.

•

As much as 96 per cent of the 5 million-plus outlets are smaller than 500 square feet in area. This means that India per capita retailing space is about 2 square feet (compared to

16 square feet in the United States). India?s per capita retailing space is thus the lowest in the world just over 8 percent of India?s population is engaged in retailing (compared to 20 percent in the United States). There is no data on this sector?s contribution to the GDP. • From a size of only Rs. 20,000 crore, the ORGANIZED retail industry will grow to Rs. 160,000 crore by 2005. The TOTAL retail market, however, as indicated above will grow 20 percent annually from Rs. 400,000 crore in 2000 to Rs. 800,000 crore by 2005 (source: survey by AT Kearney). • Given the size, and the geographical, cultural and socio-economic diversity of India, there is no role model for Indian suppliers and retailers to adapt or expand in the Indian context. • The first challenge facing the organized retail industry in India is: competition from the unorganized sector. Traditional retailing has established in India for some centuries. It is low cost structure, mostly owner-operated, has negligible real estate and labour costs and little or no taxes to pay. Consumer familiarity that runs from generation to generation is one big advantage for the traditional retailing sector. • In contrast, players in the organized sector have big expenses to meet, and yet have to keep prices low enough to be able to compete with the traditional sector. High costs for the organized sector arises from: higher labour costs, social security to employees, high quality real estate, much bigger premises, comfort facilities such as air-conditioning, back-up power supply, taxes et. Organized retailing also has to cope with the middle class psychology that the bigger and brighter a sale outlet is, the more expensive it will be. • The above should not be seen as a gloomy foreboding from global retail operators. International retail majors such as Benetton, Dairy Farm and Levis have already entered the market. Lifestyles in India are changing and the concept of “value for money” is picking up. • India?s first true shopping mall – complete with food courts, recreation facilities and large car parking space – was inaugurated as lately as in 1999 in Mumbai (this mall is called “Crossroads”). • Local companies and local-foreign joint ventures are expected to more advantageously position than the purely foreign ones in the fledgling organized India?s retailing industry.

• •

These drawbacks present opportunity to international and /or professionally managed Indian corporations to pioneer a modern retailing industry in India and benefit from it. The prospects are very encouraging. The first steps towards sophisticated retailing are being taken, and “Crossroads” is the best example of this awakening. More such malls have been planned in the other big cities of India.

•

An FDI Confidence Index survey done by AT Kearney, retail industry is one of the most attractive sectors for FDI (Foreign Direct Investment) in India and foreign retail chains would make an impact circa 2003.

MAJOR INDUSTRY PLAYERS

•

Nanz in North India, Nilgiris in the South, Pantaloon in the East and Crossroad in the West were the pioneers of the retail revolution in India. Nanz faced several obstacles (See Case Study) in their business and had to finally down their shutters.

•

Nilgiris, due to some strange reason, did not see any logic to expand beyond the southern frontiers.

•

Pantaloon went to scale up and become bigger and bigger to form the Future Group, that is now omnipresent in almost all formats right from small groceries to e-tailing.

•

Crossroads in Mumbai imparted some valuable lessons to their parent, thePiramyd Group, who has since then gone on an expansion drive with other formats of retailing indifferent cities.

•

The big players in Indian retail landscape now are the Future Group, Shoppers Stop, Westside, Subiksha and RPG Spencer.

•

The newcomers who are knocking at the gates are Reliance Retail, Bharti Wal-Mart and Aditya Birla Trinethra.

•

Here, we intend to do a brief profiling of the major players in order to understand the retail business in a better manner.

The Future Group

The Future Group, which was earlier known as PRIL (Pantaloon Retail India Limited) began as a trouser manufacturer in the mid 1980s. The Future Group is divided into six verticals – Future Retail, Future Capital, Future Brands, Future Space, Future Media and Future Logistics. The Future Group started operations in the mid 1987s by incorporating the company as Manz Wear Private Limited. The company went on to manufacture ready made trousers under the “Pantaloons” brand name. It came out with a public issue in 1991 and later changed their name to Pantaloon Fashions (India) Limited (PFIL).The first exclusive men?s store called Pantaloon Shoppe was inaugurated in 1992. Pantaloons went for franchisee route to expand the number of retail outlets and by 1995, it had reached to a crucial number of 70. The first departmental store called Pantaloons was opened in Kolkata in 1997 with an investment of Rs 0.7 million. The store was a success and recorded revenues of Rs 100 million within the first year of operations. In 1999, the company?s name was changed to Pantaloon Retail (India) Limited (PRIL).The success of Pantaloons departmental stores encouraged PRIL to come up with other retailing formats such as “Big Bazaar” to retail low cost general merchandising, and “Food Bazaar” to retail food products. As of 2005, the Future Group has 3.5 million sq ft of retail space and over 100 stores across25 cities in India. It employs more than 12,000 people and has a customer base of more than 120million.Kishore Biyani, the promoter of the group who likes to address himself as “Chief Knowledge Officer “has plans to launch 18 formats and over 3,340 stores, thereby turning the Future Group into a US$7billion company with over US$1 billion in profits by the year 2010.

Shoppers Stop

Shoppers? Stop, promoted by the real estate group K Raheja?s, was one of the first movers to have setup a large retail outlet in New Delhi with international ambience. Shopper?s Stop Ltd now has a considerable presence all over the country with over 7 lakh square feet of retail space and stocks over200 brands of garments and accessories. The stores are spread all over India with presence in Mumbai, Delhi, Bangalore, Hyderabad, Jaipur, Pune, Kolkata, Gurgaon, and Chennai& Ghaziabad. Shoppers? Stop is also very well known for having pioneered several quality retailing concepts in India like CROSSWORD, Hyper CITY and Mother Care. They are the only retailer from India to become a member of the prestigious Intercontinental Group of Departmental Stores (IGDS).Shoppers? Stop is positioned as a family store delivering a complete shopping experience. With its wide range of merchandise, exclusive shop-in-shop counters of international brands and world-class customer service, Shoppers? Stop brought international standards of shopping to the Indian consumer providing them with a world class shopping experience. Shoppers? Stop?s core customers represent a strong SEC A skew. They fall between the age group of 16 years to 35 years, the majority of them being families and young couples with a monthly household income above Rs. 20,000/- and an annual spend of Rs.1,50,000/-. A large number of Non - Resident Indians visit the shop for ethnic clothes in the international environment they are accustomed to. The stores offer a complete range of apparel and lifestyle accessories for the entire family. From apparel brands like Provogue, Color Plus, Arrow, Levi?s, Scullers, Zodiac to cosmetic brands like Lakme, Chambor, Le Teint Ricci etc., Shoppers? Stop

caters to almost every lifestyle need. Shoppers' Stop also retails its own line of clothing namely Stop, Life, Kashish, Vettorio Fratini and DIY. The merchandise at Shoppers? Stop is sold at a quality and price assurance backed by its guarantee stamp on every bill. Shoppers? Stop?s customer loyalty program is called “The First Citizen”. The program offers its members an opportunity to collect points and avail of innumerable special benefits. Currently, Shoppers? Stop has a database of over 2.5 lakh members who contribute to nearly 50% of the total sales of Shoppers? Stop.

The Organisation, in 2000, along with ICICI ventures also acquired the reputed bookstore, “Crossword”, which offers the widest range of books along with CD-ROM, music, stationery and toys. Services like Dial-a-book, Fax-a-book and Email-a-book enable customers to shop from their homes. Crossword currently has 18 Stores. Realising the role of IT way back in 1991, Shoppers? Stop was among the first few retailers to use scanners and barcodes and completely computerise its operations. Today it is one of the few stores in India to have retail ERP in place, which is now being integrated with Oracle Financials and the Arthur Planning System, the best retail planning system in the world. With the help of the ERP, they are able to replicate stores, open new stores faster and get information about merchandise and customers online, which reduces the turnaround time in taking quick decision.25

Shoppers Stop has been very keen to understand the importance of distribution and logistics in ensuring that merchandise is available on the shop floors. This has led the retail chain o streamline its supply chain. The company has developed process manuals for each part of the logistics chain. These modules include vendor management, purchase order management, stock receiving systems, purchase verification and inventory build up, generation and fixing of price and store tags, dispatch of stocks to the retail floor and forwarding of bills for payment. Shoppers? Stop has a grand ambition to position itself as a global retailer. The company intends to bring the world?s best retail technology, retail practices and sales to India. Currently, they are adding 4to 5 new stores every year.

Trent – Westside

Established in 1998, Trent operates some of the nation's largest and fastest growing retail store chains. A beginning was made in 1998 with Westside, a lifestyle retail chain, which was followed up in2004 with Star India Bazaar, a hypermarket with a large assortment of products at the lowest prices. In2005, it acquired Landmark, India's largest book and music retailer. In a recently signed deal, Trent has agreed to anchor 12 malls set up by DLF Universal Ltd across the country, at its Westside, Landmark and Star India Bazaar outlets. This amounts to about 27 locations, totalling to about a million square feet of space. Trent retails garments and household accessories for men, women and children, cosmetics and perfumes at Westside, food, beverages, health and beauty products, vegetables, fruits, dairy products, consumer electronics and household items at Star India Bazaar and books, music and stationery at Landmark. Westside has 25 outlets across 17 cities in India offering a variety of designs and styles in garments, footwear and accessories, as table linens, artifacts, home accessories and furnishings. Well-designed interiors, sprawling space, prime locations and coffee shops enhance the customers' shopping experience.

Trent also runs another chain of retail stores called Star India Bazaar. Launched in 2004, Star India Bazaar provides a large assortment of high quality products made available at the lowest prices coupled with a unique shopping experience. Star India Bazaar is located in Ahmadabad and offers awide choice of staple food, beverages, health and beauty products, vegetables, fruits, dairy products, consumer electronics and household items at the most affordable prices. Trent has also recently acquired a 76 per cent stake in Landmark, one of the largest books and music retail chains in India. Landmark commenced its operations in 1987 with its first store in Chennai, and now has nine stores in the major metros of the country. Earlier Landmark was focused on books, stationery and greeting cards. In 1996 it added music to its product portfolio and also started the trend of stocking curios, toys, music, CDs and other gift items.

Piramyd

Piramyd Retail is part of the Piramal Group, which has presence in diverse sectors spanning Pharmaceuticals, Textiles, Real Estate, Engineering, Family Entertainment and Retail with manufacturing operations in 19 locations across five states and employing over 18,000 people. The promoters launched the apparel business in 1999 under Piramyd Retail and Merchandising Pvt.Ltd. (PRMPL) while its food; home & personal care businesses (FHPC) were housed under Crossroads Shoppertainment Pvt. Ltd. (CSPL). As the apparel and food businesses individually reached a critical mass the management merged the two companies into Piramyd Retail Ltd. due to distant synergies in two businesses in March 2005. Pyramid also has a smaller format of stores called TruMart that caters to Food and Personal Care products. Piramyd Retail currently has 5 Mega stores and 8 TruMart stores mainly in Maharashtra. The company plans to increase these numbers to 17 Mega stores and 69 TruMarts by 2008. The floor space is expected to be 5 times on successful expansion. The FHPC (Food & Personal Care) business is volume driven while the Lifestyle store is a margin driven business. Piramyd Retail plans to increase the contribution of private labels from existing 7% to18-20% of the revenues by 2010. Gross margins from private labels are over 40% and hence the company is planning to increase this business. Most of the stores are on the lease format and the company is prone to higher lease rentals due to the overall increase in real estate prices. This may bring the profit levels down substantially. Piramyd Retail did have a first mover advantage in many locations but it has actually failed to capitalise over this advantage. Its competitors like Pantaloon, Shoppers Stop and Trent gained larger benefits of their far more aggressive business & marketing strategy in the retail space.

Subhiksha

The Chennai based Subhiksha grocery chain runs around 200 outlets all over the country and its current turnover stands at Rs 224 crore. Their target customer is the middle income value conscious buyers. The main aim of Subhiksha is to offer a functional and transactional shopping experience. This retail chain has no qualms and spends almost no money on creating a pleasant shopping experience, and all stores are non-air conditioned. There is no false roofing or sparkling vitrified tiles on the floor. A few years ago, Subhiksha did not even offer shoppers self service. The customer had to place an order at a computerized teller and the goods were billed and delivered after cash is collected. Customers had to bring their own carry bags or pay to buy them from the store. Subhiksha even attempted to charge the customers for home delivery. However, now Subhiksha has slightly tweaked their business model in order to create a better appeal to customers who were defecting to the competitors. The store formats are still small and nonairconditioned. But customers have the option to pick from shelf spaces. They also get shopping bags and free home delivery. But the selling USP (unique selling proposition) remains the same --- Subikshatries to be as close to the customer as possible and offers the lowest price and huge savings in comparison to competitors. Its slogan happens to be --- bachat mera adhikar hain (saving is my fundamental right).

RPG Spencer’s

RPG?s Spencer presently has 125 stores across 25 cities covering a retail trading area of half a million square feet and with a clientele of 3 million customers a month. Spencer's has a national footprint with seven hypermarkets, three supermarkets and 70 daily use outlets, called Dailies. All the newly opened Spencer's stores stock every conceivable product that is required by a household on a daily basis. At Spencer's Daily shoppers can get fresh fruits, vegetables, fastmoving consumer goods, household items, groceries, with regular offers and discounts. Spencer's outlets are divided in to three retail formats. These are, Spencer's Hyper, the over 25,000-sqft hypermarkets stocking over 25,000 items. The 8,000sq ft to 15,000-sq ft mini hyper stores, branded as Spencer's Super and the daily purchase 4,000-sq ft to 7,000-sq ft Spencer's Daily for groceries, fresh food, chilled and frozen products, bakery and weekly top up shopping.

Reliance Retail

On June 26, 2006, Mukesh Ambani, Chairman and Managing Director, Reliance Industries Limited, announced an Rs 25,000-crore investment in the retail sector. Reliance Retail started its retail operation with “Reliance Fresh”, a grocery store that sells vegetables, fruits, personal care items and other food products. Soon, these retail outlets will also be selling apparel and footwear, lifestyle and home improvement products, electronic goods and farm implements and inputs. They will also offer products and services in energy, travel, health and entertainment. In addition to this, partnerships would be developed to bring the best of global luxury brands to India as well. Reliance Retail plans to extend it?s footprint to cover 1,500 Indian cities and towns with outlets of avaried format, a mix of neighbourhood convenience stores, supermarkets, specialty stores and hypermarkets. Reliance also plans to open restaurant outlets, financial services marts and tourism counters within its stores. Mukesh Ambani?s ultimate ambition seems to be to create the Indian equivalent of Wal-Mart by scaling up the business to unprecedented heights to reach every nook and corner of the country. With its retailing venture, Reliance expected a revenue target of US $20 billion through its retail operations by2010. Over a span of five years, RRL expects a 20% return-on-investment. The first store christened “Reliance Fresh” opened in November 2006 at Hyderabad. Within a few months they have now opened stores in Mumbai, Pune and Ahmadabad and plans foray into other cities on a rapid scale.

Bharti Wal-Mart

Bharti Retail (Pvt.) Ltd. unveiled the roadmap for its retail venture on 19th February, 2007 envisaging an investment of $2.5 billion with expectation of revenue of $4.5 billion (about Rs. 20,000 crore) from this business by 2015. The first retail outlet is expected to open somewhere in the month of August.Bharti?s plan is to invest $2.5 billion by 2015 and open stores across all major cities. This investment would be only for setting up front-end stores. The modalities for its back-end linkage, including its joint venture with the world's largest retailer Wal-Mart, are in the process of being worked out. A high-level team from Wal-Mart was visited India in the later part of February to work out the details of the back-end chain. While Bharti would manage front-end of the retail venture, Wal-Mart would be involved in the back-end, including logistics, supply chain and cash-and-carry, he added. The JV was presently scouting for 10 million sq. ft. of retail space, which would include hypermarkets, supermarkets and convenience stores and would provide employment to about 60,000 people. The company would open multi-format retail outlets in all cities with a population of about one million. Bharti is now conducting a massive consumer survey to take a final decision on branding and promotional campaign. However, Bharti and Wal-Mart have been facing stiff opposition from the left parties and other political outfits who fear that the entry of the Bentonville giant will make life difficult for the small grocers and create massive unemployment. They also expect Wal-Mart to take a tough stance on lowering prices and force farmers to sell their produce at lower rates. A lurking fear of monopolistic regime in the retail sector is also enhancing their fears. Both Bharti and Wal-Mart are presently having a tough time in convincing the ministers, politicians, agriculturists, the NGOs and other pressure groups that their business model would serve to work in the best interests of all the stakeholders.

Aditya Birla – MORE.

The Aditya Birla Group is India's first truly multinational corporation. Global in vision, rooted in values, the Group is driven by a performance ethic pegged on value creation for its multiple stakeholders.AUS$ 24 billion conglomerate, with a market capitalization of US$ 23 billion and in the League of Fortune 500, it is anchored by an extraordinary force of 100,000 employees belonging to over 25different nationalities. Over 50 per cent of its revenues flow from its operations across the world.” Our mission is to change the way people shop. We will give them more.” says Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group. The more. For you advantage: more. Promises a world-class pleasurable shopping experience to Indian consumers in their very own neighbourhood. More. Quality, more. Variety, more. Convenience and more. Value is the four delivery cornerstones of the more. Chain of supermarket stores. More. MORE. Value MORE. Promises best in market pricing. Linking up directly with farmers to source fresh fruits, vegetables and staples ensure great quality as well as great price. Add to this, the membership program Club more. This provides convenience, customized shopping solutions and savings, and the more. Value promise becomes all the more evident. More. Is an inspirational brand for an inspirational country. We have a bright and committed, enthusiastic team that represents the best experience from India and globally. MORE. Also has arrange of products from its own stable available across value, premium and select ranges. The products have been quality-checked and are available in attractive packaging at competitive prices. To avail additional benefits, at no extra charge, customers can also enrol for the membership program Club more.

Vishal Retail:

Vishal is one of fastest growing retailing groups in India. Its outlets cater to almost all price ranges.The showrooms have over 70, 00 products range which fulfils all your household needs, and can be catered to less than one roof. It is covering about 1282000 sq. ft. in 18 states across India. Each store gives you international quality goods and prices hard to match. The cost benefit that is derived from the large central purchase of goods and services is passed on to the consumer. What started as humble one store enterprise in 1986 in Kolkata (erstwhile, Calcutta) is today a conglomerate encompassing 51 showrooms in 39 cities. India?s first hyper-market has also been opened for the Indian consumer by Vishal. Situated in the national capital Delhi this store boasts of the singe largest collection of goods and commodities sold less than one roof in India. The group?s prime focus is onretailing. The Vishal stores offer affordable family fashion at prices to suit every pocket. The group?s philosophy is integration and towards this end has initiated backward integration in the field of high fashion by setting up a state of the art manufacturing facility to support its retail endeavours. Company has already tied up for 5-lakh sq ft space and is looking for more. Company will come up with 32 new stores this year. Company is doing research on more formats. Company is looking for opportunities of expansion in the South. Contribution of apparels business at 53% may slightly come down to 50%.India is a big country and there is huge space for four-five big retail players. Vishal can always sustain growth in this big market. Company can sustain margins as it is going for backward integration. Currently manufacturing contributes 10% of the business, which in the next two to three years will group to 25%. Company is increasing its focus on the non-apparel and FMCG segment. The current share of FMCG at 15% could go up to 20-25%. Apparel sales currently at 63% in the next 2-3 years

Metro – Cash & Carry India

METRO Group today, is the third largest trading and retailing group in the world. The company employs over 2, 50,000 staff in 30 countries. In the year 2005 METRO Group had generated sales of over €55.7 billion; 53% of total sales came from outside Germany. METRO Cash & Carry started operations in India in 2003 with two Distribution Centres in Bangalore. With this METRO introduced the concept of Cash & Carry to India. These Centres offer the benefit of quality products at the best wholesale price to over 150,000 businesses in Bangalore. METRO offers assortment of over 18000articles across food and non food at the best wholesale prices to business customers such as Hotels, Restaurants, Caterers, Food and Non-food Traders, Institutional buyers and professionals. Metro?s Cash & Carry business model is based on a Business to Business (B2B) concept and focuses on meeting all the needs and requirements of business customers. It is a modern format of wholesale trading, catering only to business customers.

Viveks- The Unlimited Shop

Vivek Limited is a professionally managed public limited company carrying three retail brands Viveks, Jainsons, and Premier and continuously adding to the formidable strength of 1000 employees. Vivek Ltd is the largest consumer electronics & home appliances retail chain in India. Viveks popularized several brands by creating visibility and have the distinction of being market leaders and trendsetters with continuous support from the principal companies. Viveks evolved its strategies to suit the larger scene where there was a stigma attached to borrowing. Very few hire purchase options were available and hence Viveks started Vivek Hire Purchase and Leasing Ltd to finance consumer durables, which enhanced the core retailing business also. Viveks grew from 3 stores to more than 52 stores and turnover increased to over Rs. 350 crore (USD 80 million) and also become a public limited company from a family run enterprise. In this process, 14 store Jainsons was bought over in 1999, 2 store Premier in 2001 and Spencer?s in 2002 and have recently absorbed Spencer?s into the Premier brand. With the liberalization of economy and other changes in the global scene, Viveks streamlined the marketing and advertising activities and shopping ambience was improved.

MAJOR PLAYERS IN RETAIL SECTOR WITH THEIR BRANDS:-

K. Raheja’s Group Shoppers stop Home Group Mother Care Hyper City Crossword Planet M

Tata Trent Westside Star India Bazaar Landmark

RPG Group

Reliance Group

Bharti Group

Aditya Birla Group

Café Coffee Day

The Future Group

INDIA VS WORLD

•

Indian retail is fragmented with over 12 million outlets operating in the country. This is in comparison to 0.9 million outlets in USA, catering to more than 13 times of the total retail market size as compared to India.

• •

India has the highest number of outlets per capita in the world - widely spread retail network but with the lowest per capital retail space (@ 2. Sq.ft. per person). Annual turnover of Wal-Mart (Sales in 2001 were $ 219 billion) is higher than the size of Indian retail industry. Almost 100 times more than the turnover of HLL (India?s largest FMCG Company).

• •

Wal-Mart- over 4,800 stores (over 47 million square meters) where as none of large for India?s mat store (Shoppers? Stop, Westside, and Lifestyle) can compare. The sales per hour of $22 million are incomparable to any retailer in the world. Numbers of employees in Wal-Mart are about 1.3 million where as the entire Indian retail industry employs about three million people.

• • • •

One-day sales record at Wal-Mart (11/23/01) $1.25 billion – roughly two third of HLL?s annual turnover. Developed economies like the U.S. employ between 10 and 11 percent of their work force in retailing (Against 7 percent employed in India today). 60% of retailers in India feel that the multiple format approach will be successful here whereas in US 34 of the fastest-growing 50 retailers have just one format. Inventory turns ratio: measures efficiency of operations. The U.S. retail sector has an average inventory turns ratio of about 18. Many Indian retailers KPMG surveyed have inventory turns levels between 4 and 10.

•

Global best-practice retailers can achieve more than 95 percent availability of all SKUs on the retail shelves (translating into a stock-out level of less than 5%). The stock-out levels among Indian retailers surveyed ranged from 5 to 15 percent.

RURAL RETAILING IN INDIA

The Indian rural market with its vast size and demand base offers great opportunities to marketers. Two-thirds of countries consumers live in rural area and almost half of the national income is generated here. It is only natural that rural markets form an important part of the total market of India. our nation is classified in around 450 districts, and approximately 630000 villages, which can be sorted in different parameters such as literacy levels, accessibility, income levels, penetration, distances from nearest towns, etc.

FEW FACTS

•

70% of India?s population lives in 627000 villages in rural areas. According to the NCAER study, there are almost twice as many „lower middle income? households in rural areas as in the urban areas.

• • •

At the highest income level there are 2.3 million urban households as against 1.6 million households in rural areas. A middle and high-income household in rural India is expected to grow from 80 million to 111 million by 2007. In urban India, the same is expected to grow from 46 million to 59 million. Thus, the absolute size of rural India is expected to be double that of urban India.

OPPORTUNITIES The above figures are a clear indication that the rural markets offer the great potential to help the India Inc. which has reached the plateau of their business curve in urban India to bank upon the volume-driven growth. The Indian rural market with its vast size and demand base offers a huge opportunity that MNCs cannot afford to ignore. With 128 million households, the rural population is nearly three times the urban. As a result of the growing affluence, fuelled by good monsoons and the increase in agricultural output to 200 million tones from 176 million tones in 1991, rural India has a large consuming class with 41 per cent of India?s middle-class and 58 percent of the total disposable income. The importance of the rural market for some FMCG and durable marketers is underlined by the fact that the rural market accounts for close to 70 percent of toilet-soap users and 38 per cent of all two-wheeler purchased. The rural market accounts for half the total market for TV sets, fans, pressure cookers, bicycles, washing soap, blades, tea, salt and toothpowder. What is more, the rural market for FMCG products is growing much faster than the urban counterpart. FEATURES OF INDIAN RURAL MARKETS • Large and Scattered market The rural market of India is large and scattered in the sense that it consists of over 63 crores consumers from 5, 70,000 villages spread throughout the country. • Major Income from agriculture Nearly 60% of the rural income is from agriculture. Hence rural prosperity is tied with agricultural prosperity. • Low standard of living The consumer in the village area do have a low standard of living because of low literacy, low per capital income, social backwardness, low savings, etc.

•

Traditional Outlook The rural consumer values old customs and tradition. They do not prefer changes.

•

Diverse socio-economic backwardness Rural consumers have diverse socio-economic backwardness. This is different in different parts of the country.

•

Infrastructure Facilities: The Infrastructure Facilities like roads, warehouses, communication system, and financial facilities are inadequate in rural areas. Hence physical distribution becomes costly due to inadequate infrastructure facilities.

The rural bazaar is booming beyond everyone?s expectation. This has been primarily attributed to a spurt in the purchasing capacity of farmers now enjoying an increasing marketable surplus of farm produce. In addition, an estimated induction of Rs. 140 billion in the rural sector through the government?s rural development schemes in the Seventh Plan and about Rs. 300 billion in the Eighth Plan is also believed to have significantly contributed to the rapid growth in demand. PROBLEMS IN THE BOOMING RURAL MARKETING Although the rural market does offer a vast untapped potential, it should also be recognized that it is not that easy to operate in rural market because of several problems. • • • • • • • • • Underdeveloped People and Underdeveloped Markets Lack of Proper Physical Communication Facilities Media for Rural Communication Many Languages and Dialects Dispersed Market Low Per Capita Income Low Levels of Literacy Prevalence of spurious brands and seasonal demand Different way of thinking

DEVELOPMENT IN RURAL MARKETING

RURAL MALLS: CHAUPAL SAGAR

Chaupal Sagar is one of the first organized retail forays into the hinterland. It was soft-launched on 15th August. It is actually a warehouse for storing the farm produce that ITC buys through its e-chaupals. The mall has come up in one part of this warehouse. It has been set up by the international business division of tobacco major ITC. It has been initiated as rural shopping-cuminformation centres in Madhya Pradesh. The first rural mall has come up 40-odd kilometres journey from Bhopal towards Sehore. ITC Spent 3 years and Rs. 80 crores on research and development of this concept including investments in e-choupal. OBJECTIVE: ITC descries the establishment as a set to create a high-quality, low-cost fulfilment channel for rural India. • • Reap benefits from the market they have created Creating an entry barrier for other prospective players.

ITC has very effectively integrated its profit and social motives. FORMAT Chaupal Sagar cannot be shoehorned into any of the existing retailing categories. At 7,000 square feet, it is too small to be a mall. It has opted for self-service, stocking its merchandise on shelves lining the neat aisles, it stocks a breadth of products no supermarket can. It offers almost everything – from toothpastes to televisions, hair oils to motorcycles, mixer-grinders to water pumps, shirts to fertilizers… It defies pigeonholing. It is just a very sharply thought-out rural store. Most of the brands it sells are national such as Marico, LG, Philips, torches from Eveready, Shirts from ITC?s apparel business, bikes from TVS, and tractors from Eicher. FACILITIES Spread over 5 acres of land at Sehore in Madhya Pradesh:-

• •

Rural shopping malls will be open from 6 am to 9 pm. Features and facilities at these ITC malls can overshadow those in the metros. The ITC store sells everything that a rural consumer may ask for – sarees to kurta-pyjamas to shirts (in the range of Rs. 99-500), footwear, groceries, electronic durable from TVs to microwaves, cosmetics and other accessories, farm consumption products like seeds, fertilizers, pumps, generators and even tractors, motorcycles and scooters.

• • • • • • • • • •

Banking and automated teller machines will be standard at the malls. Insurance products for farmers. Entertainment facilities, restaurants, public facilities and parking space will also be available. There is even a fuel pump in tie-up with BPCL and a cafeteria. Parking lot for 160 tractors. There will be a primary healthcare facility to be serviced by a private healthcare service provider. Information centres: The Company will create the facility for providing online information on commodity rates and weather. Shopping malls will have a training facility on modern farm techniques. Farmers can come and log on to the Internet and check the pricing and sell their commodities. There will also be godowns for storing the wheat and soybean and also for stocking products retailed at the mall.

STRATEGY FOR SUCCESS • • • • Use of ITC warehouse Targeted at Farmers selling to ITC warehouse through E-Chaupal ITC intends to capture the rural folks? out of village shopping. Retail channel for its own brands as well as for other brands.

SWOT OF RETAIL MARKET

Strenght

Weakness

Oppourtunity

Threats

STRENGTH

• • • • • • •

Organized retailing at US$ 3.31 BILLION, GROWING AT 8%. 2nd Largest contributor to GDP after agriculture at 20%. Pattern of consumption changing along with shopping trends. A growing population changing along with shopping trends. Consumers spending increasing at 11% annually. Paradigm shift in shopping experience for consumers pulling in more people. Most of the entrants to organized retail come from 3 main categories, and have ventured into retail as their business extension. • • • Real Estate Developers Corporate Houses Manufacturers / Exporters

WEAKNESSES

• • • • • •

Shortage of quality retail spaces at affordable rates. Government regulations on development of real estate (Urban Land Ceiling Act) Lack of industry status. Retail revolution restricted to 250 million people due to monolithic urban rural divide. Footfalls not a clear indicator of sales as actual consumers lower in number. Lack of huge investments for expansion.

OPPORTUNITIES

• • • • • • •

Increase urban population-more participants in retail revolution. Increase in consuming middleclass population. Social factors like dual household income have enhanced spending power. Spends moving towards lifestyle products and esteem enhancing products. Availability of old industrial lands-prime real estate locked in sick industrial units. Average grocery spends at 42% of monthly spends-presents a huge opportunity. Increase in use of credit cards.

THREATS

• • • • • • •

Rising lease/rental costs affecting project viability FDI restrictions in the retail sector. Poor monsoons and low GDP Growth could affect consumer spending drastically. Archaic labour laws are a hindrance to providing 24/7 shopping experience Personalized service offered by Mom & Pop stores. Unavailability of qualified personnel to support exponential growth in retail. Difference taxations laws hindering expansion.

CONCLUSION/ FINDINGS

In this report we have analyzed in detail the retail industry in India. We had initially started with the evolution of the retail sector in India, and then moved onto its size, distribution and the growth of the retail sector. We have also covered issues like the Foreign Direct Investment in the retail sector, the untapped opportunities that exist in the retail industry in India. We have also discussed about the bottlenecks that the retail industry is facing in India, online retailing in India and the role of Information Technology in the retail sector in India. In this section we have coined down the major findings of our research.

Some Major Findings:1. The Retail Sector in India can be split up into two, the organized and the unorganized. The organized sector whose size is expected to triple by 2010 can be further split up into departmental stores, supermarkets, shopping malls etc. 2. In terms of value the size of the retail sector in India is $300 billion. The organized sector contributes about 4.6% to the total trade. 3. The retail sector in India contributes 10% to the Gross Domestic Product and 8% to the employment of the country. 4. In terms of growth the FMCG retail sector is the fastest growing unit and the retail relating to household care, confectionery etc, have lagged behind. 5. The foreign retail giants were initially restricted from making investments in India. But now FDI of 51% is permitted in India only through single branded retail outlets. Multi brand outlets are still beyond their reach. Again they can only enter the market through franchisees,. This was how Wal-Mart had entered joining hands with Bharati Enterprises. 6. On line retailing is still to leave a mark on the customers due to lacunae that we have already mentioned.

BIBLOGRAPHY

Books:Retail Marketing-Gibson G. Vedamani Retail Management- Chetan Bajaj Ranjish Tuli Nidhi Shrivastav

Search Engines:www.google.com www.bing.com

Web-sites:www.retail.com www.retailmantra.com www.wikepedia.org www.indiasretail.com www.cii.in www.cbre.co.in
www.retailnews.com

Newspapers:The Times of India The Hindustan times



doc_988432205.docx