Description
For a long time, the corner grocery store was the only choice available to the consumer, especially in the urban areas. This is slowly giving way to international formats of retailing
Trends in Present Retail Market
New Product Categories:
For a long time, the corner grocery store was the only choice available to the consumer,
especially in the urban areas. This is slowly giving way to international formats of retailing. The
traditional food and grocery segment has seen the emergence of supermarkets/grocery chains
(Food World, Nilgiris, Apna Bazaar), convenience stores (ConveniO, HP Speedmart) and fast-
food chains (McDonalds, Dominos).
It is the non-food segment, however that foray has been made into a variety of new
sectors. These include lifestyle/fashion segments (Shoppers' Stop, Globus, LifeStyle, Westside),
apparel/accessories (Pantaloon, Levis, Reebok), books/music/gifts (Archies, MusicWorld,
Crosswords, Landmark), appliances and consumer durables (Viveks, Jainsons, Vasant & Co.),
drugs and pharmacy (Health and Glow, Apollo).
Increasing competition in the retail market:
New entrants such as Reliance, Bharti Enterprises and the AV Birla group will compete
against well-established retailers, such as Pantaloon Retail, Shoppers’ stop, Trent, Spencer’s and
Lifestyle stores. Foreign retailers are keenly evaluating the Indian market and identifying
partners to forge an alliance with in areas currently permitted by regulations. With an estimated
initial investment of USD 750 million, Reliance is planning to launch a nationwide chain of
hypermarts, supermarkets, discount stores, department stores, convenience stores and speciality
stores. These 5,500 stores will be located in 800 cities and towns in India.
Increase in Private Labels:
With the emergence of organized retail and modern retail formats, private labels have
been gaining significance. They enhance the profitability levels of product categories, increase
retailers’ negotiation powers and create consumer loyalty. More retailers are introducing their
own brands in all categories including Food & Groceries, apparel, accessories, footwear. These
own brands also do not have to manage intermediaries since retailers maintain oversight of the
supply chain.
The label penetration is in a huge rise. Private Label penetration has been on a rise. It is
mainly growing among FMCG products in most supermarkets with groceries accounting for
45.9%
Expanding to Tier II and III cities:
Indian retailers are planning to extend operations into Tier II and Tier III cities as
heightened IT offshoring activity in these locations have increased consumers’ disposable
income. The population in these cities is typically well educated and willing to purchase goods
and services. Some major retailers, like Globus, Reliance Retail and Pantaloon, have already
begun building a retail presence in Tier III cities before many retailers have finalized their Tier II
retail operations.
Foray into Retail Agri-Business:
India’s most prestigious business houses and global retailers are planning to enter retail
agri-business. Market entrants plan to invest in the entire value chain, moving goods “from the
farm to the fridge at home.” Viewed as India’s next “Sunrise Sector,” retailers are employing
contract farming as a means of boosting their ventures. Contract farming enables farmers to
access land, manpower and farming skill without having to purchase land. Of the total Cultivable
land of 400 million acres in India, contract farming represents 7 million acres thus indicating a
tremendous opportunity. For pure corporate contracts between farmers and companies, only
2,00,000 acres are used.
Experimenting with formats:
Selecting the right retail format is essential in modern retailing. The difference between
urban and rural customers is one of the reasons why multiple formats are required in India. Local
conditions and insights into buying-behaviour shape the format choice. No single format will be
suitable for an all India strategy and selecting the relevant format is the key success factor.
doc_907398542.docx
For a long time, the corner grocery store was the only choice available to the consumer, especially in the urban areas. This is slowly giving way to international formats of retailing
Trends in Present Retail Market
New Product Categories:
For a long time, the corner grocery store was the only choice available to the consumer,
especially in the urban areas. This is slowly giving way to international formats of retailing. The
traditional food and grocery segment has seen the emergence of supermarkets/grocery chains
(Food World, Nilgiris, Apna Bazaar), convenience stores (ConveniO, HP Speedmart) and fast-
food chains (McDonalds, Dominos).
It is the non-food segment, however that foray has been made into a variety of new
sectors. These include lifestyle/fashion segments (Shoppers' Stop, Globus, LifeStyle, Westside),
apparel/accessories (Pantaloon, Levis, Reebok), books/music/gifts (Archies, MusicWorld,
Crosswords, Landmark), appliances and consumer durables (Viveks, Jainsons, Vasant & Co.),
drugs and pharmacy (Health and Glow, Apollo).
Increasing competition in the retail market:
New entrants such as Reliance, Bharti Enterprises and the AV Birla group will compete
against well-established retailers, such as Pantaloon Retail, Shoppers’ stop, Trent, Spencer’s and
Lifestyle stores. Foreign retailers are keenly evaluating the Indian market and identifying
partners to forge an alliance with in areas currently permitted by regulations. With an estimated
initial investment of USD 750 million, Reliance is planning to launch a nationwide chain of
hypermarts, supermarkets, discount stores, department stores, convenience stores and speciality
stores. These 5,500 stores will be located in 800 cities and towns in India.
Increase in Private Labels:
With the emergence of organized retail and modern retail formats, private labels have
been gaining significance. They enhance the profitability levels of product categories, increase
retailers’ negotiation powers and create consumer loyalty. More retailers are introducing their
own brands in all categories including Food & Groceries, apparel, accessories, footwear. These
own brands also do not have to manage intermediaries since retailers maintain oversight of the
supply chain.
The label penetration is in a huge rise. Private Label penetration has been on a rise. It is
mainly growing among FMCG products in most supermarkets with groceries accounting for
45.9%
Expanding to Tier II and III cities:
Indian retailers are planning to extend operations into Tier II and Tier III cities as
heightened IT offshoring activity in these locations have increased consumers’ disposable
income. The population in these cities is typically well educated and willing to purchase goods
and services. Some major retailers, like Globus, Reliance Retail and Pantaloon, have already
begun building a retail presence in Tier III cities before many retailers have finalized their Tier II
retail operations.
Foray into Retail Agri-Business:
India’s most prestigious business houses and global retailers are planning to enter retail
agri-business. Market entrants plan to invest in the entire value chain, moving goods “from the
farm to the fridge at home.” Viewed as India’s next “Sunrise Sector,” retailers are employing
contract farming as a means of boosting their ventures. Contract farming enables farmers to
access land, manpower and farming skill without having to purchase land. Of the total Cultivable
land of 400 million acres in India, contract farming represents 7 million acres thus indicating a
tremendous opportunity. For pure corporate contracts between farmers and companies, only
2,00,000 acres are used.
Experimenting with formats:
Selecting the right retail format is essential in modern retailing. The difference between
urban and rural customers is one of the reasons why multiple formats are required in India. Local
conditions and insights into buying-behaviour shape the format choice. No single format will be
suitable for an all India strategy and selecting the relevant format is the key success factor.
doc_907398542.docx