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This research is basically done to find out the training needs of the sales people in
the retail industry and how they are being fulfilled. The retail industry in our country is at boom
and getting organized day by day, the demands of customers are not just great products but also
great shopping experience and to make this possible a retail outlet should have well trained sales
people. This study is made to know how well the sales people of retail industry in INDIA are
trained to meet the customer expectations and global standards.
The retail sales people demonstrate how items work and explain details of items
to customers; they give information about various models, colors, and brands of an item.
Sometimes they give special information about very expensive or complex items. They help
customers to find items in the store, they try to convince customers to buy those items. Retail
sales people compute the amount of the total sale and received cash, cheque or credit card
payments. Sales people also handle returns or exchanges of items.
The above mentioned are the very basic and important duties of sales people and
they require great skills and knowledge to perform well. And this high level performance can
only be seen if the sales people are provided with training as and when required.
The retail industry in INDIA has changed its face and approach. Sales people
working in this industry play major role in handling the customers effectively. This study is done
to evaluate the training system used by the retail industry in INDIA and also to understand
training aspects which keeps the sales force of retain industry fit and ready to face any kind of
challenges, particularly due to increasing domestic and international competition.
GROWTH OF RETAIL SECTOR
Retail and real estate are the two booming sectors of India in the present times.
And if industry experts are to be believed, the prospects of both the sectors are mutually
dependent on each other. Retail, one of India’s largest industries, has presently emerged as one of
the most dynamic and fast paced industries of our times with several players entering the market.
Accounting for over 10 per cent of the country’s GDP and around eight per cent of the
employment retailing in India is gradually inching its way toward becoming the next boom
industry.
As the contemporary retail sector in India is reflected in sprawling shopping
centers, multiplex- malls and huge complexes offer shopping, entertainment and food all under
one roof, the concept of shopping has altered in terms of format and consumer buying behavior,
ushering in a revolution in shopping in India. This has also contributed to large scale investments
in the real estate sector with major national and global players investing in developing the
infrastructure and construction of the retailing business. The trends that are driving the growth of
the retail sector in India are
Low share of organized retailing
Falling real estate prices
Increase in disposable income and customer aspiration
Increase in expenditure for luxury items
Another
credible factor in the
prospects of the retail
sector in India is the
increase in the young working population. In India, hefty pay-packets, nuclear families in urban
areas, along with increasing working-women population and emerging opportunities in the
services sector. These key factors have been the growth drivers of the organized retail sector in
India which now boast of retailing almost all the preferences of life - Apparel & Accessories,
Appliances, Electronics, Cosmetics and Toiletries, Home & Office Products, Travel and Leisure
and many more. With this the retail sector in India is witnessing a rejuvenation as traditional
markets make way for new formats such as departmental stores, hypermarkets, supermarkets and
specialty stores.
The retailing configuration in India is fast developing as shopping malls are
increasingly becoming familiar in large cities. When it comes to development of retail space
specially the malls, the Tier II cities are no longer behind in the race. If development plans till
2007 is studied it shows the projection of 220 shopping malls, with 139 malls in metros and the
remaining 81 in the Tier II cities. The government of states like Delhi and National Capital
Region (NCR) are very upbeat about permitting the use of land for commercial development thus
increasing the availability of land for retail space; thus making NCR render to 50% of the malls
in India.
India is
being seen as a potential
goldmine for retail
investors from over the
world and latest research
has rated India as the top
destination for retailers
for an attractive emerging retail market. India’s vast middle class and its almost untapped retail
industry are key attractions for global retail giants wanting to enter newer markets. Even though
India has well over 5 million retail outlets, 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. The organized retail sector is expected to grow stronger than GDP
growth in the next five years driven by changing lifestyles, burgeoning income and favorable
demographic outline.
Another cap to the retailing industry in India is allowing 51% FDI in single brand
outlet. The government is now set to initiate a second wave of reforms in the segment by
liberalizing investment norms further. This will not only favor the retail sector develop in terms
of design concept, construction quality and providing modern amenities but will also help in
creating a consumer-friendly environment. Retail industry in India is at the crossroads but the
future of the consumer markets is promising as the market is growing, government policies are
becoming more favorable and emerging technologies are facilitating operations in India. And this
upsurge in the retail industry has made India a promising destination for retail investors and at
the same time has impelled investments in the real estate sector. As foreign investors cautiously
test the Indian Markets for investments in the retail sector, local companies and joint ventures are
expected to be more advantageously positioned than the purely foreign ones in the evolving
India's organized retailing industry.
The retail scenario in India is unique. Much of it is in the unorganized sector. With
over 12 million retail outlets of various sizes and formats. Almost 96% of these retail outlets are
less than 500sq.ft. In the size and the percapita retail space in India being 2 sq.ft compared to the
U.S. figure of 16sq.ft. India’s percapita retailing space is the lowest in the world.
With more than 9 outlets per 1000 people, India has the largest number in the
world. Most of them are independent and contribute as much as 96% to total retail sales. There is
an incredible amount of activity in terms of creation of retail-oriented space across India. As per
some estimates, there are over 200 retail mall projects under construction or under active
planning stage spanning over 25 cities. This may translate into over 25 million sq. ft. of new
retail space in the market within next 24 months.
Each of the retail stars has identified and settled into a feasible and sustainable
business model of its own:
The retail business in India in the year 2000 was Rs. 4000,000 crore and is
estimated to go to Rs. 800,000 crore by the year 2005,an annual increase of 20%. The
contribution of the organized retail industry in the year 2000 was Rs.20, 000 crore and is likely to
increase to Rs. 160,000 crore by 2005.
Retail is India’s largest industry, accounting for over 10 per cent of the country’s
GDP and around eight per cent of the employment. Retail industry in India is at the crossroads. It
has emerged as one of the most dynamic and fast paced industries with several players entering
the market. But because of the heavy initial investments required, break even is difficult to
achieve and many of these players have not tasted success so far. However, the future is
promising; the market is growing, government policies are becoming more favorable and
emerging technologies are facilitating operations.
Retailing in India is gradually inching its way toward becoming the next boom
industry. The whole concept of shopping has altered in terms of format and consumer buying
behavior, ushering in a revolution in shopping in India. Modern retail has entered India as seen in
sprawling shopping centres, multi-storeyed malls and huge complexes offer shopping,
entertainment and food all under one roof. The Indian retailing sector is at an inflexion point
where the growth of organized retailing and growth in the consumption by the Indian population
is going to take a higher growth trajectory. The Indian population is witnessing a significant
change in its demographics. A large young working population with median age of 24 years,
nuclear families in urban areas, along with increasing working-women population and emerging
opportunities in the services sector are going to be the key growth drivers of the organized retail
sector in India.
The Indian textile industry, the backbone of the apparel segment, has a large
share of the Indian economy, accounting for over 20% of industrial production as well as
providing direct and indirect employment to around 65 million people.
Despite the retail store density in India with regard to population being the largest,
it is estimated that over 90% of the stores are less than 500 sq. ft in size. Industry estimates put
the number of retail outlets at 12 million. This is clearly indicative of small-shop ownership
crowding the unorganized segment of retailing. While this fragmented market structure does
pose significant challenges for organized retailing, potential does exist if modern information and
supply chain management systems are deployed to support the development of convenience
shops that match customer expectations.
The demand perspective in India highlights some key changes in consumer demographics
driving organized retailing. These include:
Income and consumption growth
Increasing literacy levels
Changes in family structure and women’s role in the family
Growing role of children as influencers
Gradual acceptance of frozen goods as a viable alternative to fresh produce
Growing influence of TV.
Avg. Transaction Value= Avg. Sales per day/ (Avg.daily walk in * Avg.
Conversion %)
The ratio gives an indication of how much each customer on an average spends in
the store. Useful for comparison and analysing if this needs to be increased.
Display to stock ratio
The display to stock ratio means the amount of backroom inventory maintained as a backbone to
that displayed in the store. It is calculated as follows:
Hypermarkets: Huge stores over 40000 sq ft situated outside the town with
ample parking space aimed for bulk purchases stocking electronics, furniture
and clothing. Carrefour is the global major in this format.
Discounters: Aimed at bargain buyers offering less choice but deep discount
on bulk sourcing deals through controlled inventory. Aldi is the world leader
in this format.
During the last 10 years, many retail start-ups promised a lot. A few folded
up even before they really got started, a few others struggled and then burnt
out before they could develop a sustainable business model and others are
still evolving. However, a significant number of new (and some not so new)
retail businesses have broken rank and seem poised to surge ahead with
renewed vigor, optimism, confidence and capability. Shoppers' Stop,
Lifestyle, Westside, Giant and Tanishq are the current torch-bearers of the
modern Indian retail sector, flanked creditably by FoodWorld, Nilgiris, Big
Bazaar and Pantaloon, and The Home Store.
Business Opportunities in the Indian Retail Sector
The current players have just touched the tip of the total potential of over Rs
8, 50,000 crore of annual consumer spending in India through various retail
channels. There is an outstanding opportunity in other product categories, in
new formats, and in new geographical territories. For example, let us
consider new product categories that are under-represented in India in terms
of reach of efficient, organized retail channels.
Market Trends
Change in consumer behavior
The whole concept of shopping has altered in terms of format and consumer
buying behavior, ushering in a revolution in shopping in India. Rising income
levels, falling real estate costs and a greater exposure to media and
international trends have fuelled retail growth. Consumer spending in India is
estimated to have grown at an average rate of 11.5% per year over the past
decade. While retailers have improved their offerings, many attribute their
better fortunes to a change in consumer behavior.
Forces that could make or break the industry
The unorganized nature of retailing had stunted its growth over several
years. Lack of industry status affects financing prospects and stunts growth
of the industry. In the current scenario, only players with deep pockets have
been able to make it big. In addition to the advent of Internet, there are
many other challenges that retailers have to address.
Human Resources
To establish a retail shop / mall, the real estate and the infrastructure are
very vital. The expenditure and availability on both the accounts do hinder
the growth of the retail chain. The lack of secondary infrastructure also
affects the logistics and supply chain management for retail companies.
Labor Laws
Departmental store: Several product lines with each line operated as a separate
department managed by specialist buyers or merchandisers.
Specialty store: These stores usually stock narrow product lines with a deep
assortment.
Supermarket: Relatively large, low cost, low margin, high-volume, self services
designed to serve total needs for food, laundry, and household maintenance products.
Convenience store: Relatively small store located near residential area, open long
hours seven days a week, and carrying a limited line of high-turnover convenience products at
slightly higher price.
Discount store: Standard merchandise sold at lower prices with lower margins
and higher volumes.
Off-price retailers: Merchandise bought at less than regular wholesale prices and
sold at less than retail often leftover goods, overruns, and irregulars obtained at reduced prices
from manufacturers or other retailers.
To persuade the retailer or wholesaler to carry more units than the normal
amount: Manufacturers will offer volume allowances to get the trade to carry more in
warehouses and stores. Manufacturers believe the trade will work harder when they are “loaded”
with the manufacturer’s product.
To stimulate retailers and their sales clerks to push the product: Manufacturers
compete for retailer sales effort by offering push money, sales aids, recognizing programs,
premiums, and sales contests.
Price-off (off-invoice or off-list): A straight discount off the list price on each case
purchased during a stated time period. The offer encourages dealers to buy a quantity or carry a
new item that they might not ordinarily buy. The dealers can use the buying allowance for
immediate profit, advertising, or price reductions.
Allowance: An amount offered in return for the retailer’s agreeing to feature the
manufacturer’s products in some way. An advertising allowance compensates retailers for
advertising the manufacturer’s products. A display allowance compensates them for carrying a
special product display.
Industry Profile
The Fast Moving Consumer Goods (FMCG) sector is the fourth largest sector in
the economy with a total market size in excess of Rs. 60,000 crores. This industry essentially
comprises Consumer Non Durable (CND) products and caters to the everyday need of the
population.
The fast moving consumer goods business is characterized by two pillars - strong
brand equity and a wide distribution network. Brand equities are built over a period of time by
technological innovations, consistent high quality, aggressive advertisement and marketing.
Availability near the consumer through a wide distribution network is another crucial success
factor, as products are of small value, frequently purchased daily use items.
Product Characteristics:
Products belonging to the FMCG segment generally have the following
characteristics:
They are used at least once a month
They are used directly by the end-consumer
They are non-durable
They are sold in packaged form
They are branded
Industry Segments:
Household Care: Fabric wash (laundry soaps and synthetic detergents), household
cleaners (dish/utensil cleaners, floor cleaners, toilet cleaners, air fresheners, insecticides and
mosquito repellants, metal polish and furniture polish).
Major companies active in this segment include Hindustan Lever, Nirma
and Reckitt & Colman.
Branded and Packaged Food and Beverages: Health beverages; soft drinks;
staples/cereals; bakery products (biscuits, bread, cakes); snack food; chocolates; ice cream; tea;
coffee; processed fruits, vegetables and meat; dairy products; bottled water; branded flour;
branded rice; branded sugar; juices etc.
Major companies active in this segment include Hindustan Lever, Nestle,
Cadbury & Dabur
Spirits and Tobacco: Major companies active in this segment include ITC,
Godfrey Philips, UB and Shaw Wallace.
An exact product-wise sales break up for each of the items is difficult. The size of
the fabric wash market is estimated to be Rs 4500 crore, of household cleaners to be Rs 1100
crore, of personal wash products to be Rs 4000 crore, of hair care products to be Rs 2600 crore,
of oral care products to be Rs 2600 crore, of health beverages to be Rs 1100 crore, of bread and
biscuits to be Rs 8000 crore, of chocolates to be Rs 350 crore and of ice cream to be Rs 900
crore.
In volume terms, the production of toilet soap is estimated to have grown by four
per cent in 1999-2000 from 5,30.000 tonnes from 5,10,000 tonnes in 1998-99. The production of
synthetic detergents has grown by eight per cent in 1999-2000 to 2.6 million tonnes. The
cosmetics and toiletries segment has registered a 15 per cent growth in 1999-2000 as against an
annual growth of 30 per cent recorded during the period 1992-93 to 1997-98.
In the packaged food and beverage segment, ice cream has registered a negligible
growth and the soft drink industry has registered a six per cent growth in 1999-2000.
Background:
The size of the Indian fast-moving consumer goods (FMCG) sector is close to Rs
600 bn. The northern and the western regions of the country account for more than half of the
market for consumer goods. Barring the fastest-growing personal care segment, no other product
segment has seen the entry of so many players.
In the past decade, the personal care industry has witnessed a consumer boom.
This has been due to liberalization, urbanization, and an increase in the disposable incomes, and
altered lifestyles, especially a heightened level of awareness among the rural community,
consequent to the onslaught of satellite television. Furthermore, the boom has also been fuelled
by the reduction of excise duties, dereservation from the small-scale sector and the concerted
efforts of personal care companies to woo the burgeoning affluent segment of the middle class
through product and packaging innovations.
Unlike in the past, when domestic companies were not perceived as competitive
vis-à-vis multinational corporations (MNCs), the scenario is gradually changing, with some
domestic companies, like Nirma, Marico and Jyothi Labs, standing up to their MNC
counterparts. Also, competition amongst the MNCs has intensified, leading to shrinkage of
margins.
The personal and home care segment has very low entry barriers of technology
and capital requirements. This attracts new players and has resulted in intensifying competition.
Despite this, the strong distribution networks and heavy investments needed for brand building
remain key deterrents to new players.
Low margins and high volumes characterize the industry. While the level of
disposable incomes determines the overall sector growth, the market has already been segmented
and sub-segmented. Companies have launched products at a number of price points to drive up
volumes. New products are being launched in niche segments, and old products re-launched.
Brand equity drives the customer’s purchase decisions, and is the key to gaining market share.
Also, competitive pressures have hiked the advertising budgets of most players. Besides, a
profusion of promotional schemes are being offered. Most players, including Hindustan Lever
Ltd (HLL), are struggling to maintain top line growth, despite the heavy advertising and sales
promotion (ASP) expenditure.
A lower price differential between the organized and the unorganized sectors from
reducing excise duties allows the former to grow at the expense of the latter. The organized
sector also has a superior distribution reach. Although most of the product categories are still in
the growth phase, a few broad categories, like detergents, have reached a mature phase only in
the urban market. According to industry sources, the affluent segment in the rural sector is
growing at a faster rate than the urban one. For the past three years, the organized sector has been
focusing on the rural markets, which are perceived to drive growth in the industry and which, to
a very large extent, are dominated by unorganized players.
Industry characteristics:
• Branding: Creating strong brands is important for FMCG companies and they
devote considerable money and effort in developing bands. With differentiation on functional
attributes being difficult to achieve in this competitive market, branding results in consumer
loyalty and sales growth.
• Distribution Network: Given the fragmented nature of the Indian retailing
industry and the problems of infrastructure, FMCG companies need to develop extensive
distribution networks to achieve a high level of penetration in both the urban and rural markets.
Once they are able to create a strong distribution network, it gives them significant advantages
over their competitors.
• Contract manufacturing: As FMCG companies concentrate on brand building,
product development and creating distribution networks, they are at the same time outsourcing
their production requirements to third party manufacturers. Moreover, with several items
reserved for the small scale industry and with these SSI units enjoying tax incentives, the
contract manufacturing route has grown in importance and popularity.
• Large unorganised sector : The unorganised sector has a presence in most
product categories of the FMCG sector. Small companies from this sector have used their
locational advantages and regional presence to reach out to remote areas where large consumer
products have only limited presence. Their low cost structure also gives them an advantage.
• Brand Equity: Brand equities are built over time by technological innovations,
consistent quality, aggressive advertising and marketing.
Key players in the FMCG industry:
There is a strong MNC presence in the Indian FMCG market and out of the top 10
FMCG companies, four are multinationals while two others have significant MNC
shareholdings. Unlike several other sectors where multinationals have entered after 1991, MNCs
have been active in India for a long time. The top five listed FMCG companies on the basis of
their sales turnover in the last financial year (either year ended December 31, 1999 or March 31,
2000) are:
Among the major companies, Hindustan Lever has a strong presence in the food,
personal care and household care (detergents) sectors, ITC is the market leader in cigarettes,
Nirma has a strong presence in the detergent market, Nestle and Britannia are active in the food
sector and Colgate has a strong presence in the oral care segment.
The FMCG sector is a key component of India’s GDP and is a significant direct
and indirect employer. It is the fourth largest sector in the economy and is responsible for five
per cent of total factory employment in the country. The sector also creates employment for three
million people in downstream activities, much of which is disbursed in small towns and rural
India.
Unlike the perception that the FMCG sector is a producer of luxury items targeted
at the elite, in reality the sector meets the every day needs of the masses, across the country.
Low-priced products contribute the majority of the sales volume and lower income and lower
middle income groups account for over 60 per cent of the sector’s sales. Moreover, rural markets
account for 56 per cent of total domestic FMCG demand and FMCG outlets reach more villages
than any other basic facility such as primary schools or bus facilities.
The FMCG sector has several other salient features. It has strong links with
agriculture and 71 per cent of sales come from agro-based products, it is a significant value
creator with a market capitalisation second only to the IT sector and it is a key contributor to the
exchequer. In 2000-01, it accounted for eight per cent of total corporate tax, six per cent of
central excise revenue and seven per cent of state tax revenues.
Pricing: The Indian consumer is very price sensitive. In the personal care sector,
branding allows companies to partially pass on the cost increases to the customers. Most players
have introduced products with mass-market pricing, so as to build volumes. The increased
promotional activity that is taking place amongst players has relegated brand loyalty to the
backseat. Moreover, the increased competition has restricted not only growth rates, but also the
ability to absorb frequent price increases, thus benefiting the consumer. With the rise in
disposable incomes of consumers, players in the premium-product categories will be able to
increase volumes.
Strengths:
Well-established distribution network extending to rural areas.
Strong brands in the FMCG sector.
Low cost operations
Weaknesses:
Low export levels.
Small scale sector reservations limit ability to invest in technology and achieve
economies of scale.
Several “me-too” products.
Opportunities:
Large domestic market.
Export potential.
Increasing income levels will result in faster revenue growth.
Threats:
Imports.
Tax and regulatory structure.
Slowdown in rural demand.
The fabric wash market has three segments, laundry bars, synthetic detergents and
powders. The 3-mn tonne market, valued at Rs 45 bn, is amongst the world's largest, after China
and USA. Laundry soaps accounts for 20 per cent of the total volumes and 15 per cent of the
value.
Consumer preferences have been changing in the past few years. In the urban
markets, people prefer to use washing powder and detergents, instead of bars, on account of
convenience of usage, increased purchasing power, aggressive advertising and increased
penetration of washing machines. The demand for detergents has been growing at an annualized
growth rate of 10-11 per cent in the past five years, while the laundry bar market has witnessed a
negative growth. In the fabric wash market, the rural growth is at a higher rate of 13-14 per cent,
compared to the urban growth rate of 8-9 per cent. The major players in the detergent market are
HLL (Surf), Nirma (Nirma Super, Nima), Proctor & Gamble (Ariel, Gain, Tide) and Henkel-Spic
(Henko), with the rest of the market being fragmented amongst a large number of players.
The Indian soap industry is a mature market, which is valued at Rs 45 bn, and can
be classified into popular and premium categories. While the growth rate for the overall personal
wash market is only 7-8 per cent, premium and middle-end soaps are growing at a rate of 10 per
cent. Positioning of the product is very important in this market. The leading players in this
market are HLL (Lux, Lifebuoy, Breeze, Rexona), Nirma (Nima), Godrej Soaps (Cinthol,
FairGlow, Shikakai, Nikhar), and Reckitt & Colman (Dettol). The rest of the market is highly
fragmented, with companies having strong presence in select segments or a regional presence
only. Brand loyalty is very low, except at the premium end. Key factors to success are
distribution (in rural markets) and advertising (in urban markets).
Repellants market:
The estimated market for insecticides and repellants is around
Rs 8 bn, which is growing at 15 per cent annually. It includes mosquito coils, mats and other
insecticide products. The leading players are Godrej Sara Lee (Goodknight), which has a 38.1
per cent share followed by RCI (Mortein), with a 23.5 per cent market share. Godrej Sara Lee is
the world's largest manufacturer of mosquito mats, with an all-India market share of 66 per cent.
The organized sector is trying to increase penetration levels by higher brand visibility.
The fabric whitener market is estimated at Rs. 250 crore. Robin Blue fabric
whitener was the dominant market leader in the fabric whitener segment until local player Jyoti
Laboratories stormed the market with the launch of a superior liquid whitener Ujala. Robin Blue
has been unable to regain market share as consumers have shifted to using liquid whiteners.
FMCG outlook:
The FMCG sector has traditionally grown at a very fast rate and has generally out
performed the rest of the industry. Over the last one year, however the rate of growth has slowed
down and the sector has recorded sales growth of just five per cent in the last four quarters.
The outlook in the short term does not appear to be very positive for the sector.
Rural demand is on the decline and the Centre for Monitoring Indian Economy (CMIE) has
already down scaled its projection for agriculture growth in the current fiscal. Poor monsoon in
some states, too, is unlikely to help matters. Moreover, the general slowdown in the economy is
also likely to have an adverse impact on disposable income and purchasing power as a whole.
The growth of imports constitutes another problem area and while so far imports in this sector
have been confined to the premium segment, FMCG companies estimate they have already
cornered a four to six per cent market share. The high burden of local taxes is another reason
attributed for the slowdown in the industry
At the same time, the long-term outlook for revenue growth is positive. Give the
large market and the requirement for continuous repurchase of these products, FMCG companies
should continue to do well in the long run. Moreover
SUGGESTIONS
The retailers should be educated about the various brands ofproduct and about
their use.
The retailers should be taken seriously and the company should give more
attention to them.
The company should work at making a good name for itself in the market.
The company should advertise its products well to keep the customers well
informed about the products.
Since most of the retailers are buying their stocks from the company’s distributors
the company should work at giving better service to the retailers.
The company’s distributors should regularly visit the shops and should be
courteous with the retailers.
The company’s distributors should work at maintaining better relations with the
retailers.
The company should keep its products in display at the retail shops in order to
increase sales of its products.
There should be more advertisements of products so that the customers are well
informed about the products.
For the retailers to start suggesting the products to the customers there should be
more customer enquiries and more sales for these products. For this there should be more ads for
the products.
The company should try to do something regarding the imitation to the brands by
shops survey..
The company should go for poster ads and hoardings in addition to the TV and
radio ads.