Present Indian retail scenario

Retail is clearly the sector that is poised to show the highest growth in the next
five years. The sector is set for a revolution, as both the present players and new
entrants are gearing up to explore the market. This sector contributes 10% of
India's GDP and the current growth rate is 8.5%. The present size of the organized
retailing sector is approximately 3% and is expected to grow to 25-30% by the
year 2010. There are about 300 new malls, 1500 supermarkets and 325
departmental stores currently under construction. Many players are coming up
with huge investments, due to which the present 12 million mom-and-pop shops
and kirana stores fear losing their business. Most predictions say that the sector
might reach to US$ 400-600 billion by the year 2010. Global retail giants such as
Wal-Mart, Tesco, Germany's Metro AG and many others are ready to enter the
retail markets. The rising demand of branded products and increase in purchasing
power have lured these companies to enter the market.

Modern retail development in India is focused on the following cities:

West

 Mumbai
 Pune
 Ahmedabad

North

 Delhi and the National Capital Region

South

 Chennai
 Banglore
 Hyderabad
 East
 Kolkata

Leading Indian retailer Bata India Ltd, Big Bazaar, Crossword, Ebony Retail
Holdings Ltd., Food Bazaar, Globus Stores Pvt. Ltd., Liberty shoes Ltd., Music
World Entertainment Ltd., Pantaloon Retail India Ltd., Shoppers Stop, Subhiksha,
Titan Industries, Trent and the new entrants penetrating the market soon will
include Reliance Retail Ltd, Wal-Mart Stores, Carrefour, Tesco, Boots Group, etc.

Current scenario

A glimpse of the International Retail

 One of the world's largest industries exceeding US$ 9 trillion

 47 global fortune companies & 25 of Asia's top 200 companies are retailers
 Dominated by developed countries
 US, EU & Japan constitute 80% of world retail sales.
 Biggest player in India is Pantaloon Retail India Limited.

Percentage of Organized Retail

USA - 85%
Taiwan - 81%
Malaysia - 55%
Thailand - 40%
Brazil - 36%
Indonesia - 30%
Poland - 20%
China - 20%
India - 3%
 Key trends

The existing players like Big Bazaar, Shoppers' Stop, Piramyd are expanding
to smaller towns and cities. Many other business houses are planning to
enter the retail sector either on their own or through partnerships. New
entrants like Reliance Retail Ltd and Wal-Mart are going to enter the
market soon. Even rural areas will provide a huge opportunity to be
explored.

Estimates and Predictions

 The industry is estimated to be more than US$ 400 billion by a study of

McKinsey.
 The Economist Intelligence Unit (EIU) estimates the retail market in India to
increase to US$608.9 billion in 2009 from US$394 billion in2005.
 A KPMG report says that the organized retail would grow at a higher rate
than GDP in the next five years.
 The retail sector would generate employment for more than 2.5 million
people by the year 2010, says an analysis by Ma Foi Management
Consultants Ltd.

Benefits of FDI in Retail Sector

 Higher competition would lead to higher quality in products and services.
 Better lifestyle as better products would be introduced.
 Exports would increase due to greater sourcing of major players.
 Investment in whole supply chain would increase.
 Technology would be upgraded in terms of logistics, production, and
distribution channels.
 The markets of the sector would flourish and develop.
 Employment would increase and skills & manpower will develop.
 A strong retailing sector would promote tourism.
  Economies of scale would help lower consumer prices and increase the
purchasing power of the consumer.
 In the long term it will be beneficial in the up-gradation of agriculture and
small scale & medium scale industries.

Indian Consumerism
The Indian consumer behaviour is rapidly changing with a shift in new
generation's preference towards luxury commodities

Retail Space: A Scope for Real Estate Sector

With new boom in the retail industry, the country has identified new scope for
real estate development. The already revolutionizing urbanization and growing
demand for finished products has necessitated development of new space for
retail outlets.

formats of retailing in India

Popular Formats
• Hypermarts
• Large supermarkets, typically (3,500 - 5,000 sq. ft)
• Mini supermarkets, typically (1,000 - 2,000 sq. ft)
• Convenience store, typically (7,50 - 1,000 sq. ft)
• Discount/shopping list grocer
• Traditional retailers trying to reinvent by introducing self-service formats as well
as value-added services such as credit, free home delivery etc.

The Indian retail sector can be broadly classified into:

a) FOOD RETAILERS
There are large number and variety of retailers in the food-retailing sector.
Traditional types of retailers, who operate small single-outlet businesses mainly
using family labour, dominate this sector .In comparison, super markets account
for a small proportion of food sales in India. However the growth rate of super
market sales has being significant in recent years because greater numbers of
higher income Indians prefer to shop at super markets due to higher standards of
hygiene and attractive ambience.

b) HEALTH & BEAUTY PRODUCTS

With growth in income levels, Indians have started spending more on health and
beauty products .Here also small, single-outlet retailers dominate the market
.However in recent years, a few retail chains specializing in these products have
come into the market. Although these retail chains account for only a small share
of the total market , their business is expected to grow significantly in the future
due to the growing quality consciousness of buyers for these products .

c) CLOTHING & FOOTWEAR

Numerous clothing and footwear shops in shopping centers and markets operate
all over India. Traditional outlets stock a limited range of cheap and popular
items; in contrast, modern clothing and footwear stores have modern products
and attractive displays to lure customers. However, with rapid urbanization, and
changing patterns of consumer tastes and preferences, it is unlikely that the
traditional outlets will survive the test of time.

d) HOME FURNITURE & HOUSEHOLD GOODS

Small retailers again dominate this sector. Despite the large size of this market,
very few large and modern retailers have established specialized stores for these
products. However there is considerable potential for the entry or expansion of
specialized retail chains in the country.

e) DURABLE GOODS
The Indian durable goods sector has seen the entry of a large number of foreign
companies during the post liberalization period. A greater variety of consumer
electronic items and household appliances became available to the Indian
customer. Intense competition among companies to sell their brands provided a
strong impetus to the growth for retailers doing business in this sector.
f) LEISURE & PERSONAL GOODS
Increasing household incomes due to better economic opportunities have
encouraged consumer expenditure on leisure and personal goods in the country.
There are specialized retailers for each category of products (books, music
products, etc.) in this sector. Another prominent feature of this sector is
popularity of franchising agreements between established manufacturers and
retailers.

Malls In India
Over the last 2-3 years, the Indian consumer market has seen a significant growth
in the number of modern-day shopping centers, popularly known as ‘malls’. There
is an increased demand for quality retail space from a varied segment of large-
format retailers and brands, which include food and apparel chains, consumer
durables and multiplex operators. Shopping-centre development has attracted
real-estate developers and corporate houses across cities in India. As a result,
from just 3 malls in 2000, India is all set to have over 220 malls by 2005. Today,
the expected demand for quality retail space in 2006 is estimated to be around 40
million square feet. While previously it was the large, organised retailers – with
their modern, up-market outlets, and direct consumer interface- who had been a
key factor driving the growth of organised retail in the country, now it is the malls
which are playing the role.

Factors such as availability of physical space, population densities, city planning,

and socio-economic parameters have driven the Indian market to evolve, to a
certain extent, its own definition of a ‘mall’. For example, while a mall in USA is
400,000 to 1 million sq.ft. in size, an Indian version can be anywhere between
80,000 sq.ft. and 500,000 sq.ft. By 2005, total mall space in the 6 cities of
Mumbai, Bangalore, Hyderabad, Chennai, Kolkata, and National Capital Region
(Delhi, Noida, Gurgaon) is expected to increase to over 21.1 million sq. ft.
Compared to other big cities, Kolkata and Hyderabad are relatively new entrants
in the mall segment, but are witnessing quick growth. Smaller cities like Pune,
Ahmedabad, Lucknow, Ludhiana, Jaipur, Chandigarh and Indore, are also
expected to see a formidable growth in the growth of malls in the near future. But
malls in India need to have a clear positioning through the development of
differential product assortment and differential pricing, in order to compete
effectively in a growing mall market. Segmentation in malls, like up-market malls,
mid-market malls, etc. , proper planning, correct identification of needs, quality
products at lower prices, the right store mix, and the right timing, would ensure
the success of the ‘mall revolution’ in India.

Challenges of Retailing in India

Retailing as an industry in India has still a long way to go. To become a truly
flourishing industry, retailing needs to cross the following hurdles:
• Automatic approval is not allowed for foreign investment in retail.
• Regulations restricting real estate purchases, and cumbersome local laws.
• Taxation, which favours small retail businesses.
• Absence of developed supply chain and integrated IT management.
• Lack of trained work force.
• Low skill level for retailing management.
• Intrinsic complexity of retailing – rapid price changes, constant threat of product
obsolescence and low margins.

The retailers in India have to learn both the art and science of retailing by closely
following how retailers in other parts of the world are organizing, managing, and
coping up with new challenges in an ever-changing marketplace. Indian retailers
must use innovative retail formats to enhance shopping experience, and try to
understand the regional variations in consumer attitudes to retailing. Retail
marketing efforts have to improve in the country - advertising, promotions, and
campaigns to attract customers; building loyalty by identifying regular shoppers
and offering benefits to them; efficiently managing high-value customers; and
monitoring customer needs constantly, are some of the aspects which Indian
retailers need to focus upon on a more pro-active basis.
Despite the presence of the basic ingredients required for growth of the retail
industry in India, it still faces substantial hurdles that will retard and inhibit its
growth in the future. One of the key impediments is the lack of FDI status. This
has largely limited capital investments in supply chain infrastructure, which is a
key for development and growth of food retailing and has also constrained access
to world-class retail practices. Multiplicity and complexity of taxes, lack of proper
infrastructure and relatively high cost of real estate are the other impediments to
the growth of retailing. While the industry and the government are trying to
remove many of these hurdles, some of the roadblocks will remain and will
continue to affect the smooth growth of this industry. Fitch believes that while
the market share of organised retail will grow and become significant in the next
decade, this growth would, however, not be at the same rapid pace as in other
emerging markets. Organised retailing in India is gaining wider acceptance. The
development of the organised retail sector, during the last decade, has begun to
change the face of retailing, especially, in the major metros of the country.
Experiences in the developed and developing countries prove that performance
of organised retail is strongly linked to the performance of the economy as a
whole. This is mainly on account of the reach and penetration of this business and
its scientific approach in dealing with customers and their needs. In spite of the
positive prospects of this industry, Indian retailing faces some major hurdles (see
Table 1), which have stymied its growth. Early signs of organized retail were
visible even in the 1970s when Nilgiris (food), Viveks (consumer durables) and
Nallis (sarees) started their operations. However, as a result of the roadblocks
(mentioned in Table 1), the industry remained in a rudimentary stage. While
these retailers gave the necessary ambience to customers, little effort was made
to introduce world-class customer care practices and improve operating
efficiencies. Moreover, most of these modern developments were restricted to
south India, which is still regarded as a ‘Mecca of Indian Retail’.

Scope of Indian retail market

The scope of the Indian retail market is immense for this sector is poised for the
highest growth in the next 5 years. The India retail industry contributes 10% of
the countries GDP and its current growth rate is 8.5%. In the Indian retail market
the scope for growth can be seen from the fact that it is expected to rise to US$
608.9 billion in 2009 from US$ 394 billion in 2005.

The organized retailing sector in India is only 3% and is expected to rise to 25-
30% by the year 2010. There are under construction at present around 325
departmental stores, 300 new malls, and 1500 supermarkets. This proves that
there is a tremendous scope for growth in the Indian retail market.

The growth of scope in the Indian retail market is mainly due to the change in the
consumers behavior. For the new generation have preference towards luxury
commodities which have been due to the strong increase in income, changing
lifestyle, and demographic patterns which are favorable.

The scope of the Indian retail market have been seen by many retail giants and
thats the reason that many new players are entering the India retail industry. The
major Indian retailers are:

 Pantaloons Retail India Ltd

 Shoppers Stop
 Bata India Ltd
 Music World Entertainment Ltd

Judging the scope for growth in the India retail industry many global retail giants
are also entering the Indian retail market. They are :

 Tesco
 Metro AG
 Wal- Mart

The scope for growth in the Indian retail market is seen mainly in the following
cities:

 Mumbai
  Delhi
 Pune
 Ahmedabad
 Bangalore
 Hyderabad
 Kolkata
 Chennai

The scope of the Indian retail market is very vast. And for it to reach its full
potential the government and the Indian retailers will have to make a determined
effort.

Strategic planning in retailing:

The retail strategy can be defined as a clear and definite plan that the retailer
outlines to tap the market and build a long-term relationship with the consumers.
A retail strategy is fundamental to the existence of the retail organization. It helps
the organization, it purpose and hoe the retailer will face various challenges in the
environment and marketplace.

Steps in the process if strategic planning in retail:

Define the business mission
 Conduct the situation audit

Identify strategic plan

Evaluate the plan

Establish specific objectives

Develop the retail mix

Evaluate the performance and make adjustments

Step 1. Define the business mission

The mission statement is a statement of the long-term purpose of the
organization. It describes what the retailer wishes to accomplish in the markets in
which it chooses to compete. It highlights the following elements:

 The products and services that will be offered.

 The customers who will be served.
 The geographic areas that organization chooses to operate in.
 The manner in which the firm intends to compete in its chosen markets.

Step 2. Conduct the situation audit:

Situation audit is an analysis of the opportunities and threats in the retail
environment and the strengths and weaknesses of the retail business relative to
its competitors. In situation analysis one conduct a research on following factors:

Market Factors

Size, growth, seasonality, and Business Cycles

Competitive Factors

Barriers to entry, bargaining power of vendors, and competitive rivalry

Barriers entry- institute conditions in a retail market that make it difficult for
other firms to enter the market, such as scale economics, customer loyalty, and
the ability for great locations.

Scale economics- are cost advantages due to a retailer’s size.

Bargaining power of vendors- Markets are less attractive when only a few
vendors control the merchandise sold in it. In these situations, vendors have the
opportunity to dictate prices other terms (like delivery dates), reducing the
retailer’s profits.

Competitive Rivalry- defines the frequency and intensity of reactions to actions

undertaken by competitors. When rivalry is high, price wars erupt, employee raids
occur, advertising and promotions expenses increase, and profit potential falls.
Conditions that may lead to rivalries are: large number of competitors that are all
about the same size, slow growth, high fixed costs, and a lack of perceived
differences between competing retailers.

Environmental Factors

Technology, economic, regulatory, and social

Strengths and weaknesses analysis- indicates how well the business can seize
opportunities and avoid harm from threats in the environment.

Step 3. Identify strategic plan:

In this step the retailer consider the various alternatives available for tapping the
market. Igor Ansoff presented a matrix, which looked at growth opportunities by
focusing on the firm’s present and potential products in the existing and new
markets. This matrix, which is popularly known as Ansoff’s Matrix, helps us
understand the options available to a retailer. These alternatives available to the
retailer are:

Existing New Retail formats

Existing Market penetration: Market development
/Expansion
 Increase the
market size  New market
  Increase the segments with
customers existing format
 Increase the  New customer
purchase base
frequency
New Retail format Diversification
development
 New retail formats
 New format with directed at new
existing customers market segments

Market segments

Step 4. Evaluate the plan:

This determines the retailer’s potential to establish a sustainable competitive
advantage and reap long-term profits from the opportunities being evaluated.
Retailer must focus on opportunities that utilize its strengths and its competitive
advantage

Step 5. Establish specific objectives:

Objectives are a translation of the mission statement into operational terms. They
indicate the results to be achieved. The purpose of setting objectives is to give
direction and set standards for the measurement of performance. Management
normally sets both long-term and short-term objectives. One-or two-year time
frames for achieving specific targets are short-term. Long-term objectives are less
specific than short-term targets and reflect the strategic dimensions of the firm.
Good objectives are measurable, are specific to time and indicate the priorities for
the organization. Main organizational objectives are:
• Market performance objectives: Sales Objectives - Volume or growth goals
are often seen

• Customer Traffic Objectives - Get new people into the store through
promotions, sales, special services

• Customer Loyalty - Get customers for life. The sale is the beginning of
customer contact not the end

• Market Share - sales goals stated in terms of share of market in comparison

to local competitors

• Retail Image - Re-identifying the target market and the future growth
potential (e.g. Sears)

• Vendor relations - increase sales through better coordination with vendors

• Financial performance: objectivesTargeted Returns - Ratio of calculated net

income to sales (ROS) or to total assets (ROA) or to equity (ROE)

• Earnings per share - Important consideration for publicly traded retail firms

• Stockholder dividends

• Labor productivity - Sales per employee is a common retail measurement

• Space productivity - Sales per square foot of space (or per square foot of
selling space) is another common measurement

• Merchandise productivity - Inventory turnover goals

• Personal objectives: Self-Gratification - Owners, managers, and employees

will probably choose working in a retail environment they enjoy

• Status and Respect - Managing a store or being an employee of the month

adds to individuals status and self-respect
 • Power and authority - Retail employment usually provides for more
responsibility than factory employment

• Societal objectives: Social responsibilities are becoming more important

• The amount of social responsibility that comes from a true concern for
society (e.g. Ben & Jerry’s) versus the amount that is triggered by the desire
for positive publicity and promotion (Drug store health fairs) is unknown

• Societal concerns often are at the expense of financial objectives.

Step 6. Develop a retail mix:

This is to develop a retail mix for each opportunity in which an investment will be
made and control and evaluate performance

Step 7. Evaluate performance and make adjustments:

This step is to evaluate the results of the strategy and implementation program. If
the retailer is meeting or exceeding the objectives, changes aren’t needed.

Introduction of the retail unit:

The foundation of shopper’s stop was laid on October 27,1991 by the K. Raheja
Crop. group of companies. Being amongst India’s biggest hospitality and real
estate players, the group crossed yet another milestone with its lifestyle venture-
Shopper’s stop. From its inception, shopper’s stop has progressed being a single
brand shop to becoming a fashion & lifestyle store for the family. Today,
Shopper’s Stop is household name, known for its superior quality products,
services and above all, for providing a complete shopping experience.

Retail location strategies:

selecting the location for the store is in the hands of retailers because before
selecting the location they have to check many factors like walking traffic,
competitor, parking infrastructure etc. they also have to decide that they want to
buy the site or they will take it on rent. So after deciding all these things they
reach to the final decision. In jaipur after evaluating all the above things they
select two places:

1. Triton mall, jhotvara

2. Gaurav tower, malviya nagar

The retail location which we select for the survey is Shopper’s stop at
Malviya nagar. The factors considered for location selection are:

1. it is a centralized location which cover the consumers of Malviya Nagar,

Jawahar Nagar, mansarover etc. areas so people reside there come to GT
for shop.
2. Huge availability of transport like taxi, buses etc.
3. Facility of free and ample parking increased the number of footfall in GT .
4. Clientage for shopper’s stop prefer to shop in malls and convince store
rather than an individual store so a store in mall is good than an individual
shop.

Customer Profile:
Shoppers‘ Stop‘s customers 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. 20000 and an annual spend of Rs.15000. A large number of Non
- Resident Indians visit the shop for cultural clothes in the international
environment they are used to which means people from abroad are also
interested in shopping in Shopper‘s stop. Their target customers are upper middle
class and upper class.

Customer Rewards:
Shoppers Stop‘s customer loyalty program is called The First Citizen. The program
offers its members an opportunity to collect points and avail of special benefits.
Currently, Shoppers‘ Stop has a database of over 2.5 lakh members who
contribute to nearly 65% of the total sales of Shoppers‘ Stop. They also offer a co-
branded credit card with Citibank for their members.

SCM:

Understanding the importance of distribution and logistics in ensuring that

merchandise is available on the shop floors has led Shoppers‘ Stop to 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
buildup, fixing of price and store tags, dispatch of stocks to the retail floor and
forwarding of bills for payment. If we talk about various brands then the answer is
that they have a direct tie ups with different companies and companies deliver all
the needed products to their door-step means deliver all the goods to every
shopper‘s stop showroom. But there are some companies which do not provide
them these services so for those they have their own carrier.

CRM (customer relationship management) Strategies:

Retail chain Shoppers‘ Stop Ltd, is eyeing over 50 per cent sales this year from its
customer relationship management (CRM) initiatives. The company has also lined
up an aggressive expansion plan targeting smaller towns and cities in the country.
BS Nagesh, managing director and CEO of Shoppers‘ Stop, told FE that the
company has given a new direction to its CRM initiatives after it acquired a
business intelligence software called ‗Business Solutions‘ about eight months
ago. The new software helps generate intelligent data from Shoppers‘ Stop
customer base of about 2,30,000. The company then collects this data and
touches base with customers via direct mailers informing them of all new
promotions that is currently on and also updates them about the upcoming
events. Shoppers‘ Stop claims that it has taken its CRM initiatives to a new height
and now calls it‘s loyalty programmes Customer Experience Management. ―If we
find from the data that a customer had bought a pair of trousers, we tell him
about a new range of shirts that we have just brought into our store,‖ says Mr
Nagesh. ―We are planning to open 35 outlets within the next three years. We
have identified 21 new locations including Kanpur, Amritsar, Jalandhar,
Ahmedabad and Indore, among others to set up these outlets,‖ Mr Nagesh said.

Use of IT in the store:

Shoppers‘ Stop was 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 (Enterprise resource planning) in place, which is the best retail
planning system in the world. With the help of the ERP, they are able to open new
stores faster and get information about merchandise and customers online, which
reduces the time in taking quick decision.

Major competitors of Shopper’s stop:

In India competitors for Shopper’s Stop are mainly foreign players and also
Individual stores. The name of few competitors is given below:
Lifestyle

Globus

Central

Pantaloons

Westside

Ebony

The retail unit at malviya nagar the major competitors for Shopper’s Stop are: