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STORY BEHIND OUR SUCCESS

Apna Bazar opened its first branch like a traditional shop, in December 1984, in BHEL,Hyderabad with an initial investment of Rs. 10000 and just 100 products. By year 2005, the turnover of apna bazaar reached Rs. 33,000 crores and 9,842 branches across 18 states were added to cater the needs of more than 20 lac families. Total number of employees reached to 92 thousand. The advertisement expenses incurred during 1984 to 2005 of apna bazaar was less than Rs one lac(For each branch). What was the secret mantra of such phenomenalgrowth? Our strong belief and trust in Human values and Relationships. The secret of apna bazaars success lies in its customers loyalty to its stores. Children and grand children of our first customers, patronized the bazaar and there were times when three generations walked together to buy our products. Apna Bazar never felt it was doing a business. The running of business is treated like a social responsibility where human relations, customer service, high quality and lower prices are the prime factors. The relations between employees and customers were like friends and family. The interaction with our customers was so strong that employees were often invited to attend and participate in the Vastness and Space Lowest Prices Work Force Productivity Home Delivery Other Advantages Advantages Up-gradation at the Outer Level Location Quality Easy and Quick Availability Ambiance Value-added Services Strengths Friendly Advice to the Suppliers

The Right Shopping-Ally and the Right Buzz to Hum with APNA BAZAAR. Think of a mixture of old and new, traditional and modern, past glory and present bright times, think APNA BAZAAR, its the right place and the right getaway for all your shopping needs. Its a place where you feel at home, a home away from home. A place where you can scent quality, variety, security and an aura of assured feel-good factor in terms of affordable and reasonable rates. Super Bazaars are no more a place where purchase-chore is a mechanical affair, a place where one comes, makes purchases and goes. It has become a place where one should experience the thrill of shopping, which is an art in itself, an art which transmits a veil of joy, exuberance, fun, merriment, pleasure and above all a feeling of pride. Step into that confines and experience a shopping expedition in itself, step into Apna Bazaar and realize a whole new world, a world of shopping paradise. Stay tuned with us, we bring you the best and the latest of shopping goodies. The word Apna Bazaar means Our Bazaar and that is what we have been ever since our inception. The trend of shopping big and buying big started in the early 1980s, a momentous time in Indian history. It was a ready-made platform for those aspiring to have a big shopping presence, big and modern, yet simple and accessible to people of all income barriers. The idea of Apna Bazaar came about more than a decade back before the Government of Andhra Pradesh initiated the Rythu Bazaars and Gruha Mitra Schemes. The year 1983, saw us entering this segment. We originated from the initiative of a non-profit and charitable trust Consumer Awareness & Research Society (Trust), better known as CARS. We originated with the philosophy of meeting the needs of lakhs of consumers from different segments of society. The First APNA BAZAAR is opened on 12 December 1984 at B.H.E.L.(HYDERABAD) CARS emphasize the need for such a kind of supermarket, which makes available products of various hues, of the best quality at the most affordable prices. It drives home the point that the products sold by it are reliable and properly certified in the most accurate of weights and measurements.

We project the following highlights


Vastness and Space

We are the biggest chain of supermarkets in India operating with more than 9,842 outlets, in 18 states throughout the nation and 29 countries, selling more than 2,00,000 essential commodities and needy products.

We are the only biggest supermarket chain that keeps in view the development of consumer association, indirectly cooperates with every activity and supports consumer rights to acquire quality products without compromising on quality.

We possess one of the best and biggest warehouse facilities. The same is well equipped, scientifically tested to be of quality one. It also provides direct employment to more than 10,000 volunteers and employment to more than 1, 00,000 people. In this way it has been a good job creator and sustainer.

Our outlets are well spaced to display the vast range of products at easy view angles, with ample room for people's movements. Each and every outlet covers an average plinth area which is said to be a better space for this sort of retailing format.

Location
All our outlets are located in prime locations which are home to people of varying backgrounds, income-range and purchasing power. We go by certain points before setting up of Apna Bazaar outlet in that area/locality. They are: Density of population

Easy Address

Access to four corners of that particular locality

Parking Space

Real Estate

Neighbourhood Outlets a study

Income Group a study

Double Roads their impact

Frontage All of the above points are worked out to the nicety to provide the maximum benefit to the consumers.

Lowest Prices
The same has been possible due to the following factors Buying from the source of production.

Buying in large quantities by catering to the needs of all the Apna Bazaar outlets in the state apart from our institutional sales. The above two points provide the base for securing all the stocks at a very cheap rate and the accrued profits are passed on to the consumers in the shape of the following Providing all items at less than MRP rates.

Promotional activities.

Discounts and offers (freebies).

We have achieved tremendous success in the same and also it has been possible due to our loyal nationwide producer base.

Quality
We adhere to the best quality standards, that is, our products are AGMARK, BIS, ECO MARK, HALLMARK accredited. The same has been possible due to the long process commencing from identification, selection, cleaning, purification, packaging and storage. The whole work process tackled from the following angles - adulteration, mixing and imitation. The other notable factor is that we ensure the weighment and quantity of the products before they are dispatched for sale (before packing and after packing) in the warehouse.

Work Force Productivity


We possess an army of well-trained large volunteer force that ensures maximum interactivity. The same has given the advantage to get the best out of their capacity vide making them work on a flexi-hour basis. Our volunteer-to-outlet ration has enabled us to divide work among them in areas as: Service

Maintenance

Monitoring

Point-of-purchase assistance We are proud to reveal the fact Pre-employee productivity of Apna Bazaar is one of the best among all the retail chains in India.

Easy and Quick Availability


All our outlets are equipped with a complete range of products that forms a part of the daily/regular needs of a typical Indian family. All the products are available under one roof, groceries, food and beverages, milk, personnel care products, vegetables, crockery items and so on and also they come with depth in range and makes. The whole process is based on the foundation of Freedom of Choice to shop at a onestop

Home Delivery
We have introduced for the benefit of our consumers the concept of Home Delivery, the same has been utilized well by people who are busy and have little time to spare for shopping. The same is worked out by dialing our helpline at no extra cost.

Ambience
To put our customers in the proper frame of mind and instill the dose of shopping spirit, our outlets are done up in the most modern, tasteful and well-decorated manner. The blue hoardings at our outlet's entrance signify a positive spirit and approach serenity, calmness and above all that feel at home theme. In addition to this, we are further guided by the themes of Shop-atEase in Peace or Shopping Peacefully.

Other Advantages

Our network extends to more than 1,100 mandals at Andhra Pradesh State and 8,800 places in 18 states in India and has specified consumer cells.

We possess a network of 30 branches in various parts of the world.

Value-added Services

Customer Suggestion Box: Every outlet possesses special boxes wherein, our customers can deposit their suggestions and complaints pertaining to any product or service.

Consumer Grievance Cell: Problems faced by the customers in their day-to-day life relating to products and services used by them and the complaints against defects in them are lodged in cell. The same are maintained carefully and resolved through consumer courts.

ConvenienceJoints: We are initiating the introduction of Bill Payment service through which our customers can pay their

telephone, water, electricity bills and bookings for cooking gas, travel, etc.

Supplier focus towards achieving world class supply chain efficiency. We are very much focused and believe in the theme, Together let us redefine the view of business in the minds of consumers.

Advantages

Continuous Availability

Authentic Promotions

Sale

Good Will

Brand Penetration

Low Transaction

Strengths

Higher Retention Rates

Stable Supplier Relations

Multiplier Effect

Up-gradation at the Outer Level

Increase in display space

Creation of separate section called Latest or New Arrivals in each product category (Encouragement to niche products)

Induction of more product lines into our product portfolio range

Implementation of innovative, makes customers feel happy resulting in an increase in the sales

Creation of regular promotional (frontage) space in all the outlets thus helping the suppliers working out their business more practically at the outlet level

Friendly Advice to the Suppliers


We are a consumer organization as well as a retail chain our basic service to the consumers start at the supermarket level and towards the same we seek the cooperation from all our regular and trusted suppliers. As a result, we demand more sops from the suppliers on mutually-beneficial terms which will result in a substantial sale increase as well as quality service to the consumers. The facility of this prompt service to the consumers can only be understood by the suppliers/manufacturers who want enduring returns (in retailing parlance) and not by those who look for everything quick in todays competitive business world.

We encourage

Quality Products

More Discounts / Margins

Your participation in various welfare activities conducted by CARS (Trust) The other noted point is that we have a solid and established base all over the state which is a major plus to the suppliers, manufacturers and farmers. The same comes about in the form of no investment required on advertising and publicity and instead they can avail the facility of outlets all over the state, reaching so many consumers is a task possible only through Apna Bazaar. The Producer/Manufacturer also need not invest any money on advertising since Apna Bazaar will ensure the sale of his product. More than 20 lakhs consumers all over the country are being introduced to new products, through Apna Bazaar. The most difficult problem faced by most well-known brands today is 'imitation'. Imitation is so close to the real product that it is difficult for the consumer to distinguish between the real product and the imitation. As a result, the manufacturers of the quality products and the buyers of the imitation products are the ultimate losers. Manufacturers can also avoid the hurdle of imitations, by selling their products through the totally centralized and transparent functioning of the Apna Bazaar. The members of the Apna Bazaar are also members of the local Consumer Association, so they will have a good idea of the quality of the products. In this way, the sales of pure and quality products will increase by leaps and bounds. Future is here, it beckons and it sure glows brightly and emits that priceless quality called Pride of Place, the future is Apna Bazaar. The CARS (trust which runs Apna Bazaar) has a well spread out and maintained complex beside the Hyderabad-Nagarjuna Sagar Road. The complex is located on an area, which spans 12 acres of prime land, which measures 4, 00,000 sqft. The trust has a fleet of 215 heavy container transport vehicles, which distributes the essential daily items to the various Apna Bazaar outlets in different parts of the state. Apna Bazaar outlets as on now have 2,400 outlets in all the 20 districts of Telangana, Rayalaseema districts. Well-manned and trained staff mans each and every outlet, the and Andhra areas. Chain has provided direct employment to more than 4000 people and indirect employment to many more. With its philosophy based on the saying The Consumer is the King, it has earned rave reviews from the general public and various international organizations. Similarly in East, West, north and South states having 40, 00,000 sq.ft warehousing area. More than 10,000 transport vehicles are using in r distribution of goods . We deal in more than 2, 00,000 different products. All our products are lab-tested and well certified to attach the quality tag to it. Our product range is as follows A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Medical Services: Pharmacy, Pathological services, diagnosis of disease by medi net, Suggesting the medicines, information about hospitals needed to the patient, Ambulance services, Health insurance, health card, Blood bank , Doctors information and services. Legal Services: Providing necessary advisors and advocates to solve the issues like Civil cases, Consumer cases, and Insurance disputes. Real Estate: Purchases, Sales, Legal opinions, Identification of lands, Land survey, Protection of land and building property etc Security services: Guidance and services. Placement Services: Guidance and services. Educational Advises (Primary to foreign education): guidance and services. Servant maid: Supply of Technicians, Labor, cooks, Plumbers, Electricians, Fiters, TV repairers, Computer repairers, Vehicle mechanics, Friz & Air Conditioning mechanics, Drivers, Hospitality management persons, Painters, etc Utility Services: Provision of paying electric bills, Telephone bills, Munucipal taxes, Water bills etc like e-seva. Mobile recharging: Giving connections and bill payments for the services like Tata Sky, Dish TV, Sun Network, Cable TV, and Internet etc Astrology Vaasthu Adrusta Diamond rudrakshas services and supply.

Courier Services Parcel Services Packers & Movers Sales of Application forms of All jobs. Pass Port services Visa Services IT, Sales Tax, VAT, Firm Registration, R.O.C., I.O.C., S.S.I., Society/Trust registration Etc Trademark Registration, Copy Right, Patent Rights etc.. Travel Services: Bus Ticket, Train ticket, Flight ticket, Hotel booking, Taxi booking, Guide booking, Tourism packages, Pilgrimages,to anywhere across the world, etc Driving License, Driving school, Vehicle registration, Pollution certificate, Tax Payment, Vehicle insurance, etc Banking & Finance Savings & Investments Insurance Services: Life insurance, General insurance, Accidental insurance, Health insurance, Travel insurance and Postal insurance. Credit card, Health card, Discount card, and Debit card Services. Advertisement: Services like making the ads fit to internet, Radio, TV Channels, Magazines and their publishing and telecasting. Web designing, Website creation, etc Books, Magazines: Clipping services: Providing the necessary information to the different companies and business organizations on day, weekly and monthly bases by gathering the information from magazines, internet and Television. Fertilizers, Seeds, Pest killers, warehouse facilities for formers, and making convenience of getting the machines and tools for rent and giving them for rent, Marketing and loan facility. Second hand vehicles sales purchases, and loan facility. Arrangements of movie tickets, Audio & Video cassettes and Video games. Event management: All the facilities required for weddings, functions, Parties like catering services, Press relations etc Supplying of construction material and appointing the technical persons. Services like Caste certificate, income certificate, sales of non judicial stamps, non encumbrance certificate, etc Detective services: Power Services: Solar energy, UPS, Invertors, generators etc Supplying to consumers Electrical, Electronics, Consumer durables, Furniture, Hallmark gold & Jewelry, Costly garments, Watches, computers & Laptops etc as early as possible by showing the dummies, brochures and video cassettes. Mineral water, Bulk supply, Water purification of water tanks wells etcand supply of Bore well equipments, Soil testing, Motors etc Providing home Tuition Masters, Music teachers, Spoken English teachers, and computer basics teachers. Printing work services Fitness services like Beauticians, gym, yoga, Herbal treatment, etc Womens services like Foils, Dyeing, Embroidery, Tailoring, Fashion Designing, Stitching, Hand works, etc Provision for selling away waste things like waste papers, Iron, Waste Bottles, etc for better prices. Counseling for disputed families, smokers, drinkers, people in depression. Services for old age people, orphans, assaulted women. Money transfer and forex services. Gift Services: presenting bouquets and gifts to the people anywhere in the world on special days like birth days, wedding anniversaries in time on behalf of their well wishers. Aquarium, Pet Dogs, Pet animals, and plantation related services Provision for the donors to donate for the Charitable trusts and societies. Services like pest control and water leakages etc

Translation services: Translation services to Indian languages and international languages. Co-operation in purchasing of new vehicles.

Services mentioned above are provided to the consumers few in minutes, few in hours, and few in days

Indian Retail Industry - Opportunities, Challenges, and Development Strategies: A global scenario
By

K.K. Pandey
Lecturer BBDNITM Lucknow

ABSTRACT The revolution in retailing industry has brought many changes and also opened door for many Indian as well as foreign players. In a market like India there is a constant clash between challenges and opportunities but chances favour those companies that are trying to establish themselves. So to sustain in a market like India companies have to bring innovative solutions. Indian market has potential to accommodate many retail players, because still a small proportion of the pie is organized. This paper discusses the challenges like merchandising mix, retail differentiation, supply chain management and also competition from supplier's brand in the Indian perspective.it tries to describe the different segments in which retailing could have tremendous opportunity as well. Key words- Retail differentiation, Supply chain& logistic, Merchandising Mix, Private level brand, index, visual communication. 1.0 Introduction

Retailing is still in its infancy in India. In the name of retailing, the unorganised retailing has dominated the Indian landscape so far. According to an estimate the unorganized retail sector has 97% presence whereas the organized accounts for merely 3% . Industry has already predicted a trillion dollar market in retail sector in India by 2010. However, the retail industry in India is undergoing a major shake-up as the country is witnessing a retail revolution. The old traditional formats are slowly changing into more complex and bigger formats. Malls and mega malls are coming up in almost all the places be it metros or the smaller cities, across the length and breadth of the country. A comparative change can be seen with the help of graphical study given below.

Source: Ernst &Young, The Great Indian Retail Story, 2006.

A McKinsey report on India (2004) says organized retailing would increase the efficiency and productivity of entire gamut of economic activities, and would help in achieving higher GDP growth. At 6%, the share of employment of retail in India is low, even when compared to Brazil (14%), and Poland (12%).Govt of India's plan of changing the FDI guidelines in this sector speaks of the importance attached to retailing. Recently moves by big corporate houses like Reliance Industries has further fuelled the major investments in retail sector. A strategic alliance, land acquisitions in prime areas give the essence of the mood in this sector. Both MNCs and Indian firms want to get their share of this burgeoning pie. Notable in Indian firms are Pantaloons Retail & Big Bazaar, Trent's Westside, Shopper's stop, Reliance and Subhiskha, Wills Lifestyle stores, Caf Coffee Day, which are present in India in different retail formats. Wal-Mart stores have just started operations in India. Some leading retail coffee chains of the world like Starbucks, Barnies are planning to expand in a major way in India. 2.0 THE INDIAN RETAIL SECTOR India is the country having the most unorganized retail market. Traditionally it was a family's livelihood, with their shop in the front and house at the back, while they run the retail business.More than 99% retailer's function in less than 500 square feet of shopping space. Global retail consultants KSA Technopak have estimated that organized retailing in India is expected to touch Rs 35,000 crore in the year 2005-06. The Indian retail sector is estimated at around Rs 900,000 crore, of which the organized sector accounts for a mere 2 per cent indicating a huge potential market opportunity that is lying in the waiting for the consumer-savvy organized retailer. Purchasing power of Indian urban consumer is growing and branded merchandise in categories like Apparels, Cosmetics, Shoes, Watches, Beverages, Food and even Jewellery, are slowly becoming lifestyle products that are widely accepted by the urban Indian consumer. Indian retailers need to advantage of this growth and aiming to grow, diversify and introduce new formats have to pay more attention to the brand building process. The emphasis here is on retail as a brand rather than retailers selling brands. The focus should be on branding the retail business itself.There is no doubt that the Indian retail scene is booming. A number of large corporate houses Tata's, Raheja's, Piramals's, Goenka's have already made their foray into this arena, with beauty and health stores, supermarkets, self-service music stores, new age book stores, every-day-low-price stores, computers and peripherals stores, office equipment stores and home/building construction stores. Today the organized players have attacked every retail category. The Indian retail scene has witnessed too many players in too short a time, crowding several categories without looking at their core competencies or having a well thought out branding strategy. The growth rate of super market sales has been 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. With growth in income levels, Indians have started spending more on health and beauty products. Here also small, single-outlet retailers dominate the market. In recent years, a few retail chains specialised 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 .Numerous clothing and footwear shops in shopping centres 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. With rapid urbanization, and changing patterns of consumer tastes and preferences, it is unlikely that the traditional outlets will survive the test of time. Despite the large size of this market, very few large and modern retailers have established specialized stores for products. There seems to be a considerable potential for the entry or expansion of specialized retail chains in the country. 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. 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. A strong impetus to the growth of retail industry is witnessed by economic boom and driver of key trends in urban as well as rural India. 2.1 Opportunities in various segments:These are different segments cercerned with food, beverage, grocery, fashion & life style etc.it can be discussed separately: Food Retailing Segment: The Food World (FW) supermarket chain has been one of the pioneers in organized food retailing in India. Before FW entered the food retailing market, it carried out an extensive survey in consumer attitude towards retailing. An important finding of the survey was that in terms of overall satisfaction, traditional Indian grocery stores scored 5 6 on a 10-point scale. FW believed that this was largely due to the absence of organized retailing and low brand proliferation. The company thus decided to offer people a pleasant shopping experience and work towards making grocery shopping less cumbersome. The main challenge for FW was to alter the existing mindset of Indians with respect to price and value and add excitement to grocery shopping. On the basis of the above information, FW defined its objective as: "To offer the Indian housewife the freedom to choose from a wide range of products at a convenient location in a clean, bright, and functional ambience without a price penalty." Initially, the target markets were identified as neighbourhoods that had at least 4,000 households with an average monthly income of more than Rs. 4,000. For this kind of customer base, FW needed to start operations in a metropolitan city. Considering the fact that the cost of real estate was low in Southern India, FW chose Chennai, Hyderabad and Bangalore as initial locations for setting up FW stores. FW adopted a self service format for its stores, which typically had around 4500 sq ft of selling space. The designing of the stores was given special attention and a uniform look was adopted for all the stores. The colors red and yellow (as used in the FW logo) were used liberally while designing the stores. To give the outlets an up market look, the interiors were kept completely visible to the public by using huge glass panes for the frontage. The interiors were kept brightly lit and emphasis was given to creating a clean, pleasant ambience. All the outlets were air conditioned and played popular music continuously. All this was done with the objective of providing an enjoyable and refreshing shopping experience to customers. The merchandise primarily comprised groceries, personal care products, kitchenware and tableware. Over the years, this list was expanded to include music, magazines and a few other product categories to cater to a wider customer base. Every item in the store was marked individually with both price and bar codes. Separate payment counters were set up for people planning to pay through credit/debit cards and for people buying only 3 5 items. FW also entered into alliances with the fast food major, Pizzas Corner and the satellite radio broadcasting company, World Space. While Pizza Corner sold pizzas from FW outlets. World space displayed and sold

its services and products at the stores. Such tie ups and promotional exercise have become a routine feature for FW. Retailing of Lifestyle Products segment: Shopper's Stop Limited (SSL) is the pioneer in India's organized retail revolution. SSL redefined the concept of 'shopping' by making efforts to provide the Indian consumers with an international shopping experience. In 1991, SSL set up its first outlet in Mumbai, Maharashtra, with a floor space of around 4,000 sq ft. Since then, SSL has established its stores in all major cities in India with store space ranging from 18,000 sq ft to 60,000 sq ft. SSL stores provide a complete and in depth range of fashion and lifestyle products and accessories to meet the lifestyle pattern of every shopper. Around 85% of SSL's merchandise is branded and it stocks more than 150 national and international brands. Within a short period, SSL emerged as the largest single retailer for Levis, Pepe, Lee, Arrow, Zodiac, Reebok, Nike, Parker, Ray Ban, Swatch, Chambor, Revlon, Lego, Mattel and many other leading brands. The company closely monitored the movement of all brands, and if any brand failed to meet customer expectations, it was phased out. SSL also launched a range of private labels like Life, Kashish and Karrot in the premium classic, value classic and value fashion segments. A team of designers were recruited from India's premier fashion design institutes to develop private labels. Earlier, Indian customers were used to shopping for their apparel and accessories at various shops (as no shops offered all the products at one place), which paid little or no attention to the ambience or the comfort of their customers. SSL, apart from offering a complete range of garments and accessories, included central air conditioning, impeccably maintained trial rooms, beautiful rest rooms, play area for children, large car parking, in store caf, and other services such as alterations, goods exchanged without any questions and gift wrapping. As a part of differentiating its product offerings from that of other major lifestyle stores such as Life Style and Globus, SSL also began conducting many events and promotion campaigns to combine entertainment with shopping. These included the 101 day Seven Wonders of the World Festival, Surprise Sale, Salon Streets, and Men in Vogue, Great Store Robbery, Campus Stoppers and Valentine Promotion. One of the major events offered by SSL, which attracts hoards of customers, is Parikrama a crafts fare aimed at showcasing he diverse ethnic arts and traditions in India. Coffee Parlors Barista and Caf Coffee Day: Being a traditional tea consuming country, the average coffee consumption in India was quite low at 10 cups per person annually. However, in the late 1990s, a silent coffee revolution was sweeping urban India. Coffee drinking was increasingly becoming a statement of the young and upwardly mobile Indians. Coffee bars, an unheard concept till the mid 1990s had become big business. There was a transition from the conventional and outdated coffee house to more sophisticated and trendy coffee bar chains like Barista, Caf Coffee Day, Qwiky's and Caf Nescafe. By the turn of 20th century, nontraditional coffee retailing outlets like coffee bar chains, coffee vending machines and specialty coffee powder shops succeeded in making coffee one of the most desirable beverages in urban India. The coffee parlors were an instant hit across all major metros and cities in India, as they offered an entirely new experience to customers. Barista entered the Indian coffee retailing market in 2000 and decided to position itself as a lifestyle brand. The company targeted the premium segment youth, as it realized that it wasn't only coffee that its target segment was looking form, but also for a place to hang around comfortably, where they could be themselves and do whatever they wanted, such as reading a book, writing a letter, or simply chilling out. Hence, it recreated the ambience and experience of the typical Italian neighborhood espresso bars in India, with bright, trendy and comfortable interiors. It promoted a social and interactive environment, where one can play games like chess and scrabble, read books, listen to music, enjoy arts, surf the Net

and sip an Espresso Italiano, or Iced Caf Mocha. Fun posters, message boards and TV screens with music videos, all set the right mood. An open kitchen behind the bar enables one to watch the coffee actually being made. To ensure superior quality of its product offerings, Barista used only top grade Arabica beans to make coffee and also invited brew masters from Italy to create new blends. The employee orientation program at Barista specially focused on enabling the team to understand and avoid the attitudes and behaviors in traditional restaurants that restrain customer from being himself/herself. Since 2002, as a part of differentiating its services, Barista began offering Italian food at its outlets and also entered into tie ups with Planet M, Crossword and Ebony to set up Espresso Corners at these places. During this period, to expand the reach of its services, the company also opened outlets in banks (ABN Amro), movie theaters (PVR in Delhi), offices (HSBC and GE), airports and in hotels. Vending Machines Nescafe, Cadbury E-Cuba and Tata Tea: Nestle popularized the coffee kiosk concept in India, where it offered coffee through its vending machines. Nestle installed hundreds of Nescafe kiosks at places such as shopping malls, cinema halls, food centers and office buildings. Its vending machines came in different sizes and styles to match the needs of consumers at different locations. For instance Nestl's high capacity multitask vending machines provided snacks, drinks and confectionery items. The kiosk model enabled consumers to have hot coffee instantly, whether they were shopping or at office, just by the click of buttons. Most offices buy the Nescafe vending machines to provide their employees with free coffee. Cadbury India, with the help of telecommunications companies BPL Mobile and E-Cuba India, launched chocolate vending machine operated by mobile handsets in select corporate and congregation points in Mumbai. Since 2002 the concept of vending machines to retail has picked up momentum in India. The Tata were the first in India to establish vending machines for tea, followed by HLL 'Taj Mahal' and Lipton vending machines and coca-cola international tea brand 'Georgia'vending machines. These vending machines were placed at many strategic places such as airports, railways stations, shopping malls and complexes, restaurants and food outlets. Beauty and Healthcare retailing segment: The Shahnaz Hussian group founded and led by Shahnaz Hussian has been one of the pioneers of organized beauty care retailing in India. The group offers exclusive salon treatment geared to individual needs as well as a number of commercial formulations for the treatment of specific problems like acne, pimples, pigmentation, dehydration, apopecia etc., it employs about 4200 people in 650 salons spread across 104 countries with a strong presence in Asia, US and the Middle east. The group formulates and markets over 400 products for all age groups and for a variety of beauty and health problems or needs. The group sophisticated R&D units develop the products and put them through stringent quality control tests. These products are environment friendly and no testing is done on animals. All the products offered by the group are entirely natural and carry the guarantee of purity and safety. 2.2 Key Trends in Urban India: * Retailing in India is witnessing a huge revamping exercise.

* Estimated to be US$ 200 billion, of which organized retailing (i.e. modern trade) makes up 3 percent or US$ 6.4 billion. * Ranked second in a Global Retail Development Index of 30 developing countries drawn up by AT Kearney.

* India is rated the fifth most attractive emerging retail market: a potential * Food and apparel retailing key drivers of growth.

goldmine

* Organized retailing in India has been largely an urban phenomenon with affluent classes and growing number of double-income households. 2.3 Key Trends in Rural India: * Rural markets emerging as a huge opportunity for retailers reflected in the share of the rural market across most categories of consumption * ITC is experimenting with retailing through its e-Choupal and Choupal Sagar rural hypermarkets. 3.0 The Hidden Challenges Modern retailing is all about directly having "first hand experience" with customers, giving them such a satiable experience that they would like to enjoy again and again. Providing great experience to customers can easily be said than done. Thus challenges like retail differentiation, merchandising mix, supply chain management and competition from supplier's brands are the talk of the day. In India, as we are moving to the next phase of retail development, each endeavor to offer experiential shopping. One of the key observations by customers is that it is very difficult to find the uniqueness of retail stores. The problem: retail differentiation. The next problem in setting up organized retail operations is that of supply chain logistics. India lacks a strong supply chain when compared to Europe or the USA. The existing supply chain has too many intermediaries: Typical supply chain looks like:- Manufacturer - National distributor - Regional distributor Local wholesaler - Retailer - Consumer. This implies that global retail chains will have to build a supply chain network from scratch. This might run foul with the existing supply chain operators. In addition to fragmented supply chain, the trucking and transportation system is antiquated. The concept of container trucks, automated warehousing is yet to take root in India. The result: significant losses/damages during shipping. Merchandising planning is one of the biggest challenges that any multi store retailer faces. Getting the right mix of product, which is store specific across organization, is a combination of customer insight, allocation and assortment techniques. The private label will continue to compete with brand leaders. So supplier's brand wiil take their own way because they have a established brand image from last decades and the reasons can be attributed to better customer experience, value vs. price, aspiration, innovation, accessibility of supplier's brand. 3.1The following factor can be considered as Pros and Cons of Retailing. Employment opportunities Urban Employment :- Employment opportunities for youth, According to PricewaterhouseCoopers (PwC) it is said that retailing will create additional eight million jobs though retailing In India and will benefit population by employing local (Urban) youth and others directly or indirectly. But it is feared that our friendly neighborhood kirana shops where, one can make purchases in small quantities and return the goods if not found good and many more friendly services, will be on the verge of disappearance there by creating a vacuum which cannot be filled by the big organized one. Rural Employment : - Contract Farming is the new mantra of organized retailing in India. There is no doubt that the farmers are in some way benefited by contract faming where in, the latest technology and equipment and scientific farming is done by farmers with the help of retailers there by increasing the productivity in agriculture, and uniform payment for their produce through out the crop irrespective of fluctuations in market price. But one should also focus on the freedom of farmers to sell their produce at will. It is evident in India that rich farmers who possess vast lands are the beneficiary but farmers who

have little land and dependent on other trades are marginally benefited by this kind of business. Ashok Rajgopal director (retail industry) for Ernst & Young said, " By targeting the youth population in India, retailers will be investing for the future as they will be able to influence and create loyalty from the start." What small retailers and customers say? "I've lost half my business," says Rajiv Das, who has been selling fruit and vegetables for 18 years and now has to contend with a new Reliance store a three-minute walk away. "I'm not able to fight, but I would if I could." Similarly, Selva Kumar, who runs a kirana 100 meters from a Reliance outlet in Chennai, says, "We have lost 40 percent of our business, and that's the future. We're not closing, but there'll be no growth." "It's good value here, better than other supermarkets, but there are difficulties with the quality, especially apples and papayas," says Rama Tibrewal, a middle-aged Reliance shopper in Hyderabad. Competition The organized retailers are financially sound in investing in Big Business promotion, aesthetic looks, technology and Supply chain management etc. Its business principle "The bigger the better". The Bigger retailers the better it can counter competition from small retailers and sustain business. But the unorganized retailer cannot compete and are trying fight hard against organized retailers however they cannot afford to invest heavy on technology and other inputs. Due to tough competition, Customer have lot many opportunities and choices to go for, unless local retailers offer them best prices they wont be interested to come back, unorganized retailers stores are finally waking up to become competitive and try to attract more consumers. Competitive trend "Small pharmacy stores have teamed up to implement steps to fight back the competition from large chains. The All-India Chemist and Druggist Association (AIODC) are conducting talks with several companies such as Dr Lal Path Labs, Dr Reddy's Labs and Thyrocare Pathology to offer diagnostic facilities". "Metro Cash & Carry will be starting a training school for kirana stores, in an effort to strengthen them and their business practices to take on the competition from organized retailers". Geraro Monzillo, the deputy managing director. Government's Contribution Government of India permitted up to 51% foreign direct investment in single-brand retailing in the country. This rule, to some extent saved the existence of unorganized retailers but in the long run there is a possibility that Indian Government may allow 100% FDI there by permitting to setup multinational retail operators which may wipe out the existence of unorganized sector. Government's ignorance towards the needs of the unrecognized retailers and in one way discouraging them by not giving enough support in the form of financial, infrastructural, distribution, storage, transport, trade centers and other facilities makes it an awful situations for unorganized retailers and this may lead to catastrophe. Growing Economic Disparity In India more than 60% population is engaged in farming, which is major chunk of income generated and it is the equivalent to half of other sectors but disparities in income levels in India specifically rural India remain as wide as ever. Nevertheless employment will grow in all sectors and which will be of labor incentive. However, Work force of women in agricultural and services sector will enhance pressure on rural

jobs in near future. "Much of India is still mired in poverty, but just over a decade after the Indian economy began shaking off its statistic shackles and opening to the outside world, it is booming.... The growth of the past decade has put more money in the pockets of an expanding middle class, 250 million to 300 million strong, and more choices in front of them" (Despite Widespread Poverty, a Consumer Class Emerges in India, NYT 10/20/03). 4.0 Strategies 4.1: Right Positioning The effectiveness of the mall developer's communication of the offering to the target customers determines how well the mall gets positioned in their minds. At this stage, the communication has to be more of relative nature. This implies that the message conveyed to the target customers must be effective enough in differentiating the mall's offering from that of its competitors without even naming them. The message should also clearly convey to the target audience that the mall offers them exactly what they call the complete shopping-cum-entertainment point that meets all their expectations. The core purpose is to inform the target customers about the offering of the mall, persuade them to visit the mall and remind them about the mall. The mall developer can create awareness about the offering among the target customers in a number of ways. Various communication tools available to the mall developer for this purpose may include advertising, buzz marketing (WoM), celebrity endorsement, use of print media, press releases and viral marketing .Once the message is being conveyed through these channels, the mall developer must add a personal touch to his message by carrying out a door-to-door campaign in order to reinforce the message. 4.2: Effective Visual Communication Retailer has to give more emphasis on display visual merchandising, lighting, signages and specialized props. The visual communication strategy might be planned and also be brand positioned. Theme or lifestyle displays using stylized mannequins and props, which are based on a season or an event, are used to promote collections and have to change to keep touch with the trend. The merchandise presentation ought to be very creative and displays are often on non-standard fixtures and forms to generate interest and add on attitude to the merchandise. 4.3: Strong Supply Chain Critical components of supply chain planning applications can help manufacturers meet retailers' service levels and maintain profit margins. Retailer has to develop innovative solution for managing the supply chain problems. Innovative solutions like performance management, frequent sales operation management, demand planning, inventory planning, production planning, lean systems and staff should help retailers to get advantage over competitors. Importance of Supply Chain and Logistics Management One of the most important challenge in organized retail in India is faced by poor supply chain and logistics management. The importance can be understood by the fact that the logistics management cost component in India is as high as 7% -10% against the global average of 4% - 5% of the total retail price. Therefore, the margins in the retail sector can be improved by 3% - 5% by just improving the supply chain and logistics management. In India, with demand for end-to-end logistics solutions far outstripping supply, the logistics market for organised retail is pegged at $50 million and is growing at 16%. It is expected to reach $120-$130 million by 2010. Organised retail on the other hand is growing at 400% and is expected to reach around $30 billion by 2010.Even supply chain and logistics firms like Hong Kong based Heng Tai Consumables and ABS Procurement Co and ACM China (the greenhouse specialist) is also eying the opportunity for managing the supplies. The supply chain management is logistics aspect of a value delivery chain. It comprises all of the parties

that participate in the retail logistics process: Manufacturers, Wholesalers, Third Party Specialists like Shippers, Order Fulfillment House etc. and the Retailer. Here, logistics is the total process of planning, implementing and coordinating the physical movement of merchandise from manufacturer to retailer to customer in the most timely, effective and cost efficient manner possible. Logistics regards order processing and fulfillment, transportation, warehousing, customer service and inventory management as interdependent functions in the value delivery chain. It oversees inventory management decisions as items travel through a retail supply chain. If a logistics system works well, the retail firm reduces stock outs, hold down inventories and improve customer service all at the same time. Logistics and Supply Chain enables an organized retailer to move or store products more effectively. Efficient logistics management not only prevents needless movement of goods, vehicles transferring products back and forth; but also frees up storage space for more productive use. Retail analysts say on-time order replenishments will become even more critical once the Wal-Mart/ Bharti combine begins operations - the American retailer works almost entirely on cross-docking and is likely to demand higher service levels, including potential levies for delays in shipment. The efficiency and effectiveness of supply chain and logistics management can also be understood by the fact that m odern retail stores maintain lower inventories than traditional retail. In India, generally in the traditional kirana stores, three weeks inventories are kept; while in a modern retail store like Hypercity, it's nine days and it's under two weeks for Food Bazaar. Now, it is beneficial for both the manufacturer as well as the retailer. If we go through the following food supply chain in India, we find that a lot can be improved by maintaining the supply chain and logistics. 4.4: Changing the Perception Retailers benefit only if consumers perceive their store brands to have consistent and comparable quality and availability in relation to branded products. Retailer has to provide more assortments for private level brands to compete with supplier's brand. New product development, aggressive retail mix as well as everyday low pricing strategy can be the strategy to get edge over supplier's brand. 5.0 Conclusion: In their preparation to face fierce competitive pressure, Indian retailers must come to recognize the value of building their own stores as brands to reinforce their marketing Positioning, to communicate quality as well as value for money. Sustainable competitive advantage will be dependent on translating core values combining products, image and reputation into a coherent retail brand strategy. With the generous use of Global and Local Experiences, Indian retailers are going to improve their bottom lines with efficient management of Supply Chain and Logistics. At the same time, Indian Retailers like Future Group with retail stores like Big Bazaar, Pantaloons and Reliance Retail are also going to show the world as to how it can be managed in a more innovative and efficient manner. The retail sector in India is witnessing a huge revamping exercise as traditional markets make a way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Western style malls have begun appearing in metros and second-rung cities which introduced the Indian consumer to a shopping experience like never before. Rated the fifth most attractive emerging retail market, India is being seen as a potential goldmine. It has been ranked 2nd in Global Retail Development Index of 30 developing countries drawn up by A.T. Kearney. Government of India has also opened the door for the retailing giants to enter into the markets. Many foreign investors are also showing keen interest to enter into the Indian market. With the flow of FDI, retail sector will have to see a many changes in the coming years.

Retailing in India
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A textile retail store in India

A fish retail store in West Bengal, India

A food staple retail shop in Pushkar, India

Retailing in India is one of the pillars of its economy and accounts for about 15% of its GDP. [1] The Indian retail market is estimated to be US$ 450 billion and one of the top five retail markets in the world by economic value. India is one of the fastest growing retail market in the world, with 1.2 billion people.[2][3] India's retailing industry is essentially owner manned small shops. In 2010, larger format convenience stores and supermarkets accounted for about 4 percent of the industry, and these were present only in large urban centers. India's retail and logistics industry employs about 40 million Indians (3.3% of Indian population). Until 2011, Indian central government denied foreign direct investment (FDI) in multi-brand retail, forbidding foreign groups from any ownership in supermarkets, convenience stores or any retail outlets. Even single-brand retail was limited to 51% ownership and a bureaucratic process. In November 2011, India's central government announced retail reforms for both multi-brand stores and single-brand stores. These market reforms paved the way for retail innovation and competition with multi-brand retailers such as Walmart, Carrefour and Tesco, as well single brand majors such as IKEA, Nike, and Apple.[4] The announcement sparked intense activism, both in opposition and in support of the reforms. In December 2011, under pressure from the opposition, Indian government placed the retail reforms on hold till it reaches a consensus.[5] In January 2012, India approved reforms for single-brand stores welcoming anyone in the world to innovate in Indian retail market with 100% ownership, but imposed the requirement that the single brand retailer source 30 percent of its goods from India. Indian government continues the hold on retail reforms for multi-brand stores.[6] IKEA announced in January that it is putting on hold its plan to open stores in India because of the 30 percent requirement. [7] Fitch believes that the 30 percent requirement is likely to significantly delay if not prevent most single brand majors from Europe, USA and Japan from opening stores and creating associated jobs in India.

Contents

[hide] 1 Local terms 2 Background 3 Growth 3.1 Growth over 1997-2010 3.2 Growth after 2011

4 The Indian Retail Market 5 Major Indian Retailers 6 Challenges 7 India retail reforms 7.1 Indian retail reforms on hold 7.2 Single-brand retail reforms approved

8 Social impact and controversy with retail reforms 8.1 Controversy over Indian retail reforms 8.2 Opposition to retail reforms 8.3 Support for retail reforms 8.3.1 Farmer groups 8.3.2 Economists and entrepreneurs 8.3.3 Chief Ministers of Indian states 8.3.4 Current supermarkets

9 See also 10 External links 11 References

[edit] Local terms


Organised retailing, in India, refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the publicly-traded supermarkets, corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses. Unorganised retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local mom and pop store, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc.[8] Organised retailing was absent in most rural and small towns of India in 2010. Supermarkets and similar organized retail accounted for just 4% of the market.[4]

[edit] Background

A vegetable retail market in Kerela, India on a sunny day; During monsoons, vendors experience more produce spoilage.
Most Indian shopping takes place in open markets or millions of small, independent grocery and retail shops. Shoppers typically stand outside the retail shop, ask for what they want, and can not pick or examine a product from the shelf. Access to the shelf or product storage area is limited. Once the shopper requests the food staple or household product they are looking for, the shopkeeper goes to the container or shelf or to the back of the store, brings it out and offers it for sale to the shopper. Often the shopkeeper may substitute the product, claiming that it is similar or equivalent to the product the consumer is asking for. The product typically has no price label in these small retail shops; although some products do have a manufactured suggested retail price (MSRP) pre-printed on the packaging. The shopkeeper prices the food staple and household products arbitrarily, and two consumers may pay different prices for the same product on the same day. Price is sometimes negotiated between the shopper and shopkeeper. The shoppers do not have time to examine the product label, and do not have a choice to make an informed decision between competitive products. India's retail and logistics industry, organized and unorganized in combination, employs about 40 million Indians (3.3% of Indian population). [9] The typical Indian retail shops are very small. Over 14 million outlets operate in the country and only 4% of them being larger than 500 sq ft (46 m2) in size. India has about 11 shop outlets for every 1000 people. Vast majority of the unorganized retail shops in India employ family members, do not have the scale to procure or transport products at high volume wholesale level, have limited to no quality control or fake-versus-authentic product screening technology and have no training on safe and hygienic storage, packaging or logistics. The unorganized retail shops source their products from a chain of middlemen who mark up the product as it moves from farmer or producer to the consumer. The unorganized retail shops typically offer no after-sales support or service. Finally, most transactions at unorganized retail shops are done with cash, with all sales being final. Until the 1990s, regulations prevented innovation and entrepreneurship in Indian retailing. Some retails faced complying with over thirty regulations such as "signboard licences" and "anti-hoarding measures" before they could open doors. There are taxes for moving goods to states, from states, and even within states in some cases. Farmers and producers had to go through middlemen monopolies. The logistics and infrastructure was very poor, with losses exceeding 30 percent. Through the 1990s, India introduced widespread free market reforms, including some related to retail. Between 2000 to 2010, consumers in select Indian cities have gradually begun to experience the quality, choice, convenience and benefits of organized retail industry.

[edit] Growth

An organized retail store in Ahmedabad (ca. 2009)

Customers inside a retail store in Kolkata (ca. 2011)


[edit] Growth over 1997-2010
India in 1997 allowed foreign direct investment (FDI) in cash and carry wholesale. Then, it required government approval. The approval requirement was relaxed, and automatic permission was granted in 2006. Between 2000 to 2010, Indian retail attracted about $1.8 billion in foreign direct investment, representing a very small 1.5% of total investment flow into India.[10] Single brand retailing attracted 94 proposals between 2006 and 2010, of which 57 were approved and implemented. For a country of 1.2 billion people, this is a very small number. Some claim one of the primary restraint inhibiting better participation was that India required single brand retailers to limit their ownership in Indian outlets to 51%. China in contrast allows 100% ownership by foreign companies in both single brand and multi-brand retail presence. Indian retail has experienced limited growth, and its spoilage of food harvest is amongst the highest in the world, because of very limited integrated cold-chain and other infrastructure. India has only 5386 stand-alone cold storages, having a total capacity of 23.6 million metric tons. However, 80 percent of this storage is used only for potatoes. The remaining infrastructure capacity is less than 1% of the annual farm output of India, and grossly inadequate during peak harvest seasons. This leads to about 30% losses in certain perishable agricultural output in India, on average, every year.[10] Indian laws already allow foreign direct investment in cold-chain infrastructure to the extent of 100 percent. There has been no interest in foreign direct investment in cold storage infrastructure build out. Experts claim that cold storage infrastructure will become economically viable only when there is strong and contractually-binding demand from organized retail. The risk of cold storing perishable food, without an assured way to move and sell it, puts the economic viability of expensive cold storage in doubt. In the absence of organized retail competition and with a ban on foreign direct investment in multi-brand retailers, foreign direct investments are unlikely to begin in cold storage and farm logistics infrastructure. Until 2010, intermediaries and middlemen in India have dominated the value chain. Due to a number of intermediaries involved in the traditional Indian retail chain, norms are flouted and pricing lacks transparency. Small Indian farmers realize only 1/3rd of the total price paid by the final Indian consumer, as against 2/3rd by farmers in nations with a higher share of organized retail. [10] The 60%+ margins for middlemen and traditional retail shops have limited growth and prevented innovation in Indian retail industry.

India has had years of debate and discussions on the risks and prudence of allowing innovation and competition within its retail industry. [11] Numerous economists repeatedly recommended to the Government of India that legal restrictions on organized retail must be removed, and the retail industry in India must be opened to competition. For example, in an invited address to the Indian parliament in December 2010, Jagdish Bhagwati, Professor of Economics and Law at the Columbia University analysed the relationship between growth and poverty reduction, then urged the Indian parliament to extend economic reforms by freeing up of the retail sector, further liberalisation of trade in all sectors, and introducing labor market reforms. Such reforms Professor Bhagwati argued will accelerate economic growth and make a sustainable difference in the life of India's poorest.,[12][13] A 2007 report noted that an increasing number of people in India are turning to the services sector for employment due to the relative low compensation offered by the traditional agriculture and manufacturing sectors. The organized retail market is growing at 35 percent annually while growth of unorganized retail sector is pegged at 6 percent.[14] The Retail Business in India is currently at the point of inflection. As of 2008, rapid change with investments to the tune of US $ 25 billion were being planned by several Indian and multinational companies in the next 5 years. It is a huge industry in terms of size and according to India Brand Equity Foundation (IBEF), it is valued at about US$ 395.96 billion. Organised retail is expected to garner about 16-18 percent of the total retail market (US $ 65-75 billion) in the next 5 years. India has topped the A.T. Kearneys annual Global Retail Development Index (GRDI) for the third consecutive year, maintaining its position as the most attractive market for retail investment. The Indian economy has registered a growth of 8% for 2007. The predictions for 2008 is 7.9%.[15] The enormous growth of the retail industry has created a huge demand for real estate. Property developers are creating retail real estate at an aggressive pace and by 2010, 300 malls are estimated to be operational in the country.[16]

[edit] Growth after 2011


Before 2011, India had prevented innovation and organized competition in its consumer retail industry. Several studies claim that the lack of infrastructure and competitive retail industry is a key cause of India's persistently high inflation. Furthermore, because of unorganized retail, in a nation where malnutrition remains a serious problem, food waste is rife. Well over 30% of food staples and perishable goods produced in India spoils because poor infrastructure and small retail outlets prevent hygienic storage and movement of the goods from the farmer to the consumer.,,[17][18][19] One report estimates the 2011 Indian retail market as generating sales of about $470 billion a year, of which a miniscule $27 billion comes from organized retail such as supermarkets, chain stores with centralized operations and shops in malls. The opening of retail industry to free market competition, some claim will enable rapid growth in retail sector of Indian economy. Others believe the growth of Indian retail industry will take time, with organized retail possibly needing a decade to grow to a 25% share. [19] A 25% market share, given the expected growth of Indian retail industry through 2021, is estimated to be over $250 billion a year: a revenue equal to the 2009 revenue share from Japan for the world's 250 largest retailers.,[20][21] The Economist forecasts that Indian retail will nearly double in economic value, expanding by about $400 billion by 2020. [22] The projected increase alone is equivalent to the current retail market size of France. In 2011, food accounted for 70% of Indian retail, but was under-represented by organized retail. A.T. Kearney estimates India's organized retail had a 31% share in clothing and apparel, while the home supplies retail was growing between 20% to 30% per year. [23] These data correspond to retail prospects prior to November announcement of the retail reform.

[edit] The Indian Retail Market

This section requires expansion.


Indian market has high complexities in terms of a wide geographic spread and distinct consumer preferences varying by each region necessitating a need for localization even within the geographic zones. India has highest number of outlets per person (7 per thousand) Indian retail space per capita at 2 sq ft (0.19 m2)/ person is lowest in the world Indian retail density of 6 percent is highest in the world. [24] 1.8 million households in India have an annual income of over 45 lakh (US$99,000).[25]

While India presents a large market opportunity given the number and increasing purchasing power of consumers, there are significant challenges as well given that over 90% of trade is conducted through independent local stores. Challenges include: Geographically dispersed population, small ticket sizes, complex distribution network, little use of IT systems, limitations of mass media and existence of counterfeit goods.[26]

[edit] Major Indian Retailers

This section requires expansion.


[dated info]

Checkout lanes, organized retail in Malad, Mumbai


Indian apparel retailers are increasing their brand presence overseas, particularly in developed markets. While most have identified a gap in countries in West Asia and Africa, some majors are also looking at the US and Europe. Arvind Brands, Madura Garments, Spykar Lifestyle and Royal Classic Polo are busy chalking out foreign expansion plans through the distribution route and standalone stores as well. Another denim wear brand, Spykar, which is now moving towards becoming a casualwear lifestyle brand, has launched its store in Melbourne recently. It plans to open three stores in London by 2008-end.[27] The low-intensity entry of the diversified Mahindra Group into retail is unique because it plans to focus on lifestyle products. The Mahindra Group is the fourth largest Indian business group to enter the business of retail after Reliance Industries Ltd, the Aditya Birla Group, and Bharti Enterprises Ltd. The other three groups are focusing either on perishables and groceries, or a range of products, or both.

REI AGRO LTD Retail: 6TEN and 6TEN kirana stores Future Groups-Formats: Big Bazaar, Food Bazaar, Pantaloons, Central, Fashion Station, Brand Factory, Depot, aLL, E-Zone etc. Raymond Ltd.: Textiles, The Raymond Shop, Park Avenue, Park Avenue Woman, Parx, Colourplus, Neck Ties & More, Shirts & More etc. Fabindia: Textiles, Home furnishings, handloom apparel, jewellery RP-Sanjiv Goenka Group Retail-Formats: Spencers Hyper, Spencer's Daily, Music World, Au Bon Pain (Internaional bakery cafeteria), Beverly Hills Polo Club The Tata Group-Formats: Westside, Star India Bazaar, Steeljunction, Landmark, Titan Industries with World of Titans showrooms, Tanishq outlets, Croma. Reliance Retail-Formats: Reliance MART, Reliance SUPER, Reliance FRESH, Reliance Footprint, Reliance Living, Reliance Digital, Reliance Jewellery, Reliance Trends, Reliance Autozone, iStore Reliance ADAG Retail-Format: Reliance World K Raheja Corp Group-Formats: Shoppers Stop, Crossword, Hyper City, Inorbit Mall Nilgiris-Formats: Nilgiris supermarket chain

Marks & Spencer: Clothing, lifestyle products, etc. Lifestyle International-Lifestyle, Home Centre, Max, Fun City and International Franchise brand stores. Pyramid Retail-Formats: Pyramid Megastore, TruMart Next retail India Ltd (Consumer Electronics)(www.next.co.in) Vivek Limited Retail Formats: Viveks, Jainsons, Viveks Service Centre, Viveks Safe Deposit Lockers PGC Retail -T-Mart India [1], Switcher, Respect India, Grand India Bazaar,etc., Subhiksha-Formats: Subhiksha supermarket pharmacy and telecom discount chain. Trinethra- Formats: Fabmall supermarket chain and Fabcity hypermarket chain Vishal Retail Group-Formats: Vishal Mega Mart BPCL-Formats: In & Out German Metro Cash & Carry Shoprite Holdings-Formats: Shoprite Hyper Paritala stores bazar: honey shine stores Aditya Birla Group - "More" Outlets Kapas- Cotton garment outlets Nmart Retails with 71 operating Stores till now and total 153 Stores in India and 1 to open in Dubai Shortly. (Expected to be 150 by the end of Aug-2012) (www.nmart.co.in)

Entry of MNCs

A spice market
The world's largest retailer by sales, Wal-Mart Stores Inc and Sunil Mittal's Bharti Enterprises have entered into a joint venture agreement and they are planning to open 10 to 15 cash-and-carry facilities over seven years. The first of the stores, which will sell groceries, consumer appliances and fruits and vegetables to retailers and small businesses, is slated to open in north India by the end of 2008. [28] see also for more Detail Pick/Mller "[2]"</ref> Carrefour, the worlds second largest retailer by sales, is planning to set up two business entities in the country one for its cash-and-carry business and the other a master franchisee which will lend its banner, technical services and know how to an Indian company for direct-toconsumer retail.[29] The worlds fifth largest retailer by sales, Costco Wholesale Corp (Costco) known for its warehouse club model is also interested in coming to India and waiting for the right opportunity.[30]

Opposition to the retailers' plans have argued that livelihoods of small scale and rural vendors would be threatened. However, studies have found that only a limited number of small vendors will be affected and that the benefits of market expansion far outweigh the impact of the new stores.[31] Tesco Plc., plans to set up shop in India with a wholesale cash-and-carry business and will help Indian conglomerate Tata group to grow its hypermarket business.

[edit] Challenges
A McKinsey study claims retail productivity in India is very low compared to international peer measures. For example, the labor productivity in Indian retail was just 6% of the labor productivity in United States in 2010. India's labor productivity in food retailing is about 5% compared to Brazil's 14%; while India's labor productivity in non-food retailing is about 8% compared to Poland's 25%.[32] Total retail employment in India, both organized and unorganized, account for about 6% of Indian labor work force currently - most of which is unorganized. This about a third of levels in United States and Europe; and about half of levels in other emerging economies. A complete expansion of retail sector to levels and productivity similar to other emerging economies and developed economies such as the United States would create over 50 million jobs in India. Training and development of labor and management for higher retail productivity is expected to be a challenge. To become a truly flourishing industry, retailing in India needs to cross the following hurdles:[33]

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. Lack of Retailing Courses and study options Intrinsic complexity of retailing rapid price changes, constant threat of product obsolescence and low margins.

In November 2011, the Indian government announced relaxation of some rules and the opening of retail market to competition.

[edit] India retail reforms


Until 2011, Indian central government denied foreign direct investment (FDI) in multi-brand Indian retail, forbidding foreign groups from any ownership in supermarkets, convenience stores or any retail outlets, to sell multiple products from different brands directly to Indian consumers. The government of Manmohan Singh, prime minister, announced on 24 November 2011 the following:[17][34]

India will allow foreign groups to own up to 51 per cent in "multi-brand retailers", as supermarkets are known in India, in the most radical pro-liberalisation reform passed by an Indian cabinet in years; single brand retailers, such as Apple and Ikea, can own 100 percent of their Indian stores, up from the previous cap of 51 percent; both multi-brand and single brand stores in India will have to source nearly a third of their goods from small and medium-sized Indian suppliers; all multi-brand and single brand stores in India must confine their operations to 53-odd cities with a population over one million, out of some 7935 towns and cities in India. It is expected that these stores will now have full access to over 200 million urban consumers in India; multi-brand retailers must have a minimum investment of US$100 million with at least half of the amount invested in back end infrastructure, including cold chains, refrigeration, transportation, packing, sorting and processing to considerably reduce the post harvest losses and bring remunerative prices to farmers;

the opening of retail competition will be within India's federal structure of government. In other words, the policy is an enabling legal framework for India. The states of India have the prerogative to accept it and implement it, or they can decide to not implement it if they so choose. Actual implementation of policy will be within the parameters of state laws and regulations.

The opening of retail industry to global competition is expected to spur a retail rush to India. It has the potential to transform not only the retailing landscape but also the nation's ailing infrastructure.,[17][35] A Wall Street Journal article claims that fresh investments in Indian organized retail will generate 10 million new jobs between 20122014, and about five to six million of them in logistics alone; even though the retail market is being opened to just 53 cities out of about 8000 towns and cities in India.[35] It is expected to help tame stubbornly high inflation but is likely to be vehemently opposed by millions of small retailers, who see large foreign chains as a threat. The need to control food price inflationaveraging double-digit rises over several yearsprompted the government to open the sector, analysts claim. Hitherto India's food supplies have been controlled by tens of millions of middlemen (less than 5% of Indian population). Traders add huge mark-ups to farm prices, while offering little by way of technical support to help farmers boost their productivity, packaging technology, pushing up retail prices significantly. Analysts said allowing in big foreign retailers would provide an impetus for them to set up modern supply chains, with refrigerated vans, cold storage and more efficient logistics. "I think foreign chains can also bring in humongous logistical benefits and capital," Chandrajit Banerjee, director-general, Confederation of Indian Industry, told Reuters. "The biggest beneficiary would be the small farmers who will be able to improve their productivity by selling directly to large organised players," Mr Banerjee said.

[edit] Indian retail reforms on hold


According to Bloomberg, on 3 December 2011, the Chief Minister of the Indian state of West Bengal, Mamata Banerjee, who is against the policy and whose Trinamool Congress brings 19 votes to the ruling Congress party-led coalition, claimed that Indias government may put the FDI retail reforms on hold until it reaches consensus within the ruling coalition. Reuters reports that this risked a possible dilution of the policy rather than a change of heart.,,[36][37][38] India Today claimed that the resistance to Indian retail reforms is primarily because it has been badly sold, even though it can help fix the exploitation of Indian farmers by the decades-old "arhtiya" and "mandi" monopoly system. India Today claims the policy is good for the small Indian farmer and the Indian consumer.[39] Pratap Mehta, president of the Centre for Policy Research, claimed any U-turn or postponement of retail reforms will cause an immense loss of face to the Congress-led central government of Manmohan Singh. The mom-and-pop farmers of India support these reforms. The consumers of India want the reforms. The government has already annoyed those who oppose change and innovation in retail. By putting retail reforms on hold, the government will additionally alienate much larger segment of India's population supporting FDI. So they will now have the worst of both worlds, claims Mehta.[40] Deepak Parekh, Ashok Ganguly and other economic policy leaders of India, on 4 December 2011, called placing investment and innovation in retail on hold for the sake of vested interests as unfair and detrimental to vast majority in India. They urged farmers, consumers and the common people to raise their voice against this false drama of apprehension against investment and modernising trade in organised retailing. They called upon Indians to come out and strongly support progressive measures and reforms with the same spirit and gusto with which we take the liberties to criticize policies or issues we do not appreciate.[41] Several newspapers claimed on 6 December 2011 that India parliament is expected to shelve retail reforms while the ruling Congress party seeks consensus from the opposition and the Congress party's own coalition partners. Suspension of retail reforms on 7 December 2011 would be, the reports claimed, an embarrassing defeat for the Indian government, suggesting it is weak and ineffective in implementing its ideas.[42] Anand Sharma, India's Commerce and Industry Minister, after a meeting of all political parties on 7 December 2011 said, "The decision to allow foreign direct investment in retail is suspended till consensus is reached with all stakeholders."[5]

[edit] Single-brand retail reforms approved


On January 11, 2012, India approved increased competition and innovation in single-brand retail.[43] The reform seeks to attract investments in production and marketing, improve the availability of goods for the consumer, encourage increased sourcing of goods from India, and enhance competitiveness of Indian enterprises through access to global designs, technologies and management practices. In this announcement, India requires single-brand retailer, with greater than 51% foreign ownership, to source at least 30% of the value of products from Indian small industries, village and cottage industries, artisans and craftsmen. Mikael Ohlsson, chief executive of IKEA, announced IKEA is postponing its plan to open stores in India. He claimed that IKEA's decision reflects Indias requirements that single-brand retailers such as IKEA source 30 percent of their goods from local small and medium-sized companies. This was an obstacle to IKEA's investment in India, and that it will take IKEA some time to source goods and develop reliable supply chains inside India. Ikea announced that it plans to double what it sources from India already for its global product range, to over $1 billion a year, within three years. IKEA in the near term, plans to focus expansion instead in China and Russia, where such restrictions do not exist.[7]

[edit] Social impact and controversy with retail reforms


The November 2011 retail reforms in India have sparked intense activism, both in opposition and in support of the reforms.

[edit] Controversy over Indian retail reforms

A horticultural produce retail market in Kolkata, India; produce loss in these retail formats is very high for perishables
Critics of the Indian retail reforms announcement are making one or more of the following points:,[44][45]

Independent stores will close, leading to massive job losses. Walmart employs very few people in the United States. If allowed to expand in India as much as Walmart has expanded in the United States, few thousand jobs may be created but millions will be lost. Walmart will lower prices to dump goods, get competition out of the way, become a monopoly, then raise prices. We have seen this in the case of the soft drinks industry. Pepsi and Coke came in and wiped out all the domestic brands. India doesn't need foreign retailers, since homegrown companies and traditional markets may be able to do the job. Work will be done by Indians, profits will go to foreigners. Remember East India Company. It entered India as a trader and then took over politically. There will be sterile homogeneity and Indian cities will look like cities anywhere else. The government hasn't built consensus. Organized retail will need workers. Walmart employs 1.4 million people in United States alone.[46] With United States population of about 300 million, and India's population of about 1200 million, if Walmart-like retail companies were to expand in India as much as their presence in the United States, and the staffing level in Indian stores kept at the same level as in the United States stores, Walmart alone would employ 5.6 million Indian citizens. Walmart has a 6.5% market share of the total United States retail. Adjusted for this market share, the expected jobs in future Indian organized retail would total over 85 million. In addition, millions of additional jobs will be created during the building of and the maintenance of retail stores, roads, cold storage centers, software industry, electronic cash registers and other retail supporting organizations. Instead of job losses, retail reforms are likely to be massive boost to Indian job availability.

Supporters claim none of these objections has merit. They claim:[45]

KPMG - one of the world's largest audit companies - finds that in China, the employment in both retail and wholesale trade increased from 4% in 1992 to about 7% in 2001, post China opening its retail to foreign and domestic innovation and competition. In absolute terms, China experienced the creation of 26 million new jobs within 9 years, post China announcing FDI retail reforms. Additionally, contrary to some concerns in China, post retail reforms, the number of traditional small retailers also grew by 30% over 5 years.[10] India needs trillions of dollar to build its infrastructure, hospitals, housing and schools for its growing population. Indian economy is small, with limited surplus capital. Indian government is already operating on budget deficits. It is simply not possible for Indian investors or Indian government to fund this expansion, job creation and growth at the rate India needs. Global investment capital through FDI is necessary. Beyond capital, Indian retail industry needs knowledge and global integration. Global retail leaders, some of which are partly owned by people of Indian origin,[47] can bring this knowledge. Global integration can potentially open export markets for Indian farmers and producers. Walmart, for example, expects to source and export some $1 billion worth of goods from India every year, since it came into Indian wholesale retail market.[48] Walmart, Carrefour, Tesco, Target, Metro, Coop are some of over 350 global retail companies with annual sales over $1 billion. These retail companies have operated for over 30 years in numerous countries. They have not become monopolies. Competition between Walmart-like retailers has kept food prices in check. Canada credits their very low inflation rates to Walmart-effect.[49] Antitrust laws and state regulations, such as those in Indian legal code, have prevented food monopolies from forming anywhere in the world. Price inflation in these countries has been 5 to 10 times lower than price inflation in India. The current consumer price inflation in Europe and the United States is less than 2%, compared to India's double digit inflation. The Pepsi and Coke example is meaningless in the context of Indian beverage market. More competition is lacking because of limited demand. Indian consumer has limited interest in soft drinks. Soft drinks represent less than 5% of Indian beverage market.[50] Indian consumer prefers milk-based, tea and coffee and these account for 90% of Indian beverage market. In these markets, Coca Cola and Pepsi have plenty of competition. The next most important market in India is bottled water, that outsells combined soft drink sales of the Pepsi and Coca Cola. Bottled water, milk, coffee and tea market in India are big markets, and have plenty of domestic brands, European brands like Nestle, as well as Pepsi and Coca Cola. Organized retail too will have numerous brands and strong competition. Comparing 21st century to 18th century is inappropriate. Conditions today are not same as in the 18th century. India wasn't a democracy then, it is today. Global awareness and news media were not the same in 18th century as today. Consider China today. It has over 57 million square feet of retail space owned by foreigners, employing millions of Chinese citizens. Yet, China hasn't become a vassal of imperialists. It enjoys respect from all global powers. Other Asian countries like Malaysia, Taiwan, Thailand and Indonesia see foreign retailers as catalysts of new technology and price reduction; and they have benefitted immensely by welcoming FDI in retail. India too will benefit by integrating with the world, rather than isolating itself.[51]

With 51% FDI limit in multi-brand retailers, nearly half of any profits will remain in India. Any profits will be subject to taxes, and such taxes will reduce Indian government budget deficit. Many years ago, China adopted the retail reform policy India has announced; China allowed FDI in its retail sector. It has taken FDI-financed retailers in China between 5 to 10 years to post profits, in large part because of huge investments they had to make initially. Like China, it is unlikely foreign retailers will earn any profits in India for the first 5 to 10 years. [22] Ultimately, retail companies must earn profits with hard work and by creating value. States have a right to say no to retail FDI within their jurisdiction.[34] States have the right to add restrictions to the retail policy announced before they implement them. Thus, they can place limits on number, market share, style, diversity, homogeneity and other factors to suit their cultural preferences. Finally, in future, states can always introduce regulations and India can change the law to ensure the benefits of retail reforms reach the poorest and weakest segments of Indian society, free and fair retail competition does indeed lead to sharply lower inflation than current levels, small farmers get better prices, jobs created by organized retail pay well, and healthier food becomes available to more households. Inbuilt inefficiencies and wastage in distribution and storage account for why, according to some estimates, as much as 40% of food production doesn't reach consumers. Fifty million children in India are malnourished.[45] Food often rots at farms, in transit, or in antiquated state-run warehouses. Cost-conscious organized retail companies will avoid waste and loss, making food available to the weakest and poorest segment of Indian society, while increasing the income of small farmers. Walmart, for example, since its arrival in Indian wholesale retail market, has successfully introduced "Direct Farm Project" at Haider Nagar near Malerkotla in Punjab, where 110 farmers have been connected with Bharti Walmart for sourcing fresh vegetables directly, thereby reducing waste and bringing fresher produce to Indian consumers.[48] Indian small shops employ workers without proper contracts, making them work long hours. Many unorganized small shops depend on child labour. A wellregulated retail sector will help curtail some of these abuses.[45] Organized retail has enabled a wide range of companies to start and flourish in other countries. For example, in the United States, an organized retailer named Whole Foods has rapidly grown to annual revenues of $9 billion by working closely with farmers, delighting customers and caring about the communities it has stores in.[52] The claims that there is no consensus is without merit. About 10 years ago, when opposition formed the central government, they had proposed retail reforms and suggested India consider FDI in retail. Retail reforms discussions are not new. More recently, retail reforms announced evolved after a process of intense consultations and consensus building intiative. In 2010, the Indian government circulated a discussion paper on FDI retail reforms.[10] On July 6, 2011, another version of the discussion paper was circulated by the central government of India.[53] Comments from a wide cross-section of Indian society including farmers' associations, industry bodies, consumer forums, academics, traders' associations, investors, economists were analyzed in depth before the

matter was discussed by the Committee of Secretaries. By early August 2011, the consensus from various segments of Indian society was overwhelming in favor of retail reforms.[54] The reform outline was presented in India's Rajya Sabha in August 2011. The announced reforms are the result of this consensus process. The current opposition is not helping the consensus process, since consensus is not built by threats and disruption. Those who oppose current retail reforms should help build consensus with ideas and proposals, if they have any. The opposition parties currently disrupting the Indian parliament on retail reforms have not offered even one idea or a single proposal on how India can eliminate food spoilage, reduce inflation, improve food security, feed the poor, improve the incomes of small farmers.
[edit] Opposition to retail reforms
Within a week of retail reform announcement, Indian government has faced a political backlash against its decision to allow competition and 51% ownership of multi-brand organized retail in India. Despite the fact that Salman Khurshid, Indias law minister, claiming that many opposition parties, including the Bharatiya Janata Party, had privately encouraged the government to push through the retail reform, the intense criticism now targets Congress-led coalition government, and its decision to push through one of the biggest economic reforms in years for India. Opposition parties claim supermarket chains are illadvised, unilateral and unwelcome.[55] The opposition claims the entry of organized retailers would lead to their dominance that would decimate local retailers and force millions of people out of work. Mamata Banerjee, the chief minister of West Bengal and the leader of the Trinamool Congress, announced her opposition to retail reform, claiming Some people might support it, but I do not support it. You see America is America and India is India. One has to see what ones capacity is.[56] Other states whose Chief Ministers have either personally announced opposition or announced reluctance to implement the retail reforms: Tamil Nadu, Uttar Pradesh, Bihar and Madhya Pradesh. Chief Ministers of many states have not made a personal statement in opposition or support of India needing retail reforms. Gujarat, Kerala, Karnataka and Rajasthan are examples of these states. Both sides have made conflicting claims about the position of chief ministers from these states. A Wall Street Journal article reports that in Uttar Pradesh, Uma Bharti, a senior leader of the opposition Bharatiya Janata Party (BJP), threatened to "set fire to the first Wal-Mart store whenever it opens;" with her colleague Sushma Swaraj busy tweeting up a storm of misinformation about how Wal-Mart allegedly ruined the U.S. economy.[57] On 1 December 2011, an India-wide "bandh" (close all business in protest) was called by political parties opposing the retail reform. While many organizations responded, the reach of the protest was mixed. [58] The Times of India, a national newspaper of India, claimed people appeared divided over the bandh call and internal rivalry among trade associations led to a mixed response, leaving many stores open daylong and others opening for business as usual in the second half of the day. Even Purti Group, a network of stores owned and operated by Nitin Gadkari were open for business, ignoring the call for bandh. Gadkari is the president of BJP, the key party currently organizing opposition to retail reform.[59] The Hindu, another widely circulated newspaper in India, claimed the opposition's call for a nation wide shutdown on 1 December 2011, in protest of retail reform received a mixed response. Some states had strong support, while most did not. Even in states where opposition political parties are in power, many ignored the call for the shutdown. In Gujarat, Bihar, Delhi, Andhra Pradesh, Haryana, Punjab and Assam the call evoked a partial response. While a number of wholesale markets observed the shutdown, the newspaper claimed a majority of kirana stores and neighborhood small shops for whom apparently the trade bandh had been called remained open, ignoring the shutdown call. Conflicting claims were made by the organizers of the nation wide shutdown. Contrary to eyewitness reports, one Trader union's secretary general claimed traders across the country participated wholeheartedly in the strike.[60] The political parties opposing the retail reforms physically disrupted and forced India's parliament to adjourn again on Friday 2 December 2011. The Indian government refused to cave in, in its attempt to convince through dialogue that retail reforms are necessary to protect the farmers and consumers. Indian parliament has been dysfunctional for the entire week of November 28, 2011 over the opposition to retail reforms.[61]

[edit] Support for retail reforms


In a pan-Indian survey conducted over the weekend of 3 December 2011, overwhelming majority of consumers and farmers in and around ten major cities across the country support the retail reforms. Over 90 per cent of consumers said FDI in retail will bring down prices and offer a wider choice of goods. Nearly 78 per cent of farmers said they will get better prices for their produce from multi-format stores. Over 75 per cent of the traders claimed their marketing resources will continue to be needed to push sales through multiple channels, but they may have to accept lower margins for greater volumes.[62]

[edit] Farmer groups

Various farmer associations in India have announced their support for the retail reforms. For example:

Shriram Gadhve of All India Vegetable Growers Association (AIVGA) claims his organization supports retail reform. He claimed that currently, it is the middlemen commission agents who benefit at the cost of farmers. He urged that the retail reform must focus on rural areas and that farmers receive benefits. Gadhve claimed, "A better cold storage would help since this could help prevent the existing loss of 34% of fruits and vegetables due to inefficient systems in place." AIVGA operates in nine states including Maharashtra, Andhra Pradesh, West Bengal, Bihar, Chattisgarh, Punjab and Haryana with 2,200 farmer outfits as its members.[63] Bharat Krishak Samaj, a farmer association with more than 75,000 members says it supports retail reform. Ajay Vir Jakhar, the chairman of Bharat Krishak Samaj, claimed a monopoly exists between the private guilds of middlemen, commission agents at the sabzi mandis (India's wholesale markets for vegetables and farm produce) and the small shopkeepers in the unorganized retail market. Given the perishable nature of food like fruit and vegetables, without the option of safe and reliable cold storage, the farmer is compelled to sell his crop at whatever price he can get. He cannot wait for a better price and is thus exploited by the current monopoly of middlemen. Jakhar asked that the government make it mandatory for organized retailers to buy 75% of their produce directly from farmers, bypassing the middlemen monopoly and India's sabzi mandi auction system.[63] Consortium of Indian Farmers Associations (CIFA) announced its support for retail reform. Chengal Reddy, secretary general of CIFA claimed retail reform could do lots for Indian farmers. Reddy commented, India has 600 million farmers, 1,200 million consumers and 5 million traders. I fail to understand why political parties are taking an anti-farmer stand and worried about half a million brokers and small shopkeepers. CIFA mainly operates in Andhra Pradesh, Karnataka and Tamil Nadu; but has a growing members from rest of India, including Shetkari Sanghatana in Maharashtra, Rajasthan Kisan Union and Himachal Farmer Organisations. Prakash Thakur, the chairman of the People for Environment Horticulture & Livelihood of Himachal Pradesh, announcing his support for retail reforms claimed FDI is expected to roll out produce storage centers that will increase market access, reduce the number of middlemen and enhance returns to farmers.[64] Highly perishable fruits like cherry, apricot, peaches and plums have a huge demand but are unable to tap the market fully because of lack of cold storage and transport infrastructure. Sales will boost with the opening up of retail. Even though India is the second-largest producer of fruits and vegetables in the world, its storage infrastructure is grossly inadequate, claimed Thakur. Sharad Joshi, founder of Shetkari Sangathana (farmers association), has announced his support for retail reforms.[65] Joshi claims FDI will help the farm sector improve critical infrastructure and integrate farmer-consumer relationship. Today, the existing retail has not been able to supply fresh vegetables to the consumers because they have not invested in the backward integration. When the farmers' produce reaches the end consumer directly, the farmers will naturally be benefited. Joshi feels retail reform is just a first step of

needed agricultural reforms in India, and that the government should pursue additional reforms.
Suryamurthy, in an article in The Telegraph, claims farmer groups across India do not support status quo and seek retail reforms, because with the current retail system the farmer is being exploited. For example, the article claims:[64]

Indian farmers get only one third of the price consumers pay for food staples, the rest is taken as commissions and markups by middlemen and shopkeepers For perishable horticulture produce, average price farmers receive is barely 12 to 15% of the final price consumer pays Indian potato farmers sell their crop for Rs. 2 to 3 a kilogram, while the Indian consumer buys the same potato for Rs. 12 to 20 a kilogram.[66]

[edit] Economists and entrepreneurs


Many business groups in India are welcoming the transformation of a long-protected sector that has left Indian shoppers bereft of the scale and variety of their counterparts in more developed markets.[55] B. Muthuraman, the president of the Confederation of Indian Industry, claimed the retail reform would open enormous opportunities and lead to much-needed investment in cold chain, warehousing and contract farming. Organized retailers will reduce waste by improving logistics, creating cold storage to prevent food spoilage, improve hygiene and product safety, reduce counterfeit trade and tax evasion on expensive item purchases, and create dependable supply chains for secure supply of food staples, fruits and vegetables. They will increase choice and reduce Indias rampant inflation by reducing waste, spoilage and cutting out middlemen. Fresh investment in organized retail, the supporters of retail reform claim will generate 10 million new jobs by 2014, about five to six million of them in logistics alone.[57] Organized retail will offer the small Indian farmer more competing venues to sell his or her products, and increase income from less spoilage and waste. A Food and Agricultural Organization report claims that currently, in India, the small farmer faces significant losses post-harvest at the farm and because of poor roads, inadequate storage technologies, inefficient supply chains and farmer's inability to bring the produce into retail markets dominated by small shopkeepers. These experts claim India's post-harvest losses to exceed 25%, on average, every year for each farmer.,[67][68] Unlike the current monopoly of middlemen buyer, retail reforms offer farmers access to more buyers from organized retail. More buyers will compete for farmers produce leading to better support for farmers and to better bids. With less spoilage of staples and agricultural produce, global retail companies can find and provide additional markets to Indian farmers. Walmart, since its arrival in India's wholesale retail market, already sources and exports about $1 billion worth of Indian goods for its global customers. Not only do these losses reduce food security in India, the study claims that poor farmers and others loose income because of the waste and inefficient retail. Over US$50 billion of additional income can become available to Indian farmers by preventing post-harvest farm losses, improving transport, proper storage and retail. Organized retail is also expected to initiate infrastructure development creating millions of rural and urban jobs for Indias growing population. One study claims that if these post-harvest food staple losses could be eliminated with better infrastructure and retail network in India, enough food would be saved every year to feed 70 to 100 million people over the year.[69] Supporters of retail reform, The Economist claims, say it will increase competition and quality while reducing prices helping to reduce India's rampant inflation that is close to the double digits. These supporters claim that unorganized small shopkeepers will continue to exist alongside large organized supermarkets, because for many Indians they will remain the most accessible and most convenient place to shop.[70] Amartya Sen, the Indian born Nobel prize winning economist, in a December 2011 interview claims foreign direct investment in multi brand retail can be good thing or bad thing depending on the nature of the investment. Quite often, claims Professor Sen, FDI is a good thing for India.[71]

[edit] Chief Ministers of Indian states


Supporters of retail reform who have voiced the need to promote organized retail include Chief Ministers of several states of India, several belonging to political parties that have no affiliation with Congress-led central government of India. The list includes the Chief Ministers of Maharashtra, Andhra Pradesh, Tamil Nadu and Gujarat. In a report submitted earlier in 2011, these Chief Ministers urged the Prime Minister to prioritize reforms to help promote organized retail, shorten the retail path from farm to consumer, allow organized retail to buy direct from farmers at remunerative produce prices, and reduce farm to retail costs. [72] Similarly, the Chief Minister of Delhi has come out in support of the retail reform,[73] as have the Chief Ministers of the two farming states of Haryana and Punjab in north India.,[74][75] The Chief Ministers of Haryana and Punjab claim that the announced retail reforms will immensely benefit farmers in their states. The Chief Minister of the state of Maharashtra - the state with the highest GDP in India and home to its financial capital Mumbai - has also welcomed the retail reform.,[76][77] Tarun Gogoi, the Chief Minister of Assam, an eastern state in India, announcing his support to the retail reform, claimed "this will go a long way in bringing about a sea change in rural economy. The decision will boost agriculture and allied sectors, manufacturing, logistics, integrated cold chains, refrigerated transportation and food processing facilities in a big way." Criticising the BJP-organized opposition, Gogoi claimed that these parties who had just a few years ago dubbed opening up retail as good for India, are now singing a different tune.[78]

[edit] Current supermarkets


Existing Indian retail firms such as Spencer's, Foodworld Supermarkets Ltd, Nilgiri's and ShopRite support retail reform and consider international competition as a blessing in disguise. They expect a flurry of joint ventures with global majors for expansion capital and opportunity to gain expertise in supply chain management. Spencer's Retail with 200 stores in India, and with retail of fresh vegetables and fruits accounting for 55 per cent of its business claims retail reform to be a win-win situation, as they already procure the farm products directly from the growers without the involvement of middlemen or traders. Spencers claims that there is scope for it to expand its footprint in terms of store location as well as procuring farm products. Foodworld, which operates over 60 stores, plans to ramp up its presence to more than 200 locations. It has already tied up with Hong Kong-based Dairy Farm International. With the relaxation in international investments in Indian retail, Indias Foodworld expects its global relationship will only get stronger. Competition and investment in retail will provide more benefits to consumers through lower prices, wider availability and significant improvement in supply chain logistics.[79]

[edit] See also

Indian road network Agriculture in India Indian expressways Fishing in India The Economist December 2011 issue - Reform in India: Let Walmart in The Financial Times: How to open up Indias economy (2 December 2011) Report on Indian Retail, KPMG 2009 The Great Indian Retail Story - An Ernst & Young Report, 2007 2011 Retail Reform Commentary: Expected impact of FDI in Retail Ernst & Young India Viewpoint The Old Kings... And The New: Indian retail industry is evolving. A report that lists some of the evolution over last 20 years. 1. ^ "The Bird of Gold - The Rise of India's Consumer Market". McKinsey and Company.
May 2007. http://www.mckinsey.com/mgi/reports/pdfs/india_consumer_market/MGI_india_consu mer_full_report.pdf.

[edit] External links

[edit] References

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