INTRODUCTION TO RETAIL INDUSTRY

Retail comes from the French word retailer, which refers to "cutting off, clip and divide"
in terms of tailoring (1365). It first was recorded as a noun with the meaning of a "sale in
small quantities" in 1433 (French). Its literal meaning for retail was to "cut off, shred,
paring. Retail is the final stage of any economic activity. By virtue of this fact, retail
occupies an important place in the world economy. According to Philip Kotler, Retailing
includes all the activities involved in selling goods or services to the final consumers for
personal, non-business use. A retailer or retail store is any business enterprise whose
sale volume comes primarily from retailing. These are the final business entities in a
distribution channel that links manufacturers to customers. Manufacturers typically
make products and sell them to retailers or wholesalers. Wholesalers resell these
products to the retailers and finally, retailers resell these products to the ultimate
consumers.
Any organization selling to final consumers whether it is a manufacturer, wholesaler or
retailer-is doing retailing. It does not matter how the goods or services are sold (by
person, mail, telephone, vending machine, or internet or where they are sold-in a store,
on the street, or in the consumers home). A Retailer thus, provides value creating
functions like assortment of products and services to the consumers, breaking bulk,
holding inventory and provides services to consumers, manufacturers and wholesalers.
Retailing broadly involves:
1. Understanding the consumers needs
2. Developing good merchandise assortment and
3. Display the merchandise in an effective manner so that shoppers find it easy and
attractive to buy.

Retailing thus, may be understood as the final step in the distribution of merchandise,
for consumption by the end consumers. Put simply, any firm that sells products to the
final consumer is performing the function of retailing. It thus consists of all activities
involved in the marketing of goods and services directly to the consumers, for their
personal, family or household use. In an age where customer is the king and marketers
are focusing on customer delight, retail may be redefined as the first point of customer
contact.
The distribution of finished products begins with the producer and ends at the ultimate
consumer. Between two of them there is a middleman the retailer. Retailing is the set
of business activities that adds value to the product and services sold to the consumers
for their personal or family use. Often retailing is being thought of as the sale of
products in the stores, but retailing also involves the sales of services: overnight lodging
in a hotel, a haircut, a car rental, or home delivery of Pizza. Retailing encompasses
selling through the mail, the internet, and door-to-door visits any channel that could be
used to approach the consumer. Retailing is responsible for matching individual
demands of consumer with supplies of all the manufacturers.
Retailing has become such an intrinsic part of our everyday lives that it is often taken for
granted. The nations that have enjoyed the greatest economic and social progress have
been those with a strong retail sector. The world over retail business is dominated by
small family run chains and regionally targeted stores. Gradually more and more
markets in the Western world are being taken over by billion-dollar multinational
conglomerates, such as Wal-Mart, McDonalds, Marks and Spencers, etc. The larger
retailers have set up huge supply/distribution chains, inventory management systems,
financing pacts, and wide scale marketing plans which have allowed them to provide
better services at competitive prices by achieving economies of scale.

Retail Concept
The retailing concept is essentially a customer oriented, company-wide approach to
developing and implementing a marketing strategy. It provides guidelines which must be
followed by all retailers irrespective of their size, channel design, and medium of selling.
The retailing concept covers the following four broad areas:
1. Customer orientation
The retailer makes a careful study of the needs of the customer and attempts to
satisfy those needs.
2. Goal orientation
The retailer has clear cut goals and devises strategies to achieve those goals.
3. Value driven approach
The retailer offers good value to the customer with merchandise keeping the price
and quality appropriate for the target market.
4. Coordinated efforts.
Every activity of the firm is aligned to the goal and is designed to maximize its
efficiency and deliver value to the customer

Indian Retail Scenario

Retailers in India have to experiment with formats maintaining scalability in
terms of segments, along with deepening penetration levels. Traditionally Indian
Retail can be traced back from Weekly Markets, Melas, and Village Fairs in Small
towns and villages to Kirana stores, PDS outlets, Khaki Bhandaar, co-operative
stores in Urban cities. The wave of retail began with various textile manufactures like
Bombay Dyeing, Raymonds, S Kumars, and Grasim foraying into selling the
product through their outlets and competition among FMCG players driving the
forces towards retailing. The evolution of retailing lead to an emergence of various
formats like Shopping malls, Super-marts, Hyper-marts, Departmental Stores,
Apparel Stores, etc. catering to majority all sectors of society providing the allimportant 3Vs Value, Variety and Volume. India is the country having the most
unorganized retail market. Traditionally it is a Familys livelihood, with their shop in
the front and house at the back, while they run the Retail business. More than 99%
retailers 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 Rs900,000 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. 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.

Growth of Organized Retail in Indian Cities

Organized Share of retail sector is expected to increase to 8-9 percent in2010-11 from 6
percent in 2008.The Retail sector contributes to around 36 percent of GDP in India and
is largest employment generator. The sector is dominated by small-scattered
unorganized regional players, large players contributing to meager 10percent of the
total pie. Organized retail is at its nascent phase wherein the large organized retail
groups are having aggressive expansion plans to penetrate the Metros and Tier I cities
and establish themselves amongst rural masses of Tier I and Tier II cities. There lies a
challenge for retailers to experiment with new value formats along with developing
customer loyalties. Since there will be demographic shift in population growth,
urbanization and migration due to transition in urban household growth and income
distribution. The total retail market in the top 67 cities in India in 2006 was Rs. 2.55
trillion, which is expected to increase to Rs. 3.91 trillion in 2011.American mass retailing
began in the late 1800s with Montgomery Ward marketing its products through general
merchandise mail order catalogs, which was very effective at that time for reaching a
largely rural society. In the 1940s, the population began its movement to the suburbs as
the economy shifted from an agricultural base to an industrialized nation. The first
shopping center was opened, which would eventually be a significant factor in the
decline of downtown Retailing in the 1960s and 70s. JC Penney and Sears began their
national mass retailing expansion, and the use of credit cards as Major retail chains
began. The 1950s witnessed the reaffirmation of the traditional family. The first planned
mall and franchised food restaurant opened. As people continued to flock to the
suburbs, the downtown areas began to decline. Larger suburban malls were created
and anchored by traditional downtown department store merchants. Freeways were
expanded and the sales of private automobiles grew, giving the consumer a wider
accessible area in which to shop. The 1960s witnessed the growth of enclosed
shopping centers, with department stores anchors and specialty retail chains. The baby
boomers were teenagers at this point, leading to the growth of juniors-oriented stores
and vendors.

Women became targets not just as mothers or wives as they entered the workforce
and consumers became more demanding in their expectation of quality and service.
According to CRISIL, around 87 percent of the retail opportunity comes from top 25
cities compromising Metro Delhi, Mumbai, Calcutta, Mini Metros Hyderabad,
Chennai, Bangalore, Mini Metros Ahmedabad and Pune, Tier I cities of Kanpur ,
Nagpur, Surat and Ludhiana, Tier II cities Coimbatore, Chandigarh, Lucknow, Kochi,
Jaipur and Tier III cities Vadodara, Vizag, Indore, Vijaywada, Thiruvananthpuram,
Bhopal, Nashikand Madurai. Organized retail has been established in Metros and
Tier 1 cities, other cities having negligible level of penetration.
Old Retail Formats:
Kiranas: These are food and non-food neighborhood counter stores, also called
mom and pop stores in western countries. These are big chunks forming the
segregated and unorganized retail segment. These are family-owned and- run retailoutlets picking the goods from wholesalers totaling to around 12million stores across
India.
Mandis: These are the largest chunk of unorganized retail catering to urban and
rural masses. Mandis are physically located at different regions to enhance
convenient shopping. The sellers bring across various products like eatables,
vegetables and fruits, pulses, cereals, spices etc. The most prominent of the mare
sabzi mandis found in most of the localities across India.
Village Haats: This form is operating in rural areas where buyers and sellers gather
once in a week or month from nearby villages and small towns to cater their
livelihood and leisure needs. These haats are a source of entertainment and
socialization among rural masses.
Push Cart Vendors: The are categories of vendors roaming from door to door in
various localities selling fruits, vegetables, and other eatables, from which mostly
housewives makes purchases that too on credit.

Key drivers of the Indian Retail Industry

Emergence of nuclear families

An increase in the double-income households trend
Large working population
Reasonable Real estate prices
Increase in disposable income and customer aspiration
Demand as well as increase in expenditure for luxury items
Growing preference for branded products and higher aspirations
Growing liberalization of the FDI policy in the past decade
Increasing urbanization,
Rising affluence amid consumers

Factors Affecting Retailing in India:

Various factors affect retailing in India. However, if one were to Single out the single
biggest different in the development of organized retailing in India, it would undoubtly
be the cost of real estate. The high cost of real estate in India, in spite of the fact that
the per capital income is one of the lowest in the world, makes the country a land of
contradictions. In fact so exorbitant is the cost of property in almost every town of
India that it makes the very concept of organized retailing nonviable. Obsolete rental
laws have compounded the situation even further and unless immediate and serious
steps are initiated in this direction it would be fairly long before the benefits of this
concept reach the public at large. The rampant corruption &poor implantations of
taxation laws also permit a majority of the unorganized retail fraternity with
substantially large turn over to avoid paying full taxes. There are no single factors
but numerous factors which have prevented organized retailing from taking off as it
should have in India. Some of the leading factors that have restricted this growth are
as follows.
High real estate costs
Obsolete rental laws
Lack of finance options
High interest costs
Unplanned cities
Rampant corruption
Exorbitant electricity costs

FOREIGN TOUCH IN INDIAN RETAIL

The chief of Marks & Spencer has been making trips to India over the past year.
Global investment bank Warburg Pincus is awaiting the Indian governments
clearance to pick up a 25.1per cent stake, worth $13 million, in Shoppers Stop. Dairy
Farm International and Jardine Matheson are present here, through tie-ups with the
RPG Group. Fast food major McDonalds have already made a dent in the
marketplace and in Indian palates.The Dubai-based Landmark group is making its
presence felt in Chennai through its Lifestyle mega store of over 30,000 sq ft.
Landmark is owned by Mukesh Jagtiani , a non-resident Indian. Lifestyle
International Private Limited, formed in India recently, is a wholly-owned subsidiary
of the Mauritius-based Lifestyle International which, in turn, is wholly-owned by the
Landmark group. In India, according to Lifestyle Internationals marketing manager,
Roshan Mathew, the target is to "have 12 to 16 stores by 2005." These stores will
sell all lifestyle products, barring furniture, under one roof. Immediate plans include
opening a 46,000 sq ft store in Hyderabad, which Mathew terms "The Millennium
Store". The Hyderabad store will have additional sections for books and music,
23. unlike the Chennai store. Besides, as soon as Lifestyle gets a keenly awaited
Foreign Investment Promotion Board clearance for a Rs 100 crore investment, it will
create outlets in Bangalore, Pune , Mumbai, Delhi and Ahmedabad. The Hong Kongbased Dairy Farm International, a 125 year old retail major with around 1,300outlets
across nine countries, recently converted its technical tie-up (since 1996) with the
RPG groups Spencer & Company for Foodworld into a 49:51 joint venture. The new
venture is called Foodworld Supermarkets Limited. DFI also has a 50:50 joint
venture with the Indian group in RPG Guardian. DFI is the retail arm of Jardine
Matheson. In Western markets, a familiar sight is the McDonalds golden arch. In
India too McDonalds has maintained its unique selling proposition -- providing the
same quality of food and the same ambience as anywhere in the world. Its raw
material requirements are totally out-sourced. Butwhat it has taken care of is world
class quality in all its raw material sourcing, with specification sensured strictly. The
chain has been smart enough to tailor its products to the

Indian environment, adding fare for the large number of vegetarians who love fast food,
and avoiding certain beef and pork in deference to social sensitivities. In a market place
where Kentucky Fried Chicken failed to make an impact, McDonalds seems to be
finding its place slowly.

Reliance Retail

Reliance Retail is the retail initiative of the group and an epicenter of their consumer
facing businesses. It has in a short time forged strong and enduring bonds with millions
of consumers by providing them unlimited choice, outstanding value proposition,
superior quality and unmatched experience across all its retail stores.

Since its inception in 2006, Reliance Retail has grown to cater to millions of customers,
and thousands of farmers and vendors. Reliance Retail serves over 2.5 million
customers every week, and its loyalty programme, Reliance One, has the patronage of
more than 6.75 million customers. Their nationwide network of retail outlets delivers a
world-class shopping environment and unmatched customer experience powered by
our state-of-the-art technology and seamless supply-chain infrastructure.
Reliance Retail has adopted a multi-format strategy and operates convenience stores,
supermarkets, hypermarkets, wholesale cash & carry stores, and specialty stores and
has democratized access to all types of products and services across all segments for
all Indian consumers.
Reliance Retail has achieved the distinction of being the largest retailer in the country
with core format sectors attaining market leadership in their respective categories.
Reliance Retails commitment to bettering lives has been embodied in its pursuit to
make a difference on social socio-economic issues in India. The initiative has brought
millions of farmers and small producers to the forefront of the retail revolution by
partnering with them for growth.
Deep insight into Indias economic, cultural and consumption diversity drives Reliance
Retails vision in the retail universe. The operating model is based on customer
centricity, while leveraging common centers of excellence in technology, business
processes and supply chain. More importantly, it has built a strong and unwavering

foundation through its extraordinary people.

Reliance Retail has emerged as the partner of choice for International brands and has
established exclusive partnerships with many revered international brands such as
Diesel, Superdry, Hamleys, Ermenegildo Zegna, Marks and Spencer, Paul & Shark,
Thomas Pink, Kenneth Cole, Brooks Brothers, Steve Madden, Payless Shoesource,
Grand Vision and many more.
Reliance Retail operates 1,723 stores pan India with over 11 million square feet of retail
space and is growing rapidly.

RELIANCE FRESH
Reliance fresh is the retail chain division of reliance Industries of India which is headed
by Mukesh Dhirubhai Ambani. Reliance has entered into this segment by opening new
retail stores into almost every metropolitan and regional area of India.
The super mart sells fresh fruits and vegetables, staples, groceries, fresh juice bars and
dairy products and also will sport a separate enclosure and supply-chain for nonvegetarian products.
Reliance fresh uses segmentation to reach customer in different geographic markets
with its new store of community concept.
Now number of Reliance fresh have been designed to reflect the communities in which
they are located.

4Ps OF RELIANCE FRESH

Price

Products

Place

Promotion

Price
It is established mainly for the middle class people & working class people.
In the reliance fresh price of vegetables & fruits are available in a cheap price.
There is always some discount & free offers on cosmetics.

Product
Reliance is the 1st into enter to the unorganized sector of fresh vegetables & fruits avail
in the shopping malls.
Cosmetics, consumer durables, groceries, snacks are available there.
There are different sections for different things. I.e. vegetables for separate section,
cosmetics for separate section, etc.

Place
All over India total 700+ Reliance fresh are established in 93 cities.