A study on consumer and preferences for multi brand retailing.

Overview:
The retail sector in the developing countries is witnessing a huge revamping exercise as
traditional markets make way for new formats such as departmental stores, hypermarkets,
supermarkets and specialty stores. Rated the fifth most attractive emerging retail market,
India is being seen as a potential goldmine. A recent McKinsey study titled “India’s
Retailing Comes of Age” has predicted a retail revolution in India. Store Retailing as the
departmental store, which is a store or multi brand outlet, offering an array of products in
various categories under one roof, trying to cater to not one or two but many segments of
the society and Non store retailing as the direct selling, direct marketing, automatic
vending. Most of these stores believe in creating not just a marketing activity with its
customers, but rather favor relationship building with him so as to convert first time
customers into a client.
A number of Indian and international retailers are entering this nascent, though dynamic
market. Market liberalization and increasingly assertive consumers are sowing the seeds
of a retail transformation that will bring bigger Indian and multinational players on to the
scene. Buoyed by a strong increase in private consumption, retailing is one industry that
is waiting to explode. Though retail may well be our next sunrise industry after
Information Technology, capitalizing on the opportunities is still a formidable task for
retailers. We may have made several forays into the world of international retailing, but
success has only been moderate. At about 2 per cent of the total global retail market, we
are still only scraping the surface.

Significance of study in current scenario:

Various important sectors, in India, need well-functioning markets to drive growth,
employment and economic prosperity in rural as well as in urban areas of the country.
Further, in order to provide dynamism and efficiency in the marketing system, large
investments are required for the development of post-harvest and cold-chain
infrastructure nearer to the farmers' field. FDI in front end retailing is imperative to fund
this investment. Allowing FDI in front end retail operations will enable organized
retailers to generate sufficient cash to fund this investment. Investment in organized retail
by domestic players will be ineffectively deployed if FDI is delayed. International
retailers should be mandated to bring with them technology and management know-how
which will ensure that investment in organized retail works to India's advantage. In order
to provide dynamism and efficiency in the marketing system, large investments are
required for organized retailing, linked with the back end of the value chain. FDI in front-
end retailing is imperative to derive full advantage of the value chain for the producer and
the consumer. International retailers will bring with them technology and management
know-how that will finally impact our whole retail sector through the adoption of best
practices.
Personal consumption as a percentage of GDP India is second only to Vietnam in Asia
and a close fourth globally. Robust growth of Indian economy will result in increase in
personal consumption as a percentage of GDP. According to IMA, Asia, India had one of
the highest personal consumption as a percentage of GDP in Asia at around 55% in 2007.
This portends well for Indian Retail as with per capita income growing, this personal
consumption would translate into higher Retail Sales. Hence, India with one of the
highest personal consumption as a percentage of GDP in Asia, seems to be a better and
more opportunistic bet in the Retail Sector compared to China (~35%), Singapore
(~45%), Hong Kong (~50%) and South Korea (~46%)

Literature review:
The BMI India Retail Report for the third-quarter of 2010, forecasts that the total retail
sales will grow from US$ 353 billion in 2010 to US$ 543.2 billion by 2014. With the
expanding middle and upper class consumer base, there will also be opportunities in
India's tier II and III cities. The greater availability of personal credit and a growing
vehicle population to improve mobility also contribute to a trend towards annual retail
sales growth of 11.4 per cent. Mass grocery retail (MGR) sales in India are forecast to
undergo enormous growth over the forecast period. BMI further predicts that sales
through MGR outlets will increase by 154 per cent to reach US$ 15.29 billion by 2014.
This is a consequence of India's dramatic, rapid shift from small independent retailers to
large, modern outlets. BMI forecasts consumer electronic sales at US$ 29.86 billion in
2010, with over the counter (OTC) pharmaceutical sales at US$ 3.28 billion. The latter is
predicted to be the fastest growing retail sub-sector and BMI forecasts that sales will
reach US$ 6.18 billion by 2014, an increase of 88.5 per cent.
China and India are predicted to account for almost 91 per cent of regional retail sales in
2010 and by 2014 their share of the regional market is expected to be more than 92 per
cent. Growth in regional retail sales for 2010-2014 is estimated by BMI at 72.2 per cent,
an annual average of 14 per cent. India should experience the most rapid rate of growth in
the region, followed by China. For India, its forecast market share of 13.9 per cent in
2010 is expected to increase to 14.3 per cent by 2014. Moreover, for the 4th time in five
years, India has been ranked as the most attractive nation for retail investment among 30
emerging markets by the US-based global management consulting firm, A T Kearney in
its 8th annual Global Retail Development Index (GRDI) 2009. India remains among the
leaders in the 2010 GRDI and presents major retail opportunities. India's retail market is
expected to be worth about US$ 410 billion, with 5 per cent of sales through organised
retail, meaning that the opportunity in India remains immense. Retail should continue to
grow rapidly—up to US$ 535 billion in 2013, with 10 per cent coming from organised
retail, reflecting a fast-growing middle class, demanding higher quality shopping
environments and stronger brands, the report added. Bharti Retail strengthened its
position in northern India by opening 59 stores, Bharti Wal-Mart is expected to open 10
to 15 wholesale locations in the next three years, and Marks & Spencer is considering
plans to open additional outlets in the next few years. Established retailers are tapping
into the growing retail market by introducing innovative store formats. Spencer's Retail,
More (owned by Aditya Birla Group) and Shoppers Stop (owned by K Raheja Group)
already plan to expand. According to a McKinsey & Company report titled 'The Great
Indian Bazaar: Organized Retail Comes of Age in India', organised retail in India is
expected to increase from 5 per cent of the total market in 2008 to 14 - 18 per cent of the
total retail market and reach US$ 450 billion by 2015.

Furthermore, according to a report titled 'India Organized Retail Market 2010', published
by Knight Frank India in May 2010 during 2010-12, around 55 million square feet (sq ft)
of retail space will be ready in Mumbai, national capital region (NCR), Bengaluru,
Kolkata, Chennai, Hyderabad and Pune. Besides, between 2010 and 2012, the organized
retail real estate stock will grow from the existing 41 million sq ft to 95 million sq ft.
India continues to be among the most attractive countries for global retailers. Foreign
direct investment (FDI) inflows between April 2000 and April 2010, in single-brand
retail trading, stood at US$ 194.69 million, according to the Department of Industrial
Policy and Promotion (DIPP). Leading watchmaker Titan Industries Limited plans to
invest about US$ 21.83 million for opening 50 premium watch outlets Helios in next five
years to attain a sales target of US$ 87.31 million. "We are looking to open Helios outlets
in Mumbai, Delhi, Hyderabad, Kolkata, Chennai, Pune, Ahmedabad etc in next 12
months," said Ajoy Chawla, Vice President (Retail), Titan. British high street retailer,
Marks and Spencer (M&S) plans to significantly increase its retail presence in India,
targetting 50 stores in the next three years. M&S currently operates 17 stores in India
through a joint venture (JV) with Reliance Retail. Chinese retail major, Yishion has
entered the Indian market and plans to have at least 125 points of sales, including
exclusive stores and multi-brand outlets, across India by 2012. It will open its first
exclusive store in New Delhi by September 2010. Spain's Inditex, Europe's largest
clothing retailer opened the first store of its flagship Zara brand in India in June 2010. It
further plans to open a total of five Zara outlets in India. Bharti Retail, owner of Easy
Day store—supermarkets and hypermarkets—plans to invest about US$ 2.5 billion over
the next five years to add about 10 million sq ft of retail space in the country by then,
according to a company spokesperson. Raymond Weil plans to invest US$ 883,665 in
India during 2010, according to Olivier Bernheim, President and CEO, Raymond Weil.

Policy Initiatives
FDI up to 51 per cent under the Government route is allowed in retail trade of Single
Brand products, according to the Consolidated FDI Policy document.

Road Ahead
According to industry experts, the next phase of growth is expected to come from rural
markets. According to a market research report published in June 2008 by RNCOS titled,
'Booming Retail Sector in India', organized retail market in India is expected to reach
US$ 50 billion by 2011.
The key findings of the report are:
• Number of shopping malls is expected to increase at a CAGR of more than 18.9
per cent from 2007 to 2015
• Rural market is projected to dominate the retail industry landscape in India by
2012 with total market share of above 50 per cent
• Driven by the expanding retail market, the third party logistics market is
forecasted to reach US$ 20 billion by 2011
Apparel, along with food and grocery, will lead organized retailing in India.

Foreign Direct Investment (FDI) is one of the major sources of investments for a
developing country like India wherein it expects investments from Multinational
companies to improve the countries growth rate, create jobs, share their expertise, and
research and development in the host country.
There have been many discussions on this issue and recently the Government had
decided to put up a paper for discussion in the month of July to take views from all the
stake holders about the impact and their views on allowing FDI in the multi brand
retailing and the commerce ministry is planning to process all the views of the stake
holders on October 15th 2010 before putting up the issue in front of political leadership.
As of now National Retailers like Future Group, Reliance Retail, Shoppers Stop, Aditya
Birla Retail and Spencers are in the multi brand retailing and have been successful in the
Indian Scenario by getting private label and expanding in every major cities and towns.

Retailers like Bharti-Walmart have been lobbying hard to get the FDI for Multi brand
retailing which it is being barred from and have only B2B stores set-up in India on the
outskirts of Chandigarh, Others like Tesco and Carrefour have been trying hard to get
into the Indian market which is being seen as a potential gold mine and research agencies
have already rated Indian Retail market to be very lucrative taking into consideration the
huge population and untapped retail industry which is at a very nascent stage compared to
the potential of retail biggies like Wal-mart, Tesco and Carrefour.

On the other hand the current national retailers in India have different view points on the
proposal of FDI in India, Retail King of India Mr.Kishore Biyani of Future Group feels
that the current situation in the Indian Retail is at a very nascent stage and any
introduction of FDI will harm the interest of the National Retailers and believes there are
enough investors in India and have been successful citing his own example wherein his
home furnishing business investors have received 3x the amount invested. Whereas
retailers like Shoppers Stop and Reliance Retail feel with the induction of FDI they can
grow at a much more faster rate than now and can cover most of the Tier 2 and Tier 3
towns of India and share the joy and savings with them too and expertise of Wal-Mart
and other Multinational retailers can help in building infrastructure which has been a
point of concern for all the National retailers as there are no adequate warehouse, cold
storage facility and failure of logistics companies in providing highly professional
services which can be improved once the foreign retailers will foray into the Indian
scenario.

Retail in India has tremendous growth potential, Retail is already the second largest
employer in India and any changes by bringing major foreign retailers who will be
directly procuring from the main supplier will not only create unemployment on the front
end retail but also the middleman who have been working in this industry and the chain
will impact the governments growth and employment problems in a long term. Apart
from the effect on front end retail, middlemen and mom and pop stores, the effect of big
retailers like Wal-Mart has also been seen on the manufacturing sector in United States
where companies have either gone bankrupt or have moved to Asian countries in order to
sell their products to retailers like Wal-Mart at much cheaper rate and provide discounts
to wal-mart's customers by chopping their margins and have been bleeding to keep their
big customer i.e Wal-Mart intact. The current Indian retailers have now moved to such a
low that now it recruits school dropouts at their retail stores as front end employees
which was supposed to be graduates or undergraduates at the beginning mainly because
of the non availability of staff and high attrition rate among its human resource and all
retailers have now moved from not only keeping their customers happy but also their
human resource happy and believe in Happy Associates make Happy Customers idiology
and is not being followed by one but all the national retailer from the Tata House to
Future Family by providing a good career path to their employees a.k.a associates and
have implemented new indigenous models of human resource like the LSD Model by
Future Group,The (L)axmi -Monetary, (S)araswati -Providing knowledge and (D)urga-
Providing Power in the job to retain talent in the company.

India does have problems at the back end with poor infrastructure, warehouse, cold
storage and logistics but it can be overcome very easily as per the Retail Guru
Mr.Kishore Biyani who himself now owns not only a logistics company, but also cold
storages, and warehouses in all major cities and have improved the situation and feels
they can share and grow rather than having individual infrastructures and compete against
each other in the National Space and FDI will only send back money to its parent
company from the Poor Indians pocket as dividends and make more poorer rather than
the other way round.

In any case at the end of the day there is no harm in getting FDI but it should be done in a
phased manner with a beginning of 10% and later to 26% and 51% looking at the
situation to pump more money in the Indian Retail sector which is also said to be having
cash crunch and many other clauses of procuring, staff recruitment, investments in
warehouse, cold storage, infrastructure, competition and retail formats so that not only
does the money comes in but also it's a win-win situation for the current national retailer
as well as mom and pop stores who account for 70% of the retail business even after the
arrival of national retailers from the corporate giants like the Tata, Reliance, Future
Group and the Birla's.

Purpose of the study:

Main purpose of the study is to know about consumer preferences and their behavior
regarding the multi brand retailing in India. The rationale behind studying the consumer
behavior is to assess the growth prospects for foreign players in Indian retail sector if at
all the proposed FDI in multi brand retailing is approved by Indian regulatory authorities.
Currently no FDI is allowed in multi brand retailing.
Theoretical framework of study:
a. Porter’s five forces model:
Porter's five forces is a framework for the industry analysis and business strategy
development formed by Michael E. Porter of Harvard Business School in 1979. It draws
upon Industrial Organization (IO) economics to derive five forces that determine the
competitive intensity and therefore attractiveness of a market. Attractiveness in this
context refers to the overall industry profitability. An "unattractive" industry is one in
which the combination of these five forces acts to drive down overall profitability. A very
unattractive industry would be one approaching "pure competition", in which available
profits for all firms are driven down to zero.
Three of Porter's five forces refer to competition from external sources. The remainders
are internal threats
b. SWOT analysis
SWOT analysis is a strategic planning method used to evaluate the Strengths,
Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It
involves specifying the objective of the business venture or project and identifying the
internal and external factors that are favorable and unfavorable to achieve that objective.
The technique is credited to Albert Humphrey, who led a convention at Stanford
University in the 1960s and 1970s using data from Fortune 500 companies.
A SWOT analysis must first start with defining a desired end state or objective. A SWOT
analysis may be incorporated into the strategic planning model. Strategic Planning has
been the subject of much research.
• Strengths: characteristics of the business or team that give it an advantage over
others in the industry.
• Weaknesses: are characteristics that place the firm at a disadvantage relative to
others.
• Opportunities: external chances to make greater sales or profits in the
environment.
• Threats: external elements in the environment that could cause trouble for the
business.

Objective:
• To study the Consumers behavior in response to organized multi brand retail
market.
• To study the consumer decision-making on brands, where the consumer goes
through a process starting from identifying needs to post- purchase issues.
• To study the Structure of Retail Market and the opportunity that Indian market
provides.

Methodology:
• Primary data collection and analysis: Primary data is the first hand information
collected from parents, College/ School going Students, Professionals to
understand their views. The collected data will then be analysed using various
statistical tools as applicable.
• Secondary data analysis.