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1. Industry Overview 05 2. Organized Retail Sector 10 3. Origin of retail 13 4. Indian Retail Industry 18 5. Retailing Formats in India 23 6. Specialty stores 25 7. Major Industry Players 33 8. The growth Drivers 44 9. Swot of the Market 51 10. Challenges 55 11. Location Planning 58 12. Competitor Analysis 65 13. Future Outlook 68 14. Merger and Acquisition 70
Growth of Retail Sector in India 15. Technology in retail 75 16. Government initiatives and regulation 79 17. Research methodology 83 18. Research analysis 86 19. Conclusion 89 20. Consumer survey questionnaire 90 21. References 94
Growth of Retail Sector in India
Industry analysis of the Indian retail sector:
Modern retailing has entered India in form of malls and huge complexes offering shopping, entertainment, leisure to the consumer as the retailers experiment with a variety of formats, from discount stores to supermarkets to hypermarkets to specialty chains. However, kiranas still continue to score over modern formats mostly due to the convenience factor i.e. near to their house. This organized segment typically comprises of a large number of retailers, greater enforcement of taxation mechanisms and better labour law monitoring system. It's no longer about just stocking and selling but about efficient supply chain management, developing vendor relationship quality customer service, efficient merchandising and even the labour class is also in the working process timely promotional campaigns. The modern retail formats are encouraging development of well-established and efficient supply chains in each segment ensuring efficient movement of goods from farms to kitchens, which will result in huge savings for the farmers as well as for the nation. The government also stands to gain through more efficient collection of tax revenues. Network marketing has been
Growth of Retail Sector in India
growing quite fast and has a few large players today. Gas stations are seeing action in the form of convenience stores, ATMs, food courts and pharmacies appearing in many outlets. In the coming years it can be said that the hypermarket route will emerge as the most preferred format for international retailers stepping into the country. Estimates indicate that this sector will have the potential to absorb many more hypermarkets in the next four to five years
List of retailers that have come with new formats:
Retailer Formats Shoppers’ Stop mall Crossword shop Piramyd mall, Food retail Pantaloon Hypermarket Current Format New
Own brand store
Subhiksha Supermarket considering moving to self service Globus fashion stores Department Store Small
Traditionally, the kirana retailing has been one of the easiest ways to generate self-employment, as it required minimum investment in terms of land, labour and capital. These store are not affected by the modern format of retailing. In order to keep pace with the modern formats, kiranas have now started providing more value-added services like stocking ready to cook vegetables and other fresh produce. They also provide services like credit, phone service, home delivery etc. The organized retailing has helped in promoting several niche categories such as packaged fruit juices, hair creams, fabric bleaches, shower gels, depilatory products and convenience and health foods, which are generally not found in the local kirana stores. Looking at the vast opportunity in this sector, big players like Reliance has announced its plans to become the country's largest modern retainers by establishing a chain of stores across all major cities. Apart from metro cities, several small towns like Nagpur, Nasik, Ahmedabad, Aurangabad, Sholapur, Kolhapur and Amravati has seen the expansion of modern retails. Small towns in Maharashtra
Growth of Retail Sector in India
are emerging as retail hubs for large chain stores like Pantaloon Retail because many small cities like Nagpur have a student population, lower real estate costs, fewer power cuts and lower levels of attrition. However, retailers need to adjust their product mix for smaller cities, as they tend to be more conservative than the metros. In order for the market to grow in modern retail, it is necessary that steps are taken for rewriting laws, restructuring the tax regime, accessing and developing new skills and investing significantly in India.
India is rated as the most attractive retail markets
Country Risk Country 25%
Market Attractiveness 25%
Market Saturation 30%
Time Pressure 20%
Russia China Turkey Thailand Malaysia Egypt Brazil India’s Rank
52 68 51 64 70 51 52 24th
58 40 56 41 49 35 56 14th
71 53 66 59 58 85 57 1st
92 90 65 71 40 30 20 7th
2nd 4th 9 12 18 25 29 1st
Growth of Retail Sector in India Socio demographic factors will lead to faster growth of Organized retail in India: 100% 80% 60% 40% 20% 0% 1991 0-19 Yrs 1996 20-34 Yrs 2001 35-54 Yrs 2006 55+ Yrs 2010E 47% 47% 45% 42% 39% 9% 19% 24% 10% 20% 24%
9% 19% 25%
11% 22% 26%
12% 23% 27%
Music & Gifts 3% Watch & Jewellery 17% Footwear 13% 7 .Growth of Retail Sector in India Entertainment Durable 10% 1% Home 3% Pharma 2% Food & Grocery 14% Clothing and Textile 36% Health & Beauty 1% Books.
Growth of Retail Sector in India ORGANIZED RETAIL 8 .
foreign multiple-brand retailers. "If you want to be an international player in retail. Middle Eastern countries are also represented on the list. while China's 9 . 10 India has emerged as the world's most attractive destination for mass merchant and food retailing. China and Vietnam top the list of the most attractive emerging markets for retailers' investment in 2007. 'market attractiveness'." the report said. The higher the ranking. India has already attracted the attention of global retailers like WalMart Stores Inc. which sell diverse brands under one roof. which ranks the top 30 emerging countries for retail development and focuses on mass-merchant and food retailers." said Gurski. When variables stay constant. India has attracted "the low end and the high end because of the breadth of the consumer segments that are available. do-it-yourself. population. Gurski said. which is working with India's Bharti Enterprises to set up a joint venture for a cash-and-carry business. apparel and electronics retailers usually enter emerging markets some two years after international grocers establish themselves. Kearney. debt and credit ratings." said Laura Gurski. according to the 2007 Global Retail Development Index from management consultant firm A. together with retailers moving into second-tier cities. infrastructure and regulations. measuring political risk. maintaining its 2005 position in an annual study of retail investment attractiveness among 30 emerging markets. The study based its results on four variables: 'country risk'.Growth of Retail Sector in India Emerging Retail Markets: India.. 5 spot last year. are limited to cash-and-carry and franchise or license operations. In India. a co-author of the study and partner in A. the more urgency for retailers to enter the market. 'market saturation'. 3 from its No. "Once India's window closes for grocery retailers. with Saudi Arabia ranking No. "India's window of opportunity continues to be wide for retail investment and development. While India and Russia have held the top two spots since 2004.T. and 'time pressure'. these are the markets that demonstrate the characteristics (where) you can be successful. encompassing retail sales per capita. India was given the top ranking in management consulting company AT Kearney's 2006 Global Retail Development Index (GRDI)." The country's growing population of young urban professionals with disposable incomes and the nouveau riche has also made India attractive for luxury retailers. Kearney's consumer and retail practice. helped it rise to No. according to the study.T. Russia. "The Indian retail market is gradually but surely opening up. China's booming consumer spending. there will be little opportunity for market domination in the main cities.
Gurski said. Russia slipped to second place behind India last year and remained there in 2006 too. all of which are in the top 15. South Korea and Malaysia. Retailers that have already established a presence in major Chinese cities like Shanghai and Beijing. the study found.' "The learning is that timing is the most important source of competitive advantage for global and regional retailers in the globalization race. declining one more place since 2005. ability to spend and willingness to embrace new formats may be different than in larger urban areas. they're looking to make profits in the secondtier cities." Gurski said. which has risen five places to third place. the market is becoming increasingly saturate as and United Arab Emirates No. and countries like Thailand. 10 ." she said. a principal in AT Kearney's Consumer Industries and Retail Practice and leader of the GRDI study.Growth of Retail Sector in India market becomes increasingly saturated. "If the markets are saturated. But she cautioned that a separate strategy is needed for the smaller markets since consumer tastes. Asia with a large 40 per cent of the top 20 markets has surpassed Eastern Europe as the 'dominant region for global retail expansion." said Fadi Farra. China was ranked fifth in this year's tally." said Farra. are now looking at less developed markets in second-tier cities. International retailers rush to establish a presence and build market share. Much to the surprise of market observers. the study reveals. Gap Inc announced last week it had struck a deal with two franchisees to open Gap stores in Saudi Arabia starting at the end of this year. Despite its focus on luxury. or those that have been slow to gain a foothold there. 18. Knowing when to enter emerging retail markets is the key to success. Dubai has capitalized on consumer desire for a more Western lifestyle and has established itself as a retail mecca. According to the study. Powering Asia's charge are Vietnam. After topping the ranking for two consecutive years in 2003 and 2004. Dubai is "just beginning to be populated by the bread-and-butter retailers of the United States and the Western world. While China remains very attractive.
Growth of Retail Sector in India Origin of Retail Sector 11 .
General Store: 12 . When a producer who had a surplus could not find another producer with suitable products to swap. he may have allowed others to owe him goods. he would occasionally find himself with a surplus of goods. HOW RETAIL DEVELOPED: Peddlers and Producers: The Retail Trade is rooted in two groups. Producers were interested in selling goods that they had produced. he would attempt to trade his goods for different goods produced elsewhere. These early efforts to swap goods developed into more formal gatherings. Thus early credit terms would have been developed. Thus markets were formed. the peddlers and producers. and eventually money.Growth of Retail Sector in India Early Trade: When man started to cultivate and harvest the land. They would purchase any goods that they thought they could sell for a profit. Once the needs of his family and local community were met. Peddlers tended to be opportunistic in their choice of stock and customer. This would have led to symbolic representations of such debts in the form of valuable items (such as gemstones or beads).
and once again.Growth of Retail Sector in India This division continues to this day with some shops specializing in specific areas. regular markets appeared. As well as garnering goods from whichever locality they found themselves in. and others providing a broad mix. or Superstore. producers would have seen value in deliberately overproducing in order to profit from selling these goods. Merchants would also have begun to appear. Early Markets: Over time. For some shopkeepers.S. They would travel from village to village. the general store has increasingly taken on specialist products. this removed the mobility that a peddler or traveling merchant may still have enjoyed. demand grew. This soon turned into a regular trade. the start of the Retail Trade. As the popularity of general stores has grown. Although advantageous in many respects. most probably operated by another 13 . Although specialist shops are still with us. so has their size. markets would become permanent fixtures i. These shops along with the logistics required to get the goods to them were. would regularly take their goods to one selling place in the centre of the community. This combined with the advent of Self-Service has lead to the Supermarket. it made sense to obtain extra stock and open up another shop. Similarly. Over time. they would have also taken advantage of the lines of communication to order goods from home. Origins of Retail It is likely that. horse etc. Thus. shops. A second reason that distance selling increased was through war. known as General Store (such as Casey's in the Midwest of the U. both producers and merchants. as markets became more permanent fixtures they evolved into shops. there were still instances where individuals purchased goods at long distance for their own use. the earliest instances of distance retailing probably coincided with the first regular delivery or postal services.The First Shop : Eventually.e. purchasing these goods and selling them for a profit. They arranged for some of these goods to be sent to them. new settlers discovered goods in their new surroundings that they dispatched back to their birthplace. When individuals or groups left their community and settled elsewhere. Although such trading routes expanded mainly through the growth of traveling salesmen and then wholesalers. some missed foodstuffs and other goods that were only available in their birthplace. The Birth of Distance Retailing: Defined as sales of goods between two distant parties where the deliverer has no direct interest in the transaction.A. over time. they laid down communication lines stretching from their home base to the front. Such services would have started in earnest once man had learned how to ride a camel.). Customers have found this to be more convenient than having to visit many shops thus the term "Convenience Store" has also been applied to these shops. reflecting their origins as outlets for producers (such as Pacific Concord of Hong Kong). Others in their newly adopted community enjoyed these goods and demand grew. As armies marched through territories.
collecting their shopping in a basket that was supplied. The groceries were stacked on shelves allowing customers to walk around and browse.Growth of Retail Sector in India family member. This was soon followed a year later by the Piggly Wiggly® self-service store. even more definite limiting factor was the distance the furthest shop would have been from the original shop. Efficiency These entrepreneurs noticed that their staff had to spend a great deal of time taking grocery orders from customers. a natural barrier to expansion. leading to the retail chain that we see today. 14 . founded by Clarence Saunders in Tennessee in the U. This was a limiting factor as there would have been a limit to the amount of trusted non family members available to help run the chain. they would have needed to employ people from outside of their family. From Family Business to Formal Structure: Although retail chains would have been mostly run by families. Thus the retail chain would have started. This would recover business from peddlers and create new business and the greater volume would allow the shopkeeper to strike a better deal with suppliers. Its thought that this process would have started in china over 2200 years ago with a chain of shops owned by a trader called Lo Kass. Growth: This new type of shopping was more efficient and many customers preferred it. the more time and effort would have been needed to effectively manage outpost shops and to service them with goods. but there has been a steady rise in the global amount of self-service stores ever since. The First Self-Service Store: This all changed in 1915 when Albert Gerrard opened the Groceteria in Los Angeles. The greater the distance. Although personal service stores remain to this day. as some chains grew. Many of these businesses became more structured and formalized. this new concept started a rapid growth of self-service stores in the United States. The shopkeeper would only need to tot up the final bill at the end of the process and transfer the goods from the basket to the customer and receive payment.S. There was. the first documented self-service store. That was the case until transport and communications became faster and more reliable. When this happened towards the end of the 19th century. Another. chains became much bigger and more widespread. Other countries were slow to take up the idea. therefore.
Growth of Retail Sector in India 15 .
Growth of Retail Sector in India 16 .
Growth of Retail Sector in India Indian Retail Industry 17 .
Conventional marketplaces are paving way for new shopping malls. The retail industry in India is split up into the unorganized and organized retail segments. The unorganized retail sector includes the big. it includes analyzing the market in an effort to provide reasonable prices together with an array of options and experience to customers. India represents the most compelling international investment opportunity for mass merchant and food retailers looking to expand overseas. Indian retail is currently a US$ 245 billion market and is anticipated to extend to almost US$ 385 billion mark by the next five years.5 trillion market. according to management consulting firm AT Kearney's 2005 Global Retail Development Index (GRDI). supermarkets and brand label stores. the likes of superstores. Global retailers that missed opportunities to capture first-mover advantage in China will make up for it in India. The country's retail market totals $330 billion. By 2010. The Indian retail sector is currently sporting a brand new look and together with a 46.000 villages that makes up 50 per cent of the rural population. average and modest grocery stores and the chemist shops.000 villages.Growth of Retail Sector in India UNORGANISED RETAIL SECTOR: Today. A changeover is taking place from the conventional retail sector to organized retailing. the total retail market is primarily focused in rural regions. acquainting the Indian customer to a unique shopping experience. even though its centre of attention is focused around a core group of 100. The rural market is spread over 627. But the unorganized segment still dominates and leads the industry. According to the latest report India Retail Sector Analysis (2006ñ07)I by RNCOS.64 per cent three-year Compounded Annual Growth Rate (CAGR). the Indian retailing sector is anticipated to become an Rs12. India is rated as the fifth largest emerging retail market and is seen as a potential goldmine. retailing doesn’t involve just dealing or marketing from shops. The message for retailers on India is clear – move now or forego prime locations and market positions that will soon become saturated. 18 . is vastly underserved and has grown by 10 per cent on an average over the past five years. Driving global brands into India is the greatly improved investment climate due to the recent relaxation of direct ownership restrictions on foreign retailers. International style shopping centers have started dotting the skyline of cities and smaller towns. an annual study of retail investment attractiveness among 30 emerging markets. shopping plazas. The sole purpose of all this is retaining the brand loyalty of customers. which represents 45 per cent or US$ 135 billion of the gross retail market. The anticipated staggering growth in organized retailing provides an opportunity to expand the market for both established and new players. The share of organized retailing is supposed to jump to about 10 per cent from the existing three per cent. which makes up 55 per cent or US$ 165 billion of the overall retail market as opposed to urban segment.
most retailers look at decent entry-level solutions starting at Rs 25. 96 per cent of the retail outlets are smaller in area than the standard norms. Secondly. delivery order management.000. There is no supply chain management perspective. Organized retailing refers to trading activities undertaken by licensed retailers who are registered for sales tax and income tax. These include corporate backed hypermarket and retail chains and so on. Unorganized retailing is the traditional low-cost shops. they are greatly unorganized. Software available to the retailers is ShawMan’s RetailMagiK. a number of new jobs will be created. far better paid than the underage labor working in the local shops.Growth of Retail Sector in India Though India has more than five million retail outlets. “It would surely help the unorganized sector to get into technologies like bar-coding. Thus one can see that allowing FDI in retailing is beneficial to all the stakeholders involved The Big Bazaars and Spencer’s. the organized sector is only 25 per cent and the rest is unorganized. Though it’s early days yet to measure it penetration in the unorganized retail industry. Some other features are a user-defined billing screen and discount with control mechanism from the headoffice. which will make their operations more efficient. batch control and quick information search. throwing up exportable surpluses. The efficiency of organized sector in retailing is manifested in some of the newer supermarkets in urban/metropolitan India – the produce is cleaner. Taxation policies also push you to automate and the push is even harder for those looking to expand beyond their single store existence. handcarts and pavements and is by far the prevalent form of trade in India. of transforming the unorganized retail sector into an organized sector. even if at a model scale. Though the interest is more with retailers who register good sales and volumes. fresher. One can even deploy a computer and start with 19 . This is possible because of the far more efficient distribution system. which will also benefit the economy as a whole. well packed and often cheaper than the local shopkeeper. However. The retail industry is divided into organized and unorganized sectors. the benefits to the producer and consumer through better prices and lesser wastage. “It’s good to at least answer their questions. The screen design and the functionality are designed in such a way that the user need not press too many keys to get things done. Shawman Software. which takes care of the front-end store needs. The product is a simple to use. business development manager. interest levels are surely raising fast. out of the entire retail sector in India. Firstly. as well as the back-end warehouse requirements.” says Khushroo Bagwadia. To begin with. which organized retail chains are employing. In fact. the huge unorganized retail sector is finally beginning to see the merit of logging on. by cutting the layers of middlemen involved. there are cheaper quick-fix solutions available too. among others. There are other benefits too.
Here. so the cheap systems are more than welcome. Comparing the case with China. the technology has advanced in phases. toys. and so is the case in India. which will get their work done at a reasonable cost.000. Format Description The Value Proposition Branded Stores Complete range available for a Exclusive showrooms either owned or franchised out given brand. According to Oberoi of Polaris.Growth of Retail Sector in India financial accounting programmers like Microsoft Excel. At the low-end however. Small retailers seem next in line and vendors are also warming up to the opportunity. consumer needs.000 to Rs 25. FoxPro and Tally. carry most of comparison between brands is the brands available possible Large stores having a wide variety of products. the investment on retail solutions go really low. And solutions providers like Microsoft. “In China. as then one need to scale it up and take care of inventory and supply chain management. Polaris and Shawman are now working on developing smart tools for the retail enthusiasts. Focus on a specific consumer need. Specialty Stores Department Stores 20 . Most of the time these solutions are developed by local firms. Vedamani suggests India is on the right track. house wares. quality Greater choice to the consumer. For small players with just one store. appliances. and consider these as frills. furniture. smart inexpensive solutions are the need of the hour. anywhere between Rs 10. “They are not even bothered about upgrading.” he says. certified product by a manufacturer. They avoid the high-end technology. etc. These solutions might not work for the mid-sized retailers with five stores. organized into different departments such as One stop shop catering to varied/ clothing. generally the mom-and-pop stores like to go for technology. we find the organized sector to be 20-23% of the total industry. who at times compete with the big names in the industry.
mart Convenience stores Shopping Malls Formats adopted by the Retail Players in INDIA. other. vast choice available warehouse appearance. generally located in quieter including services such as parts of the city cafeterias. Hyper. Small self-service formats located in crowded urban Convenient location and extended areas. all under one roof. Enclosure having different formats of in-store Variety of shops available to each retailers. operating hours. 21 .Growth of Retail Sector in India Supermarkets Discount Stores Extremely large self-service retail outlets One stop shop catering to varied consumer needs Stores offering discounts on the retail price through Low Prices selling high volumes and reaping economies of scale Larger than a supermarket. sometimes with a Low prices.
Specialty Electronics 22 . Apna Bazaar).Growth of Retail Sector in India Retailer Original formats Supermarket (Foodworld) Department Megastore) Store (Piramyd Later Formats Hypermarket (Spencer's)Specialty Store (Health and Glow) Discount Store (TruMart) RPG Retail Piramal's Pantaloon Retail Department Store (Pantaloon) K Raheja Group stop) Tata/ Trent Landmark Group Others Department Store Small format outlets (Shoppe) Supermarket(FoodBAZAR) Hypermarket (Big Bazaar) Mall (Central) (shopper's Supermarket Hypermarket (TBA) Hypermarket (Star India Bazaar) Hypermarket (TBA) Specialty Store (Crossword) Department Store (Westside) Department Store (Lifestyle) Discount Store (Subhiksha. Margin Free. Supermarket (Nilgiri's).
Ranges from 23 . in proximity to urban outskirts.Growth of Retail Sector in India Retailing formats in India 1. Malls: The largest form of organized retailing today. Located mainly in metro cities.
They stock a limited range of high-turnover convenience products and are usually open for extended periods during the day. 3. feet located near residential areas. offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left over at the season. service and entertainment. Prices are slightly higher due to the convenience premium. 7. Department Stores: Large stores ranging from 20000-50000 sq. catering to a variety of consumer needs. all under a common roof. Examples include Shoppers Stop. discount stores or factory outlets. 24 .000 sq.000 sq ft to 2. groceries.00.Growth of Retail Sector in India 60. Convenience Stores: These are relatively small stores 400-2. These stores today contribute to 30% of all food & grocery organized retail sales. 4. Further classified into localized departments such as clothing. These are located in or near residential high streets. home. toys. the Mumbai books retailer Crossword. ft. etc 5. having a strong focus on food & grocery and personal sales. Among these.000 sq ft.500 sq ft to 5. Pyramid. 2.000 sq ft and large supermarkets ranging from of 3. Hypermarts/Supermarkets: Large self service outlets. are focusing on specific market segments and have established themselves strongly in their sectors. RPG's Music World and the Times Group's music chain Planet M. the biggest success is K Raheja's Shoppers Stop. The product category can range from a variety of perishable/ non perishable goods. seven days a week.000 sq ft to 7. which started in Mumbai and now has more than seven large stores (over 30. ft) across India and even has its own in store brand for clothes called Stop!. Specialty Stores: Chains such as the Bangalore based Kids Kemp. They lend an ideal shopping experience with an amalgamation of product. Super Markets can further be classified in to mini supermarkets typically 1.000 sq ft and above. catering to varied shopper needs are termed as Supermarkets. 6. Discount Stores: As the name suggests.000 sq. Pantaloon. Department Stores: Departmental Stores are expected to take over the apparel business from exclusive brand showrooms.
SPECIALITY STORES 25 .Growth of Retail Sector in India 8. These usually do well in busy market places and Metros. offer several brands across a single product category. also known as Category Killers. MBO’s : Multi Brand outlets.
Turner International India Pvt Ltd. retailers are busy bonding--and branding: Monalisa.Growth of Retail Sector in India Food retail : Food dominates the shopping basket in India.1 billion Indian foods industry. Global lifestyle brand Nautica is bringing Nautica Kids.handset. Sahara One Television has also signed a Memorandum of Understanding to source content from Spacetoon Media Group. Middle East's largest kids' entertainment brand for animation and live action content.7 billion business. The US$ 6. International brand Zapp tied up with Raymond to foray into kids' apparel.6 billion. In comparison. growing at over 20 per cent per year.is already a US$ 16. which forms 44 per cent of the entire FMCG sales. is growing at 9 per cent and has set the growth agenda for modern trade formats. Pantaloon's joint venture with Gini & Jony will set up a retail chain to market kids' apparel. will launch Cartoon Network Townsville and Planet POGO--two theme parks designed around its channels--in the National Capital Region. the branded food industry is homing in on converting Indian consumers to branded food. the Versace of kids is coming to India. According to research 26 . with a growth rate that is half of the mobile market. with kids' clothing in India following international fashion trends. the consumer electronics and appliance market is worth US$ 5. which accounts for almost 80 per cent of the revenue. The mobile revolution: The retail market for mobile phones -. Swiss kidswear brand Milou is collaborating with Tirupurbased Sreeja Hosieries. airtime and accessories -. Since nearly 60 per cent of the average Indian grocery basket comprises non-branded items. Leading the kids' retail revolution is the apparel business. Kids retail: When it comes to Indian children. Disney launched exclusive chains which stock characterbased stationery.
Growth of Retail Sector in India firm KSA Technopak. while companies enjoy an average gross margin of about 10 per cent. 14 states. International retailers : The Australian government's National Food Industry Strategy and Austrade initiated a test marketing food retail in India wherein 12 major Australian food producers have tied up with India-based distributor AB Mauri to sell their products directly at retail outlets. agri retail 27 . mangoes. chilies. current market prices. Reliance Retail will establish links with farms on several thousand acres in Punjab. sportswear.6 billion. West Bengal and Maharashtra. etc. The largest-ever 150-member British business delegation in India committed investments in the areas of food processing. Punjab. For its e-Choupal scheme. tailored clothing. PepsiCo--with agriculture exports worth US$ 40 million--also introduced farmers to high-yielding basmati rice. the branded segment comprises US$ 701. floriculture. stationary. ITC built internet kiosks in rural villages so farmers can access latest information on weather. fragrance. Andhra Pradesh and Rajasthan amended the Agricultural Produce Marketing Committee (APMC) act this year. peanuts. pisciculture. development of seeds. and barley for its Frito-Lay snacks. which allows farmers to sell their produce directly to buyers offering them the best price. outerwear.000 to lease land for vegetables. Margins are in the range of 20-25 per cent (for dealers and distributors). theme parks. aqua culture. Besides a five-year program with the Punjab government to provide several hundred farmers with four million sweet-orange trees for its Tropicana juices by 2008. including Maharashtra. With 77 per cent of India's population relying on agriculture for a living. Toys. Export potential and a rapidly growing domestic demand for reliable produce from new supermarket chains is driving change. With a US$ 5. mushroom under cultivated conditions and services related to agro and allied sectors are open to 100 per cent FDI through the automatic route. will annually pay farmers over US$ 30. foods-in-demand. cultivation of vegetables. Agricultural sectors such as horticulture. potatoes. to hire tractors and to pay their workers. eyewear. TV channels… the segment is growing rapidly at 10 per cent per annum. multi-year investment in agriculture and retail. animal husbandry. FieldFresh. Agricultural retail: Agriculture across India is heralding the country's second Green Revolution. watches. along the lines of the Model APMC Act. improved efficiency and new markets can benefit a large number of people. footwear.7 million of the total kids' apparel market-size of over US$ 3 billion. '02. Industry experts say kids' retailing will touch annual growth of 30-35 per cent. planning to become India's first large-scale exporter of produce.
catering to varied shopper needs are termed as Supermarkets. Specialised Transportation Inc. It is also likely to press for the liberalisation of sectors like financial & legal services and retail. will enter the Indian market through a strategic alliance with Patel Retail. US-based home delivery and logistics company.000 sq ft. Tesco is sure to try again. Wal-Mart has announced its plans for India in partnership with Bharti. They are so called pioneers in organized food retailing and go by the western model in look and feel and format. Super Markets can further be classified in to mini supermarkets typically 1. a subsidiary of Patel Integrated Logistics.500 sq ft to 5. This is what everybody means when they say organized food retailing. and Carrefour too might finally find the right partner.000 sq ft to 2. Among other big international players. Franchise outlets: 28 . These stores today contribute to 30% of all food & grocery organized retail sales. Supermarkets are relatively new entrants in the market.Growth of Retail Sector in India and manufacturing. having a strong focus on food & grocery and personal sales.000 sq ft and large supermarkets ranging from of 3. Supermarkets: Large self service outlets. These are located in or near residential high streets.
These malls also known as Shopping Arcades offered only rows of shops. built on international formats of retailing and integrated with entertainment and restaurants to provide a complete family experience. These Shopping Arcades tried to maximize on their store space and did not offer any areas for recreation and entertainment. Kumar Starbucks recently expressed their interest in entering Indian company Like Tommy Hilfiger and Wal-Mart. Hypermarket is known for a wide range of goods offered.Starbucks recently expressed their interest in entering India through the franchise route. S Kumar’s. 29 . Subway. other US retailers are firming up their India entry strategies and if they are already in.Growth of Retail Sector in India Like Tommy Hilfiger and Wal Mart. Shopping Malls: The new shopping malls that have been expanding their footprint across Indian cities are well designed. Shopping malls have existed in India since several decades but were designed and built to house several shops in a single facility. Fashion brand DKNY is also all set to foray into the Indian fashion Industry through a franchisee agreement with Indian company. most of which were small stores that promised bargains for their various wares. McDonald’s has major expansion plans lined up. and the very successful McDonald’s. they are undergoing rapid expansion. while similar goods can be offered in several forms. It consist of dozens of thousands of items. they are undergoing rapid expansion. In order to work with such an assortment it is necessary to group it into categories and sub categories that would unite goods according to this or that criteria. quality display of goods on the shelves and complex systems providing for customers loyalty. S. Fashion brands DKNY is also al set to foray into the Indian fashion Industry through a franchisee agreement with Indian company. in the next 3 years. The specific features of a hypermarket are the wide range of goods offered. Hypermarket: A very large commercial establishment that is a combination of departmental store and a supermarket. other US retailers are firming up their India entry strategies and if they are already in. it plans to open another 100 outlets in cities across India. quality service. like their AmericanF&B counterparts Pizza Hut. Over 300 malls are expected to be built over the next two years and most Indian cities with over a million populations will be exposed to this modern method of retailing.
30 . Most malls also feature a multiplex cinema that offers entertainment to the visitors of the mall.Growth of Retail Sector in India The present day malls are a creation of the past few years post 2000. Finally the mall has large atria and open spaces to allow visitors and families to hang-out. recreation. They are designed professionally using a lot of international experience and combine shopping with a lot of brand building. Malls also have a large format store that serves as their anchor for shopping and a prominent restaurant that anchors the food needs of visitors. food and entertainment.
Growth of Retail Sector in India Organized Sector Retail 31 .
Most of the organized retailing in the country has just started recently.690. Foreign Presence. India also has the largest number of retailers. Anil K Agarwal says:” The organized sector retailing is all set to grow at much faster speed than unorganized sector and the higher growth speed will alone be responsible for its higher market share which has been projected for $17 billion by 2010-11. adds to this slice of the pie. This is despite the fact that India is one of the biggest markets. ASSOCHAM president. operate. 1500 supermarkets and over 10. lease and sell basis". especially in Tier II Cities. 32 . The 4 major organized retail sectors are Food & Grocery. is pegged to rise. footwear is the highest category. 50 million sq ft of quality space under development 7 major cities to account for 41 million sq ft development 300 malls. Nike etc. Adidas. Organized retailing in India has a huge scope because of the vast market and the growing consciousness of the consumer about product quality and services. Organized retail only accounts for 3% of the total retail industry as yet and is estimated to grow to $64 billion by the year 2015. and has been concentrated mainly in the metro cities. In 2003-04. Reebok. Retail business contributes around 10-11 per cent of GDP. shopping centre and multiplexes under construction To open 35 hypermarkets. Footwear is driven by the dominance of home –grown players like Liberty as well as the 15% market share that MNC retailer Bata Commands. Clothing. retail sales constitute about 61% (USD 230 billion). Chennai. followed by clothing. e. Franchisee activity in this category. Consumer Durables and Books & Music.Growth of Retail Sector in India Product Segments: The organized retail business in India is very small.000 crores (USD 375 billion) of which. Cities and metropolis in which retailing will show booming prospects include Mumbai. especially through the franchisee route. though they are mostly small. private consumption expenditure in India amounted to Rs 1. 325 large department stores. about 12 million.000 new outlets To add US $ 10 billion of business to organized retail. said Agarwal adding that the popular mode adopted for building shopping malls in these cities will be based on build. As a result.g. Delhi.In terms of penetration by the organized retail sector. Bangalore and Kanpur. the retailing space in the country will also rise by 15-20% by 2010. Kolkata.
478 retail The Four Large Segments: Food -Chain Stores -Single Large Stores Clothing -Manufacturer retailers -Chain stores -Single Large Stores Consumer durables Manufacturer retailers -Chain stores -Single Large Stores Book and Music -Chain Stores -Single Large Stores 391 326 65 1.266 590 852 824 33% 35% 20% 16% 15% 22% 12% 359 141 98 120 822 284 298 240 18% 15% 25% 15% 97 54 43 310 202 108 26% 30% 20% 33 .924 1.645 422 8.462 162 2.624 1.Growth of Retail Sector in India Estimated Growth in Organized Retail 2004 Large Segments Other Segments 1.024 2.075 293 315 467 1.091 CAGR (%) 21% 15% 12% 18% Non-store 239 Retailing Total Organized 3.315 2009 5.
Growth of Retail Sector in India Retail is amongst the fastest growing sectors in the country. 34 . Indiaranks First. in terms of emerging markets potential in retail and is deemed a ‘Priority’ market for International retail. ahead of Russia.
who has since then gone on an expansion drive with other formats of retailing in different cities. that is now omnipresent in almost all formats right from small groceries to e-tailing.Growth of Retail Sector in India Major Industry Players Nanz in North India. due to some strange reason. Nilgiris in the South. Nanz faced several obstacles in their business and had to finally down their shutters. Pantaloon in the East and Crossroad in the West were the pioneers of the retail revolution in India. Crossroads in Mumbai imparted some valuable lessons to their parent. did not see any logic to expand beyond the southern frontiers. the Piramyd Group. 35 . Nilgiris. Pantaloon went to scale up and become bigger and bigger to form the Future Group.
The store was a success and recorded revenues of Rs 100 million within the first year of operations. The Future Group is divided into six verticals – Future Retail. The Future Group started operations in the mid 1987s by incorporating the company as Manz Wear Private Limited.7 million. and “Food Bazaar” to retail food products. the promoter of the group who likes to address himself as “Chief Knowledge Officer” has plans to launch 18 formats and over 3. Future Capital.340 stores. which was earlier known as PRIL (Pantaloon Retail India Limited) began as a trouser manufacturer in the mid 1980s. 1 The Future Group The Future Group. Future Brands. The company went on to manufacture ready made trousers under the “Pantaloons” brand name. The newcomers who are knocking at the gates are Reliance Retail. As of 2005.000 people and has a customer base of more than 120 million. Shoppers Stop. Westside. The first departmental store called Pantaloons was opened in Kolkata in 1997 with an investment of Rs 0. the Future Group has 3. The success of Pantaloons departmental stores encouraged PRIL to come up with other retailing formats such as “Big Bazaar” to retail low cost general merchandising. thereby turning the Future Group into a US$7 billion company with over US$1 billion in profits by the year 2010. Pantaloons went for a franchisee route to expand the number of retail outlets and by 1995. The first exclusive men’s store called Pantaloon Shoppe was inaugurated in 1992. In 1999. It came out with a public issue in 1991 and later changed their name to Pantaloon Fashions (India) Limited (PFIL). we intend to do a brief profiling of the major players in order to understand the retail business in a better manner. Future Media and Future Logistics. Here. it had reached to a crucial number of 70. Subiksha and RPG Spencer. the company’s name was changed to Pantaloon Retail (India) Limited (PRIL). Future Space. It employs more than 12. 36 .Growth of Retail Sector in India The big players in Indian retail landscape now are the Future Group. Kishore Biyani.5 million sq ft of retail space and over 100 stores across 25 cities in India. Bharti Walmart and Aditya Birla Trinethra.
Kolkata.000/. Delhi. the majority of them being families and young couples with a monthly household income above Rs. HyperCITY and Mothercare. was one of the first movers to have set up a large retail outlet in New Delhi with international ambience. They fall between the age group of 16 years to 35 years. Hyderabad. Life . A large number of Non . Zodiac to cosmetic brands like Lakme. Kashish. The stores are spread all over India with presence in Mumbai. From apparel brands like Provogue. Shopper’s Stop Ltd now has a considerable presence all over the country with overr 7 lakh square feet of retail space and stocks over 200 brands of garments and accessories. Gurgaon. Vettorio Fratini and DIY.. With its wide range of merchandise. Shoppers’ Stop brought international standards of shopping to the Indian consumer providing them with a world class shopping experience. promoted by the real estate group K Raheja. 37 .Resident Indians visit the shop for ethnic clothes in the international environment they are accustomed to. Pune .Growth of Retail Sector in India 2 Shoppers Stop Shoppers’ Stop.50. Shoppers’ Stop’s core customers represent a strong SEC A skew. Color Plus. Shoppers’ Stop is also very well known for having pioneered several quality retailing concepts in India like CROSSWORD. exclusive shop-in-shop counters of international brands and world-class customer service. The merchandise at Shoppers’ Stop is sold at a quality and price assurance backed by its guarantee stamp on every bill. Levi’s. Le Teint Ricci etc.000/-. They are the only retailer from India to become a member of the prestigious Intercontinental Group of Departmental Stores (IGDS). Shoppers' Stop also retails its own line of clothing namely Stop. Chambor. Bangalore. Shoppers’ Stop caters to almost every lifestyle need. Arrow. Shoppers’ Stop is positioned as a family store delivering a complete shopping experience.and an annual spend of Rs. Scullers. Chennai & Ghaziabad.1. The stores offer a complete range of apparel and lifestyle accessories for the entire family. Jaipur. 20.
Growth of Retail Sector in India Shoppers’ Stop’s customer loyalty program is called “The First Citizen”. which offers the widest range of books along with CD-ROM. women and children. dispatch of stocks to the retail floor and forwarding of bills for payment. These modules include vendor management. stationery and toys.5 lakh members who contribute to nearly 50% of the total sales of Shoppers’ Stop. which is now being integrated with Oracle Financials and the Arthur Planning System. Fax-a-book and Email-a-book enable customers to shop from their homes. totaling to about a million square feet of space. 38 . Shoppers’ Stop has a database of over 2. Shoppers’ Stop was among the first few retailers to use scanners and barcodes and completely computerise its operations. in 2000. Shoppers Stop has been very keen to understand the importance of distribution and logistics in ensuring that merchandise is available on the shop floors. consumer electronics and household items at Star India Bazaar and books. a hypermarket with a large assortment of products at the lowest prices. cosmetics and perfumes at Westside. they are adding 4 to 5 new stores every year. Realising the role of IT way back in 1991. music and stationery at Landmark. Today it is one of the few stores in India to have retail ERP in place. A beginning was made in 1998 with Westside. health and beauty products. at its Westside. “Crossword”. they are able to replicate stores. a lifestyle retail chain. purchase verification and inventory build up. food. which was followed up in 2004 with Star India Bazaar. purchase order management. Landmark and Star India Bazaar outlets. In a recently signed deal. Trent has agreed to anchor 12 malls set up by DLF Universal Ltd across the country. This has led the retail chain o streamline its supply chain. India's largest book and music retailer. The company intends to bring the world’s best retail technology. Shoppers’ Stop has a grand ambition to position itself as a global retailer. Currently. vegetables. Trent operates some of the nation's largest and fastest growing retail store chains. Crossword currently has 18 Stores. The program offers its members an opportunity to collect points and avail of innumerable special benefits. open new stores faster and get information about merchandise and customers online. Services like Dial-a-book. dairy products. This amounts to about 27 locations. Currently. The company has developed process manuals for each part of the logistics chain. beverages. fruits. stock receiving systems. music. With the help of the ERP. along with ICICI ventures also acquired the reputed bookstore. the best retail planning system in the world. 3 Trent – Westside Established in 1998. which reduces the turnaround time in taking quick decision. it acquired Landmark. generation and fixing of price and store tags. retail practices and sales to India. The Organisation. In 2005. Trent retails garments and household accessories for men.
Launched in 2004. one of the largest books and music retail chains in India. dairy products. vegetables. Star India Bazaar provides a large assortment of high quality products made available at the lowest prices coupled with a unique shopping experience. health and beauty products. artifacts. Star India Bazaar is located in Ahmedabad and offers a wide choice of staple food. consumer electronics and household items at the most affordable prices. Piramyd Retail currently has 5 Mega stores and 8 TruMart stores mainly in Maharashtra . home accessories and furnishings. prime locations and coffee shops enhance the customers' shopping experience. As the apparel and food businesses individually reached a critical mass the management merged the two companies into Piramyd Retail Ltd. Real Estate. Trent also runs another chain of retail stores called Star India Bazaar.Growth of Retail Sector in India Westside has 25 outlets across 17 cities in India offering a variety of designs and styles in garments. which has presence in diverse sectors spanning Pharmaceuticals. footwear and accessories. Ltd. Well-designed interiors. Textiles. home & personal care businesses (FHPC) were housed under Crossroads Shoppertainment Pvt. as table linens. Ltd. Pyramid also has a smaller format of stores called TruMart that caters to Food and Personal Care products. Landmark commenced its operations in 1987 with its first store in Chennai. (PRMPL) while its food. Engineering. Trent has also recently acquired a 76 per cent stake in Landmark. The promoters launched the apparel business in 1999 under Piramyd Retail and Merchandising Pvt. Piramyd Piramyd Retail is part of the Piramal Group. CDs and other gift items. toys. beverages. stationery and greeting cards. and now has nine stores in the major metros of the country. 4. (CSPL). sprawling space. music.000 people. due to distant synergies in two businesses in March 2005. The company plans to increase these 39 . Earlier Landmark was focused on books. Family Entertainment and Retail with manufacturing operations in 19 locations across five states and employing over 18. In 1996 it added music to its product portfolio and also started the trend of stocking curios. fruits.
and 40 . The main aim of Subiksha is to offer a functional and transactional shopping experience. Piramyd Retail did have a first mover advantage in many locations but it has actually failed to capitalise over this advantage. Most of the stores are on the lease format and the company is prone to higher lease rentals due to the overall increase in real estate prices. Gross margins from private labels are over 40% and hence the company is planning to increase this business. Its competitors like Pantaloon. Piramyd Retail plans to increase the contribution of private labels from existing 7% to 1820% of the revenues by 2010. This retail chain has no qualms and spends almost no money on creating a pleasant shopping experience. This may bring the profit levels down substantially. 5. The FHPC (Food & Personal Care) business is volume driven while the Lifestyle store is a margin driven business. Subiksha The Chennai based Subiksha grocery chain runs around 200 outlets all over the country and it’s current turnover stands at Rs 224 crores. Their target customer is the middle income value conscious buyers. Shoppers Stop and Trent gained larger benefits of their far more aggressive business & marketing strategy in the retail space. The floor space is expected to be 5 times on successful expansion.Growth of Retail Sector in India numbers to 17 Mega stores and 69 TruMarts by 2008.
Spencer's outlets are divided in to three retail formats.000-sq ft hypermarkets stocking over 25. groceries. Spencer's Hyper.000-sq ft Spencer's Daily for groceries. At Spencer's Daily shoppers can get fresh fruits. the over 25. They also get shopping bags and free home delivery. with regular offers and discounts. branded as Spencer's Super and the daily purchase 4. now Subiksha has slightly tweaked their business model in order to create a better appeal to customers who were defecting to the competitors. A few years ago. chilled and frozen products. 6. fresh food. bakery and weekly top up shopping.000-sq ft mini hyper stores. vegetables.000-sq ft to 7.000sq ft to 15. The store formats are still small and nonairconditioned. 41 . It’s slogan happens to be --. There is no false roofing or sparkling vitrified tiles on the floor. But the selling USP(unique selling proposition) remains the same --Subiksha tries to be as close to the customer as possible and offers the lowest price and huge savings in comparison to competitors.000 items. Subiksha did not even offer shoppers self service. RPG Spencer RPG’s Spencer presently has 125 stores across 25 cities covering a retail trading area of half a million square feet and with a clientele of 3 million customers a month.bachat mera adhikar hain (saving is my fundamental right). household items. Spencer's has a national footprint with seven hypermarkets. These are. Customers had to bring their own carrybags or pay to buy them from the store. three supermarkets and 70 daily use outlets. called Dailies. Subiksha even attempted to charge the customers for home delivery. The 8. The customer had to place an order at a computerized teller and the goods were billed and delivered after cash is collected. However. fastmoving consumer goods. But customers have the option to pick from shelf spaces. All the newly opened Spencer's stores stock every conceivable product that is required by a household on a daily basis.Growth of Retail Sector in India all stores are non-air conditioned.
supermarkets. announced a Rs 25. The first store christened “Reliance Fresh” opened in November 2006 at Hyderabad. Reliance Retail On June 26. In addition to this. a mix of neighborhood convenience stores. specialty stores and hypermarkets.Growth of Retail Sector in India 7. Reliance Industries Limited. electronic goods and farm implements and inputs. Reliance Retail started it’s retail operation with “Reliance Fresh”. Within a few months they have now opened stores in Mumbai. financial services marts and tourism counters within it’s stores. Reliance Retail plans to extend it’s footprint to cover 1. partnerships would be developed to bring the best of global luxury brands to India as well. 42 . RRL expects a 20% return-on-investment. Pune and Ahmedabad and plans foray into other cities on a rapid scale. fruits. With it’s retailing venture. these retail outlets will also be selling apparel and footwear. travel. Chairman and Managing Director. Over a span of five years. health and entertainment. Reliance also plans to open restaurant outlets. a grocery store that sells vegetables. lifestyle and home improvement products. personal care items and other food products. Soon. Mukesh Ambani.000-crore investment in the retail sector. 2006. They will also offer products and services in energy.500 Indian cities and towns with outlets of a varied format. Mukesh Ambani’s ultimate ambition seems to be to create the Indian equivalent of Wal-Mart by scaling up the business to unprecedented heights to reach every nook and corner of the country. Reliance expected a revenue target of US $20 billion through it’s retail operations by 2010.
Bharti’s plan is to invest $2.) Ltd. unveiled the roadmap for its retail venture on 19th February.5 billion (about Rs. A high-level team from Wal-Mart was visited India in the later part of February to work out the details of the back-end chain. Wal-Mart would be 43 .Growth of Retail Sector in India 8. The first retail outlet is expected to open somewhere in the month of August . This investment would be only for setting up front-end stores. 2007 envisaging an investment of $2.5 billion with expectation of revenue of $4. 20. While Bharti would manage front-end of the retail venture.5 billion by 2015 and open stores across all major cities.000 crore) from this business by 2015. including its joint venture with the world's largest retailer Wal-Mart. Bharti Wal-Mart Bharti Retail (Pvt. The modalities for its back-end linkage. are in the process of being worked out.
000 people. with a market capitalization of US$ 23 billion and in the League of Fortune 500. ft. Chairman. We will give them more. The JV was presently scouting for 10 million sq. Aditya Birla Group. The more. of retail space. politicians. supply chain and cashand-carry. including logistics.000 employees belonging to over 25 different nationalities. supermarkets and convenience stores and would provide employment to about 60. Aditya Birla – MORE The Aditya Birla Group is India's first truly multinational corporation. Both Bharti and Walmart are presently having a tough time in convincing the ministers. Bharti is now conducting a massive consumer survey to take a final decision on branding and promotional campaign. Over 50 per cent of its revenues flow from its operations across the world. he added. rooted in values. 9. A lurking fear of monopolistic regime in the retail sector is also enhancing their fears. Kumar Mangalam Birla. They also expect Wal-Mart to take a tough stance on lowering prices and force farmers to sell their produce at lower rates. However. it is anchored by an extraordinary force of 100. A US$ 24 billion conglomerate. for you 44 . agriculturists.” Our mission is to change the way people shop. the NGOs and other pressure groups that their business model would serve to work in the best interests of all the stakeholders. The company would open multi-format retail outlets in all cities with a population of about one million.” says Mr. Global in vision. the Group is driven by a performance ethic pegged on value creation for its multiple stakeholders. Bharti and Wal-Mart have been facing stiff opposition from the left parties and other political outfits who fear that the entry of the Bentonville giant will make life difficult for the small grocers and create massive unemployment.Growth of Retail Sector in India involved in the back-end. which would include hypermarkets.
Each store gives you international quality goods and prices hard to match. India’s first hyper-market has also been opened for the Indian consumer by Vishal. in 18 state across India. Its outlets cater to almost all price ranges. value are the four delivery cornerstones of the more. MORE. VISHAL RETAIL : Vishal is one of fastest growing retailing groups in India. and the more. It is covering about 1282000 sq. promises best in market pricing. Situated in the national capital Delhi this store boasts of the singe largest collection of goods and commodities sold under one roof in India. 45 . The products have been quality-checked and are available in attractive packaging at competitive prices. We have a bright and committed. customers can also enroll for the membership program Club more. The group’s prime focus is on retailing. promises a world-class pleasurable shopping experience to Indian consumers in their very own neighborhood. vegetables and staples ensure great quality as well as great price. which provides convenience. variety. convenience and more. What started as a humble one store enterprise in 1986 in Kolkata(erstwhile. more. Value MORE. more. The showrooms have over 70. Add to this. More. To avail additional benefits. premium and select ranges. enthusiastic team that represents the best experience from India and globally. chain of supermarket stores. value promise becomes all the more evident. more. the membership program Club more. also has a range of products from its own stable available across value. MORE. Is an inspirational brand for an inspirational country.Growth of Retail Sector in India advantage: more. Quality. ft. more.00 products range which fulfills all your household needs. Calcutta) is today a conglomerate encompassing 51 showrooms in 39 cities. 10. and can be catered to under one roof. at no extra charge. The cost benefits that is derived from the large central purchase of goods and services is passed on to the consumer. Linking up directly with farmers to source fresh fruits. customized shopping solutions and savings.
Company is increasing its focus on the non-apparel and FMCG segment. Company will come up with 32 new stores this year. Eventually. Currently. it has very little space in the south India. which in the next two to three years. The company employs over 2. These Centres offer the benefit of quality products at the best wholesale price to over 150. With this METRO introduced the concept of Cash & Carry to India. Company can sustain margins as it is going for backward integration. With growth in volumes.50. Apparel sales currently at 63% in the next 2-3 years should come down to 50% as the company is now also focusing on different segments. Company is looking for opportunities of expansion in the South. Currently manufacturing contributes 10% of the business. the cost of sourcing will come down in the near future. it will have a pan-India set up. The group’s philosophy is integration and towards this end has initiated backward integration in the field of high fashion by setting up a state of the art manufacturing facility to support its retail endeavors. METRO – CASH & CARRY INDIA METRO Group today. will go up to 25%. In the year 2005 METRO Group had generated sales of over €55. Company is doing research on more formats.7 billion. India is a big country and there is huge space for four-five big retail players. Company will venture wherever it gets real estate space. METRO Cash & Carry started operations in India in 2003 with two Distribution Centres in Bangalore. Contribution of apparels business at 53% may slightly come down to 50%. Vishal can always sustain growth in this big market. is the third largest trading and retailing group in the world. 53% of total sales came from outside Germany.000 46 .000 staff in 30 countries. 11. The current share of FMCG at 15% could go up to 20-25%. Company has already tied up for 5-lakh sq ft space and is looking for more.Growth of Retail Sector in India The Vishal stores offer affordable family fashion at prices to suit every pocket.
Viveks grew from 3 stores to more than 52 stores and turnover increased to over Rs. With the liberalization of economy and other changes in the global scene. which enhanced the core retailing business also. Viveks. catering only to business customers. 14 store Jainsons was bought over in 1999. Very few hire purchase options were available and hence Viveks started Vivek Hire Purchase and Leasing Ltd to finance consumer durables. 2 store Premier in 2001 and Spencers in 2002 and have recently absorbed Spencers into the Premier brand. In this process. Jainsons. 350 crores (USD 80 million) and also become a public limited company from a family run enterprise. 12. Institutional buyers and professionals. Restaurants. Viveks popularized several brands by creating visibility and have the distinction of being market leaders and trendsetters with continuous support from the principal companies. Premier and continuously adding to the formidable strength of 1000 employees. METRO offers assortment of over 18000 articles across food and non food at the best wholesale prices to business customers such as Hotels. Viveks streamlined the marketing and advertising activities and shopping ambience was improved. Caterers. Vivek Ltd is the largest consumer electronics & home appliances retail chain in India.Growth of Retail Sector in India businesses in Bangalore. It is a modern format of wholesale trading.Viveks. METRO's Cash & Carry business model is based on a Business to Business (B2B) concept and focuses on meeting all the needs and requirements of business customers. 47 . Food and Non-food Traders.The Unlimited Shop Vivek Limited is a professionally managed public limited company carrying three retail brands . Viveks evolved its strategies to suit the larger scene where there was a stigma attached to borrowing.
Growth of Retail Sector in India THE GROWTH DRIVERS 48 .
India is on the radar of Global Retailers and suppliers / brands worldwide are willing to partner with retailers here. Lucknow. Successful development of value based concepts as well as development of retail space in smaller cities and towns shall drive the organized retail into the next levels of cities. Retail Space is no more a constraint for growth. Stocks in the retail sector are also becoming increasingly attractive from an investor's point of view. ITC. DRIVERS FOR GROWTH: Indian consumers are rapidly evolving and accepting modern formats overwhelmingly. if he or she sees value in shopping from a particular location. and over INR 200 billion by end of 2010. Retailers have responded to this phenomenon by introducing contemporary retail formats such as hypermarkets and supermarkets in the new pockets of growth.Growth of Retail Sector in India Drivers of Retail Industry • • • The Demography Dynamics: Approximately 60 per cent of • • Indian population below 30 years of age. Food and Grocery etc. Prominent ‘tier-II' cities and towns which are witnessing a pick-up in activity include Surat. Double Incomes: Increasing instances of Double Incomes in most families coupled with the rise in spending power. Plastic Revolution: Increasing use of credit cards for categories relating to Apparel. large Indian corporate groups like Tata. Raheja. Covering distances has become easier: with increased automobile penetration and an overall improvement in the transportation infrastructure. Further. The quantum of investments is likely to sky-rocket as the inherent attractiveness of the segment lures more and more investors to earn large profits. Consumer Durable Goods. 49 . Investments into the sector are estimated at INR 20 – 25 billion in the next 2-3 years. covering distances has become easier than before. Now a customer can travel miles to reach a particular shop. Murugappa & Piramal Groups etc and also foreign investors and private equity players are firming up plans to identify investment opportunities in the Indian retail sector. Aggregation of demand that occurs due to urbanization helps a retailer in reaping the economies of scale. Bombay Dyeing. Reliance. Urbanization: increased urbanization has led to higher customer density areas thus enabling retailers to use lesser number of stores to target the same number of customers.
Bhubaneswar. or as a ‘necessary evil' as was the case earlier. manufacturers and retailers of products such as personal computers. JC Penney. Karstadt-Quelle etc stepping up their sourcing requirements from India and moving from third-party buying offices to establishing their own wholly owned / wholly managed sourcing & buying offices shall further make India as an attractive retail opportunity for the global players. thereby. Vijaywada. Development of India as a sourcing hub shall further make India as an attractive retail opportunity for the global retailers. Retailers like Wal-Mart. Some of the niche 50 . many international retailers have entered the Indian market on the strength of rising affluence levels of the young Indian population along with the heightened awareness of global brands and international shopping experiences and the increased availability of retail real estate pace. automobiles. jewellery and accessories. the ‘retail boom'. H&M. These sectors have already witnessed the emergence of organized formats though more players are expected to join the bandwagon.Growth of Retail Sector in India Dehra Dun. Varanasi and Ludhiana among others. Over the last few years. instead of viewing retailers with suspicion. wider availability of products and brand communication are some of the factors that are driving the retail in India. consumer durables. mobile phones. Manufacturers in industries such as FMCG. have set up dedicated units to service the retail channel. availability of increasing quality retail space. The next level of opportunities in terms product retail expansion lies in categories such as apparel. mall development activity in the small towns is also picking up at a rapid pace. paints etc are waking up to the growing clout of the retailers as a shift in bargaining power from the former to the latter becomes more discernible. creating quality space for retailers to fulfill their aggressive expansion plans. 85% of which has so far been concentrated in the metros is beginning to percolate down to smaller cities and towns. Already. petro-retailing efforts of petroleum giants scattered through out the country's landscape have also ensured that smaller towns are also exposed to modern retailing formats. Bhopal. GAP. financial services etc are increasingly targeting consumers in tier II cities and towns. Thus. catering services and home improvement. consumer durables. On the supply side. in line with trends in developed markets. international exposure. GROWING CONSUMER CLASS: Favorable demographic and psychographic changes relating to India's consumer class. In addition. Indore. Also. The contribution of these tier-II cities to total organized retailing sales is expected to grow to 20-25%. Vadodara. manufacturers are beginning to acknowledge them as channel members to be partnered with for providing solutions to the end-consumer more effectively. Tesco. Coimbatore. consumer durables. a number of manufacturers in India. Nasik. With consumption in metros already being exploited.
000 1999 1.215.6 71. Income 2.6 28. any number of opportunities are available . Indian consumer class can be classified according to the following criteria: 1. 22-45.9 74.000 Source: NCAER 2. increase in demand. Socio-Economic status 3. which is mainly 51 . Income Classification Consumer Classes The Rich The Climbers The Aspirants The Destitute Total Annual Income in Rs. There are a lot of young people in India in different income categories.000 and more Rs.2 32. Rs. India has the youngest population amongst the major countries. Music and Gifts offer interesting opportunities for the retail players.7 2009 6.2 90. The bottom line is that Indian market is changing rapidly and is showing unprecedented consumer business opportunity. Geographical dispersion 1.8 199.3 12. Socio-Economic Classification: In addition to income classification and consumer classification. 16-22.1 44 33 164. 16. This is called as Socio-Economic Classification (SEC).000 Rs. Indian households can also be segmented according to the occupation and education levels of the chief earner of the household (the person who contributes most to the household expenses).1 15. 215.1 23.8 2004 2. presence of large number of young population.2 Change 416% 179% 37% -65% -61% 21% The Consuming Class Rs 45.5 54. In India they do not have to face this dilemma largely because rapid urbanization.0 54. Indian consumer goods market is expected to reach $400 billion by 2010.Growth of Retail Sector in India categories like Books.000 Below Rs. Age demographics 4.4 180.
thirds of its population is below the age of 35.7 1012. Consumption Trends Food Essentials 45. Education. if compared with some advanced and developed countries.7 224 178.Growth of Retail Sector in India used by market planners to target market before launching their new products. and 10.2 90.8 207.4 279.3 101. It will have a significant impact over the consumer goods market.7 934.4 119. Age Demographics: India is a very young nation. it is expected that this will generate trade opportunities and continuous investment in the economy.2 2001 1996 Marketers explain that the boom in the consumption level and leisure related expenditure is because of this young population.7 1094.25% 4.5 221. Nearly two. There is huge potential for further consumption of goods and services due to the increased level of disposable income.2 118.2 122. power.5 239. rent. Geographical Dispersion of market potential 52 .1 109. In addition to that. SEC is made to understand the purchase behavior and the consumption pattern of the households 3. and Culture Home Goods 4.9% 0. Age distribution if Indian population (In Millions) Year/ 2006 Age Below 4 yrs 5-14 yrs 15-19 yrs 20-34 yrs 35-54 yrs 55 & above Total 113.25% 14.1 108.68% Essential Services (water. The expenditure on essential goods and services has a higher share in developing countries as compared with that of developed countries.5 233.1% fuels) Clothing Footwear Medicare Transport & Communication Recreation.51% Less than 4% 3. and nearly 50 % is below 25.1 239.0 246.1 88.63% 4.
Tesco is one of the food sector's most successful exponents of clothing in Europe DISPOSABLE INCOME There is no point complaining. the Report says. perceptions and goals of people. Wal-Mart-owned ASDA. and agricultural development. traditional food retailers have been able to stock more extensive non-food ranges. exploit the changes that have already occurred and use them as opportunities. has become the number one apparel retailer in the Czech Republic and also a major player in Hungary apart from being one of the fastest growing clothing retailers in the UK. Identify the changes that have already happened. industrial. Carrefour. Germany. India has 500 districts. India will have at least three million people with an annual income of over Rs 4. Category C districts have 40% of the geographical share. Recent research finding is that by the year 2010.000. France. with the emergence of larger store formats like superstores and hypermarkets in countries like UK. One could comfortably presume that one fourth of the three millions would reside in Bangalore. classified according to their market potential. Mind you.000. Considering the third successive year with great economic growth in India.Peter Drucker The important and distinctive are always the result of changes in values. Remaining 200 districts (category C) are backward and account for only 7% of national market potential. accusing or justifying that retailing business is only for larger players and multinational retailing companies. this is the official.Growth of Retail Sector in India There is large difference in economic prosperity levels among several states in India. GROWING ECONOMY Potential for all Formats to Thrive : Most of the global powerhouses in the retailing sector such as WalMart. declared and straight income meaning there will be a considerable number of consumers with other sources of income! (I suppose). Spain since the 1980s and Eastern Europe more recently. UK's leading grocer. Further. Similar trends Identifying the future The important thing is to identify the 'future that has already happened' . That's total rubbish and rather an assumed limitation. In fact. Chief Economist for Keystone India ñ a Chicago-based firm providing cross-border trade facilitation and asset management services in US are likely to be exhibited in India as all formats present prospects for growth. There are poor districts in many states. Together with its rival. Tesco. it is obvious that we shall have more 53 . Dr William T Wilson. linked to the wealth creation from trade. out of which 150 districts (category A) and next 150 districts (category B) account for 78% and 15% of the national market potential respectively. Tesco etc have adopted multi-format and multiproduct strategies in order to customize their product offering for distinct target segments.
and ETC by Ebony are private label brands. With higher disposable income. There is a distinct advantage in naming the brand launched by the retailer after the same name as that of the store. controlled. Indian consumers are getting richer noticeably leading to higher disposable money. Private Labels Brands. better. customized and more. different. This growing high-income population is triggering the demand for consumer goods. These terms may seem to be synonyms of each other. But at the same time. the discerning Indian consumers are not going to be conscious about price alone. store labels. leading to the proliferation of Higher quality/higher priced products. is the market research arm of global communications specialist Aegis Group. private label brands. each of these terms has a different meaning. the growth of private labels is about 2-3 times more than that of advertised brands .Among the product lines launched by retailers. the ones whose nomenclature is the name of the store itself are called store labels. said that after significant accelerations in economic growth recently. experience and convenience. India’s middle and High Income group has grown at a rapid pace of over 10% per annum . the number of house holds earning above Rs. This emerging consumers would want something special.000 per annum is about 30 million today and is expected to grow to 80 million by 2007. Find the synonyms and transliterate these into value offerings in your field of business and you have a gold mine. Kick-started by the cable-explosion during the gulf war. Foodworld and Nilgiris have launched their own brand of supermarket products under the "Foodworld" and "Nilgiris" brand names. value . when it comes to retailing. unique. While we all know what a brand is. EXPLOSION OF MEDIA There has been an explosion in media as well during the past decade . it has also taken place in rural markets. Life and Kashish by Shoppers' Stop. especially when you manage to connect with the customers' value and perception and India. making it equal to or greater than Japan's. RISING INCOMES Over the past deacde . Among Indian retailers. 54 . According to Synovate.This media bombardment has exposed the Indian consumer to the lifestyles of more affluent countries and raised their aspirations from the shopping experience – they want more choice . television has accelerated to a pint where there are more cable connections than telephones in Indian homes and more than 100 channels are being aired at all times . Stop.Growth of Retail Sector in India people with higher disposable income. a private label and a store label are different from any other brand because they are product lines that are owned. Though this growth is most evident in urban areas. merchandised and sold by a specific retailer in its own stores. store brands. India's economy is expected to equal or surpass Japan as the world's third largest sometime in the year 2006. Further. Dr Wilson also added that India's economy measured in PPP (purchasing power parity) terms will eclipse the US$ four trillion mark in 2006. However.150.
This brings about a more consistent and acceptable product portfolio. Modern Bazaar and The Home Store are store brands since each of them stands for a certain retail offering. in menswear. Introduction of an in house brand of products helps the retailer to have means with which they can compete head on with the other branded products. They are not perceived as being interchangeable with similar private label products launched by other retailers (unlike manufacturers of branded products. For instance. it also helps them to plug gaps in their product portfolio. which also helps reduce mark-downs. Service adds to the differentiation. Private label products contribute to a retail brands differentiation. regional and national brands for practically all kinds of products? The reasons are multifold. and together with a unique product range. A store brand on the other hand is a brand name the retailer carries. retailers say that gross margins on branded products vary from 25-38 per cent. which are the same regardless of the retailer). 55 . because of its unique offering.Growth of Retail Sector in India the store label also carries the burden of not only the success of the brand. An established private label brand provides the retailers a platform to negotiate with suppliers. which is what the store brand signifies. A retailer can achieve differentiation through a large (but not necessarily exclusive) portfolio of private label products. Each retailer. This is not so in the case of private labels. An outside brand could be purchased from any outlet. Retailers are now aggressively moving into developing their own private labels as it not only makes economic sense in the form of retailers achieving higher margins. which may have a negative rub-off effect on the retailer's image. Compared to that. Nallis. and the retailers are thus self-sufficient in a certain category. but also the failure. is a brand in itself. so the product experience keeps bringing the consumer back The question is: why would retailers want to get into the trouble of launching an own brand when there are "n" number of local. results in a strong retail brand. the retailers can earn whopping margins of around 55-60 per cent on private labels. A retailer can create a stronger emotional connect with the consumer as the experience is not just the store experience but also the product experience. They have more control over the merchandise and are able to make the required changes and modifications to suit the changing customer profile much quicker.
Growth of Retail Sector in India SWOT MARKET OF THE 56 .
Growth of Retail Sector in India 57 .
retail space available. 8) Most of the entrants to organized retail come from 3 main categories. Almost 25 million sq. Government regulations on development of real estate(Urban Land Ceiling Act) 3) Need to provide Value for Money-squeezing margins 4) 5) Lack of industry status.Growth of Retail Sector in India STRENGTH 1) 2) 3) 4) 5) 6) 7) Organized retailing at US$ 3. Consumer spending increasing at 11% annually. and have ventured into retail as their business extension. • • • Real Estate Developers Corporate Houses Manufacturers/Exporters WEAKNESSES 1) 2) Shortage of quality retail spaces at affordable rates. Retail revolution restricted to 250 million people due to monolithic urban-rural divide. 7) Lack of huge investments for expansion 58 . ft. A Growing population will translate to move consumers. Pattern of consumption changing along with shopping trends.31 billion. 6) Footfalls not a clear indicator of sales as actual consumers lower in number. Paradigm shift in shopping experience for consumers pulling in more people. 2nd largest contributor to GDP after agriculture at 20%. growing at 8%.
6) Average grocery spends at 42% of monthly spends-presents a huge opportunity. 5) Availability of old industrial lands-prime real estate locked in sick industrial units. 4) Archaic labor laws are a hindrance to providing 24/7 shopping experience. 7) Increase in use of credit cards. 5) 6) Personalized service offered by Mom-&-Pop stores. Social factors like dual household income has enhanced spending power. Increase in consuming middle class population. 7) Differentiate taxation laws hindering expansion. FDI restrictions in the retail sector. THREATS: 1) 2) 3) Rising lease/rental costs affecting project viability. 59 . 4) Spends moving towards lifestyle products and esteem enhancing products. Poor monsoons and low GDP Growth could affect consumer spending drastically. Unavailability of qualified personnel to support exponential growth in retail.Growth of Retail Sector in India OPPORTUNITIES: 1) 2) 3) Increasing urban population-more participants in retail revolution.
Growth of Retail Sector in India CHALLENGES 60 .
Growth of Retail Sector in India Retailing in its traditional form has been existing in India for decades. • Low price strategy: The Indian consumer being value-conscious. The following are the key challenges of retailing: • Large transactions: Retailers need to handle smaller transactions in large numbers and still be able to make money. Price and place). different from other Indian consumers. It is unlike other forms of marketing and the traditional marketing rules do not apply. the People. as in service. discount and collection schemes (say.Retailers need to conduct MRs and behavioral studies into the Indian psyche simply because he is so different from those in the west and in fact.) and thus keep the enthusiasm going. In retailing. The most important difference is that where marketing has the classic 4 Ps (Product. They are critical to a service business like retailing both as employees who execute the business and the customers with whom retailers must interact. Promotion. • Location: A prime location in the city/town so a big plus. His shopping patterns need to be analyzed in detail. • Indian consumer behaviors . in retailing a fifth P. • Use of information technology (IT) in developing a supply chain and 61 . Things such as waiting and parking areas need to be taken care of. there is a fifth P added to the existing 4 of marketing. • Aggressive sales. people is added which is critical. But retail management in the true sense (as retailing is known in the west) is a relatively new discipline in India. credit facilities. Therefore the contact person (whom the consumers interact with) becomes a doubly important entity. a key to success for many retailers is the ability to attract customers by offering low price guarantee.
committees to track retailing industry throughout the country. In the last 2-3 years . Given that these chains come with huge asset bases and financing from their international operations. There is also an increasing trend towards hiring hotel management graduates in the retail sector. constant changes in consumer preferences and patterns. marketing.an efficient and adaptable supply chain. An agile and adaptive supply chain is key Logistical challenges. supply chain. business development.However. efficient customer responsiveness and swiftly evolving retail environment in India. There is also an increase in number of retail management programmes and institutes.Growth of Retail Sector in India integrating all the retailing processes from procurement to after sales. Conquering the retailing in India will be a major challenge. product development and research. The retail industry is expected to create 2 million jobs between now and 2010. operating margins. given the complications that the unorganized sector poses those of the supply chain and consumer behavior as well as the glaring complexities of such a vast a market with all kinds of consumer segments thrown in. the local Gods! HR… a critical business process: The Industry is facing a severe shortage of talented professional. There is also a huge risk for Indian retailers becoming a poaching ground for international retailers once they enter India. A wise retailing hawk would set up special cells.several retailers ranging from F&B operators to discount clothing. crowded marketplaces. Benchmarking the best in the country and seeing oneself as to where exactly he wants to be in the complicated perceptual map would be a fine starter. Any retail chain needs to experiment and reorient to cater to the local needs and preferences. Therefore. especially at middle-management level. the people. the poorer (but strong) unorganized cousins and of course. especially for mid-sized retailers will shrink. As somebody rightly pointed out. Successful Indian retailers are creating a robust second and third level of management by hiring aggressively for these key roles. have implemented Supply chain management 62 . talented professionals will put increased pressure on wage costs. the success of anyone foraying into the land of snake-charmers and maharajas ultimately depends on how well and in-depth understanding they have of the conditions. India remains one of the last frontiers of modern retailing. this is not a difficult task. This will bridge the gap in availability of talented professionals at the middle and lower levels. the supply Retailing in India chain dynamics. These factors pose a huge challenge for that all important key to pushing growth in this kind of an environment. Areas gradually becoming critical are technology. While Indian markets still beckon a large retail chain.
refrigerated transport and ware house facilities across the country. This is despite the fact that most large modern format retailers use standard security features such as CCTV’s. lives in rural retail potential We feel that private logistics companies offering specialized services. enterprise-wide IT platforms to manage operations. including employee pilferage.Growth of Retail Sector in India (SCM) solutions to improve core business processes such as global sourcing. Improvement in infrastructure and logistics needed India is a large and highly fragmented country. vendor frauds and inaccuracy in supervision and administration costs the Indian retail industry about Rs 550-600 crores every year. Fraud in retail is expensive We feel that fraud in going to be one of the retail sector’s primary challenges in the future. Fraud and theft. Going ahead. there will be a pressing need for a single. which will become increasingly complex. As Indian and International retailers continue to grow their presence regionally. India’s FMCG and retail sectors are likely to see an increase in adoption of SCM. 63 .logistics. most Indian retail players are under serious pressure to make their supply chains more efficient in order to deliver the levels of quality and service that consumers are demanding.distribution. However. compliance and management of point of sale(POS) data. cost of this fraud constitutes about 2% of the organized retail sector’s revenues. with 29 states and 18 officials’ languages. 66. shoplifting.transparency and visibility in financials and inventory. A bulk of its population. along with timely distribution of supplies to retail outlets will. POS systems and anti shoplifting systems for greater control over fraud and theft. In financial terms. We believe that the implications and size of this loss will be more significant as retailers continue to scale up and increase product lines.innovation.1%.
Growth of Retail Sector in India LOCATION PLANNING 64 .
000 PCU’s. Ports will witness 38% increase in tonnage in next -3 years and hence. Urbanization is driving an increasing need to upgrade or create infrastructure facilities. or lack of it. Eg :Phoenix Mills Compounds and Shopper’s Stop in Mumbai. Has an array of retail stores in small sizes. However.Has an Existing mall traffic. An indicator of the urgent need for highway development. This will help in an overall decline in logistics a cost which is currently 10-12% of total GDP. Eg: Linking road in Bandra. areas. High real-estate rentals. is a major hindrance for retailers in India. Distribution. for instance. Low real-estate rentals. Very busy with high customer traffic. d. Brigade Road in Bangalore (B) Destination / Freestanding Location a. Transport is a major concern. May not be a commercial retail area at all.Growth of Retail Sector in India TYPES OF LOCATIONS A) High – Street Location: a. the average load carried by trucks in India around 7 tons_ is very low. the Indian Government is presently investing heavily in the state highway system. Growth in air passenger traffic. necessitates quadrupling of airport capacities. b. for next two years. estimated at 20% p. 65 . 10.existent distribution sector results in inefficient logistics systems. port infrastructure cannot be ignored. The lack of quality infrastructure across the country and a non. The lack of adequate infrastructure makes it virtually impossible to reach this virtually untapped market. with a deteriorating railway system and a limited highway network . c. May have a large parking area.000 Passenger car units (PCU’s) far exceeds the highway capacity of 15. Infrastructure is the weakest link in India’s path to progress and there is urgent need to address issues plaguing this area. Has stores that are generally found in clusters based on product categories. c.a. Does not have a high footfall rate (customer traffic needs to be pulled I through the store’s marketing efforts or products/services/process differentiations) b. b .000 MW of power needs to be added every year for next decade. is the fact that average daily traffic volume on highways of 39.Has a clean Environment.In contrast to the global standards. b. (C) Shopping Centre/Mall Location a .
store design and layout: Once a geographical market has been chosen. The most important planning occurs before a retail store even opens for business. Retailers can get specialized assistance from merchandise suppliers. A well thought out plan not only makes the best of the present. 66 . and maximizing profit per square foot. Store layout involves such considerations as allocation of space. In order to use these resources in the most productive way. From the field of management. Crossroads in Mumbai Location. Has a designated parking area. No location is static. we learn that planning is one of the most important functions of the retailer." In assessing the desirability of various available locations. funds. note the positive and negative aspects of each. Some bad decisions made in the planning stage can be corrected. By gathering and synthesizing the relevant information into a retail business plan.Growth of Retail Sector in India c. accounting and management. The retailer draws on knowledge from such areas as marketing. there is plenty of room for creativity. customer traffic flow throughout the store. Once again. Retailers must decide how to make the best use of limited resources. but it is so important that the successful retailer must give it top priority. location. and store planning consultants. This part of the plan takes a lot of thought and consideration. but mistakes made in the area of store design and layouts are usually quite costly to correct. Planning a retail business has several advantages. Eg: DLF Mall in Delhi. Store design and layout of the store's interior and exterior help determine the store's image and character. local architects. the retailer plans for the future. The importance of this decision is summarized by a favorite saying of retailers: "There are three vitally important things in retailing location. Display windows. the next step in formulating the retail business plan is to select a site for the store. such as people. d . It is a function often neglected under the pressure of day-today business activity. finance. A workable retail business plan should be detailed. psychology. and location. and storage are examples of areas covered in this part of the retail business plan. the retailer can make better decisions. Careful planning at this time can greatly enhance a store's chances of success.Medium to High rental cost. but also anticipates future contingencies Retailing is a challenging and dynamic field. lighting. In planning a new store or remodeling of an old one. it is either improving or declining in such things as traffic flow and potential market area. analysis of trends is important. fixtures. and inventories.
banks.a yardstick to compare results with efforts. another essential part of financial planning. and in writing. if the store is to be a "good citizen" of its business community Objectives are difficult to apply to real situations and decisions if they are stated in vague terms. these assets must be financed in part with funds obtained from outside sources . or why it should be done. An objective should establish a measurable goal . there is no predetermined course of action. The retailer must make a sales forecast. and development of a good store image. monthly reviews of progress. In forming the retail business plan. relatives. Goals or objectives such as "to increase sales by 18 per cent this year" or "to break even in the first year of operation" are examples of clearly defined and measurable objectives. must often be given consideration. is a primary objective for any retail organization. Stores can have many different objectives: survival. however. and so on. Without planning. In fact. and estimate the capital requirements of the business. involves inventory. Schedule quarterly. Financial planning: Financial planning is an important part of the retail business plan. inadequate financial planning is a frequent cause of store failure. too. Do not lose sight of these objectives once they are formulated. Assessing available resources: 67 . Financial statistics on the type of business under consideration are often available from trade associations. Asset planning. where to do. growth. Planning involves selecting objectives and developing specific program’s. Revise and update your objectives periodically as well. a major advantage of planning is that it forces the retailer to put ideas in writing. equipment and fixtures. policies. of course. or if appropriate. They waste their own energies and the resources of the store. Steps in formulating the retail business plan: Setting objectivesPlanning begins with objectives. high return on investment. Some objectives are more important than others. Indeed. They must be supported with concrete plans that are specific for reaching these goals. calculate a breakeven point. and with out some predetermined course of action. Remember to be customer-oriented while setting objectives. be as specific as possible. market share increase. it is one of the keys to successful retailing. Often. and procedures for achieving them. accounts receivable. Profit. retailers do not know what to do. and cash.Growth of Retail Sector in India specific. Social concerns. This information can be invaluable to the manager in the initial planning stages.
but they should try to find a market where there is an unfilled demand for the type of store they are planning. the best strategy can be to locate as close as possible to the competition. A retailer with general retailing experience but little knowledge of. could benefit greatly by hiring experienced shoe salespeople if she is planning to open a shoe store. At least as important as knowing the strengths of the business is analyzing its weaknesses. Retailers should not be afraid of competition. Too many similar stores serving too few consumers cause the sales volume of each store to suffer. Customers are drawn to the area because of this convenience. or what segment of the market. and each store's traffic helps the other stores. a retailer can maximize the use of all available assets and can limit or eliminate the handicaps imposed by the inherent weakness of these resources. Experienced. For some types of stores. Sufficient working capital to meet the costs of doing business the first year is another. creative management is a strong resource. for example. Assessing the competitive situation Competition is a good thing. Even during the planning stage. Additional training and outside reading are other answers to many weak areas. the shoe business. and second. Competing stores located in the same area may increase customer traffic. An extreme example of poor market assessment would be trying to sell expensive fur coats in a poor mining town. The key factors in market assessment are: first. however. Some weaknesses can be overcome by hiring an outside expert in areas in which the retailer's knowledge and experience are limited. does the store cater to? Is there enough demand for the products to provide sufficient sales volume? These are some of the main questions the retailer tries to answer by assessing market potential. Some cities. Even the age distribution of the population can affect a store's market potential. the buying power of these people. Awareness of weak areas is the first step in overcoming them. Price wars eat away profits. It leads to better products and services at lower prices. It can inspire a retailer to do a better job. say. However. an accountant can be helpful in setting up an appropriate bookkeeping system. have an area with many antique shops. A retailer who is weak in the areas of financial planning and control needs to work closely with a good accountant. Assessing market potential What type of customer.Growth of Retail Sector in India What are the strengths and weakness of the business? By assessing these factors. the number of people living in the trade area. numerous and / or aggressive competitors are costly to the retailer in many ways. Other assessments: 68 .
lighting. Location. These assessments are often difficult to make. the retailer establishes relationships among people. and store planning consultants. leading. Other management functions performed by the retailer are organizing." In assessing the desirability of various available locations. People can really be the most important asset of a retail firm. and location. Retailers can get specialized assistance from merchandise suppliers. The importance of this decision is summarized by a favorite saying of retailers: "There are three vitally important things in retailing location. an area with slightly lower market potential at present could be growing very fast and provide a better long-run market for a particular store. It is a vitally important function because the employees of a store represent that store to the public. The retailer's 69 . and maximizing profit per square foot. Because leadership means understanding people. Some bad decisions made in the planning stage can be corrected. and responsibility is delegated. Every retailer is in a leadership position. it is either improving or declining in such things as traffic flow and potential market area. tax rates. the next step in formulating the retail business plan is to select a site for the store. while at the same time accomplishing the goals of the organization. analysis of trends is important. Staffing entails the recruitment and selection of employees. No location is static. but the population of this area might be declining. fixtures. By organizing. On the other hand. it is one of the most creative and challenging aspects of a retailer's job. be aware of trends as well. Store design and layout of the store's interior and exterior help determine the store's image and character. and controlling. The planner should investigate these uncontrollable environmental factors. Once again. For example.Growth of Retail Sector in India Local laws. and storage are examples of areas covered in this part of the retail business plan. In planning a new store or remodeling of an old one. staffing. there is plenty of room for creativity. Display windows. customer traffic flow throughout the store. In this preliminary work. Leadership means motivating employees to achieve their maximum potential. Organization and supervision Planning is an example of a management function. but mistakes made in the area of store design and layout are usually quite costly to correct. demand for the products may look very promising in a certain area. note the positive and negative aspects of each. Store layout involves such considerations as allocation of space. This part of the plan takes a lot of thought and consideration. Labour is organized and divided. location. and the labour force are other areas that can affect the retail store. and other resources to get a job done. materials. store design and layout: Once a geographical market has been chosen. local architects. but the effort put into planning at this stage will pay off handsomely when store operations get under way.
closely related to financial planning. such as markup. and psychological pricing.Growth of Retail Sector in India professionalism and attitudes set the tone for employees' attitudes and performance. is helpful. from the discount store to the exclusive shop with quality merchandise and expanded customer services. Advertising and promotion A store's location. Advertising is another key element of the store's image in the minds of customers. Pricing The goals of retail pricing are fourfold. The objective of an advertisement is to stimulate the customer to want what the retailer has to offer. an understanding of the target customer's shopping habits and motivations. inventory costs and expenses must be covered. First. these past data are not available. Besides advertising. a desired profit must be made. and product lines affect its overall image. By giving careful consideration to defining who the advertisement is directed at (the "target customer"). Controlling is the follow-up function of retail management. Actual performance is compared with planned performance to spot and evaluate deviations. and at the right price for the customer. if a sales forecast and desired inventory turnover rate have been determined. Successful retailing involves having the right merchandise in the right place. markdown. past sales data are very helpful in knowing how much to buy. Once the inventory has been obtained. Information channels beyond the direct control of the retailer are publicity and word-of-mouth communication. Second. There are different pricing strategies for different types of stores. Retailers have special terms to describe various pricing operations. Pricing in retailing is both a science and an art. sales promotion. Information from suppliers can provide valuable input for the store buyer. For a new retail business. retailers can get 70 . A balance between meeting customers' needs and high inventory carrying costs must be found. However. and to persuade the customer to take action to satisfy the stimulated want or need. at the right time. Third. In the absence of this information. layout. Knowledge on buying For established retail operations. and packaging. design. prices should be fair to customers. a unit control system must be set up to keep track of the stock. Knowing how much to buy goes hand in hand with knowing what to buy. naturally. and fourth. retailers send messages to customers through personal selling. Pricing is. the goods must sell at a satisfactory rate. Advertising can be thought of as communicating with customers. the beginning inventory figure can be calculated. Information from store records is a valuable aid in knowing what to buy.
and opportunity are often more important than pay. Fairness. Good advertising and promotion can get people into a store. and trading stamps. and fair values. Because window displays are so visible. Window displays can serve to attract customers. Many retailers are surprised to learn that monetary compensation. to show customers the kind of merchandise the store carries. Good records are the basis for guiding and controlling a retail business. are summaries of the financial strength and profitability 71 . and ultimately. The content of an advertisement should focus on benefits desired by the target customers. As part of the retail business plan. Interior displays can be informative. or can suggest uses of a product. although important to employees. such as balance sheets and income statements. sales. attracting customers to the store. services. Accounting and financial management Information and control play an important role in the internal operation of a retail business. is usually not their most important concern. Sales promotion and display techniques are a major promotional tool. care. employee attitudes. and handling of credit policies and customer complaints. Good salespeople and good value keep them coming back. In addition. coupons. they can enhance the store's image. Employee selection and training The salesperson is a communicator: This person translates product features into benefits and satisfactions for the customer. Sales promotions can have various objectives. Services. security. But most important. deserve the ongoing attention of the manager. expenses. Financial statements. can stimulate impulse buying. honesty. This attitude is expressed to the customer through shopping conveniences. and to project the image of the store. They are the tools a manager uses to control inventory. The importance of employee selection and training cannot be overstated. decisions must be made about the types of services to be offered. and building goodwill. and creative input they deserve. profits. Other sales promotion strategies include special events.Growth of Retail Sector in India more mileage out of advertising spend. The unique quality that distinguishes personal selling from other promotion activities is the opportunity for feedback between customer and salesperson. Services An enlightened retailer realizes that the customer is the pivot around which all retailing activities revolve. such as generation of immediate sales. they should be given the attention. the salesperson is the representative of the store to its customers.
marketing research. Most of the research involved in formulating the retail business plan is in fact. Another source of information for the retailer is marketing research. Information is important for intelligent decision-making. promotion and distribution. They tell how well a business is doing. such as the market assessment. Financial planning in the form of budgets helps retailers to spot problems before they occur. and that is the computer. More and better information is available to the retailer now than ever before. Information One information tool in particular has been a real boon to retailers. Research can also help answer questions in such areas as pricing. and give evidence about the quality of management decisions. Computers offer speed and accuracy of information processing that is especially helpful in inventory management.Growth of Retail Sector in India of the retail business. 72 . This means that better and faster decisions can be made. because of computers. Much of this information evolves from basic store records or is provided by a computer system.
Inorbit Mall Hyper City. Early Birds Retailer K Raheja Group Brands Shopper’s Stop.Growth of Retail Sector in India COMPETITOR ANALYSIS The table below outlines some of the strategic moves being planned to change the competitive structure of Retail business in India. 100 Café Brio/ Desi Café and 14 new Hypercity Strengths Pulse on customer tastes with vast local retailing experience Challenges Keeping up brand loyalty Threats Could get bogged down positioning itse right 73 . Café Brio/Desi Café Plans 310 Shoppers’ Stop Outlets by 2010. 60-70 new Crossword outlets within two years. Crossword.
Food Bazaar. Volume 46. Blue Sky A store a day for the next three to four years – 3. and introducing new retail formats It’s smaller ret operations RPG Spencer’s. Issue 1. January 2007. BCities next on list Still considered a southern brand Establishing itself into newe regions.Growth of Retail Sector in India Future Group Pantaloon. Fashion Station. opening more outlets. manpower. nationwide fuel retailing platform Challenges Getting the retail portfolio right for Indian tastes Threats Product pricing. infrastructure. convenience stores and hypermarkets as well as create a back-end retailservices business Strengths Strong back end. sourcing products at competitive prices Source : Indian Management. currently operates 21 stores Already has an established brand like Westside Sprucing up product offerings. Big Bazaar. Page 16 Debutantes Retailer Reliance Brands Reliance Fresh Plans Plans to set up a range of different store formats. brands 74 . sourcing products at cheaper rates Straddling with too many retai formats Tata Trent Westside Looking to register it’s presence in hypermarkets. Music World Expansion into other major cities at prime locations.300 planned by 2010 Can evolve on vast customer experience and existing models Expanding customer base.
Planet Fashion and Trouser Town Easy Bill Plans To roll out it’s retail business within the next 78 months with a combination of large and small stores Strengths Extensive experience in supply-chain management. Currently developing two industrial parks at Haridwar and Uttaranchal Creating retail operations from scratch Little experience in everyday consumer retailing. vendor development with premium brands like Louis Phillippe. 75 . Birla Sun Life Insurance and Idea Cellular. shelf and overall offerings In the Pipeline Retailer Aditya Birla Brands Madura Garments. Van Heusen and Allen Solly Strong background in several manufacturing sectors. sound financial base Challenges Gaining a national footprint Threats Building retail formats from scratch Hero Group Floated Aero Infrastructure Ltd announcing foray into retail.Growth of Retail Sector in India Bharti Walmart Field Fresh Pan-Indian operations expected Bharti’s local expertise and Wal-Mart’s back-end make it a lethal combo Wooing the price sensitive Indian consumer Product pricing.
Modern retail has entered India as seen in sprawling shopping centers. The Indian population is witnessing a significant change in its demographics. A large young working population with median age of 24 years. ushering in a revolution in shopping in India. entertainment and food all under one roof.Growth of Retail Sector in India Future Outlook Retailing in India is gradually inching its way toward becoming the next boom industry. The Indian retailing sector is at an inflexion point where the growth of organized retailing and growth in the consumption by the Indian population is going to take a higher growth trajectory. multi-storied malls and huge complexes offer shopping. The whole concept of shopping has altered in terms of format and consumer buying behavior. nuclear 76 .
along with increasing workingwomen population and emerging opportunities in the services sector are going to be the key growth drivers of the organized retail sector in India. Inorbit Mall. Accounting for over 10 per cent of the country’s GDP and around eight per cent of the employment retailing in India is gradually inching its way toward becoming the next boom industry. entertainment and food all under one roof. the prospects of both the sectors are mutually dependent on each other. The trends that are driving the growth of the retail sector in India are • • • • Low share of organized retailing Falling real estate prices Increase in disposable income and customer aspiration Increase in expenditure for luxury items (CHART) Road Ahead. home and lifestyle centres.ft retail space and achieve Rs. Will operate 55 "Hypercity" hypermarkets with US$100 million sales across India by 2015.Growth of Retail Sector in India families in urban areas. Raheja's: Operates Shoppers' Stop. multiplex. And if industry experts are to be believed. Pantaloon Retail: Will occupy 10 mn sq.400 crore-plus ($90 million) in next five years on Max Hypermarkets & value retail stores. 30. Plans of Large Retailers • • • • • • Reliance Retai l: investing Rs.ft retail spaces through 150 stores in next five years. This has also contributed to large-scale investments in the real estate sector with major national and global players investing in developing the infrastructure and construction of the retailing business. As the contemporary retail sector in India is reflected in sprawling shopping centers. the concept of shopping has altered in terms of format and consumer buying behavior. has presently emerged as one of the most dynamic and fast paced industries of our times with several players entering the market. 50-plus Spencer's Hyper covering 4 million sq.000 crore-plus ($2 bn) sales by 2008. and 'Home Stop' formats. one of India’s largest industries.malls and huge complexes offer shopping.000 crore plus ($20 billion) by 2009-10.67 billion) in setting up multiple retail formats with expected sales of Rs. Piramyd Retail: Aiming to occupy 1.9. Retail and real estate are the two booming sectors of India in the present times. 77 . Crossword. RPG: Planning IPO will have 450-plus Music World. ushering in a revolution in shopping in India. Retail.000 crore ($6.75 million sq.ft by 2010. LIFESTYLE: Investing Rs. 90.
Growth of Retail Sector in India Merger and acquisition activity 78 .
France Lingerie and women's wear retailing 25% 50% N/A 2006 (Future group company) 8 (JV) Source: Price water house Coppers. 100% toys) Books.League Clothing Future group Odyssey India Landmark Deccan Chronicle Holdings Tata Trent Leisure retail chain (books. mid year 2006.Growth of Retail Sector in India India witnessed a record number of M&A deals in the first half of 2006. accessories 74% 2006 Bistro Hospitality Indus League clothing TGI Friday's (a subsidiary of Carlson Restaurant (Food Restaurant Worldretail) wide) Etam group.13 The table below shows some recent deals that have taken place in the Indian retail sector: Year 2005 2005 2005 2005 Acquired/ JV Company/ Acquirer Target Liberty Shoes Future group Consideration Nature of Business Stake (US$ million) Retail (Footwear) Retail clothing 51% 68% 3 5 14 24 Indus . which were collectively worth USD 25. Asia-Pacific M&A bulletin. music. A significant number of deals have being carried out in the Indian retail sector in the past few months in order to acquire a larger share in the growing domestic market and to compete against the prospective global and domestic players. music. 79 .6 billion.
Faced with an empty shelf. consumer driven replenishment within the Indian retail sector will be reflected in rapid growth in sales of supermarkets. This information captured via the PDAs dictates next-day replenishments at the stores. These will include initiatives to streamline internal back end costs so as to translate savings onto customers. When the world's largest retailer knows about an approaching hurricane or snowstorm. retailers are now looking at ways to enhance the supply chain and predict consumer-buying habits. these out-of-stocks rise to 15 per cent. one needs to first collect and analyze pre-shopping signals. stores will take advantage of up-to-the-minute data at the right time for increased strategic flexibility and informed decisionmaking for managing inventory. No wonder. The major business change will start at the business process level. Indian retail players are under tremendous pressure to make the supply chain more efficient in order to deliver quality. Consumer driven replenishment will change the way the industry handles forecasting and replenishment. maximizing mind share in a cluttered market and delivering the best in store experience. enabling information to flow freely from retail functions to suppliers. What this implies is placing the consumer in the centre of the replenishment process. retailers and their supply chain partners must redesign the current business process. retailers and supply chain partners can use existing consumer touch points to map consumers' buying preferences. department stores and hypermarkets. consumers often do not substitute the same brand.Technology – A Critical Tool Out-of-stocks are the most noticeable problem for consumers — during normal shopping experiences eight per cent of intended purchases are not on the shelf and when it comes to promotional offers. Spanish retailer Zara furnishes its store employees with PDAs to help them order out-of-stock items the minute the customer brings it to the assistant's attention. selection and service to consumers. retailers will look at various opportunities to maximize customer satisfaction. All supply chain partners will become part of a cohesive architecture. For example. consumers may speak to store associates or call centre agents to enquire on a particular product. Retailers are now looking at creating an efficient supply-chain via a concept popularly referred to as consumer driven replenishment. To implement consumer driven replenishment. the stores in that area are doubly stocked up with essential items such as bottled water and batteries. RFID tags on each piece of merchandise will enable companies to monitor their inventory at a more detailed level than . Wal-Mart leverages weather data for replenishment. to respond quickly to consumer demand. which often go unnoticed today. Keeping these deliverables in mind. As this often leads consumers to purchase products. In another instance. They simply keep their money and leave the store in search of another product. to allow retailers to be able to use real-time data to sense and respond to changing consumer demands. For example. With visibility into every resource. And with this increased competition. High consumption patterns driven by disposable incomes. Let's take the example of a $25-billion retailer: lost sales due to out-of-stocks added up to nearly 1 per cent of total sales — a mind-boggling figure of $1 billion! Retailers across the nation are unable to predict and master the demand-supply gap as a result of orthodox tools to measure changing consumer behavior. RFID: Widely regarded as the key defining technology to hit the retail sector. This data helps Wal-Mart align inventory with increased demand to cover unnatural events and prevent out-of-stock situations. lifestyle shifts and availability of a wide range of brands are dictating the high-growth of different retail formats in India. Considering the Indian retail industry grew by 300 per cent in the last 12 months and supply chain accounts for 50 per cent of costs. Inevitably. some of the other key modules that the store of the future will look to implement will include: Store connectivity: Stores will invest in building wide-area networks (WANs) and virtual private networks (VPNs) to access information across various sites.
Within the retail environment goods shrinkage is widely perceived to account for up to one per cent of stock. • Track discrete movement of tagged inventory. inventory management. and there are numerous applications—both business and consumer—that can be built around radio frequency identification (RFID) to deliver operational efficiencies. Inventory Management • Maintain a real-time view of tagged inventory as it flows through the supply chain. . RFID can go beyond just intangible cost savings. it can minimise losses. receiving points. Indeed. Maximizing warehouse space With the high costs associated with storage real estate. if a retailer is able to track shipments and high-value assets in real-time. and throughout the supply chain to reduce costs. the Indian consumer will hopefully never find his shopping preferences out of stock. providing instant communication throughout stores at significantly reduced costs. Executives will identify when problems occur by monitoring signal readers installed at key junctures. control costs. With networks that will enable real time updates to predict and replenish stocks. For instance. Minimizing errors in delivery Misdirected deliveries or incorrect orders can immediately result in on-shelf out-of-stock situations leading to reduced sales and damaged customer relationships. the goal is to maximize warehouse space. Uncertainty is the mother of inventory and the father of stock-outs. The Indian retail market is booming. In conclusion. • Trigger alerts around inventory movement based on business rules you construct. Store Mobility: Stores will use wireless technologies at the point of sale for faster checkout and real-time product information in the store to improve operations. and measure results. counterfeit control. Minimizing goods shrinkage Theft combined with imprecise inventory management can create a significant shortfall in actual versus expected goods available. Businesses must avoid focusing too intently on the ways RFID tags can be used and instead stay focused on how RFID can improve consumer value and address complex business issues. for organizations relying on the delivery of specific components to fulfill their own order schedule. as RFID can play a role in food safety. suffice to say that faced with poor supply chain management and a rapidly changing environment. today's retailers will most definitively look for consumer driven replenishment to simplify supply chain operations. allowing them to identify problems as shop lifting. Benefits to Consumers. Apart from improved and enhanced accuracy. IP Communications: Stores will converge their data and voice systems. such errors can have a serious impact on customer satisfaction.ever before. backrooms and store shelves. • Allowing just-in-time practices. and warranty programs. such as loading docks. The biggest benefit is the total visibility across the entire supply chain: What managers worry about the most? It is directly or indirectly related to uncertainty. This will improve utilization without undermining the ease with which goods can be moved in and out. RFID can also lead up to 80 percent savings in time spent on scanning items. representing a significant dent in profit margin. These readers in turn will be networked to a centralized monitoring system that would give companies information they could never imagine with current operations. and even 'gray market’ sales that can erode profits and damage distribution relationships. Let’s see the actual benefits of using RFID in the supply chain. distribution centers.
Explains Chamaria, “RFID is a transformational technology that has the potential to change the way business is conducted. Although at a nascent stage, we expect RFID will start gaining traction around 2010. The cost of tags and readers is fairly high today; once it comes down and ROI is established, it will surely be a boon for both retailers and CPG companies.” Aggarwal of BEA elaborates. “While RFID is at a nascent stage, there are several killer applications that can utilise RFID technology across verticals. Supply Chain Visibility and Reusable Asset Tracking will emerge as key solutions that have high applicability in the Indian market, especially in manufacturing, retail, government and healthcare." But as of now, RFID has hardly any presence in India. Laments Chopra, “Indian retailers are still to adopt bar-coding completely. The level of bar-code usage is also largely due to the retailers’ initiatives of printing these codes at their warehouses, unlike in developed countries, where suppliers print barcodes. Most retailers do not have integrated IT systems today. Many retailers have few IT systems in the areas of supply chain management, vendor development, merchandising and inventory management. The annual expenditure on IT is quite negligible.”
Technology in Retail
Over the years as the consumer demand increased and the retailers geared up to meet this increase, technology evolved rapidly to support this growth. The hardware and software tools that have now become almost essential for retailing can be into 3 broad categories.
Customer Interfacing Systems
Bar Coding and Scanners Point of sale systems use scanners and bar coding to identify an item, use pre-stored data to calculate the cost and generate the total bill for a client. Tunnel Scanning is a new concept where the consumer pushes the full shopping cart through an electronic gate to the point of sale. In a matter of seconds, the items in the cart are hit with laser beams and scanned. All that the consumer has to do is to pay for the goods.
Payment Payment through credit cards has become quite widespread and this enables a fast and easy payment process. Electronic cheque conversion, a recent development in this area, processes a cheque electronically by transmitting transaction information to the retailer and consumer's bank. Rather than manually process a cheque, the retailer voids it and hands it back to the consumer along with a receipt, having digitally captured and stored the image of the cheque, which makes the process very fast.
Internet Internet is also rapidly evolving as a customer interface, removing the need of a consumer physically visiting the store.
ERP System Various ERP vendors have developed retail-specific systems which help in integrating all the functions from warehousing to distribution, front and back office store systems and merchandising. An integrated supply chain helps the retailer in maintaining his stocks, getting his supplies on time, preventing stock-outs and thus reducing his costs, while servicing the customer better.
along with the various available CRM (Customer Relationship Management) Systems. Mumbai. Strategic Decision Support Systems • Store Site Location Demographics and buying patterns of residents of an area can be used to compare various possible sites for opening new stores. Investment Opportunities • • Potential For Investment: The total estimated Investment Opportunity in the retail sector is around US$ 5-6 Billion in the Next five years. software packages are helping retailers not only in their locational decisions but in decisions regarding store sizing and floor-spaces as well. Footwear & Leather. Coimbatore. A larger number of visual merchandising tools are available to him to evaluate the impact of his stacking options. Leading manufactures. distributors and retailers and considering APS packages such as those from i2. Chennai. Bangalore. They enable consolidation of activities such as long term budgeting. all the way from raw material suppliers right through to the retail shelf. Bann. Today. Manugistics.• CRM Systems The rise of loyalty programs. MerciaLincs and Stirling-Douglas. • Advanced Planning and Scheduling Systems APS systems can provide improved control across the supply chain. These APS packages complement existing (but often limited) ERP packages. Nagpur there exists tremendous potential in two tier towns over the next 5 years. weekly factory scheduling and daily distribution scheduling into one overall planning process using a single set of data. monthly forecasting. allows the retailers to study the purchase behavior of consumers in detail and grow the value of individual consumers to their businesses. • Visual Merchandising The decision on how to place & stack items in a store is no more taken on the gut feel of the store manager. Delhi. mail order and the Internet has provided retailers with real access to consumer data. Ahmedabad. Sectors with High Growth Potential: Certain segments that promise a high growth are • Food and Grocery Clothing Furniture and Fixtures Pharmacy Durables. This. Data warehousing & mining technologies offers retailers the tools they need to make sense of their consumer data and apply it to business. Watch & Jewellery . Pune. Location: with modern retail formats having made their foray into the top cities namely Hyderabad. The SPACEMAN Store Suit from AC Neilsen and ModaCAD are example of products helping in modeling a retail store design.
ITC launched the country's first rural mall ' Chaupal Sagar'. with Corporates and Entrepreneurs having made a foray in the past. Other corporate bodies include Escorts and Tata Chemicals (with Tata Kisan Sansar) setting up agri-stores to provide products/services targeted at the farmer in order to tap the vast rural market. • • Cheap Consumer Credit . German giant Metro AG and South African Shoprite Holdings have already made headway in this segment by setting up stores selling merchandise on a wholesale basis in Bangalore and Mumbai respectively. There has been yet another initiative by the DCM Sriram Group called the ' Hariyali Bazaar'. These new-format cash-and-carry stores attract large volumes from a sizeable number of retailers who do not have to maintain relationships with multiple suppliers for all their needs. Wholesale Trading: wholesale trading also holds huge potential for growth.• Fastest Growing Formats: Some of the formats that offer good growth potential are: o Speciality and Super Market • • Hyper Market Discount stores Department Stores Convenience Stores and E-Retailing Supply Chain Infrastructure: Supply chain infrastructure in terms of cold chain and Logistics. India's largely rural population has caught the eye of retailers looking for new areas of growth. that has initially started off by providing farm related inputs and services but plans to introduce the complete shopping basket in due course. offering a diverse product range from FMCG to electronics appliance to automobiles. Rural Retail: Retail sector offers opportunities for exploration and investment in rural areas. attempting to provide farmers a one-stop destination for all of their needs.
Government Initiatives & Regulations .
Four of the world’s 10 largest retailers. Indian companies need time to mobilize at least part of the capital before the foreign players are allowed in. So what impact has this had? The top 100 retailers (both domestic and foreign) in China had combined sales of $60 billion in 2004.There has always been a strong opposition to FDI in India’s retail sector (though 100 percent FDI is allowed in distribution companies that sell to the trade and not to the consumer). China’s public Now. cash & carry convenience stores every conceivable format operates in China. “ The debate is not ‘whether or not to allow FDI. They also argue that giant global retailers will squeeze suppliers and finish them off. though towards the end of Vajpayee’s government‘s term there were noises that it would consider such a move. But five or 10 years later. Is that fear justified? The answer can be found in the experience of othercountries that allow FDI in retail. Therefore their performance cannot be compared with rest of the country’s retail sector. These days. because of their enormous numbers. “ The negative effects in terms of job losses and the displacement of traditional supply chains by the monopoly/ monophony power of multinational retailers far outweigh the supposed benefits…” the left observed in a recent seven-page note that summarized its arguments against FDI. It must be mentioned that the global giants got unfettered access into China only in 2004. discount stores. 35 of the top 50 and 78 of the top 250 have already opened stores in China. 000 crore will be needed in retail to scale up to its potential. Hypermarkets. supermarkets.20. These 100 companies have so far opened 30. Global chains have had a 13 year run in china. But if the Thailand story is forbidding. the government has barred FDI in retailing since 1997. they have retailing PSU’s!) had a 32 percent share and private sector retailers had 45 per cent. total employment in the country). the foreign firms account for only 23 percent sales of the top 100 retailers. Today it has 60. but must be benchmarked only against the top 100 firms. leading to millions of job losses. The arguments are familiar – that global retailers will swamp the Indian markets. “argues Kishore Biyani. then the China one is inspirational. when they have built up larger business. according to the China Chain Store & Franchise Association. argues CII.8 million square metres. managing director. But – and here’s the revelation they have only 9. Of course.9 per cent in 2000.This sector. The big worry is that global retailers will quickly put these kiranas out of business. the question is which theory is relevant to . Biyani is also chairman of Confederation of Indian Industry’s retail committee. It set up Allied Retail Trade. 000. the argument of asking for more time to get even better valuation may not lose its appeal even a decade later. which estimates that Rs. wipe out small kirana stores and put millions of jobs in jeopardy. but ‘when and how’. Given the political clout of the small trading community. which brought small stores together to fight the big chains. Most of India’s home grown retailers also oppose FDI. The globalization of china is complete. Pantaloon Retail. (Supermarkets are perceived to be kirana killers!). Now.6 per cent share of China‘s $628. they may get far higher valuations.” he clarifies. INDIA’s retail industry – the fourth largest in the world – accounts for 11 per cent of the country’s GDP and employs over 40 million people (about 7 per cent of Sector retailers (Yes. The BJP was not too keen on it early on.416 stores with a total area of 25. In 1992. I allowed domestic chains to build up good valuation before opening FDI. China had one supermarket. in fact acts as an informal social security net – almost anyone without a job can set up a kirana. China allowed only one foreign store per province. a huge majority of the retail workforce is in kiranas. In private some domestic retailers fear getting lower valuations from their global counterparts if they sell out today. a network of franchised stores. In fact the Thai government had to step step in to save local retailers from annihilation. the left parties are orchestrating a passionate opposition to allowing FDI in retail.billion retail trade! That figure has grown from 2. In Thailand and Malaysia. global retailers have spelt doom for the traditional mom and pop stores. When seen thus. “What is the hurry (to allow FDI)? For 10 years. if the approach is instinctively protectionist. though for a different reason.
They know their customers by name. But the fact is that the single. they are matching the chains’ prices and continue to do brisk business. offer a different product mix. . Its retailing industry is one of the most matures ones in the world. They have tailored their inventory for their customers. They are also under pressure and their market share in on the decline. in Chennai. where large and organised supermarket chains like FoodWorld and Nilgiri’s have grabbed a 20 percent market share. these small players have not find a lot of them in the vicinity of a Wal. more efficient more customer. They are smarter.India – China’s or Thailand’s? “India cannot be compared with Thailand and Malaysia as the scale is much smaller and economic levels are dissimilar. but they are still small ‘mom and pop’ operations on the US scale. But there is a less understood aspect of the US retail scene – 95 percent of all retailers in the US are single – store operations.store operations still control a little less than 50 percent of US retail trade. Investment in whole supply chain Improved product basket from India for exports.up-gradation of agriculture. back home. so they have great inventory management. “Small businesses have their own competitive advantages. Or better still. China makes sense because of its similarities with India: large area. Even stores in close vicinity of these large supermarkets have survived. Despite over six decades of dominance by large chains. Greater investment in the food processing sector technology Better operations in production cycle and distribution. so they offer great customer service. one could also look at the US story. the kiranas haven’t been slaughtered. The right comparison would be Germany 20-30 years ago or Brazil today. Benefits of opening the Retail sector Improve competition Develop the market : Greater level of exports due to increased sourcing by major players Sourcing by Wal-Mart from China improved multifold after FDI permitted in China Similar increase in sourcing observed for Metro in India Provides access to global markets for Indian producers. Small businesses have their own model. chairman of consultancy KSA Technopak. they are usually in the same block that the customers are in. development of efficient small and medium size industries. and keep their customers happy. I think small business can grow and prosper with Wal Mart. Investment in technology Cold storage chains solve the perennial problem of wastage.friendly than they were five years ago.” says Arvin Singhal. Better lifestyle Greater level of wages paid by international players usually More product variety Newer product categories Economies of scale to help lower consumer price. “Menzer had argued in an inclusive interview with BW during his May visit. They may not be as the Indian Kirana. Long term benefits. They are local. It is also home to some of the world’s largest retailers. disparity in income levels. large chunk of underdeveloped population. and they are very convenient.Mart or a target. and many times they give credit. Again. Increased purchasing capacity of consumers Manpower and skill development through retail training and Greater managerial talent inflow from other countries Tourism Development : A strong retailing sector boosts tourism as seen from the experience of Singapore and Dubai.
“If the economy grows at 6.5 percent or so every year. Currently this is a majorly unemployed demographic group Boom in employment similar to job generation in ITES industry. almost 15 million people or 11.In India. but they also create many jobs. foreign retailers will be in a position to influence employment only several years after they enter India. In reality. Finally. the economy cannot grow…Such inefficiency will lead to job losses. Shifting of jobs is bound to happen.7 of the workforce are employed in retail. Metro Cash & Carry. This is almost double the retail workforce in China – and much higher than in India! Many believe that organised retail actually leads to job gains rather than job losses.FDI would result in market growth and expansion. therefore argue that India’s consumption is actually way below actual potential – and that there is inherent job loss of jobs that exists in the economy. Several large and influential business groups like the Tatas and Ambanis have ambitious plans that include setting up of hundreds of supermarkets and hypermarkets. you won’t have employment growth. then the government ought to be equally concerned about Indian retailers as well. Here poor distribution and below-par processes is another bottleneck. India. owners of large and small stores will tell you that they face stockouts – products not available when a consumer asks for it. This is lost demand. One reason for that is growth of organised retail stimulates consumption. And it is due to India’s rather inefficient supply chain. in India the consumer is invariably forgotten when protectionist lobbies voice their concern.000 people. But they will have an impact on the consumer almost immediately. The top 100 retailers in China employ 810.” argues retail expert Gale. .” argues Harsh Bahadur. managing director. “Supermarket chains will divert business from small vendors. And increased consumption means more production and therefore more jobs. we will have 5-7 years. This is not to say that the changeover will be painless. Won’t these kill kiranas and lead to job losses. the percentage looks paltry. If you do not have organized distribution. needs high school graduates and other similar skill level. In the US. One could. Increased consumer demand implies employment generation across the value chain does not need very high skill sets. Of course. if the fear of kiranas being snuffed out is true. If you do not have an efficient distribution chain. Employment generated at various levels. But compared with the US. a figure growing at over 25 percent every year. its retail still employs 6 percent of the total workforce ( only marginally smaller than India). Despite the entry of organized retail – domestic and foreign – in China. On a much larger scale But new jobs comparatively lower down the value chain Greater clarity and objectivity can be achieved if one looks beyond kiranas at the larger issue of employment.
RESEARCH METHODOLOGY .
• To study the preference given by consumers in term of quality.Objectives of study • The overall purpose of this endeavor is to investigate empirically customers’ preference towards exclusive and multi brand retail outlets and to determine the factors that influence the satisfaction level of customers’ in retail sector especially in Lucknow city. • What are the factors affects for the purchase? Research Design: Descriptive research design will be used. ambience. Secondary Data . • • • Type: Descriptive Study Scope: combination of theoretical study as well as Statistical Study Environment: Field Research Data Sources: Primary Data .It will be collected with the help of Internet. journals. service.Survey of Customers in Lucknow. 1. scheme and location for retail purchase. Questionnaire method . articles of newspapers & magazines and research papers related to booming organized retail sector. • This study is also aimed at finding out the relation between major demographic variables and satisfaction level of customers’ and preference of retail formats. Data Analysis: Data will be analyzed with the help of certain statistical tools. books. As well as unstructured observation will also come in use at some part (topic) of study. It will be collected with the help of Questionnaire Method and Survey Research.
Method of observation Sampling Design: • • • • Population: Consumers of Lucknow city Survey area: Consumer located in different area of Lucknow city Sampling method: Non-Probability Convenient sampling plan. Sample size: 100 consumers from Lucknow city Significance of the Study: • • To know the awareness of people about different brands of retail sector. • It will be helpful to know the connection between demographic factors of consumer like age. . • • First copy of project report will be submitted to project guide. The study was limited to only in Lucknow city. Result will be the knowledge about customer’s preference towards exclusive and multi-brand retail outlet that will be helpful to find out the factors that influence the satisfaction level of customer. Second copy is participant’s own copy. The bias of respondents while responding cannot be eliminated. income. Delivery Method: Two hard copies in form of booklets and two softcopies in form of CDs.2. Limitations of the Study: • • • The present study is limited to the growth of retail sector in india only. education and choice of people for different types of product.
RESEARCH ANALYSIS .
• Average Monthly Shopping Budget of Consumers: The below given was the interpretation of the average monthly shopping budget for the sample size in the project survey. attractive offers and discounts and its very good promotional and marketing activities. 12% 7% 1% 0-2000 23% 2000-5000 5000-10000 10000-20000 38% 20000-50000 50000 & More 19% • Awareness about different brands of Retail Sector: The store location. The Vishal Mega Mart is also famous because of its reach in the various areas of the city.This research analysis is based on the answers given by the sample customers of Lucknow city in the above given consumer survey questionnaire. its customer services. its quality are the important factors for the awareness of the any retailing company or brand but apart from all these the most important thing which influence the awareness of any particular brand is it’s advertising and other promotional activities. 2000-5000.e. . 38%)were able to do shopping between Rs. In the sample size most of the people (i. Big Bazaar of future group in Lucknow is very well know brand among the people of sample because of it’s pricing. discount schemes and offers.
Vishal Mega Mart is also giving attractive discount on formal wear so it is also known for good footfall. After that they also going there for the quality experience. Landmark 11% Shoppers Stop 17% West Side 9% Big Bazar 36% Vishal Mega Mart 27% • Customer Preferences for shopping from Retail chains: The consumers of sample size were visiting the big retail outlets most because of their good pricing and for their attractive schemes and discounts offers. . Thereafter they are also looking for good customer services. Ambience came in last for all of them. Shoppers stop do not have discount offers and schemes but it is still liking of some of people in sample size because of its ambience. shopping comfort and good customer services. The location of the store is also a big concern for the consumers. They want to get well treated by the sales persons of the stores.120 100 80 60 40 20 0 Shoppers Stop Landmark Big Bazar Vishal Mega Mart West Side • Which Retail chain Customers like to visit often: Because of it’s attractive pricing and good schemes and offers people like to visit Big Bazaar most often.
Big Retail still has a long way to go before satisfying the highly diverse needs of the Indian population. Because of competitions in the market the branded formals are also became cheaper so the younger generation prefers to purchase from the retail outlets of the brand the city. gift items and other. The most of the consumer’s want to get some attractive prices. there will be a steady state where Big Retail will co-exist with Small Retail. mobiles. good after sales services and the goodwill of the store. Those who are able to purchase their needs and want for a month in a bulk prefers to go to the retail chains. they prefer to take it from where they are getting cheap prices. As a result. Only the big retail chains are able to satisfy all these needs of the new age consumers whereas there is still some consumers mostly of the old age are willing to purchase from the local kirana store. Assuming that improvements in infrastructure and lower real estate costs become a reality. After studying the customer survey questionnaire statistically and theoretically as well and after observing the consumer’s mood and their preferences I can say that Big Retail is here to stay. . Some of them have perception that these big stores are too costly to afford and some of them are not able to make purchases in a bulk so they do not want to waste their time to go especially to the big store for 2-3 items purchase. It is difficult for the retail stores to satisfy all the needs of the customers. good schemes and offers on every purchases and a shopping comfort as well. In the case of other items like wristwatches.Discount Schemes Quality Location Customer Service Ambience Conclusion The consumer’s preferences are changing rapidity and becoming highly diversified. branded jewelry.
All information provided by you shall be kept confidential and we shall only be publishing the outcomes. 1. Please let us know your spontaneous response to the questions that pertain to your shopping experience in Retail Chains. Which retail chains did you visit ? Big Bazaar Shoppers Stop Westside Landmark Vishal Megamart Any other (Please specify) ________________________________ 3.APPENDIX CONSUMER SURVEY QUESTIONNAIRE RETAIL CHAINS The objective of this survey is to collect tangible information about shopping in Retail Chains. Please provide us your unbiased and frank opinions. This questionnaire is being administered to people like you who have visited and bought products in Retail Chains. Which retail chains do you visit often? Big Bazaar Shoppers Stop Westside Landmark Vishal Megamart Any other (Please specify) ________________________________ . What is your monthly shopping budget? 0-2K 2-5K 5-10K 10-20K20-50K>50K 2.
4. Why did you like that particular retail chain? Ambience Attractive Prices Wide range of choices Discount Schemes Free Offers Customer Service Any Other (Please Specify) ___________________________________ 6. Which retail chain did you like most? Big Bazaar Shoppers Stop Westside Landmark Vishal Megamart Any other (Please specify) ________________________________ 5. Mark on a scale of -3 to +3 your perceptions about your shopping experience in the following retail chains (where -3 indicates inferior and + 3 indicates superior) : Feature Ambience Attractive Prices Range of Choices Price Discounts Freebies Salespeople Behavior Parking Facilities Convenience Home Delivery Big Bazaar 15 70 65 80 60 50 Vishal Westside Shoppers Landmark Megamart Stop 7. Which products do you normally buy from retail chains? _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ .
Which products do you normally buy from your chemist shop? _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ 10. The emergence of retail chains will create unemployment problems: Strongly Agree Agree Neither Agree Nor Disagree Disagree Strongly Disagree 14. Why do you like to buy from local grocery store? _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ 11.8. How much time do you spend in the retail chain on every visit? 0-30 Minutes 3-4 Hours 30-60 Minutes 4-5 Hours 1-2 Hour <5 Hours 2-3 Hours 13. The emergence of retail chains will destroy social harmony: Strongly Agree Agree Neither Agree nor Disagree Disagree Strongly Disagree . Why do you like to buy from chemist shops? _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ 12. Which products do you normally buy from your local grocery store? _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ 9.
Demographics 1. Employee Private Employee Businessman Any other (Pls specify) _______________ 5k-10k 40k-50k Student MBA 10k-20k 20k-30k 50k & above 30k-40k Graduate Post-Graduate Any other (Pls specify) ___________________ Five 6. Age: 3. Occupation: 4. Telephone Number / E-mail:___________________________________________ ________________________________ Thank You______________________________ . Education: ______________________________________________________ 15-20 40-50 20-30 50 & above 30-40 Student Govt. FDI in Retail Sector will contribute to the Growth Momentum: Strongly Agree Agree Neither Agree Nor Disagree Disagree Strongly Disagree. Income group: 5. Number of Family Dependants: Nil One Two Any other (Pls specify) 7.15. Name: 2. The emergence of retail chains will cause monopolistic control over prices: Strongly Agree Agree Neither Agree Nor Disagree Disagree Strongly Disagree 16.
com www.google.equitymaster.economywatch.References Web Sites and Search Engines • • • • • • • • www.com www.indiainfoline.com www.com www.indiabiznews.ibef.org Newspapers • • • • • • The Times Of India The Indian Express The Economic Times Financial Express Business Standard Business Line Books and Magazines • • • Business World The Indian Dream Business & Economy .com www.fashion2fibre.rediff.com www.com www.