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Retailing involves all activities incidental to selling to ultimate consumer for their
personnel family and household use. It does this by organizing their availability on a
relatively large scale and supplying them to a customers on relatively small-scale.
Retailer is any person/organization instrumental in reaching the goods or merchandise oer
services to the end users. Retailer is a must and cannot be eliminated.
The Indian retailing industry is becoming intensely competitive, as more and more payers
are Vying for the same set of customers. The major retail players are Pantaloon Retail,
Shoppers Stop, Reliance,etc..,

Retailing is one of the biggest sectors and it is witnessing revolution in India. The new
entrant in retailing in India signifies the beginning of retail revolution. India's retail
market is expected to grow tremendously in next few years. According to AT Kearney,
The Windows of Opportunity shows that Retailing in India was at opening stage in 1995
and now it is in peaking stage in 2006. India's retail market is expected to grow
tremendously in next few years. India shows US$330 billion retail market that is
expected to grow 10% a year, with modern retailing just beginning. India ranks first in
2005. In fact, in 2005 and 2006, India is the most compelling opportunity for retailers,
because now India is in peaking stage
This window of opportunity is useful for executives who plan their market-specific
strategies; the four stages or the lifecycle of this industry is as as follows:

In growth stage, the market is developing quickly and also ready for modern retailing.
Countries, which are in Peaking stage, are India, Ukraine and Vietnam. Retailers entering
this stage have the best chance for long-term success. Retailers at this stage should enter
through local representations, sourcing offices and new stores. Wal-Mart success in china
in the late 1990's and early 2000's gives us the importance of committing to a promising
high-growth market at right time.

Strategy suggested: The strategy of adopting quality and styled products with new models
and shift of advertising from product awareness to product preference E.g. the big bazaar
advt says surf excel is cheaper than the market price. The idea behind adopting strategy is
to strengthen against competitors.

In this stage the market is still big and growing, but the space for new entrants will
become tighter and retailers should act quickly at this stage because retailers at this stage
have limited time to explore, and also their margin for error is thin. In general , they
should act according to the established rules and should be open to face the competition
from international retailers. This stage generally lasts longer than the previous two stages.
Strategy suggested: Enter new market segments that is either enter new geographic areas
e.g. visual mega mart has opened stores in smaller cities tier II and III cities

The window of opportunity is closing fast and modern retail share is reaching 40 to 60
percent. Though the opportunity is closing the existing retailers can enter with new
formats such as discount models or non-food formats such as consumer electronics and

Window of opportunity ends for about 5 to 10years before a market enters the closing
phase and reaches saturation level. India for example, was in the opening stage in 1995
and entered peaking stage in the year 2003 and reached number 1 rank in2005.
Strategy suggested: Identifying weak segments, maintaining investment level selectively.

Unorganized retailing in India

In India, the most of the retail sector is unorganized. In India, the retail business
contributes around 11 percent of GDP. Of this, the organized retail sector accounts only
for about 3 percent share, and the remaining share is contributed by the unorganized
sector. The main challenge facing the organized sector is the competition from
unorganized sector. Unorganized retailing has been there in India for centuries, theses
are named as mom-pop stores. The main advantage in unorganized retailing is consumer
familiarity that runs from generation to generation. It is a low cost structure, they are
mostly operated by owners, has very low real estate and labor costs and has low taxes to

Organized retailing in India

In late 1990's the retail sector has witnessed a level of transformation. Retailing is being
perceived as a beginner and as an attractive commercial business for organized business
i.e. the pure retailer is starting to emerge now. Organized retail business in India is very
small but has tremendous scope. The total in 2005 stood at $225 billion, accounting for
about 11% of GDP. In this total market, the organized retail accounts for only $8 billion
of total revenue. According to A T Kearney, the organized retailing is expected to be
more than $23 billion revenue by 2010.

In organized retailing will grow faster than unorganized sector and the growth speed will
be responsible for its high market share, which is expected to be $ 17 billion by 2010-11.
Retailing will show good prospects in cities like Mumbai, Delhi, Chennai, kolkata,
Banglore and Kanpur. After Dubai, Singapore and Hong Kong, In India Delhi will be
the next big retail destination, According to Confederation of Indian Industries whose
findings have shown that Delhi has the good resources and good conditions for the retail
sector. Out of the total earnings of the Government of Delhi Rs 11,000 crore, Rs 6,500
crore is achieved from the retail sector.

Share of Organised Retail

1999 2002 2005

Total Retail (in billion INR) 7000 8250 10000

Organized Retail (in billion INR) 50 150 350

% Share of Organized Retail 0.70% 1.80% 3.5%

The organized sector is expected to grow faster than GDP growth in next few years
driven by favorable demographic patterns, changing lifestyles, and strong income growth.
This organized retail sector mix includes supermarkets, hypermarkets discounted stores
and specialty stores, departmental stores. For example, Spencer network has 69 stores,
which includes seven Spencer hypermarkets, three Spencer super markets and 49 Spencer
Dailys. Now the company is planning to open 20 stores in 10 cities in six months. The
top 10 retailers account only for 2% of total market, today modern retailing is expected
to enter a boom phase, which has major players and these players might capture 10% of
total market, within next five years. The retail sales in India for future are shown below
(data from 2005-2008 is based on estimates):


(1)Unorganized market: Rs. 583,000 crores

(2)Organized market: Rs.5, 000 crores

(3) 5X growth in organized retailing between 2000-2005

(4)Over 4,000 new modern Outlets in the last 3 years

(5)Over 5,000,000 sq. ft. of mall space under development

(6)The top 3 modern retailers control over 750,000 sq. ft. of retail space

(7)Over 400,000 shoppers walk through their doors every week

Growth drivers in India for retail sector

• Rising incomes and improvements in infrastructure are enlarging consumer markets and
accelerating the convergence of consumer tastes.

•Liberalization of the Indian economy

• Increase in spending Per capita Income.

• Advent of dual income families also helps in the growth of retail sector.

• Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc.

• Consumer preference for shopping in new environs

• The Internet revolution is making the Indian consumer more accessible to the growing
influences of domestic and foreign retail chains. Reach of satellite T.V. channels is
helping in creating awareness about global products for local markets.
• About 47% of India's population is under the age of 20; and this will increase to 55% by
2015. This young population, which is technology-savvy, watch more than 50 TV
satellite channels, and display the highest propensity to spend, will immensely contribute
to the growth of the retail sector in the country.

• Availability of quality real estate and mall management practices

• Foreign companies' attraction to India is the billion-plus population.

Boom in the Indian retail Sector

The retail sector in India properties is one of the prime indicators of economic health of
India. The importance of retail sector can be gauged from the fact that retailing is the
second largest industry in terms of number of employees and establishments in the US.
Who has not heard of Wal-mart and its contribution to the US economy?

Indian retail sector belonging to India Real Estate accounts for about 9-10% of the
country's GDP. It remains one of the least developed sectors in India. According to
Associated Chambers of Commerce & Industry (ASSOCHAM), the estimated annual
retail sales accounts for about $ 6 billion and is expected to reach $ 17 billion dollar mark
by the year 2010. Historically, the Indian retail sector is dominated by sole proprietorship
mostly governed by old principles of business inheritance. The perception is now
changing with Indian government, under pressure from the US and other western
countries, deciding to gradually increase the limit of Foreign Direct Investment (FDI) in
retail sector.

The decision is fuelled by booming economy and the positive reports of leading retail
assessors of the world. The favorable business environment in the country is indicated by
the increased NRI investment in India since the past few years. The Non resident Indians
are also putting added pressure on the government to open up the retail sector in India for
the FDI as the prices of commercial property in India are already on the upswing and the
ever-increasing spending power of the consumers lend positive air to the business
environment in the country.

The Indians have just started to feel the malls, cineplex, multiplex culture that has
revolutionized the west. All the major global players like Wal-Mart, Tesco and others are
keen to enter the Indian retail market with a bang. A T Kearney has ranked India 5th out
of 30 most attractive retail markets in terms of investment.
It is being estimated that if the government timely adopts the favorable policies, then by
2009 the retail industry will start appreciating by the rate of 25-30 % per year. Further,
millions of jobs are expected to be generated by the retail sector. Integrated retailing
(retail-cum-entertainment) – a sub-division of retailing – is already booming in tier cities
of India. And with the liberalized policy of FDI in retail sector, the things can only get

Challenges of Retailing in India

In India the Retailing industry has a long way to go,and to become a truly flourishing
industry, retailing needs to cross the following hurdles:

* The first challenge facing the organized retail sector is the competition from
unorganized sector.

* In retail sector, Automatic approval is not allowed for foreign investment.

* Taxation, which favors small retail businesses.

* Developed supply chain and integrated IT management is absent in retail sector.

* Lack of trained work force.

* Low skill level for retailing management.

* Intrinsic complexity of retailing- rapid price changes, threat of product obsolescence

and low margins.

* Organized retail sector has to pay huge taxes, which is negligible for small retail
*Cost of business operations is very high in India.

Key Findings
• Organized retail market in India is expected to reach US$ 50 Billion mark by
• Number of shopping malls is expected to increase at a CAGR of more than 18.9%
from 2007 to 2015.
• Rural market is projected to dominate the retail industry landscape in India by
2012 with total market share of above 50%.
• Organized retailing of mobile handset and accessories is expected to reach close
to Rs. 5000 Crore by 2010.
• Driven by the expanding retail market, third party logistic market is forecasted to
reach US$ 20 Billion by 2011.
• Apparel, along with food and grocery, will lead the organized retailing in India.

Many agencies have estimated differently about the size of organized retail market in
2010. The one thing that is common amongst these estimates is that Indian organized
retail market will be very big in 2010. The status of the retail industry will depend mostly
on external factors like Government regulations and policies and real estate prices,
besides the activities of retailers and demands of the customers also show impact on retail
As the retail market place changes shape and competition increases, the potential for
improving retail productivity and cutting costs is likely to decrease. Therefore it is
important for retailers to secure a distinctive position in the market place based on values
relationships or experience.
Finally it is important to note that these strategies are not strictly independent of each
other; value is function of not just price quality and service but can also be enhanced by
personalization and offering a memorable experience