The Indian Retail

INDUSTRY EVOLUTION

Introduction
Retailing in India is receiving global recognition and attention and this emerging market is witnessing a significant change in its growth and investment pattern. It is not just the global players like Wal-Mart, Tesco and Metro group are eying to capture a pie of this market but also the domestic corporate behemoths like Reliance, KK Modi , Aditya Birla group, and Bharti group too are at some stage of retail development. Reliance, announced that it will invest $3.4 billion to become the country's largest modern retailer by establishing a chain of 1,575 stores by March 2007. The last couple of years have been rosy for real estate developers and the retailers are finding suitable retail space in prominent locations. The industry is buoyant about growth and the early starters are in expansion mood. There is increased sophistication in the shopping pattern of consumers, which has resulted in big retail chains coming up in most metros; mini metros and towns being the next target. Consumer taste and preferences are changing leading to radical alteration in lifestyles and spending patterns which in turn is giving rise to new business opportunities. Companies need to be dynamic and proactive while responding to the ever-changing trends in consumer lifestyle and behavior. Retailing in India is currently estimated to be a USD 200 billion industry, of which organised retailing makes up 3 percent or USD 6.4 billion. By 2010, organised retail is projected to reach USD 23 billion and in terms of market share it is expected to rise by 20 to 25 per cent. The report also predicts a stronger retailer growth than that of GDP in the coming five years. The generic growth is likely to be driven by changing lifestyles and by strong surge in income, which in turn will be supported by favorable demographic patterns. Rapid growth in international quality retail space brings joy to shoppers and shopping malls are
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The Indian Retail

becoming increasingly common in large cities, and announced development plans project at least 150 new shopping malls by 2008. The number of department stores is growing at a much faster pace than overall retail, at 24 per cent annually. Supermarkets have been taking an increasing share of general food and grocery trade over the last two decades.

Development of mega malls in India is adding new dimensions to the booming retail sector. Shopping experience in the nation of shopkeepers is changing and changing very fast. There is significant development in retail landscape not only in the metros but also in the smaller cities. Even ITC went one step ahead to revolutionize rural retail by developing ‘Choupal Sagar’ a rural mall. On one hand there are groups of visionary corporate working constantly to improve upon urban shopping experience and on the other hand some companies are trying to infuse innovative retail experience into the rural set up.

Overview
The attitudinal shift of the Indian consumer in terms of "Choice Preference", "Value for Money" and the emergence of organised retail formats have transformed the face of Retailing in India. With a growth over 20 percent per annum over the last 5 years, organised retailing is projected to reach US$ 23 Billion by 2010. The Indian retail industry though predominantly fragmented through the owner -run " Mom and Pop outlets" has been witnessing the emergence of a few medium sized Indian Retail chains, namely Pantaloon Retail, RPG Retail, Shoppers Stop, Westside (Tata Group) and Lifestyle International. Given the attractiveness of the Indian retail sector, foreign retailers like Wal-Mart, Carrefour SA, Europe's largest retailer and Tesco Plc, the UK's largest retailer, were keen to enter this growing market, despite the Indian retail sector being closed to foreign direct investment (FDI).

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The Indian Retail

In the last few years, Indians have gone through a dramatic transformation in lifestyle by moving from traditional spending on food, groceries and clothing to lifestyle categories that deliver better quality and taste. Modern retailing satisfies rising demand for such goods and services with many players entering the bandwagon in an attempt to tap greater opportunities.

Traditionally retailing in India can be traced to – The emergence of the neighborhood ‘Kirana’ stores catering to the convenience of the consumers – Era of government support for rural retail: Indigenous franchise model of store chains run by Khadi & Village Industries Commission

• •

1980s experienced slow change as India began to open up economy. Textiles sector with companies like Bombay Dyeing, Raymond's, S Kumar's and Grasim first saw the emergence of retail chains

Later Titan successfully created an organized retailing concept and established a series of showrooms for its premium watches

The latter half of the 1990s saw a fresh wave of entrants with a shift from Manufactures to Pure Retailers.

For e.g. Food World, Subhiksha and Nilgiris in food and FMCG; Planet M and Music World in music; Crossword and Fountainhead in books.

Post 1995 onwards saw an emergence of shopping centers, – – mainly in urban areas, with facilities like car parking targeted to provide a complete destination experience for all segments of society

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The Indian Retail

Emergence of hyper and super markets trying to provide customer with 3 V’s Value, Variety and Volume

Expanding target consumer segment: The Sachet revolution - example of reaching to the bottom of the pyramid.

At year end of 2010 the size of the Indian organized retail industry is estimated at Rs. 14,00,000 crore .

THE INDIAN ECONOMY: • GDP growth for the year 2007-08 ended at 8.4%.
• Tops AT Kearney list of emerging markets for global retailers to enter. • 2nd Fastest growing economy in the World • Fourth in terms of Purchasing Power Parity next only to TUSA, China and Japan. • 50% of the total GDP led by services such as IT, telecommunications, healthcare and retailing. • Reserves crossed the $150 bn mark, showcasing India as one of the top ten holders of Foreign exchange reserves. • Over 3.9 mn tourists visited India this year, up from 3.0 mn last year.

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these supermarkets frequently issued trading stamps as incentives to customers. The King Kullen store. Cullen. The shopping process was slow. The general trend in retail since then has been to stock shelves at night so that customers. Tennessee and developed a selfservice grocery store. the costs of appropriate security measures ideally outweighed by the increased economies of scale and reduced labor costs." "club cards. Sell it low. most foods and dry groceries did not come in the individually wrapped consumer-size packages and an assistant had to weigh and wrap the precise amount desired by the consumer. Queens in New York City. American retailers found these practices were by nature very labor-intensive and therefore quite expensive. Today. opened the first true supermarket in the United States on August 4. most chains issue store-specific "membership cards. The Great Atlantic and Pacific Tea Company (A&P) was another successful early grocery store chain in Canada and the United States. first Piggly Wiggly store opened in Memphis. 1930. Early self-service grocery stores did not sell fresh meats and produce and it was only after 1920s these stores stated selling perishable items like meats and vegetables. Although there were higher risks of shoplifting.000 square foot (560 m²) former garage in Jamaica. In 1916. According to the Smithsonian Institution. Michael J." At the time of Cullen's death in 1941. and became common in North American cities in the 1920s. an assistant fetched all items from shelves behind the merchant's counter while customers waited in front of the counter and indicated the items they wanted. a former Kroger employee. there were seventeen King Kullen stores in operation. inside a 6. as the number of customers who could be attended to at one time was limited by the number of clerks employed in the store." or VIKAS D JAGTAP Page 5 . the following day.The Indian Retail Past In the early days of grocery retailing in America. can obtain their own goods and bring them to the front of the store to pay for them. By 1950s. In addition. operated under the slogan "Pile it high.

They typically comprises meat. supermarkets attempt to make up for their lower margins in EDLP items by selling more of higher-margin HL items. fresh produce. household cleaning products. Its basic appeal is the availability of a broad selection of goods under a single roof at relatively low prices. Present Present day supermarkets are much larger and offer a wide variety of food and household merchandise. Other advantages include ease of parking and the convenience of shopping hours that extend far into the evening or even 24 hours a day. Supermarkets usually offer products at low prices but certain products typically staple foods such as bread. dairy. usually on a single level. Milk. Every Day Low Price (EDLP) and High Low (HL). and to maintain a profit. These supermarkets usually make massive outlays of newspaper and other advertising and often present elaborate in-store displays of products. The traditional suburban supermarket occupies a large amount of floor space. bread. clothes. These typically enable the cardholder to receive special members-only discounts on certain items at checkout. and baked goods departments along with shelf space reserved for canned and packaged goods. pet supplies and some sell a much wider range of nonfood products. Most supermarkets are similar in design and layout and fresh vegetables tends to be located near the entrance of the store. organized into departments. and other essential staple items are VIKAS D JAGTAP Page 6 . Most supermarkets also sell a variety of other household products that are consumed regularly. and is located near a residential area for convenience of their consumers.The Indian Retail "loyalty cards". such as alcohol (where permitted). milk and sugar are often sold on less than their usual market price to attract more consumers. These supermarkets often are part of a corporate chain that controls the company owned as well franchised stores and supplies to these stores are made by large centralized distribution centers (CDC). Usually there are two pricing strategies. medicine.

This extra supplier cost (up to $30. Indian-owned supermarket Subhiksha is one of the first and the largest retail chain in the country. A larger full-service supermarket like this combined with a department store is sometimes known as a hypermarket. cafés. Supply-chain constraints. India's largest private-sector company. Supermarkets use stock rotation. video rentals. photo processing. Many stores also place consumer durable items and toys near the checkouts to attract families with children waiting in checkout queues. Spencer and More. More and more every day facilities like banks. Started in 1997 as a single store entity in South Chennai. unorganized real estate markets. major-brand supermarkets often demand slotting fees from suppliers in exchange for premium shelf space and/or better positioning (such as at eye-level. Many other supermarket brands have joined the race but supermarkets in India are still fragmented and struggling to provide a delightful experience to its customers. the practice of moving products with an earlier sell-by date to the front of a shelf so they get picked up and sold first. Reliance Industries Limited (RIL) also ventured into the retailing business in 2006 by opening the fresh food "Reliance Fresh" chain of stores in major cities across India.The Indian Retail usually situated toward the rear of the store to reduce thawing and to maximize the customer's time spent in the store. irrational tax structures and VIKAS D JAGTAP Page 7 . on the checkout aisle or at a shelf's "end cap"). and/or gas stations are being added to bigger supermarkets to provide their customers one stop shop convenience. In the United States. Some critics have questioned the ethical and legal propriety of slotting fee payments and their effect on smaller suppliers.000 per brand for a chain for each individual SKU) may be reflected in the cost of the products offered. pharmacies. childcare centers/creches. Other major supermarkets include 6Ten. it is now present nationally across 1000 outlets and spread across more than 90 cities selling everything from vegetables to mobile phones. strolling past other items and capitalizing on impulse buying.

CATEGORY WISE PRIVATE FINAL CONSUMPTION EXPENDITURE VIKAS D JAGTAP Page 8 .The Indian Retail shortage of quality retail professionals are some of the factors which are holding back the growth of organized retail in India specially in supermarkets sector.

is worth $300 billion at present and is expected to grow to a staggering US$450 .The Indian Retail • • Total Private Final Consumption Expenditure is Rs 16.US$500 billion by 2110.000 cr. But Deloitte's study says that organized retail grew at a scorching pace in 2007. VIKAS D JAGTAP Page 9 .30. A study conducted by Mumbai-based brokerage Edelweiss Capital in February'08 had said that organized retail would form 15% of the retail sales by March 2011 from 4. As the Indian government continues to reform and liberalize the market.000 cr. retail giants like UK's Tesco.e. going to 8% of total retail sales from 5% in 2006. both organized and unorganized. Rs 9. France's Carrefour and American Wal-Mart are looking to make a foray into the Indian retail market. 55% is Retail Sales i. India's retail industry.90. Predictions The supermarket sector is witnessing a major corporate push with large domestic retailers and foreign giants establishing chains of supermarkets.1% now.

because they under-estimated the extent to which someone else already held their market position for example.5-8 percent during VIKAS D JAGTAP Page 10 . Real GDP growth accelerated from 7. Indian economy has shown an impressive growth of over 6 per cent for last five years and continues to surge ahead. there would not be many differentiating factors in terms of pricing. The absences of retail professionals at mid-level management and shortage of retail educators who can educate form their real experience. variety and service quality.5 per cent during 2004-05 to 8.The Indian Retail Wal-Mart has signed a deal with Indian telecom leaders Bharti and is ready to make a dent by end of 2008. Aldi in Germany. But it will not be an easy ride for Wal-Mart. according to Wharton professor of marketing David Bell says "Wal-Mart will have to take a close look at the extent to which they will have to 'customize' their approach to local market conditions. Likewise. Big question now is that will entry of all these big supermarket players work in the long run or they will under go a Lose-Lose situation in the long run. GDP growth rate in 2003-04 recorded a fifteen year high of 8.The central bank forecasts similar growth of 7. it is not easy to incorporate different taxation structures and other demographic factors in formation of supply-chain. once foreign retail giants get established in retail market.4 per cent during 2005-06 on the back of buoyant manufacturing and services activity supported by a recovery in the agricultural sector. when the supermarket attains industry status. Land in India is at a premium and infrastructural facilities are minimal.5% and subsequently maintained a steady growth for the next two years. layout. They have had some failures internationally. consumers in India may like supermarkets or may not like supermarkets but they can not ignore these supermarkets." But like telecom sector. For now. each one would carve a separate niche of their own with their own sets of brands and suppliers and would try establish their own customer base by providing them royalty cards. All these factors indicate that supermarket retail chains are unlikely to enjoy a high-profit margins in the near future. like in Germany and Brazil. Logistically.

service and entertainment.00. Located mainly in metro cities. 14. They lend an ideal shopping experience with an amalgamation of product. in proximity to urban outskirts. all under a common roof.00. RETAIL INDUSTRY GROWTH: BY 2010 Rs.000 sq ft to 7. Ranges from 60. With strong economic growth consumerism is increasing in the country and India is the fourth largest economy as far as purchasing power parity is concerned. Pantaloon.Examples include Shoppers Stop.The Indian Retail 2006-07. just behind USA. Piramyd.000 sq ft and above. Japan and China. VIKAS D JAGTAP Page 11 .000 cr GROWTH RATE IS 8%. RETAILING FORMATS IN INDIA • Malls: The largest form of organized retailing today.

catering to varied shopper needs are termed as Supermarkets. home. • Hypermarts/Supermarkets: Large self service outlets. the biggest success is K Raheja's Shoppers Stop.000 sq. catering to a variety of consumer needs. are focusing on specific market segments and have established themselves strongly in their sectors. etc. Among these. RPG's Music World and the Times Group's music chain Planet M. The product category can range from a variety of perishable/ non perishable goods • Department Stores: Large stores ranging from 20000-50000 sq. groceries. ft) across India and even has its own in store brand for clothes called Stop!. offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left over at the season. These are located in or near residential high streets. These stores VIKAS D JAGTAP Page 12 . ft. • Discount Stores: As the name suggests. Further classified into localized departments such as clothing.The Indian Retail • Specialty Stores: Chains such as the Bangalore based Kids Kemp. which started in Mumbai and now has more than seven large stores (over 30. toys. • Department Stores: Departmental Stores are expected to take over the apparel business from exclusive brand showrooms. discount stores or factory outlets. the Mumbai books retailer Crossword.

000 sq ft to 2. seven days a week.000 sq ft. Format Branded Stores Specialty Stores Department Stores Description Exclusive showrooms either owned or franchised out by a manufacturer.The Indian Retail today contribute to 30% of all food & grocery organized retail sales. certified product quality Greater consumer. house VIKAS D JAGTAP Page 13 . Super Markets can further be classified in to mini supermarkets typically 1. choice to the comparison between brands is possible Large stores having a wide variety of One stop shop catering to products. They stock a limited range of high-turnover convenience products and are usually open for extended periods during the day.000 sq ft and large supermarkets ranging from of 3.500 sq ft to 5. also known as Category Killers. Prices are slightly higher due to the convenience premium.000 sq. • Convenience Stores: These are relatively small stores 400-2. carry most of the brands available The Value Proposition Complete range available for a given brand. having a strong focus on food & grocery and personal sales. feet located near residential areas. Focus on a specific consumer need. departments such as clothing. offer several brands across a single product category. • MBO’s : Multi Brand outlets. organized into different varied/ consumer needs. These usually do well in busy market places and Metros.

000-crore jewellery brand believes it can still post a 30 per cent growth in sales this year. the scene is not as bad as in the Western world. toys.) The Indian economy is more stable than other economies across the world and one must not confuse India with the rest of the world. Tanishq. While admitting that the company’s rate of growth has slowed down. to each other. which manages exclusive outlets for S. including services such as cafeterias. all under one roof.The Indian Retail wares. Retail and Marketing. say retailers as they hope for a positive year ahead. “Fashion retail has not been impacted in a big way. Stephens Brothers and Belmonte. sometimes Low prices.Reid & Taylor. Carmichael House. appliances. furniture. CEO and MD of Brandhouse Retails. studded jewellery had a sales growth of 40 per cent in the first VIKAS D JAGTAP Page 14 . says Mr Sandeep Kulhalli.Kumars Nationwide brands . extended operating hours. lifestyle brands are putting up a brave front. Supermarkets Discount Stores Extremely outlets Stores offering discounts on the retail price through selling high volumes and Low Prices reaping economies of scale Larger than a supermarket.mart Convenience stores Shopping Malls with a warehouse appearance. large self-service retail One stop shop catering to varied consumer needs Small self-service formats located in Convenient location and An enclosure having different formats Variety of shops available In the face of the economic slowdown. While consumer buying may not be as big as one would like it to be and sales growth rates have dipped. Not even 0. (Brandhouse is also the exclusive India franchisee for luxury brands Alfred Dunhill and Escada.5 per cent of the working population has been hit in India. vast choice Hyper. the Rs 2.” says Mr Tarun Joshi. generally available located in quieter parts of the city crowded urban areas. of in-store retailers. V-P. At Tanishq. etc.

The report on the impact of organised retail on small shop owners.” C K VIKAS D JAGTAP Page 15 . The salaried class will still be with us. there is some pressure.The Indian Retail few months of the financial year. it has dipped to 20 per cent now. given the relatively weak financial state of the unorganised retailers and the space constraints on their expansion prospects. “But this is good enough for us to maintain competition and sustain. The unorganised retail industry was valued at $309 billion in 2006-07. Of course.000 crore by the Central Government. consumers have gained with the entry of organised retailers and their overall spending has also gone up. The unorganised retail sector is expected to grow at about 10 percent per annum to reach $496 billion in 2011-12 despite the steady expansion of organised retailers.” says Mr Kulhalli. said the retail business in the country would grow at 13 percent annually from $322 billion in 2006-07 to $590 billion in 2011-12. Spending may not be robust but people are still buying. according to industry experts. property and the stock market. the organised retail that now constitutes a small four percent of the total industry is likely to grow at a much faster pace of 45-50 percent per annum and quadruple its share in total retail trade to 16 percent by 2011-12. the rural populace has a higher disposable income for fresh purchases. a study released Wednesday said. sentiments are poor. However. The organised retail sector in India is experiencing a slowdown with expansion projects either getting postponed or put on hold. the rural sector has been largely untouched by the economic slowdown. the report said. released in parliament by the Delhi-based think tank Indian Council for Research on International Economic Relations (Icrier). the report revealed that lower income consumers saved more. But interestingly. Hence. not retail. The people who are hit worst in India are those who invested in real estate. As a result. While all income groups saved through organised retail purchases. this sector alone will not be able to meet the growing demand. the Icrier said. the Icrier added that small shop owners in the vicinity of organised retailers have experienced a decline in their volume of business and profit after the entry of bigger players. According to the report.“The rural industry has done even better than last year in the last six months due to record output of crops and the loan waiver of Rs 60. However.

India has experienced a boom in organized retailing in its metro cities—all due to globalization. The loan waiver size had later been increased to Rs 71. Westside. Central. Food World. etc. transportation and warehousing which would generate further revenues for the government Over the past few years. Big Bazaar. It would lead to a zero tolerance policy for inefficiencies since consumers would be unwilling to pay for substandard products. revenue collections would increase. Shoppers’ Stop.680 crore. better incomes. PricewaterhouseCoopers (PwC) released a retail report on ‘The Benefits of Modern Trade to Transitional Economies’. Food Bazaar. The report states that with modern trade. Since modern trade players were tax compliant and their sale figures outnumbered that of the organised sector. Earlier. organised by the Confederation of Indian Industry (CII) Tamil Nadu. ORGANISED RETAIL GROWTH: VIKAS D JAGTAP Page 16 . changes in lifestyle and more spending money. CII and advisory firm.The Indian Retail Ranganathan. This book deals with the Indian retail industry and explains concepts related to it. consumers would benefit from widely available choices and quantity along with rationalization and convergence of prices. Large retailers would require development of a support mechanism for their operations including logistics. CavinKare told to this website’s newspaper on the sidelines of the Conference on ‘Retailing for India’. while also detailing applications of these concepts. Case studies of successful retailing experiences in India include Pantaloon. Chairman and Managing Director.

The Indian Retail By 2010 Rs 1.00.000 cr 9% of Total Retail Industry Growth Rate is 30% RECENT TRENDS VIKAS D JAGTAP Page 17 .

4 billion • As per a report by KPMG the annual growth of department stores is estimated at 24% Ranked second in a Global Retail Development Index of 30 developing countries drawn up by AT Kearney. • Estimated to be US$ 200 billion. of which organized retailing (i.e. • Multiple drivers leading to a consumption boom: Favorable demographics VIKAS D JAGTAP Raising aspirations : Value added goods sales Page 18 . modern trade) makes up 3 percent or US$ 6.The Indian Retail • Retailing in India is witnessing a huge revamping exercise as can be seen in the graph • India is rated the fifth most attractive emerging retail market: a potential goldmine.

– Mahamaza is leveraging technology and network marketing concepts to act as an aggregator and serve the rural markets. • ‘e-tailing’ slowly making its presence felt.com and Indiatimes.com to eBay to radically change buying behavior across the globe. • Rural markets emerging as a huge opportunity for retailers reflected in the share of the rural market across most categories of consumption – ITC is experimenting with retailing through its e-Choupal and Choupal Sagar rural hypermarkets.The Indian Retail Growth in income Increasing population of women • Food and apparel retailing key drivers of growth • Organized retailing in India has been largely an urban phenomenon with affluent classes and growing number of double-income households. • More successful in cities in the south and west of India. • Companies using their own web portal or tie-sups with horizontal players like Rediff.com to offer products on the web. Traditionally three factors have plagued the retail industry: Unorganized : Vast majority of the twelve million stores are small "father and son" outlets VIKAS D JAGTAP Page 19 . – HLL is using its Project Shakti initiative – leveraging women self-help groups– to explore the rural market. • IT is a tool that has been used by retailers ranging from Amazon. Reasons range from differences in consumer buying behavior to cost of real estate and taxation laws.

Unorganized retailing is getting organized: To meet the challenges of organized retailing such as large cineplexes. Bombay Bazaar and Efoodmart formed which are aggregations of Kiranas. Ex. Baristas. the retail space per capita at 2 s. Emergence of discount stores: They are expected to spearhead the organised retailing revolution. and malls. Cash and carry etc. Research shows that the chances of senses dictating sales are upto 10-15%. Haats are the weekly markets : serve groups of 10-50 villages and sell day-to-day necessities.q. Store design : Biggest challenge for organised retailing to create a “customer-pull” environment that increases the amount of impulse shopping. Bombay Bazaar. Rural retail industry has typically two forms: "Haats" and “Melas". Stores trying to emulate the model of Wal-Mart.The Indian Retail Fragmented : Mostly small individually owned businesses. Melas are larger in size and more sophisticated in terms of the goods sold (like TVs). Though India has the highest number of retail outlets per capita in the world. Big Bazaar. ft. VIKAS D JAGTAP Page 20 .q. RPGs. Piramyd and Globus are laying major emphasis & investing heavily in store design. Retail chains like MusicWorld. Quasi-mall. which are backed by the corporate house such as 'Ansals' and 'PVR‘ the unorganized sector is getting organized. Rural bias: Nearly two thirds of the stores are located in rural areas. Recent changes: Experimentation with formats: Retailing in India is still evolving and the sector is witnessing a series of experiments across the country with new formats being tested out. Ex. sub-urban discount stores. ft per person is amongst the lowest. 25 stores in Delhi under the banner of Provision mart are joining hands to combine monthly buying. average size of outlet equals 50 s.

The Indian Retail MAJOR RETAILERS VIKAS D JAGTAP Page 21 .

Shoppers’ Stop and Lifestyle are likely to target metros and small cities almost doubling their current number of stores • These Walmart wannabes have the economy of scale to be low –medium cost retailers pocketing narrow margin • Major Retail Chains Active in the Indian Market COMPANY NAME GROUP NAME VIKAS D JAGTAP Page 22 .The Indian Retail • • • India’s top retailers are largely lifestyle. clothing and apparel stores This is followed by grocery stores Following the past trends and business models in the west retail giants such as Pantaloon.

Landmark Group R Raheja Group Pantaloon Retail DS Group Viswapriya Group Independent Retailer Germany's Metro Group RPG & Dairy Farm Nilgiris Pantaloon Retail Pantaloon Retail RPG Group TOP RETAILERS OF INDIA VIKAS D JAGTAP Page 23 .The Indian Retail Hypermarkets Big Bazaar Giant Supermarkets FoodWorld Nilgiris Food Bazaar Discount Stores Subhiksha Margin Free Markets Cash & Carry Metro Cash & Carry Department Stores Shoppers Stop Westside LifeStyle Globus Pantaloon Ebony Specialist Retailing Music World Tanishq Health & Glow Crossword RPG Group TATA RPG Group Shoppers Stop & ICICI Ventures K Raheja Group Trent Ltd.

• Over 600 malls expected by 2010.RAHEJA SALE(Cr) 650 545 404 300 NILGIRIS LAND MARK VISHWAPRIYA GROUP TATA(TRENT) ADANI PIRAMALS AVENUE SUPER MRKT 250 230 200 130 100 79 78 • Real estate is key for a retail business during its investment phase.9 million outlets in USA.The Indian Retail Sr 1 2 3 4 5 6 7 8 9 10 11 NAME BIG BAZAAR FOOD WORLD SHOPPER STOP MARGIN FREE NILGIRIS LIFE STYLE SUBIKSHA WEST SIDE ADANI PIRAMYD D’MART COMPANY PANTALOON RPG K. • Total investments of USD 5 bn would be required from organized retailers by • Real Estate development in India – poised for Dramatic growth 2010. catering to more than 13 times of the total retail market size as compared to India VIKAS D JAGTAP Page 24 . This is in comparison to 0. INDIA VS WORLD • Indian retail is fragmented with over 12 million outlets operating in the country. • 100% FDI in Construction & Real Estate now permitted. • Drop in interest rates have made property buying and leasing viable.

Lifestyle) can compare. ft.The Indian Retail • India has the highest number of outlets per capita in the world .S. • The sales per hour of $22 million are incomparable to any retailer in the world.The stock-out levels among Indian retailers surveyed ranged from 5 to 15 percent.25 billion .widely spread retail network but with the lowest per capita retail space (@ 2 sq. • Wal-Mart . • Developed economies like the U. The U.3 million where as the entire Indian retail industry employs about three million people. Almost 100 times more than the turnover of HLL (India's largest FMCG company). • 60% of retailers in India feel that the multiple format approach will be successful here whereas in US 34 of the fastest-growing 50 retailers have just one format • Inventory turns ratio: measures efficiency of operations. • Global best-practice retailers can achieve more than 95 percent availability of all SKUs on the retail shelves (translating into a stock-out level of less than 5 %).S. employ between 10 and 11 percent of their workforce in retailing (against 7 percent employed in India today). Number of employees in Wal-Mart are about 1. • One-day sales record at Wal-Mart (11/23/01) $1.800 stores (over 47 million square meters) where as none of India's large format store (Shoppers' Stop. Westside. per person) • Annual turnover of Wal-Mart (Sales in 2001 were $219 billion) is higher than the size of Indian retail industry.roughly two third of HLL's annual turnover.over 4. Many Indian retailers KPMG surveyed have inventory turns levels between 4 and 10. FUTURE DIRECTION: POSITIVES VIKAS D JAGTAP Page 25 . retail sector has an average inventory turns ratio of about 18.

food is the most dominating sector and is growing at a rate of 9% annually.branded items. shopping. and entertainment all under the same roof.stored malls. It is expected that by 2016 modern retail industry in India will be worth US$ 175.The Indian Retail India retail industry is the largest industry in India. India may have 600 new shopping centers. The branded food industry is trying to enter the India retail industry and convert Indian consumers to branded food. changing lifestyles. and favorable demographic patterns. Since at present 60% of the Indian grocery basket consists of non. with an employment of around 8% and contributing to over 10% of the country's GDP. India retail industry is expanding itself most aggressively. Shopping in India have witnessed a revolution with the change in the consumer buying behavior and the whole format of shopping also altering. and sprawling complexes which offer food. Retail industry in India is expected to rise 25% yearly being driven by strong income growth. VIKAS D JAGTAP Page 26 . as a result a great demand for real estate is being created. Industry of retail in India which have become modern can be seen from the fact that there are multi. It is expected that by 2010. huge shopping centers.5 billion.5 billion by 2010 from the current size of US$ 7. rising incomes. India retail industry is progressing well and for this to continue retailers as well as the Indian government will have to make a combined effort. It has further been predicted that the retailing industry in India will amount to US$ 21. India retail industry is one of the fastest growing industries with revenue expected in 2007 to amount US$ 320 billion and is increasing at a rate of 5% yearly. Indian retailers preferred means of expansion is to expand to other regions and to increase the number of their outlets in a city. and a steep rise in rural consumption.200 billion. In the Indian retailing industry. A further increase of 7-8% is expected in the industry of retail in India by growth in consumerism in urban areas.

RPG: Planning IPO. Raheja's: Operates Shoppers' Stop. and 'Home Stop' formats. Crossword. • Pantaloon Retail: Will occupy 10 mn sq. TATA (Trent Ltd. • • • • Piramyd Retail: Aiming to occupy 1. VIKAS D JAGTAP Page 27 . • • AT Kearney has estimated India’s total retail market at US$ 202.ft by 2010.): Trent to open 27 more stores across its retail formats adding 1 mn sq.ft retail space and achieved Rs.ft retail space through 150 stores in next five years.7 billion to US$ 24 billion by 2010.000 crore-plus ($2 bn) sales by 2008. home and lifestyle centres.75 million sq. LIFESTYLE :Investing Rs. will have 450-plus Music World.9. Titan industries to add 50-plus Titan and Tanishq stores in 2006.000 crore plus ($20 billion) by 200910. • • Aditya Birla Group: Investing $3.35 billion in over 6000 stores in a combination of large and small stores.The Indian Retail Road Ahead. Plans of Large Retailers • Reliance Retail: investing Rs. Inorbit Mall.6 billion which is expected to grow at a compounded 30 per cent over the next five years. Will operate 55 "Hypercity" hypermarkets with US$100 million sales across India by 2015. revenues from the sector are expected to triple from the current US$ 7.400 crore-plus ($90 mn) in next five years on Max Hypermarkets & value retail stores. 30. 50-plus Spencer's Hyper covering 4 mn sq.67 billion) in setting up multiple retail formats with expected sales of Rs. over three years Bharti – Wal-Mart Partnership: Will boost the number the stores further up.ft of space in the next 12 DLF malls.000 crore ($6. 90. • With the organised retail segment growing at the rate of 25-30 per cent per annum.

India has moved from culture of Traditional Street Retail Markets to a Shopping Centre Culture. One year ago less than 5% of Indian retail facilities were within Organized Shopping Centers. Retail Spending Power is growing at 24%per annum.The Indian Retail • The share of modern retail is likely to grow from its current 2 per cent to 15-20 percent over the next decade • Over next two years India will see several Indian retail businesses attaining a critical mass as growth in the industry picks up momentum driven by two key factors: – – Availability of quality real estate and mall management practices Consumer preference for shopping in new environments • Wal-Mart : huge plans for India. expects to open one store each in Delhi. Rate of Shopping Center development grew by 37%in 2007. to head its market research and business development functions pertaining to its retail plans in India. Over next decade India’s Urban Markets could grow by over Ten Times. • New York-based high-end fashion retailer Saks Fifth Avenue has tied up with realty major DLF Properties to set up shop in a mall in New Delhi. Arkansas. Anchored by local Indian Brand Fashion Department Stores or Hypermarkets. • Over past 5 years. Ahmedabad. Moving a senior official from its headquarters in Bentonville. Expected to grow by a further 42%in 2008. VIKAS D JAGTAP Page 28 . In urban markets such as Delhi’s Gurgaon. Lucknow and Bangalore in the next four months. • Tommy Hilfiger. retailer of apparels. First Wave of Indian Shopping Center development have evolved as Enclosed Vertical Malls.

As per India’s Marketing Whitebook (2006) by Businessworld. India has around 192 million households. • Increased Participation ofWomen inWorkforce resulting in Higher Disposable Household Income and a rise in demand for Personal Care. • Acceleration of Suburbanization as affluent residents escape pollution & congestion of central cities.The Indian Retail The Indian Market .000. particularly on leisure. • Market polarization between "Value" and "Luxury/Indulgence" • Increase in Retail Spending by Young College Graduates. • Increasing Car Ownership expanding travel patterns in search of shopping & leisure • Decline in Household Size as families shift from traditional joint-family to nuclear families increasing number of households & Demand for Consumer Durables. Aspirational and open-minded market seeking International Brands and Luxury.CONSUMER TRENDS At the same time. • Reduced savings & shift towards Personal Needs & Indulgences. • Respect for value while seeking "Affordable Luxuries". earning between INR45. India is currently having the largest young population in the world and 54 per cent of India’s population is below 25 years of age and 80 per cent are below 45 years. 000. the following trends are fueling the third wave of retail development in India: • Increasingly Global. Health/Beauty Products. Another 75 million households are in the category of ‘well off’ immediately below the affluent. Jewelry and Fashion. Of these only a little over six million are ‘affluent’ – that is. with household income in excess of INR215. VIKAS D JAGTAP Page 29 . • Surge in 20 to 34 Year-Old age cohort (280 million) resulting in growth in "Long Term Consumerism". This is a sizable proportion which offers excellent opportunity for organized retailers to serve.000 and INR215.

of this. it is less developed in terms of infrastructure and facilities. as the number of such stores exceeds 80. Therefore. 48 per cent of shoppers in India admit that they ‘love to try new things’. VIKAS D JAGTAP Page 30 . the consuming class would be about 60 million households. It is not impossible but a bit more difficult.000. groceries and personal care items every month and (2) convenience stores are booming in most markets. income distribution is unequal compared to other Asian economies. In fact. the larger issue is to find out a suitable business model and retail format to fit local taste and preference.The Indian Retail AC Nielsen’s Retail and Shopper Trends 2004 Report made the following observations on shopper’s behaviour in India: (1) Indian shoppers spend an average of INR2500 on food. For example the most successful and the largest incorporation Wal-Mart started in the rural market where as competition started in the urban market. Unlike the urban market. There is no denying that the rural market holds immense promise for the organized retail but companies ponder over how to serve that market profitably. giving it a scale of 23 million households. or 115 million consumers. Business communities believe that sizable disposable income in India is concentrated in the urban areas and well off and affluent classes. the urban and the rural upper-income groups can form an interesting continuum market. In 2006-07. According to the report. Of course cost of doing business in rural market would be lesser compared to urban market but reaching out to the mass is a concern. or 300 million consumers. More than any thing else. the 20 million middle class home in rural India equal the number in urban India and thus have the same purchasing power. Given the increasing urban exposure of rural India. there is significant and considerable opportunity for organized retailers in the rural areas. Indians also appear to spend more on groceries and personal care items. making them the most novelty seeking shoppers around the region and total average monthly expenditure is only $50. This retailer has proved that it is important to understand how do you operate your business model rather than where you do it. $21 is spent on fresh food. comprising 42 per cent of the entire monthly spend.

VIKAS D JAGTAP Page 31 . Consumer Durable Goods. Aggregation of demand that occurs due to urbanization helps a retailer in reaping the economies of scale. perhaps.000 rural haats.The Indian Retail NCAER data shows that for 1998-99. The Growth Drivers : The Indian Retail growth can be attributed to the several factors including • Demography Dynamics: Approximately 60 per cent of Indian population below 30 years of age.500 crore was spent. Now a customer can travel miles to reach a particular shop. Plastic Revolution: Increasing use of credit cards for categories relating to Apparel. Urbanisation: increased urbanisation has led to higher customer density areas thus enabling retailers to use lesser number of stores to target the same number of customers. and only about 20% by the top two income groups in urban areas. for a basket of 22 FMCG products it tracks. These are some of the indicators how rural India is performing. Food and Grocery etc. covering distances has become easier than before. marketers have to worry about purchasing power of consumer not where he is living. Hence.500. Double Incomes: Increasing instances of Double Incomes in most families coupled with the rise in spending power. a total of over Rs 91. if he or she sees value in shopping from a particular location. 37% was spent by the two lowest-income groups in rural India. This is. For example there are nearly 42. the best and only statement of the structure and potential of the Indian market. • • • • Covering distances has become easier: with increased automobile penetration and an overall improvement in the transportation infrastructure. Of this. In rural India there are 50 million Kisan Credit Card (KCC) holders and in 2002-03. average number of sales outlets per haat is 300 and average sales per outlet is INR 900 and average foot fall in a haat is about 4. LIC sold 50 percent of its policies in rural India.

• For the average Indian.000 PLUS SQ. because Indian consumers are accustomed to looking down as they shop. The Indian consumer likes to pick out the produce themselves and barter over the price. CHANGE IN RETAILING BEFORE COUNTER SERVICE LESS THAN 200 SKU FEW HUNDRED SQ. Providing damaged fresh produce. so the organized retailer attempts to create an atmosphere which “feels like” this experience. dusty and dirty means fresh from the farm. Consumers like to touch and smell the grains. as well as good-quality produce in the same box. so the stores sell wheat. rice. SHOP NO GADGETS NO IT NO BAR CODING DULL SHOPPING EXPERIENCE SELF SERVICE 8000 TO 10000 SKU 50. • • • Products are often displayed in large bins.FT. rather than on shelves. gives shoppers a chance to choose and think they are getting a better deal.FT ADVANCE GADGETS ADVANCED IT ADVANCED RFID SHOPENTERTAINMENT AFTER VIKAS D JAGTAP Page 32 . Indian consumers aren't used to processed and packaged goods. lentils and other products out of large buckets.The Indian Retail The Indian Consumer prefers the Public Market experience.

These are becoming increasingly common in large cities and development plans. Shopping Malls.5% over the last decade. encouraging large-scale building of malls and complexes and urban planning reform .000) per annum projected to grow to 48% of total by 2010 from 31% in 2002.000 ($2. Department store.The Indian Retail Key Factors Driving Retail Growth and Demand: • Rapid urbanization: This implies availability of a larger number of products to bigger towns & cities. • Increased Spending Power: Number of households above INR 90. 2.This segment is growing much faster than overall retail. In the near term different shopping formats would emerge such as: 1. (Consumer Spend CAGR of 11.) • Larger Working Population: Working population (between 15-65 years) would continue to rise and reach a peak in 2020 • Entry of New formats: Easing of real-estate laws. It is projected that at least 150 new shopping malls by 2009.has led to a more progressive attitude towards commercial activity and investment in developing malls more focused on organized retailing. the number of stores has been growing by an annual 24% and sales have grown at around 34% during 1999-2002 VIKAS D JAGTAP Page 33 .

which makes the process very fast. processes a cheque electronically by transmitting transaction information to the retailer and consumer's bank. In a matter of seconds. • Internet Page 34 VIKAS D JAGTAP . Rather than manually process a cheque. Tunnel Scanning is a new concept where the consumer pushes the full shopping cart through an electronic gate to the point of sale. as well as hard goods. Customer Interfacing Systems • Bar Coding and Scanners Point of sale systems use scanners and bar coding to identify an item. a recent development in this area. The hardware and software tools that have now become almost essential for retailing can be into 3 broad categories. Technology in Retail : Over the years as the consumer demand increased and the retailers geared up to meet this increase. • Payment Payment through credit cards has become quite widespread and this enables a fast and easy payment process. use prestored data to calculate the cost and generate the total bill for a client. All that the consumer has to do is to pay for the goods. Hypermarkets. technology evolved rapidly to support this growth. the retailer voids it and hands it back to the consumer along with a receipt. the items in the cart are hit with laser beams and scanned. having digitally captured and stored the image of the cheque.This segment been taking an increasing share of general food & grocery trade.The Indian Retail 3. Electronic cheque conversion.

Data warehousing & mining technologies offers retailers the tools they need to make sense of their consumer data and apply it to business. allows the retailers to study the purchase behavior of consumers in detail and grow the value of individual consumers to their businesses. mail order and the Internet has provided retailers with real access to consumer data. This. They enable consolidation of activities such as long term budgeting. preventing stockouts and thus reducing his costs. • CRM Systems The rise of loyalty programs. removing the need of a consumer physically visiting the store. These APS packages complement existing (but often limited) ERP packages. VIKAS D JAGTAP Page 35 . An integrated supply chain helps the retailer in maintaining his stocks. • Advanced Planning and Scheduling Systems APS systems can provide improved control across the supply chain. while servicing the customer better.The Indian Retail Internet is also rapidly evolving as a customer interface. getting his supplies on time. monthly forecasting. all the way from raw material suppliers right through to the retail shelf. Operation Support Systems • ERP System Various ERP vendors have developed retail-specific systems which help in integrating all the functions from warehousing to distribution. weekly factory scheduling and daily distribution scheduling into one overall planning process using a single set of data. front and back office store systems and merchandising. along with the various available CRM (Customer Relationship Management) Systems.

Delhi. Coimbatore. Today. MerciaLincs and Stirling-Douglas. Manugistics. Bangalore. Bann. • 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. A larger number of visual merchandising tools are available to him to evaluate the impact of his stacking options. Mumbai.The Indian Retail Leading manufactures. distributors and retailers and considering APS packages such as those from i2. Chennai. 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. • 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. • Sectors with High Growth Potential: Certain segments that promise a high growth are  Food and Grocery Page 36 VIKAS D JAGTAP . 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. software packages are helping retailers not only in their locational decisions but in decisions regarding store sizing and floor-spaces as well. Nagpur there exists tremendous potential in two tier towns over the next 5 years. Ahmedabad. Pune.

Footwear & Leather. German giant Metro AG and South African Shoprite Holdings have already made VIKAS D JAGTAP Page 37 .The Indian Retail     • Clothing Furniture and Fixtures Pharmacy Durables. • 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. India's largely rural population has caught the eye of retailers looking for new areas of growth. Watch & Jewellery Fastest Growing Formats: Some of the formats that offer good growth potential are:      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. There has been yet another initiative by the DCM Sriram Group called the ' Hariyali Bazaar'. 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. with Corporates and Entrepreneurs having made a foray in the past. ITC launched the country's first rural mall ' Chaupal Sagar'. • Wholesale Trading: wholesale trading also holds huge potential for growth. offering a diverse product range from FMCG to electronics appliance to automobiles. that has initially started off by providing farm related inputs and services but plans to introduce the complete shopping basket in due course.

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. • Cheap Consumer Credit VIKAS D JAGTAP Page 38 .The Indian Retail headway in this segment by setting up stores selling merchandise on a wholesale basis in Bangalore and Mumbai respectively.

M.g. Prescribes working conditions. holidays. shift times for employees etc. Contract labor registration Act Changes from state to state. and Orissa Shops & Commercial Establishments Act Changes from state to state. Also an issue with consumer access to the stores. West Bengal.P. Kerala. Poor Infrastructure Conditions: Inadequate infrastructure of logistics network and roads. creates significant supply chain issues resulting in out of stocks and inadequate fill ratios. working conditions. Reliance Opposition to big-box retailing in some states like U.P. opening and closing hours. ports and freight etc. employee bonus and PF contributions for labor etc. Prescribes minimum wages (Minimum Wages Act 1948).The Indian Retail CHALLENGES FOR THE RETAILER Regulatory Pressures: FDI Policy 51% FDI allowed in single-brand retailing in 2006 Strong opposition by left wing communist leaders against entry of international big-box retailers in India Local Opposition Growing opposition against local large scale retailers e. Growth and Expansion Challenges: VIKAS D JAGTAP Page 39 .

The Indian Retail Scramble to lock in quality real estate by retailers led by aggressive growth plans and rising real estate costs. at a monthly rate of Rs 200 per sq ft. Deeper integration between partners and adoption of standards and enabling technologies in order to share data and work toward common goals are needed. Normally.25 In such a scenario the reality of retail business could change and sustaining profitable business could pose the highest threat of its kind. the challenges remain same from a retailer’s view point as the cost to acquire retail space in mall is increasing. Technology VIKAS D JAGTAP Page 40 . this figure varies between 4% for a hypermarket (that is. Generally retailers work out a rent-to-revenue ratio with developers at which they feel they can sustain their business. cipher that rentals in established malls in top metros have jumped by 20-30 % in the last six months. • • • Stamp duty charges on transfer of property varies from state to state Conversion of agricultural land acquired into commercial land is a long drawn process Unavailability of good prime locations for retailers in metros and other cities due to fragmented land holdings. to nearly 20% for very niche retailers. rent will constitute 4% of revenues) and 10% for a department store. Business Partners Collaboration Challenges: Higher levels of interdependence and collaboration are required to support growth. But. Researchers from Knight Frank India. Challenges Ahead Infrastructure Even though there is huge investment coming especially in the area of retail space development in the form of mall development. a department store might have to make Rs 2.000 per sq ft per month just to break even. a real estate consultancy.

VIKAS D JAGTAP Page 41 . A country where almost 97 percent of retailing is in the hand of unorganized retailers it is predictable that the retailers are going have operational inefficiency. promotion management and replenishment • Inconsistent/ non-productive in-store replenishment procedures • Poor inventory data accuracy and visibility. inventory of unwanted items.The Indian Retail Technology is going to play a major role in retail development in India. Through technology retailers can capture a whole lot of segmentation variables and subsequently use them for shopper segmentation. Merchandising and supply chain issues impact Indian Retailers’ operating performance and the customer experience Merchandising and Supply Chain Challenges: 1. Customer Impact: Out of stocks. Technology helps to take better decision in some critical areas such as new product introduction. ordering and above all keeping track of customer by maintaining consumer data base. They face several challenges like maintaining inventory. Most of the organized retailers are using available and affordable technology to capture consumer information. quicker ordering and assortment planning. Retailers are going to experience the impact of technology in retail. Out of Stock Conditions: • Manual and non-integrated demand planning. empty shelves. Retailers use shopper’s loyalty data to design customized promotional offering for different set of customers. Technology can be useful in this aspect. Modern retailers are using scanner data to figure out answer to lot of questions. store aisles haphazardly filled with goods … Resulting in inconsistent experiences. suitable product offering. Currently most of the retailers are operating almost everything manually.

excessive racks of markdown merchandise Till now most retailers in India have invested majorly into the front end but relatively little on the back end and supply chain. Germany and VIKAS D JAGTAP Page 42 . Ineffective Sourcing: • • Sourcing strategies not tailored to the demand No supporting infrastructure and vendor management Customer Impact: Items not on the shelf at the right time. Inefficient Merchandise flow: • • • • Suboptimal merchandise flows and logistics network Ineffective routing and carrier management Insufficient packaging and in-store logistics processes Multiple. Offerings not Aligned to the Demand: • • • Poor in-store merchandising and shopping experience Lack of understanding of target customer needs and wants No visibility to consumer and customer demand data Customer Impact: Non differentiated/relevant offerings. at the right price or of the right quality 4. impacting product visibility. 3. non integrated fulfillment operations Customer Impact: Disorganized shelves and displays from poor packaging. and fresh appeal 5.The Indian Retail 2. Even in countries like the USA. Poor Product Introduction Processes: • • Long product introduction lead times Inability to quickly respond to changes in demand Customer Impact: Lack of newness.

Probably that would bring some kind of mutual understanding between manufactures and retailers to develop strong supply chain network. The sector is highly fragmented and organized retail contributes hardly 3-4 percent of total retailing pie. In a special lecture series at Indian Institute of Management.The Indian Retail England where organized retail is highly developed supply chain efficiency is a concern. It is very difficult to get experienced store managers to run stores. Probably that would help a lot in reducing wastage in the supply chain and retailers would be happy to use railway infrastructure rather than spending huge amount of money in developing infrastructure. The biggest retailer in India. The minister is looking forward to use railway infrastructure to carry fresh fruits and vegetables in temperature controlled containers from various nodal points essentially opened in railway stations to different parts in India. poor packaging. Laloo Prasad Yadav raised his concern over safe transportation of food. New entrants like Reliance Retail is believed to be investing substantially in the supply chain especially cold chain as it is set to start its venture by opening ‘Reliance Fresh’26 stores. The channel dynamics is going to change over next couple of years as the retailers start growing in size and their bargaining power is likely to increase. both the existing operators and new operators must put collaborative efforts to phase out inefficiencies in the supply chain network. and lack of availability of temperature controlled vans. There are huge inefficiencies in the supply chain. In such a scenario. The most important part of retailing business is to find a balance between investing in front-end and back-end operations. Human resource Even though AT Kearny places India as most attractive retail market for the second consecutive year in a row but it is lagging behind in the retail labor index and positioned in the 8th place. Pantaloon Retail is yet to open stores in each & every major city in India. Ahmedabad. The nature of retail sector in India is different from other countries around the world. VIKAS D JAGTAP Page 43 . For example Indian supply chain for food products is characterized by extensive wastage and poor handling. At this point of time talent is in short supply and employee churn has been high for all players. honorable minister for Railway. Mr. Probably that is an indication of how the retail concentration is happening mainly in big cities. The wastage occurs because of multiple points of manual handling.

Considering our robust policies for retaining and developing workforce. If. Tesco.27 VIKAS D JAGTAP Page 44 . and there is a cultural willingness among employees to work cooperatively with management. we use these resources properly we can develop a large talent pool to fulfill the growing demand for various positions in the retail organization. The country also possesses a rapidly growing cadre of promising professional managers. Home Depot and Ahold. currently Pantaloon Retail India is operating around 48 Food Bazaars across the county and planning to increase the number to over 80 stores by the end of 2006. retailers should not worry about shortage of talent pool in the long run. If we look at the human resources employed by global retailers like Wal-Mart. The retailer is ready with retail space in different malls and high traffic retail location but availability of qualified and experienced personnel is still a big concern for the retailer. Foreign Direct Investment Though talk of opening up the retail sector for FDI has been making the rounds for quite some time now. The way the sector is growing in terms of opening stores it is very predictable that there is going to be huge scarcity of professionals to manage stores. It is very difficult to develop human capital in a short time span of five years. Currently the sector is facing a shortage of human resources.The Indian Retail For example. no major breakthrough has happened yet. Reliance Retail is planning to employ half a million work force in various levels in next five years. Carrefour. a large educational system. The country is expecting a strong economic growth of about 8-10% per year and this can be achieved by raising the rate of investments as well as by generating demand for the increased goods and services produced. we find that none other than Wal-Mart exceeds half a million. There is absolutely no issue in getting retailing space in prime locations but the bigger concern is to find additional store managers. PricewaterhouseCoopers estimates that Indian retail will get USD 412 by 2011and majority of investment will be directed toward the two most popular retail formats: hyper markets and supermarkets. Retail contributes about 10% to the national GDP and is expected to increase over the next decade or so. Almost all retailers are indulged in poaching which is not a permanent solution.

• Aging Infrastructure and services. However. as India's retail revolution unfolds. The infusion of much-needed foreign investment would result in: (1) retail consolidation and increase in the share of the organised retail sector. (5) making shoppers feel international shopping experience. which might lead to over-capacity of malls • Lack of differentiation among the malls that are coming up. a number of defining issues are framing this evolution: • Constraints on land availability and Suitable Plots. FUTURE DIRECTION: CONCERNS • 78 million square feet of mall space is expected to be available by end of 2009.retailers clearly need to augment their operations. Although at this point in time FDI in retailing is receiving mixed reaction.The Indian Retail Growth of this sector holds paramount importance to the Indian economy. water & electricity. • Complex Zoning and land use policies and tax structures. One option may be to look at specialization. • Foreign Direct Investment (FDI) regulations. but our feeling is that FDI would bring a lot of positive changes both for the operators and the consumer. superior quality for consumers. VIKAS D JAGTAP Page 45 . such as roads. (2) increase in employment in retail (3) increase supply chain efficiency which would lead to lower prices. (4) enhanced opportunity for domestic operators to join hand with global retail players to bring in technical know how and global practices. so any augmentation of this sector will have a resultant growth effect on the economy. • Poor inventory turns and stock availability measures .

lead to retailers having state-level procurement and storage leads to Indian retailers having higher inventories. Most of the organized retailers in India are harping on quality. is an issue • Sales tax laws . in terms of adherence to delivery schedules and delivering the quantity ordered. Probably in a growing market no one finds difficulty in pulling customer into store but that may not be sufficient to operate profitably. convenience. service.The Indian Retail • Operations of retailers and suppliers are not integrated. No doubt that retail format is one of the vehicles to deliver value proposition and also it helps to position the store in the mind of target shoppers. delegates conveyed mixed message about FDI but one final message was loud and clear that India’s retail development is inevitable. Supply chain and customer relations followed by merchandising. • Supplier maturity. satisfaction and assured benefits to lure shoppers into the store. Retailers need to find out what matches consumer requirement and VIKAS D JAGTAP Page 46 . Conclusion : In the 2008 India Economic Summit. • • Increased adoption of IT and shrinkage management will be a critical area. facilities management and vendor development are areas which have significant gaps and proactive training is a key imperative for overcoming these. Retailers should create value for the consumer and must decide suitable vehicle to deliver desired consumer value. VAT has helped alleviate this a bit. Efficient replenishment practices practiced in the Indian auto and auto-component industry can be leveraged to implement efficient supply chain management techniques.

faster and at less cost.wikipedia.com VIKAS D JAGTAP Page 47 . It is not all about deciding the format but all about serving the consumer better.scribd. BIBLIOGRAPHY Reference books: Marketing Management by Philip Kotler Retail Marketing Websites: www. Some companies like Pantaloon Retail has gone one step ahead to start e-tailing format along with brick and mortar formats.google. faster and at less cost.com www. most of the retailers are concerned about growth in number of stores rather than creating value for consumer. Retailers have to out think consumer in providing service and value. Again some of the product categories books are highly successful on internet as those categories require less feel and touch. Our conclusion is that consumer is the focus of retail business and the retailers should serve the consumer better.com www. If Pantaloon Retail India gets the same credibility and trust it is able to find from current customer base it is highly probable that the new format is going to be successful. Retailers can use their store as an indicator of what they stand for and what value they offer. The most important issue in e-tailing is credibility and trustworthiness of the supplier. Retailers certainly need to be innovative in designing the value proposition and deciding the format to deliver that to the consumer. At this juncture.The Indian Retail offer better than competition.

projectparadise.com VIKAS D JAGTAP Page 48 .The Indian Retail www.

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