A spice market

Retailing is one of the pillars of the economy in India and accounts for 13% of GDP.

The retail industry is divided into organised and unorganised sectors. Over 12 million
outlets operate in the country and only 4% of them being larger than 500 sq ft (46 m2) in
size. Organised retailing refers to trading activities undertaken by licensed retailers, that
is, those who are registered for sales tax, income tax, etc. These include the corporate-
backed hypermarkets and retail chains, and also the privately owned large retail
businesses. Unorganised retailing, on the other hand, refers to the traditional formats of
low-cost retailing, for example, the local kirana shops, owner manned general stores,
paan/beedi shops, convenience stores, hand cart and pavement vendors, etc.[2] In India, a
shopkeeper of such kind of shops is usually known as a dukandar.

Most Indian shopping takes place in open markets and millions of independent grocery
shops called kirana. Organized retail such supermarkets accounts for just 4% of the
market as of 2008.[3] Regulations prevent most foreign investment in retailing. Moreover,
over thirty regulations such as "signboard licences" and "anti-hoarding measures" may
have to be complied before a store can open doors. There are taxes for moving goods to
states, from states, and even within states.[3]

Contents
[hide]

• 1 Growth
• 2 The Indian Retail Market
• 3 Major Indian Retailers
• 4 Entry of MNCs
• 5 Challenges

• 6 References

[edit] Growth
An increasing number of people in India are turning to the services sector for
employment due to the relative low compensation offered by the traditional agriculture
and manufacturing sectors. The organized retail market is growing at 35 percent annually
while growth of unorganized retail sector is pegged at 6 percent.[4]

The Retail Business in India is currently at the point of inflection. Rapid change with
investments to the tune of US $ 25 billion is being planned by several Indian and
multinational companies in the next 5 years. It is a huge industry in terms of size and
according to management consulting firm Technopak Advisors Pvt. Ltd., it is valued at
about US $ 350 billion. Organised retail is expected to garner about 16-18 percent of the
total retail market (US $ 65-75 billion) in the next 5 years.

India has topped the A.T. Kearney’s annual Global Retail Development Index (GRDI) for
the third consecutive year, maintaining its position as the most attractive market for retail
investment. The Indian economy has registered a growth of 8% for 2007. The predictions
for 2008 is 7.9%.[5] The enormous growth of the retail industry has created a huge
demand for real estate. Property developers are creating retail real estate at an aggressive
pace and by 2010, 300 malls are estimated to be operational in the country.[6]

With over 1,000 hypermarkets and 3,000 supermarkets projected to come up by 2011,
India will need additional retail space of 700,000,000 sq ft (65,000,000 m2) as compared
to today. Current projections on construction point to a supply of just 200,000,000 sq ft
(19,000,000 m2), leaving a gap of 500,000,000 sq ft (46,000,000 m2) that needs to be
filled, at a cost of US$15–18 billion.[7]

According to the Icrier report, the retail business in India is estimated to grow at 13%
from $322 billion in 2006-07 to $590 billion in 2011-12. The unorganized retail sector is
expected to grow at about 10% per annum with sales expected to rise from $ 309 billion
in 2006-07 to $ 496 billion in 2011-12.[8]

[edit] The Indian Retail Market

Indian market has high complexities in terms of a wide geographic spread and distinct
consumer preferences varying by each region necessitating a need for localization even
within the geographic zones. India has highest number of outlets per person (7 per
thousand) Indian retail space per capita at 2 sq ft (0.19 m2)/ person is lowest in the world
Indian retail density of 6 percent is highest in the world.[9] 1.8 million households in India
have an annual income of over 45 lakh (US$99,900)[10].

Delving further into consumer buying habits, purchase decisions can be separated into
two categories: status-oriented and indulgence-oriented. CTVs/LCDs, refrigerators,
washing machines, dishwashers, microwave ovens and DVD players fall in the status
category. Indulgence-oriented products include plasma TVs, state-of-the-art home theatre
systems, iPods, high-end digital cameras, camcorders, and gaming consoles. Consumers
in the status category buy because they need to maintain a position in their social group.
Indulgence-oriented buying happens with those who want to enjoy life better with
products that meet their requirements. When it comes to the festival shopping season, it is
primarily the status-oriented segment that contributes largely to the retailer’s cash
register.[11]

While India presents a large market opportunity given the number and increasing
purchasing power of consumers, there are significant challenges as well given that over
90% of trade is conducted through independent local stores. Challenges include:
Geographically dispersed population, small ticket sizes, complex distribution network,
little use of IT systems, limitations of mass media and existence of counterfeit goods.[12]

[edit] Major Indian Retailers

Indian apparel retailers are increasing their brand presence overseas, particularly in
developed markets. While most have identified a gap in countries in West Asia and
Africa, some majors are also looking at the US and Europe. Arvind Brands, Madura
Garments, Spykar Lifestyle and Royal Classic Polo are busy chalking out foreign
expansion plans through the distribution route and standalone stores as well. Another
denim wear brand, Spykar, which is now moving towards becoming a casualwear
lifestyle brand, has launched its store in Melbourne recently. It plans to open three stores
in London by 2008-end.[13]

The low-intensity entry of the diversified Mahindra Group into retail is unique because it
plans to focus on lifestyle products. The Mahindra Group is the fourth largest Indian
business group to enter the business of retail after Reliance Industries Ltd, the Aditya
Birla Group, and Bharti Enterprises Ltd. The other three groups are focusing either on
perishables and groceries, or a range of products, or both.

• Next retail India Ltd (Consumer Electronics)(www.next.co.in)

• Vivek Limited Retail Formats: Viveks, Jainsons, Viveks Service Centre, Viveks
Safe Deposit Lockers
• PGC Retail -T-Mart India[2], Switcher , Respect India , Grand India Bazaar ,etc.,
• REI AGRO LTD Retail-Formats:6TEN Hyper & 6TEN Super
• RPG Retail-Formats: Music World, Books & Beyond, Spencer’s Hyper,
Spencer’s Super, Daily & Fresh
• Pantaloon Retail-Formats: Big Bazaar, Food Bazaar, Pantaloons, Central, Fashion
Station, Brand Factory, Depot, aLL, E-Zone etc.
• Marks & Spencer: Clothing, lifestyle products, etc.
• The Tata Group-Formats: Westside, Star India Bazaar, Steeljunction, Landmark,
Titan Industries with World of Titans showrooms, Tanishq outlets, Chroma.
• K Raheja Corp Group-Formats: Shoppers Stop, Crossword, Hyper City, Inorbit
Mall
• Lifestyle International-Lifestyle, Home Centre, Max, Fun City and International
Franchise brand stores.
• Pyramid Retail-Formats: Pyramid Megastore, TruMart
• Nilgiri’s-Formats: Nilgiris’ supermarket chain
 • Subhiksha-Formats: Subhiksha supermarket pharmacy and telecom discount
chain.
• Trinethra- Formats: Fabmall supermarket chain and Fabcity hypermarket chain
• Vishal Retail Group-Formats: Vishal Mega Mart
• BPCL-Formats: In & Out
• Reliance Retail-Formats: Reliance Fresh
• Reliance ADAG Retail-Format: Reliance World
• German Metro Cash & Carry
• Shoprite Holdings-Formats: Shoprite Hyper
• Paritala stores bazar: honey shine stores
• Aditya Birla Group - more Outlets
• Kapas- Cotton garment outlets

[edit] Entry of MNCs

The world's largest retailer by sales, Wal-Mart Stores Inc and Sunil Mittal's Bharti
Enterprises have entered into a joint venture agreement and they are planning to open 10
to 15 cash-and-carry facilities over seven years. The first of the stores, which will sell
groceries, consumer appliances and fruits and vegetables to retailers and small
businesses, is slated to open in north India by the end of 2008.[14]

Carrefour, the world’s second largest retailer by sales, is planning to setup two business
entities in the country one for its cash-and-carry business and the other a master
franchisee which will lend its banner, technical services and know how to an Indian
company for direct-to-consumer retail.[15]

The world’s fifth largest retailer by sales, Costco Wholesale Corp (Costco) known for its
warehouse club model is also interested in coming to India and waiting for the right
opportunity.[16]

Opposition to the retailers' plans have argued that livelihoods of small scale and rural
vendors would be threatened. However, studies have found that only a limited number of
small vendors will be affected and that the benefits of market expansion far outweigh the
impact of the new stores.[17]

Tesco Plc., plans to set up shop in India with a wholesale cash-and-carry business and
will help Indian conglomerate Tata group to grow its hypermarket business.(19)

[edit] Challenges
To become a truly flourishing industry, retailing needs to cross the following hurdles:[18]

• Automatic approval is not allowed for foreign investment in retail.

• Regulations restricting real estate purchases, and cumbersome local laws.
• Taxation, which favours small retail businesses.
 • Absence of developed supply chain and integrated IT management.
• Lack of trained work force.
• Low skill level for retailing management.
• Lack of Retailing Courses and study options
• Intrinsic complexity of retailing – rapid price changes, constant threat of product
obsolescence and low margins.

To overcome some of the challenges faced by modern retail, the country is developing a
support infrastructure in form of specialised retail schools. One such skill development
initiative has been taken by TKWs Group. Its TKWs Retail School has already training
over a thousand students and retail professionals for different retail skills. TKWs Retail
School is also associated with government projects like enhancing retail experience of
foreign tourists, improving retail of handicraft and local produce, skill development of
village youth.

[edit] References
1. ^ "[1]." 7 November 2007.
2. ^ "ICRIER Begins Survey of Indian Retail Sector." 19 March 2007.
3. ^ a b "Retailing in India Unshackling the chain stores". The Economist. 29
May 2008. http://www.economist.com/displayStory.cfm?story_id=11465586.
4. ^ "India again tops global retail index." 22 /6/ 2007.
5. ^ "Economic and financial indicators" 3 July 2008.
6. ^ "Indian Retail story from Myths to Mall." 11 August 2007.
7. ^ "Demand for retail real estate to soar"
8. ^ "Centre consulting states for setting up retail regulator." 2 July 2008.
9. ^ "Fashion meets tech as handsets get sleek expensive"
10. ^ "LCD televisions, laptops are flying off the shelves."
11. ^ "[ICICI Properties & KSA Technopak White Paper - [India Retail Real
Estate – 2005-06]"
12. ^ "Traditional Retail Trade in India." 28 June 2009.
13. ^ "Mahindra joins the retail bandwagon, to sell lifestyle products"
14. ^ "Bharti & Wal-Mart joint venture"
15. ^ "Carrerfour readies plan to enter India’s retail industry"
16. ^ "Costco, US’s fifth biggest, eying India?"
17. ^ "India's Retail Revolution - CNN Money"
18. ^ "Retail Scenario in India"

Retrieved from "http://en.wikipedia.org/wiki/Retailing_in_India"

Categories: Retailing in India
Hidden categories: Orphaned articles from February 2009 | All orphaned articles

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