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RETAIL INDUSTRY IN INDIA *Mrs.B.Chitra, M.Com., M.Phil., PGDCA. **Dr.U.Vani, M.Com., M.B.A., M.Phil., PGDCA.,Ph.

D INTRODUCTION 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 corporatebacked 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. HISTORY Indian retail industry is the largest industry in India, with an employment of around 8% and contributing to over 10% of the countrys GDP. Retail industry in India is expected to rise 25% yearly being driven by strong income growth, changing lifestyles, and favorable demographic patterns. It is expected that by 2016 modern retail industry in India will be worth US$ 175- 200 billion. Indian 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. A further increase of 7-8% is expected in the industry of retail in India by growth in consumerism in urban areas, rising incomes, and a steep rise in rural consumption. It has further been predicted that the retailing industry in India will amount to US$ 21.5 billion by 2010 from the current size of US$ 7.5 billion. *Lecturer, Department of Commerce, PSG College of Arts and Science, Coimbatore-14. 99436-36240 **Head, Department of Commerce, PSG College of Arts and Science, Coimbatore-14. 98943-16150 Shopping in India has witnessed a revolution with the change in the consumer buying behaviour and the whole format of shopping also altering. Industry of retail in India which has become modern can be seen from the fact that there are multi- stored malls, huge

shopping centres, and sprawling complexes which offer food, shopping, and entertainment all under the same roof. Indian retail industry is expanding itself most aggressively; as a result a great demand for real estate is being created. Indian retailers preferred means of expansion is to expand to other regions and to increase the number of their outlets in a city. In the Indian retailing industry, food is the most dominating sector and is growing at a rate of 9% annually. The branded food industry is trying to enter the India retail industry and convert Indian consumers to branded food. Since at present 60% of the Indian grocery basket consists of non- branded items. 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. 1.8 million households in India have an annual income of over 45 lakh (US$100,350). 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. Indulgenceoriented 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 statusoriented segment that contributes largely to the retailers cash register. 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. 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. Denim wear brand, Spykar,

which is now moving towards becoming a casual wear lifestyle brand, has launched its store in Melbourne recently. 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.
Future groups-formats: Big Bazaar, Pantaloons, Central, Fashion Station, Brand

Factory, Depot, E-Zone etc.

Fabindia: Textiles, Home furnishings, handloom apparel, jewellery RPG Retail-Formats: Music World, Books & Beyond, Spencers Hyper, Spencers Super, Daily & Fresh The Tata Group-Formats: Westside, Star India Bazaar, Steeljunction, Landmark, Titan Industries with World of Titans showrooms, Tanishq outlets, Croma. Reliance Retail-Formats: Reliance MART, Reliance SUPER, Reliance FRESH, Reliance Footprint, Reliance Living, Reliance Digital, Reliance Jewellery, Reliance Trends, Reliance Autozone, iStore.

Reliance ADAG Retail-Format: Reliance World K Raheja Corp Group-Formats: Shoppers Stop, Crossword, Hyper City, In orbit

Mall Nilgiris-Formats: Nilgiris supermarket chain Marks & Spencer: Clothing, lifestyle products, etc. Lifestyle International-Lifestyle, Home Centre, Max, Fun City and International Franchise brand stores.
Pyramid Retail-Formats: Pyramid Megastore, TruMart. Next retail India Ltd (Consumer Electronics)

Vivek Limited Retail Formats: Viveks, Jainsons, Viveks Service Centre, Viveks Safe Deposit Lockers PGC Retail -T-Mart India, Switcher , Respect India , Grand India Bazaar ,etc.,
REI AGRO LTD Retail-Formats: 6 TEN Hyper & 6 TEN Super.

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. German Metro Cash & Carry. Shoprite Holdings-Formats: Shoprite Hyper. Paritala stores bazar: honey shine stores. Aditya Birla Group More Outlets. Kapas- Cotton garment outlets. Nmart Retails with 64 operating Stores till now and total 139 Stores in India and 1

to open in Dubai Shortly. (Expected to be 139 by the end of Aug-2012). RETAILING IN INDIA Malls: The largest form of organized retailing today. Located mainly in metro cities, in proximity to urban outskirts. Ranges from 60,000 sq ft to 7,00,000 sq ft and above. They lend an ideal shopping experience with an amalgamation of product, service and entertainment, all under a common roof. Examples include Shoppers Stop, Piramyd, and Pantaloon. DiscountStores: As the name suggests, discount stores or factory outlets, offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left over at the season. The product category can range from a variety of perishable and non-perishable goods. Department Stores: Large stores ranging from 20,000 50,000 sq.ft, catering to a variety of consumer needs. Further classified into localized departments such, home, toys, home, groceries, etc. Stores are expected to take over the apparel business from exclusive brand showrooms. Among these, the biggest success is K Rahejas shoppers stop, which started in Mumbai and now has more than seven large stores across India. Hyper mart and Supermarkets: Large self-service outlets, catering to varied shopper needs are termed as Supermarkets. These are located in or near residential high streets. These stores today contribute to 30% of all food and grocery organized retail sales. Super Markets can further be classified into mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large

supermarkets ranging from 3,500 sq ft to 5,000 sq ft having a strong focus on food and grocery personal sales. Convenience Stores: These are relative small stores 400-4,000 sq ft located near residential areas. They stock a limited range of high turnover convenience products and are usually open for extended periods during day, seven days a week. Prices are slightly higher due to the convenience premium. MBO: Multi Brand outlets, also known as Category Killers, offers several brands across a single product category. These usually do well in busy market places and Metros. STRATEGIES, TRENDS AND OPPORTUNITIES: Retailing in India is gradually inching its way toward becoming the next boom industry. The whole concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. Modern retail has entered India as seen in sprawling shopping centres, multi-storied malls and huge complexes offer shopping, entertainment and food all under one roof. The Indian retailing sector is at an inflexion point where the growth of organized retailing and growth in the consumption by the Indian population is going to take a higher growth trajectory. The Indian population is witnessing a significant change in its demographics. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing working women population and emerging opportunities in the services sector are going to be the key growth drivers of the organized retail sector. CHALLENGES FACING INDIAN RETAIL INDUSTRY:

The tax structure in India favours small retail business. Lack of adequate infrastructure facilities. High cost of real estate. Dissimilarity in consumer groups. Restrictions in Foreign Direct Investment. Shortage of retail study options. Shortage of trained manpower. Low retail management skill.



In India, the retail sector is the second largest employer after agriculture. The retail industry in India is estimated to employ about 10% of the total labour force. The retail industry in India is enjoying boom time and job opportunities in retailing have been increasing. In fact, retailing has emerged as a new stream of management curriculum, providing new areas of employment. The retailing sector in India is highly fragmented and predominantly consists of small independent, owner-managed shops. Given the size, and the geographical, cultural and socio-economic diversity of India, there is no role model for Indian suppliers and retailers to adapt or expand in the Indian context. GOVERNMENT POLICIES: Government of India do not even consider this sector worthy of being deemed as an industry status or to formulate any strategy or directive to support or nurture it. Foreign Direct Investment (FDI) in the retailing sector is not permitted yet, in order to protect the interests of the small retailers. There is a strong lobby of small traders that has been vocal on the issue of not permitting FDI into retail. The lobby is based on the premise that modern retail will impact the livelihood of millions of small family-run businesses. Since 1997, the government has barred foreign participation in the retail sector, except for the cash-and-carry wholesale route where wholesalers cannot open retail shops to sell to consumers directly, 100 percent foreign ownership is permitted, and for franchising. However, the Commerce Department is considering a proposal to allow 100% FDI in department stores and 5 star shopping arcades, as these would not compete with small retailers. GROWTH OF RETAIL SECTOR IN INDIA: Retail and real estate are the two booming sectors of India in the present times. And if industry experts are to be believed, the prospects of both the sectors are mutually dependent on each other. Retail, one of Indias largest industries, has presently emerged as one of the most dynamic and fast paced industries of the times with several players entering the market. As the contemporary retail sector in India is reflected in sprawling shopping centres, multiplex- malls and huge complexes offer shopping, entertainment and food all under one roof, the concept of shopping has altered in terms of format and consumer buying behaviour, ushering in a revolution in shopping in India. This has also contributed to large-scale investments in the real estate sector with major national and global players investing in developing the infrastructure and construction of the retailing business. INDIAN RETAIL FORUM 2011

Indian Retail Forum (IRF) is a congregation of the most innovative and successful retail brands, companies and minds from across the globe and the entire retail support universe, including retail real estate, design & architecture, merchandise & services, visual merchandising, security and technology. The 2011 edition of IRF will be modelled on the theme Shopping for Retail Success as modern retail in India poises for real, sustainable growth. The retail industry in India has gone through several orientations and readjustments since the advent of modernisation approximately six years ago. After the initial years of reckless expansion and hard lessons, its time now to train our sights on building retail business that are relevant and successful. IRF 2011 had debate and conclude on key issues and challenges facing the future of Indian retail. What is the role of modern retail in driving consumption? How did some retailers grow at their fastest during the most difficult economic phases? Is the growth sustainable? Who is responsible for developing retail infrastructure? What would be the smartest strategies for global players to effect success in India?
How can small retailers be involved and engaged in the overall retail growth

story? The forum had bought the participants an opportunity to learn, share and evolve with the masters in the business, explore out of the box ideas, witness innovation in merchandise, spaces, IT and support systems, and celebrate outstanding achievements in the business of retail in India. THE CHALLENGES AND OPPORTUNITIES OF 2011 The strong growth in 2010 has retailers cautiously optimistic that the economic recovery is finally taking hold. Consumers have accumulated some spending power and their market confidence is starting to return. Although unemployment remains stubbornly high, retail sales are finally showing real signs of momentum. NRF is forecasting 2011 retail sales to increase 4.0 percent. Retailers will continue to be cautious as they precede in 2011, paying extremely close attention to economic indicators such as employment, housing and commodity prices throughout the year. Many retailers were able to make adjustments to remain competitive. Some were even able to make themselves stronger in the process. There is some expectation in pricing

issues to impact operations in the coming year for all modes of transportation and thus retailers learned a lot about their real supply chain partners. CONCLUSION: The retail sector has played a phenomenal role throughout the world in increasing productivity of consumer goods and services. The India Retail Industry is the largest among all the industries, accounting for over 10 per cent of the countrys GDP and around 8 per cent of the employment. The Retail Industry in India has come forth as one of the most dynamic and fast paced industries with several players entering the market. But all of them have not yet tasted success because of the heavy initial investments that are required to break even with other companies and compete with them. The India Retail Industry is gradually inching its way towards becoming the next boom industry.