Retail Industry of India A Case Study of Bharti Retail

Tazyn Rahman
903, S.G. Impression, Near Mewar Institute , Sector 4 , Vasundhara, Ghaziabad 201012 ( U.P. ) E-Mail- tazyn08@gmail.com Mobile- 9313272573

Abstract
Organized retailing has become popular in big cities in India and most of the metropolitan cities and other big cities are flooded by modern organized retail stores. The growth rate of super market sales has been significant in recent years because greater numbers of higher income Indians prefer to shop at super markets due to higher standards of hygiene and attractive ambience. The organized retail sector presently occupying 5 % and is expected to grow 10% by end of 2010. To trapped the huge opportunities ,a number of large Indian corporate houses like Aditya , Bharti , Reliance ,Pantaloon ,Vishal , Tata's , RPG, Raheja's and Piramals's have already made their foray into this arena. Bharti Retail Limited a wholly owned subsidiary of Bharti Enterprises enter into Indian Retail sector with 2 formats Supermarket & Hypermarket. Bharti Retail continues to invest heavily in increasing their store networks and improving instore offerings. This paper will discuss some of the reasons behind the emerging eminence of retailing in India which brought sea change in consumption pattern. The paper chalks out the marketing strategies adopted by Bharti Retail to tap the untapped Indian Retail market. Key words: Retail, Growth, Organized, Bharti, Economies

Overview of Indian Retail Industry

The retail sector in India is witnessing a huge revamping exercise as traditional markets make a way for new formats such as departmental stores, hypermarkets, supermarkets and specialty
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stores. Western style malls have begun appearing in metros and second-rung cities which introduced the Indian consumer to a shopping experience like never before. India has been ranked 2nd in Global Retail Development Index of 30 developing countries drawn up by A.T.Kearney. The India Retail Report prepared by BMI forecasts that total retail sales will grow form INR 18.85 trn ( US$ 392.63 bn ) in 2011 to 26.64 trn ( US$ 674.37 bn ) by 2014.The key factor behind the forecast growth are economy growth , population expansion , the increasing wealth of individuals and the rapid construction of organized retail infrastructure. The Indian retail industry is divided into organized and unorganized sectors. Organized 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. Unorganized 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. The Indian retail sector is highly fragmented with 95 per cent of its business being run by the unorganized retailers like the traditional family run stores and corner stores. The organized retail is at a very nascent stage though attempts are being made to increase its proportion to 9-10 per cent by the year 2010 bringing in a huge opportunity for prospective new players. The sector is the largest source of employment after agriculture. Organized retailing has become more popular in big cities in India and most of the metropolitan cities and other big cities are flooded by modern organized retail stores. The growth rate of super market sales has been significant in recent years because greater numbers of higher income Indians prefer to shop at super markets due to higher standards of hygiene and attractive ambience. Indian retailers must come to recognize the value of building their own stores as brands to reinforce their marketing Positioning, to communicate quality as well as value for money. To trapped the huge opportunities ,a number of large Indian corporate houses like Aditya , Bharti , Reliance ,Pantaloon ,Vishal , Tata's , RPG, Raheja's and Piramals's have already made their foray into this arena. Bharti Retail Limited a wholly owned subsidiary of Bharti Enterprises enter into Indian Retail sector with 2 formats Supermarket & Hypermarket. Bharti Retail continues to invest heavily in increasing their store networks and improving in-store offerings. Till now, entry of foreign retailers was restricted in Indian retail market because of the ban on Foreign Direct Investment in Indian Retail Sector. But recently, as government has changed its policy and the

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cabinet has allowed 51 per cent FDI in single-brand retail, the prospects of foreign players entering India became high.

Opportunities for the Organized Retail Sector in India Booming Economy

Indias booming economy is a major source of opportunity. India is the second fastest growing major economy in the world. Indian economy now expected to grow at over 8% and with average salary hikes of about 15%, manufacturers and retailers of consumer goods and services can expect a major boost in consumption

Rise in per Capita income

India's huge population has a per capita income of Rs.44,365/-

Double Incomes
Increasing instances of Double Incomes in most families coupled with the rise in spending power

Demography Dynamics
Approximately 60 per cent of Indian population below 30 years of age.

Plastic Revolution
Increasing use of credit cards for categories relating to Apparel, Consumer Durable Goods, Food and Grocery etc.

Urbanization
Increased urbanization has led to higher customer density areas thus enabling retailers to use lesser number of stores to target the same number of customers. Aggregation of demand that occurs due to urbanization helps a retailer in reaping the economies of scale.

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Retailing formats in India

1. Malls 2. Specialty Stores 3. Discount Stores 4. Department Stores 5. Hypermarts / Supermarkets 6. Convenience Store 7. MBOs 8. E-trailer

Marketing Strategies adopted by Bharti Retail Limited

Bharti Retail Limited is a wholly owned subsidiary of Bharti Enterprises. Bharti Retail operates a chain of multiple format stores. The companys neighbourhood format stores operate under the "Easyday" brand and the compact hypermarket format under the Easyday market brand. "Easyday" - Conveniently located in neighbourhoods, it cater to the daily, weekly and monthly shopping needs of consumers. The product offerings include a wide range of fresh fruits & vegetables, groceries, personal care, home care, general merchandise & a basic range of apparels. Currently, 93 small-sized neighborhood stores under the Easyday brand operated across the country. The Easyday neighbourhood stores are located in Delhi, Punjab, Haryana, Uttar Pradesh, Uttarakhand and Rajasthan. The Hypermarket Easyday market - is a one stop shopping destination for the entire family . Besides a large range of products across fruits & vegetables, groceries, processed foods, , meat, chicken, fish, bakery, chilled frozen foods and FMCG products, Easyday market also has a strong emphasis on general merchandise, garments and fashion accessories including trendy fashion wear such as George (international brand) and Astitva (Indian ethnic wear) , consumer electronics & electrical products, mobile phones, books , home decor and needs, office stationeries, soft toys & CDIT. Currently, Six mid-sized compact hypermarket stores under the "Easyday Market" is operating in Punjab, Rajasthan and National Capital Region.

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Recently the company has become more involved in the food economic sectors, with a joint partnership in the agriculture company FieldFresh. FieldFresh Foods Pvt. Ltd. is a joint venture between Bharti Enterprises and DMPL India Ltd. (a subsidiary of Del Monte Pacific Ltd.). The company offers fresh fruits & vegetables and processed foods & beverages in the domestic as well as international markets including Europe and the Middle East. The company produces markets and distributes farm fresh products. FieldFresh Foods Pvt. Ltd, aims to become one of the most trusted provider of premium quality fresh farm products, processed foods and beverages. Bharti Enterprises and Wal-Mart have a 50:50 wholesale venture, Bharti Wal-Mart . Bharti Walmart is a business-to-business joint venture between Bharti Enterprises and Walmart for wholesale cash & carry and back-end supply chain management operations in India to serve small retailers, manufacturers, institutions and farmers. The Company operates Cash & Carry stores under the Best Price Modern Wholesale brand. The JV launched its first B2B Best Price Modern Wholesale cash-and-carry store in Amritsar in May 2009. A typical cash-and-carry store stands between 50,000 and 100,000 square feet and sells a wide range of fresh, frozen and chilled foods, fruits and vegetables, dry groceries, personal and home care, hotel and restaurant supplies, clothing, office supplies and other general merchandise items. Which are available at competitive wholesale prices, allowing retailers and business owners to lower their cost of operations. The JV is expected to open 10 to 15 wholesale cash-and-carry facilities and employ approximately 6,000 7,000 people over the next three years. Currently, Best Price Modern Wholesale stores are present in Amritsar, Zirakpur, Jalandhar and Kota. Bharti will invest $2-2.5 billion to build a pan-India footprint with approximately 10 million square feet of retail experience across all cities in India by 2015. Bharti Retail has announced plans to increase the number of retail stores to about 125 Easyday and 13 Easyday Market stores by end of the 2010 and in support of this plan, they sourcing real estate, pan-India. The retailer recently appointed former Hypercity CEO Andrew Levermore as its chief operating officer to spearhead operations. Bharti Retail plans to roll out stores in South India soon, as part of its plans to become a national retailer.They had already signed three-four properties in the southern states and was looking at booking spaces for around 50 stores by the year end. The retailer is also scouting for properties and Western and Central India to open stores and is holding talks with

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property developers in this regard. The chain has hired a dozen persons to scout and book the properties. Bharti Retail Limited. currently has an employee strength of over 11,000.

Challenges faced by Organized Retail Sector in India

1. Availability of skilled workforce. The talent base is limited, and with the entry of big giants there is a struggle amongst them to retain this talent. Areas such as technology, supply chain, distribution, logistics, marketing, product development and research are becoming very critical for the success of the organizations. All of these would lead to the recruitment of highly professional people who specialize in these fields. This has resulted in big salary hikes at the level of upper and middle management and thereby eroding the profit margin of the business. Shortage of manpower exists even at the lower levels. 2. Competition from unorganized sector is another challenge facing the organized retail industry in India. It is a low cost structure, mostly owner-operated, has negligible real estate and labor costs and little or no taxes to pay. It has become more customers friendly by offering credit, home deliveries, etc. It adds a personal touch to shopping that organized retailers may find impossible to emulate. 3. The organized retail sector in India is still at a developmental stage, characterized by a very small number of players trying to create a new paradigm. To become a flourishing industry, the Indian retail sector has to attract leading Indian and foreign players to make substantial investments. 4. Technology is one of the major challenges faced by organized retailers; specifically, the availability, feasibility, and adoption of technology. Customer centric retailers worldwide are increasingly banking on technology to gain an advantage in the marketplace. Technology is already being widely used for a host of activities including theft prevention, logistics, billing & payment. The scope of technology is wider that all this and can be used for other functions like understanding customer preference using RFID, keeping track of customers using CRM packages, enterprise management tools (ERP) for efficient management.

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5. Inefficient distribution channels. Distribution is an integral part of any retail organization. Delivering the right goods to the right place at the right time is main task of distribution. Retail majors are under serious pressure to improve their supply chain systems and distribution channels and reach the levels of quality and service desired by customers. The lack of proper infrastructure and distribution channels in the country results in inefficient processes. 6. Retail shrinkage is the difference in the value of stock as per the books and the actual stock available in the shop. The causes of retail shrinkage are mainly employee theft, shoplifting, administrative errors and vendor fraud. 7. Understanding customers in terms of customer behavior and loyalty. A number of factors play a part in influencing the loyalty and the commitment of customers, such as quality and value of core offering, levels of customer satisfaction etc. Profits increase by decreasing the rate at which customers defect. By retaining just 5% more of its customers, it was proved in a report how a company could almost double its profits. Globalization has brought about a change in the Indian consumerism psyche with the consumer becoming more aware of his/her value of money strength and their economic purchasing power becoming more evident than in the previous generations. The concept of product quality and service delivery which were earlier not very engraved in the consumer psyche are now very much demanded and delivered for in the new age format of organized product retailing in the Indian consumer goods market. People increasingly want more and more for less.

8. Losses due to lack of infrastructure (roads, traffic, airport, railways, ports). Infrastructure in retail refers to proper pliable roads, airports and railway stations capable of handling large consignments on a daily basis, proper warehouses, cold storage systems, roads with less traffic, proper connectivity etc. The infrastructure for easy transportation of goods is not adequate in the country. There is a tremendous amount of wastage and value loss of agricultural products due to lack of storage, refrigeration, transportation and processing facilities.

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9. Organized retail outlets use very large volumes of electricity for a variety of applications from lighting, air conditioning, escalators, cold storing, billing systems, lifts etc. In fact, retailing in an organized retail outlet would be lifeless if power is not available. As a result of insufficient and inefficient power supply, a huge amount of private investment goes into ensuring power backups. This makes it very difficult for organized retail to grow. 10. The single-largest factor hampering retailers in India is the cost of quality real

estate. As location is the king in retail, the increasing cost of real estate has become a concern for retailers who operate on very low margins. The present scenario of the industry is focused on forward buying of retail real estate in order to reap balance sheet advantages later in the business cycle. Another problem is confirming with regulations restricting real estate purchase and cumbersome local laws. 11. As more and more organized retail outlets are dotting the Indian topography,

competition is no more restricted between organized and unorganized retailing. It is now quite evident between organized retailers as well. Loyalty programs, home delivery of goods, customer retention strategies, offers, discounts etc are the order of the day. 12. Organized retailers in India cannot concentrate on their core competency alone

like in many developed countries. They will need to manage everything from supply chain, logistics, selling, sourcing, stocking, merchandizing, trend analyzing etc. Players in the organized sector have big expenses to meet, and yet have to keep prices low enough to be able to compete with the traditional sector. This is a very huge challenge. High costs for the organized sector arises from: higher labour costs, social security to employees, high quality real estate, rentals, security, maintenance, much bigger premises, comfort facilities such as air-conditioning, back-up power supply, higher electricity tariffs, taxes etc.

Conclusion
Thus, looking at the opportunities and challenges, which Indian retail markets offer to the
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marketers and the manufacturers, it can be said that the future is very promising for those who can understand the dynamics of the markets and make use of them to their best advantage. India is being seen as a potential goldmine. It has been ranked 2nd in Global Retail Development Index of 30 developing countries drawn up by A.T.Kearney. Government of India has also opened the door for the retailing giants to enter into the markets. Many foreign investors are also showing keen interest to enter into the Indian market. With the flow of FDI, retail sector will have to see a many changes in the coming years. As more and more organized retail outlets are dotting the Indian topography, competition is no more restricted between organized and unorganized retailing. It is now quite evident between organized retailers as well. The retail industry in India is currently growing at a great pace and is expected to go up to US$ 833 billion by the year 2013.

Bibliography
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10.http://economictimes.indiatimes.com/news/news-by-industry/services/retailing/bharti-retailin-aggressive-mode/articleshow/6710085.cms

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