A Project Report On

RETAIL MANAGEMENT IN INDIA
Submitted in partial fulfillment for the Award of degree of MASTER IN BUSINESS ADMINISTRATION (MBA)

2010-2012 SHANKARA INTERNATIONAL SCHOOL OF MANAGEMENT & RESEARCH

Submitted By:Amitesh kumar jha MBA Fourth (Sem)

Submitted To:Ms. Ayushi Mathur HOD (SIM)

Preface

Project Study as we Known is essential to supplement to Knowledge worth the Practical Knowledge and to inculcate efficiency. It was observed that due to lack of practical most of the managers are ineffective in their job. Due to this reason Market research of 30 Days has been made an integral part of the syllabus of MASTER IN BUSINESS ADMINISTRATION (MBA) BY SHANKARA MANAGEMENT, KUKAS, JAIPUR, (RAJSTHAN) Project Study is considered a major component of the research remains incomplete till the report has been presented and written. The purpose of project Study is nor well served unless the finding and experience gained are made known to others. Writing of report is the last step in the Market Research Programme. Thus the purpose of Project Study and subsequent of report writing are meant both as a mean of gaining first hand experience in the organization and also an academic exercise. In the above mentioned context. I had a privilege of getting this Market Research. The Project Study is done under ‖ RETAIL MANAGEMENT IN INDIA” The report gives a true picture of the practical activities done by me within jurisdiction. The effort has been made to collect the relevant information regarding the topic. This present study of “ RETAIL MANAGEMENT IN INDIA” I would like to express my sincere gratitude to all those persons who help me in the preparation of the project. INSTITUTE OF

Acknowledgement

I express my sincere thanks to my project guide, Ms.Ayushi Mathur. for guiding me right form the inception till the successful completion of the project. I sincerely acknowledge him for extending their valuable guidance, support for literature, critical reviews of project and the report and above all the moral support he had provided to me with all stages of this project.

I would also like to thank the supporting my friends, for their help and cooperation throughout our project.

(Signature of student)

Name of Student Amitesh Kumar jha

through an exploratory and conclusive research. Store Retailing and Non-store Retailing. Therefore. The growing affluence of India‘s consuming class. It witnesses tremendous growth with the changing demographics and an improvement in the quality of life of urban people. the emergence of the new breed of entrepreneurs and a flood of imported products in the food and grocery space. automatic vending. from the traditional retail outlet and street local market shops to upscale multi brand outlets. this concept of retail marketing through departmental stores.Project Report on Retail Marketing in India Executive Summary The Indian retail industry is now beginning to evolve in the line with the transformation that has swept other large economies. direct marketing. Sainsbury and Tesco but at least the winds are blowing in the direction of growth. Though at this moment. it is still premature to say that the Indian retail market will replicate the success stories of names such as Wal-Mart stores. especially stores or departmental stores. which is a store or multi brand outlet. trying to cater to not one or two but many segments of the society and Nonstore Retailing as the direct selling. Hence. focusing on two aspects of retail marketing i. has taken many forms and dimensions. Store Retailing as the departmental store. The concept retail which includes the shopkeeper to customer interaction.e. offering an array of products in various categories under one roof. . has driven the current retail boom in the domestic market. which is coming up in a big way in India was decided to be studied in detail.

Most of these stores believe in creating not just a marketing activity with its customers. as they seem to derive immense pleasure of convenience and exposure to variety under one roof. or discount offers. when they don‘t have time for things. in their extremely busy lives. .The objective being to assess the various parameters that influences a buyer to visit or shop at departmental store thereby contributing to its turnover (in terms of sales and profits) hence leading to its overall success. Though some of the customers perceive departmental stores to be expensive and only high income category‘s cup of tea. Hence this document entails me through these aspects in great detail. the stores make constant efforts to induce them to at least visit the store at once during the sale period. helping me to understand the concept of retail marketing through departmental stores in Delhi. amongst the shopping spree in Delhi. but rather favor relationship building with him so as to convert first time customers into a client. The extensive research brought me to conclude that departmental stores are soon emerging on the top priority lists.

The Indian Retailing Industry stands poised to take off into the 21st century. India has five million retailers with a business volume of . store design & operations. initiated in the mid-80s and accelerated through the 90s has begun to impact the structure and conduct of the retail industry. retailing in India. liberalization in mindsets driven by media. and which leverages scale and scope to offer value-added services to its customers. India has some 12 million retail outlets. it is not even considered a real industry. In fact. visual merchandising logistics and communications. Retail boom is unabating. It is one of the fastest growing sectors in the nation that caters to the world's second largest consumer market. It is also India‘s least evolved industries. a national mindset which favored denial over indulgence. which is one of the world‘s largest organized employers. has the deepest penetration to rural India. and FMCG companies who can add to their offers by partnering this revolution. It is the country‘s largest source of employment after agriculture. Compare this with the global retail industry. However. The industry suffers from lack of management talent. been mostly in the hand of small disorganized entrepreneurs.1 Introduction to the Project Report : The word ‗retail‘ means to sell or be sold directly to individuals.Chapter 1 : RETAILING – THE SUNRISE INDUSTRY 1. unfavorable regulation and denial of access to best practices. only recently has there been an awakening in this sector. and generates more than 10percent of India‘s GDP. The liberalization of the consumer goods industry. retailing in India has so far. B2C service providers. and a fractured supply chain for agricultural products have all contributed to prevent the development of modern tenants based on scale advancements and consumer preferences. but many of these act merely as subsistence providers for their owners and survive on a cost structure where labor and land is assumed to be free and taxes nil. The Indian retail industry is only now beginning to evolve in line with the transformation that has swept other large economies. Fifty years of restricting the consumer goods industry. is at the cutting edge of technology. Retail is India‘s largest industry. Backed by changing consumer trends and metrics. with more organized retailers starting to make an impact. However. new opportunities and increasing wealth. poor access to capital. presents a vast opportunity for a variety of businesses .real estate. and arguably the one with the most impact on the population.

on the basis of purchasing power parity (PPP) it has already hit the $1200 level. This does strengthen the belief that probably. In other developing economies. Europe went through this phase of retail revolution about 40-50 years ago. Smaller but still interesting opportunities will be created in other sectors like books. new businesses with sales of 1billion – 2 billion US $ will be created in grocery and of 250million . As India goes through this transformation. organized retail already has a 40 percent share of the market. all Southeast Asian countries like Indonesia. This transformation will also impact the supply chain in agriculture. Though India has a per capital income of $ 400. China. compared to India‘s current levels of 2 percent. The middle class drives retailing anywhere in the world and this segment should have reasonable income. The next driver is availability of variety of goods. is going through the same phase what India is also facing now. Malaysia. In many of these countries. . In the last 10 years. the tax collections from trade and the way people shop. and music. Taiwan and Korea have gone through similar phases. the right time for organized retailing to click in India has come.$180 million growing at 5 to 7 per cent a year. electronics. products and brands. using the global industry as the backdrop. The third one is ―sense of awareness‖.500million US $ in apparel. It is believed that when a country‘s per capita income reaches the level of $1.200 per annum. with a per capita income of $650-700 per annum. organized retailing begins to takeover. this transformation has already begun. This report aims at providing an insight into the emerging trends in the industry and the barriers to change and a perspective on what this industry could become.

6 trillion.1. The industry accounts for over 8 percent of the GDP in western economies. with total sales of $ 6. are retailers. Titan. This localized nature of the industry is changing as retailers face low rates of growth and threatened profitability at home. most retailers have had very localized operations. Fitch estimates the current share of organized retail to grow from 2percent presently to around 15 to 20 percent by 2010. and around 25 of the Asian top 500 companies. Gold Bazaar (Pantaloon) Home Store. It is also home to a number of the world‘s largest enterprises. Shoppers Stop Tanishq. New geographies will help them sustain top-line growth as well as permit global . Clothing & Apparel Jewelry.6 Pantaloon Westside. is the world‘s largest private industry ahead of financial industries $ 5. Health & Glow Source: economic time‘s industry report Traditionally. Woodland VLCC. Retail: Largest private industry in the world economy A Study by Mc Kinsey states that organized retail accounts for just around 2 percent (out of which modern retail formats account for 7 percent of trade) presently is set to grow at exponential exceeding 35 percent.7 3.2 Overview of the Global Retail Industry Retail: world largest industry Retail. Table 1: Retail Consumption areas US $ billion Existing Companies in the organized sector Food Retailing 130 Food Bazaar (Pantaloon) Food World Subhishka. Arcus (Pantaloon) Bata. Watches Home Furnishing Foot wear Beauty Care 12 7 5 1.1 trillion. Over 50 of the Fortune 500 companies.

operational effectiveness and ambience have driven the spread of organized retail. Each of these formats has been driven by marketer‘s need to offer relevant. Wal-Mart. Poland 12 percent. Global retailers have also reached a position of strength that enables their brand to be leveraged across a wide range of services. . In apparel. but are also entering large new areas of business.sourcing. Many of them have expanded their offering. Grocery. China 8percent. hypermarkets. Home Depot and Kingfisher are benchmark retailers in these fields. distinctive and economic propositions to an evolving consumer base. Significantly. The basic department stores and co-operatives of the early 20th Century have given way to mass merchandisers. car retail. category killers. This has put them in a position where they are not only beginning to capture growth from geographical expansion. retail formats have changed radically. The recent evolution of the Internet has helped further broaden the scope of operations of large retailers. the advantage is driven by the marketers‘ ability to provide better products in a comfortable ambience at affordable prices. Profits in retail have steadily been rising and have generated 18 percent shareholder returns between 1994 and 1999. Further. accounting for instance 16 percent of the US workforce. India 10 percent and Brazil 6percent. retail is also one of the world‘s largest employers. IKEA and GAP are good examples of this model of retailing. which in turn is driven by superior sourcing and merchandising and cost-efficient operations. In these cases sourcing capability has to be backed by strong design capability and store management. a large number of retailers are pursuing innovative aggregation and supply chain-streamlining initiatives using B2B technology. home furnishings and furniture. electronics are examples of categories that compete on the strength of better pricing. merchandising. discounters and convenience stores. convenience services and personal financial services. Over the last few decades. warehouse clubs. Factors such as scale in sourcing. over the years to include fuel retail.

The second group. Saboos. 12 hours a day. comprises developers. whose participation is essential in making retail a boom-sector in this millennium. Indeed. Standard. so that it is possible to develop retail-estate beyond the city-limits. it is imperative that the Central government and all state governments bring in Value Added Taxation or a unified taxation system to ensure that the tax-regimes are the same across the country. Music World. The first among these is the government. The laws governing retail real estate should also be looked into. However. Vijay Store and Janaki Das & Sons. The relevant rules should also be amended to allow retail-stores to operate 7 days a week. the development of organized retail is dependent on the efforts of several agencies and institutions. This is evident from the experiences of retail-outlets like Shoppers' Stop. Given the hours most urban consumers keep at work. In a country as big as India and with as many states as ours. indeed. Apart from providing entertainment and retail opportunities. the right shopping experience does induce Indian consumers to spend more. therefore. out at malls. Ebony. its people.Chapter 2 : THE RETAIL MARKETING REVOLUTION By 2010. and its households. The Home Store. thus. Crosswords. make sense. and keeping in mind the increase in the number of nuclear families. Retail Marketing will go through a tremendous change in India this millennium. so far. It will change India's cities. This will also help people enjoy their evenings. the list of India's top 10 retailers will have at least 5 Indian corporate. this will also decongest the city center and facilitate the development of suburbs. It is. Westside etc. Bigjo‘s. this may. been few efforts to present the product in the right kind of environment in India. Most properties are developed without considering the end user. The Indian consumer is reportedly the largest spender in Singapore and London. the shopper's convenience is not taken into consideration while the property is constructed. . Often. Food World. strange that there have. we sometimes find high-ceilinged offices and low-ceilinged retail stores.

or in shops during jaunts abroad. Indeed. several transnational retail giants have established their presence in India. The last decade of the millennium witnessed the emergence of lifestyle brands and the plastic culture. Customer-expectations zoomed . with manufacturer-retail brands like Bata. Thus. A glimpse of the last 2 decades of the previous century proves illuminating. mall-management is treated as a specialized discipline of retail management. retailing will present an attractive opportunity. Large-format retailing started with outlets like Vivek's and Nalli's in Chennai and Kidskemp in Bangalore. franchised or otherwise. Organized retail allows them to expose their products to a large volume of customers in an environment conducive to buying. In contrast. and Titan. For manufacturers. and there is a huge opportunity for retail institutes in India. who aspired to own everything we saw on TV. Bombay Dyeing. it can supply to a retail-chain that has the resources to create a brand of its own. Liberalization and increasing awareness of the world around us created the Indian yuppie. if a manufacturing company lacks the resources to build a brand. internationally. Retail is a people-intensive business. the Indian consumer became more mature. New lifestyle brands offered traditional retail-outlets an opportunity to convert themselves into exclusive stores. And even as these developments were taking place. Manufacturers need to draw a plan of producing quality products and tie in with retailers. at another level. This is what we have to focus on in this millennium.Another area of concern is the way in which developers sell their space. others. India is too large a market to be ignored by transnational retail giants. and forging relationships with organized retail. have visited India and studied the Indian market. Already. and. notably Chinese retailers. There's a lot at stake here: even so early in the 21st Century. the focus should be on producing good products. the birth of organized retail will also engender the creation of private labels and store-brands. From the manufacturing company's perspective. The only consideration is the price. not the usage pattern or the nature of the product that is to be sold. The third constituency that has a role to play in the fortunes of organized retail this century is the education-sector.

And retailers. (USA) 1134 Royal Ahold (Netherlands) Metro AG (Germany) Kmart Corporation (USA) 7150 2169 2105 Sears. have to focus on the quality of the shopping experience.726 $36. and the entire shopping experience. Today.787 $61.362 Source: economic times industry report .047 $49. Not just in terms of the product-quality. In the US. and the smile of the counter-person to that decorating the face of a Jet Airways' crew member. retailers have to deal with a customer who is extremely demanding.189 $37. To cope with the new customer. (USA) 8130 3445 The Home Depot. it is Wal-Mart with a turnover in excess of $ 120 billion. 2231 (USA) 9 10 Albertson's.028 $36. (USA) Target Corporation (USA) 2512 1307 $36. the typical customer who shops in a retail outlet compares the time spent at the check-out counter with that at an efficient petrol station. retailing is a large business. it is Marks and Spencer's with close to £ 10 billion. you find at least one retailer amongst the top 10 companies in every country. and. Inc.823 in US$ owned 1 2 3 4 5 6 7 8 Wall-Mart Stores Inc. Roebuck and Co.738 $45.000 $45. but also in terms of service.Thus. (USA) 4178 Carrefour Group (France) The Kroger Co. Inc.729 $44. Table 2: Top 10 Retailers Worldwide Rank Retailer No of stores Sales Millions $180. at the beginning of the New Millennium. In the UK. Internationally. it is Karstadt with a turnover in excess of dm 10 billion. manufacturers have to focus on product quality and brand building. in turn. in Germany.

whose sales volume comes primarily from retailing. non-business use. India will benefit from these developments because of increased consumption through retailing and the corresponding increase in employment created by retailing. or retailer – is doing retailing. wholesaler. Any organization selling to final consumers -.whether a manufacturer. 2. It does not matter how the goods or services are sold (by Person. in India have indicated a huge potential for retailing in the country. Mail. customers will want to spend time with their family and friends. several companies from the organized sector have also jumped into the fray. In this millennium. They may like to visit malls on weekends where everything will be available under one roof.1 Retail Marketing Retail Marketing includes all the activities involved in selling goods or services directly to final consumes for personal. Vending Machine. and retail organizations. 000 crore that is expected to be the size of the retail industry by the end of the first decade of this millennium. or in the consumer‘s home). on the street. Drawn by the magic number of Rs 1. There are store retailers.T. Consumers today can shop for goods and services in a wide variety of stores. There are many approaches to understanding and defining retail marketing. 60. Japanese department stores such as Takashimaya and Mitsukoshi . but what we emphasized upon is defined as follows: ―Any business that directs its marketing efforts towards satisfying the final consumer based upon the organization of selling goods and services as a means of distribution‖ The concept assumed within this definition is quite important. Telephone. most emphasize retail marketing as the business activity of selling goods or services to the final consumer. and McKinsey & Co.Studies by consulting firms like A. non-store retailers. Retail organizations exhibit great variety and new forms keep emerging. The final consumer within the distribution chain is a key concept here as retailers are at the end of the chain and are involved in a direct interface with the consumer. like in the last. The best-known type of retailer is the department store. Kearney. A retailer or retail store is any business enterprise. or Internet) or where they are sold (in a store. KSA Technopak.

Retailing mix. It expands in terms of product offering. a new retailer enters with new price appeal. In the entry stage. its share of the market. There are three main phases in the life of a retailing institution. the retailer starts expanding. with the help of a few personnel. . With all these. A retailer is at the end of the distributive channel. better services. and improved interiors. The maximum satisfaction to the customers is achieved by a proper blend of all three. These are:    Innovation (Entry) Trading Up Vulnerability. A retailer deals in an assortment of goods to cater to the needs of consumers. cooking classes. This he does through his small organization. which means that it offers products at low prices so as to get a competitive edge over its competitors. limiting product offerings. therefore. These stores feature art galleries. With that end in view he has to pursue a policy to achieve his objective. He provides goods and service to the ultimate consumers. Sparton Stores & Limited services. its volume of turnover. It is the combination of all efforts planned by the retailer and embodies the adjustment of the retail store to the market environment. Its monopoly power over the others is its price advantage. A retailing mix is the package of goods and services that store offers to the customers for sale. a communication mix and a distribution mix. The need for organization becomes essential as soon as he hires people and enters into partnership or takes the help of members of his family in running his store. The success of the retail stores. This policy is called retailing mix. and children‘s playgrounds. depends on customers‘ reaction to the retailing mix which influences the profits of the store. In an individual retail store there is not much scope for organization except in the sense that the shopkeeper has to organize and apportion his time and resources. His objective is to make maximum profit out of his enterprise.attract millions of shoppers each year. it starts charging a bit higher prices. its image and status and finally its survival. In the trading up stage.

electronic appliances and other household goods. Normally these stages are there in the life of a retail institution. kids section. this is due to increase in the prices by the retailer. It is usually divided into different sections like clothing. there is a gap in the market leaving some space for the new players to come in. I have already explained the three stages in life of a retail institution. which are defined as follows: 1.In the vulnerability stage. Store Retailing Non store Retailing 2. They have a narrow product line with deep assortment such as apparel stores. . These stores are usually expensive and satisfy the needs of selected consumers who have liking or preference for exclusive things. 2. any retail institution targeting the upper class may start itself with a large variety & high price.2 Types OF Retail Marketing Store Retailing Store retailing provides consumers to shop for goods and services in a wide variety of stores and it also help the Consumers to get all the needed goods and services from one shop only. But all these may not be necessarily there in every retail institution. For instance. Departmental Store These stores are usually built in large area and keep variety of goods under one shed. The different types of store retailing are given below: Specialty Stores These stores focus on leisure tastes of different individuals. furniture stores. In a departmental store a consumer can buy variety of goods under one shed. sporting goods stores. home furnishings. florists and bookstores. This brings to broadly identify and categorize the types of retail marketing.

added new lines and services. and carrying a limited line of high turnover convenience products at slightly higher prices than departmental stores. offering mostly national brands. and opened suburban branches—all of which has led to higher costs and prices and as some department stores have cut their prices to compete with discounters. many discount retailers have ―traded up‖. Discount Store These stores sell standard merchandise at lower prices by accepting lower margins and selling higher volumes. Off . Supermarkets earn an operating profit of only 1 percent on sales and 10percent on net worth. The use of occasional discounts or specials does not make a discount store. low margin.price retailer. self service operations designed to serve total needs for food. The defects are normally minor.Price Retailer These stores sell goods at low price with lower margins & higher volumes. The company owned showroom selling the seconds products is a typical example of off . These stores sell goods with deteriorated quality.Supermarket These stores are relatively large. low cost. not inferior goods. coffee and pastries. . Convenience Stores These are relatively small stores located near residential area. This target at the persons belonging to the lower income group. though some have a collection of imported goods aimed to target the younger generation. laundry and household maintenance products. In recent years. high volume. They have improved decor. open for long hours seven days a week. A true discount store regularly sells its merchandise at lower prices. Many such stores also have added takeout sandwiches.

about 78 percent of these are small family owned businesses utilizing only household labour. and bookstores.3 Major Formats of Retailing Major formats of In-Store Retailing have been listed in Table given below: Table 3: Format Branded Stores Description Exclusive The Value Proposition showrooms either Complete range available a given brand. power tools. Focus on a specific consumer Greater choice to the . discount stores have moved beyond general merchandise into specialty merchandise stores. fast-moving. While the number of businesses operating supermarkets is higher ( 425 in 2004 ) most of these had only 1 outlet. even among retail enterprises that hire workers the bulk of them hire less than 3 workers . luggage small appliances. There are only 14 companies that run departmental stores and mere two with hypermarket operations. electronics stores. 2. Catalog showrooms have been struggling in recent years to hold their share of the retail market. such as discount sporting goods stores. This epithet has its roots in the huge number of retail enterprises in the country totaling 12 million. cameras.Not only that. the number of companies with supermarket chains was less than 10. Specialty Stores Certified product quality. Catalog showrooms make their money by cutting costs and margins to provide low prices that will attract a higher volume of sales. toys. brandname goods at discount prices. and sporting goods. These include jewelry. RETAIL SCENE IN INDIA India has some sometimes been called a nation of shopkeepers.India‘s retail sector appears backwards not only by standards of industrialized countries but also in comparison to several other emerging markets in Asia and elsewhere. Catalog Showroom Catalog showrooms generally sell a broad selection of high-markup. owned or franchised out by a for manufacturer.

house wares. of shops operating An enclosure having different Variety formats of in-store retailers. all available close to each under one roof. Hyper-mart Larger than a Supermarket. to varied consumer needs. other. needs. Low prices. vast choice sometimes with a warehouse available including appearance. Supermarkets Extremely large self-services One stop shop catering retail outlets. carry most of the brands consumer. such as clothing. appliances. Source: India info line . Department Stores comparison between brands possible Large stores having a wide One stop shop catering variety of products. the retail price through selling high volumes and reaping the economies of scale. toys. furniture. Shopping Malls self-service in crowded formats Convenient location and urban extended hours. in quieter parts of the city Convenience Stores Small located areas. Discount Stores Stores offering discounts on Low prices. available. organized to into different varied consumer departments. etc. generally located services as cafeterias.need.

A variant of direct selling is called multilevel marketing. Different types of non-store retailing are given below: Direct Selling Direct selling which started centuries ago with itinerant peddlers has burgeoned into a $9 billion industry. with over 600 companies selling door to door.Department store format Westside . who in turn recruit and sell to sub distributors. record albums. T-shirts. Automatic Vending Automatic vending has been applied to a considerable variety of merchandise. very good value for money merchandise for the entire family    Giant and Big Bazaar . newspaper. candy. usually in customer homes.Specialty retailing . soft drinks. television direct response marketing.Hypermarket/cash & carry store Food World and Nilgiris – Supermarket format Pantaloons and The Home Store . or at home sales parties. including telemarketing.Non-store Retailing It is another type of retail marketing. cosmetics. including impulse goods with high convenience value (cigarettes. hot soups and food.   Shoppers' Stop . office to office. hot beverages) and other products (hosiery. whereby companies such as Amway recruit independent businesspeople who act as distributors for their products.4 Organized Retail Formats in India Each of the retail stars has identified and settled into a feasible and sustainable business model of its own. film. who eventually recruit others to sell their products. Direct Marketing Direct marketing has its roots in mail-order marketing but today includes reaching people in other ways than visiting their homes or offices. food snacks. insurance policies. 2.Emulated the Marks & Spencer model of 100 per cent private label. paperbacks. and even fishing worms). and electronic shopping.

The regular consumer who spends on big volumes (large pack sizes) because of a price advantage per unit. The small retailer. Some of these are listed in Table below. Structure of the retailing industry according to ownership patterns:       An unaffiliated or independent retailer A chain retailer or corporate retail chain A franchise system A Leased Department (LD) Vertical Marketing System (VMS) Consumer Co-operatives A new entrant in the retail environment is the 'discounter' format. Shopping experience in terms of ambience or the service is not the mainstay here. 1. These formats usually work on bulk buying and bulk selling. Retailing in India is still evolving and the sector is witnessing a series of experiments across the country with new formats being tested out. a customer of Giant could be a dhabawala who needs to buy edible oil in bulk. the old ones tweaked around or just discarded. . It is also is known as cash and-carry or hypermarket. Tanishq has very successfully pioneered a very high quality organized retail business in fine jewellery. 2. RPG group has set up the first 'discounter' in Hyderabad called the Giant. Now Pantaloon is following suit. Two categories of customers visit these retail outlets. For example.

adding food retail Corner shops Quasi-mall. In India the trends are mainly in three sectors. to increase reach and business from their stores.Table 4: Retailer Shoppers' Stop Ebony Crossword Pyramid Pantaloon Subhishka Vitan Foodworld Glob us Bombay Bazaar Efoodmart Metro S Kumar's Current Format Department Store Department Store Large bookstore Department Store Own brand store Supermarket Supermarket Food supermarket Department Store Super market Food super market Departmental store Departmental store New Formats Quasi-mall Quasi-mall. food retail Hypermarket Considering moving to self service Suburban discount store Hypermarket. smaller outlets. Crossword bookstores are experimenting with Crossword Corner. I can summarize the main development retailers and manufacturers need to take into account as they plan their competitive strategies. These sectors are: . Foodworld express Small fashion stores Aggregation of Kiranas Aggregation of Kiranas Cash and carry Discount store Source: India info line Retailers are also trying out smaller versions of their stores in an attempt to reach a maximum number of consumers. FoodWorld is experimenting with a format of one-fourth the normal size called FoodWorld Express.5 Trends in Retail Marketing At this point. 2.

to which they can immediately respond by calling a toll-free number or via computer. and telephones. In the book selling business. New retail forms and combinations continually emerge. Yet the news is not all bad for smaller companies. The electronic age has significantly increased the growth of non store retailing. New retail forms are facing a shorter life span. consumers receive sales offers in the mail and over television. Because of their bulk buying power. computers. and prospect for permanent tenants. Successful carts average $ 30.Trends in retail marketing 1. push carts help budding entrepreneurs test their retailing dreams without a major cash investment. Even old retail forms are reappearing: In 1992 Shawna and Randy Heniger introduced peddler‘s carts in the Mall of America. 4. The competition between chain superstores and smaller independently owned stores has become particularly heated. Bank branches and ATM counters have opened in supermarkets. They provide a way for malls to bring in more mom-andpop retailers.000 a month in sales and can easily top $ 70. 3.000 in December.000 to $ 40. With an average startup cost of only $3. Many small independent retailers thrive by knowing their customers better and providing them with more personal service.000. the arrival of a superstore has forced nearby independents out of business. Bookstores feature coffee shops. They are rapidly copied and quickly lose their novelty. chains get more favorable terms than independents. catalog showrooms. or between different types of store outlets. 2. and the chains‘ large square footage allows them to put in cafes and bathrooms. showcase seasonal merchandise. . Today three-fourths of the nation‘s major malls have carts selling everything from casual wear to condoms. and department stores all compete for the same consumers. Competition today is increasingly intertype. In many locations. Gas stations include food stores that make more profit than the gas operation. Discount stores. the arrival of a Barnes & Noble superstore or Borders Books and Music usually puts smaller bookstores out of business.

Manufacturers have little choice: They stand to lose 10 to 30 percent of the market if they refuse.5. Through their superior information systems and buying power. but are moving into a mix of retail formats. who become dependent on one large retailer and are therefore extremely vulnerable. Gap. they are crowding out smaller manufacturers. Retailers are using computers to produce better forecasts. and smaller retailers. Today‘s retailers are moving toward one of two poles. and Toys ―R‖ Us have become globally prominent as a result of their great marketing prowess. control inventory costs. and even how to reorganize and improve production and management. . such as department stores. 7. Marketing channels are increasingly becoming professionally managed and programmed. order electronically from suppliers. McDonald‘s. The Limited. when and how to ship. electronic funds transfer. who simply do not have the budget of the buying power to compete. how to price and promote. Superpower retailers are emerging. and improved merchandise-handling systems. They are not sticking to one format. Many more Indian retailers are actively pursuing overseas markets to boost profits. operating either as mass merchandisers or as specialty retailers. Many retailers are even telling the most powerful manufacturers what to make. these giant retailers are able to offer strong price savings. 6. and even sell to customers within stores. These retailers are using sophisticated marketing information and logistical systems to deliver good service and immense volumes of product at appealing prices to masses of consumers. 8. They are adopting checkout scanning systems. retail organizations are increasingly designing and launching new store formats targeted to different lifestyle groups. In the process. send e-mail between stores. Technology is becoming critical as a competitive tool. Retailers with unique formats and strong brand positioning are increasingly moving into other countries.

. such as Starbucks. from folk dancing to women‘s meetings. Brew pubs such as New York‘s Zip City Brewing and Seattle‘s Trolley man Pub offer tasting and a place to pass the time. offers indoor spaces where kids can go wild without breaking anything and stressed-out parents can exchange stories. juice bars. The Discovery Zone.500 in 1989 to a forecasted 13. and brew pubs. And Barnes & Noble turned a once-staid bookstore industry into a fun-filled village green. Denver‘s two Tattered Covered bookstores host more than 250 events annually. There are also the nowubiquitous coffeehouses and espresso bars. tea shops. bookshops.000 by 2001. a chain of children‘s play spaces. whose numbers have grown from 2.9. such as coffeehouses. There has been a marked rise in establishments that provide a place for people to congregate.

High import duties on imported goods. Poor infrastructure facilities like roads etc. High taxes. Retail is derived from the French word retailer. No exposure to media. In this system the company operating on all India basis appoints hundreds of distributors across the country that supplies to various retailers and wholesalers. Without proper retailing the companies can't do their business. Retailing is the process of selling goods in small quantities to the public and is not meant for resale. . Savings focused and less indulgence mindset. Anyone with some money and some real estate can open a small shop and become a retailer catering to the locality in which he opens the shop. meaning to cut a piece off or to break bulk. Low per capita income. forms the backbone of the front-end logistics of most of the consumer-good companies. Some of the major reasons being:         Poverty and lower literacy levels. The current retailing system prevalent across the country is highly fragmented and unorganized. Wholesalers in turn can either directly sell in the market or can supply to retailers. There are various ways of making goods available to consumers like:    Company to distributor to wholesaler to retailer to consumer Company to salesperson to consumer Company to consumers (online/ phone/ catalog ordering) These three are among the most common ways of making the goods available to consumers.Chapter 3 : RETAIL MARKETING IN INDIA Retail marketing is the most important part of the entire logistics chain in a business especially in consumer related products. Restrictions on intra-state good movement. wholesaler and retailer. There are a number of reasons behind this fragmented retail market. But in India the three layered system of distributor.

which led to stifling of growth of organized segment of retailing sector and which instead led to highly fragmented market. Due to the high investments required in the early . Today in India we have more than 12 million retail outlets and most of then are family run and locally owned. In India the process of buying and selling at these unorganized retail outlets.6percent in the last decade resulting in increased income levels and higher purchasing power for the population. several structural and demographic changes that are taking place are helping the industry to grow. interest rates have also declined in the past few years further propelling the consumption demand.1 Retailing in 1990s On account of the liberalization drive in the 1990s. These factors were the key drivers for the retail wave in the country. Hitherto none of the business schools in India were offering specialized courses on retailing. Initially. 3. Increasing literacy levels. higher international travel by Indian population and increasing media penetration has raised aspiration levels of the population. Seeing the huge market size of retail business in the country and the current level of organized segment. many players have jumped into the fray and many are waiting for the right opportunity to enter it. is highly characterized by bargaining and negotiations. Finally. increasing number of working women. with south India holding its ground as the pioneer in organized retail growth. Notable among the early entrants were players like Shoppers Stop. There are very few nationally present retail stores. which translates into higher prospects for increased consumption levels in the future. Subhiksha. on account of the low cost of real estate. the growth in organized retail was very slow and concentrated mainly in metros. The GDP has grown by 6.  Expensive supply chain.   FDI in retailing is not allowed. But slowly with increasing influence of media and urbanization the market is shifting towards organized segment. Besides this there is other reasons too. Ebony. Retailing is not considered as a business or industry by the government. etc. Foodworld. resulting in demand for better shopping experience and larger variety of goods. increasing urbanization. India has close to 54percent of population below the age of 25. Pantaloon.

DLF – Real Estate Developer ITC .Diversified Business House Source: Fitch In the early 1990s.Real Estate Developer Shopper‘s Stop Chain of departmental stores Hiranandani . DLF malls Wills Sport – Chain of apparel stored. The second half of 1990s saw several players making losses and exiting from the business. Giant hypermarkets. The worst years for the industry were 2000 and 2001. as the stock market downturn. Table 5: Sponsors Group Rajan Raheja – Real Retail Business Estate Globus – Chain of departmental stores Developer K. and growth of the industry remained slow. as the players were lower down on the learning curve many faltered in their models. The industry recovered starting 2002. Raheja . .Real Estate Developer RPG – Diversified Business House Westside – chain of department stores Ebony . Tata – Diversified Business House DS Group .chain of department stores Foodworld supermarkets. had a direct impact on the performance of the industry.stages and the fact that real estate was the key deciding factor for success of stores. Loft shoe stores and Hakone mall. Health & Glow beauty and health stores. It now appears the efforts and learning‘s of the players in the last decade are beginning to pay off. real estate developers have been the major players in the industry (see Table). which reduced customer confidence and spending.Real Estate Developer Haiko supermarket. the organized retail industry has established firm roots and is beginning to grow.

The share of . The future growth need not necessarily come only from the big metros. where there already exists a good retail network. perhaps. 30. consumers are looking for convenience. we have a situation where both demand and supply side dynamics are fuelling the growth of organized retailing in India. particularly for food items has led a few players to consolidate their operations to take advantage of economies of scale and match consumer expectations in terms of delivery as well as space. The fact that big Indian retail chains are moving into places like Indore or Chandigarh is an important indicator of future growth. Chandigarh. The spread of super stores to the northern cities such as Delhi. convenience is defined as having everything under one roof. For the Rs.000 crore by 2005 Mall Mania: The developing mall culture in India Emergence of region-specific formats Emergence of discount formats Entry of international players Retail experts find Indian industry promising The retail movement in India has acquired the critical mass that is required for rapid acceleration in terms of industry growth as well as geographical spread. 5000-crore organized retail industry it is. longer hours and multiplicity of choice. With the increasing number of nuclear families. although improvements in the supply chain are yet to fully match with consumer expectations. greater work pressure and increased commuting time. The Indian retail industry can no longer be called nascent. Jaipur and Kolkata is evidence of the fact that organized retailing in India has emerged from its southern bastion. And. The retailing boom is being driven by increased expectations as well as changing shopping behavior of the urban Indian consumer. working women. time to tap the relatively smaller cities.2 Present Retail Scenario In India       Retail experts find Indian industry promising Retail sales to touch Rs. So.3. the current inefficient supply chain in India. On the supply side.

While projections can be slippery. particularly Chennai. ft. which will increase their efficiencies. organized retailing is focusing on only SEC-A cities. other segments like food and groceries. retailers would now have access to retail-specific properties. ft. Today 82 per cent of organized retailing comes from the top six cities and 12 per cent from the next four. South India. while the top six would still be the growth centers for consumer durables. rentals for retail properties have shown a marked decline. Hyderabad and Bangalore. several mall projects were announced. The second half of the top 10 cities will provide large growth for food and groceries. close to 12 million sq. is expected to be operational by end of 2003 (see Table below). believes KSA.organized sector in total retail sales will grow from one per cent now to six per cent by 2005. There could be variations in growth patterns in different segments. of which 10 million sq. consumer durables and even books and music have witnessed the emergence of organized players in large cities in South India. Table 6: . KSA projects the top six cities will account for 66 per cent of total organized retailing and the next four for 20 per cent. This appears to be the case so far. KSA says the top 10 cities provide 94 per cent of organized retail sales in India. With this. Moreover. The lack of trained manpower or alternatively the tremendous scope the sector has to provide employment is another issue. By 2005. While garment stores have been around for sometime. The spread of organized retailing is unlikely to be a national phenomenon yet. According to market estimates. hard facts point to exciting growth ahead for this sector. By early 2001. have seen the emergence of chain stores or large format stores. Mall Mania: The Developing Mall Culture in India Modern malls made their entry into India in the late 1990s. That is where a large portion of the country's urban population exists. India‘s 23 largest cities. According to KSA. which has brought down the break-even levels of the retail projects. of mall space is being developed across several cities in the country. The top 10 cities will account for 86 per cent of organized retail sales. with the establishment of Crossroads in Mumbai and Ansals Plaza in Delhi.

. . By the end of 2004. ft. there were only few international style shopping malls in India -Spencer in Chennai. Industry Reports Till some time back. Nasik and Jaipur Malls Hyatt. Phoenix Malls Lower Parel. Ansals Plaza in New Delhi and Sriram‘s Arcade in Kolkata. 60 per sq. Mumbai Malad. source: Chesterten Meghraj. Mumbai Location Tardeo. ft. Mumbai Borevali. 225-250 175-200 75-90 75-90 65-85 60-80 55-75 55-75 75 50-70 65-85* 65-85 80-180 100 55 45-55 75 70-90 70 45-55 175-300 100-125 *average for the metropolitian is Rs. Mumbai East Delhi Gurgaon Gurgaon Gurgaon Noida KolKotta KolKotta Kanpur Baroda Bangalore Chennai Rate / Sq. Mumbai & Leela. Mumbai South Ex. Mumbai Andheri.Mall Development in India Mall Crossroads Ansals Nirmal Lifestyle Runweals Mall Karnavat Mall Raheja Mind space Jog‘s Mall Cable Corporation Ansals Sahara MGF Malls – Metroplitian & Plaza DLF Shipra Forum City Center Rave 3 Inox Forum Spencers Plaza Phase III Indore. Delhi Mulund. Crossroads in Mumbai. Mumbai Mulund. Mumbai Thane. that number jumped to many.

which has helped them to standardize the merchandise offering across the chain. range. malls are as large as 50 lakh sq ft. the industry is witnessing the development of region-specific formats. Even the 26 malls that are being planned are likely to measure between 50.000 sq. consumers want more variety before making their purchase decision. sizes. like Shopper's City in Kolkata or the Esplanade Mall at Kochi. It is perhaps the best way to use an idle real estate asset.it occupies 7 lakh sq ft and even that is dwarfed by Asia's largest mall. Many old-time corporates are seriously considering using their idle assets. this will rise to 70-lakh sq ft. This signifies that people are finally ready for multi-option complexes. So. In the US and South-East Asia. There's a flip side though -malls even as small as 80. The Indian mall cannot offer too many choices in terms of brands. With organized retail penetrating into B class towns. In the next one year. can be sustained. ft. Most players have started operating these two formats across various cities.000 sq ft and 2 lakh sq ft. developing a very large mall can never be sustainable. . A study on consumer outlook suggests that over 80 percent of consumers want a wide range of products at hand while shopping. Emergence of Region-Specific Formats For the first time in 10 years. stores in B class towns have stabilized in the 25. especially when there is opportunity here. in departmental store format. retailers have started differentiating in the sizes and formats of stores. As the retail industry evolves.000 plus sq. The limited kitty of brands has yet another significant knock on effect on the typical size of Indian malls. In three years.000-35.It looks like a virtual stampede. Spencer is by far the largest mall in India .000 sq ft. close to 40 lakh square feet of retail space will be developed. For example. It makes sense for landowners to develop it and keep the returns rather than sell it outright or even lease it. the 4-million sq ft mega mall in Malaysia. ft. major players with a cumulative investment of Rs 375 crore are set to change cityscapes across India. while most A class cities and metros have larger stores of 50.

promoted by Pantaloon and Giant. A number of the major brands have entered the country through licensing agreements with Indian players to capitalize on the opportunities available in the sector. promoted by the RPG Group. Penetration of organized retail into the lower strata of income groups and consumer demand for increased value-for-money has improved the prospects of these formats. USA Source: Industry Reports Retail Ventures In India Lifestyle Chain of Departmental Stores Hypermarket Supermarket. South Africa Nanz. Germany Marks & Spencer.Emergence of Discount Formats Larger discount formats. Spain McDonalds. Dubai Metro. Hypermarket Supermarket Apparel Retailer Apparel Retailer Food Retailer Food Retailer Food Retailer . USA Dominos USA Tricon Restaurant. are now emerging as major competitors to both unorganized and organized retailers. Entry of International Players A large number of international retailers have evinced interest in India. UK Mango. Germany Shoprite. These formats span across the entire range of merchandise categories. Big Bazaar. are examples of this format. despite the absence of favorable government policy for foreign players (see Table below). popularly known as hypermarkets. Table 7: International players International Players Landmarc Group.

having digitally captured and stored and image of the cheque. Rather than manually process a cheque. technology evolved rapidly to support this growth. Electronic cheque conversion. removing the need of a consumer physically visiting the store. Operation support systems ERP System Various ERP vendors have developed retail-specific systems which help in integrating all the functions from warehousing to distribution. front and back office store systems and . In a matter of seconds. which makes the process very fast. processes a cheque electronically by transmitting transaction information to the retailer and consumer's bank. Tunnel Scanning is a new concept where the consumer pushes the full shopping cart through an electronic gate to the point of sale. The hardware and software tools that have now become almost essential for retailing can be divided into 3 broad categories: Customer interfacing systems Bar coding and scanners Point of sale systems use scanners and bar coding to identify an item. use pre-stored data to calculate the cost and generate the total bill for a client. Internet Internet is also rapidly evolving as a customer interface.Chapter 4 : INFORMATION TECHNOLOGY IN RETAIL Over the years as the consumer demand increased and the retailers geared up to meet this increase. the items in the cart are hit with laser beams and scanned. All that the consumer has to do is to pay for the goods. the retailer voids it and hands it back to the consumer along with a receipt. Payment Payment through credit cards has become quite widespread and this enables a fast and easy payment process. a recent development in this area.

Leading manufactures. monthly forecasting. mail order and the Internet has provided retailers with real access to consumer data. preventing stock-outs and thus reducing his costs. These APS packages complement existing (but often limited) ERP packages. Manugistics. weekly factory scheduling and daily distribution scheduling into one overall planning process using a single set of data. Advanced Planning and Scheduling Systems APS systems can provide improved control across the supply chain. along with the various available CRM (Customer Relationship Management) Systems. getting his supplies on time. . while servicing the customer better. Mercial incs and Sterling-Douglas. They enable consolidation of activities such as long term budgeting. This. all the way from raw material suppliers right through to the retail shelf.merchandising. CRM Systems The rise of loyalty programs. distributors and retailers and considering APS packages such as those from i2. allows the retailers to study the purchase behavior of consumers in detail and grow the value of individual consumers to their businesses. Data warehousing & mining technologies offers retailers the tools they need to make sense of their consumer data and apply it to business. Bann. An integrated supply chain helps the retailer in maintaining his stocks.

software packages are helping retailers not only in their locational decisions but in decisions regarding store sizing and floor-spaces as well. 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. . The SPACEMAN Store Suit from AC Nielsen 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.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. Today.

Besides.300 outlets across nine countries.providing the same quality of food and the same ambience as anywhere in the world. a nonresident Indian. is whollyowned by the Landmark group. unlike the Chennai store. But what it has taken care of is world class quality in all its raw material sourcing. recently converted its technical tie-up (since 1996) with the RPG group's Spencer & Company for Foodworld into a 49:51 joint venture." These stores will sell all lifestyle products. it will create outlets in Bangalore. Roshan Mathew. Global investment bank Warburg Pincus is awaiting the Indian government's clearance to pick up a 25. The Dubai-based Landmark group is making its presence felt in Chennai through its Lifestyle mega store of over 30. In India. in Shoppers Stop. is a whollyowned subsidiary of the Mauritius-based Lifestyle International which. DFI also has a 50:50 joint venture with the Indian group in RPG Guardian. worth $13 million.1 per cent stake. formed in India recently. Fast food major McDonalds have already made a dent in the marketplace and in Indian palates. Delhi and Ahmedabad. as soon as Lifestyle gets a keenly awaited Foreign Investment Promotion Board clearance for a Rs 100 crore investment. Dairy Farm International and Jardine Matheson are present here. In India too McDonalds has maintained its unique selling proposition -. with specifications ensured strictly. The Hyderabad store will have additional sections for books and music. The new venture is called Foodworld Supermarkets Limited.000 sq ft store in Hyderabad. Its raw material requirements are totally outsourced. which Mathew terms "The Millennium Store". through tie-ups with the RPG Group. The Hong Kong-based Dairy Farm International. DFI is the retail arm of Jardine Matheson. under one roof.Chapter 5 : FOREIGN TOUCH IN INDIAN RETAIL The chief of Marks & Spencer has been making trips to India over the past year.000 sq ft. In Western markets. Lifestyle International Private Limited. Landmark is owned by Mukesh Jagtiani. The chain has been smart enough to tailor its products . Mumbai. the target is to "have 12 to 16 stores by 2005. in turn. barring furniture. Pune. a 125 year old retail major with around 1. according to Lifestyle International's marketing manager. Immediate plans include opening a 46. a familiar sight is the McDonalds golden arch.

Though at this moment. which is a store or multi brand outlet. and avoiding certain beef and pork in deference to social sensitivities. direct marketing. it is still premature to say that the Indian retail market will replicate the success stories of names such as Wal-Mart stores.e. Store Retailing as the departmental store. Store Retailing and Non-store Retailing. has driven the current retail boom in the domestic market. through an exploratory and conclusive research. In a market place where Kentucky Fried Chicken failed to make an impact. offering an array of products in various categories under one roof. especially stores or departmental stores. trying to cater to not one or two but many segments of the society and Nonstore Retailing as the direct selling. which is coming up in a big way in India was decided to be studied in detail. The objective being to assess the various parameters that influences a buyer to visit or shop at departmental store thereby contributing to its turnover (in terms of sales and profits) hence leading to its overall success.to the Indian environment. The growing affluence of India‘s consuming class. . has taken many forms and dimensions. Hence. Therefore. automatic vending. McDonalds seems to be finding its place slowly but surel The Indian retail industry is now beginning to evolve in the line with the transformation that has swept other large economies. this concept of retail marketing through departmental stores. Sainsbury and Tesco but at least the winds are blowing in the direction of growth. adding fare for the large number of vegetarians who love fast food. The concept retail which includes the shopkeeper to customer interaction. focusing on two aspects of retail marketing i. from the traditional retail outlet and street local market shops to upscale multi brand outlets. It witnesses tremendous growth with the changing demographics and an improvement in the quality of life of urban people. the emergence of the new breed of entrepreneurs and a flood of imported products in the food and grocery space.

as they seem to derive immense pleasure of convenience and exposure to variety under one roof. In fact. and arguably the one with the most impact on the population. when they don‘t have time for things. retailing in India has so far. 1.The extensive research brought me to conclude that departmental stores are soon emerging on the top priority lists. the stores make constant efforts to induce them to at least visit the store at once during the sale period. It is also India‘s least evolved industries. However. India has some 12 million retail outlets. Fifty years of restricting the consumer goods industry. Hence this document entails me through these aspects in great detail.1 Introduction to the Project Report : The word ‗retail‘ means to sell or be sold directly to individuals. a national mindset which favored denial over indulgence. poor access to capital. amongst the shopping spree in Delhi. or discount offers. but rather favor relationship building with him so as to convert first time customers into a client. which is one of the . The Indian retail industry is only now beginning to evolve in line with the transformation that has swept other large economies. Retail is India‘s largest industry. been mostly in the hand of small disorganized entrepreneurs. The industry suffers from lack of management talent. it is not even considered a real industry. has the deepest penetration to rural India. helping me to understand the concept of retail marketing through departmental stores in Delhi. and a fractured supply chain for agricultural products have all contributed to prevent the development of modern tenants based on scale advancements and consumer preferences. and generates more than 10percent of India‘s GDP. It is the country‘s largest source of employment after agriculture. Compare this with the global retail industry. Though some of the customers perceive departmental stores to be expensive and only high income category‘s cup of tea. unfavorable regulation and denial of access to best practices. but many of these act merely as subsistence providers for their owners and survive on a cost structure where labor and land is assumed to be free and taxes nil. Most of these stores believe in creating not just a marketing activity with its customers. in their extremely busy lives.

The third one is ―sense of awareness‖. Malaysia.real estate. only recently has there been an awakening in this sector. with a per capita income of $650-700 per annum. presents a vast opportunity for a variety of businesses . and FMCG companies who can add to their offers by partnering this revolution. . is at the cutting edge of technology. with more organized retailers starting to make an impact. This does strengthen the belief that probably. visual merchandising logistics and communications. products and brands. liberalization in mindsets driven by media. this transformation has already begun.200 per annum. new businesses with sales of 1billion – 2 billion US $ will be created in grocery and of 250million . and which leverages scale and scope to offer value-added services to its customers. In other developing economies. is going through the same phase what India is also facing now. Europe went through this phase of retail revolution about 40-50 years ago. Smaller but still interesting opportunities will be created in other sectors like books. B2C service providers. the tax collections from trade and the way people shop.world‘s largest organized employers. The middle class drives retailing anywhere in the world and this segment should have reasonable income. In many of these countries. and music. organized retailing begins to takeover. It is one of the fastest growing sectors in the nation that caters to the world's second largest consumer market. The Indian Retailing Industry stands poised to take off into the 21st century. However. As India goes through this transformation. The liberalization of the consumer goods industry. the right time for organized retailing to click in India has come. Retail boom is unabating. Taiwan and Korea have gone through similar phases. Backed by changing consumer trends and metrics. This transformation will also impact the supply chain in agriculture. on the basis of purchasing power parity (PPP) it has already hit the $1200 level. India has five million retailers with a business volume of $180 million growing at 5 to 7 per cent a year. store design & operations. Though India has a per capital income of $ 400. all Southeast Asian countries like Indonesia. compared to India‘s current levels of 2 percent. electronics. new opportunities and increasing wealth. The next driver is availability of variety of goods.500million US $ in apparel. In the last 10 years. China. It is believed that when a country‘s per capita income reaches the level of $1. initiated in the mid-80s and accelerated through the 90s has begun to impact the structure and conduct of the retail industry. retailing in India. organized retail already has a 40 percent share of the market.

7 3. It is also home to a number of the world‘s largest enterprises. is the world‘s largest private industry ahead of financial industries $ 5.6 trillion. Woodland VLCC. Table 1: Retail Consumption areas US $ billion Existing Companies in the organized sector Food Retailing 130 Food Bazaar (Pantaloon) Food World Subhishka. Arcus (Pantaloon) Bata. Health & Glow Source: economic time‘s industry report . Over 50 of the Fortune 500 companies. and around 25 of the Asian top 500 companies. Clothing & Apparel Jewelry. with total sales of $ 6. Watches Home Furnishing Foot wear Beauty Care 12 7 5 1. Fitch estimates the current share of organized retail to grow from 2percent presently to around 15 to 20 percent by 2010. Retail: Largest private industry in the world economy A Study by Mc Kinsey states that organized retail accounts for just around 2 percent (out of which modern retail formats account for 7 percent of trade) presently is set to grow at exponential exceeding 35 percent. The industry accounts for over 8 percent of the GDP in western economies. are retailers. using the global industry as the backdrop. Retail: world largest industry Retail. Titan.This report aims at providing an insight into the emerging trends in the industry and the barriers to change and a perspective on what this industry could become. Shoppers Stop Tanishq.1 trillion. Gold Bazaar (Pantaloon) Home Store.6 Pantaloon Westside.

most retailers have had very localized operations. distinctive and economic propositions to an evolving consumer base. Global retailers have also reached a position of strength that enables their brand to be leveraged across a wide range of services. Poland 12 percent. . IKEA and GAP are good examples of this model of retailing. a large number of retailers are pursuing innovative aggregation and supply chain-streamlining initiatives using B2B technology. hypermarkets. Each of these formats has been driven by marketer‘s need to offer relevant. discounters and convenience stores. Further. merchandising. but are also entering large new areas of business. Home Depot and Kingfisher are benchmark retailers in these fields. home furnishings and furniture. which in turn is driven by superior sourcing and merchandising and cost-efficient operations.Traditionally. retail is also one of the world‘s largest employers. The recent evolution of the Internet has helped further broaden the scope of operations of large retailers. warehouse clubs. electronics are examples of categories that compete on the strength of better pricing. Profits in retail have steadily been rising and have generated 18 percent shareholder returns between 1994 and 1999. Grocery. New geographies will help them sustain top-line growth as well as permit global sourcing. Factors such as scale in sourcing. In apparel. category killers. operational effectiveness and ambience have driven the spread of organized retail. This has put them in a position where they are not only beginning to capture growth from geographical expansion. China 8percent. Many of them have expanded their offering. over the years to include fuel retail. retail formats have changed radically. Over the last few decades. India 10 percent and Brazil 6percent. This localized nature of the industry is changing as retailers face low rates of growth and threatened profitability at home. the advantage is driven by the marketers‘ ability to provide better products in a comfortable ambience at affordable prices. accounting for instance 16 percent of the US workforce. In these cases sourcing capability has to be backed by strong design capability and store management. Significantly. The basic department stores and co-operatives of the early 20th Century have given way to mass merchandisers. car retail. convenience services and personal financial services. Wal-Mart.

Vijay Store and Janaki Das & Sons. Bigjo‘s. Indeed. this will also decongest the city center and facilitate the development of suburbs. It will change India's cities. This will also help people enjoy their evenings. Crosswords. we sometimes find high-ceilinged offices and low-ceilinged retail stores. The laws governing retail real estate should also be looked into. Retail Marketing will go through a tremendous change in India this millennium. out at malls. 12 hours a day. been few efforts to present the product in the right kind of environment in India. thus. The relevant rules should also be amended to allow retail-stores to operate 7 days a week.By 2010. comprises developers. make sense. Westside etc. In a country as big as India and with as many states as ours. Music World. Given the hours most urban consumers keep at work. it is imperative that the Central government and all state governments bring in Value Added Taxation or a unified taxation system to ensure that the tax-regimes are the same across the country. However. and its households. Standard. indeed. the development of organized retail is dependent on the efforts of several agencies and institutions. whose participation is essential in making retail a boom-sector in this millennium. This is evident from the experiences of retail-outlets like Shoppers' Stop. the right shopping experience does induce Indian consumers to spend more. the list of India's top 10 retailers will have at least 5 Indian corporate. The Indian consumer is reportedly the largest spender in Singapore and London. Often. therefore. It is. Apart from providing entertainment and retail opportunities. this may. its people. The Home Store. . and keeping in mind the increase in the number of nuclear families. Most properties are developed without considering the end user. Ebony. The second group. Saboos. so that it is possible to develop retail-estate beyond the city-limits. The first among these is the government. Food World. the shopper's convenience is not taken into consideration while the property is constructed. strange that there have. so far.

and forging relationships with organized retail. the Indian consumer became more mature. with manufacturer-retail brands like Bata. who aspired to own everything we saw on TV. This is what we have to focus on in this millennium. have visited India and studied the Indian market. and. it can supply to a retail-chain that has the resources to create a brand of its own. Thus. For manufacturers. Manufacturers need to draw a plan of producing quality products and tie in with retailers. Retail is a people-intensive business. at another level. if a manufacturing company lacks the resources to build a brand. The third constituency that has a role to play in the fortunes of organized retail this century is the education-sector. The only consideration is the price. Customer-expectations zoomed . From the manufacturing company's perspective. Liberalization and increasing awareness of the world around us created the Indian yuppie. The last decade of the millennium witnessed the emergence of lifestyle brands and the plastic culture. several transnational retail giants have established their presence in India. Organized retail allows them to expose their products to a large volume of customers in an environment conducive to buying. There's a lot at stake here: even so early in the 21st Century. notably Chinese retailers. Indeed. Bombay Dyeing. the birth of organized retail will also engender the creation of private labels and store-brands. or in shops during jaunts abroad. the focus should be on producing good products. and Titan. Large-format retailing started with outlets like Vivek's and Nalli's in Chennai and Kidskemp in Bangalore. In contrast. A glimpse of the last 2 decades of the previous century proves illuminating.Another area of concern is the way in which developers sell their space. New lifestyle brands offered traditional retail-outlets an opportunity to convert themselves into exclusive stores. mall-management is treated as a specialized discipline of retail management. and there is a huge opportunity for retail institutes in India. Already. others. franchised or otherwise. And even as these developments were taking place. India is too large a market to be ignored by transnational retail giants. internationally. retailing will present an attractive opportunity. not the usage pattern or the nature of the product that is to be sold.

have to focus on the quality of the shopping experience. and the smile of the counter-person to that decorating the face of a Jet Airways' crew member. Inc.823 in US$ owned 1 2 3 4 5 6 7 8 Wall-Mart Stores Inc. 2231 (USA) 9 10 Albertson's. it is Marks and Spencer's with close to £ 10 billion. but also in terms of service.738 $45. (USA) 4178 Carrefour Group (France) The Kroger Co.000 $45.729 $44.028 $36. (USA) 1134 Royal Ahold (Netherlands) Metro AG (Germany) Kmart Corporation (USA) 7150 2169 2105 Sears. Inc. retailing is a large business. Internationally. (USA) 8130 3445 The Home Depot.Thus.362 Source: economic times industry report . Table 2: Top 10 Retailers Worldwide Rank Retailer No of stores Sales Millions $180. the typical customer who shops in a retail outlet compares the time spent at the check-out counter with that at an efficient petrol station. In the UK. To cope with the new customer. In the US. and the entire shopping experience.787 $61. it is Wal-Mart with a turnover in excess of $ 120 billion. at the beginning of the New Millennium. you find at least one retailer amongst the top 10 companies in every country. (USA) Target Corporation (USA) 2512 1307 $36.726 $36. retailers have to deal with a customer who is extremely demanding. and.189 $37. Roebuck and Co. Today. And retailers.047 $49. in turn. in Germany. it is Karstadt with a turnover in excess of dm 10 billion. manufacturers have to focus on product quality and brand building. Not just in terms of the product-quality.

Drawn by the magic number of Rs 1. or in the consumer‘s home). The final consumer within the distribution chain is a key concept here as retailers are at the end of the chain and are involved in a direct interface with the consumer. and McKinsey & Co. non-business use. whose sales volume comes primarily from retailing. KSA Technopak. 000 crore that is expected to be the size of the retail industry by the end of the first decade of this millennium. Telephone. Any organization selling to final consumers -. most emphasize retail marketing as the business activity of selling goods or services to the final consumer. 2. Vending Machine. customers will want to spend time with their family and friends. non-store retailers. in India have indicated a huge potential for retailing in the country. A retailer or retail store is any business enterprise. or Internet) or where they are sold (in a store. several companies from the organized sector have also jumped into the fray. In this millennium. and retail organizations. Retail organizations exhibit great variety and new forms keep emerging.T. It does not matter how the goods or services are sold (by Person.whether a manufacturer. India will benefit from these developments because of increased consumption through retailing and the corresponding increase in employment created by retailing. Mail. The best-known type of retailer is the department store. wholesaler. like in the last. They may like to visit malls on weekends where everything will be available under one roof. or retailer – is doing retailing.Studies by consulting firms like A. 60. There are many approaches to understanding and defining retail marketing. Japanese department stores such as Takashimaya and Mitsukoshi . Consumers today can shop for goods and services in a wide variety of stores. on the street. Kearney.1 Retail Marketing Retail Marketing includes all the activities involved in selling goods or services directly to final consumes for personal. but what we emphasized upon is defined as follows: ―Any business that directs its marketing efforts towards satisfying the final consumer based upon the organization of selling goods and services as a means of distribution‖ The concept assumed within this definition is quite important. There are store retailers.

This he does through his small organization. The need for organization becomes essential as soon as he hires people and enters into partnership or takes the help of members of his family in running his store. its share of the market. and children‘s playgrounds. These stores feature art galleries. and improved interiors. A retailing mix is the package of goods and services that store offers to the customers for sale. It is the combination of all efforts planned by the retailer and embodies the adjustment of the retail store to the market environment.attract millions of shoppers each year. cooking classes. . In the entry stage. its volume of turnover. In the trading up stage. It expands in terms of product offering. therefore. A retailer deals in an assortment of goods to cater to the needs of consumers. the retailer starts expanding. There are three main phases in the life of a retailing institution. These are:    Innovation (Entry) Trading Up Vulnerability. The maximum satisfaction to the customers is achieved by a proper blend of all three. With all these. its image and status and finally its survival. limiting product offerings. a communication mix and a distribution mix. His objective is to make maximum profit out of his enterprise. A retailer is at the end of the distributive channel. With that end in view he has to pursue a policy to achieve his objective. which means that it offers products at low prices so as to get a competitive edge over its competitors. with the help of a few personnel. The success of the retail stores. Its monopoly power over the others is its price advantage. better services. it starts charging a bit higher prices. This policy is called retailing mix. Sparton Stores & Limited services. a new retailer enters with new price appeal. depends on customers‘ reaction to the retailing mix which influences the profits of the store. Retailing mix. He provides goods and service to the ultimate consumers. In an individual retail store there is not much scope for organization except in the sense that the shopkeeper has to organize and apportion his time and resources.

They have a narrow product line with deep assortment such as apparel stores. Normally these stages are there in the life of a retail institution. electronic appliances and other household goods. Store Retailing Non store Retailing 2. which are defined as follows: 1. this is due to increase in the prices by the retailer. kids section. florists and bookstores. there is a gap in the market leaving some space for the new players to come in. In a departmental store a consumer can buy variety of goods under one shed.In the vulnerability stage. . I have already explained the three stages in life of a retail institution. sporting goods stores. any retail institution targeting the upper class may start itself with a large variety & high price. These stores are usually expensive and satisfy the needs of selected consumers who have liking or preference for exclusive things. This brings to broadly identify and categorize the types of retail marketing. Departmental Store These stores are usually built in large area and keep variety of goods under one shed. But all these may not be necessarily there in every retail institution. For instance. 2. It is usually divided into different sections like clothing.2 Types OF Retail Marketing Store Retailing Store retailing provides consumers to shop for goods and services in a wide variety of stores and it also help the Consumers to get all the needed goods and services from one shop only. The different types of store retailing are given below: Specialty Stores These stores focus on leisure tastes of different individuals. home furnishings. furniture stores.

Supermarkets earn an operating profit of only 1 percent on sales and 10percent on net worth. The defects are normally minor. and opened suburban branches—all of which has led to higher costs and prices and as some department stores have cut their prices to compete with discounters. Many such stores also have added takeout sandwiches. self service operations designed to serve total needs for food. low margin.price retailer. These stores sell goods with deteriorated quality. Discount Store These stores sell standard merchandise at lower prices by accepting lower margins and selling higher volumes. Off . not inferior goods. high volume. This target at the persons belonging to the lower income group. laundry and household maintenance products. In recent years. coffee and pastries. added new lines and services. and carrying a limited line of high turnover convenience products at slightly higher prices than departmental stores.Supermarket These stores are relatively large.Price Retailer These stores sell goods at low price with lower margins & higher volumes. The company owned showroom selling the seconds products is a typical example of off . many discount retailers have ―traded up‖. They have improved decor. low cost. though some have a collection of imported goods aimed to target the younger generation. open for long hours seven days a week. Convenience Stores These are relatively small stores located near residential area. . The use of occasional discounts or specials does not make a discount store. offering mostly national brands. A true discount store regularly sells its merchandise at lower prices.

owned or franchised out by a for manufacturer. even among retail enterprises that hire workers the bulk of them hire less than 3 workers . such as discount sporting goods stores. power tools. fast-moving. brandname goods at discount prices.India‘s retail sector appears backwards not only by standards of industrialized countries but also in comparison to several other emerging markets in Asia and elsewhere.3 Major Formats of Retailing Major formats of In-Store Retailing have been listed in Table given below: Table 3: Format Branded Stores Description Exclusive The Value Proposition showrooms either Complete range available a given brand. discount stores have moved beyond general merchandise into specialty merchandise stores. Catalog Showroom Catalog showrooms generally sell a broad selection of high-markup. Specialty Stores Certified product quality. This epithet has its roots in the huge number of retail enterprises in the country totaling 12 million. and sporting goods. There are only 14 companies that run departmental stores and mere two with hypermarket operations. Focus on a specific consumer Greater choice to the . RETAIL SCENE IN INDIA India has some sometimes been called a nation of shopkeepers.Not only that. and bookstores. cameras. Catalog showrooms have been struggling in recent years to hold their share of the retail market. the number of companies with supermarket chains was less than 10. toys. These include jewelry. about 78 percent of these are small family owned businesses utilizing only household labour. Catalog showrooms make their money by cutting costs and margins to provide low prices that will attract a higher volume of sales. While the number of businesses operating supermarkets is higher ( 425 in 2004 ) most of these had only 1 outlet. luggage small appliances. 2. electronics stores.

appliances. carry most of the brands consumer. Shopping Malls self-service in crowded formats Convenient location and urban extended hours. in quieter parts of the city Convenience Stores Small located areas. other. Source: India info line Non-store Retailing It is another type of retail marketing. house wares. generally located services as cafeterias. etc. toys. needs. organized to into different varied consumer departments. Supermarkets Extremely large self-services One stop shop catering retail outlets. vast choice sometimes with a warehouse available including appearance. to varied consumer needs. all available close to each under one roof. of shops operating An enclosure having different Variety formats of in-store retailers. Department Stores comparison between brands possible Large stores having a wide One stop shop catering variety of products. such as clothing. Discount Stores Stores offering discounts on Low prices. available. Low prices. furniture. the retail price through selling high volumes and reaping the economies of scale. Hyper-mart Larger than a Supermarket.need. Different types of non-store retailing are given below: .

candy. including impulse goods with high convenience value (cigarettes. .Direct Selling Direct selling which started centuries ago with itinerant peddlers has burgeoned into a $9 billion industry. film.Department store format Westside . record albums. soft drinks. T-shirts. food snacks. office to office. cosmetics. with over 600 companies selling door to door. newspaper. hot soups and food. television direct response marketing. A variant of direct selling is called multilevel marketing. paperbacks.4 Organized Retail Formats in India Each of the retail stars has identified and settled into a feasible and sustainable business model of its own. usually in customer homes. hot beverages) and other products (hosiery. Automatic Vending Automatic vending has been applied to a considerable variety of merchandise.Hypermarket/cash & carry store Food World and Nilgiris – Supermarket format Pantaloons and The Home Store . Direct Marketing Direct marketing has its roots in mail-order marketing but today includes reaching people in other ways than visiting their homes or offices. 2. and even fishing worms).Specialty retailing Tanishq has very successfully pioneered a very high quality organized retail business in fine jewellery. whereby companies such as Amway recruit independent businesspeople who act as distributors for their products. or at home sales parties. who in turn recruit and sell to sub distributors. very good value for money merchandise for the entire family     Giant and Big Bazaar . insurance policies.Emulated the Marks & Spencer model of 100 per cent private label. who eventually recruit others to sell their products. including telemarketing. and electronic shopping.   Shoppers' Stop .

Shopping experience in terms of ambience or the service is not the mainstay here. The small retailer. These formats usually work on bulk buying and bulk selling. a customer of Giant could be a dhabawala who needs to buy edible oil in bulk. adding food retail Corner shops Quasi-mall.Structure of the retailing industry according to ownership patterns:       An unaffiliated or independent retailer A chain retailer or corporate retail chain A franchise system A Leased Department (LD) Vertical Marketing System (VMS) Consumer Co-operatives A new entrant in the retail environment is the 'discounter' format. Retailing in India is still evolving and the sector is witnessing a series of experiments across the country with new formats being tested out. the old ones tweaked around or just discarded. smaller outlets. It is also is known as cash and-carry or hypermarket. Table 4: Retailer Shoppers' Stop Ebony Crossword Pyramid Pantaloon Current Format Department Store Department Store Large bookstore Department Store Own brand store New Formats Quasi-mall Quasi-mall. Two categories of customers visit these retail outlets. Some of these are listed in Table below. RPG group has set up the first 'discounter' in Hyderabad called the Giant. 1. Now Pantaloon is following suit. The regular consumer who spends on big volumes (large pack sizes) because of a price advantage per unit. For example. 2. food retail Hypermarket .

These sectors are: Trends in retail marketing 1. I can summarize the main development retailers and manufacturers need to take into account as they plan their competitive strategies.5 Trends in Retail Marketing At this point. Successful carts average $ 30. FoodWorld is experimenting with a format of one-fourth the normal size called FoodWorld Express.000. Foodworld express Small fashion stores Aggregation of Kiranas Aggregation of Kiranas Cash and carry Discount store Source: India info line Retailers are also trying out smaller versions of their stores in an attempt to reach a maximum number of consumers. Today three-fourths of the nation‘s major malls have carts selling everything from casual wear to condoms. 2. push carts help budding entrepreneurs test their retailing dreams . Gas stations include food stores that make more profit than the gas operation. to increase reach and business from their stores.000 a month in sales and can easily top $ 70. Crossword bookstores are experimenting with Crossword Corner. Even old retail forms are reappearing: In 1992 Shawna and Randy Heniger introduced peddler‘s carts in the Mall of America.Subhishka Vitan Foodworld Glob us Bombay Bazaar Efoodmart Metro S Kumar's Supermarket Supermarket Food supermarket Department Store Super market Food super market Departmental store Departmental store Considering moving to self service Suburban discount store Hypermarket. Bookstores feature coffee shops.000 in December. New retail forms and combinations continually emerge.000 to $ 40. In India the trends are mainly in three sectors. With an average startup cost of only $3. Bank branches and ATM counters have opened in supermarkets.

and prospect for permanent tenants. The electronic age has significantly increased the growth of non store retailing. New retail forms are facing a shorter life span. They are rapidly copied and quickly lose their novelty. 3. and smaller retailers. when and how to ship. the arrival of a superstore has forced nearby independents out of business. they are crowding out smaller manufacturers. Yet the news is not all bad for smaller companies. consumers receive sales offers in the mail and over television. operating either as mass merchandisers or as specialty retailers. and the chains‘ large square footage allows them to put in cafes and bathrooms. and telephones. these giant retailers are able to offer strong price savings. who simply do not have the budget of the buying power to compete. chains get more favorable terms than independents. and department stores all compete for the same consumers. Today‘s retailers are moving toward one of two poles. or between different types of store outlets. who become dependent on one large retailer and are therefore extremely vulnerable. They provide a way for malls to bring in more mom-andpop retailers. 4. Because of their bulk buying power. Competition today is increasingly intertype. In the process. Superpower retailers are emerging. and even how to reorganize and improve production and management. . Through their superior information systems and buying power. Discount stores. The competition between chain superstores and smaller independently owned stores has become particularly heated.without a major cash investment. These retailers are using sophisticated marketing information and logistical systems to deliver good service and immense volumes of product at appealing prices to masses of consumers. In the book selling business. 5. to which they can immediately respond by calling a toll-free number or via computer. the arrival of a Barnes & Noble superstore or Borders Books and Music usually puts smaller bookstores out of business. how to price and promote. Many small independent retailers thrive by knowing their customers better and providing them with more personal service. Many retailers are even telling the most powerful manufacturers what to make. showcase seasonal merchandise. 2. catalog showrooms. Manufacturers have little choice: They stand to lose 10 to 30 percent of the market if they refuse. computers. In many locations.

Retailing is the process of selling goods in small quantities to the public and . and improved merchandise-handling systems. 9. electronic funds transfer. and brew pubs. Marketing channels are increasingly becoming professionally managed and programmed. They are adopting checkout scanning systems. Many more Indian retailers are actively pursuing overseas markets to boost profits. and even sell to customers within stores. Chapter 3 : RETAIL MARKETING IN INDIA Retail marketing is the most important part of the entire logistics chain in a business especially in consumer related products. Denver‘s two Tattered Covered bookstores host more than 250 events annually. Brew pubs such as New York‘s Zip City Brewing and Seattle‘s Trolley man Pub offer tasting and a place to pass the time. tea shops. such as department stores. such as coffeehouses. from folk dancing to women‘s meetings. Technology is becoming critical as a competitive tool. juice bars. They are not sticking to one format. The Discovery Zone.500 in 1989 to a forecasted 13. And Barnes & Noble turned a once-staid bookstore industry into a fun-filled village green. There has been a marked rise in establishments that provide a place for people to congregate. bookshops. McDonald‘s. 7. and Toys ―R‖ Us have become globally prominent as a result of their great marketing prowess. control inventory costs. whose numbers have grown from 2.000 by 2001. Retailers are using computers to produce better forecasts. offers indoor spaces where kids can go wild without breaking anything and stressed-out parents can exchange stories. The Limited. such as Starbucks. retail organizations are increasingly designing and launching new store formats targeted to different lifestyle groups. Without proper retailing the companies can't do their business. a chain of children‘s play spaces. There are also the nowubiquitous coffeehouses and espresso bars. Retailers with unique formats and strong brand positioning are increasingly moving into other countries.6. but are moving into a mix of retail formats. Gap. send e-mail between stores. 8. order electronically from suppliers.

High taxes. No exposure to media. . wholesaler and retailer. In this system the company operating on all India basis appoints hundreds of distributors across the country that supplies to various retailers and wholesalers. Some of the major reasons being:            Poverty and lower literacy levels. meaning to cut a piece off or to break bulk.is not meant for resale. There are a number of reasons behind this fragmented retail market. Low per capita income. Retailing is not considered as a business or industry by the government. Savings focused and less indulgence mindset. The current retailing system prevalent across the country is highly fragmented and unorganized. FDI in retailing is not allowed. Restrictions on intra-state good movement. forms the backbone of the front-end logistics of most of the consumer-good companies. Anyone with some money and some real estate can open a small shop and become a retailer catering to the locality in which he opens the shop. There are various ways of making goods available to consumers like:    Company to distributor to wholesaler to retailer to consumer Company to salesperson to consumer Company to consumers (online/ phone/ catalog ordering) These three are among the most common ways of making the goods available to consumers. Wholesalers in turn can either directly sell in the market or can supply to retailers. Retail is derived from the French word retailer. Hitherto none of the business schools in India were offering specialized courses on retailing. Poor infrastructure facilities like roads etc. But in India the three layered system of distributor. High import duties on imported goods.

Expensive supply chain.

Besides this there is other reasons too, which led to stifling of growth of organized segment of retailing sector and which instead led to highly fragmented market. Today in India we have more than 12 million retail outlets and most of then are family run and locally owned. There are very few nationally present retail stores. In India the process of buying and selling at these unorganized retail outlets, is highly characterized by bargaining and negotiations. But slowly with increasing influence of media and urbanization the market is shifting towards organized segment. Seeing the huge market size of retail business in the country and the current level of organized segment, many players have jumped into the fray and many are waiting for the right opportunity to enter it. 3.1 Retailing in 1990s On account of the liberalization drive in the 1990s, several structural and demographic changes that are taking place are helping the industry to grow. The GDP has grown by 6.6percent in the last decade resulting in increased income levels and higher purchasing power for the population. Increasing literacy levels, increasing number of working women, increasing urbanization, higher international travel by Indian population and increasing media penetration has raised aspiration levels of the population, resulting in demand for better shopping experience and larger variety of goods. India has close to 54percent of population below the age of 25, which translates into higher prospects for increased consumption levels in the future. Finally, interest rates have also declined in the past few years further propelling the consumption demand. These factors were the key drivers for the retail wave in the country. Notable among the early entrants were players like Shoppers Stop, Pantaloon, Ebony, Foodworld, Subhiksha, etc. Initially, the growth in organized retail was very slow and concentrated mainly in metros, with south India holding its ground as the pioneer in organized retail growth, on account of the low cost of real estate. Due to the high investments required in the early stages and the fact that real estate was the key deciding factor for success of stores, real estate developers have been the major players in the industry (see Table). Table 5:

Sponsors Group Rajan Raheja – Real Retail Business Estate Globus – Chain of departmental stores

Developer K, Raheja - Real Estate Developer Shopper‘s Stop Chain of

departmental stores Hiranandani - Real Estate Developer Haiko supermarket, Loft shoe stores and Hakone mall. Tata – Diversified Business House DS Group - Real Estate Developer RPG – Diversified Business House Westside – chain of department stores Ebony - chain of department stores Foodworld supermarkets, Giant

hypermarkets, Health & Glow beauty and health stores. DLF – Real Estate Developer ITC - Diversified Business House Source: Fitch In the early 1990s, as the players were lower down on the learning curve many faltered in their models, and growth of the industry remained slow. The second half of 1990s saw several players making losses and exiting from the business. The worst years for the industry were 2000 and 2001, as the stock market downturn, which reduced customer confidence and spending, had a direct impact on the performance of the industry. The industry recovered starting 2002. It now appears the efforts and learning‘s of the players in the last decade are beginning to pay off; the organized retail industry has established firm roots and is beginning to grow. 3.2 Present Retail Scenario In India
   

DLF malls Wills Sport – Chain of apparel stored.

Retail experts find Indian industry promising Retail sales to touch Rs. 30,000 crore by 2005 Mall Mania: The developing mall culture in India Emergence of region-specific formats

 

Emergence of discount formats Entry of international players

Retail experts find Indian industry promising The retail movement in India has acquired the critical mass that is required for rapid acceleration in terms of industry growth as well as geographical spread. The Indian retail industry can no longer be called nascent. The spread of super stores to the northern cities such as Delhi, Chandigarh, Jaipur and Kolkata is evidence of the fact that organized retailing in India has emerged from its southern bastion. The retailing boom is being driven by increased expectations as well as changing shopping behavior of the urban Indian consumer. With the increasing number of nuclear families, working women, greater work pressure and increased commuting time, consumers are looking for convenience. And, convenience is defined as having everything under one roof, longer hours and multiplicity of choice. On the supply side, the current inefficient supply chain in India, particularly for food items has led a few players to consolidate their operations to take advantage of economies of scale and match consumer expectations in terms of delivery as well as space. So, we have a situation where both demand and supply side dynamics are fuelling the growth of organized retailing in India, although improvements in the supply chain are yet to fully match with consumer expectations. The future growth need not necessarily come only from the big metros, where there already exists a good retail network. The fact that big Indian retail chains are moving into places like Indore or Chandigarh is an important indicator of future growth. For the Rs. 5000-crore organized retail industry it is, perhaps, time to tap the relatively smaller cities. The share of organized sector in total retail sales will grow from one per cent now to six per cent by 2005.While projections can be slippery, hard facts point to exciting growth ahead for this sector. According to KSA, organized retailing is focusing on only SEC-A cities, India‘s 23 largest cities. That is where a large portion of the country's urban population exists. Today 82 per

other segments like food and groceries. with the establishment of Crossroads in Mumbai and Ansals Plaza in Delhi. ft. is expected to be operational by end of 2003 (see Table below). By 2005. close to 12 million sq. There could be variations in growth patterns in different segments. which has brought down the break-even levels of the retail projects. This appears to be the case so far. The spread of organized retailing is unlikely to be a national phenomenon yet. which will increase their efficiencies. of mall space is being developed across several cities in the country. By early 2001. several mall projects were announced. Table 6: Mall Development in India Mall Crossroads Ansals Location Tardeo. With this.cent of organized retailing comes from the top six cities and 12 per cent from the next four. 225-250 175-200 . The second half of the top 10 cities will provide large growth for food and groceries. Mumbai South Ex. ft. Hyderabad and Bangalore. South India. According to market estimates. particularly Chennai. The top 10 cities will account for 86 per cent of organized retail sales. have seen the emergence of chain stores or large format stores. retailers would now have access to retail-specific properties. ft. KSA projects the top six cities will account for 66 per cent of total organized retailing and the next four for 20 per cent. While garment stores have been around for sometime. of which 10 million sq. consumer durables and even books and music have witnessed the emergence of organized players in large cities in South India. rentals for retail properties have shown a marked decline. Moreover. Delhi Rate / Sq. while the top six would still be the growth centers for consumer durables. believes KSA. The lack of trained manpower or alternatively the tremendous scope the sector has to provide employment is another issue. KSA says the top 10 cities provide 94 per cent of organized retail sales in India. Mall Mania: The Developing Mall Culture in India Modern malls made their entry into India in the late 1990s.

In the next one year. close to 40 lakh square feet of retail space will be developed. there were only few international style shopping malls in India -Spencer in Chennai. It looks like a virtual stampede. Industry Reports Till some time back. 60 per sq. that number jumped to many. Mumbai Borevali. Ansals Plaza in New Delhi and Sriram‘s Arcade in Kolkata. source: Chesterten Meghraj. this will rise to 70-lakh sq ft. In three years. Mumbai Andheri. . Nasik and Jaipur Malls Hyatt. Mumbai East Delhi Gurgaon Gurgaon Gurgaon Noida KolKotta KolKotta Kanpur Baroda Bangalore Chennai 75-90 75-90 65-85 60-80 55-75 55-75 75 50-70 65-85* 65-85 80-180 100 55 45-55 75 70-90 70 45-55 175-300 Lower Parel. ft.Nirmal Lifestyle Runweals Mall Karnavat Mall Raheja Mind space Jog‘s Mall Cable Corporation Ansals Sahara MGF Malls – Metroplitian & Plaza DLF Shipra Forum City Center Rave 3 Inox Forum Spencers Plaza Phase III Indore. Mumbai Malad. Mumbai Thane. Crossroads in Mumbai. Mumbai Mulund. By the end of 2004. Phoenix Malls Mulund. major players with a cumulative investment of Rs 375 crore are set to change cityscapes across India. Mumbai 100-125 *average for the metropolitian is Rs.. Mumbai & Leela.

000-35. Penetration of organized retail into the lower strata of income groups and consumer demand for increased value-for-money . It is perhaps the best way to use an idle real estate asset. The Indian mall cannot offer too many choices in terms of brands. A study on consumer outlook suggests that over 80 percent of consumers want a wide range of products at hand while shopping. Emergence of Region-Specific Formats For the first time in 10 years. consumers want more variety before making their purchase decision. range.it occupies 7 lakh sq ft and even that is dwarfed by Asia's largest mall. especially when there is opportunity here. in departmental store format. are now emerging as major competitors to both unorganized and organized retailers. Spencer is by far the largest mall in India . developing a very large mall can never be sustainable.000 sq ft and 2 lakh sq ft. while most A class cities and metros have larger stores of 50. retailers have started differentiating in the sizes and formats of stores. This signifies that people are finally ready for multi-option complexes. can be sustained. sizes. like Shopper's City in Kolkata or the Esplanade Mall at Kochi. With organized retail penetrating into B class towns. Emergence of Discount Formats Larger discount formats. the industry is witnessing the development of region-specific formats. stores in B class towns have stabilized in the 25. ft. the 4-million sq ft mega mall in Malaysia. The limited kitty of brands has yet another significant knock on effect on the typical size of Indian malls.000 sq. Even the 26 malls that are being planned are likely to measure between 50. Most players have started operating these two formats across various cities.As the retail industry evolves. For example.000 sq ft. which has helped them to standardize the merchandise offering across the chain. So. Many old-time corporates are seriously considering using their idle assets. It makes sense for landowners to develop it and keep the returns rather than sell it outright or even lease it. malls are as large as 50 lakh sq ft. There's a flip side though -malls even as small as 80. ft. popularly known as hypermarkets. In the US and South-East Asia.000 plus sq.

has improved the prospects of these formats. These formats span across the entire range of merchandise categories. Big Bazaar, promoted by Pantaloon and Giant, promoted by the RPG Group, are examples of this format. Entry of International Players A large number of international retailers have evinced interest in India, despite the absence of favorable government policy for foreign players (see Table below). A number of the major brands have entered the country through licensing agreements with Indian players to capitalize on the opportunities available in the sector. Table 7: International players International Players Landmarc Group, Dubai Metro, Germany Shoprite, South Africa Nanz, Germany Marks & Spencer, UK Mango, Spain McDonalds, USA Dominos USA Tricon Restaurant, USA Source: Industry Reports Chapter 4 : INFORMATION TECHNOLOGY IN RETAIL Over the years as the consumer demand increased and the retailers geared up to meet this increase, technology evolved rapidly to support this growth. The hardware and software tools that have now become almost essential for retailing can be divided into 3 broad categories: Retail Ventures In India Lifestyle Chain of Departmental Stores Hypermarket Supermarket, Hypermarket Supermarket Apparel Retailer Apparel Retailer Food Retailer Food Retailer Food Retailer

Customer interfacing systems Bar coding and scanners Point of sale systems use scanners and bar coding to identify an item, use pre-stored data to calculate the cost and generate the total bill for a client. Tunnel Scanning is a new concept where the consumer pushes the full shopping cart through an electronic gate to the point of sale. In a matter of seconds, the items in the cart are hit with laser beams and scanned. All that the consumer has to do is to pay for the goods. Payment Payment through credit cards has become quite widespread and this enables a fast and easy payment process. Electronic cheque conversion, a recent development in this area, processes a cheque electronically by transmitting transaction information to the retailer and consumer's bank. Rather than manually process a cheque, the retailer voids it and hands it back to the consumer along with a receipt, having digitally captured and stored and image of the cheque, which makes the process very fast. Internet Internet is also rapidly evolving as a customer interface, removing the need of a consumer physically visiting the store. Operation support systems ERP System Various ERP vendors have developed retail-specific systems which help in integrating all the functions from warehousing to distribution, front and back office store systems and merchandising. An integrated supply chain helps the retailer in maintaining his stocks, getting his supplies on time, preventing stock-outs and thus reducing his costs, while servicing the customer better. CRM Systems

The rise of loyalty programs, mail order and the Internet has provided retailers with real access to consumer data. Data warehousing & mining technologies offers retailers the tools they need to make sense of their consumer data and apply it to business. This, along with the various available CRM (Customer Relationship Management) Systems, allows the retailers to study the purchase behavior of consumers in detail and grow the value of individual consumers to their businesses. Advanced Planning and Scheduling Systems APS systems can provide improved control across the supply chain, all the way from raw material suppliers right through to the retail shelf. These APS packages complement existing (but often limited) ERP packages. They enable consolidation of activities such as long term budgeting, monthly forecasting, weekly factory scheduling and daily distribution scheduling into one overall planning process using a single set of data. Leading manufactures, distributors and retailers and considering APS packages such as those from i2, Manugistics, Bann, Mercial incs and Sterling-Douglas. 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. Today, software packages are helping retailers not only in their locational decisions but in decisions regarding store sizing and floor-spaces as well. 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. A larger number of visual merchandising tools are available to him to evaluate the impact of his stacking options. The SPACEMAN Store Suit from AC Nielsen and Modacad are example of products helping in modeling a retail store design. Chapter 5 : FOREIGN TOUCH IN INDIAN RETAIL

In a market .The chief of Marks & Spencer has been making trips to India over the past year. Dairy Farm International and Jardine Matheson are present here.000 sq ft store in Hyderabad. Global investment bank Warburg Pincus is awaiting the Indian government's clearance to pick up a 25. a 125 year old retail major with around 1.providing the same quality of food and the same ambience as anywhere in the world. In Western markets. a familiar sight is the McDonalds golden arch. DFI also has a 50:50 joint venture with the Indian group in RPG Guardian. is a whollyowned subsidiary of the Mauritius-based Lifestyle International which. Immediate plans include opening a 46. unlike the Chennai store. In India. it will create outlets in Bangalore. barring furniture. adding fare for the large number of vegetarians who love fast food. is whollyowned by the Landmark group.1 per cent stake. The new venture is called Foodworld Supermarkets Limited. The Hyderabad store will have additional sections for books and music.300 outlets across nine countries. Landmark is owned by Mukesh Jagtiani. and avoiding certain beef and pork in deference to social sensitivities." These stores will sell all lifestyle products. Lifestyle International Private Limited. Mumbai. The chain has been smart enough to tailor its products to the Indian environment. according to Lifestyle International's marketing manager. through tie-ups with the RPG Group. Roshan Mathew. In India too McDonalds has maintained its unique selling proposition -. which Mathew terms "The Millennium Store". Besides. The Hong Kong-based Dairy Farm International. DFI is the retail arm of Jardine Matheson. Its raw material requirements are totally outsourced. with specifications ensured strictly. recently converted its technical tie-up (since 1996) with the RPG group's Spencer & Company for Foodworld into a 49:51 joint venture. Fast food major McDonalds have already made a dent in the marketplace and in Indian palates. the target is to "have 12 to 16 stores by 2005. Delhi and Ahmedabad. under one roof. The Dubai-based Landmark group is making its presence felt in Chennai through its Lifestyle mega store of over 30. as soon as Lifestyle gets a keenly awaited Foreign Investment Promotion Board clearance for a Rs 100 crore investment. But what it has taken care of is world class quality in all its raw material sourcing. in Shoppers Stop. a nonresident Indian. worth $13 million. in turn. Pune. formed in India recently.000 sq ft.

The sector‘s growth was partly a reflection of the impressive Indian economic growth and overall rise in income levels of consumers.1 trillion (in PPP terms) in 2005-06. . with consumer spending growing by unprecedented rates and with increasing number of global players investing in this sector.3 per cent. more than doubling in size to US$ 311. The market was estimated at US$ 1.place where Kentucky Fried Chicken failed to make an impact. when the sector revenues increased by about 93. Reta il MARKET & OPPORTUNITIES CONTENTS Indian Retail Sector on the Fast . Organised retail in India is undergoing a metamorphosis and is expected to scale up to meet global standards over the next five years. India‘s retail market has experienced enormous growth over the past decade.Track 2 Advantage India 6 Policy and Regulatory Environment 9 Key Trends and Drivers 11 Key Players 17 Key Opportunities 22 A report by Ernst & Young for IBEF Retail MARKET & OPPORTUNITIES MARKET & OPPORTUNITIES The Indian retai l re volution Retailing in India is evolving rapidly. The most significant period of growth for the sector was between years 2000 and 2006.7 billion in 2005-06.5 per cent translating to an average annual growth of 13. McDonalds seems to be finding its place slowly but surely.

retaining its position in the global market as the most preferred retail destination amongst emerging markets. India topped AT Kearney‘s Global Retail Development Index 2007 for the third consecutive year. Indian consumers were also found to be bullish about their personal finances over the next 12 months. The growth and potential of the sector is being widely acknowledged both in the domestic as well as international forums. reflecting the booming economy of the country. Indians were judged the world‘s most optimistic consumers. The economics of Indian consumerism is buoyant. Indian retail business promises to be one of the core sectors of the Indian economy. with organised retail sector estimated to grow by 400 per cent of its current size by 2007-08.4 per cent in 2006-07 is the highest posted for over 18 years. contributing to about 10 per cent of the GDP and providing employment to 8 per cent of the nation‘s workforce.Even the introduction of Value Added Tax (―VAT‖) in April 2005 has not severely impacted consumer demand for retail goods. The sector is on a high growth trajectory and is expected to grow by more than 27 per cent over the next 5 to 6 years. India also topped the Global Consumer Confidence Index June – 2007 conducted twice a year by The Nielsen Company. For the fifth time. Retail is one of India‘s largest industries. Growing in tandem with the economy is the Indian retail sector. The sector also benefited considerably by the rising popularity of satellite television since the early 1990s. Greater exposure to western products and lifestyles has helped drive consumerism. with India ranking as the fourth largest economy in terms of . which provided a highly Indian Retail Sector on the Fast – Track India‘s GDP growth of 9. with large sections of the population considering ―now‖ a good time to spend.

Over 12 million small and medium retail outlets exist in India. push-cart vendors. The quintessential mom-and-pop retailing outlets or the cornerstore formats constitute a major part of Indian retail store formats. next only to United States.7 261. India is expected to outpace Japan by the year 2010 to become world‘s third largest economy.3 205.3 2002-03 2003-04 2004-05 2005-06 0 50 100 150 200 250 300 350 Exchange Rate: US$ 1 = INR 41 (Valid through the report) RETAIL effective mass marketing route. More than 80 per cent of these are run as small family businesses. reaching out to the large Indian consumer base.4 2001-02 186. Tra ditiona l an d mo dern retai lin g: The India stor y Traditional retailing continues to be the backbone of the Indian retail industry. with traditional/unorganised retailing contributing to over 95 per cent of total retail revenues. Total Retail Sales Source: Datamonitor 311. the young Indian consumer is buying big to look good and feel good. the highest in any country.Purchasing Power Parity (PPP). With 54 per cent of the Indians aged below 25. ―melas‖ . Prevalence of traditional retailing is highly pronounced in small towns and cities with primary presence of neighborhood ―kirana‖ stores. Japan and China.8 230.

grocery and allied products largely sourced from the local stores or push-cart vendors. Mobile phone as a product category has witnessed the highest growth in consumer demand amongst all retail product offerings. The other product categories are gaining traction . in value terms. A large number of domestic and international players are setting up base and expanding their business with newer organised retail formats and intense competition driving innovation in formats. The Food and Beverages vertical accounts for the largest share of revenues at 74 per cent of the total retail market. The Telecommunications sector has been adding on an average 5 million new users every month. This category has the highest consumer demand across all income levels and various retail formats. Organised formats are only in the initial stages of adoption in these regions.9 billion per annum in 2005-06 to more than US$ 43 billion by 2009-10. The Indian consumer behavior of preferring proximity to retail formats is highly pronounced in this sector. Gro wth across se gments Retail sector in India is primarily categorised by the type of products retailed. by 2007-08. with increasing penetration of telecommunications in towns and villages. The sector is predicted to grow by 400 per cent. Leading retail players in the industry are beginning to explore these markets and the rural consumers are slowly beginning to embrace the newer organised retail formats. Apparels and consumer durables are the fastest growing verticals in the retail sector.and ―mandis‖. Organised retail revenues are expected to increase from an estimated US$ 12. as opposed to the different retail formats in operation. fuelled by bourgeoning economic activity. Modern/Organised retailing is growing at an aggressive pace in urban India. with food.

20% .390 million: 4. The Food and Beverages segment recorded the highest growth over 2004-05.6 12. owing to the rapidly rising number of malls and introduction of several domestic and international apparel brands in the country. with increasing average income and spending power of young urban India.951 million: 74. compared to total retail sales estimated at US$ 311.7 2006-07P 2010-11P 460.9 0 50 100 150 200 250 300 350 400 450 500 Source: Crisil Research Revenue and Share of Verticals Food and beverages US$ 231.87% Jewellery and Watches US$ 13.024 million: 9.5 337.854 million: 2. Organise d retai l in India Organised retail clocked revenues of US$ 12. The apparel industry contributed to the largest share of the organised retail pie.463 million: 3.927 million.31% Consumers Durables US$ 15.756 million.8 16.3 2005-06E 311. with revenues of US$ 4.30% Home Decor US$ 9.04% Beauty Care US$ 6.41% Clothing and Textile US$ 29.731 million in 2005-06. with the proliferation of Projected Retail Growth Source: Crisil Research n Total Retail n Organised Retail 43.171 million: 4.predominantly in the urban areas and emerging cities.

Apparel is one of the fastest growing verticals.52 per cent in 2009-10. an increase from the 3 per cent estimated for 2004-05. Liberty and Paragon. with revenues from organised retail expected to touch US$ 43. with the highest number of domestic and foreign brands mushrooming in the market.15 per cent in 2005-06. and is projected to increase to 9. Entry of players like Crossword and Music world has given the segment strong impetus. hypermarkets and the entry of major players like Reliance Fresh (promoted by Reliance Retail Ltd).829 million in 2009-10. primarily due to the presence of well established players like Bata.610 million: 0. This segment is poised to gain traction. It is envisaged that modern retail will adapt and absorb some of the traditional . with several new players planning their entry and the existing players expanding their business in this segment at a rapid pace. These players have been in the market for over three decades. The Home Décor segment followed suit growing at 18 per cent.268 million: 1.84 per cent. and increasing consumer willingness to pay for brand and quality of products. with the organised retail sector projected to grow to US$ 43.8 billion in the said year. Penetration of organised retail was at 4.84% MARKET & OPPORTUNITIES supermarkets.6 billion by 2010-11.Footwear US$ 3. have good brand recall and a well established distribution network penetrating both rural and urban areas. Consumer durables segment and the books and music segment also witnessed continued growth. Footwear segment recorded the highest penetration of 32. Future out look Retail sector revenues is pegged to reach US$ 460. Music and Gifts US$ 2.05% Books. with a boom in the real estate and housing sector.

is set to embark on the establishment of 1. Dabur and Godrej have strengthened their distribution channels and are increasing their penetration to leverage the higher consumer demand in these markets. Established players like Unilever. as opposed to the plush and vibrant formats adopted for the urban retailing. ushering in a new era of organised-rural retail. Unorganised retail formats are expected to converge and combine in formats such as mushrooming village malls and rural retailing ventures. rural retailing is set to provide a new dimension to the Indian retail scenario. with the aim to make these hubs the nodal institutions for retailing activity. a wholly owned subsidiary of Reliance Industries Ltd. with larger share of increase in demand for consumer and household products . Retail giants are set to embrace newer and innovative formats. and are exploring options to increase their customer outreach. With the rural retail revenues forming the largest share of total retail revenues. Reliance Retail Ltd. Pilot test concepts are already being rolled out by players like Indian Tobacco Company (ITC) and DCM Shriram Consolidated Ltd. Indian Retail (US$ million) Organised . by giving modern retail a traditional look in line with consumer needs and expectations.600-odd rural retail hubs by 2010. With modest store formats being pursued to attract the average rural customer.formats in the course of its expansion. increasing number of players are in the fray to explore opportunities in the rural areas. (DSCL) with their rural initiatives of Choupal Saagar and Hariyali Kisan Bazaar. The rural retail revenues are estimated to increase by 60 per cent by 2012.

268 0.39 Consumer Durables 15.39 Food and Beverages 13.731 12.951 2.84 Books.610 341 13.268 1.08 Total 311.390 829 6.98 Clothing and Textile 29.463 829 8.04 Home Décor and Furnishing 9.Retail (US$ million) Penetration of organised retail (%) Food and Beverages 231.756 16.76 .171 2.15 Source: Crisil Research Source: Crisil Research Organised Retail: Revenue by Verticals (US$ million) Footwear 32.76 Jewelry and Watches 13.04 Clothing and Textile 16.08 Home Decor and Furnish 8.024 4.84 Consumer Durables 17.854 244 3.56 Footwear 3.585 17.925 4.19 Beauty Care 6.073 32. Music and Gifts 2.

98 RETAIL Changing Paradigm: The Confidence of Modern and Traditional Retail 1st Phase 2nd Phase 3rd Phase 4th Phase 2000 2005 2008 2011 Growth Entry. Format Options. Consolidation. Leveraging Traditional Formats for Modern Retail M&A.19 Beauty Care 3.Jewellery and Watches 6. Confluence of Indian Retail Per Capita Retail Space MARKET & OPPORTUNITIES Advantage India Against the backdrop of an accelerating modern retail revolution. High Investments. Expansion. Beginning of the Rural-Urban Retail Merge Technology Adoption. with its young population just beginning to embrace significant . India offers to be an attractive destination for global corporations and leading retailers seeking emerging markets overseas. Portfolio. India presents a significant market.56 Footwear 0. Top Line Focus for Organised Retail Range. Growth.

The youn g India Against the backdrop of an ageing world. Analysts predict India to sustain an average GDP growth rate of 5 per cent till the mid of this century. Projections by analysts suggest that India has the potential to be labeled the fastest-growing economy and outpace the developed economies by 2050. The more recent growth rates of over 9 per cent posted for India. India is home to 20 per cent of the global population under 25 years of age. The large proportion of the working-age population translates to a lucrative consumer base vis-à-vis other economies of the world. 35 per cent of India‘s population is under 14 years of age and more than 60 per cent of the population is estimated to constitute the working age group (15-60) till 2050. with the Indian consumers confident about their earnings and are spending a large portion of their high disposable incomes. as opposed to the world median age of 33. with the median age of 23 years. . comparable to most of the leading economies around the world.lifestyle changes. Rapi d economi c gro wth The fast and furious pace of growth of the Indian economy is the driving force for Indian consumerism. Private consumption accounted for 62 per cent of India‘s GDP in 2004-05. Two-thirds of Indian population is under 35. with India projected to outpace the other developed economy markets by 2050. placing India on the radar as one of the most promising retail destinations of the world. with the share set to reach its maximum in 2010. This trend is projected to continue for the next decade. second only to China. India possesses the advantage of having a largely young population. The average annual growth rate for 1994-2004 was pegged at 6. promise a continued robust growth story.1 per cent.

spanning from rural retailing to luxury retailing. in terms of emerging market potential and is deemed a ―Priority 1‖ market for international retail. . comprising of over 75 million households.700. India is home to a large base of consumers with annual incomes ranging from US$ 1. The impressive retail space availability and growing trend of consumerism in the emerging cities and small towns add to the market attractiveness. ahead of Russia. A steadily rising percentage of rich and super rich population and impressive disposable incomes offers a spectrum of opportunities.000 – US$ 4.Gross Domestic Product Source: Reserve Bank of India 2002-03 2003-04 2004-05 2005-06 2006-07 0 200 400 600 800 1000 US$ billion Growth Rate (per cent) Source: Reserve Bank of India 2002-03 2003-04 2004-05 2005-06 2006-07 0 2 4 6 8 10 US$ billion RETAIL Potentia l untappe d market India ranks first. Organised retail penetration is on the rise and offers an attractive proposition for entry of new players as well as scope for expansion for existing players.

Hyderabad • Indian Institute of Jewelry.000 in 14. Multiple centres across India • Indian School of Business.000 students were enrolled in about 150. Delhi & Jaipur • Global Retail School. Ahmedabad • National Institute of Fashion Technology (NIFT). Abun dant avai labilit y of ski lled La bour India has a vast resource base of talent and skilled labour. which captures 14. with over 15 premier institutes offering specialised courses in Retail Management. Over 37. New Delhi • Indian Retail School. compared to Tesco Plc.700. giving an insight into the large untapped market potential.000 pre-college institutes and over 11. New Delhi • Foreign Trade Development Centre – Centre for Retail Management. Mumbai • Indian Institute of Retail.000. New . one of India‘s retail giants captures a mere 0. the language skills of the Indian workforce score higher than that of emerging economies. New Delhi • Ebony Retail Academy. With English being the language for business in India. Post-graduate institutes offering specialised courses in Retail Management • Birla Institute of Management Technology. New Delhi • Institute of Management Studies. Mumbai • International Institute of Retail Management. Mumbai • Mudra Institute of Communications. Mumbai • Institute of Technology and Management.Pantaloon Retail India Limited. New Delhi • K J Somaiya Institute of Management Studies & Research.3 per cent of total market.3per cent of England‘s market and Walmart which captures 20 per cent of USA‘s market. Retail Management is a sought after education stream amongst students.000 higher education institutions in 2005-06 .

0 20 40 60 80 100 Malaysia Thailand Indonesia China India Talwan US 3 97 20 80 30 70 40 60 55 45 81 19 85 15 Source: Ernst & Young Retail Report n Organised retail n Traditional retail MARKET & OPPORTUNITIES .Delhi • Pearl Academy of Fashion. New Delhi • Retail Academy of India. Distance Learning programmes offered Growing Young Population Source: India Census n Under 15 n 15-64 n Over 65 2000 2005 2010E 2015E 2020E 0 100 200 300 400 500 600 700 800 900 1000 US$ million Share of Organised and Traditional Retail * 2004-05 figures.

450 Thailand 2.000 Phillipines 2. These cities offer significant cost advantage in the form of availability of low-cost skilled human resources. Mumbai Source: Ernst & Young Research Lo w cost of operations The most attractive component of India‘s value proposition is its cost attractiveness.000 US$ per annum RETAIL Policy and Regulatory Environment The Government is progressively undertaking reforms and liberalising the retail sector.000 25.000 20.• PG Institute of Retail Management. With well-educated small town graduates turning to the urban cities for employment. Existing players are increasingly turning to Tier II and Tier III cities for retail establishments and for manpower sourcing.192 729 Indonesia 1. Mumbai • The Retail Academy. Labour Cost per Worker across Asian Countries Source: Department of Industrial Policy & Promotion China India 1.743 Singapore 21.317 0 5. these graduates are ideal candidates for sales and marketing executive roles in modern organised retail formats.705 Malaysia 3.0000 15.000 1.429 Korea 10. Ahmedabad • Welingkar Institute of Management. thereby attracting significant . Mumbai & Chennai • SP Jain Institute of Management and Research.

even if the goods are produced by the same manufacturer. To facilitate easier flow of Foreign Direct Investments (―FDI‖) inflow. Malaysia. Fran chisin g This is a widely taken entry route. The most common channels for entry of foreign retailers are the strategic licence agreements. The franchising routes operable in India are: . technology and global best practices and catering to the demand for such branded goods in India. However. franchising. Strate gic licen ce agreements This route involves the foreign company entering into a licencing agreement with a domestic retailer or partnering with Indian promoter owned companies in the Middle East (UAE) or South East Asian countries (Singapore. Nokia and Adidas.foreign investments. Indonesia). such as in the case of Reebok. with prior Government approval for retail trade in ‗Single Brand‘ products with the objective of attracting investment. The regulatory and supervisory policies are being reshaped and reoriented to meet the new challenges and opportunities in this sector. distribution. Relaxation of FDI restrictions are being vigorously pursued by the business and trade coalitions and are expected to fall in place over the next 3-5 years. manufacturing. Thailand. with many international brands setting up shop via this provision. joint ventures and cash and carry wholesale trading. This implies that foreign companies can now sell goods sold globally under a single brand. FDI up to 51 per cent is allowed. FDI up to 100 per cent is allowed under the automatic route for cash and carry wholesale trading and export trading. instead of having to seek Foreign Investment Promotion Board (―FIPB‖) approval. retailing of multiple brands. is presently not allowed.

Cas h-an d-carr y wholesa le tra din g 100 per cent FDI is allowed in wholesale trading which involves building a large distribution infrastructure to assist local retailers and manufacturers. Entry through this route entails the company the rights to retail the products in India through individual retailing outlets. MARKET 10 & OPPORTUNITIES Manufa cturin g International retailers can set-up manufacturing units for their products in India. a route primarily used by domestic brands • Master franchisee: Rights are granted for an entire territory to the master franchisee and the master franchisee can in turn grant unit and multiple franchisees in that territory • Regional franchisee: This route is similar to that of the master franchisee. The labour laws in India are under the scanner for higher liberalisation. and set up base in India. franchisee outlets can also be set up in this route. Distri bution An international company can set up distribution offices in India and supply products to the local retailers. Joint ventures International firms can enter into agreements with domestic players. The share of the multinational is restricted to 49 per cent in this route.• Unit franchisee: Franchisee is granted rights to operate a single business unit • Multiple franchisee: Individual unit franchises are given to multiple outlets. but applicable on a larger scale The master and regional franchisee routes are the most preferred and the oft-adopted routes of entry into India by the international retailers. with the Government permitting flexibilities in the rules in emerging retail hubs like .

with the Governments benefiting from the access to impressive revenues from land sales and tax collection from retail developments. with a Draft Model Act being legislated by the . allotment of Government controlled land etc. The Agricultural Produce Marketing Committee Act (APMC). food grains) is proposed to be amended soon. which curtails direct sourcing of agriculture produce (grocery. The Government is expected to take a calibrated approach in land and rent reforms to improve the real estate regulatory environment and facilitate easy access to retail space for international investors.Bangalore and Hyderabad. This would reduce the entry and establishment timelines for new players in the market and facilitate easy procedures in issuance of necessary approvals. with the aim of introducing a single-window clearance mechanism. Efforts are also being undertaken by the Government to remove impediments being posed by licensing and clearance mechanisms in India. mandatory closure of the store once a week are being modified to suit the modern retailing demands and necessities. Instituted laws like restriction on working hours. Value Added Tax (VAT) has been introduced and implemented in most states and territories. without adversely impacting the labour benefits. are being pursued by the Government. Solutions to problems related to the lease rentals and pro-tenancy laws. with initiatives like Special Economic Zones (SEZs). which significantly deter international investors. This is soon to be followed by other state governments. The Government is releasing large tracts of unused land for retail development in the Mumbai and NCR regions. and many industry verticals to resolve the multiple taxation issue and maintain uniform prices across regions.

The new act promotes direct marketing to corporate investors. Contract farming is already being pursued in certain states with players like Reliance and Pepsi Co. with the former gaining access to better prices and the latter to a steady supply source. Indicative list of foreign players‘ entry path to India Franchisee • Pizza Hut • Domino‘s Pizza • Marks & Spencer • Nike. Faridabad and Gurgaon of Haryana and Noida and Ghaziabad of Uttar .government. Mango swarovski RETAIL 11 Maturin g Metros National Capital Region (NCR) NCR comprises of National Capital Territory (NCT). The Government is encouraging the contract farming practice. forging alliances with local farmers for direct procurement of raw materials. sorting and grading facilities made available as a part of the infrastructure services. Tommy Hilfiger • Subway Cash & Carry wholesale trading • Metro • ShopRite Joint Ventures • Mc Donald‘s • Reebok Manufacturing • Bata • United Colors of Benetton Distribution • Hugo Boss. The Government is currently considering modernising and developing eight strategically located ―Mandis‖ with cold storage. setting up of farmers/consumers market and contract farming. as it benefits both the farmers and the corporate retailers.

contributes US$ 12. with businessmen. with more than 7.522 million by 2010-11. the middle class and the rich account for 47 per cent and 30 per cent of retail revenues of the city. Mumbai is home to a large percentage of the rich and super-rich households. this city contributes to US$ 10. from value segment to the lifestyle segment. The regions of NCR and Mumbai dominate the organised retail scenario in India. Each category of population has a significant share in the retail pie.195 million of total retail revenue. The total number of households in Delhi stood at 2.000 households belonging to the rich and super-rich category.342 million of retail revenues in 2005-06. This is the highest for any city across the country. with incomes higher than US$ 243. with the city offering opportunities for a spectrum of retail formats. have been projected to achieve world‘s 2nd and 3rd largest city status by 2015 and have the highest number of malls and modern retail format stores in operation and many more in the pipeline.8 million in 2005-06. NCR contributed to US$ 16. These Key Trends and Drivers cities which are also referred to as the ―Maturing Metros‖. and is projected to open doors to markets worth US$ 19. This city is projected to offer a retail potential of US$ 14. politicians and bollywood personalities.927 million by 2010-11. having their base in the city.902 per annum. Delhi. The combined contribution of these metros is estimated to reach 40 per cent by 2007-08.683 million to the retail revenues.Pradesh. Mumbai A potpourri of consumers. the fashion capital of India and home to the highest number of rich and super-rich households. Most pan-India retailers have multiple . The hub of Indian cinema and home to diverse income categories.

The middle class households contribute to almost half the retail activity in these metros. with the consuming middle class forming the largest share of population. the metros have experienced exponential growth over the past few years. Bangalore and Hyderabad have low penetration of underprivileged households.511 million worth retail revenues in 2005-06. Hyderabad. hospitality etc. Chennai and Kolkatta are growing at an exceptional rate. projected to touch US$ 25. These cities contributed to US$ 15. with the retail buzz in these cities becoming more pronounced by the day. These cities have considerable latent demand for branded products and offer suitable opportunities for a variety of retail offerings. Lastly.retail outlets present in these cities. With the growth in the IT/ITeS sector and other sunrise sectors like biotechnology. Luxury retailing has found entry and tremendous response in these markets. these maturing metros are the hub of the ‗luxury-retailing‘ in India. Most of the retail sector giants have a footprint in these . owing to the success of the technology sector and other sunrise sectors such as biotechnology and hospitality MARKET 12 & OPPORTUNITIES industries. These cities also act as launch pads for the new entrants. with lifestyle formats beginning to mushroom. with increasing number of rich and super rich households in these cities. Metros on the Growth Path Metros of Bangalore. concentrated in these cities.610 million by 2010-11. These cities are expected to witness a radical transition in the migration of households belonging to the lower income strata to the higher income category. and are expected to demonstrate robust economic performance in the coming years.

Vijayawada.976 million by 2010-11. Organised retail penetration is lower than in any of the metros. These cities are less saturated than the metros. Lucknow.cities. Underprivileged population is expected to decrease by more than 30 per cent in cities of Pune and Ahmedabad by 2010-11. Chandigarh. Vadodara. there has been a steady proliferation of malls. with the organised retail penetration substantially increasing. with more than half the population falling in this category. Surat. with the other smaller cities also following a similar trend. The combined retail potential of these cities is expected to increase to US$ 23. Middle class and lower middle class form majority of the households. Pune and Ahmedabad are the fastest growing cities with thriving industry activity. Indore.619 million worth total retail activity. Nagpur. Kochi. Nashik and Madurai contribute to US$ 15. Coimbatore. Jaipur. The cities.563 million. with significant improvement in their infrastructure and purchasing power. a trend specially . Kanpur. but have greater spending power. Investors from the IT/ITeS sector and the other emerging sectors are eyeing these cities for expansion. Pune has witnessed an explosive increase in the mall space availability in the recent years. Vizag. Metros-in-the-making The emerging cities of Ahmedabad.854 million worth retail revenues in 2005-06. These two cities contributed to US$ 3. Ludhiana. projected to increase to US$ 5. Trivandrum. are set to take centre stage as the future retailing hotspots. with traditional retail ruling the market across these geographies. with aggressive future plans for expansion. The ma ll phenomenon From the setting up of India‘s first mall in 1999. Pune. Bhopal. along with the other potential cities as listed below.

Total number of malls was estimated at 200 for 2005-06. High Growth Cities Pune Ahmedabad Chandigarh Ludhiana Kochi Vadodara Jaipur Lucknow Emerging Cities Indore Amritsar Jalandhar Mangalore Nashik Bhubaneshwar Agra Vishakhapatnam Coimbatore Kanpur Nagpur Goa Surat Mysore Jamshedpur Thiruvananthpuram Potential Cities Jodhpur Patna Varanasi Meerut Rajkot Aurangabad Bhopal Sonepat Vijayawada Madurai Ranchi Guwahati Jamnagar Srinagar Allahabad Indicative List of Emerging Destinations for Retail Activity Total Mall Space Availability Source: Jones Lang LaSalle Meghraj Retail Report 2003-04 2004-05 2005-06 2006-07 2007-08P 2002-03 0 10 20 30 40 50 60 70 in million sq. Mumbai. there is increasing retailing space availability for players. was spread over 40 million square feet in 2006-07. The total mall space across seven cities (NCR. RETAIL 13 . Bangalore. projected to increase to 600 by 2010-11. Mall space is projected to increase to over 60 million square feet in 2007-08. Pune and Chennai).pronounced in the urban cities. Kolkatta Hyderabad. with malls further providing incentives like lower rentals for anchor tenants and greater consumer exposure. With increasing number of malls. The activity in the retail sector is further being supported by the allowance of FDI in real estate by the Government. ft.

Mall development activity is being pursued aggressively across all the metros and the high-growth cities. the market trend promises a positive outlook for the future. With the economy opening new vistas of employment and with employers offering attractive compensation packages and perks. The new found freedom to shop at plush malls and stores for expensive gadgets like mobile phones and laptops has fuelled the growth of organised retail in India. India‘s swelling middle class is redefining lifestyle patterns with adoption of western values and growing brand consciousness. with analysts predicting a similar trend for the next two decades. The Indian consumer is gradually moving from the local ―kirana‖ shopping to ―Mall Hopping‖. Chan gin g fa ce of Indian consumerism Favorable demographics. The thriving services sector growth has handed young India a bulging wallet and a penchant for luxury products. the Indian consumer is fast embracing modern retail. With the country‘s income pyramid changing . The evolving cosmopolitan population with rising aspirations and growing incomes across the country is the driving force increasing domestic and international investments. the pool of Indian skilled professionals are boasting of higher disposable incomes. with significant investments in the pipeline.With impressive ratio of transactions to customer footfalls ratio (conversion ratio) across malls. The average household disposable income has doubled since 1985. With a number of domestic and international brands available in stores in metros and smaller cities and with a wide range of product offerings from food and grocery to furniture and fixtures. combined with increasing disposable incomes. are progressively changing the face of Indian consumerism. From frugal spending to frenzied shopping.

ft.94 Pune 4. Mail Space Distribution in Top 7 Cities (in million sq. there has been a definite shift from the ―saving‖ tendency to the ―spending‖ attitude. There has been a marked increase in the number of new entrants in the retail sector with player revenues increasing across all the retail segments. Hi gher disposa ble in comes Disposable incomes are on the rise with the economy providing new avenues of employment in IT/ITeS and other sunrise sectors like biotechnology. an increase of 11 per cent over 2005-06. Delhi.8 Chennai 1 Source: Jones Lang LaSalle Meghraj Retail Report Source: Reserve Bank of India Personal Disposable Income 2000-01 2001-02 . The increase of per capita income has been more pronounced in the metros and the emerging cities.dramatically. with a progressive growth in the standard of living with employers offering attractive compensation packages and perquisites to the pool of skilled Indian professionals.07 Bengaluru 1.25 Mumbai 9. the seat of Indian Government and the centre of thriving economic activity has the highest per capita income.1 Kolkatta 3. National per capita income (NNP at factor cost) stood at US$ 717 in 2006-07.) NCR 19. Increased consumer exposure to the latest trends and brands driven by the mass media is contributing to the soaring retail revenues. mirroring the higher standard of living.5 Hyderabad 1.

00. Increasin g ur banisation India‘s urban population is estimated at 286 million. in numerical terms. next only to China. constituting 33.400 million by 2010. Urban population has grown over five times over the past five decades. with India‘s urban population being second largest in the world. With over 34 cities having a population of over 1 million.7 per cent urban population. The urban population is projected to increase to 468 million. constituting 27.000) have an average concentration of 73. Class I cities (cities with population greater than 1.8 per cent of the total population of 1. with the share increasing rapidly. Delhi is the most urbanised city in India.2002-03 2003-04 2004-05 0 100 200 300 400 500 600 700 US$ billion Source: Reserve Bank of India Y-o-Y Percentage Growth 2000-01 2001-02 2002-03 2003-04 2004-05 0 2 4 6 8 10 12 14 US$ billion MARKET 14 & OPPORTUNITIES Urban India‘s disposable incomes are ricocheting with favorable and conducive economy and employment trends.029 million as on 2001.4 per cent of the total projected population of 1. with about 93 per cent of the population concentrated in urban areas. this number is projected to grow rapidly. An increase in the number of young employed .

Eas y avai labilit y of cre dit Higher penetration and availability of credit facilities and increasing credit card and debit card subscriptions have further fuelled the growth of retail sector.executives and the increasing population of working women is stimulating growth of modern retailing in urban areas. The average exposure of banks to retail loans was at 25.5 per cent of total loans in 2005-06. Most of the banks and financial institutions have increased their range and amount of retail credit and loans service offerings. * Advance Estimates for 2006-07 Increase of Per Capita Income Source: Reserve Bank of India 0 100 200 300 400 500 600 700 800 2002-03 2003-04 2004-05 2005-06 2006-07 2001-02 (US$) * Advance Estimates for 2006-07 Y-o-Y Percentage Growth Source: Reserve Bank of India 0 100 200 300 400 500 600 700 800 2002-03 2003-04 2004-05 2005-06 2006-07 2001-02 (US$) 1981 1991 2001 .

Urban population ( per cent to total) 23.7% Source: Census India Source: Crisil Research 0 2 4 6 8 10 12 14 16 18 number of cards (in millions) Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Credit Card Growth Source: Crisil Research 0 10 15 20 25 30 35 40 45 50 number of cards (in millions) Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Y-o-Y Percentage Growth RETAIL 15 Increased subscription of credit cards in the last 3-4 years indicates a definitive change in the consumer habits of the Indian population.8% Urban population in Class I cities (%) 60.6 million in 2005-06.2% 73.7% 27.4% 65. growing at a compound annual . The number of credit cards issued was at 16.3% 25.

7 million by 2005-06. Carrefour. The number of debit cards have increased manifold and touched 53. The growing acceptance of plastic money across small and medium sized stores and retail outlets has stimulated the rapid growth in issuance of credit cards. and plans to set up its first cash-n-carry outlet by 2007-08. Increasin g in vestment acti vit y International retail giants are increasingly choosing India as the target market. Source: Crisil Research number of cards (in millions) Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06E 0 10 20 30 40 50 60 Debit Card Growth Source: Crisil Research number of cards (in millions) Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 . Wal-Mart has entered into a 50:50 Joint Venture and Franchisee agreement with Bharti Retail Ltd. joint venture would provide Indian market access to the world‘s largest coffee chain.growth rate of 28 per cent in the last 6 years. It is anticipated that the Starbucks – Pepsi Co. with most of the global retail power-houses exploring entry options into the country‘s retail market. France‘s retail major is set to finalize its entry route to Indian retail sector.

00 . New Vernon. Genesis Capital. & Construction 7% Real Estate 3% Media 2% Others 25% Source: NASSCOM Breakup of VC /PE investments in 2006(Volume) IT-BPO 28% BFSI 18% Manufacturing 10% Engg.Mar-06E -50 25 100 175 250 325 400 Y-o-Y Percentage Growth Breakup of VC /PE investments in 2006(Volume) IT-BPO 20% BFSI 13% Manufacturing 13% F&B and Retail 9% Healthcare & Life Sciences 8% Engg.March 2007) Target Acquirer/Investor Value in US$ million Provogue (India) Fidelity.73 Home Solutions Retail India Kotak Private Equity 12.27 Flemingo Duty Free Shops Citygroup Venture Capital 22.00 S Kumars Nationwide ADM Capital 82.24 Mudra Lifestyle SIDBI Venture Capital and State Bank 3.00 Brandhouse Retail ADM Capital 25. and Construction 10% Healthcare & Life Sciences 8% F&B and Retail 6% Real Estate 5% Media 4% Others 11% Source: NASSCOM Recent VC /PE Deals (January . Blackstone. Artis Capital and Liberty International 33.

Pantaloon Retail operates in over twenty diverse store formats. a Future Group venture started its operations with Pantaloon Shoppe in 1993 and has since emerged the retailing giant of India with over 5 million square feet of retail space spread over 450 stores across 40 cities in India. combined with the aim of capturing both the value segment and the lifestyle segment of the market has resulted in Pantaloons capturing a large part of the organised retail pie.9 million. The aggressive expansion rate. an 84 per cent increase over 2005-06. The operating income stood at US$ 43. It employed over 13. with a spectrum of offerings ranging from food and grocery to carpentry services. Big Bazaar and Brand Factory. the small scale retailers are also embracing IT solutions to optimise their operational efficiencies. including the Central chain of malls. It operates some of the immensely popular retail outlets of India.000 people in 2005-06 in its various retail activities. Retail sector constituted 8 per cent of the IT export revenues in 2005-06. RETAIL 17 Panta loon Retai l (India ) Limite d Pantaloon Retail. 5 per cent of total revenues. Oracle and SAP are developing solutions for smaller retailers‘ requirements. Apart from the industry giants. Big league IT firms like IBM India.Source: Ernst & Young Research MARKET 16 & OPPORTUNITIES Increasin g te chno logy adoption With modern retail store formats growing players are increasingly deploying advanced Information Technology tools for managing their supply chain. The attrition rate stood at 8. warehousing and logistics requirements.36 per cent as . The company clocked revenues worth US$ 869 million in 2006-07.

etc. Innovative store formats like Hometown. consolidating the market position of PRIL. aimed at value retailing while Central. Health City . with discounted store formats like Brand Factory setting benchmarks for new players entering the market.against a sector average of 20-25 per cent. Pantaloons captures the lifestyle segment consumers.a value segment targeted spa and beauty care venture. Fashion Station etc.a sports theme restaurant complete with game courts and screens for match viewing. The unique selling proposition of Pantaloon Retail is the dual approach to tap both the ―Value‖ segment and ―Lifestyle and Luxury‖ segment consumers. attracting and Key Players retaining skilled workforce through various management and academic initiatives. has now expanded to • Navaras • Food Bazaar • Central • All • Big Bazaar • Pantaloons • Depot • Top 10 • Blue Sky • Star Sitara . Pantaloon Retail has many firsts to its name in the Indian market. are hitting the market. Sports Bar.a one stop shop for all the home requirements. by establishing retail formats in each segment like Big Bazaar. Raheja Group.. Shopper ‟s Stop Limite d Shoppers Stop. established in 1991 with its flagship storeShoppers Stop by the K. The company offers post-graduate programme in Retail Management in association with premier institutes across the country.

The firm employed 3. The operating income stood at US$ 16. The company clocked revenues of US$ 202 million in 2006-07. with Shoppers Stop clocking impressive total number of transactions to customer footfalls ratio (conversion ratio) of 27 per cent. with the growing affluent middle class population as their target consumer base.7 million for 2006-07.1 million square feet of built-up area. 8 per cent of total revenues. a 30 per cent increase from revenues of US$ 155 million in 2005-06.1 0 100 200 300 400 500 600 700 800 900 161 11. n Retail Turnover n Operating Income 846 21. Private labels account for more than 21 per cent of their retail revenues.• Fashion Station • Tulsi • BF 95. The group offers formats in the lifestyle and luxury segment. . spanning a spectrum of retailing verticals and formats.6 33.157 customer care associates in 2006-07.2 2004-05 2005-06 2006-07 2003-04 US$ million MARKET 18 & OPPORTUNITIES over 100 retail outlets spread across 1.2 472 264 Source: Pantaloons Retail (India) Ltd.

to develop the format of catalogue retailing in India under an exclusive franchise. Landmark. The firm has forayed into the entertainment industry by acquiring 45 per cent stake in Timezone Entertainment Private Ltd. have jointly entered into an agreement with Home Retail Group Plc. • Manufacture private labels in apparels • Principal fascia: Westside. United Kingdom. Star India Bazaar RPG Enterprises • Established retail in 1996 . The 50:50 joint venture has been incorporated as the Nuance Group (India) Pvt. Kolkata and Hyderabad. Other Key Players Tata Trent Ltd. Ltd. • Established in 1998 • Revenues: US$ 53 million • Retail sector activity: Apparel. are aiding Shoppers Stop in catering to the niche markets. Specialty – books and music • Current store format: Hypermarket. Ahmedabad. for undertaking the operation and management of retail shops & food and beverage outlets in the duty free zones of Indian airports. which has 5 outlets spread across 35. Aggressive expansion plans are being developed for formats like Timezone.Strategic partnerships with international retailing players like Mothercare Plc of Britain and Leisure & Allied Industries of Australia. Supermarkets • Future plan: New venture-Infiniti Retail Ltd. a leisure and entertainment format venture and Brio the coffee bar located strategically in their Crossword bookstores.606 square feet at Mumbai. Shoppers Stop and Hypercity Retail (India) Ltd. The Company signed the Memorandum of Understanding and Shareholders Agreement with The Nuance Group AG of Switzerland.

hypermarkets • Current outlets: 279 outlets • Music world has tie ups with 350 affiliates across the country. Music World Landmark Group • Present in India since 1999 • Retail sector activity: Apparel. • Future plan: by 2009 set-up 2000 stores in India • Principal fascia: Spencer‘s. Specialty.music • Current store format: Convenience stores. Max Retail • Home Stop • Mothercare • Brio • Desicaffe • Shoppers Stop • Crossword 16.4 0 50 100 150 200 250 84 3. Home décor & Furnishing • Current store format: Department stores.7 11. Home Centre. Beauty products. supermarkets. Hypermarkets • Current outlets: Lifestyle-10 outlets.8 .• Revenues: US$ 182 million • Retail sector activity: Food & grocery. Max Retail-4 outlets • Future plan: Presence in mini metros and Tier-II cities • Principal fascia: Lifestyle.9 155 109 Source: Shopper‘s Stop n Operating Income n Retail Turnover 202 8.

Premier-3 outlets • Future plan: Set up 60 stores in South India • Principal fascia: Viveks. Allen Solly. Jaisons-26 outlets. SF jeans. Hypermarkets • Current outlets: Vivek-23 outlets. Beauty. SpecialtyElectronics & Home appliances • Current store format: Supermarkets. Premier Globus • Established in 1998 • Retail sector activity: Apparel • Current store format: Stand alone stores • Current outlets: 21 • Future plan: To set up 100 stores by 2008 • Manufacture private labels under Globus and F21 . Jaisons. Trouser town-9 outlets • Future plan: Projected to increase to 300 outlets by 2009 and diversify into the women‘s wear segment Vivek Group • Established in 1965 • Revenues: US$ 91.5 million • Retail sector activity: Food & Grocery. Peter England • Joint Venture with international brands: Esprit • Current outlets: Planet Fashion-50 outlets. Van Heusen.2004-05 2005-06 2006-07 2003-04 US$ million RETAIL 19 Madura Garments • Established in 1988 • Part of the Aditya Birla Nuvo Group • Retail sector activity: Apparel • Principal fascia: Louis Philippe.

Trinethra Quick Shop Provogue Ltd. Specialty.5 million • Retail sector activity: Food & grocery.6 million • Retail sector activity: Food. Apparel.1 million • Retail sector activity: Apparel. • Established in 1904 • Revenues: US$ 30.• Principal fascia: Globus Subhiksha Trading Services • Established in 1997 • Turn over of US$ 75.5 million • Retail sector activity: Food & Grocery.. • Established in 1986 (Taken over by Aditya Birla Nuvo Group in 2006) • Revenues: US$ 58. Footwear • Current store format: Stand alone stores . Supermarkets. Beauty products • Current store format: Convenience stores.Bakery products • Current store format: Supermarkets • Future plan: To increase stores to 100 • Principal fascia: Nilgiris Trinethra Super Retail Ltd. Footwear • Principal fascia: Trinethra Super Retail LTD. • Established in 1997 • Revenues: US$ 38. Hypermarkets • Current outlets: 150 outlets • Future plan: To enter into Pharmacies. Medicines • Current store format: Supermarkets • Current outlets: 150 outlets • Future plan: To set up 600 stores with 145 stores in NCR region • Principal fascia: Subhiksha Nilgiris Ltd.

8 million • Retail sector activity: Footwear and Accessories • Current store format: stand alone stores • Current outlets: 1100 outlets • Future plan: To remodel 150 stores and open 40 more stores • Principal fascia: Bata MARKET 20 & OPPORTUNITIES Archies Ltd • Present since 1979 • Revenues: US$ 20. Prozone Bata India Ltd.8 million • Retail sector activity: Specialty-cards & gifts • Current store format: Stand alone stores • Future plan: To increase from 73 stores to 200 by 2008 • Principal fascia: Archies. • Present since 1931 • Revenues: US$ 179. Stupid Cupid Players across verti cals Food and Grocery • Hindustan Unilever Limited • BJN Group • Magna • Café Coffee Day • Barista • Apna Bazaar • Spar • ITC • Aditya Birla Group • NF • FabMall • Godrej .• Current outlets: 139 outlets • Future plan: To manage and develop malls • Principal fascia: Provogue.

• Mc Donald‘s Clothing and Textiles • FabIndia • Biba • Pyramid • Lee • Levi‘s • Ebony • Pepe Jeans • Raymonds • Kappa • Mango • Lee Cooper • Nalli • Peter England Jewellery and Watches • Tissot • Gili • Tanishq • Kiah • Carbon • JBL Footwear • Reebok • Liberty • New Balance • UMBRO • Adidas • Woodland • Paragon Home Decor and Furnishings • Raymond • Lifestyle • Durian .

• Bombay Dyeing • Nilkamal • Gautier • Pantaloon • Carmicheal house Electronics • Croma • Onida • Videocon • Whirlpool • LG • BPL • Philips • Next • Samsung Electronics • Godrej RETAIL 21 Beauty Care • L‘orreal • Amway • Revlon • Health Glow • Biotiue • Maybelline • Lakme • Himalaya Books and Music • Depot • Music World • Crossword • Hallmark • Planet M Internationa l retai lers International retailers are fast expanding their business in .

with these emerging Tier II and Tier III cities International retailing brands in India • Nine West • United Colors of Benetton • Adidas • Mango • Pizza • Marcoricci Italy • Red Earth • Nike • TGI Friday‘s • Mc Donalds • Samsonite • Promod • Lasenza • KFC • Reebok • Marrybrown • Movenopick • Giordan • Levi‘s • Arrow • Lacoste • Subway • Ruby Tuesday • Pepe Jeans • Tissot • Wrangler • Marks & Spencer .000 square feet of retail space and standalone stores across major metros. are expanding at a fast pace. Tommy Hilfiger and Levis have over 20. McDonalds. Subway etc.India to tap the large consumer base. Reebok has set up its largest store in the world in Hyderabad. The fast-food giants like Pizza Hut.

Retail revenues contributed by the affluent category accounted for over 30 per cent of total revenues in 2005-06. the scope for the neighborhood malls and hypermarkets will be pronounced in the residential suburbs. However. The number of affluent households is expected to double by 2010-11. the lack of space and the strict bringing down of law on illegal constructions will reinforce the migration towards organised retailing.• Landmark Group • Metro • Debenhams • Planet Sports • Royal Sporting House • Shoprite • Dollarstore 22 MARKET & OPPORTUNITIES Opportunities across Geo grap hies Maturing Metros Delhi and Mumbai offer an attractive market for luxury and lifestyle retailing with these cities being home to the highest number of households belonging to the affluent category (with income greater than US$ 24. Metros on the growth lane The growing disposable incomes. The luxury-retail segment is presently concentrated in the five-star hotels and is slowly drifting into the specialty malls and one-stop outlets. projected to trigger high growth in the luxury retailing segment. With the steady rise predicted in the percentage of middle class households and their affordability. The mushrooming lifestyle formats in these cities is stimulated by the increasing exposure of consumer .000 per annum). the consuming class and the increasing standard of living across these cities translate to opportunities across all the retailing formats and verticals.

The Wedding Malls for instance. which are unheard of in the far west are found to be very successful in the Indian market. Players like Reliance Retail. offering immense potential for the food and grocery vertical with customer preference tuned towards value retailing. especially for the food and grocery formats.base to international brands and willingness to spend for quality. Aditya Birla Nuvo Group‘s Trinethra Supermarket etc. with lower lease rentals and high availability of retail space. The retail industry players are successfully blending knowledge . Players who have already established their presence in the top metros of the nation are already planning their establishments in these emerging cities and regions to gain the first-mover advantage over other entrants. have aggressive plans to tap opportunities in these emerging cities in suitable formats. stock the complete range RETAIL 23 of wedding product offerings from apparel to jewellery. access to farms and agricultural produce. and gain a foothold in these cities. These cities provide ample opportunities. consumer goods and apparel verticals. Consuming class accounts for over 60 per cent of the total households. Key Opportunities Metros-in-the-making Many metro retailers are expected to open outlets in these cities to benefit from the ―First-Mover‖ advantage. offering potential in the food and grocery. These cities most often also serve as the test beds for any innovative store formats. The „First -Mover ‟ advanta ge More than 72 per cent of India‘s population resides in small towns and rural areas with agri-produce retailing forming the largest share of total retail pie in these regions. Inno vati ve formats Formats like ―Wedding Malls‖.

from the experiences of the global retail industry with the unique requirements and preferences of the Indian consumer. Tesco‘s around US$ 100 million and Marks & Spencer around US$ 145 million from India for the year 200506. Unilever sources major portion of their fast moving . Such customisation to the latent needs of the Indian consumer has brought about a great deal of innovation in the product offerings as well the retail formats in which they are being sold.000 existing outlets are to be beefed up to cater to the changing tastes of the young Indian consumer and thereby provide a boost to the presently stagnant sales of the khadi textiles. which would showcase the traditional handloom textiles in a completely new form. The latest addition to the list of diverse retail formats are the ―Village Malls‖. with the fair price shops being revamped to cater to larger needs of local populations. Over 7. The expiry of the Multi Fiber Arrangement has further widened the global markets for apparel. India is fast emerging as an important global sourcing hub for top international brands India has had a continued presence in the global scenario as one of the leading exporters of apparels and textiles. Wal-Mart‘s sourcing operations was estimated at US$ 1 billion. Many international brands have identified India as one of the important supply centres for procurement of textiles and apparels. Emer gen ce of India as the retai l sour cin g hub Riding on the back of a strong manufacturing industry. Khadi & Village Industries Commission is set to roll out a string of swanky ―Khadi Plazas‖. The Government of Gujarat has spearheaded one such initiative with 512 ―Village malls‖ launched in the state with further plans for 508 such malls.

with the young urban Indian consumer‘s increasing exposure to the virtual world of internet. with Adidas opening its first office in Bangalore.com were some of the early entrants in the Indian online retail space. is gaining popularity on the Indian soil as well.in. Tata Indicom‘s i-choose. eBay. with increase in number of broadband and dial-up internet connections. The stated factors are facilitating rapid growth of online shopping with the industry players scaling up to meet the consumer requirements. increased use of plastic money and large base of young population that spends a considerable time online. With value-added services like cash-on-delivery to facilitate online transactions by consumers without credit/ debit card.. e-commerce is fast gaining acceptance in India. Demand for these portals. meeting the niche Indian consumer requirements such as ethnic apparel. Most retailers are developing and maintaining their own online sale portals for easy consumer access. which has been primarily driven by the non-resident Indians. Players like Rediff.consumer goods from its wholly owned Indian subsidiary. Next and Calvin Klein are expected to follow suit.in and G&B‘s godrejlifespace. Online retai lin g The ‗Click-to-buy‘ phenomenon is fast catching up in India. Hindustan Unilever Limited. limited personal time for shopping. Some of the more recent players to enter this niche market include Pantaloons Retail India Ltd. handicrafts and jewellery.com. Adidas. unique bidding schemes etc.com are good examples of this trend. through its Futurebazaar. Indiatimes. Many smaller retail portals are also thriving on the internet. facilitating online purchase of merchandise. .com venture. clocking impressive revenues through online transactions.

DSCL‘s Hariyali Kisan Bazaar has over 70 outlets presently and the company proposes to operate a total of 200 outlets over the next 12 months. compared with the prevalent market rates for the same. with more than 70 per cent of India‘s population concentrated in the rural areas. Indian Oil Corporation‘s Kisan Seva Kendra offerings extend over fuel. ITC has 14 outlets in operation presently and plans to increase the number to 700 over the next 7-10 years.com • Lifespace • i-choose MARKET 24 & OPPORTUNITIES farm produce. and financial services. apart from the conventional retailing services.in • Indiatimes • Futurebazaar. agri-produce. to restaurants etc. fast moving consumer . to banking services. Other examples of players and their services in the rural retail segment are DSCL‘s Hariyali Kisan Bazaar and Indian Oil Corporation‘s Kisan Seva Kendra. Rural hypermarkets are growing at a blistering pace meeting the unique requirements of the rural consumer. One of the key players in the rural retail segment is ITC with its Choupal Saagar initiative.Rura l retai lin g Rural retailing constitutes more than 95 per cent of total retail revenues. The range of services provided by the rural retailers extends from creating a platform to buy and sell • Rediff.com • Ebay. agri-inputs. ITC‘s Choupal Saagar retails products and also acts as a procurement hub for ITC‘s e-choupals where farmers are offered better rates for their agriculture produce. The outlets provide a spectrum of offerings including agronomist-consultations.

340 million of retail revenues. Industry players have aggressive expansion plans in the pipeline. Thereby in 201011. The contribution of affluent households to retail revenues is also estimated to increase to 33 per cent by the said year.5 per cent by 2010-11. The company has a network of over 1400 outlets presently. However.000 million.5 per cent of the national population. The Resp len dent Lu xur y Market Affluent households in India account for just about 4. Reliance Retail and Pantaloon Retail India Ltd. Many international investors are actively pursuing an entry route into India for opportunities in the luxury segment. affluent households are expected to generate retail revenues worth US$ 152. Internationa l luxur y retai lin g bran ds . currently the location of these outlets is primarily limited to five-star hotel mall spaces. encouraged by 30 per cent increase in its India sales in the past year. the affluent households segment contributes to more than 22 per cent of the total retail sales. with investor confidence reinforced by the booming sales in the luxury segment. with limited footfalls and consumer exposure. are expected to undertake more ventures to capture the vast untapped potential in the rural retail segment. The luxury retail segment is hence a substantial opportunity for retail industry players. Hugo Boss is expanding to other metros in the country. However. The two Louis Vuitton stores in Mumbai and Delhi averaged monthly sales of US$ 13 million in 2005-06. Delhi and Mumbai are the prime contributors to the luxury retail revenues and have the highest density of luxury brand outlets in the country.goods and other value added services. translating to US$ 62. The number of affluent households is estimated to increase by 8.

in in dia • BVLGARI • UBL • GUCCI • Cerruti • Swarovski • Omega • Mont Blanc • Hugo Boss • Chanel • Vacheron Constantin • SA • Dior • Vertu • harman kardon • Florsheim • John Balliano • Versace • Rado • Louis Vuitton • Dolce & Gabbana • Denon • Do Daks • Donna Karan • Morgan • Longines • Tiffany & Co. • Canali • Bose • Kisan Sewa Kendra • E-Chaupal • Hariyali RETAIL 25 • Cartier .

with emphasis . Reliance Infotech‘s Adlabs. Construction of new airports and development of metro rail systems equaling premium global standards is opening a new realm of retailing opportunities in these transit points. Shopper‘s Stop‘s Timezone have aggressive expansion plans in the pipeline. The organised entertainment retail revenues grew at an average rate of 30 per cent over 2004-05. The immense potential in the entertainment and leisure segment is reflected by fact that there exist 10 screens per million of population in India as compared to 40 screens in the European market and 117 in the US. a 14 per cent increase over 2004-05. Cas hin g in on the transit Channe ls Infrastructure sector in India is booming with several capacity building measures being undertaken aggressively by the central and state governments. with Indian players investing heavily in this market. and are expected to maintain the same pace in the coming years.• Fendi • Tommy Hilfiger • Prada • Chopard • The Samile Row • Er Manegildo Zegna Leisure an d entertainment market Entertainment retail is redefining Indian lifestyles with the rate of growth in the number of multiplexes and gaming zones matching the growth story of malls and retail space. The total leisure and entertainment revenues were pegged at US$ 8 billion in 2005-06. Airports Authority of India has commenced the upgradation of 9 metro airports and 15 non-metro airports. with retailers exploring the joint venture option with international giants in the sector having a global presence.

the target segment for such SEZs would be the urban population with high-disposable incomes. The joint venture between Shopper‘s Stop and The Nuance Group AG has won the contract for setting up duty-free and duty-paid retailing outlets at the upcoming Bangalore and Hyderabad International Airports. Tourism re late d opportunities With tourists‘ inflow increasing impressively with each passing year. 2007 spread over states and union territories of India .also on development of retail space in the airports. with a percentage of the SEZ area earmarked for retailing in the nonprocessing zone. SEZs offer ample retail opportunities. retailers are in the fray to exploit the commercial potential of the retail space. The Mass Rapid Transit System. With the Delhi Metro Rail Corporation (DMRC) inviting tenders for retail development in the 53 metro stations in operation and 79 stations proposed to come up by 2010 in Delhi. and population in the catchment area. and under construction at other metro cities like Bangalore and Hyderabad is also expected to offer immense retail potential. The size of the area in the retailing space is calculated considering various parameters like the type of SEZ. tourism holds the key to a large retailing Leading Players in Multiplexes Market Operator Multiplexes Screens in 2005-06 . SEZ syner gies Special Economic Zones are government driven initiatives attracting higher investment into India. currently in operation in Delhi. with about 154 Special Economic Zones notified as on Oct 3. IT/ITeS based SEZs offer impressive retailing opportunities. projected size of the residential population in SEZ.

Screens projected for 2010-11 Project Description : Category : MBA Project Report Title : Retail Marketing in India Pages : 100 Project Description : Category : MBA Project Report Title : Retail Marketing in India Pages : 100 .

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