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. It witnesses tremendous growth with the changing demographics and an improvement in the quality of life of urban people. The growing affluence of India‘s consuming class, the emergence of the new breed of entrepreneurs and a flood of imported products in the food and grocery space, has driven the current retail boom in the domestic market. The concept retail which includes the shopkeeper to customer interaction, has taken many forms and dimensions, from the traditional retail outlet and street local market shops to upscale multi brand outlets, especially stores or departmental stores. 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, Sainsbury and Tesco but at least the winds are blowing in the direction of growth. Hence, focusing on two aspects of retail marketing i.e. Store Retailing and Non-store Retailing. Store Retailing as the departmental store, which is a store or multi brand outlet, offering an array of products in various categories under one roof, trying to cater to not one or two but many segments of the society and Nonstore Retailing as the direct selling, direct marketing, automatic vending. Therefore, this concept of retail marketing through departmental stores, which is coming up in a big way in India was decided to be studied in detail, through an exploratory and conclusive research. 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. The extensive research brought me to conclude that departmental stores are soon emerging on the top priority lists, amongst the shopping spree in Delhi, as they seem to derive immense pleasure of convenience and exposure to variety under one roof, in their extremely busy lives, when they don‘t have time for things. Though some of the customers perceive departmental stores to be expensive and only high income category‘s cup of tea, the stores make constant efforts to induce them to at least visit the store at once during the sale period, or discount offers. Most of these stores believe in creating not just a marketing activity with its customers, but rather favor relationship building with him so as to convert first time customers into a client. Hence this document entails me through these aspects in great detail, helping me to understand the concept of retail marketing through departmental stores in Delhi.

1.1 Introduction to the Project Report : The word ‗retail‘ means to sell or be sold directly to individuals. Retail is India‘s largest industry, and arguably the one with the most impact on the population. It is the country‘s largest source of employment after agriculture, has the deepest penetration to rural India, and generates more than 10percent of India‘s GDP. However, retailing in India has so far, been mostly in the hand of small disorganized entrepreneurs. It is also India‘s least evolved industries. In fact, it is not even considered a real industry. The industry suffers from lack of management talent, poor access to capital, unfavorable regulation and denial of access to best practices. 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

B2C service providers. presents a vast opportunity for a variety of businesses . China. Retail boom is unabating.2 Overview of the Global Retail Industry Retail: world largest industry Retail. However. It is also home to a number of the world‘s largest enterprises. compared to India‘s current levels of 2 percent. The Indian Retailing Industry stands poised to take off into the 21st century. and FMCG companies who can add to their offers by partnering this revolution. Though India has a per capital income of $ 400. The liberalization of the consumer goods industry. 1. organized retail already has a 40 percent share of the market. 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. organized retailing begins to takeover. In many of these countries. Backed by changing consumer trends and metrics. Over 50 of the Fortune 500 companies. new businesses with sales of 1billion – 2 billion US $ will be created in grocery and of 250million . electronics. new opportunities and increasing wealth. As India goes through this transformation. a national mindset which favored denial over indulgence. is at the cutting edge of technology. visual merchandising logistics and communications. The next driver is availability of variety of goods. with total sales of $ 6.1 trillion. The third one is ―sense of awareness‖. This transformation will also impact the supply chain in agriculture. initiated in the mid-80s and accelerated through the 90s has begun to impact the structure and conduct of the retail industry. It is believed that when a country‘s per capita income reaches the level of $1. and around 25 of the Asian top 500 companies. In other developing economies. using the global industry as the backdrop. the right time for organized retailing to click in India has come. and music. Retail: Largest private industry in the world economy . Malaysia. Europe went through this phase of retail revolution about 40-50 years ago.real estate. are retailers. this transformation has already begun. with a per capita income of $650-700 per annum. It is one of the fastest growing sectors in the nation that caters to the world's second largest consumer market. Compare this with the global retail industry. The middle class drives retailing anywhere in the world and this segment should have reasonable income. 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. is the world‘s largest private industry ahead of financial industries $ 5. The industry accounts for over 8 percent of the GDP in western economies.500million US $ in apparel.6 trillion. and which leverages scale and scope to offer value-added services to its customers.200 per annum. This does strengthen the belief that probably. Taiwan and Korea have gone through similar phases. In the last 10 years. all Southeast Asian countries like Indonesia. Smaller but still interesting opportunities will be created in other sectors like books. the tax collections from trade and the way people shop. products and brands. India has five million retailers with a business volume of $180 million growing at 5 to 7 per cent a year. liberalization in mindsets driven by media. with more organized retailers starting to make an impact. store design & operations. is going through the same phase what India is also facing now. only recently has there been an awakening in this sector. 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. retailing in India.the consumer goods industry. India has some 12 million retail outlets. on the basis of purchasing power parity (PPP) it has already hit the $1200 level. which is one of the world‘s largest organized employers.

Each of these formats has been driven by marketer‘s need to offer relevant. The basic department stores and co-operatives of the early 20th Century have given way to mass merchandisers. China 8percent. India 10 percent and Brazil 6percent. and its households. discounters and convenience stores. but are also entering large new areas of business. It will change India's cities. Poland 12 percent.6 Existing Companies in the organized sector Food Bazaar (Pantaloon) Food World Subhishka. the advantage is driven by the marketers‘ ability to provide better products in a comfortable ambience at affordable prices. Fitch estimates the current share of organized retail to grow from 2percent presently to around 15 to 20 percent by 2010. Further. distinctive and economic propositions to an evolving consumer base. retail formats have changed radically. electronics are examples of categories that compete on the strength of better pricing. the list of India's top 10 retailers will have at least 5 Indian corporate. over the years to include fuel retail. Over the last few decades. Watches Home Furnishing Foot wear Beauty Care US $ billion 130 12 7 5 1. warehouse clubs. In these cases sourcing capability has to be backed by strong design capability and store management. retail is also one of the world‘s largest employers.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. Chapter 2 : THE RETAIL MARKETING REVOLUTION By 2010.7 3. The recent evolution of the Internet has helped further broaden the scope of operations of large retailers. The Indian . New geographies will help them sustain topline growth as well as permit global sourcing. Woodland VLCC. This localized nature of the industry is changing as retailers face low rates of growth and threatened profitability at home. Pantaloon Westside. most retailers have had very localized operations. Significantly. In apparel. 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. This has put them in a position where they are not only beginning to capture growth from geographical expansion. category killers. Table 1: Retail Consumption areas Food Retailing Clothing & Apparel Jewelry. home furnishings and furniture. Retail Marketing will go through a tremendous change in India this millennium. Titan. Arcus (Pantaloon) Bata. Factors such as scale in sourcing. accounting for instance 16 percent of the US workforce. which in turn is driven by superior sourcing and merchandising and cost-efficient operations. car retail. Shoppers Stop Tanishq. hypermarkets. Home Depot and Kingfisher are benchmark retailers in these fields. Profits in retail have steadily been rising and have generated 18 percent shareholder returns between 1994 and 1999. Gold Bazaar (Pantaloon) Home Store. Many of them have expanded their offering. Global retailers have also reached a position of strength that enables their brand to be leveraged across a wide range of services. Wal-Mart. operational effectiveness and ambience have driven the spread of organized retail. its people. convenience services and personal financial services. Grocery. Health & Glow Source: economic time‘s industry report Traditionally. merchandising.

In contrast. and. thus. The laws governing retail real estate should also be looked into. Bigjo‘s. Large-format retailing started with outlets like Vivek's and Nalli's in Chennai and Kidskemp in Bangalore. it can supply to a retail-chain that has the resources to create a brand of its own. and forging relationships with organized retail. It is. or in shops during jaunts abroad. Standard. This is what we have to focus on in this millennium. Customerexpectations zoomed . and keeping in mind the increase in the number of nuclear families. The only consideration is the price. The Home Store. this may. The last decade of the millennium witnessed the emergence of lifestyle brands and the plastic culture. whose participation is essential in making retail a boom-sector in this millennium. and there is a huge opportunity for retail institutes in India. Liberalization and increasing awareness of the world around us created the Indian yuppie. strange that there have. with manufacturerretail brands like Bata. not the usage pattern or the nature of the product that is to be sold. This is evident from the experiences of retail-outlets like Shoppers' Stop. India is too large a market to be ignored by transnational retail giants. This will also help people enjoy their evenings. Already. franchised or otherwise. In a country as big as India and with as many states as ours. and Titan. who aspired to own everything we saw on TV. indeed. the right shopping experience does induce Indian consumers to spend more. However. And even as these developments were taking place. out at malls. The third constituency that has a role to play in the fortunes of organized retail this century is the educationsector. From the manufacturing company's perspective. retailing will present an attractive opportunity. the focus should be on producing good products. mall-management is treated as a specialized discipline of retail management. have visited India and studied the Indian market. the Indian consumer became more mature. the development of organized retail is dependent on the efforts of several agencies and institutions. The second group. the shopper's convenience is not taken into consideration while the property is constructed. the birth of organized retail will also engender the creation of private labels and store-brands. A glimpse of the last 2 decades of the previous century proves illuminating. Thus. Manufacturers need to draw a plan of producing quality products and tie in with retailers. this will also decongest the city center and facilitate the development of suburbs. Most properties are developed without considering the end user. Food World. Crosswords. The relevant rules should also be amended to allow retail-stores to operate 7 days a week. so that it is possible to develop retail-estate beyond the city-limits. make sense. Music World. Ebony. at another level. notably Chinese retailers. Vijay Store and Janaki Das & Sons. been few efforts to present the product in the right kind of environment in India. several transnational retail giants have established their presence in India. internationally. Westside etc. Given the hours most urban consumers keep at work. 12 hours a day. Retail is a people-intensive business. others. Indeed. The first among these is the government. we sometimes find high-ceilinged offices and low-ceilinged retail stores. if a manufacturing company lacks the resources to build a brand. Indeed. Bombay Dyeing. Saboos. For manufacturers. Another area of concern is the way in which developers sell their space. There's a lot at stake here: even so early in the 21st Century. New lifestyle brands offered traditional retail-outlets an opportunity to convert themselves into exclusive stores. Often. therefore.consumer is reportedly the largest spender in Singapore and London. so far. Organized retail allows them to expose their products to a large volume of customers in an environment conducive to buying. 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. Apart from providing entertainment and retail opportunities. comprises developers.

retailers have to deal with a customer who is extremely demanding. (USA) Target Corporation (USA) Source: economic times industry report Studies by consulting firms like A. but what we emphasized upon is defined as follows: No of stores owned 4178 8130 3445 1134 7150 2169 2105 2231 2512 1307 Sales in US$ Millions $180. and. In the US.T. Any organization selling to final consumers -. Drawn by the magic number of Rs 1. (USA) Royal Ahold (Netherlands) Metro AG (Germany) Kmart Corporation (USA) Sears. several companies from the organized sector have also jumped into the fray.Thus.189 $37. And retailers. or in the consumer‘s home). KSA Technopak.000 $45. most emphasize retail marketing as the business activity of selling goods or services to the final consumer. in turn. India will benefit from these developments because of increased consumption through retailing and the corresponding increase in employment created by retailing. manufacturers have to focus on product quality and brand building.028 $36.whether a manufacturer. at the beginning of the New Millennium. like in the last. 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. or Internet) or where they are sold (in a store.787 $61. customers will want to spend time with their family and friends. (USA) Albertson's. Inc. on the street. Today. They may like to visit malls on weekends where everything will be available under one roof. in India have indicated a huge potential for retailing in the country. Inc. Kearney.1 Retail Marketing Retail Marketing includes all the activities involved in selling goods or services directly to final consumes for personal. and McKinsey & Co. it is Wal-Mart with a turnover in excess of $ 120 billion. it is Karstadt with a turnover in excess of dm 10 billion. retailing is a large business. 2. In this millennium. non-business use.726 $36.823 $36. (USA) The Home Depot. or retailer – is doing retailing.047 $49. (USA) Carrefour Group (France) The Kroger Co. To cope with the new customer.362 . and the entire shopping experience. and the smile of the counter-person to that decorating the face of a Jet Airways' crew member. In the UK. Vending Machine. Internationally.738 $45. Table 2: Top 10 Retailers Worldwide Rank 1 2 3 4 5 6 7 8 9 10 Retailer Wall-Mart Stores Inc. you find at least one retailer amongst the top 10 companies in every country.729 $44. wholesaler. It does not matter how the goods or services are sold (by Person. 000 crore that is expected to be the size of the retail industry by the end of the first decade of this millennium. Mail. 60. it is Marks and Spencer's with close to £ 10 billion. Roebuck and Co. have to focus on the quality of the shopping experience. but also in terms of service. There are many approaches to understanding and defining retail marketing. Telephone. Not just in terms of the product-quality. in Germany.

2 Types OF Retail Marketing . its share of the market. Normally these stages are there in the life of a retail institution. These stores feature art galleries. For instance. the retailer starts expanding. In the vulnerability stage. 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. These are:    Innovation (Entry) Trading Up Vulnerability. A retailing mix is the package of goods and services that store offers to the customers for sale. and children‘s playgrounds. this is due to increase in the prices by the retailer. I have already explained the three stages in life of a retail institution. The maximum satisfaction to the customers is achieved by a proper blend of all three. Retailing mix. depends on customers‘ reaction to the retailing mix which influences the profits of the store. This policy is called retailing mix. With all these. 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. therefore. A retailer is at the end of the distributive channel. But all these may not be necessarily there in every retail institution. a new retailer enters with new price appeal. There are store retailers. Consumers today can shop for goods and services in a wide variety of stores. with the help of a few personnel. With that end in view he has to pursue a policy to achieve his objective. there is a gap in the market leaving some space for the new players to come in. which are defined as follows: 1. This brings to broadly identify and categorize the types of retail marketing. and improved interiors. its image and status and finally its survival. The success of the retail stores. He provides goods and service to the ultimate consumers. In the trading up stage. a communication mix and a distribution mix. This he does through his small organization. Store Retailing Non store Retailing 2. A retailer or retail store is any business enterprise. which means that it offers products at low prices so as to get a competitive edge over its competitors.―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. whose sales volume comes primarily from retailing. Sparton Stores & Limited services. and retail organizations. The best-known type of retailer is the department store. Retail organizations exhibit great variety and new forms keep emerging. limiting product offerings. In the entry stage. it starts charging a bit higher prices. It expands in terms of product offering. A retailer deals in an assortment of goods to cater to the needs of consumers. 2. Its monopoly power over the others is its price advantage. any retail institution targeting the upper class may start itself with a large variety & high price. There are three main phases in the life of a retailing institution. better services. His objective is to make maximum profit out of his enterprise. its volume of turnover. non-store retailers. 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. cooking classes. It is the combination of all efforts planned by the retailer and embodies the adjustment of the retail store to the market environment. Japanese department stores such as Takashimaya and Mitsukoshi attract millions of shoppers each year.

Discount Store These stores sell standard merchandise at lower prices by accepting lower margins and selling higher volumes. electronics stores. They have improved decor. low margin. In a departmental store a consumer can buy variety of goods under one shed. added new lines and services. home furnishings. The use of occasional discounts or specials does not make a discount store. Off . and bookstores. and carrying a limited line of high turnover convenience products at slightly higher prices than departmental stores. power tools. electronic appliances and other household goods. self service operations designed to serve total needs for food. These include jewelry. This target at the persons belonging to the lower income group. high volume. The defects are normally minor. low cost. These stores are usually expensive and satisfy the needs of selected consumers who have liking or preference for exclusive things.Price Retailer These stores sell goods at low price with lower margins & higher volumes. 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. sporting goods stores. fast-moving. furniture stores. Convenience Stores These are relatively small stores located near residential area. toys. kids section. not inferior goods. Supermarket These stores are relatively large. luggage small appliances. discount stores have moved beyond general merchandise into specialty merchandise stores. laundry and household maintenance products. These stores sell goods with deteriorated quality. Catalog . Many such stores also have added takeout sandwiches. and sporting goods. Not only that. coffee and pastries. cameras. In recent years. though some have a collection of imported goods aimed to target the younger generation. Departmental Store These stores are usually built in large area and keep variety of goods under one shed. offering mostly national brands. brand-name goods at discount prices.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. Supermarkets earn an operating profit of only 1 percent on sales and 10percent on net worth.price retailer. The different types of store retailing are given below: Specialty Stores These stores focus on leisure tastes of different individuals. such as discount sporting goods stores. It is usually divided into different sections like clothing. The company owned showroom selling the seconds products is a typical example of off . A true discount store regularly sells its merchandise at lower prices. Catalog Showroom Catalog showrooms generally sell a broad selection of high-markup. many discount retailers have ―traded up‖. florists and bookstores. They have a narrow product line with deep assortment such as apparel stores. open for long hours seven days a week.

Low prices. Shopping Malls An enclosure having different formats of in-store retailers. Variety of shops available close to each other. all under one roof. generally located in as cafeterias. house wares. Discount Stores Stores offering discounts on the Low prices. the number of companies with supermarket chains was less than 10. even among retail enterprises that hire workers the bulk of them hire less than 3 workers . different departments.showrooms make their money by cutting costs and margins to provide low prices that will attract a higher volume of sales. varied consumer needs. Specialty Stores Focus on a specific consumer Greater choice to the need. etc. Source: India info line . This epithet has its roots in the huge number of retail enterprises in the country totaling 12 million. furniture. 2. extended operating hours. appliances. Catalog showrooms have been struggling in recent years to hold their share of the retail market. There are only 14 companies that run departmental stores and mere two with hypermarket operations. Hyper-mart Larger than a Supermarket. While the number of businesses operating supermarkets is higher ( 425 in 2004 ) most of these had only 1 outlet. toys. comparison available. Supermarkets Extremely large self-services One stop shop catering to retail outlets. RETAIL SCENE IN INDIA India has some sometimes been called a nation of shopkeepers. carry most of the brands consumer. between brands possible Department Stores Large stores having a wide variety One stop shop catering to of products. retail price through selling high volumes and reaping the economies of scale. quieter parts of the city Convenience Stores Small self-service formats located Convenient location and in crowded urban areas. such as clothing. about 78 percent of these are small family owned businesses utilizing only household labour. product quality. Certified manufacturer. organized into varied consumer needs.3 Major Formats of Retailing Major formats of In-Store Retailing have been listed in Table given below: Table 3: Format Branded Stores Description The Value Proposition Exclusive showrooms either Complete range available owned or franchised out by a for a given brand. vast choice sometimes with a warehouse available including services appearance.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.

It is also is known as cash and-carry or hypermarket. paperbacks. Now Pantaloon is following suit. food snacks. and even fishing worms). film. including telemarketing. including impulse goods with high convenience value (cigarettes. cosmetics. hot soups and food.Non-store Retailing It is another type of retail marketing. or at home sales parties. Automatic Vending Automatic vending has been applied to a considerable variety of merchandise. Two categories of customers visit these retail outlets. candy.Specialty retailing  Tanishq has very successfully pioneered a very high quality organized retail business in fine jewellery. RPG group has set up the first 'discounter' in Hyderabad called the Giant. with over 600 companies selling door to door. and electronic shopping. newspaper. . T-shirts.Department store format Westside .   Shoppers' Stop . insurance policies. hot beverages) and other products (hosiery. who in turn recruit and sell to sub distributors. 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. 2. 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. record albums.Emulated the Marks & Spencer model of 100 per cent private label.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. television direct response marketing. soft drinks. usually in customer homes. very good value for money merchandise for the entire family  Giant and Big Bazaar . Shopping experience in terms of ambience or the service is not the mainstay here. These formats usually work on bulk buying and bulk selling. who eventually recruit others to sell their products. A variant of direct selling is called multilevel marketing. office to office. 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.

to increase reach and business from their stores. Retailing in India is still evolving and the sector is witnessing a series of experiments across the country with new formats being tested out. smaller outlets.5 Trends in Retail Marketing At this point.000 to $ 40. 2. The small retailer. FoodWorld is experimenting with a format of one-fourth the normal size called FoodWorld Express. the old ones tweaked around or just discarded.000 in December. showcase seasonal merchandise. Crossword bookstores are experimenting with Crossword Corner. New retail forms and combinations continually emerge.1. They provide a way for malls to bring in more mom-and-pop retailers. In India the trends are mainly in three sectors. These sectors are: Trends in retail marketing 1. Today three-fourths of the nation‘s major malls have carts selling everything from casual wear to condoms.000 a month in sales and can easily top $ 70. and prospect for permanent tenants. . Successful carts average $ 30. a customer of Giant could be a dhabawala who needs to buy edible oil in bulk. food retail Hypermarket Considering moving to self service Suburban discount store Hypermarket. Even old retail forms are reappearing: In 1992 Shawna and Randy Heniger introduced peddler‘s carts in the Mall of America. With an average start-up cost of only $3. push carts help budding entrepreneurs test their retailing dreams without a major cash investment. Bookstores feature coffee shops. 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. Gas stations include food stores that make more profit than the gas operation. I can summarize the main development retailers and manufacturers need to take into account as they plan their competitive strategies. The regular consumer who spends on big volumes (large pack sizes) because of a price advantage per unit.000. 2. For example. Some of these are listed in Table below. 2. Bank branches and ATM counters have opened in supermarkets. 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. They are rapidly copied and quickly lose their novelty. adding food retail Corner shops Quasi-mall. New retail forms are facing a shorter life span.

Discount 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. They are adopting checkout scanning systems. retail organizations are increasingly designing and launching new store formats targeted to different lifestyle groups. these giant retailers are able to offer strong price savings. Because of their bulk buying power. And Barnes & Noble turned a oncestaid bookstore industry into a fun-filled village green. Competition today is increasingly intertype. catalog showrooms. Denver‘s two Tattered Covered bookstores host more than 250 events annually. Retailers are using computers to produce better forecasts. The Discovery Zone. how to price and promote. consumers receive sales offers in the mail and over television. offers indoor spaces where kids can go wild without breaking anything and stressed-out parents can exchange stories. 8. operating either as mass merchandisers or as specialty retailers. Retailers with unique formats and strong brand positioning are increasingly moving into other countries. 6. 5. control inventory costs. when and how to ship. such as department stores. In many locations. a chain of children‘s play spaces. They are not sticking to one format. chains get more favorable terms than independents. 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. and smaller retailers. Without proper retailing the companies can't do their business. such as coffeehouses. There are also the now-ubiquitous coffeehouses and espresso bars. from folk dancing to women‘s meetings. In the book selling business. 9. Retail is derived from the French word retailer. Marketing channels are increasingly becoming professionally managed and programmed. and even how to reorganize and improve production and management. Today‘s retailers are moving toward one of two poles. computers. tea shops. Many retailers are even telling the most powerful manufacturers what to make.500 in 1989 to a forecasted 13. 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. Manufacturers have little choice: They stand to lose 10 to 30 percent of the market if they refuse. McDonald‘s.000 by 2001. and the chains‘ large square footage allows them to put in cafes and bathrooms. whose numbers have grown from 2. In the process. . The Limited. they are crowding out smaller manufacturers. There has been a marked rise in establishments that provide a place for people to congregate. The competition between chain superstores and smaller independently owned stores has become particularly heated. Many more Indian retailers are actively pursuing overseas markets to boost profits. 7. the arrival of a Barnes & Noble superstore or Borders Books and Music usually puts smaller bookstores out of business. order electronically from suppliers. and brew pubs. Many small independent retailers thrive by knowing their customers better and providing them with more personal service. and department stores all compete for the same consumers. and improved merchandisehandling systems. who simply do not have the budget of the buying power to compete. and telephones. juice bars. Gap. Yet the news is not all bad for smaller companies. 4. who become dependent on one large retailer and are therefore extremely vulnerable. The electronic age has significantly increased the growth of non store retailing.3. but are moving into a mix of retail formats. to which they can immediately respond by calling a toll-free number or via computer. the arrival of a superstore has forced nearby independents out of business. such as Starbucks. or between different types of store outlets. and Toys ―R‖ Us have become globally prominent as a result of their great marketing prowess. Technology is becoming critical as a competitive tool. Superpower retailers are emerging. meaning to cut a piece off or to break bulk. send e-mail between stores. bookshops. Through their superior information systems and buying power. Retailing is the process of selling goods in small quantities to the public and is not meant for resale. electronic funds transfer. and even sell to customers within stores.

Besides this there is other reasons too. higher international travel by Indian population and increasing media penetration has raised aspiration levels of the population. many players have jumped into the fray and many are waiting for the right opportunity to enter it. FDI in retailing is not allowed. increasing urbanization. Retailing is not considered as a business or industry by the government. There are a number of reasons behind this fragmented retail market. increasing number of working women. several structural and demographic changes that are taking place are helping the industry to grow. Subhiksha. Pantaloon. India has close to 54percent of population below the age of 25. Restrictions on intra-state good movement. which translates into higher prospects for increased consumption levels in the future. But in India the three layered system of distributor. Wholesalers in turn can either directly sell in the market or can supply to retailers. In India the process of buying and selling at these unorganized retail outlets.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. 3. the growth in organized retail was very . Poor infrastructure facilities like roads etc. Finally. Today in India we have more than 12 million retail outlets and most of then are family run and locally owned. Increasing literacy levels. Expensive supply chain. There are very few nationally present retail stores. But slowly with increasing influence of media and urbanization the market is shifting towards organized segment. In this system the company operating on all India basis appoints hundreds of distributors across the country that supplies to various retailers and wholesalers. Notable among the early entrants were players like Shoppers Stop. Savings focused and less indulgence mindset. which led to stifling of growth of organized segment of retailing sector and which instead led to highly fragmented market. No exposure to media. 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. Hitherto none of the business schools in India were offering specialized courses on retailing. forms the backbone of the front-end logistics of most of the consumer-good companies. Ebony. resulting in demand for better shopping experience and larger variety of goods. Initially. wholesaler and retailer. The current retailing system prevalent across the country is highly fragmented and unorganized. interest rates have also declined in the past few years further propelling the consumption demand. Seeing the huge market size of retail business in the country and the current level of organized segment. Low per capita income. High import duties on imported goods. The GDP has grown by 6. is highly characterized by bargaining and negotiations. etc.1 Retailing in 1990s On account of the liberalization drive in the 1990s. Some of the major reasons being:             Poverty and lower literacy levels.6percent in the last decade resulting in increased income levels and higher purchasing power for the population. These factors were the key drivers for the retail wave in the country. Foodworld. High taxes.

Giant hypermarkets.Chain of departmental stores Haiko supermarket. DLF malls Wills Sport – Chain of apparel stored.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.chain of department stores Foodworld supermarkets. the organized retail industry has established firm roots and is beginning to grow.Real Estate Developer Tata – Diversified Business House DS Group . Jaipur and Kolkata is evidence of the fact that organized retailing in India has emerged from its southern bastion. and growth of the industry remained slow. DLF – Real Estate Developer ITC . Loft shoe stores and Hakone mall. 3.Real Estate Developer RPG – Diversified Business House Retail Business Globus – Chain of departmental stores Shopper‘s Stop . Chandigarh. With the increasing number of nuclear families. 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. working women. The worst years for the industry were 2000 and 2001. as the players were lower down on the learning curve many faltered in their models. with south India holding its ground as the pioneer in organized retail growth. had a direct impact on the performance of the industry. It now appears the efforts and learning‘s of the players in the last decade are beginning to pay off. on account of the low cost of real estate. which reduced customer confidence and spending. Health & Glow beauty and health stores. The retailing boom is being driven by increased expectations as well as changing shopping behavior of the urban Indian consumer.2 Present Retail Scenario In India       Retail experts find Indian industry promising Retail sales to touch Rs. Westside – chain of department stores Ebony .Real Estate Developer Hiranandani . The industry recovered starting 2002. The Indian retail industry can no longer be called nascent. real estate developers have been the major players in the industry (see Table).slow and concentrated mainly in metros. The spread of super stores to the northern cities such as Delhi. greater work pressure and .Diversified Business House Source: Fitch In the early 1990s. as the stock market downturn. The second half of 1990s saw several players making losses and exiting from the business. Table 5: Sponsors Group Rajan Raheja – Real Estate Developer K. 30. Raheja .

According to market estimates. organized retailing is focusing on only SEC-A cities. other segments like food and groceries. The share of organized sector in total retail sales will grow from one per cent now to six per cent by 2005. So. Mumbai Rate / Sq. consumer durables and even books and music have witnessed the emergence of organized players in large cities in South India. Hyderabad and Bangalore. India‘s 23 largest cities. which has brought down the break-even levels of the retail projects. Mumbai Mulund. Mumbai Andheri. ft. Mumbai Thane. And. 225-250 175-200 75-90 75-90 65-85 60-80 55-75 . consumers are looking for convenience. while the top six would still be the growth centers for consumer durables. Mall Mania: The Developing Mall Culture in India Modern malls made their entry into India in the late 1990s. Table 6: Mall Development in India Mall Crossroads Ansals Nirmal Lifestyle Runweals Mall Karnavat Mall Raheja Mind space Jog‘s Mall Location Tardeo. South India. Mumbai Malad. With this. ft. time to tap the relatively smaller cities. There could be variations in growth patterns in different segments. of which 10 million sq. which will increase their efficiencies. believes KSA. By 2005. While garment stores have been around for sometime. rentals for retail properties have shown a marked decline.increased commuting time. By early 2001. Mumbai South Ex. of mall space is being developed across several cities in the country. The spread of organized retailing is unlikely to be a national phenomenon yet. 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. For the Rs. 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. This appears to be the case so far. is expected to be operational by end of 2003 (see Table below). That is where a large portion of the country's urban population exists. although improvements in the supply chain are yet to fully match with consumer expectations.While projections can be slippery. ft. where there already exists a good retail network. KSA projects the top six cities will account for 66 per cent of total organized retailing and the next four for 20 per cent. longer hours and multiplicity of choice. 5000-crore organized retail industry it is. The second half of the top 10 cities will provide large growth for food and groceries. Delhi Mulund. perhaps. we have a situation where both demand and supply side dynamics are fuelling the growth of organized retailing in India. close to 12 million sq. KSA says the top 10 cities provide 94 per cent of organized retail sales in India. The lack of trained manpower or alternatively the tremendous scope the sector has to provide employment is another issue. convenience is defined as having everything under one roof. On the supply side. According to KSA. The future growth need not necessarily come only from the big metros. Moreover. The fact that big Indian retail chains are moving into places like Indore or Chandigarh is an important indicator of future growth. several mall projects were announced. retailers would now have access to retail-specific properties. particularly Chennai. Today 82 per cent of organized retailing comes from the top six cities and 12 per cent from the next four. with the establishment of Crossroads in Mumbai and Ansals Plaza in Delhi. hard facts point to exciting growth ahead for this sector. the current inefficient supply chain in India.

Mumbai & Leela. The Indian mall cannot offer too many choices in terms of brands. developing a very large mall can never be sustainable. Crossroads in Mumbai. Mumbai 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. By the end of 2004. For example. Even the 26 malls that are being planned are likely to measure between 50. close to 40 lakh square feet of retail space will be developed. Mumbai East Delhi Gurgaon Gurgaon Gurgaon Noida KolKotta KolKotta Kanpur Baroda Bangalore Chennai Lower Parel. Nasik and Jaipur Malls Hyatt. Most players have started operating . can be sustained. that number jumped to many. Phoenix Malls Borevali. there were only few international style shopping malls in India --Spencer in Chennai. Many old-time corporates are seriously considering using their idle assets. like Shopper's City in Kolkata or the Esplanade Mall at Kochi.000 sq ft and 2 lakh sq ft. major players with a cumulative investment of Rs 375 crore are set to change cityscapes across India. especially when there is opportunity here.000 sq. this will rise to 70-lakh sq ft. It is perhaps the best way to use an idle real estate asset.000 sq ft.. the industry is witnessing the development of region-specific formats. 60 per sq. Ansals Plaza in New Delhi and Sriram‘s Arcade in Kolkata. A study on consumer outlook suggests that over 80 percent of consumers want a wide range of products at hand while shopping. source: Chesterten Meghraj. It looks like a virtual stampede. ft.Cable Corporation Ansals Sahara MGF Malls – Metroplitian & Plaza DLF Shipra Forum City Center Rave 3 Inox Forum Spencers Plaza Phase III Indore. Spencer is by far the largest mall in India . With organized retail penetrating into B class towns. In the next one year. in departmental store format. Emergence of Region-Specific Formats For the first time in 10 years. the 4-million sq ft mega mall in Malaysia. sizes. while most A class cities and metros have larger stores of 50. consumers want more variety before making their purchase decision. In the US and South-East Asia. stores in B class towns have stabilized in the 25. ft. Industry Reports Till some time back. The limited kitty of brands has yet another significant knock on effect on the typical size of Indian malls. As the retail industry evolves. In three years. This signifies that people are finally ready for multi-option complexes. So. retailers have started differentiating in the sizes and formats of stores.000 plus sq.000-35. It makes sense for landowners to develop it and keep the returns rather than sell it outright or even lease it. occupies 7 lakh sq ft and even that is dwarfed by Asia's largest mall. There's a flip side though -malls even as small as 80. ft. malls are as large as 50 lakh sq ft.

South Africa Nanz. Germany Marks & Spencer. the items in the cart are hit with laser beams and scanned. Dubai Metro. Germany Shoprite. are examples of this format. Table 7: International players International Players Landmarc Group. technology evolved rapidly to support this growth. are now emerging as major competitors to both unorganized and organized retailers. 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. despite the absence of favorable government policy for foreign players (see Table below). promoted by the RPG Group. Big Bazaar. which has helped them to standardize the merchandise offering across the chain. Spain McDonalds. USA Dominos USA Tricon Restaurant. Hypermarket Supermarket Apparel Retailer Apparel Retailer Food Retailer Food Retailer Food Retailer Chapter 4 : INFORMATION TECHNOLOGY IN RETAIL Over the years as the consumer demand increased and the retailers geared up to meet this increase. All that the consumer has to do is to pay for the goods. 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. 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. Entry of International Players A large number of international retailers have evinced interest in India. promoted by Pantaloon and Giant. UK Mango. USA Source: Industry Reports Retail Ventures In India Lifestyle Chain of Departmental Stores Hypermarket Supermarket. Payment . These formats span across the entire range of merchandise categories. In a matter of seconds. popularly known as hypermarkets.these two formats across various cities. Emergence of Discount Formats Larger discount formats. 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.

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 retailer voids it and hands it back to the consumer along with a receipt. a recent development in this area. Operation support systems ERP System Various ERP vendors have developed retail-specific systems which help in integrating all the functions from warehousing to distribution. removing the need of a consumer physically visiting the store. allows the retailers to study the purchase behavior of consumers in detail and grow the value of individual consumers to their businesses. front and back office store systems and merchandising. Bann. Advanced Planning and Scheduling Systems APS systems can provide improved control across the supply chain. These APS packages complement existing (but often limited) ERP packages. getting his supplies on time. distributors and retailers and considering APS packages such as those from i2. which makes the process very fast. They enable consolidation of activities such as long term budgeting. weekly factory scheduling and daily distribution scheduling into one overall planning process using a single set of data. Manugistics. 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. preventing stock-outs and thus reducing his costs. An integrated supply chain helps the retailer in maintaining his stocks. along with the various available CRM (Customer Relationship Management) Systems. Mercial incs and Sterling-Douglas. mail order and the Internet has provided retailers with real access to consumer data. The SPACEMAN Store Suit from AC Nielsen and Modacad are example of products helping in modeling a retail store design. processes a cheque electronically by transmitting transaction information to the retailer and consumer's bank. Data warehousing & mining technologies offers retailers the tools they need to make sense of their consumer data and apply it to business.Payment through credit cards has become quite widespread and this enables a fast and easy payment process. Leading manufactures. Internet Internet is also rapidly evolving as a customer interface. . while servicing the customer better. all the way from raw material suppliers right through to the retail shelf. having digitally captured and stored and image of the cheque. This. Today. Electronic cheque conversion. Rather than manually process a cheque. A larger number of visual merchandising tools are available to him to evaluate the impact of his stacking options. software packages are helping retailers not only in their locational decisions but in decisions regarding store sizing and floor-spaces as well. monthly forecasting. CRM Systems The rise of loyalty programs.

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

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