CASE ON :

WHAT LIES IN STORE FOR

THE RETAILING INDUSTRY
IN INDIA?*
What is Retailing
 It’s a final connection in the marketing channel
that brings goods from manufacturer to
consumers…….
 Retailing is the combination of activities involved
in selling consumer goods and services directly to
consumers for their personal or household use
 It is vibrant part of our changing society and a
major source of employment
INDIAN RETAIL MARKET
 Fifth largest retail destination globally.

 Most attractive emerging market for investment.

 13-15% share in GDP (2009) and expected to

touch 22% by the end 2010.

 Only 6% is organized retail market.

Organized
organized
Environment threat and opportunity profile
(ETOP) for a Retail industry in India :
ENVIRONMENTAL NATURE OF IMPACT IMPACT OF EACH
SECTORS SECTOR
The Indian consumers
behavior pattern has
changed. Now the Indian
consumer gets more hefty
pay- packages, is younger, a
large number of women are
ECONOMIC FAVOURABLE working, western influences,
and more disposable income
have opened a lot of
opportunities in Indian
organized retail sector. The
Indian consumer wants to
shop, eat and get
entertainment in one place
and is have given Indian
organized retail sector an
opportunity to grow.
 The Indian government
in 2005 allowed foreign
direct investment (FDI)
in single brand retail to
51%. This have opened
POLITICAL FAVOURABLE up a lot of opportunities
in India organized retail
sector. In fact 325
departmental stores, 300
new malls, and 1500
supermarkets are being
built which shows the
tremendous
opportunities in the
organized retail sector
in India.
 The Indian government
have allowed 51%
foreign direct
investment (FDI) in the
POLITICAL UNFAVOURABLE India retail sector to one
brand shops only. This
have made the entry of
global retail giants to
organized retail sector
in India difficult. This is
a challenge being faced
by the Indian organized
retail sector.
 The biggest challenge
facing the Indian
organized retail sector is
the lack of retail space.
With real estate prices
escalating due to
REGULATORY UNFAVOURABLE increase in demand
from the Indian
organized retail sector,
it is posing a challenge
to its growth. With
Indian retailers having
to shell out more for
retail space it is
effecting there overall
profitability in retail.
 Growth of Retail Companies in
India is still not yet in a
matured stage with great
potentials within this sector still
to be explored. The organized
MARKET FAVOURABLE retailing sector in India is only
3% and is expected to rise to
25- 30% by the year 2010. The
Growth of Retail Companies in
India is most pronounced in the
metro cities of India, however
the smaller towns are also not
lagging behind in this.
 The availability of
supply chain
management, customer
relationship
management &
merchandising software
can help much while
performing activities
TECHNOLOGICAL FAVOURABLE such as ordering &
tracking inventory
items, warehousing,
transportation &
customer profiling. IT is
a tool that has been used
by retailers ranging
from Amazon.com to
eBay to radically change
buying behavior across
the globe.
 The supplier
environment offers the
biggest constraint on the
growth of retailing
SUPPLIER UNFAVOURABLE industry in India.
Reaching India’s
consumers cost
effectively is a
distribution nightmare,
owing to the sheer
geographical size of the
country and the
presence of traditional,
fragmented distribution
& retailing networks &
erratic logistics.
ETOP for Wal-Mart :
'Wal-Mart Stores, Inc. is the world's largest
retailer, with $256.3 billion in sales in the fiscal
year ending Jan. 31, 2004. The company
employs 1.6 million associates worldwide
through more than 3,600 facilities in the
United States and more than 1,570 units.
 Environment threat and opportunity profile
(ETOP) for Wal-Mart :
ENIRONMENTAL NATURE OF IMPACT IMPACT OF EACH SECTOR
SECTORS
The Indian consumers behavior
pattern has changed. Now the
Indian consumer gets more hefty
pay- packages, is younger, a large
ECONOMIC number of women are working,
FAVOURABLE western influences, and more
disposable income have opened a
lot of opportunities in Indian
organized retail sector. The Indian
consumer wants to shop, eat and
get entertainment in one place
and is have given Wal-Mart an
opportunity to grow.
 The Indian government
have allowed 51% foreign
direct investment (FDI) in
the India retail sector to one
brand shops only. This have
made the entry of global
retail giants to organized
UNFAVOURABLE retail sector in India
POLITIC difficult. This is a challenge
being faced by the Wal-
AL Mart in Indian retail sector.
Being a global retailer
means that you are exposed
to political problems in the
countries that you operate
in.
 Being number one
means that you are the
target of competition,
MARKET UNFAVOURABLE locally and globally.
Cut-throat competition
from the 12 million
mom-and-pop stores.
These are easily
accessible and provide
services like free home
delivery and goods at
credit.
 The biggest challenge
facing Wal-Mart in
India is the lack of retail
space. With real estate
prices escalating due to
increase in demand
REGULATORY UNFAVOURABLE from the Indian
organized retail sector,
it is posing a challenge
to its growth.
Estimates and predictions for retail sector:
At present, the industry is estimated to be at more
than US$ 400 billion by a study of McKinsey.
The Economist Intelligence Unit (EIU) estimates
the retail market in India will increase to US$608.9
billion in 2009 from US$394 billion in 2005.
KPMG Report says that the organized retail would
grow at a higher rate than the GDP in the next five
years.
The retail sector would generate employment for
more than 2.5 million people by the year 2010,
predicts an analysis by Ma Foi Management
Consultants Ltd.
 Strengths:
 High brand equity enjoyed by Big Bazaar
 State of the art infrastructure
 A vast variety of stuff available under one roof
 Everyday low prices, which attract customers
 Maximum percent of footfalls converted in sales
 Huge investment capacity
 Biggest value retail chain in India
 It offers a family shopping experience, where entire family can visit together.
 Available facilities such as online booking and delivery of goods
 Weakness:
 Unable to meet store opening targets on time
 Falling revenue per sq ft
 General perception: ‘Low price = Low quality’
 Overcrowded during offers
 Long lines at billing counters which are time consuming
 Limited only to value offering low price products. A no of branded products are still missing
from Big Bazaar’s line of products. E.g. Jockey, Van heusen,
 Opportunity:
 A lot of scope in Indian organized retail as it stands at
approximately 4%.
 Increasing mall culture in India.
 More people these days prefer to visit big stores where they can
find large variety under one roof
 Threats:
 Competition from other value retail chains such as Shoprite,
Reliance (Fresh and trends), Hypercity and D mart.
 Unorganized retail also appears to be a threat to Big Bazaar’s
business. A large population still prefers to visit local convenient
stores for daily purchases
 Changing Government policies
 International players looking to foray India
Some of the players present in the industry:
Archies, Bata India Ltd, Big Bazaar, Crossword,
Ebony Retail Holdings Ltd., Fabmall, Food
Bazaar, Globus Stores Pvt. Ltd., Health and Glow,
Liberty Shoes Ltd., MTR Foods Ltd., Music World
Entertainment Ltd., Pantaloon Retail India Ltd.,
Shoppers Stop, Style SPA Furniture Ltd,
Subhiksha, Titan Industries, Lifestyle, etc.
New entrants entering the market soon will be:
Reliance Retail Ltd, Wal-Mart Stores, Carrefour,
Tesco, Boots Group, etc.
Socio Economic Favorable A lot of scope in Indian
organized retail as it
stands at approximately
5%
family shopping
experience, where entire
family can visit together.
More people these days
prefer to visit big stores
where they can find
large variety of quality
and cheaper products
under one roof
Culture Favourable Increase mall culture in
India

Available facilities such

as online booking and
delivery of goods

Facility of Plastic
Money
Competitors Unfavorable Competition from other
value retail chains such as
Shoprite, Reliance (Fresh
and trends), Hypercity and D
mart.

International players looking

to foray India.

Unorganized retail also

appears to be a threat to Big
Bazaar’s business. A large
population still prefers to
visit local convenient stores
for daily purchases

Biggest value retail chain in

Favourable India
Government:FDI is allowed
only for single brand
retailing in India
Suppliers Favourable Maximum suppliers to
Big Bazaar are very big
players of their
industries so very less
chances of low supply of
products.
can have advantage of
Co-operative marketing
with the suppliers
Customers Favourable Large crowd during
weekends due to which
customers have to wait a
long at POS, this may
change the perception of
consumer about the
timely services.

Huge potential market

as only 5% of Retail
sector is captured by
Organized retailers

High brand equity

enjoyed by Big Bazaar
(customer perception)
International