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A kirana of ones own By Bidya Sapam September 21, 2012

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Birla | FDI | kirana | mamata banerjee | More | Wal-Mart

Indias kiranas, or small general stores, fear that the countrys decision to allow Wal-Mart and other foreign companies to invest in grocery stores and other kinds of retailers will hurt their businesses.

They should go to Bangalore and talk to Nandini. She might brighten their mood.

Nandini, who lives in Bangalores Indiranagar neighbourhood, was at Aditya Birla Groups More retail store, eyeing the detergents when I interviewed her about the new rules on foreign direct investment, or FDI.

Things here are more attractive, she said. You can see more options, but for my daily chores I always run in to our local shop nearby.

Many Indians find it more convenient to call upon their nearest kirana uncles rather than rushing to a posh housing development to buy rice or noodles at the Big Bazaar or Star Bazaar.

Fear that the kiranas and other homegrown retailers will suffer at the expense of big, foreign investors exploiting India forced a large nationwide strike this week. The move, aimed at resuscitating Indias economy, also was one of the reasons that the coalition government that rules India just lost one of its main allies, Mamata Banerjees Trinamool Congress.

They shouldnt worry, experts said.

Local shops have co-existed with the organised retailers. They are now already selling private labels of these retail chains, said Ernst & Young retail and consumer partner Paresh Parekh. India is a big market. There is room for everyone.

India retail is a $435 billion business, according to a study by global consulting firm A T Kearney and cited by Macquarie Equities Research (Correction: Because of an editing error, we had the names in the wrong order). Modern trade accounts only for 7 percent of that, according to the report. While that could rise to 20 percent by 2020 because of the new investment rules, kiranas might benefit from difficulties that the big companies have in retail: poor infrastructure, high real estate costs, inefficient supply routes, difficult tax laws and rigid labour rules.

Chennai-based Subhiksha which ran around 1600 outlets selling groceries and medicines to mobile phones across the country, shut down in 2007, primarily because of a cash crunch. Vishal Retail went bust after several attempts to revive itself. According to news reports, Kishore Biyanis Future Group, which runs Big Bazaar, Food Bazaar and Pantaloon retail stores among others, is sitting on a debt of more than 60 billion rupees (about $1.13 billion). Aditya Birla Group reportedly lost 4.23 billion rupees ($79.4 million) last year.

While much-needed capital to fund their expansion plans is likely to come through foreign investment, the Macquarie report said opposition from some several state governments will slow the process.

Even well funded business groups have not been able to grow their retail businesses rapidly, the report said. Similarly, despite its global expertise, Wal-Mart hasnt been profitable in China for last 12 years.

On the other hand, sources in the Indian fast-moving consumer goods business (toiletries, soft drinks, foods, etc) said they will still continue to depend on selling their products through kiranas because most of their customers live in rural areas where organised retail outlets havent opened.

It will be hard to ignore the other 93 per cent of the market, said an official who works with a popular Indian company in this business, but declined to be identified because he did not have authority to speak about the topic. We are here to do business with both (local shopkeepers and big chains). The rural market is very significant for us.

Companies such as Dabur, Godrej Consumer Products, Emami and Wipro Consumers get significant amounts of their business from rural regions. For now, kiranas and local dealers are the way in. The next question: when does Wal-Mart start its kirana division?

(A customer shops at a family-owned store at a market in New Delhi. Reuters photo by Mansi Thapliyal) Previous Post Next Post More From Reuters

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[?] Comments 2 comments so far | RSS Comments RSS Sep 22, 2012 11:20 am UTC

thanks for sharing this information. I really liked your article.

Natalia

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mumbai property

noida property Posted by natalia2012 | Report as abusive

Sep 23, 2012

3:15 pm UTC

A kirana store is not the only type of store run by the small families. they run store for the electronic goods and other consumer items. it is those store who will be hit badly as one big chains will push manufactures for the lower cost and then they will send slightly lower to these small stores price, thus putting these stores out of business. yes no one rush to super store to buy 1 kgs of rice. but if one has to buy a TV, he will go to a supermarket instead of a small store. what kind of reforms are these where the counrty is being sold to foreign chains who can source money cheaper than available in india. why not govt. providing level playing feild to these small stores too? it is nothing more than selling the nation to the big corporations. Posted by ajaybansal | Report as abusive

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Bidya Sapam Bidya Sapam is a journalist on the Reuters.com desk in Bangalore. She previously worked at the Press Trust of India. Reuters India Top News Five die in Egypt violence on anniversary of uprising North Korea threatens war with South over UN sanctions Quake hits central Italy, no injuries reported Murray outmuscles Federer to reach Australian Open final Maruti Q3 net profit doubles, first rise in six quarters Mumbai women given knives, chilli to fend off rapists

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as Manmohan Singh got his mojo back? The Indian Prime Minister has recently suffered the indignity of being called overwhelmed and out of steam in the Indian magazine Caravan; a dithering, ineffectual bureaucrat by the Washington Post; and an underachiever on the cover of TIME.

And yet, there he was on Sept. 14, boldly pushing a major economic reform that would open up Indias vast retail market to greater participation by foreign companies. Singh tried the same move last fall, only to be shouted down by populists within his coalition, who threatened to bring down the government, claiming that the measure would threaten the livelihood of small shopkeepers. Unable to make his case, Singh backed down. This time, he all but dared them to call his bluff. Whos dithering now?

(MORE: India Allows Walmart and Friends in)

What looks like boldness is actually a deft finesse from a leader who has rarely been comfortable playing the role of politician. By leaving the implementation of this new reform up to the countrys states, Singh avoids having to push too hard while still getting credit for taking a proreform, progrowth stance that plays well with the foreign investors who have cooled on India.

Its a canny move. States with big urban centers and enough middle-class consumers to actually shop at foreign retail outlets are likely to move forward on retail reform. Poorer, less urbanized states and those where Indias traders and merchant castes are politically powerful can opt out. So far, the two most vocal critics of the new measure are ideological opposites Mamata Banerjee, a left-leaning populist, and Narendra Modi, a right-wing Hindu nationalist who styles himself as a business-friendly reformer. The rest of Indias ambitious chief ministers will end up competing with one another for a limited pool of big-ticket investment, creating an incentive to implement the reforms quickly.

(MORE: The 2012 TIME 100 Mamata Banerjee)

Once the reforms take hold, India could see some profound changes. India lacks the infrastructure like refrigeration and warehousing that most big retailers are used to, so Walmart, Carrefour, Tesco, et al. would have to build it themselves. That would benefit the entire retail-supply chain in India, decreasing spoilage and reducing time to market. To take advantage of economies of scale, those retailers will also as Walmart does now on a limited scale deal directly with farmers.

Dont be fooled: these big-box stores will not suddenly replace Indias mom-and-pop stores by undercutting their prices. Thats the experience of retail in the U.S.: the small retailers that once served the middle classes could not match Walmarts much lower prices. The Indian retail market is different. Yes, they may be locally owned, but those small retailers keep their prices low because they use only the cheapest possible casual labor and invest next to nothing in their stores. Prices cannot get any lower; in India, Walmart can compete only by offering higher prices and better quality to attract the middleclass consumers who are able to pay. A handful of Indian big-box retailers and high-end specialty stores are already using that strategy.

The same goes for farmers. Under the current system, they are forced to sell their produce in government-supported wholesale markets where they have no pricing power at all. If big companies like Walmart enter the market, farmers can only benefit from the competition for the goods they supply.

Of course, no single company or single piece of economic reform has the scale to transform the lives of 800 million struggling farmers. Once Walmart is a full-fledged part of Indias market, it will become clear that even the largest company in the world isnt big enough to change India. It will take broad-based change in everything from water and electricity to education to lift their livelihoods. Singhs bold move is just a small first step.

Read more: http://world.time.com/2012/09/18/how-the-entry-of-walmart-and-big-retail-chains-willchange-india/#ixzz2JGQQbbyu

ay, the ministry of commerce and industry took its campaign to promote FDI (Foreign Direct Investment) in retail to the literate population of India, with full page advertisements in newspapers.

The advertisement claims that such direct investment will bring huge benefits not only to the farmers but to the society at large and that it will generate over 10 million new jobs and so on. Naturally, it does not give any time frame to achieve this end.

The ministry calls this as another revolutionary leap for the Indian economy. Reading such an ad makes it nice, but whether it will truly benefit the people in the long run remains to be seen. At least in US, it did not do so, according to the media.

The first and foremost fear is that farmers will be exploited by the predatory pricing policy of the large retailers, a job that is probably and already being done by a host of middlemen. So, instead of many such middlemen, there will one source where the farmer will face a single-window clearance, and that of the FDI retailer!

Having said that, will this process reduce the ultimate cost that the actual consumer has to pay for the farm products? Yes, in more ways than one, as the present Indian retails and supermarkets reveal.

Let's take a look at any Indian major city, like Bangalore, for instance. There are several big business houses in retail, such as Reliance, Tatas, Goenkas, and supermarkets like Spar, Big Bazaar, etc to name a few. In this category, we could include government sponsored HOPCOMs too.

There is intense competition amongst all these organizations. The pricing is sharp and the range of products covered is going up by the day.

And who are the buyers? They are the growing middle-class rich consumer society, where the chances are that both husband and wife earn a living and have a reasonably comfortable lifestyle. In all probability, they shop once in a week to make the purchases and do it methodically; no spur of the moment purchase, but needs are listed and shopping is done at leisure on chosen days.

The only thing that is left to buy is the odd item that may fall short which the family member at home or the cook may resort to purchase from the nearest Kirana shop or buy from the cart vendor, whose prices are at least 50% higher than the retailers mentioned above. This is based on the actual experience of the writers family.

FDI in retail is not a simple exercise to be covered in a single article but an in-depth study will take quite sometime and its impact cannot be visualized easily. If Reliance and Big Bazaar have come to stay, so will the FDI in retail, in due course.

FDI in retail will be subject to a lot of discussions and scrutiny. To generalize and compare how other countries have fared and still let kirana (small shops in road corners) survive or bring about better returns to farmer is a futile exercise. The conditions in India are different. We need to clearly spell out some basic pre-conditions that have to be complied within a specified time-frame, failing which, the licensee will have to pack up and go home.

a) At least 30% of the indigenous farm produce will have to be retailed

b) Each FDI-R licensee be given the choice of seven to 10 locations where it can commence its actual retail operations

c) These operating centres will have to be supported by actual infrastructural development of warehouses, cold storage and transportation logistics in identified sources of supply at the produce points

d) The next set of new cities will be after successful performance, a minimum of 18-24 months later, with the same conditions relating to infrastructure development or by expansion of existing ones

e) The activities of the FDI-R licensee will be subject to a close check and follow-up by a regulator who will maintain a watchdog committee for keeping a track of purchase pricing to retail selling; of the actual commitments in terms of fulfilling employment growth and how these actually are benefiting the country in terms of taxes earned

f) These FDI-R licensees should not become the single largest selling point for marketing products of other countries when identical or similar products of indigenous makes are readily available.

These measures would be the first of many that one can think of as a start.

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at anantha_ramdas@yahoo.com.) If you found this article useful, why not sign up here to receive daily updates from Moneylife straight into your mailbox? Organized Retailing and Kirana Shops

India's retail sector is going to transform and with a three-year compounded annual growth rate of 46.64 per cent, retail sector is the fastest growing sector in the Indian economy. Traditional markets are transforming themselves in new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Western-style malls have begun appearing in metros and near metro cities, introducing the Indian consumer to a new shopping experience.

KSA-Technopak, a retail consulting and research agency, predicts that by 2010, organized retailing in India will cross the US$ 21.5-billion mark from the current size of US$ 7.5 billion.

The Indian retail market is of enormous size about US$ 350 billion. But organized retail is not so huge and it is at only US$ 8 billion. However, the opportunity for growth is hugeby 2010, organized retail is expected to grow to US$ 22 billion. With the growth of organized retailing estimated at 40 per cent over the next few years, Indian retailing is clearly at a tipping point.

This article is an attempt to analyse the areas where retail sector is growing and will grow, what will be the target market segment for the retailers and how will they try to serve this segment.

Overview

India is witnessing an unprecedented consumption boom. The economy is growing between 8 to 10 percent and the resulting improvements in income dynamics along with factors like favorable demographics and spending patterns are driving the consumption demand. Indian Retail Industry is ranked among the ten largest retail markets in the world. The attitudinal shift of the Indian consumer in terms of "Choice Preference", "Value for Money" and the emergence of organized retail formats have transformed the face of Retailing in India. The Indian retail industry is currently estimated to be a US$ 200 billion industry and organized Retailing comprises of 3 per cent (or) US$6.4 Billion of the retail industry. With a growth over 20 percent per annum over the last 5 years, organized retailing is projected to reach US$ 23 Billion by 2010.

The Indian retail industry though predominantly fragmented through the owner -run " Mom and Pop outlets" has been witnessing the emergence of a few medium sized Indian Retail chains, namely Pantaloon Retail, RPG Retail, Shoppers Stop, Westside (Tata Group) and Lifestyle International. In the last few years, Indians have gone through a dramatic transformation in lifestyle by moving from traditional spending on food, groceries and clothing to lifestyle categories that deliver better quality and taste. Modern retailing satisfies rising demand for such goods and services with many players entering the bandwagon in an attempt to tap greater opportunities.

According to the report of American Management Consulting Firm A. T. Kearney's 2006 Global Retail Development Index (GRDI), India is on the first position , continuing for two years (2005 and 2006), among 30 countries as the world's most attractive market for mass merchant and food retailers seeking overseas growth. On the other hand, China is loosing its attractiveness and making the way to India GRDI helps retailers to prioritize their global development strategies by ranking emerging countries based on a set of 25 variables including economic and political risk, retail market alternatives, retail saturation level, and the difference between gross domestic product growth and retail growth. The study quotes: "The Indian retail market is gradually but surely opening up, while China's market becomes increasingly saturated."

The Growth Drivers

The Indian Retail growth can be attributed to the several factors including

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

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

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

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

Investment Opportunities

* Potential for Investment: The total estimated Investment Opportunity in the retail sector is around US$ 5-6 Billion in the Next five years.

* Location: with modern retail formats having made their foray into the top cities namely Hyderabad, Coimbatore, Ahmedabad, Mumbai, Pune, Chennai, Bangalore, Delhi, Nagpur there exists tremendous potential in two tier towns over the next 5 years.

* Sectors with High Growth Potential: Certain segments that promise a high growth are

o Food and Grocery (91 per cent) o Clothing (55 per cent) o Furniture and Fixtures (27 per cent) o Pharmacy (27 per cent) o Durables, Footwear & Leather, Watch & Jewellery (18 per cent).

* Fastest Growing Formats: Some of the formats that offer good growth potential are:

o Specialty and Super Market (45 per cent) o Hyper Market (36 per cent) o Discount stores (27 per cent) o Department Stores (18 per cent) o Convenience Stores and E-Retailing (9 per cent)

* Supply Chain Infrastructure: Supply chain infrastructure in terms of cold chain and Logistics.

* Rural Retail: Retail sector offers opportunities for exploration and investment in rural areas, with Corporates and Entrepreneurs having made a foray in the past. India's largely rural population has caught the eye of retailers looking for new areas of growth . ITC launched the country's first rural mall 'Chaupal Sagar', offering a diverse product ranges from FMCG to electronics appliance to automobiles, attempting to provide farmers a one-stop destination for all of their needs. There has been yet another initiative by the DCM Sriram Group called the 'Hariyali Bazaar', that has initially started off by providing farm related inputs and services but plans to introduce the complete shopping basket in due course. Other corporate bodies include Escorts and Tata Chemicals (with Tata Kisan Sansar) setting up agristores to provide products/services targeted at the farmer in order to tap the vast rural market.

* Wholesale Trading: wholesale trading also holds huge potential for growth. German giant Metro AG and South African Shoprite Holdings have already made headway in this segment by setting up stores selling merchandise on a wholesale basis in Bangalore and Mumbai respectively. These new-format cash-and-carry stores attract large volumes from a sizeable number of retailers who do not have to maintain relationships with multiple suppliers for all their needs.

* Cheap Consumer Credit

Major Formats of In-Store Retailing

Format Description The Value Proposition

Branded Stores Exclusive showrooms either owned or franchised out by a manufacturer. Complete range available for a given brand, certified product quality

Specialty Stores Focus on a specific consumer need, carry most of the brands available Greater choice to the consumer, comparison between brands is possible

Department Stores Large stores having a wide variety of products, organized into different departments such as clothing, house wares, furniture, appliances, toys, etc. One stop shop catering to varied/ consumer needs.

Supermarkets Extremely large self-service retail outlets One stop shop catering to varied consumer needs

Discount Stores Stores offering discounts on the retail price through selling high volumes and reaping economies of scale Low Prices

Hyper- mart Larger than a supermarket, sometimes with a warehouse appearance, generally located in quieter parts of the city Low prices, vast choice available including services such as cafeterias.

Convenience stores Small self-service formats located in crowded urban areas. Convenient location and extended operating hours.

Shopping Malls An enclosure having different formats of in-store retailers, all under one roof. Variety of shops available to each other.

Indian Retail- expanding the number of formats In modern retailing, a key strategic choice is the format. Innovation in formats can provide an edge to retailers. Organized retailers in India are trying a variety of formats, ranging from discount stores to supermarkets to hypermarkets to specialty chains.

Formats Adopted by Key Players in India

Retailer Original formats Later Formats

RPG Retail

Supermarket (Foodworld) Hypermarket (Spencer's)Specialty Store (Health and Glow)

Piramal's Department Store (Piramyd Megastore) Discount Store (TruMart)

Pantaloon Retail Small format outlets (Shoppe) Department Store (Pantaloon) Supermarket (Food Bazaar) Hypermarket (Big Bazaar) Mall (Central)

K Raheja Group Department Store (shopper's stop) Specialty Store (Crossword) Supermarket (TBA) Hypermarket (TBA)

Tata/ Trent Department Store (Westside) Hypermarket (Star India Bazaar)

Landmark Group Department Store (Lifestyle)

Hypermarket (TBA)

Others Discount Store (Subhiksha, Margin Free, Apna Bazaar), Supermarket (Nilgiri's), Specialty Electronics

Road Ahead; Plans of Large Retailers

* Reliance Retail: investing Rs. 30,000 crore ($6.67 billion) in setting up multiple retail formats with expected sales of Rs. 90,000 crore plus ($20 billion) by 2009-10.

* Pantaloon Retail: Will occupy 10 mn sq.ft retail space and achieve Rs.9,000 crore-plus ($2 bn) sales by 2008.

* RPG: Planning IPO will have 450-plus Music World, 50-plus Spencer's Hyper covering 4 mn sq.ft by 2010.

* LIFESTYLE: Investing Rs.400 crore-plus ($90 mn) in next five years on Max Hypermarkets & value retail stores, home and lifestyle centres.

* Raheja's: Operates Shoppers' Stop, Crossword, Inorbit Mall, and 'Home Stop' formats. Will operate 55 "Hypercity" hypermarkets with US$100 million sales across India by 2015.

* Piramyd Retail: Aiming to occupy 1.75 million sq.ft retail space through 150 stores in next five years.

* TATA (Trent Ltd.): Trent to open 27 more stores across its retail formats adding 1 mn sq.ft of space in the next 12 DLF malls. Titan industries to add 50-plus Titan and Tanishq stores in 2006.

Small is big for Indian retail

It's raining malls in small-town India. Whether it's Kanpur, Ahmedabad, Indore, Agra, Baroda or Surat, the mall and multiplex culture has caught on in the country's smaller cities, powered by the burgeoning purchasing power of India's middle-class. From a handful of malls in the mid '90s, India today has nearly 200 malls spread across large and small cities. And 700 new malls are coming up all over India-40% of them concentrated in the smaller cities.

Small-town India is the next big thing in the retail business. Consider these numbers: in 2005, the contribution of smaller cities to total organized retailing sales was 15%. By the end of this year, that proportion is expected to grow to 25%. Organized retailing in small-town India is growing at a staggering 50-60% a year compared to 35%-40% in the large cities. The striking point is that it is the big names in the organized retail business that are eyeing these new opportunities.

The Kishore Biyani-owned Future Group, India's largest retailer, plans to invest Rs 3,600 crore in 100 stores in 30 cities, increasing its retail space from 3.5 million square feet to 30 million sq feet. The RPG group plans to open malls in all cities with a population of over 8 lakh.

Similarly, Wills Lifestyle, the garments and accessories retailing division of ITC Ltd, plans to increase its footprint by doubling the number of stores from 50 to around 100 in the next two to three years, mostly in smaller cities. Even Sunil Mittal's Bharti group has announced plans to get into food and farm products retailing. All these plans, however, are dwarfed by Mukesh Ambani's ambitions to do a WalMart in India by investing $5.60 billion (Rs 25,000 crore) and covering 1,500 cities and towns.

The small-town retail boom could be considered a show-case of India's free-market prosperity. It is being powered by healthy economic growth that is making more Indians more prosperous. Organised retailers have understood this and are hoping to ride the wave, exploit the first-mover advantage and establish strong brand loyalties in these relatively under-served markets.

Indeed, this is probably the most compelling example of the trickle-down impact of liberalisation in India. Looking ahead, retail analysts suggest that the sustained success of the IT and ITeS industries in small towns is expected to create more jobs and enhance spending power.

Typically, small cities offer a 15% to 30% cost advantage over larger cities, not just in terms of employee costs but real estate costs as well, not to speak of the gains that accrue from reduced staff attrition rates. This gap is expected to widen over the next few years, creating a pull for smaller towns that will, in turn, power the small-town retail revolution.

At present, real estate costs present a major incentive for India's organized retailers. Average rental values for ground-floor space are Rs 50-60 per square foot a month, against Rs 100-120 per sq foot a month in the bigger cities. However, a strong demand for retail space has more than doubled rentals in cities like Jaipur, Chandigarh, Surat and Lucknow. While in the metros, retailers are filling gaps by increasing more stores, in small towns, these malls are way beyond the expectations of the consumers. These cities are untapped markets and retailers find it important to establish their brands there.

Most smaller cities are seeing plenty of action. For instance, Ludhiana can already boast worldwide restaurant chains like KFC, McDonald's, Pizza Hut, Domino's Pizza, Ruby Tuesday and Subway. A new world-class, 25-acre commercial centre and some seven new shopping malls-cum-entertainment centres are under construction.

The Indian retail market is estimated at $350 billion. But organized retail is estimated at only $8 billion. However, the opportunity is hugeby 2010, organized retail is expected to grow to $22 billion. With the growth of organized retailing estimated at 40% (CAGR) over the next few years, Indian retailing is clearly at a tipping point. India is currently the ninth largest retail market in the world. It is names like Dehradun, Vijayawada, Lucknow and Nasik that will power India up the rankings soon.

Small Local Stores / Kiranas

The small local stores have dominated Indian retailing over the decades and are present in every village and local community, addressing the needs of the population in the area and being the point of contact with the consumer. The distribution networks of brands extend right upto this point to stay in touch with customer needs and preferences.

India like most other countries has a very large network of local stores. The retail industry in rural India has typically two forms: "Haats" and "Melas". You will find these in almost every village and locality. A lot of them function as paan and cigarette outlets with tea and coffee sometimes also offered. Besides this these stores stock and offer small eats and soft drinks including biscuits, soft drinks, chocolate,

sweets, bread and baked products. Many of them also sell fruits like bananas and a range of toiletries and cosmetics like soaps, shampoos, toothpastes and some creams. These small stores cater to the needs of their own local population and travelers who stop by for a smoke or a snack. A little larger format is the neighborhood grocery store that focuses on grains, foods, snacks and toiletries besides other home essentials.

Fruits and vegetables that are perishable are usually maintained and offered by exclusive vegetable stores and not by the normal groceries. Every fair sized village is likely to have at least one grocery store, a fruit and vegetable shop and a paan and cigarette shop. The new addition of the past decade is to have a telephone booth that lets locals and travelers make national and international telephone calls.

This network is very large and spread all across India. It is not really a network since each store is individual or family owned and has no connection with the other. It does however represent a network since large consumer product companies like Unilever, Procter & Gamble, Colgate-Palmolive, Cadbury, Coca Cola, Pepsi and ITC uses them as their final point of retail to the consumer.

While it is commonly believed that the new retail chains will drive these small stores out of business, reality points the other way and it is likely that these stores will continue even in the next two decades of growth.

These small stores are very personal and have strong relationships with the local population. They are points of news and connection. They offer credit to the local population and help out in times of crisis. They also have a very good understanding of requirements of the local population and have very low overheads enabling them to offer the best price for their products.

Shopping Malls

The new shopping malls that have been expanding their footprint across Indian cities are well designed, built on international formats of retailing and integrated with entertainment and restaurants to provide a complete family experience. Over 300 malls are expected to be built over the next two years and most Indian cities with over a million population will be exposed to this modern method of retailing.

Shopping malls have existed in India since several decades but were designed and built to house several shops in a single facility. These malls also known as Shopping Arcades offered only rows of shops, most of which were small stores that promised bargains for their various wares. These Shopping Arcades tried to maximize on their store space and did not offer any areas for recreation and entertainment.

The present day malls are a creation of the past few years post 2000. They are designed professionally using a lot of international experience and combine shopping with a lot of brand building, recreation, food and entertainment. Malls also have a large format store that serves as their anchor for shopping and a prominent restaurant that anchors the food needs of visitors. Most malls also feature a multiplex cinema that offers entertainment to the visitors of the mall. Finally the mall has large atria and open spaces to allow visitors and families to hang-out.

These new format malls are coming up in all the major cities of India. The cities that are seeing the first rush of malls are New Delhi, Noida, Gurgaon, Chandigarh, Mumbai, Pune, Bangalore, Ahmedabad, Chennai, Kochi, Hyderabad, Kolkata

The next run-up of the malls will be the second level cities of India that includesVisakhapatnam, Coimbatore, Trivandrum, Raipur, Bhopal, Surat, Jaipur, Kanpur, Lucknow, Ranchi, Cuttack, Dehra Dun.

The new malls are air-conditioned and have spacious areas and accesses which make them a true breath of fresh-air from the earlier arcades and shop line streets that used to be the available options for Indian customers.

Malls: The new face of retail market

Robust GDP growth, stronger currency reserves and ever-improving market and operating environments are propelling the Indian market through a period of stellar growth - and the retail community is responding with newer formats and innovative products. The economy of India has shown a remarkable increase driven by overall political and social stability.

The decade-old economic reforms have engendered a new, shop-till-you-drop breed of middle class Indians who, having tasted the shopping experience of big cities overseas, have fuelled a demand that was inevitable -- the rise of the shopping malls. Centrally air-conditioned malls with piped music, high-

speed lifts and escalators, underground parking space, a multiplex movie theater, multi-cuisine restaurants and a host of national and international brands, these malls generates approximately 25,000 footfalls each, per day, with figures doubling on weekends.

Sobha Group has set its eyes on launching the largest retail mall in the country. Retail Biz tracks this unprecedented move that is ready to add a new chapter in the history of Indian retailing.It is estimated that there are 450 malls in various stages of development across India, 60 in the greater Delhi area alone. This trend has attracted several major global retail players to India. International style shopping has finally come to India - and with a splash.

Conclusion

After analyzing the retail industry, we can conclude that the organized retail has opportunities to grow in India in spite of the kirana stores because these kirana shops will also get benefit of the growing economy. The argument that the kirana shops will be affected by these malls is only myth. The organized retail is attracting more and more Indian as well as foreign players of the retail industry. As our study shows that a major portion of the organized retail will be developed in small cities and towns, this opportunity has not been encashed by kirana stores and they are unable to meet the requirements of the customers. Therefore both the malls and kirana stores can play simultaneously in India so no need get afraid due to the malls.