INTRODUCTION

INTRODUCTION
Retailing is the final step in the distribution of merchandise-the last link in the supply chainconnecting the bulk producers of commodities to the final consumers. Retailing covers diverse products such as food products, apparels, consumer goods, financial services and leisure. A retailer typically, is someone who does not effect any significant change in the product execs breaking the bulk. He/she is also the final stock point who makes products or service s available to the consumer whenever required. Hence, the valuable proposition a retailer offers to a consumer is easy availabilities of the desired product in the desired sizes at the desired times. In the developed countries, the retail industry has developed into a full fledged industry where more than three fourths of the total retail trade is done by the organized sector. Huge retail chains like wall-Mart, Carr four groups, Sears, K-Mart, McDonalds etc have now replaced the individual retail stores. Large retail formats, with high quality ambiance and courteous and well trained sales staff are regular feature of these retailers. Retailing is the second largest industry in the world, one of the largest employers in the world and an index of economic growth. In India there are about 5 million retail outlets varying in size and nomenclatures. India has the highest number of retail outlets per capita in the world but lowest number of retail space per capita in the world (2 ft/person). Out of these 5 million outlets 96% are smaller than 500 square ft in area. There are about 3 million outlets in Indias 3700 designated towns and more than 6, 00, 000 villages. About 350 million people live, with in one minute walk of these retail shops. According middle to retail census conducted by market researcher ORG-MARK, Rs 4, 79,586 crore worth of chain stores are springing up in urban areas to market consumer goods to the class in a much similar style as malls around the globe. At present about 8% of the Indian population are employed in the retailing industry as against 20% in U.S.A. As India moves towards the service oriented economy, a rise in this percentage is expected. The number of retail outlets is growing at about 8.5% annually in the urban areas in towns with population between 1, 00,000 to 1 million; the growth rate is about 4.5%.

Retailing Overview:

Worlds Largest Private industry Largest Employer after agriculture Highest outlet density in World Still evolving as an industry

Evolution
3

Informal Retailing sector: Typically small retailers Evasion of taxes No monitoring of labor laws

Formal Retailing Sector: Typically large retailers Greater enforcement of taxation mechanism High level of labor usage monitoring

RETAIL SECTOR

The retail sector in India is witnessing a huge revamping exercise as traditional markets make way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Western-style malls have begun appearing in metros and second-rung cities alike introducing the Indian consumer to a shopping experience like never before. Rated the fifth most attractive emerging retail market, India is being seen as a potential goldmine. It has been ranked second in a global retail development index of thirty developing countries drawn up by A T Kearney. The list was developed as a response to requests from retail chains facing saturated demand in most western markets. Indias vast middle class and its almost untapped retail industry are key attraction for global retail giants wanting to enter newer markets.

Organized Retail Formats in India

Each of the retail stars has identified and settled into a feasible and sustainable business model of its own. Shoppers' Stop - Department store format - Emulated the Marks & Spencer model of 100 per cent private label, very good value for money merchandise for the entire family. fine jewellery 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 Business System (VMS) Consumer Co-operatives A new entrant in the retail environment is the 'discounter' format. It is also is known as cash andcarry or hypermarket. These formats usually work on bulk buying and bulk selling. Shopping experience in terms of ambience or the service is not the mainstay here. RPG group has set up the first 'discounter' in Hyderabad called the Giant. Now Pantaloon is following suit. Two categories of customers visit these retail outlets. 1. The small retailer. For example, a customer of Giant could be a dhabawala who needs to buy edible oil in bulk.
6

Supermarket format - Specialty retailing

2. The regular consumer who spends on big volumes (large pack sizes) because of a price advantage per unit. Retailing in India is still evolving and the sector is witnessing a series of experiments across the country with new formats being tested out; the old ones tweaked around or just discarded. Some of these are listed in Table below. Table 3: Retailer Shoppers' Stop Ebony Current Format Department Store Department Store New Formats Quasi-mall Quasi-mall, smaller outlets, adding food retail Crossword Pyramid Pantaloon Subhishka Vitan Foodworld Glob us Bombay Bazaar Large bookstore Department Store Own brand store Supermarket Supermarket Food supermarket Department Store Super market Corner shops Quasi-mall, food retail Hypermarket Considering moving to self service Suburban discount store Hypermarket, Foodworld express Small fashion stores Aggregation of Kiranas

Efoodmart Metro S Kumar's Relaince retail

Food super market Departmental store Departmental store Departmental store

Aggregation of Kiranas Cash and carry Discount store Considering moving to self Service

Source: www.indianretail.com Retailers are also trying out smaller versions of their stores in an attempt to reach a maximum number of consumers. Crossword bookstores are experimenting with Crossword Corner, to increase reach and business from their stores. FoodWorld is experimenting with a format of onefourth the normal size called FoodWorld Express. 2.5 Trends in Retail Business At this point, I can summarize the main development retailers and manufacturers need to take into account as they plan their competitive strategies. In India the trends are mainly in three sectors. These sectors are:

Trends in retail Business

Urban

Suburban

Rural

1. New retail forms and combinations continually emerge. Bank branches and ATM counters have opened in supermarkets. Gas stations include food stores that make more profit than the gas operation. Bookstores feature coffee shops. 2. The electronic age has significantly increased the growth of non store retailing, consumers receive sales offers in the mail and over television, computers, and telephones, to which they can immediately respond by calling a toll-free number or via computer. 3. Competition today is increasingly intertype, or between different types of store outlets. Discount stores, catalog showrooms, and department stores all compete for the same consumers. The competition between chain superstores and smaller independently owned stores has become particularly heated. Because of their bulk buying power, chains get more favorable terms than independents, and the chains large square footage allows them to put in cafes and bathrooms. In many locations, the arrival of a superstore has forced nearby independents out of business. 4. New retail forms are facing a shorter life span. They are rapidly copied and quickly lose their novelty. 5. Business channels are increasingly becoming professionally managed and programmed. retail organizations are increasingly designing and launching new store formats targeted to different lifestyle groups. They are not sticking to one format, such as department stores, but are moving into a mix of retail formats. 6. Technology is becoming critical as a competitive tool. Retailers are using computers to produce better forecasts, control inventory costs, order electronically from suppliers, send e-mail between
9

stores, and even sell to customers within stores. They are adopting checkout scanning systems, electronic funds transfer, and improved merchandise-handling systems. 7. Retailers with unique formats and strong brand positioning are increasingly moving into other countries. McDonalds, The Limited, Gap, and Toys R Us have become globally prominent as a result of their great Business powers. Many more Indian retailers are actively pursuing overseas markets to boost profits.

Retail Breaking News

NATIONAL

April 10 REALTY WATCH: Ranchi getting ready for malls Even Ranchi is getting ready to be part of the mall map of India. Called, Firayalal Veevo City, the Rs 450 cr, 9.5 lakh sqft, eight storey mall will be set up in three years by M & J Associates in association with Singapore's Landmark Architects Associates. The mall would include a supermarket, department and speciality retail stores, amusement centre, food courts, restaurants, Cineplex, hotel, private club, banquet and conference hall. The Parsvnath Group is building an iconic modern City Centre in the Jharkhand capital. The Rs 400 cr, 10 lakh sqft project will include a hotel, residential zone and a shopping mall with a multiplex.

April 10

Rajkot

kiranas

combine to compete with goliaths In an interesting

10

development, 150 shopkeepers in Rajkot have come together to help improve their competitiveness. They have approached a Delhi based consultancy firm to develop joint buying and to computerize their operations.

April 07 Godrej tolaunch new specialty chain Not to be left out of the retail revolution, the Godrej Group is planning to launch a new specialty store chain this year itself. The 1500 sqft format will focus on four categories: home appliances, home furniture, office furniture and non-apparel lifestyle products. Godrej & Boyce Manufacturing Co, who already operate 47 Godrej Lifespace stores that showcase Godrej branded hard goods, will open six stores in the first year and 20 by 2010. Eight markets are being targeted: Mumbai, Delhi, Kolkata, Chennai, Ahmedabad, Bangalore, Hyderabad and Pune. Unlike the Godrej Lifespace stores, this chain will not be limited by Godrej branded products.

April 07 Damas-Flemingo JV bags AAI duty free Dubai based Damas Jewellery and Indian arm of Flemingo International have formed a JV (Flemingo Jewellery India) to take up duty-free retailing of jewellery and luxury watches at Indian airports. Damas holds 51% of the stake while the balance is with Flemingo. The JV has bagged the contract from the Airports Authority of India for opening stores at Chennai, Thiruvanathapuram and Jaipur international airports.

April 07 Subhiksha ties up digital signage. A sign of the times, Subhiksha has tied up with Jive Networks to set up and operate a chain wide network of digital signage. The out-of-home media network covering Subhikshas 650 shops will be the largest such network in India. The screens will constantly display advertorial content to shoppers.

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INTERNATIONAL

April 10 Claires Stores sold for $3.1 bil Jewellery and accessories retailer Claires Stores is being acquired by private equity firm Apollo Management for $3.1 bil. Claires Stores target girls and young women with accessories and trinkets. The retailer put itself up for sale in Dec and hired Goldman Sachs to look for a suitor. The company was hit by weak international sales and a general shift to lower-priced accessories.

April

10

Tesco

unlocks

property

value

in

$1.3

bil

deal

In a unique move, Tesco, Britains largest retailer, has formed a $1.27 bil (650 mil pounds) real estate JV with British Land covering 21 of its supermarkets. The deal is part of a property sale and leaseback program announced last year. Tesco expects that the deal will make available net proceeds of 570 mil pounds which will be used to fund further growth outside the UK. Tesco has taken advantage of rising UK real estate value

April

07

Wal-Mart

to

open

26

store

in

Canada

this

year

The worlds largest retailer, Wal-Mart plans to make its largest annual investment in Canada by opening 26 stores this year. This will comprise 21 supermarkets and five discount stores. ITC's Big Bang Blending diverse skills and leveraging its distribution muscle, the tobacco giant is unleashing a welter of new businesses. An inside account of the silent revolution.

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Ashtrays are ubiquitous inside the pristine white Virginia House, ITC's imposing corporate headquarters in Chowringhee, Kolkata. That's because puffing cigarettes is de rigueur here in the heart of India's largest cigarette maker. On the second floor-where the directors of the Rs 8,816 crore company sit in their burnished wood panelled chambers-each closet in the private washrooms has a porcelain ashtray discreetly placed next to the WC. So it's a bit curious when you're sitting in Chairman Y.C. 'Yogi' Deveshwar's sprawling room and one of his senior colleagues hands you plastic jars filled with unmarked sachets. One of the jars is labelled 'wild banana', another, 'cinnamon mint' and a third, 'pineapple toffee'. ''Try them,'' urges Deveshwar, like a proud father as you tentatively pop a 'wild banana' into your mouth and taste the strange, but likeably flavoured boiled sweet. Confectionery, like the exotically named three, is just one of the dozen-odd projects that are in the incubation stage at ITC, where more than 80 per cent of the company's sales come from cigarettes and tobacco. But that won't last. In the next five to seven years, ITC wants to change that proportion and generate as much as 40 per cent of its sales from non-tobacco diversifications. Many of those will be brand new businesses. Like ITC's lifestyle retail business, which it recently kicked off with the Wills Sport brand of relaxed apparel, the Expressions range of greeting card and gifts business, and the upscale ready-to-eat packaged foods business, where it has just tip-toed in with a couple of soft launches like that of the canned Dal Bukhara. In consultant-speak, ITC is leveraging competencies from its existing businesses-the most notable is the tobacco business' distribution-expertise-to tap new opportunities. If all goes well, these diversifications will add Rs 2,000 crore to ITC's topline by 2006. But many others contributing to the non-tobacco revenues are old businesses-some repurposed beyond recognition, like the group's international business and its infotech venture, and others completely turned around and revitalised like the paper and paperboards business. Yet, it's the clutch of new businesses, many of them still in the nascent stage, that Chairman Deveshwar seems excited about. He's not the only one. About 800 km away from Virginia House's throwback-to-the-Raj ambience, in sweltering Tillapudi village, 25 km from the eastern coast, Bodapati Rama Rao, a 45-year-old aqua farmer, used to think a computer at home would attract tax officials as it would lend an air of affluence that a farmer could ill-afford, especially when he would be named a pratinidhi or lead farmer by ITC in his area. Locals say it took a bit of
13

explaining of the e-choupal concept before he saw the benefits of information flow. Today, Rama Rao refers to ITC as the talli (mother) company and is at ease with the mouse and keyboard and his fluent Telugu is meshed with words like 'market trends', 'exporters', and 'price patterns'. Well, aquachoupal.com is one of the three web-based initiatives (e-choupals in company-speak) that ITC's international business division has launched as part of its strategy to vertically integrate its sourcing operations. Apart from the aquachoupal, launched in February 2001, there is the soyachoupal.com launched for soya farmers in Madhya Pradesh in June 2000, and plantersnet.com for coffee growers in Karnataka in December 2000. ''The aim is to help enhance farm productivity, improve farm-gate price realisation and to cut transaction costs,'' says S. Sivakumar, chief executive, International Business Division, ITC. The choupals act as facilitators for inputs to farmers-in the aqua, soya, and coffee domains. On the entry of MNCs and Reliance in the retail market Everybody has been asking me, are you worried about Wal-Mart coming to India? Ultimately WalMart is also going to be run by people like us. The point is you need not worry about anybody's entry. There is a huge potential for growth in India. There is potential for another ten people to come in. Ultimately the share of the unorganised kiranas will come down and the share of organised sector will go up because of the efficacy in buying and distributing. Also, this is an extremely low margin business. Ultimately, everybody has to sell within the cost. It is not that we are geniuses; we have been in the business for ten years, and we have made enough mistakes and learnt from them.I don't think any child will learn to walk without falling down first, however good the parent is.We made our mistakes when we were small. The bigger you are, the mistakes will cost you more. There are two kinds (of satisfaction). We genuinely believe that through efficiency, we are helping the consumers save more. We are also happy that we are bringing in a model that is Indian, capable of supporting the middle class of India. On what he does other than thinking about Subhiksha I would like to say I think of Subhiksha all the time, but I do not. I read a lot, mainly online. I lead a reasonably balanced life. Working 12-13 hours a day six days a week, is my working pattern. I
14

keep Sunday evenings and afternoons only for family. But I travel 12-15 days a month visiting all the Subhiksha regions. I am a pretty cool person, relaxed all the time. I am not hassled about anything. Personally I am not a very ambitious person; I am happy with my curd-rice! What gives me a kick is to show that a business model from India is superior to a business model imported from the West.We are living in an age where we do not have to be taught by the West what we should do in our country.

Organized Retail Models

High population density in the metropolitan cities and surrounding tier-1 towns is driving the geographic penetration of modern retail. Nationwide, the retail penetration has been the highest in the South in Tamil Nadu, Kerala, Karnataka, and Andhra Pradesh, moving towards the West along , Punjab, and Western Uttar Pradesh. The fresh crop of modern retail in the late 1990s started in the southern region as South India has clusters of metro cities and tier-1 towns. In addition, less complicated licensing regulations by the state and local authorities have played an important role in the spatial penetration along the regions. In AndhraPradesh, the licensing process is now online, thereby reducing the time lag. Broadly, retail firms are following three routes for their market entry: (a) the acquisition route which gives a jump-start to take advantage of the already experienced manpower, infrastructure, front-end property of the acquired firm; (b) the JV partnerships, a preferred route for firms seeking foreign collabouration fortechnical know-how and assistance in the back-end operations as well as future export opportunities; and (c) the green-field investment route for market entry. A few firms are also following a mixture of acquisition and JV routes for quick market access.Additionally, firms are strategically expanding verticals by forming subsidiaries or holding firms that act as catalysts to their retail business.Typically, firms are positioning themselves in one or both of the segments: lifestyle13and value retailing14 under multiple retail formats. Retail firms are adopting a combination of formats including, mega (hyper and/or super), medium (department and/or speciality), and small size (convenience and/or discount) for expansion. This13 Lifestyle retailing is category-specific retail of lifestyle-oriented products, such as fashion apparel,high-end consumer durables, home dcor, etc. In the Indian scenario, lifestyle retailing is more focused on apparel brands, but changing lifestyle aspirations of Indians have also seen a sizeable increase in demand for branded furniture and furnishings.
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14 Value retail is related to the pricing strategy, i.e. discount and value-for-money formats and hence it can be present across all product categories. Discount stores, a form of value retail, deal in a variety of goods ranging from food articles, household durables, electrical appliances, to apparel. 54 strategy benefits firms in several ways. It helps to: (i) attain critical mass; (ii) economies of scope in sourcing by accruing costs across stores; and (iii) reach out to consumers in the local neighbourhood locations.Regardless of the route followed, the domestic retail industry is witnessing an increase in domestic investment, technical know-how expertise, improvements in supply chain and logistics, and demand for store brand private labels.Table summarizes the business models of the key organized retailers.

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Growth Factors in Indian Organized Retail sector

The growth factors in Indian organized sector are various but it is mainly due to the fact that India's economy is booming. Also, the rise in the working population which is young, pay- packets which are hefty, more nuclear families in urban areas, rise in the number of women working, more disposable income and customer aspiration, western influences and growth in expenditure for luxury items. All these are the factors for the growth in Indian organized retail sector. In fact, India retail industry is the fastest growing industry in India and it accounts for 10% of the country's GDP. In 2006, the retail industry in India amounted to US$ 200 billion and out of this, the organized retail sector in India amounted to US$ 6.4 billion. By 2010, the Indian organized retail sector is expected to rise to US$ 23 billion. In 2003, the Indian organized retailing sector accounted for more than 4.5 million sq. ft of space absorption by malls. Many Indian companies have entered the retail industry in India and this is also a factor in the growth of Indian organized retail sector. Reliance Industries Limited is planning to invest US$ 6 billion in the organized retail sector in India by opening 1500 supermarkets and 1000 hypermarkets. Bharti Telecoms is planning a joint venture worth 750 million with Tesco a global retail giant. Pantaloons is planning to invest US$ 1 billion in order to increase its retail space to 30 million square feet. Such huge investments is also a factor in the growth of the organized retail sector in India. Global retail giants are also entering the retail industry in India and this is also one of the factors in the growth of the organized retail sector in India. The global retail giants who are entering the organized retail sector in India are:
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Opportunities in Indian Organized Retail sector

The opportunities in Indian organized retail sector are many for this sector is witnessing a boom. The retail industry in India amounted to US$ 200 billion in 2006, and out of this amount the Indian organized retail sector amounted to US$ 6.4 billion. The opportunities in India organized retail sector can be judged from the fact that by 2010 it is expected to rise to US$ 23 billion. The various opportunities in the organized retail sector in India are mainly there for the Indian consumers behavior pattern has changed. Now the Indian consumer gets more hefty pay- packages, is younger, a large number of women are 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 also 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 has opened 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.

Many Indian companies seeing the various opportunities in organized retail sector in India have entered it. Pantaloons have decided to increase its retail space to 30 million square feet with an investment of US$ 1 billion. Reliance Industries Limited is targeting for annual sales of US$ 25 billion by 2011. It is planning to invest US$ 6 billion in order to open 1,500 supermarkets and 1000 hypermarkets. Bharti Telecoms is planning a joint venture with Telco a global retail giant worth 750 million.
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FDI IN RETAIL
Retailing is the largest private sector industry in the world economy with the global industry size exceeding $6.6 trillion and a latest survey has projected India as the top destination for retail investors. And the further upsurge is anticipated in the retail sector as the Government of opened up 51% FDI in single brand retail outlets. And as the government is in a process to initiate a second phase of reforms, it is cautiously exploring the avenues for multi-brand segment. The Government is seeking for these options keeping in view the existing social framework of India and the will ensure that the entry of global retail giants do not displace the existing employment in the retail business. Industry experts are sensitive to the point that local markets have an edge over the retail investors in India as they have unique advantages such as an understanding of local needs and extended service like home delivery. As the FDI influence on the Indian retail sector sets in, the total size of the retail trade is expected to grow extensively in the coming years and the consumer segments patronizing the big malls will create frenzy for organized retailing predicting a growth of 25-30 per cent per annum over the next decade. Moreover, Indian retail chains would get integrated with global supply chains since FDI will bring in technology, quality standards and marketing thereby, leading to new economic opportunities and creating more employment generation. Industry trends for retail sector indicate that organized retailing has major impact in controlling inflation because large organized retailers are able to buy directly from producers at most competitive prices. World Bank attributes the opening of the retail sector to FDI to be beneficial for India in terms of price and availability of products as it would give a boost to food products, textiles and garments, leather products, etc., to benefit from large-scale procurement by international chains; in turn, creating jobs opportunities at various levels. As foreign investors exploring their potentials in the retail sector, are keen on developing malls in India, the size of organized retailing is expected to touch $30 billion by 2010 or approximately 10 per cent of the total. This has initiated market-entry announcement from some retailers and has signaled to international retailers about Indias seriousness in promoting the sector. While there are reports of international retailers like Wal-Mart analyzing business opportunities in India; Reliance, the largest Indian conglomerate is investing $3.4 billion to become Indias largest contemporary
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retailer. There are also reports of investments for Hypercity Retail by K.Raheja Group to establish 55 hypermarkets by 2015. All these factors will contribute in taking Indian retail business to unexpected growth based on the consumer preference for shopping in congenial environs and also availability of quality real estate.

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Benefits of larger FDI

The benefits of larger FDI can be tangibly felt in the domains pertaining to technological advancements, generation of export, production improvements, and hastening of manufacturing employment. Capital inflow into India has increased and so have the exports from the country. Thanks to the economic boom India is experiencing, some Indian companies are doing better than even the multinational corporations.

The benefits of larger FDI have been briefly elaborated below:

1. Improved human capital: Indian industries are predominantly labor based but there is also a significant number of capital based companies. A capital intensive set up is indeed an expensive proposition but with the existing as well as potential labor intensive industries, India can look forward to more professional and sophisticated number of workers and employees at every level. Human capital, in terms of quantity was never a big problem in India, thanks to its huge population and quality and efficiency in work has been ushered in by the MNCs. 2. Competition Effect: The benefits of larger FDIs will include the launching and marketing of new products and brands in the Indian market. New products are used by the multinational corporations and then demonstrated in the Indian market. The processes followed by MNCs in India serve to have a demonstration effect on Indian companies which in turn improves market competition and the standard of products. This had started in the 1980s due to Japanese firms and as a result, Indian firms started inculcating the practices of QC, JIT, and QA.
21

3. Manufacturing Employment: Larger FDIs definitely generate more and more employment opportunities. The opportunities are highly experienced in the manufacturing area. This not only includes the quality human resource but also provides for quick and efficient work and effective outcomes. 4. New Technology: Technological advancements take place as larger FDIs come in. In fact, three-fifths of the FDIs result in new and advanced technologies. The local industry is benefiting from this to a large extent. This as a result, would encourage more and more foreign firms for investment.

The benefits of larger FDI are, however, very few in number but as India capitalizes on the above mentioned benefits, there will be more competition in the market at large and the rural

sector of the country will be in the process of reformation, thus bringing about a socioeconomic stability

22

Political impact of larger FDI

The political impact of larger FDI in India has transformed the Indian investment scenario in various areas. The fact that more multinational corporations are investing in India signifies that India is increasingly focusing on the industrial sector. The increase in Foreign Direct Investments resulted in the Government of India making critical reforms in 1991 and since then, the emphasis on Indian industry has been constantly on the rise. The political impact of larger FDI is influencing the government to initialize and support concepts like liberalization. The political climate is focusing on liberalization of banking, telecom, infrastructure, and insurance sectors. The political scenario is changing gradually, and is accepting the concept of Foreign Direct Investment widely within the country. The government is looking forward to working on the rural areas and bringing about equality in terms of investment and wealth distribution with the urban areas. In November, 1991 there was tremendous activism against opening up the Indian market to multinational corporations. But now, the situation is completely different since there has been an increase in the investment of multinational corporations. The political scenario too is learning to accept globalization and privatization with an open and progressive outlook. Reformation in this regard is taking place in the public sector, financial services, and tax structures as well. The political scenario of India is looking forward to Foreign Direct Investment as a mechanism for development. In fact, there has been development in the fields of land use, water, power generation, and roads. This points towards the great political impact of larger FDI.

23

The increase in FDI flow has strengthened the foreign political relations and now foreign companies are trying to persuade the Indian Parliament to increase FDI capital depending on the sector. There are some chief bodies and boards that have been set up for the purpose of Foreign Direct Investment, such as:

Project Approval Board (PAB) Licensing Committee (LC) District Industries Centers Investment Promotion and Infrastructure Development Cell Foreign Investment Promotion Board (1991) Foreign Investment Promotion Council (1996) Foreign Investment Implementation Authority (1999) Investment Commission (2004)

Thus, the political impact of larger FDI has made prospects for India's future relationships with foreign companies really bright and exciting

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Social Impact of Larger FDI

The social impact of larger FDI is dependent on India's policies and institutions. The flexibility of the labor market would determine employment opportunities. The extent to which the lower income groups can take advantage of the growth policies determine the growth-poverty relationship. The production in the fields of physical and social infrastructure determine the regional developments. The Indian industries are predominantly labor based but there are also many capital based companies. Capital intensive set up is an expensive proposition but India can look forward to more professional and sophisticated number of workers and employees at all levels. Human capital in terms of quantity was never a big problem in India due to its huge population added emphasis must be laid on the quality and efficiency in work. This is brought about by MNCs. Foreign Direct Investments foster relations, co-operation, and harmony between India and foreign countries. The social impact of larger FDI include the product market as well because many new products come into the market as a consequence of FDIs. As a result, the people of India enjoy unprecedented exposure to branded and quality goods. In fact, various training methods, personality grooming, and soft skills are given by multinational corporations which impart value to human resources. Owing to social impact of larger FDI, India also enhance its educational system. Since 2003, the Indian government has been allowing 100% FDIs in education, which means that foreign schools, colleges, and universities can set up wholly owned subsidiaries in India. Students passing out of these institutes will be awarded foreign degrees and certificates. The social impact of larger FDI in education is such that the number of foreign students pursuing higher education in India has
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increased by a large margin. Also, the 'brain-drain' issue has also been checked to a significant extent since the number of students going out of India has also reduced. Even the civil society can work with the government and help in reducing bureaucratic hassles and interferences. The increase in FDI in India is also helping in the liberalization of labor through which the inequality in wage earnings will be reduced. There is implementation of higher education and training for the laborers. The health facilities also increase with better and sophisticated products and processes. India is definitely developing in a much faster pace now than before but in spite of that, it can be identified that developments have taken place unevenly. This means that while the more urban areas have been tapped, the poorer sections are inadequately reached out to. To get the complete picture of growth, it is essential to make sure that the rural section has equal amount of development as the urbanized ones. FDI helps to focus in this area thus,fostering social equality and at the same time a balanced economic growth. The social impact of larger FDI brings about a more broadminded outlook in the Indian society, leaving alone a few who would be a bit conservative. However, the condition of the Indian urban sector has improved drastically thereafter, which we still await the developments from other areas of the Indian economy.

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ORGANISED RETAILING IN INDIA

The retail market size in India is estimated to be around $180Billion. Retailing provides jobs to almost 15 percent of employable Indian adults and is the largest contributor to Indias GDP. But the other side of the coin is that the average size of each of the retail outlet in India is 50 square feet, and though a large employer, the industry is very unorganized, fragmented and with a rural bias. The Indian retail industry is organized There are nearly 12 million retail outlets in India and the number is still growing. Two third of these stores are in rural location. The vast majority of the twelve million stores are small father and son outlets According to the organised retailing in India report published by PwC global retail intelligence program, share of the organized sector is 58%.

The retail industry is fragmented Retail stores in India are mostly small individually owned business. The average size of an outlet is 50 square feet. And though India has the highest number of retail outlets per capita in the world, the retail space per capita at 2 square feet per person is lowest in the world.

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THE CHANGING INDIAN CONSUMER

Indian consumer has shown a great change in their buying behavior and has spent much more on its lifestyle in the ongoing scenario. Organized retail has been able to attract these consumers to a great deal. There are several reasons for this change in behavior of Indian consumer, some of which are Greater Per capita income o o Growing high and middle income population Growing at a pace of over 10% per annum over the last decade.

Affordability Growth o o o Falling interest rates. Easier consumer credit. Greater variety and quality at all price points.

The urban consumer o o o Getting exposed to international lifestyle. Inclined to acquiring assets. More discerning and demanding than ever.

No longer need based shopping o Changing Mindset

Increasing tendency to spent Greater level of education

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GOVERNMENT REGULATIONS FOR ORGANISED RETALING

FDI not permitted in retail trade sector except in: Private labels Hi-tech items( Items requiring specialized after sale service) Medical and Diagnostic items Items sourced from the Indian small sector For two year test marketing Entities established prior to 1997 o Allowed to continue with their existing foreign equity components. o No restriction in the retail sector pre-1997.

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BENEFITS TO GOVERNMENT

Increasing Tax Paying Population

Employment GDP Growth

Greater consumer Spending

Increased Tax Revenues

Greater Exports

Reduced Tax Evasion

Greater Sourcing From India

30

TRENDS IN ORGANISED RETAILING

Retailing in India is at the nascent stage of its evolution, but with in a small period of time certain trends are clearly emerging which are in line with the global experience. Organized retail is witnessing a wave of player entering the industry and these players are experimenting with various retail formats. Yet Indian retailing has not been able to come up with many successful formats that can be scaled up and applied across India. Some of the notable exceptions have been garments retailers like Madura garments and Raymonds who was scaled their exclusive showroom formats across the country. The Indian economy is highly regulated and the most significant regulation is the restriction of foreign ownership. A strong FDI presence in retail sector is expected to not only boost the retail scenario, but also act as a driving force in attracting FDI in upstream activities as well. This will be more prominent in food processing and packaging industries because many large retail chains also promote their own brands by way of backward integration/contract manufacturing.

31

IMPECT OF FDI IN ORGANISED RETAIL

India can become a giant in a short time span in food processing and textiles, for which we have the potential because Indian agricultural production is the lowest cost in the world and textile labour is the cheapest internationally. Allowing FDI in retail trade, especially in groceries and garments marketing, is one sure way of doing it. Food processing and textiles will grow very substantially from the linkage effects of a modernized; globalize retail trade that only FDI can ensure. The employment generation for Indian youth would also be enormous. Indian retail trade is of enormous size ($180 Billion), nearly 10 percent of GDP, employing 21 million persons, which is about 7 percent of the labour force. It is six times bigger than Thailand and five times bigger than South Korea and Taiwan. Chinas retail trade is 8 percent of GDP and 6 percent of employment. But the trade in India is fragmented, unorganized, un-networked and individually small. The 12 million kirana shops are mostly family or ma-pa owned with little capital for expansion or credit to receive or to extend to consumers. About 96 percent of these shops have 500 sq ft or less of space with limited stock or choice to offer. During all these years, instead of shedding tears for indigenous trade and resisting FDI, had the government declared it an industry, it would done the trade a world of good. Now it is being said that allowing FDI in retail trade would destroy this commerce! Will it? A study by the associated chambers of commerce of industry of India, New Delhi, concluded that at least for the next years that will not happen. Thereafter, the present fragmented system may get phased out or evolved into more integrated networked units.

Modern retailing is designed not only to provide consumer with a wide variety of products under one roof, but also of assured home delivery and information feedback between consumers and producers. A modern retail outlet will also make it easy to buy on credit and provide for servicing and repair of products sold. With IT application the modern retail store can cut transaction cost such as due to inventory, delivery and handling. That is precisely how the US
32

based Wall-mart grew to be a giant because it reduced its distribution costs to 3 percent of sales compared to 4.5 percent of others. With MIT professor Sanjay Sharmas epochal innovation of RFID(Radio Frequency Identification), which will do away with cash registers and clerks who are required to operate it, Wal-Mart will further reduce its costs. India today is only major economy that still does not permit FDI in retail trade. In China, 35 of the worlds top 70 retailers have already entered and set up business. They have helped boost exports. Wal-Mart alone exported in 2002 about $12 Billion worth of goods. These retailers source their goods from inside China. India is targeting its GDP to grow by 8 to 10 percent per year. This requires raising the rate of investment as well as generating demand for the increased goods and services produced. Exports are one way of producing demand. Encourage private consumption expenditure is another way. The retail giant houses can bring their better management practices and IT-friendly technology to cut wastage and set up integrated retail chain to gradually replace the present unorganized and fragmented retail market. According to McKinsey, India wastes nearly 50,000 crore in the food chain itself. These international retail outlets can help develop the food processing industry, which requires $28 Billion of modern technology and infrastructure. FDI in retail trade has forced the wholesalers and food processors to improve, raise exports and triggered growth by outsourcing supplies domestically. The availability of standardized products ahs also boosted tourism in these countries.

33

Impact on Consumers
Consumers have definitely gained from organized retail on multiple counts. Overall consumer spending has increased with the entry of the organized retail. While all income groups saved through organized retail purchases, the survey revealed that lower income consumers saved more. Thus, organized retail is relatively more beneficial to the less well-off consumers. Proximity is a major comparative advantage of unorganized outlets. Unorganized retailers have significant competitive strengths that include consumer goodwill, credit sales, amenability to bargaining, ability to sell loose items, convenient timings, and home delivery.

Impact on Farmers
Farmers benefit significantly from the option of direct sales to organized retailers. Average price realization for cauliflower farmers selling directly to organized retail is about 25 per cent higher than their proceeds from sale to regulated government mandi. viii Profit realization for farmers selling directly to organized retailers is about 60 per cent higher than that received from selling in the mandi The difference is even larger when the amount charged by the commission agent (usually 10 per cent of sale price) in the mandi is taken into account.

34

UNORGANIZED RETAILING IS GETTING ORGANIZED

To meet the challenges of organized retailing that is luring customers away from the unorganized sector, the organized sector is getting organized. 25 stores inn Delhi under the banner of provision mart is joining hands to combine monthly buying. Bombay bazaar and Efoodmart have also been formed, which are aggregations of kiranas. In a novel move, six Delhi based restaurants have come together and formed a consortium: NFC to promote new friends colony, a posh locality in the capital, as a branded place in town. The aim is to increase footfalls in the area, which is fastly losing its sheen to its closest and upcoming destinations such as large cineplexes and malls, which are backed by the corporate house such as Ansals and PVR.

35

ORGANIZED RETAIL EMERGING OPPORTUNITY FOR INDIAN EXPORTERS

Opening up of organized retail sector in India will have a major impact on Indian export. If you are an exporter its time to take stock of emerging opportunity and prepare yourself accordingly. How big is the opportunity? Global retailers buy about US Dollar 60 billion of goods each year from China alone. India has so far managed to export only about US dollar 1 Billion worth of goods to global retailers. Obviously, scope of exports through the global retail chain is enormous. The reason of such high optimism lies in the government decision of allowing global retailers to open shop in India. In a major decision, the government decides to allow international brands to set up their retail chains with majority stake instead of having to depend on local franchisees. So Mark and Spencer have their own stores in India. The move will also help companies which already have a sizable presence in India but have to operate through a network of franchisee stores at present like- Nokia and Adidas. While detailed guidelines is yet to be issued. The government has also decided not to cap the number of stores to be opened. Why FDI in retail will help Indian Exporters: Major retail chains are already procuring from India. How their direct presence does go to effect Indian exporters in a significant way? After all, Wal-Mart can buy from India without opening their store here. Though theoretically, Wal-Mart or any other global retail chain can source from India without opening their shops here-in reality, they do not work that way. That is the reason why Indias export to global retailer is so meager today. A global chain would buy large quantities for exports on a sustained basis only when it establishes a close linkage with the local market and the suppliers. This happens after they open local stores. By being close to local suppliers and customers, the global chain remains in far better position to control and monitor the supply chain including product design, quality of inputs, manufacturing process, standardization, labeling and packaging, transportation, storage warehousing,
36

distribution network etc. Such closeness with supply chain enables them to change product mix quickly in response to changing global fashions and establishing the right kind of captive suppliers who would not be selling to their competitors. Establishment of efficient supply chain and related infrastructure, which global retailers develop for their local stores, would yield significant cost economies. When the same infrastructure is used to procure supplies for their global needs. Resultant efficiency and economy of scale cannot be expected from their existing lot of Indian suppliers. Today, Wal-Mart sources some $18 billion of goods from China for their global operations. How-ever this happened only after Wal-Mart was allowed substantial presence in Chinese local retail market.

37

ORGANISED RETAIL AS AN EMPLOYMENT GENERATOR

The retail stores can generate huge amount of opportunities, and can lead to job-led economic growth. In most major economies, Services form the largest sector for creating employment. US alone have 12 percent of its employable workforce engaged in the retail sector. The retail sector in India employs nearly 21 million people, accounting for roughly 6.7% of total employment. However employment in organized retailing is still very low, because of small share of organized retail business in the total Indian retail trade. The share of organized retail trading in India is about 3% and is abysmally low, compared to 80% in USA, 40% in

Thailand and 20% in China, thus leaving the huge market potential largely untapped. A modern retail service sector has the potential of creating over two million new (direct) jobs with in the next 6 years in the country ( assuming only 8-10 percent share of the organized retailing), according to Arvin Singhal CMD, KSA Technopark.

Retail can create as many new jobs as the BPOs/ITs sector in India. A strong retail front end can also provide the necessary fillip to agriculture and food processing, handicrafts and small and medium manufacturing enterprises, creating million of new jobs indirectly. Through its strong linkages with sectors like tourism and hospitality, retail has the potential of creating jobs in these sectors also. Though the planning commission has identified retail as a prospective employment generator, in order to strengthen the multiplier effect of growth in organized retailing upon the overall employment situation, a proactive government support mechanism needs to evolve for nurturing the sector. The opening up of retail trade for foreign direct investment (FDI) promises to usher in revolutionary changes to the Indian consumer market in the days to come. Recently, in a significant step towards liberalizing India's retail trade, the government had decided to partially open the retail sector by announcing 51 percent FDI in single brand retailing - a move that should pave way for big names like Nike, Versace, Addidas, Marks & Spencer to set up their own stores in India.
38

However, experts are still divided on the problems and prospects of this move. Some say it will shrink employment opportunities, completely alter the retail distributional structure and deal a death blow to the corner shop structure. The optimists, on the other hand, see a whole range of opportunities -- from improved collection, processing and better distribution of farm products to generation of more opportunities for the rural and urban unemployed. Until now, global retailers were required to sell their products through franchises or wholesale trading. This move will help them setting their own base in India and will attract foreign capital along with better quality products and services for the consumers. The Indian retail market currently estimated to be worth $250 billion is presently dominated by millions of mom-and-pop stores that cater to 97 percent of the total market. According to a recent study, the Indian retail Industry is expected to grow at about 36 percent by 2008 and with the increase in foreign investment the industry is expected to do a business of Rs. 1.60 trillion by the year 2008. With the new regulations in place, the debate is that what will happen to these stores? Will the entry of global retailers wipe out these local stores or will it make no impact? If we take China's example, the FDI in retail has little or no impact on the local retailers and they still dominate the retail sector. Secondly, the decision may not trigger the FDI flow as such as single brand retailers who wanted to be in India like Nike and Reebok are already here through franchise and may find it tough to find local partners willing to invest in the business. Indian retail sector is the second largest employer after agriculture in the country and the entry of foreign companies will not only increase the number of employment opportunities but also exports.

39

With foreign companies setting up their own stores in India, the consumer will get access to some of the major global brands. Entry of foreign brands would also improve the quality and variety of products, increase competition and expand manufacturing. Organised retailing holds the promise of lowering the prices of foreign goods sold through these large stores. This also means that some of these retail chains will eventually have to start manufacturing locally or outsource from domestic manufacturers in order to be in the competition. This is more so considering the fact super and corner markets are very likely to co-exist in the Indian market and it would make the latter more competitive and skilled in terms of operations. Also, several Indian corporates such as the Tatas, ITC, the RPG Group and the Rahejas have already established their outlet chains. Others such as Viveks in Chennai have established multibrand stores. Mukesh Ambani's Reliance, too, is reported to be planning a major foray into retail business. All this promises to make the Indian retail market a real happening place in the days ahead while at the same time offering immense business opportunities to the domestic entrepreneurs. In fact, this is likely to transform the whole contours of the India market, making it a part of the overall global market.

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MORE FDI ORGANISED RETAIL NEEDED

The need of the hour is for the government to device pragmatic policies for FDI in the retail business. The fear expressed on the possible danger to the traditional retailer is entirely unjustified. Why do we need FDI in any sector? Primarily, for two reasons- Either domestic capital formation sector in the sector is not adequate to meet the need, as in the case in certain infrastructure sectors like power, or there is need for technical know how, which otherwise is not available in the case of chip manufacturing. In the retailing business, the need for FDI is on the account of the need for capital. It is important to appreciate that modern retailing is essential for growth, for it induces tremendous efficiency into the entire chain, beginning from, say, the farmer to the end consumer. The farmer can plan better and more efficiently in sowing crops when he has confirmed bulk order. Further it cuts out the intermediaries and thereby reduces costs. Meanwhile the buyer can put up distribution network which will reduce costs, which can be transferred to the end consumer. Hence, nobody can accuse them of increasing prices. And, a virtuous cycle starts at the consumer end. Currently retailing in India is at a very nascent stage, with minimal penetration and 98% consumption through the traditional channels. And, given the size of the retail market, of around Rs13,75,000 crore, FDI is clearly needed for servicing even a fraction of this market. For if all retail sales were to be undertaken through supermarkets, the investment requirement would be of the order of Rs 2,60,000 crore. In the past 10 years, the total capital in the modern retail in the country is of the order of Rs 10,000 crore. Given the consumption which is rising at around 8% per year, by 2011, the market would be worth Rs 18 lakh crore and the investment require to service this would be of the order of 4,00,000 to 4,50,000 crore. Assuming a generous FDI flow of around Rs 20,000 crore, its impact on traditional retail market will be next to nothing. Hence, the argument repeatedly made by certain quarters-of killing the domestic traditional retail channel by opening of the retail route is entirely unjustified. A glance at the FDI flow in other sectors reaffirms this point. This has hardly been around $4 billion to $6 billion in all the sectors put together.

41

CHALLENGES OF ORGANISED RETAILING IN INDIA

Retailing as an industry in India has still a long way to go. To become a truly flourishing industry, retailing needs to cross the following hurdles: Automatic approval is not allowed for foreign investment in retail Regulations restricting real estate purchases and cumbersome laws Taxation, which favours small retail businesses Absence of developed supply chain and integrated IT management. Lack of trained work force. Low skilled level for retailing management.

Intrinsic complexity of retailing- Rapid price changes, constant threat of product obsolescence and low margins. The retailers in India have to learn both the art and science of retailing by closely following how retailers in other parts of the worlds are organizing, managing and coping up with new challenges in an ever changing market place. Indian retailers must use innovative retail formats to enhance shopping experience and try to understand the regional variations in the consumer attitude to retailing. Retail market efforts have to improve in the country- advertising, promotions and campaign to attract customers, building loyalty by identifying regular shoppers and offering benefits to them; efficiently managing high value customers; and monitoring customers needs constantly are some of the aspects which Indian retailers need to focus upon a more proactive basis. Despite the presence of basic ingredients required for the growth of the retail industry in India, it still faces substantial hurdles that will retard and inhibit its growth in the future. One of the key impediments is the lack of FDI. This has largely limited capital investments in the supply chain infrastructure, which is a key for development and growth of food retailing and has also constrained access to world class retail practices. Multiplicity and complexity of taxes, lack of proper infrastructure and relatively high cost of real estate are other impediment to the growth of retailing.
42

While the government and the industry are trying to remove many of these hurdles, some of roadblock will remain and will continue to affect the smooth growth of this industry. Organized retailing in India is gaining wider acceptance. The development of the organized retail sector, during the last decade, has began to change the face of retailing, especially, in the major metros of the country. Experiences in the developed and developing countries prove that performance of organized retail is strongly linked to the performance of the economy as a whole. This is mainly on account of the reach and penetration of this business and its scientific approach in dealing with customers and their needs. In spite of the positive prospect of this industry, Indian retailing faces some major hurdles.

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Organised retail benefits consumers and farmers:

Indian Council for Research on International Economic Relations (ICRIER), in its report on the 'impact of big retail on neighbourhood stores' has supported organised retail in the country. According to the report submitted to the Department of Industrial Policy and Promotion today, both consumers and farmers benefit from organised retailers. The low income consumers save more from purchases from organised retailers. The farmers benefit from organised retailers as they have the option to sell directly to organised retailers. Besides, as a result of the entry of the organised retailers, there is no evidence of decline in the overall employment in the unorganised sector. However, the report admitted that initially, momand-pop stores, in the vicinity of big outlets, have seen drop in their sales and profits. The report says that unorganised retail business is likely to grow at 10 per cent per annum from $309 billion in 2006-07 to $496 billion in 2011-12. The report also adds that the unorganised retailer will not be able to meet its growing demand and hence the share of organised retail is going to increase at a rate of 45-50 per cent per annum. According to the report, organised retail, which currently contributes around 4 per cent of total retail sector, is likely to grow at much faster pace to increase its share of total retail trade to 16 per cent by 2011-12. The study, however, did not deal with the impact of foreign direct investment (FDI) on traditional retailers. "This study has nothing to do with the impact of FDI on retail," ICRIER CEO and director Rajiv Kumar told media. .

44

OBJECTIVE OF RESEARCH

To study the impact of FDI in organized retail stores. To study the opportunities of organized retail stores. To study the consumer perception in organized retail stores. To study the factors affects the organized retail stores. To study the grievance handle systems in organized retail stores.

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SCOPE OF RESEARCH

This research work will help us to understand the present position of retail and how much the environment is supportive for FDI in organised retail sector in India. What are the impacts that government have foreseen and hence has formulated strict and non supportive policies? How other economies are gaining through FDI and FII in retailing. Is there any way that government can make use of these investors and can secure the interest of existing players?

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RESEARCH METHODOLOGY

Research Methodology: Research work is descriptive type.

Source of Data: In the research both primary and secondary data is used. Primary data is collected through small retail outlets and secondary data is collected through Magazines, Journals, News Papers and Internet Etc.

Research Type: Research type applied over here is descriptive research because the purpose is to find out the perception of consumer and retailer regarding home delivery system. The main characteristic of this method is that the researcher has no control over the variable. He can only report what has happened or what is happening.

Data Collection: There are several ways of collecting the appropriate data: Primary method Secondary method

Primary Method: Primary method can be collected either through experiment or through survey. If the researcher conducts an experiment, he observes some quantitative measurement, or data, with the help of which he examines the truth contained in his hypothesis. But in this case of a survey, data can be collected by any one or more of the following ways:-

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By Questionnaires By Observations

Secondary method: Through internet Through news paper Through magegine

Sample size: The sample size is-100 In this strata is made on the basis of income and the people are selected from each income group on the basis of random sampling. So, the entire procedure of first stratification and then simple random sampling is known as stratified random sampling.

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Research design:
The research design used over here is stratified sampling. If the population from which a sample is drawn does not constitute a homogenous group, the stratified sampling technique is applied so as to obtain a representative sample. In this technique, the population is stratified into a number of non-overlapping, sub population or strata and sample items are selected from each stratum. In this stratum is made on the basis of random sampling. So the entire procedure, first stratification and then simple random sampling is known as stratified random sampling.

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DATA ANALYSIS And INTERPRETATION

50

Graphical representation
1. Data analysis As far the consumer buying behavior is considered towards the organized shop may be classified on the basis of. (a) Location (i) (ii) (iii) Village City Town

(b) Requirement (i) (ii) (iii) Bulk Small quantity Immediate require / after some time

(C)Education (i) (ii) (iii) Literate Illiterate Aware / not aware

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(a) Location
Location is an important part of the organized retailing because the location creates a lots effect on the market. When we take the example of the Village there is no scope of the organized retail sector because the people think about the organized retailer the retailer give the costly product & the rich person buy that product these organized retail shop not made for us. Now we see the town there also the poor response now a days because the malls and the big retail showrooms are not situated in the area of the town and some people have that mentality, which have the villagers. So we can say there is no more effect on the town. When we move towards the city then we see the craze of the organized shop how the organized retailing creating more effect on the people.

(b) Requirement
Requirement also a main point because when a person who require a thing immediate then there is no option to choose the unorganized retail because he has no time. But in other case we can see people who have a time & the list of the product is also large then the people think about the organized retail shop because the better & cheap quality available the retail shop.

(c) Education
Education is the main or common part of the customer choice because when Customer is educated then he is able to take a good and valid decision, which gives the satisfaction to the consumer. When the people are not educated then he is not able to take the decision what is good for purchase and where is the good place to purchase.

52

So according to the above study the shopper which are situated in the village they are not interested to change in the shop or some modification because there is no another option in the village and the customer are bound to purchase. Customers of villages are also not aware about the outside thing. Some town area shopper wants to change the shop they wants to modify the shop according to the choice of customer but some remain thing there is no effect on them opening with the organized retail showroom. City shopper are most effective with the organized retailing because every person wants the all things on a same place and the product should also cheep and the organized retailer provided to easily and cheaper. The infrastructure of the shop also creates an effect on the consumer because packaging of the any product should be good so they want to modification in their shops.

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1. According to the location division of the population.

Location Rural Urban

Percentage 70% 30%

Percentage
Rural Urban

30%

70%

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Interpretation:
Most of the respondents are group of location rural 70% and urban 30%, the reason are they are not start savings and also they are just started earning which causes them to spend more.

55

2. Interest of the rural & urban people in the organized retailing

People Rural (town only)

Percentage
20%

Urban

55%

Rural (village)

2%

Both

23%

Percentage
Rural (town only) Urban Rural (village) Both

23% 2%

20%

55%

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Interpretation:
Most of the respondents are in group of interest of the rural (town only) 20%,urban 55%,rural(village) 2% and both 23%..

3. % Of Retailers who wants the change in the retail shop to become organized shop.

People Rural (town)

Percentage 20%

Rural (Village)

5%

Urban

75%

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Percentage
Rural (town) Rural (Village) Urban

20%

5%

75%

Interpretation:
Most of the respondents wants the change in the retail shope of to become organized in group of interest of the rural (town only) 20%,urban 75%,rural(village) 5% .

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4. Is it a good for the Indian market and Indian people?

People

Percentage

45% Very good

So So

25%

Bad

30%

Percentage 0.5 0.4 0.3

0.2
0.1 0 Very good So So Bad

Percentage

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Interpretation:
Most of the respondents are in Indian market very good .4% ,so so .2% and bed .28%.
5.The organized retailing according to the customer point of view considers all the category of the customer.

People

Percentage

Rural customer

22%

Urban customer

55%

Both

38.5%

60

Percentage 60% 50% 40% 30% 20% 10% 0% Urban customer

Perce

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FINDINGS & SUGGESTIONS

Thus it is found that FDI as a strategic component of investment is needed by India for its sustained economic growth and development. FDI is necessary for creation of job, expansion for existing manufacturing industries and development of new one. Indeed, its also needed in healthcare, education, infrastructure, retail and in long term financial project. So, the study recommends the following suggestion. The study urges the policy maker to focus more on attracting diverse types of FDI. The policy maker should design polices where foreign investment can be utilized as means of enhancing domestic production , saving and exports, as medium of technological leaning and technology diffusion and also in providing access to the external market. It is suggested that government should push for the speedy improvement of infrastructure sector requirement which are important for diversification of business activities. Government should ensure the equitable distribution of FDI inflows among status, so that they can attract FDI inflows at their own level. The government must promote policies which allow development process from within(i.e. through productive capacity and by absorptive capacity )

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SUGGESTIONS
It is suggested that the government endeavor should be on the type and volume of FDI that will significantly boost domestic competitiveness, enhance skills, technological learning and invariable leading to both social and economical gain. It is also suggested that government must promote sustainable development through FDI by further strengthening of education, health and R&D system, political involvement of people and by ensuring personal security of the citizens. FDI should be guided so as to establish deeper linkage with the economy, which would stabilize the economy (e.i. improves the financial position, facilitates exports, stabilize the exchange rate, supplement domestic savings and foreign reserves etc ) and providing to investor a sound and reliable macroeconomic environment. Finally it is suggested that policy makers should ensure optimum utilization of fund and timely implementation of projects. It is also observe that the realization of approved FDI into actual disbursement is quite low. It is also observe that the government while pursuing prudent policies must also exercise strict control over inefficient bureaucracy, red-tapism and the rampant corruption, so that investors confidence can be maintain for attractive more FDI inflows to India.

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LIMITATIONS OF FDI
There are many limitations of foreign direct investment in India. These are following:-. Flow to high profit areas rather than main concern areas. Through their power and flexibility, MNCs can undermine economic autonomy and control. Faced with the problems of various resources like time and money. Sometimes interface in the national politics. Sometime engage in unfair and unethical trade practices. Sometime result in minimizing/eliminating competition and create monopolicies or oligopolistic structure.

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CONCLUSION

A large number of change that were introduced in the country,s regulatory economic policies heralded the lebralization era of the FDI policies regime in India and brought about a structural break through in the volume of the FDI inflows into the economy maintained a fluctuating and un study trend during the study period. It might of intrest to not that more than 50% of the total FDI inflows recived by India, came from Marutius. The main reason for higher levels of investments from Marutius was that the fact that India entered into a duble taxtion aviodances agreement with Marutius were procted from taxtion India, among the different sector. The service sector had recived large proportion followed by computer softwere and hardwere sector and telecommuniction sector.

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BIBLIOGRAPHY
1. Sharma, Sunil(2004), The marketing services for telecom industry published by infocom media. 2. Kotler philip (2005), Marketing management Pearson Education, 12th Edition. 3. Shajahan, S(2011), Research methods industrial newsprint. 4. Malhotrs K.Naresh, Marketing research 1st Edition published by Sharswati books. 5. Cravens David Piercy Nigel, Strategic marketing 8th Edition pub 27-aug-09 By=Tata Mc Graw Hill. 6. Lamb Cravens Charles David, Strategic marketing management cases 7th Edition Pub Date 01-jan-01 By Tata McGraw Hill.

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ANNEXURE Questionnaire
Q1: How often you come to Vishal Mega Mart? Every day or more

2-6 times a week

Once a week

Once a mont Q2: What kind of product you shop mostly? Garments

Home furnishing

FMCG

Others

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Q3: Is Vishal Mega Mart is your first preference for shopping?

YES

NO

Q4: How you found the services in Vishal Mega Mart?

Excellent

Good

Fair

Average

Q5: Does the Sales person attend you? YES

NO

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Q6: Does Sales person satisfy you completely?

YES

NO Q7: Where do you think Vishal Mega Mart should improve more?

Pricing

Customer services

Environment Variety

Q8: Have you ever filled the suggestion or feedback register? YES

NO

Q9: Have you made any complaint before? YES

NO
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Q10: Customer satisfaction is not as important as customer delight? TRUE

FALSE Q11: CRM is all about retention of customers than acquisition? TRUE

FALSE

Q12: CRM implementation requires a cultural change than rather than mind set change of people in Organization? TRUE

FALSE

Q13: How you found your morale while working?

Excellent

Good

Fair

Average

70

Q14: Do we maintain enough customer data to retain them? YES

NO Q15: Does Vishal Mega Mart need more Schemes to retain Customers?

YES NO Q16: Where you want more improvement to retain customers? Pricing

Customer Services

Environment

Variety

71