GMSI582 Extended Essay

Topic ORGANIZED RETAILING

Sandeep make the topic more inclusive means narrow it down to some specific issue
in Retail Industry.
For example: A secondary research to find out the future prospects of Organied
Retail in India.

Name: Sandeep Singh Mobile No.: !!!!""##$%
Roll No.: "&&"&# Email ID: sandeep.singh'gdgoenka.ac.in
Faculty Guide Name: (rof. ).).*orya
+ate: ",-&#-.&".
ii
ACKNOWLEDGEMENT
It is well-esta/lished fact that /ehind every achievement lays an unfathoma/le sea of
gratitude to those who have extended their support and without whom the essay
would never have come into existence0 without their help my present work would
never have assumed its forms and completion.
I 1ust want to thanxs Po!. K.K. Moya 0 for extending his support and experience as
my guide into this essay.
"Re#ite it loo$ i%to t&e !omat o! a%y ot&e 'imila
e'eac& e(ot)
iii
A*+TRACT
2ith a contri/ution of "#3 to the national 4+( and employing ,3 of the country5s
total workforce0 the retail industry is definitely one of the pillars of the Indian
economy
"
. Interestingly0 only #-63 of this monolith /usiness segment is in the
organied sector. 7he parties involved in this growth story are the manufacturers0
retailers and the consuming pu/lic and finally the government. (rincipal growth
drivers are a demographic0 rising economy0 satellite townships0 consumerism0 growth
of nuclear families0 availa/ility of real estate0 electronic media0 changes in consumer
/ehavior and impact of working women and the rise in the use of plastic money0 F+I
regulations and technological advances. +espite0 from all the freny associated with
the /usiness0 the retailing sector has not /een accorded an industry status. Other
challenges relate to inade8uate and uninterrupted power supply0 cold storage facilities0
logistics and supply chain mechanism and unfriendly la/our and tax laws.
7his is not the a/stract of your research. 9ou have 1ust written some information a/out
Indian economy. 2rite the summary of what you have done.
*ethodology0 analysis0 interpretation conclusion in /rief.
" http:::www.indiafdiwatch.org:fileadmin:India;site:"&-F+I-Retail-more-/ad.pdf. <do not write this for
a/stract=
iv
TA*LE OF CONTENT+
". Introduction "
.. O/1ectives of the study #
>. ?iterature Review 6
#. Research *ethodology "&
6. Retail Scenario in India ""
$. Retail 4rowth +rivers ".
,. Organied Retail "$
%. S2O7 Analysis of Organied Retail in India .&
!. , (5s in Retail *arketing ."
"&. F+I in Retail >"
"". Operational Issues >$
".. @onclusion >%
">. References#&
v
INTROD,CTION
Retailing as simply defined is the end process of supply chain management where
there is a direct interaction with the end-user or the customer. Aence forth availa/ility0
assortment0 display0 proper handling of product plays a vital role in a competitive
world
"
.
7he Retailing sector is one of the world largest and continues developed industries. So
it5s in a permanent state of change and the rate of this change has /een accelerating
over the period of time. From the marketing perspective0 retailers are closer to the
consumer than manufacturing companies <Reynolds .&&#/0 p.>=. 7he Retailers
sym/olie as a culmination of the marketing process and the contact point /etween
manufactured products and consumers. 2hereas retailing has a long set of /uying
decisions due to its highest priority and focused more on the product assortment0 this
sector is now follows more holistic approach on the marketing. 7hat was once a
simple way of doing /usiness is transforming into a highly sophisticated form of
management and marketing. Retail marketing is consistently features as more
meaningful0 profita/le and efficient marketing practices. <*ulhern "!!,0 pg."&>=
Retailing involves those companies that are engaged primarily in the activity of
purchasing products from other organiations with the intent to resell those goods to
the final customer0 generally without transformation and rendering the services
incidental to the sale of merchandise. 7he retailing process is considered as a final
step in the distri/ution of merchandiseB where retailers are therefore organied to sell
the commodities in small 8uantities among general pu/lic. 7he services like
transportation and stock keeping added to the products to ensure that they are
availa/le at the point of sale. Aow ever0 the process also encompasses the selection of
products for a retail assortment0 the provision of sales advice0 after sales service and
many other functions. Further0 num/er of developments is also responsi/le for
/ringing the dynamic change in modern retail management. In developed countries0
the dramatic increase in the scale of operations and market concentration are
experienced in retailing. +ue to the appearance of large scale retail chains have
covered over more market share than from independently owned small shops. 7hese
retail chains first developed into provincial groups0 then into countrywide and even
worldwide active retail operations.
"
7he Organied retail stores are characteried into large proficiently managed stores
format. 7hey provide an excellent am/ience that is conducive for shopping.
7he retail sector in India is witness of tremendous increase in the 8uality of life <ur/an
areas= and also changing demographics. Retail Sector is /ooming sector in the Indian
economy. 2ith an improving income dynamics0 growing economy and rising
awareness0 due to this India will /ecome one of the most potential markets for the
domestic and glo/al retailers.
7he retail industry in India gathered a new momentum with the esta/lishment of
different international /rand outlets0 hyper or super markets0 shopping malls and
departmental stores.
7he organied retail segment in India is pro1ected to /e ! per cent of total retail
market /y .&"6 and .& per cent /y .&.&. Aypermarkets would /e the largest retail
segment that account for ." per cent of the total retail space /y .&">C"#
.
.
7he Indian retailing sector has also started operating in 7ier-II D III due to continues
growth in population and demand for products that helps in increases the level of
num/ers of retail outlets in the country.
In .&"" surveyed conducted /y 4lo/al Apparel Index that state that India ranked sixth
among the >& countries.
Ma$et +i-e
7he E*I India Retail Report for the fourth 8uarter of .&"" forecasts that total retail
sales will grow from FSG #""..% /illion in .&"" to FSG %&#.&$ /illion /y .&"6. 7he
key factors /ehind the forecasted growth of retail are ro/ust economic growth0 growth
in population and wealth of individuals and the speedy construction of retail
infrastructure. 7he franchise market in India is also started growing at a strong pace
over #&3 per annum within 7ier-. D-> cities gradually /ecause this is getting
attracted to the network of retailers and franchisers due to Augh disposa/le income.
. http:::www.i/ef.org:industry:retail.aspx
.
O*.ECTI/E+ OF T0E +T,D1
7o find out the *arket Shares of various /rands.
Future outlook of Retailing.
@hallenges and Opportunity in Retail Industry.
*a1or Retail Segments.
F+I Scenario in India.
Retail Format in India.
4rowth +rivers.
7oo many o/1ectives and not in congruent with the main
title of the research. Reduce the num/er of o/1ectives and
specific to your research
LITERAT,RE RE/IEW
,'e t&e o!!icial !omat !o #iti%2 liteatue e3ie#4
7he recent time has /een o/served as growth of Indian organied retail market with
many folds. 7he Humerous retail /usiness groups like Eharti0 Future0 Reliance0 and
Aditya Eirla are attracted in the past few years and like to esta/lish hold in coming
time. 7he foreign companies also started showing interest <like 2al-*art= to enter
Indian market so capture large market share. 7he retail sector of India is consider as
one of the largest industry< around "# million outlets= that generate various sources of
>
employment in the country and contri/ute "&-""3 of gross domestic product with
G",& /illion of retail sales. Since0 retail industry in India is /asically considered as
unorganied and it5s primarily consists of owner managed0 independent and small
shops. 7he modern retail format in India has provided a wide variety to the new and
existing customers and also offers /est shopping experiences with an entertainment
and service under a single roof. 7he convenience stores0 malls0 specialty stores0
department stores0 discount stores and hyper:supermarkets are the emerging retailing
formats that offer different shopping experience to various consumers. <Sinha and
)ar0 .&&,0 )otler0 .&&$=
7he modern consumer of India always try to seeking more values in the terms of
pleasant shopping environment0 improved availa/ility D 8uality0 return and exchange
policies 0 trial rooms for clothing products0 financing option and competitive prices.
All such values created a rapid growing opportunity for modern and organied retail
formats to grow at a fast pace and emerge in recent years. 7hese are:
i= +(e%d %o# 3' 'a3e ealie: the consumers are willing to /orrow for the
present conservation that has resulted in the appearance of /ig retail chains in
most towns and metros.
ii= Ra(id i%come 2o#t&: consumers have a greater a/ility to spend.
iii= I%cea'i%2 ,ba%i-atio%: larger ur/an population that value convenience0
coupled with the higher propensity of the ur/an consumers to spend.
Swar further expresses that glo/al retailers like 2al-*art0 4A(0 7esco0 I.@ (enney0
Sears and @arrefour are trying to esta/lish themselves in Indian marketB Infact 2al-
*art and 7JS@O has already opened their stores with Eharti and 7A7A in Indian
market.
4upta <.&&,= has analysis the changing socio-economic scenario of IndiaB that will
put deep change in retail sector. In the retailing sector ,(5s like place0 product0
promotion0 price0 process and people plays an important role. On the other hand0
physical evidence is one aspect that does not need any emphasis at all due to changing
consumers5 mindset. As per the study0 there are num/er of elements that characterie
the retail industry in India and these are as follows:
It is a people-centric industry
#
A highly service-oriented sector
+emand drivers are more location specific
2hen there is a holiday or festival for the general pu/lic it is peak time for
retailers.
2ith such sweeping changes in the Indian retail arena0 interesting times lie
ahead. 7he proper marketing strategies should hold the key.
O3eall Retail +ce%aio
Aggarwal <.&&,= Aighlights the emergence of organied retailing in India and views
the @atalytic effects of retail on Indian Jconomy. Jmployment generation0
+evelopment of retail ancillary market0 Increase in disposa/le income and 4rowth of
real estate are the various catalytic effects on Indian economy.
7usharinani <.&&,= noted the transformation of traditional formats into new formats0
vi.0 departmental stores0 hypermarkets0 supermarkets0 specialty stores and malls
taking the lead in attracting consumers in the metro cities.
7he consumer has multiple options to choose- ranging from the shopkeeper to the
most sophisticated supermarkets0 departmental stores0 plaas and malls which provide
the latest and /etter 8uality products and it made India the top spot among the favored
retail destination as o/served /y 4upta <.&&#=0 Iasola <.&&,= and India Retail Report
<.&&!=.
4oyal and Aggarwal <.&&!= opine that In India0 a consuming class is emerging as a
result of increasing income levels and dual career families with high disposa/le
incomes. 2ith retailers eyeing their presence in the market0 it is important to identify
the target shoppers as well as the prime factors of en1oyment in shopping. 7he results
reveal that a ma1ority of the consumers are pro shoppers0 feeling en1oyment while
shopping. 7heir key interests include getting product ideas or meeting friends. 7hey
also view shopping from emerging retail formats as a means of diversion to alleviate
depression or /reak the monotony of daily routine. In addition to this0 they also go
shopping to have fun or 1ust /rowse through the outlets.
7he study /y *ishra <.&&%= expose that mall space0 demography0 rising young
population0 availa/ility of /rands0 rising retail finance0 changing lifestyle0 modern
6
retail formats and foreign direct investment are the strengths and opportunities for
modern retail model. On the other hand0 real estate cost0 improperly developed mall0
lack of skilled personnel0 underdeveloped supply chain and taxation hurdles are the
weaknesses and threats for modern retail formats.
Shukla <.&&,= and 4oyal et al <.&&!= descri/ed that Food and 4roceryB Aealth and
EeautyB ApparelB Iewellery and @onsumer dura/les are the fastest growing categories
of organied retail and fashion sector in India commands lion5s share in the organied
retail pie. 7he most appropriate retail formats for various items are: Food and grocery-
SupermarketB Aealth and /eauty care services-SupermarketB @lothing and Apparels5-
*allB Jntertainment-*allB 2atches-AypermarketB (harmaceuticals-AypermarketB
*o/ile0 accessories D Services-AypermarketB Foot wares-+epartmental store.
7he study /y Satish and Ra1u <.&"&= throws light on the ma1or Indian retailers which
highly contri/ute to the retail sector in India. (antaloon0 7ata 4roup0 R(4 4roup0
Reliance 4roup and A K Eirla group are some of the ma1or Indian retailers.
According to Aalepete <.&&%=0 India is expanding internationally due to saturation of
markets and challenges faced /y international retailers. (artnership /etween Eharti
and 2al-*art is one of the successful expansions of international retail in India.
Di3e' o! Retaili%2
Arshad et al <.&&,= and 4hosh et al <.&"&= stated that #,3 of India5s population is
under the age of .& and this will increase to 663 /y .&"6 and this young population
will immensely contri/ute to the growth of the retail sector in the country.
2hile the study /y Ali and )apoor <.&"&= indicate that a higher income and
educational level of consumers influences their decisions on product and market
attri/utes while gender and age seems to have no significant impact.
7he young consumer seeks more and more information a/out the new products
availa/le and retailers need to communicate them more effectively is emphasied /y
kaur et al <.&&,=.
Ra1agopal <.&&%=0 7hang et al <.&&>= and Srivastava <.&&%= supported that consumers
choice of shopping malls over traditional market stores is influenced /y various
factors like am/ience0 assortment0 sales promotion schemes and in-store services. 7he
$
facility of one stop-shop had a positive response from the consumers0 who found it
more convenient0 time saving and satisfactory.
7he changing retail structure has provided the consumers with more options in the
form of formats and services such as less travel time0 large variety of products and
8uality products etc0 as o/served /y (opkowski et al <.&&"=.
Aggarwal <.&&,= and Ehardwa1 et al <.&&,= indicated that organied retail industry
will mean thousand of new 1o/s0 increasing income level0 standard of living0 /etter
products0 /etter shopping experience etc.
7he study /y +ash et al <.&&!= and @II <.&&%= depict that growing middle class0 large
num/er of earning youth customers0 increase in spending0 and improvement in
infrastructure0 ?i/eraliation of Indian economy and India5s /ooming economy are
the various opportunities for organied retailing in India. On the other hand0
complexity of taxes0 lack of proper infrastructure and high cost of real estate are the
hurdles which need to remove for retail success in India. Jn1oya/le pleasant and
attractive in store shopping environment increases the chances of impulsive /uying
among consumers0 @rispen et al <.&&!=.
According to Iain and Eagdare <.&&!= ?ayout0 am/ience0 display0 self service0 value
added services0 technology /ased operations and many more dimensions with modern
outlook and practices are the ma1or determinants of modern retail formats.
Ro/inson <"!!%= and Aerper et al <.&&&= mentioned in study that there is a need for
consumer orientation rather than product orientation for future developments in
retailing.
,
RE+EARC0 MET0ODOLOG1
Wite e'eac& met&odolo2y #&ic& you &a3e u'ed !o you e'eac&.
Re'eac& De'i2%
7he Research design is /ased on a conceptual structure. It constitutes the /lueprint for
the measurement0 analysis and collection of research data. 7here/y0 making a research
report that efficiently yield maximum information with minimum effort0 money and
time.
Research design is stands for the advance planning of methods that can /e used for
collecting the relevant data and techni8ues to /e used in their data analysis. In order to
avoid the error in the research report so it is imperative that an efficient design must
/e prepared /efore starting research operations. 7his data will help to classify the
ideas in such a form where it /ecomes possi/le to look for inade8uacies and flaws.
Data Collectio%
7he research is /asically /ased on secondary data. 7he data has /een collected from
/ooks0 company pu/lications0 magaines0 newspaper and also from internet:online-
/ased etc.
Limitatio%' o%ly o%e limitatio% #ite 567 limitatio%'
7he study of this topic is extremely wide and analying period which is
availa/le is very less.
%
RETAIL +CENARIO IN INDIA
7he Jconomic li/eraliation in India has /rought diverse changes in the life of people
staying in ur/an area. 7he income level of middle class group has started increasing in
India. It also put positive impact on lifestyle and social culture in that demographic
region. So Indian Retail Industry is witness of rapid growth in the world.
I%du'ty C&aactei'tic':
7he Indian retail sector does not have trained and organied workforce. 7he
workforce mainly consists of low skills /ecause of low maturity level of industry.
Overall contri/ution of organied corporate retailers is only a small percentage.
*u'i%e'' O((otu%itie'
7he survey of *c)insey report on India says that 4+( growth would /e higher as
they increase the productivity and efficiency of entire economic activities. 7he total
market sie of Indian retail sector is estimated of G ",& Eillion.
7he various factors are responsi/le for development of the Retail sector in India is as
follows:
". 7he Hational @ouncil of Applied Jconomic Research state that a/out 6&3 of
Indian population income was low in "!!#-6 /ut in .&&,-% it is decline to
""3. 7he consumer markets are enlarging due to improvement in
infrastructure and rising incomes.
.. +ue to ?i/eraliation of the Indian economy0 it help various *H@ companies
like Hestle0 )ellogg5s and Fnilever etc to cover vast consumer markets /y
providing various product range of Indian consumer choice.
>. 7he consumers shift their demand towards foreign /rands like (anasonic0
*c+onalds and Sony etc.
!
RETAIL GROWT0 DRI/ER+4 I%clude o%ly t&o'e t&i%2'
#&ic& ae ele3a%t to you e'eac& to(ic t&at i' etail.
Remo3e u%%ece''ay data li$e eco%omic 2o#t& etc.
7here are three segments contri/uting to the growth of retailing and in turn /oosting
the economy and the country5s 4+(. 7he parties involved are the consuming pu/lic0
the manufacturers and retailers and finally0 the government. Following are the
contri/utions /y one or more parties to this growth saga.
Eco%omic Go#t&
India is one of the largest economies of the world. 7he 4+( has gone up from G$&&
/illion in .&&> to G "..6 trillion in .&&%. @urrent estimates are that the 4+( of the
country has grown '$.$ 3 <.&&!-"&= and is pro1ected to grow '!3 in <.&"&-""=.
7he growth of retailing is intrinsically linked to the 4rowth Rate of a country. In the
Indian context ma1or growth in retailing has developed during the last one decade
when the 4+( growth picked up and grew as follows:
20020! 200!0" 200"05 20050# 200#0$ 200$08 20080%
8.9: 9.7: ;.7: 9.<: =.>: =.?: @.;:
Source: *inistry of Food (rocessing0 4overnment of India
In terms of (((<(urchasing (ower (arity= the country is placed #
th
/ehind Fnited
States0 @hina and Iapan. 4ermany comes /ehind India.
Demo2a(&ic C&a%2e'
In "!%60 !>3 of India5s population had disposa/le income less than Rs.&.&! million.
Ey .&&6 the figure was 6#3 <i.e. #>" million people are a/ove the line=. Ey .&.6 it
will /e ..3.Again the average disposa/le income will grow from Rs.&.""# million in
.&&$ to Rs.&.>"! million /y .&"6. It is estimated that India will emerge as one of the
world5s youngest nations as 6# per cent of its current population is aged .# years and
less. Ey .&.&0 the country is expected to represent ", per cent of the worldLs working
age population. 2ith the availa/ility of easy credit cards and a rise in the aspirational
class0 the ma1or /eneficiary would /e the retail industry C more specifically the
apparel segment of the /usiness.
"&
Co%'umei'm
India5s middle and high-income population has notched up an impressive growth and
the country5s middle class will grow from a/out 63 of the population to more than
#&3 and create the world5s fifth largest consumer market. As a country with a high
percentage of youth <>>3 /elow the age of "6=0 consumer spending has risen sharply.
Increased awareness has resulted in a percepti/le change in /ehavior and they are on
the lookout for convenience0 speed0 efficiency and a wide range of products0
simultaneously a one-stop shopping experience. @ompared to the eighties0 India has
seen /rand explosion in almost all categories of goods providing ample choice to the
customer. 7heir economic well /eing0 increasing aspirations for higher standards of
living and comforts are responsi/le for the increase in consumerism.
Go#t& o! Nuclea Familie' a%d +atellite To#%'&i('
2ith most ma1or cities getting overcrowded new /usinesses and industries are /eing
located on the outskirts of ma1or cities resulting in people migrating to these areas for
their livelihood. 7hese proliferating satellite townships provide a /ig opportunity for
retailers who open outlets in order to target this captive consumer /ase. 2ith a shift in
family structure0 nuclear families have /ecome a significant component of ur/an
markets. ?arge families5 fragmenting into nuclear families translates into increased
footfalls and more shopping /askets providing a great opportunity for the retailers.
C&a%2e i% Co%'ume *e&a3io a%d t&e Im(act o! #o$i%2 #ome%
@hanging income levels and occupation have resulted in a change in the consumer5s
/uying /ehavior. *ore ur/an women are seeking employment resulting in dual
income families. 7his results in more disposa/le income that in turn spawns
consumerism. *oreover0 in households with working women there is greater work
pressure and increased commuting time resulting in ad1ustments /eing made to the
food ha/its <cooking vs. ready to eat= as well as clothing. 7he focus shifts to
convenience and comfort. 7he sie and composition of the shopping /asket has
changed over time. 7oday5s consumers are looking for shopping convenience and
want to have all their re8uirements under one roof0 coupled with speed in the retail
store operations.
""
+ue to time constraints0 families are now looking for Mshoppertainment5 C com/ining
shopping with entertainment. 7his is one of the causes of increased footfalls at malls
with multiplexes.
A3ailability o! Real E'tate
Over !63 of the Indian retail stores are less than 6&& s8.feet in sie. 7hrough the
"!!&s organied retail in India added 1ust " million s8.feet. of space a year. From
.&&" the pace has gathered great momentum as can /e seen from the "& million
s8.feet added in .&&> alone. In "!!!0 India had 1ust > shopping malls measuring
around " mn.s8.feet. Ey the end of .&&$0 the total mall space rose to .% mn. s8.feet.
with an average annual addition of >.! mn. s8.feet. (ost .&&$0 on an average % mn.
s8.feet. retail space has /een added annually0 pan India0 taking the mall space to over
6. mn.s8.feet /y the end of .&&!.
Tec&%olo2ical Ad3a%ce'
From /ar code scanners to RFI+0 technology has /een one of the most important
drivers of change in the retail industry. 7o leverage on the growth of internet usage0
online retailing is growing as an alternate channel. *o/ile marketing is another
availa/le tool. 2hile (lanogram software ena/les retailers in planning the store
layout0 managing shelves and designing interiors0 @R* software applications aid
retailers in developing a data/ase of customers under different classifications. 4lo/al
(ositioning Systems have /een adopted to monitor the movement of merchandise.
Electo%ic Media
As against two channels in the early !&5s there is an explosion in the num/er of 7K
channels through which retailers have access to a larger audience. +ue to creative
advertisements across channels and print media0 kid5s related products have registered
stupendous growth. In fact media invasion has changed the lifestyles of consumers
resulting in greater demands on variety and assortment0 value0 service and
convenience. *edia has helped in two waysB on the one hand0 it has resulted in
/ooming sales for the retailers and on the other0 /y creating awareness0 has ensured
that the consumer gets Mvalue for money5.
".
Ri'e i% t&e ,'e o! Pla'tic Mo%ey
(lastic money an acronym for credit cards is an important driver of retail /usinesses.
Indian consumers are increasingly using credit cards for shopping as well as dining
According to Juro monitor0 India is the second fastest growing Financial @ards
market in the Asia-(acific region. In .&&%0 credit cards sales are estimated to have
contri/uted around "..30 which is expected to /e around ".#3 of the total retail sales
in India at the end of .&"&.
C&alle%2e' A&ead
+espite all the freny associated with the /usiness0 retailing has still not /een
accorded an industry status. According industry status will ena/le retailers5 access to
cheaper /ank credit facilities. Another contentious issue relates to F+I in retail.
@onsidering the sensitivity of the issue0 there is /ound to /e a lot of resistance to
change.
">
ORGANIAED RETAIL
7he organied segment typically comprises of a large num/er of retailers0 greater
enforcement of taxation mechanisms and /etter la/our law monitoring system. 7he
modern retail formats are encouraging development of well-esta/lished and efficient
supply chains in each segment ensuring efficient movement of goods from farms to
kitchens0 which will result in huge savings for the farmers as well as for the nation.
Jstimates indicate that this sector will have the potential to a/sor/ many more
hypermarkets in the next four to five years.
+e2me%tatio% o! o2a%i-ed etail 'ecto i% I%dia
Retaili%2 Fomat' i% I%dia
". Mall': ?ocated mainly in metro cities0 in proximity to ur/an outskirts. Ranges
from $&0&&& s8 ft to ,0&&0&&& s8 ft and a/ove. 7hey lend an ideal shopping
+EGMENT I
Food and 4rocery
F*@4
Apparel
Footwear
Eeauty (roducts
Fashion Accessories
Jlectronics
@onsumer +ura/le
Iewellery
Aome decor
+EGMENT II
Super *arket
Ayper *arket
+epartment store
+EGMENT III
*A??S
"#
experience with an amalgamation of product0 service and entertainment0 all under
a common roof. Jxamples include Shoppers Stop0 (yramid0 (antaloon.
.. +(ecialty +toe': @hains such as the Eangalore /ased )ids )emp0 the *um/ai
/ooks retailer @rossword0 R(4Ls *usic 2orld and the 7imes 4roupLs music chain
(lanet *0 are focusing on specific market segments and have esta/lished
themselves strongly in their sectors.
>. Di'cou%t +toe': As the name suggests0 discount stores or factory outlets0 offer
discounts on the *R( through selling in /ulk reaching economies of scale or
excess stock left over at the season. 7he product category can range from a variety
of perisha/le: non perisha/le goods.
#. De(atme%t +toe': ?arge stores ranging from .&&&&-6&&&& s8. ft0 catering to a
variety of consumer needs. Further classified into localied departments such as
clothing0 toys0 home0 groceries0 etc. +epartmental Stores are expected to take over
the apparel /usiness from exclusive /rand showrooms. Among these0 the /iggest
success is ) Rahe1aLs Shoppers Stop0 which started in *um/ai and now has more
than seven large stores <over >&0&&& s8. ft= across India and even has its own in
store /rand for clothes called Stop.
6. Co%3e%ie%ce +toe': it5s a relatively small store with sie of #&&-.0.&& s8. feet
located near/y su/ur/an areas. 7he prices are little /it higher due /est 8uality.
7hey are open throughout week.
$. 0y(e mat'B+u(ema$et': 7he supermarkets are term due to large self service
outlets and catering to wide-ranging shopper needs such supermarkets are located
in high residential streets. 7hese stores today contri/ute to >&3 of all food D
grocery organied retail sales. 7he large supermarkets sie is ranging from of
>06&& - 60&&& s8 ft. 7hey are strongly focused on personal sales and food D
grocery.
,. M*OC': *ulti Erand outlets0 also known as @ategory )illers0 offer several /rands
across a single product category such outlets do well in metros and /usy market
places.
A2icultual Retail: in India4 the Agriculture sector is considered as a second green
Revolution it consist of "# states like (un1a/0 *aharashtra0 Ra1asthan and Andhra
(radesh are included in the Agricultural (roduce *arketing @ommittee <A(*@= act
"6
this year and along with the lines of the *odel APMC Act. 7hat allows agriculture
farmers to sell their produce products directly to those /uyers who offer them /est
price.
2ith a FSG 6.$ /illion0 multi-year investment in agriculture and retail0 Reliance Retail
will esta/lish links with farms on several thousand acres in (un1a/0 2est Eengal and
*aharashtra. 7he Field Fresh is also planning to /ecome IndiaLs first large-scale
exporter of produce products that will annually pay to farmers over FSG #&0&&& for
leasing their land to cultivate vegeta/les0 to pay their workers and can hire tractors.
7he five-year programs in the (un1a/0 the government provide orange seeds to several
thousand farmers to produce its 7ropicana 1uices in .&&%. 7he (epsi@o with
agriculture exports worth FSG #& million. 7he company like (epsi@o and I7@
introduced farmers to yield high variety of mangoes0 /asmati rice0 chilies0 potatoes0
/arleys and peanuts for snacks.
I%te%atio%al Retaile': in India0 7he Hational Food Industry Strategy of Australian
government has initiated a for test marketing food. 2hereas0 "> ma1or Australian food
producers are tied up with the India-/ased distri/utor like AE *auri to sell their
produce products directly at retail outlets. 7he /iggest Eritish /usiness <"$&
delegations= companies have decided to create investments in the field of
manufacturing0 agri-retail and food processing in India. 7he international players like
2al-*art has announced its plans do partnership with Eharti in india and 7esco will
try again to enter in Indian market.
Fa%c&i'e Outlet': ?ike 2al-*art0 7ommy Ailfiger and other FS retailers are
firming up strategies to enter in India /ut if they succeed in that than they will
undergo for rapid expansion. 7he Fashion /rands like +)H9 is also set to venture up
in the Indian fashion Industry through a franchisee agreement. 7he Star/ucks has also
recently expressed their interest in entering Indian market through franchise route.
7here are many examples like (ia Aut0 Su/way and *c+onald5s those who have
successfully entered in Indian market. 7he *c+onald5s has plan ma1or expansion
lined up in the next # years to open another %6 outlets across India.
"$
Romo3e t&i' : +WOT ANAL1+I+ OF ORGANIAED RETAIL
IN INDIA
+te%2t&'
Jmerging retail formats like
malls0 hyper:supermarkets and
specialty stores which provide
product0 service and entertainment
at one place.
Indian consumers have high
disposa/le incomes0 which
translates into high consumption
levels.
?arge num/er of earning young
population.
4rowth of real-estate and
Improvement in infrastructure.
Auge agricultural sector offering
an a/undance of raw materials.
Wea$%e''e'
+emographic differences /etween
the regions re8uire a regionally
ad1usted approach to /usiness.
(resence of a significant num/er
of strong and well-esta/lished
players in the sector limits market
entry potential.
Relatively small domestic market
limits growth opportunities.
Aigh real-estate and distri/ution
cost are the o/stacles for growth
of retail in India.
O((otu%itie'
Increasing awareness of
consumers a/out products and
services.
@hanging consumers5
re8uirements and lifestyles.
Innovation for new product
development.
(rivate la/el sector has /een
/oosted /y economic downturn.
T&eat'
Jconomic slowdown is having an
adverse effect on consumer
spending.
Rigid government policies and
regulations restrict the entry of
new players.
(rice competition among retailers
puts downwards pressure on
margins.
Jntry of International players in
",
Indian markets consumes the
share of Indian retailers.
Romo3e t&i' ; PC+ IN RETAIL MARKETING
Poduct: (roduct and merchandise management is a key activity in the
management of retail /usiness.
(roduct management0 in the context of retailing0 may /e defined as a set of
decisions related to the selection and removal of products from the retailers5
portfolio0 along with the related product and market analysis.
7he selection of the right 8uantity of the product and ensuring its availa/ility
at the right place and time.
7his involves a careful planning of products mix and its financial implications
are reflected in the products /udget.
7o the kind of products sold /y the retailer0 following are the points every
retailer will consider during planning of (roduct *ix:
/aiety: Kariety is the very important point while planning the product mix
/ecause variety creates the demand and which automatically attracts the
consumer towards the retail store. As consumers are of different kinds one
wants the products of a good 8uality and another wants the same at low price.
@ompanies are now extending their product lines to provide huge verities to
consumers.
E.2. In malls customer even can get a huge variety of a single product like in
case of fruits and vegeta/les0 consumers can get different grades of fruits and
even imported fruits.
Duality: In organied sector consumer not only considers price /ut also focus
on the 8uality. A /etter 8uality provides the consumer satisfaction while
consuming the goods. As retail outlets provides lots of varieties in products so
consumer would a/le to 1udge the 8ualities in different products.
E.2. For apparels0 in Spykar store0 customer would find only apparels <1eans=
of spykar /rands0 /ut in ?ifestyle <a *EO=0 the @ustomer would find various
/rands and types of apparels.
"%
". Pac$a2i%2: (ackaging gives more satisfaction to the customers towards the
8uality of the products. In retail outlets the product packaging gives more
preference as it attracts the customer5s mindset.
E.2. 2hen any kind of hyper markets0 try to sell the perisha/le goods like grocery
items then customer expecting more freshness in that items so that outlets provide
a good and air tight packaging to satisfy the consumers.
.. Place miE: (lace mix is the very important aspect0 a service provider has to
consider /ecause if service provider don5t know where he has to serve than the
target people can5t /e accessi/le. 7he two main important things service provider
has to consider while deciding place are Locatio% and u'e o! Di'tibutio%
C&a%%el.
Retail is the thing where retailers serve the products to the customers and for them
location and distri/ution @hannels are very important thing to consider0 as
location helps to determine target customers accessi/ility of retailer to serve them
where as distri/ution channel helps to determine availa/ility at right time0 place
and right price.
". Locatio%: For deciding location retailer has to look after target customer. As
retail service is people /ased so there must /e interaction /etween the
customer and provider. Apart from this retailer also has to look after upon the
strategies of competitors.
E.2. 7oday the organied retail has taken the footprint in cities across the
country /ut very few at negligi/le amount. 7here are many reasons that
interrupts deciding location are government policy infrastructure facility and
target customers etc. Eut now many retailers are going in rural areas /y
different distri/ution channels that will /e discussed in next point.
.. Di'tibutio% C&a%%el: After choosing the location the second important
decision is to decide the distri/ution channel. As the retailer5s main o/1ective
is to reduce the price of their products offering0 it can /e achieved only /y
reducing the intermediates in the distri/ution channel. 7he types of
distri/ution channels are:
"!
". Fa%c&i'i%2: In franchising0 franchise sells the product of service firm and
gets a fixed percentage on the sell. E.2. )outons0 Ree/ok0 Addidas0 and
7he *o/ile Store of Jssar 4roup.
.. A2e%t' a%d *o$e': In this /ig retailers use agents and /rokers who are
having good contacts and distri/ution services in their location.
>. Ca'& a%d Cay: It is a form of trade in which goods are sold from
wholesale warehouse operated either on a self-service /asis0 or on the /asis
of samples <with the customer selecting from specimen articles using a
manual or computeried ordering system /ut not serving himself= or a
com/ination of two. @ustomers <retailers0 professional users etc= settle the
invoice on the spot and in cash0 and carry the goods away themselves.
Eiggest examples of cash and carry are as follows:
". 2al-*art and Eharti
.. *etro in south
>. Pici%2: Retail service providers offer a range of service at different price
levels to cater to the needs of different target segments that may have different
levels of purchasing power. 7he right price for the product or service is that the
consumers are willing to pay for it.
A retailer needs to understand the price sensitivity of customers that forms his
target segment.
Pici%2 obFecti3e:
A Retailer should frame the proper pricing o/1ectives to keep in mind:
". @ompetitive oriented
.. 4rowth in the market
>. @ustomer afforda/ility
#. *aximie profit
6. Jarn a good market share
$. ?eadership in service 8uality
.&
E.2. In Apparels0 Erand named N(AH7A?OOHO only caters the needs of high
income level of consumer segment and provides premium /rands and sets the
prices according to the Apparel 8uality. 7heir pricing starts Rs."&&&. So0 this
would only target premium class.
On the other side0 Erand named N4?OEFSO0 are targeting all income groups their
pricing starts from Rs. .&& to Rs. .&&&& for an apparel. So this pricing strategy
gives customer more variety0 flexi/ility and dura/ility and helps the retailer to
gra/ the larger pie of the cake.
Met&od' o! (ici%2 i% etail 'e3ice':
<i= Dema%d ba'ed (ici%2: In retailing0 service provider has to set the
o/1ectives of pricing as per the demand situation in the market. 7his is
generally used where the services are price sensitive. In this cost is not
considered /ut the service providers allows the demand to determine price.
<ii= E.G. In apparels segment0 /asically in summer season0 prices of apparels
are very high as the demand is more of cotton cloths. Eut as winter comes0
the demand for cotton cloth is low so that retailer sells that apparels at a
discounted price.
<iii= Com(etitio% ba'ed (ici%2: In this method of pricing0 the price is
determined on the /asis of competitor5s price. (rice under such situation s
may /e used to gain short-term competitive advantage over rivals.
E.G. EI4 EAPAAR0 Future group5s store0 always provides a discount
offer of 6&3 on Independence +ay and repu/lic day. And from that large
revenue has /agged. And also helps to gain the competitive advantage for
the short and long term.
#. Pomotio% miE: 7he retail sector is one of the most competitive in India after
?(40 and so effective promotion strategy is needed in order to /e successful.
Aowever0 many retailers get caught up in the day-today running of their
companies and don5t use all their /usiness strategy expertise to push their /usiness
forward. In the retail /usiness0 there is a need to wake up and think carefully a/out
current promotion strategy.
."
If one does not then he:she could find himself:herself trailing /ehind the
competition and losing /usiness to other retailers. If one wants to improve his:her
retail promotion strategy0 then here are some techni8ues to promote the /usiness.
I%diect Met&od
Indirect method represents the indirect way of reaching to the consumers to
promote the products /y using various communication vehicles like advertising0
internet0 and /roachers.
Ad3eti'eme%t': 7his the another way to reach to the great num/er of
customers through a single medium that is advertisements on television0 radio0
etc. advertising on the television and radio0 etc. reaches a huge audience
<including people who would /e unlikely to /e reached in any other way=0 and
raises awareness of the issues as well as attracting support.
I%te%et: 2ith the Internet increasing in popularity all the time0 it is extremely
important to use Internet marketing as a way to improve market share. In order
to improve the access to customers0 create a we/ site where customers can
view the merchandise and possi/ly /uy products online. Selling products
online is a great way of expanding the /usiness without having to spend lots of
money on new premises or retail locations. Aowever0 if anyone doesn5t want
to develop online /usiness0 then still advertise the /usiness online. Jffective
marketing strategy should use all mediums availa/le to improve /usiness
RETAIL PROMOTION
INDIRECT MET0OD
DIRECT OR P6O6P
MET0OD
Ad3eti'eme%t
I%te%et
I% +toe Ad3eti'i%2 Media
Di'(lay
*oac&e' I%ce%ti3e' o O!!e'
..
exposure0 and with online advertising a low cost and effective medium it
makes sense to take advantage of the opportunity.
*oc&ue': 7his is another way to reach to customers it is /asically used
when new retail store or new variety is introduced in the market0 as it needs
more advertisement and it is very effective to reach the people of locality very
easily.
Diect o P6O6P Met&od
7he retail point of purchase represents the time and place at which all the elements
of the sale-the consumer0 the money0 and the product-come together. Ey using
various communications vehicles0 including displays0 sales promotions0 in-store
advertising0 the retailer hopes to influence the consumerLs /uying decision which
can provide them with a competitive edge.
I%6'toe ad3eti'i%2 media: Retailers can use a num/er of innovative
approaches for reinforcing /rand awareness and delivering advertising
messages at the point of purchase. 7hese include:
". @ommercials /roadcast over in-store sound systems.
.. *oving message display units with changea/le electronic messages.
>. @ustomer-activated videotapes and video disks that show merchandise
such as furniture that are too /ulky to /e displayed on the department
floorB the videotapes can also /e played in window displays to present0 for
example0 designer fashion shows.
#. 7elevision sets installed over cash registers to show waiting customers
commercials for products that are usually availa/le near/y.
6. Advertisements on carts used in supermarkets and other self-service
outlets.
$. Afforda/le change displays that use availa/le air space rather than limited
floor space.
Di'(lay: For one thing0 they can use well designed displays are as follows:
". 7hey attract consumer attention0
.>
.. Facilitate product inspection and selection0
>. Allow the access of several customers at once0
#. Inform and entertain0 and stimulate unplanned expenditures.
6. 7hey reduce store la/our costs /y facilitating shelf stocking and inventory
control0 minimiing out-of-stock items0 and lowering the re8uired level of
/ack-room inventory.
As additional display space can expand sales without any change in retail price0
consumer goods retailers increased their spending on displays.2ell-designed
displays respond to the needs of /oth the retailer and the consumer.
I%ce%ti3e' o O!!e': 7o attract the customers and to motivate them to come
again and again retailer can offer various incentives or offers like:
". Fee 'am(le' might /e mailed0 delivered door-to-door0 placed in /ins
in retail stores0 or attached to or inserted in another package.
.. Cou(o%' are certificates which0 when presented for redemption at a
retail store0 entitle the /earer to a stated savings on the purchase of a
specific product.
>. Mo%ey6e!u%d o!!e' are propositions in which a sum of money
:occasionally the full purchase price= is returned /y mail to participants
who mail in proof of purchase such as a /ox top.
#. Pice6o!! deal' offer consumers a certain amount of money off the
regular price of a product0 and state the amount on the productLs la/el.
6. Pemium' are items of merchandise offered free or at a low cost as a
/onus to purchasers of a particular product.
$. Co%te't' are also ma1or consumer-oriented promotion devices. 7hese
differ in that in a contest participants compete for a prie or pries on
the /asis of their skill in fulfilling a certain re8uirement0 usually
analytical or creative.
,. Fee62ood' deal0 an offer of a certain amount of a product to
customers at no cost to them /ut dependent on the purchase of a stated
amount of the same or another product.
.#
Demo%'tatio% <i.e. showing products in use= is another common consumer
promotion device.
6. Peo(le: In retail /usiness0 thus retailer has a good technology and all facilities
/ut yet it may not /e a/le to provide satisfactory customer service due to lack of
interpersonal relationship /etween service provider and customer. 7hat means0
retailer has to focus on improvement in internal staff so that they will satisfy the
customer in a /etter way.
In Retail0 @ustomer wants more interaction with the employees to get the knowledge
regarding products which they are going to purchase. Although in employer point of
view there is only one method i.e.
Cu'tome Co%tact Em(loyee': 7hey are known as front line staff as they
come in direct contact with the customers in the process of service delivery
E.2. Front office staff in *EO5s these contact employees are very important
/ecause they represent the organiation and can directly influence the
customer satisfaction /y giving them a convenience. Eut now comes that how
much degree of personnel goes for customer satisfaction levels are as follows:
". Aigh @ontact (ersonnel: 7hey are re8uired when the physical presence
and the interaction of the customer with the employees for the longer
time eg. An organiation0 marketing their product in the Ayper *arket.
RETAILER
INTERNAL +TAFF
GFRONT LINE
+TAFF:
EMPLO1EE+H
C,+TOMER OR
CON+,MER
Good tai%i%24 cu'tome6
oie%ted attitude
Cu'tome 'ati'!actio%
I! cu'tome 'ati'!ied4 t&e%
cu'tome #ould etai%
.6
.. ?ow @ontact (ersonnel: 7hey are re8uired when the physical presence
and interaction with the customer is for the lesser time. J.g. Jmployees
in a Retail outlet serving their customer only for the product information0
not for the product marketing. So they spend very lesser time with
customer.
$. Poce'': Service process refers to how a service provided or delivered to
customer. For providing a service0 there is one methodology or a process to give
convenience to customer /y making a user C friendly and a simple process. In
retail sector0 someone finds self service is a consumer friendly process and another
finds it hectic process for finding the things in the retail outlet. Retailers always
try to make the process more friendly and simple. For this they provide trollies
and hand-/ag where consumer can shop very easily0 /ut in the peak time0 retailer
cannot satisfy the consumer /y the payment making process as consumers are in
larger cues. For making more convenient to customer there are three different
types of processes adopted /y the retailers0 which are very usa/le now a day.
". Eme2e%ce o! O%li%e +&o((i%2: In this technological era0 every/ody is
friendly with latest communication technology i.e. Internet. 2hich is fastest
way of getting product information where consumer can get the information.
Eut the many I7 companies make the online shopping processes for the
customer0 and customer can purchase the product /y a click. E.2. J-Eay0
Indiatimes online shopping and SIF9 shop et al.
.. Cu'tome Patici(atio%: In this process0 where the customer participation
exists in the shopping. From this productivity can /e increased and cost can /e
reduced.
E.2. *alls and super markets.
>. 0ome deli3ey (oce'': How0 the customer can get the products easily /y the
process of +ial C a C (hone concept0 where many retailers are using . E.2. 7his
process is used in the food and /ewerages segment0 like *c +onalds and
domino5s pia.
,. P&y'ical E3ide%ce: (hysical evidence means Nthe environment in which the
service is delivered and where the firm and customer interactB and any tangi/le
commodities that facilitate performance communication of service.O
.$
Ambie%t !acto'
Air conditioning
Jxcellent ventilation
De'i2% !acto'
Fniform appearance
Jxtensive parking lot
Spacious interiors
+ocial !acto'
2ell dressed employees
@ourteous
Friendly
Jlite and up market crowd
Family atmosphere
.,
FDI IN RETAIL
7he 4overnment of India is actively considering removing the restrictions from the
retail sector /ecause it will help in /oosting retail trade. A recent note circulated /y
the *inistry of @ommerce has proposed permission for F+I up to "&& per cent in
retail trade su/1ect to 4overnment approval on a case-to-case /asis.
F+I in retail sector has /een a key driver of productivity growth in Erail0 (oland and
7hailand. 7his has resulted in lower prices to the consumer0 more consumption and
higher profit for the producer. F+I in retail trade has forced the wholesalers and food
processors to improve0 raised exports0 and triggered growth /y outsourcing supplies
domestically. 7he availa/ility of standardied products has also /oosted tourism in
these countries.
7he /iggest opposition to allowing l&&3 F+I is the feared exit of the small retailers.
@urrently0 moves are on to counter these apprehensions and the players are keenly
awaiting the final decision from the 4overnment.
FDI Policy #it& Re2ad to Retaili%2 i% I%dia: It will /e prudent to look into (ress
Hote # of .&&$ issued /y +I(( and consolidated F+I (olicy issued in Octo/er .&"&
which provide the sector specific guidelines for F+I with regard to the conduct of
trading activities.
a= F+I up to "&&3 for cash and carry wholesale trading and export trading
allowed under the automatic route.
/= F+I up to 6" 3 with prior 4overnment approval <i.e. FI(E= for retail trade
of MSingle Erand5 products0 su/1ect to (ress Hote > <.&&$ Series=
c= F+I is not permitted in *ulti Erand Retailing in India.
Foei2% I%3e'toC' Co%ce% Re2adi%2 FDI Policy i% I%dia: For those /rands
which adopt the franchising route as a matter of policy0 the current F+I (olicy will not
make any difference. 7hey would have preferred that the 4overnment li/eralie rules
for maximiing their royalty and franchise fees. 7hey must still rely on innovative
structuring of franchise arrangements to maximie their returns. @onsumer dura/le
.%
ma1ors such as ?4 and Samsung0 which have exclusive franchisee owned stores0 are
unlikely to shift from the preferred route right away.
For those companies which choose to adopt the route of 6"3 partnership0 they must
tie up with a local partner. 7he key is finding a partner which is relia/le and who can
also teach a trick or two a/out the domestic market and the Indian consumer. In effect0
it means that foreign /rand owners must /e extremely careful whom they choose as
partners and the /rand they introduce in India. 7he first /rand could also /e their last
if they do not negotiate the strategic arrangement diligently.
FDI i% +i%2le *a%d Retail: 7he 4overnment has not categorically defined the
meaning of NSingle ErandO anywhere neither in any of its circulars or nor any
notifications.
In single-/rand retail0 F+I up to 6" per cent is allowed0 su/1ect to Foreign Investment
(romotion Eoard <FI(E= approval and su/1ect to the conditions mentioned in
following
a= Only single /rand products would /e sold <i.e.0 retail of goods of multi-
/rand even if produced /y the same manufacturer would not /e allowed=
/= (roducts should /e sold under the same /rand internationally0
c= single-/rand product retail would only cover products which are
/randed during manufacturing and
d= Any addition to product categories to /e sold under Nsingle-/randO
would re8uire fresh approval from the government.
FDI i% Multi *a%d Retail: 7he government has also not defined the term *ulti
Erand. F+I in *ulti Erand retail implies that a retail store with a foreign investment
can sell multiple /rands under one roof.
In Iuly .&"&0 +epartment of Industrial (olicy and (romotion <+I((=0 *inistry of
@ommerce circulated a discussion paper on allowing F+I in multi-/rand retail. 7he
paper doesn5t suggest any upper limit on F+I in multi-/rand retail. If implemented0 it
would open the doors for glo/al retail giants to enter and esta/lish their footprints on
the retail landscape of India. Opening up F+I in multi-/rand retail will mean that
glo/al retailers including 2al-*art0 @arrefour and 7esco can open stores offering a
.!
range of household items and grocery directly to consumers in the same way as the
u/i8uitous 5kirana5 store.
7he government has added an element of social /enefit to its latest plan for cali/rated
opening of the multi-/rand retail sector to foreign direct investment <F+I=. Only those
foreign retailers who first invest in the /ack-end supply chain and infrastructure
would /e allowed to set up multi /rand retail outlets in the country. 7he idea is that
the firms must have already created 1o/s for rural India /efore they venture into multi-
/rand retailing.
It can /e said that the advantages of allowing unrestrained F+I in the retail sector
evidently outweigh the disadvantages attached to it and the same can /e deduced from
the examples of successful experiments in countries like 7hailand and @hina where
too the issue of allowing F+I in the retail sector was first met with incessant protests0
/ut later turned out to /e one of the most promising political and economical
decisions of their governments and led not only to the commenda/le rise in the level
of employment /ut also led to the enormous development of their country5s 4+(.
*oreover0 in the fierce /attle /etween the advocators and antagonist of unrestrained
F+I flows in the Indian retail sector0 the interests of the consumers have /een
/latantly and utterly disregarded. 7herefore0 one of the arguments which inevita/ly
needs to /e considered and addressed while deli/erating upon the captioned issue is
the interests of consumers at large in relation to the interests of retailers.
It is also pertinent to note here that it can /e safely contended that with the possi/le
advent of unrestrained F+I flows in retail market0 the interests of the retailers
constituting the unorganied retail sector will not /e gravely undermined0 since
no/ody can force a consumer to visit a mega shopping complex or a small
retailer:sa/1i mandi. @onsumers will shop in accordance with their utmost
convenience0 where ever they get the lowest price0 max variety0 and a good consumer
experience.
F+I in multi-/rand retailing and lifting the current cap of 6"3 on single /rand retail is
in that sense a steady progression of that tra1ectory. Eut the government has /y far
cushioned the adverse impact of the change that has ensued in the wake of the
implementation of Industrial (olicy "!!" through safety nets and social safeguards.
Cue%tly:
>&
". F+I upto 6"3 in single /rand retail store with prior govt. approval.
.. F+I upto "&&3 for cash and carry wholesale trading and export under
automatic route.
>. F+I is not allowed in multi /rand retail sector retail segment.
As per the recent developments and reports: 7he ca/inet of 4overnment of Eharat has
approved 6"3 F+I in multi-/rand retail. Also F+I ceiling for single /rand retail is
increased to "&&3 from current 6"3.
Po':
". It will lead to closure of tens of thousands of small retail stores.
.. 2hich may endanger livelihood of # crore people.
>. It may tame inflation initially /ut will fuel the inflation once *H@ companies
get a stronghold in retail.
#. Farmers may /e given lucrative prices initially0 /ut eventually they will /e at
the mercy of /ig retailers.
6. S*Js will /ecome victims of predatory pricing policies of /ig retailers.
$. It will replace ordinary middleman with sophisticated corporate middleman.
,. It will create monopoly and promote cartels.
Co%':
". It will cut the middleman and help farmers get more price and consumers less
cost.
.. (rices will /e reducing so to /ring down inflation level.
>. Eig retail chains will invest in supply chains which will cut wastage0 estimated
at #&3 in case of fruits and vegeta/les.
#. It will create more employment than displacing people of small stores.
6. It will induce /etter competition in the market0 /enefiting /oth produces and
consumers.
$. Franchising opportunities for local entrepreneurs.
>"
Some certain things to /e kept under consideration when government opens up F+I:
". After opening up of F+I0 the government should give 6-"& year time frame to
domestic retailers for ad1ust.
.. In future0 the multi /randing under F+I should /e kept restricted /ecause
Indian retailers would not /e a/le to face this competition immediately.
>. It is not currently desira/le for F+I to /e a/ove 6"30 even in single /rand
retailing. 7his will put control and easy to check foreign retail /usiness
operations and also protect the interest of domestic retailers.
#. 7he products like arms and ammunition etc are very sensitive should not /e
allowed to deal /y foreign retailers.
6. Supermarkets:Aypermarkets should /e kept away from the city centers to
protect the unorganied and small retailers who operate in these areas.
>.
I%clude Data a%aly'i' a%d I%te(etatio%
OPERATIONAL I++,E+
7o maintain the capture share market0 the retailer of consumer goods has to
successfully counter all the operational issues. 7heir existence will /e 1eopardied if
retailers are not a/le to address or diagnose those operational issues.
S&pp'y ()ain Mana*e+ent and Lo*istics
7he process of getting goods to the customer has /een traditionally known as (hysical
+istri/ution. 7his process starts from (hysical +istri/ution at factory and ends at
store. Ideally Supply @hain *anagement encompasses the material flow from
supplier5s suppliers to the final destination. It is very important for Retailers to have
grip on entire chain to control delivery cost0 procurement and it will help to choose
the right suppliers for the stock. Retailers need to come out of the constricted view
a/out the supply chain which is viewing the market as a point to point destinationB
instead they need to consider the holistic picture that is a part of ?ogistics market.
*arket ?ogistics involves physical flow of materials from point of origin to the point
where it meets the customers5 re8uirement.
7he procurement cost cut down up to great extend with the help of +emand @hain
orientation. I)JA the glo/al furniture retailing giant has successfully addressed this
issue and they are a/le to sell 8uality furniture at a much lower cost than his
competitors.
,-icin*
In Retailing environment pricing has /ecome a /urning issue to the retailers.
@ustomer5s expectation from a Retail store has /ecome very high and customers are
looking for more and more /argain prices this is known as (rice drought. 7he price
deflation is also taking hold in Retail environment and the scenario will further
complicating when its volume will /e reduce. Such trend is 8uite evident in consumer
and Apparel goods market. 7he pricing seems to /e a main positioning factor and
should /e decided in relation to the assortment mix0 competition and target market.
>>
For the retailer5s most important tool is Strategic pricing. Airlines Industry started this
strategic pricing techni8ue where the underlying philosophy is not all consumers want
a particular product at the same time and the degree of demand will also vary. Fnder
this different prices are charge for same services or products from different
consumers.
In strong competition period retailers need to adopt the right pricing tactics. 7o attract
more customers retailer reduce the price level and also run storewide reduction sale.
It is o/served that a shoe Retail outlet sells 6&3 of the product at normal mark up0
.63 of the product at #&3 mark up and remaining .63 at cost. It leads to lower
advertising cost0 greater pricing sta/ility and higher Retail profits like 2al- *art.
Sa'es ()anne's
+esign of sales channel is also a key operational issue in today5s Retail industry. 7he
technology has /ecome one of essential /usiness component. Retailers should
successfully utilie that technology for expanding their /usiness. Retailer needs to
come out from the mindset of traditional store retailing and they need to use all
availa/le channels to reach a wider consumer community. 7he J-commerce and
internet channels are gaining popularity among non retail store. @onsumers do not
need to come to store for /uying goods or service they can do that over a click of a
/utton from their drawing room.
7he emerging trends of marketing are done through call centre or catalogue
marketing. In order to attract more customers the retailers should select the sales
channels very carefully. Fltimate o/1ective here is to offer a consumer a tailor made
shopping experience and to provide more easy access to his product and service
offering.
2rite ?imitations of the study here
>#
CONCL,+ION
(resently0 Indian retailing industry is consider as one of the largest industry within
country and also generate the /iggest sources of employment every year. 7he
organied retail sector in the country0 which presently accounts for close to # percent
of total market0 will increase its share to over >& percent /y .&">.
As per estimates made /y ASSO@AA*0 the organied retail in ur/an market is
expected to grow at the rate of 6& percent to reach a value of >& percent of the total
retail market in India. 7he rural organied retail in India0 which is at nascent stage at
present with hardly a value of . percent of total organied retail0 is expected to grow
over the "&3 /y the end of .&">
>
.
7he organied retail segment in India is expected to witness higher growth going
forward due to the F+I clearances in retailing0 the changing consumer needs0 rise in
young group income <"6-#! years=. It is estimated that the young population is likely
to constitute 6>.&3 of the total population in .&.& and #$.63 of the population in
.&6& - much higher than countries like F)0 FS0 4ermany and @hina
#
etc.
From past few years numerous /usiness groups are attracted like Future0 Eharti0
Aditya Eirla and Reliance etc in Indian retailing sector that has also shows
tremendous future growth in coming years.
7he results of the study depict that infrastructure0 economic growth and changing
demographics of consumers are the ma1or driver of organied retail in India. 7he
location of the retail store0 management style and ade8uate salaries to personnel
enhance the effectiveness of retail /usiness and are important factors for retailers5
success.
7he study further reveals that younger generation0 emerging retail formats0 increasing
awareness and innovation in new products are the strengths and opportunities of
organied retail in India. On the other hand0 +emographic changes0 shrinking of
markets0 high real-estate cost and increasing price competition among retailers are
some of the threats and weaknesses of Indian retail Industry. Aence0 there is an urgent
> http:::www.smetimes.in:smetimes:news:top-stories:.&"&:Iun:.6:organied-retail-share-to-grow-over-
>&-/y-.&">.",!.$.html
# http:::www.dn/.co.in:IndianRetailIndustry:outlook.asp
>6
need to overcome the threats and weaknesses and gra/ the opportunities /y retailers
for the success of retail sector in India.
Wite co%clu'io% ba'ed o% you data a%aly'i'. T&i' i' 2e%eal i%!omatio% you
ae 2i3i%2 #&ic& i' a3ailable o%li%e.
T&ee i' %o %eed to #ite <<??? #od'. Re'tict you e(ot to aou%d 7???
#od'.
>$
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