RETAILING CHAIN

SEMINAR REPORT
ON

CHANGING SHAPE
OF
RETAIL CHAIN IN INDIA

for the partial fulfillment of the

requirement

for the degree of MBA

SUBMITTED TO
SUBMITTED BY
Mrs. RAMINDER KAUR SIRA
JAGDEEP SINGH
ASSISTANT PROFESSOR Roll No.
5718
MBA - I (E)

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SCHOOL OF MANAGEMENT
STUDIES

PUNJABI UNIVERSITY,
PATIALA

Table of Contents

1. Introduction to Retailing

2. Scenario of Retailing in India

3. Major Players

4. Types of Retail Marketing

-Store Retailing

-Speciality Stores

-Departmental Stores

-Supermarkets

-Convenience Stores

-Off-Pricing Retailer

-Discount store

-Catalog Showroom

5. Traditional Retail Scene in India

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6. Threat to the Traditional Retail in India

7. Retail Industry in India

-Retail Space

-Food Retail

-The Mobile Revolution

-Kid’s Retail

-Agricultural Retail

-International Retailer

8. Key Issues Related to Retailing in India

9. Key Challenges:

-Location

-Merchandise

-Pricing

-Target Audience

-Social of Operation

10. SWOT Analysis of Modern Retail

11. New Opportunities Due to Growth of the Retail Industry

12. Contribution of Retail Industry in India

13. Future prospect in retail business
14. Conclusion
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15. Bibliography

Introduction to Retailing

Retailing consists of the sale of goods or merchandise, from a fixed location

such as a department store or kiosk, in small or individual lots for direct consumption
by the purchaser. Retailing may include subordinated services, such as delivery.
Purchasers may be individuals or businesses. In commerce, a retailer buys goods or
products in large quantities from manufacturers or importers, either directly or through
a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are
often called shops or stores. Retailers are at the end of the supply chain. Manufacturing
marketers see the process of retailing as a necessary part of their overall distribution
strategies.

Shops may be on residential streets, or in shopping streets with few or no

houses, or in a shopping center or mall, but mostly found in the central business district.
Shopping streets may or may not be for pedestrians only. Sometimes a shopping street
has a partial or full roof to protect customers from precipitation. Retailers often
provided boardwalks in front of their stores to protect customers from the mud. Online

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retailing, also known as e-commerce is the latest form of non-shop retailing (cf. mail
order).

Shopping generally refers to the act of buying products. Sometimes this is done
to obtain necessities such as food and clothing; sometimes it is done as a recreational
activity. Recreational shopping often involves window shopping (just looking, not
buying) and browsing and does not always result in a purchase. .

Scenario of Retailing in India

Retailing is the most active and attractive sector of last decade. While the retailing
industry itself has been present since ages in our country, it is only the recent past that it
has witnessed so much dynamism. The emergence of retailing in India has more to do
with the increased purchasing power of buyers, especially post-liberalization, increase
in product variety, and increase in economies of scale, with the aid of modern supply
and distributions solution.
Indian retailing today is at an interesting crossroads. The retail sales are at the highest
point in history and new technologies are improving retail productivity. though there
are many opportunities to start a new retail business, retailers are facing numerous
challenges.

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Current Scenario of Indian Retail Industry

Marketers need to understand the existing scene in India before they invest in organized
retailing local kiryanas are incorporating changes with time, but people still prefer to
buy their goods from them. Organized retailing is concentrated only in the cities.
Organized retailing has been attacking the average middle class consumers in large
cities. Retail Trade, which is currently the largest contributor to our GDP, requires the
current marketing environment needs to be improved.It is observed that the share of
organized retailing in India is around 2%, compared to80% in USA, 40% in Thailand
and 20% in China approx. At Kearney’s global retail development index shows India
on the top of emerging retail market. Retailing through non-traditional channels is
becoming more popular. Retailing through supermarkets,hypermarkets, department
stores are increasing. Top business houses like Reliance, Tata,and Rahejas are investing
in this sector. The retail sectors also employ over 10% of national workforce.
A report by KPMG predicts that organized retail is expected to grow stronger than
organized retail is expected to grow stronger than GDP growth in the next 5 years and
this is expected to be a result of changing lifestyles, consumption patterns and
demographics.
The face of grocery retailing in India is seeing the change because of the huge
investments by the corporate. To name the few are RPG Spencer, Future group, Food
Bazaar, Reliance, Subhiksha etc.
Retail sector is the fastest growing sector in the Indian economy. Traditional markets
are making way for few formats such as department stores, hypermarkets,
books,supermarkets and specially stores. International players like Tesco and Carryfour
are expected to enter India very soon.The business sectors of banking and retail have
always had close links. Finance should also be made easily available to facilitate
expansion and restructuring plans undertaken by retailers.

Present Indian Scenario

* Unorganized market: Rs. 583,000 crores

* Organized market: Rs.5, 000 crores
* 5X growth in organized retailing between 2000-2005

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* Over 4,000 new modern Outlets in the last 3 years

* Over 5,000,000 sq. ft. of mall space under development
* The top 3 modern retailers control over 750,000 sq. ft. of retail space
* Over 400,000 shoppers walk through their doors every week
* Growth in organized retailing on par with expectations and projections of the last 5
Years: on course to touch Rs. 35,000 crores (US$ 7 Billion) or more by 2005-06

MAJOR PLAYERS
- Food and grocery
- Fashion
- Others
- Food world
- Shoppers' Stop
- Vivek's
- Subhiksha
- Westside
- Planet M
- Nilgris
- Lifestyle
- Music World
- Adani- Rajiv's
- Pyramid
- Crossword
- Nirma-Radhey
- Globus
- Life spring

Types of Retail Marketing

1.Store Retailing

Store retailing provides consumers to shop for goods and services in a wide variety of
stores and it also help the Consumers to get all the needed goods and services from one
shop only. The different types of store retailing are given below:

2.Specialty Stores

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These stores focus on leisure tastes of different individuals. They have a narrow
product line with deep assortment such as apparel stores, sporting goods stores,
furniture stores, florists and bookstores. These stores are usually expensive and satisfy
the needs of selected consumers who have liking or preference for exclusive things.

3.Departmental Store

These stores are usually built in large area and keep variety of goods under one shed. It
is usually divided into different sections like clothing, kids section, home furnishings,
electronic appliances and other household goods. In a departmental store a consumer
can buy variety of goods under one shed.

4.Supermarket

These stores are relatively large, low cost, low margin, high volume, self service
operations designed to serve total needs for food, laundry and household maintenance
products. Supermarkets earn an operating profit of only 1 percent on sales and
10percent on net worth.

5.Convenience Stores

These are relatively small stores located near residential area, open for long hours seven
days a week, and carrying a limited line of high turnover convenience products at
slightly higher prices than departmental stores. Many such stores also have added
takeout sandwiches, coffee and pastries.

6.Off - Price Retailer

These stores sell goods at low price with lower margins & higher volumes. These stores
sell goods with deteriorated quality. The defects are normally minor. This target at the
persons belonging to the lower income group, though some have a collection of
imported goods aimed to target the younger generation. The company owned
showroom selling the seconds products is a typical example of off - price retailer.

7.Discount Store

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These stores sell standard merchandise at lower prices by accepting lower margins and
selling higher volumes. The use of occasional discounts or specials does not make a
discount store. A true discount store regularly sells its merchandise at lower prices,
offering mostly national brands, not inferior goods.

In recent years, many discount retailers have “traded up”. They have improved decor,
added new lines and services, and opened suburban branches—all of which has led to
higher costs and prices and as some department stores have cut their prices to compete
with discounters.

Not only that, discount stores have moved beyond general merchandise into specialty
merchandise stores, such as discount sporting goods stores, electronics stores, and
bookstores.

8. Catalog Showroom

Catalog showrooms generally sell a broad selection of high-markup, fast-moving,

brand-name goods at discount prices. These include jewelry, power tools, cameras,
luggage small appliances, toys, and sporting goods. Catalog showrooms make their
money by cutting costs and margins to provide low prices that will attract a higher
volume of sales. Catalog showrooms have been struggling in recent years to hold their
share of the retail market.

RETAIL SCENE IN INDIA

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India has some sometimes been called a nation of shopkeepers. This epithet has its
roots in the huge number of retail enterprises in the country totaling 12 million, about
78 percent of these are small family owned businesses utilizing only household labour.
even among retail enterprises that hire workers the bulk of them hire less than 3
workers .India’s retail sector appears backwards not only by standards of industrialized
countries but also in comparison to several other emerging markets in Asia and
elsewhere. There are only 14 companies that run departmental stores and mere two with
hypermarket operations. While the number of businesses operating supermarkets is
higher ( 425 in 2004 ) most of these had only 1 outlet, the number of companies with
supermarket chains was less than 10.

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Traditional Retail Scene in India

India is the country having the most unorganized retail market. Traditionally the retail
business is run by Mom & Pop having Shop in the front & house at the back. More than
99% retailers function in less than 500Sq.Ft of area. All the merchandise was purchased
as per the test & vim and fancies of the proprietor also the pricing was done on ad hock
basis or by seeing at the face of customer. Generally the accounts of trading & home
are not maintained separately. Profits were accumulated in slow moving & non-moving
stocks which were to become redundant or consumed in-house. Thus profits were
vanished without their knowledge. The Manufactures were to distribute goods through
C & F agents to Distributors & Wholesalers. Retailers happen to source the
merchandise from Wholesalers & reach to end-users. The merchandise price used to
get inflated to a great extent till it reaches from Manufacturer to End-user. Selling
prices were largely not controlled by Manufacturers. Branding was not an issue for
majority of customers. More than 99% customers are price sensitive & not quality or
Brand Sensitive at the same time they are Brand conscious also. Weekly Bazaar in
many small tows was held & almost all the commodities were on the scene including
livestock. Bargaining was the unwritten law of market. Educational qualification level
of these retailers was always low. Hence market was controlled by handful of
distributors &/or Wholesalers. Virtually there was only one format of retailing & that
was mass retail. Retailer to consumer ratio was very low, for all the categories without
exception. Varity in terms of quality, Styles were on regional basis, community based
& truly very low range was available at any given single place. Almost all the
purchases / (buying) by mass population was need oriented & next turn may be on
festivals, Marriages, Birthdays & some specific occasions.

Impulsive buying or consumption is restricted to food or vegetables etc. Having extra

pair of trousers or Shirts or Casuals & Formals & leisure wear & sports wear &
different pair of shoes for occasions is till date is a luxury for majority population
except for those living in Metros. Purchasing power of Indian urban consumer is very
low and that of Branded merchandise in categories like Apparels, Cosmetics, Shoes,
Watches, Beverages, Food, Jewellery, are slowly seeping into the lifeline of Indian City

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folks. However electronic & electrical home appliances do hold appropriate image into
the minds of consumers. Brand name does matter in these white goods categories. In
the coming times also majority of organized retailers will find it difficult to keep
balance with rest of the unbranded retail market which is very huge.

Indian Retail is Moving Into Second Gear

1) FIRST GEAR:
(Create awareness)
* New retailers driving awareness
* High degree of fragmentation
* Real estate groups starting retail chains
* Consumer expecting 'value for money' as core value

2) SECOND GEAR:
(Meet customer expectations)
* Consumer-driven
* Emergence of pure retailers
* Retailers getting multi-locational and multi-format
* Global retailers evincing interest in India

3) THIRD GEAR:
(Back end management)
* Category management
* Vendor partnership
* Stock turns
* Channel synchronization
* Consumer acquisition
* Customer relation's management

4) FOURTH GEAR:
(Consolidation)
* Aggressive rollout

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* Organized retail acquitting significant share

* Beginning of cross-border movement
* Mergers and acquisitions

Threat to the Traditional Retail in India

Organized and Unorganized Retail in India

The retail sector in India has been quite boring and staid. The Indian retailing is
estimated to be the $180 billion, with organized sector represent only 2% share of this
market, mainly concentrated in the metropolitan cities. India is the last large Asian
economy to liberalize its retail sector. Hence the scope is great, as it is completely
dominated by the unorganized sector. Retailing in India is the second largest industry
which provides job opportunity to the huge chunk of people after the agriculture
industry. There are so many reason why organized retail industry for the so long on the
back foots. Few of the obstacles in the organized retail are

1.Poverty and low illiteracy rate: Poverty and illiteracy are the main reasons for the
slow growth of the organized retail in India . People shy to go shopping in the big
supermarkets and mall they think that these malls provide goods on a high rate compare
to the mompop stores.

2. Low per capital income: Indians have the low per capital income compare to the
other big countries in the word which also pose some threat to the development of the
organized retail in this part of the world.

3.Poor infrastructure facilities: Due to the poor infrastructure facilities like roads and
other transport means are also a big threat for this sector. Poor connectivity of roads are
pausing the threat. It is difficult by the big players to overcome this problem.

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4.High taxes: In India there are so many taxes put on this industry which caps its
growth.

5.High import duties: High import duties are also one of the main causes of slow
growth of this sector

Some other problems faced by these stores are

1. No exposure of the big stores to media

2. Expensive supply chain

3. Focus saving and high bargaining interest of the consumer

4. Licensing policies which were restricting

Hence India has been experiencing the unique strangle – hold of our traditional stores
and for generations people have been shopping from the same traditional stores.
Keeping is mind that retailing is the second largest job generator in this part of the word
and that $180 billion worth of goods are retailed every year. But now the scenario has
been India is slowly but staidly moving towards organized retail. Due to the rise in per
capital income and liberalized of the economy has given the new life to this industry.
Free flow of FDI in this sector is also another reason of its development.

Now the threat is moving towards the traditional retailers

Threat to the MOMPOP stores

As India has liberalized its economy more and more companies (National and
International) are coming to India . There are now numbers of companies which are in
this sector. Few of them are Subeksha. Reliance, Goderaj, Birlas, Bharti wallmart,
Tatas Big Bazzar, vishal mart etc.

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There are other companies who only concentrated to single areas like Mc Donalds,
Sony LG etc .Companies are also using the other way of retailing like factory outlets,
franchises etc

Some other companies which are using this format are cotton county, Reebok, Nike,
sportking, Black, woodland etc. Even some local firms are also using this format of
retailing.

These companies are posing the threats to old small store players. These small player
got there material from the long supply chain which mares the product costliest on the
other hand the big players like reliance has direct contract with the farmers and other
companies on the much cheaper rates which provide them the edge over the traditional
players. These stores provide the products in a cheaper rate and we all know that India
is very sensitive to price so it is one major reason for the growth of the organized retail.

The other major reason is one roof shopping. Today India is rising in every field and
women who once do the shopping for the family is now doing the jobs and no one has
the enough time to devote for shopping so these mall or supermarkets are the better
way because all the thing needs are under one roof and one has no need to roam for the
product from one store to another

People now have all the vehicles which takes them from one place to another in short
time so they do not hesitate to go for shopping in and around 4 to 5 Km. In old days
Indians were consider as poor but today scenario has changed Indians are not poor they
are also very good educated and the per capital has also rise due to the better job
opportunity and people are also willing to spend money not on necessities but also on
the luxuries so these store has a very good chance to grow.

Indians sees shopping as an end in itself, The Indian customer prefer to purchase
perishables like vegetables, meat etc on daily basis and hence distance is a significant
inhibitor Which these stores are managing very well. One can find a supermarket close
to the distance of 2 to 3 km from their house.

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Retail Industry in India

India's vast middle class and its almost untapped retail industry are key attractions for
global retail giants wanting to enter newer markets. Driven by changing lifestyles,
strong income growth and favorable demographic patterns, Indian retail is expected to
grow 25 per cent annually.

Modern retail in India could be worth US$ 175-200 billion by 2016. With the economy
booming, competition in the marketplace is fierce. According to 'Retail in India Getting
Organised to Drive Growth', a report by AT Kearney and the Confederation of Indian
Industry, retail is one of India's fastest growing industries with a 5 per cent
compounded annual growth rate and expected revenues of US$ 320 billion in 2007.
Rising incomes, increasing consumerism in urban areas and an upswing in rural
consumption will fuel this growth to around 7-8 per cent.

KSA-Technopak, a retail consulting and research agency, predicts that by 2010,

organised retailing in India will cross the US$ 21.5-billion mark from the current size
of US$ 7.5 billion.

Retail space

Retailers in India are the most aggressive in Asia in expanding their businesses, thus
creating a huge demand for real estate. Their preferred means of expansion is to
increase the number of their outlets in a city, and also expand to other regions, revealed
the Jones Lang LaSalle third annual Retailer Sentiment Survey-Asia.

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Deutsche Bank's research report on 'Building up India ' says India 's burgeoning middle
class will drive up nominal retail sales through 2010 by 10 per cent per annum. The
country may have 600 new shopping centres by 2010.

Food retail

Food dominates the shopping basket in India . The US$ 6.1 billion Indian foods
industry, which forms 44 per cent of the entire FMCG sales, is growing at 9 per cent
and has set the growth agenda for modern trade formats. Since nearly 60 per cent of the
average Indian grocery basket comprises non-branded items, the branded food industry
is homing in on converting Indian consumers to branded food.

The mobile revolution

The retail market for mobile phones -- handset, airtime and accessories -- is already a
US$ 16.7 billion business, growing at over 20 per cent per year. In comparison, the
consumer electronics and appliance market is worth US$ 5.6 billion, with a growth rate
that is half of the mobile market.

Kid’s retail

When it comes to Indian children, retailers are busy bonding--and branding:

Monalisa, the Versace of kids is coming to India .

Global lifestyle brand Nautica is bringing Nautica Kids.

International brand Zapp tied up with Raymond to foray into kids' apparel.

Disney launched exclusive chains which stock character-based stationery.

Pantaloon's joint venture with Gini & Jony will set up a retail chain to market kids'
apparel.

Swiss kidswear brand Milou is collaborating with Tirupur-based Sreeja Hosieries.

Turner International India Pvt Ltd. will launch Cartoon Network Townsville and Planet
POGO--two theme parks designed around its channels--in the National Capital Region.

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Sahara One Television has also signed a Memorandum of Understanding to source

content from Spacetoon Media Group, Middle East 's largest kids' entertainment brand
for animation and live action content.

Leading the kids' retail revolution is the apparel business, which accounts for almost 80
per cent of the revenue, with kids' clothing in India following international fashion
trends. According to research firm KSA Technopak, the branded segment comprises
US$ 701.7 million of the total kids' apparel market-size of over US$ 3 billion.

Industry experts say kids' retailing will touch annual growth of 30-35 per cent. Toys,
stationary, sportswear, outerwear, tailored clothing, eyewear, watches, fragrance,
footwear, theme parks, TV channels… the segment is growing rapidly at 10 per cent
per annum. Margins are in the range of 20-25 per cent (for dealers and distributors),
while companies enjoy an average gross margin of about 10 per cent.

Agricultural retail

Agriculture across India is heralding the country's second Green Revolution. 14 states,
including Maharashtra, Punjab , Andhra Pradesh and Rajasthan amended the
Agricultural Produce Marketing Committee (APMC) act this year, along the lines of
the Model APMC Act, '02, which allows farmers to sell their produce directly to buyers
offering them the best price. Agricultural sectors such as horticulture, floriculture,
development of seeds, animal husbandry, pisciculture, aqua culture, cultivation of
vegetables, mushroom under cultivated conditions and services related to agro and
allied sectors are open to 100 per cent FDI through the automatic route.

For its e-Choupal scheme, ITC built internet kiosks in rural villages so farmers can
access latest information on weather, current market prices, foods-in-demand, etc.

With a US$ 5.6 billion, multi-year investment in agriculture and retail, Reliance Retail
will establish links with farms on several thousand acres in Punjab, West Bengal and
Maharashtra .

FieldFresh, planning to become India 's first large-scale exporter of produce, will
annually pay farmers over US$ 30,000 to lease land for vegetables, to hire tractors and
to pay their workers.

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Besides a five-year program with the Punjab government to provide several hundred
farmers with four million sweet-orange trees for its Tropicana juices by 2008,
PepsiCo--with agriculture exports worth US$ 40 million--also introduced farmers to
high-yielding basmati rice, mangoes, potatoes, chilies, peanuts, and barley for its Frito-
Lay snacks.

Export potential and a rapidly growing domestic demand for reliable produce from new
supermarket chains is driving change. With 77 per cent of India 's population relying on
agriculture for a living, improved efficiency and new markets can benefit a large
number of people.

International retailers

The Australian government's National Food Industry Strategy and Austrade initiated a
test marketing food retail in India wherein 12 major Australian food producers have
tied up with India-based distributor AB Mauri to sell their products directly at retail
outlets.

The largest-ever 150-member British business delegation in India committed

investments in the areas of food processing, agri retail and manufacturing. It is also
likely to press for the liberalisation of sectors like financial & legal services and retail.

US-based home delivery and logistics company, Specialised Transportation Inc, will
enter the Indian market through a strategic alliance with Patel Retail, a subsidiary of
Patel Integrated Logistics.

Among other big international players, Wal-Mart has announced its plans for India in
partnership with Bharti, Tesco is sure to try again, and Carrefour too might finally find
the right partner.

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Key Issues Related to Retailing in India

India is among the top 15 global retail markets but it is also perhaps among the least
actively competed for with global retailers.

Space and Infrastructure

To establish a retail shop / mall, the real estate and the infrastructure are very vital. The
expenditure and availability on both the accounts do hinder the growth of the retail
chain. The lack of secondary infrastructure also affects the logistics and supply chain
management for retail companies.

• It has a complicated tax structure. Implementation of VAT has also been postponed.
Growth in non-Metros - Most retailers concentrate on the top eight metros. That's
because the market here is ready for organised retail and a premium pricing strategy is
easier to adopt. But the question to be asked is that does that leave enough room for
growth. Already Malls are coming up in small cities like Indore, Ludhiana, Chandigarh
and Meerut.

According to the latest RK Swamy BBDO guide to urban markets,

Chandigarh tops the chart as the city with the highest per capita income.The figure for
the city is Rs 26,710, ahead of the likes of Panaji, Delhi and Greater Mumbai. The city
also has the distinction of having the highest auto ownership ratio and an average
monthly expenditure on fast moving consumer goods.

Availability of manpower- Like most underdeveloped service businesses, retail lacks

a large talent pool. And thanks to the BPO boom, Shoppers' Stop says it is losing
counter staff at an alarming rate: about one in every three leaves each year. And
replacing 30% of the staff every year jacks up training and recruitments costs.

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Finding quality suppliers - Most retailers are trying to increase margins. About 350
farmers in Karnataka are doing contract farming for RPG. Everybody wins. The
farmers get a guaranteed off take, and 46- The Changing Retail Landscape of India- 9 -
48% of the price which the consumer pays (up from the earlier 40%). As for
FoodWorld, now sourcing half of its total fresh produce from these farmers, it can sell
it 15-20% cheaper in the market. Also, in apparel, it isn't easy to find suppliers who can
match the capacities that a fastexpanding chain like Shoppers' Stop needs. That's why
store labels come in and so do international labels, which offer gross margins of 40%.

Differentiation and Reach - Too many department stores, too many exclusive outlets
all too close to each other. There's hardly enough differentiation and this could make it
hard to build store loyalty. Besides, customers don't want to travel more than 20
minutes to visit a store. So, building higher levels of traffic when catchments are
shrinking is a tough challenge.

Pace of expansion - There are enough recent examples of chains that tried ramping up
too fast too soon. Barista, Domino's and Shoppers' Stop all fell into a cash trap. So
deciding the right pace of expansion will be equally critical.

FDI Policy

FDI is normally one of the ways of getting technical inputs. And because of this dearth
of FDI in this sector, development in terms of systems, people, and skills might take a
longer time.

Key Challenges:

1) LOCATION:

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"Right Place, Right choice" Location is the most important ingredient for any business
that relies on customers, and is typically the prime consideration in a customer’s store
choice. Locations decisions are harder to change because retailers have to either make
sustainable investments to buy and develop real estate or commit to long term lease
with developers. When formulating decision about where to locate, the retailer must
refer to the strategic plan:

* Investigate alternative trading areas.

* Determine the type of desirable store location
* Evaluate alternative specific store sites

2) MERCHANDISE:

The primary goal of the most retailers is to sell the right kind of merchandise and
nothing is more central to the strategic thrust of the retailing firm. Merchandising
consists of activities involved in acquiring particular goods and services and making
them available at a place, time and quantity that enable the retailer to reach its goals.
Merchandising is perhaps, the most important function for any retail organization, as it
decides what finally goes on shelf of the store.

3) PRICING:

Pricing is a crucial strategic variable due to its direct relationship with a firm's goal and
its interaction with other retailing elements. The importance of pricing decisions is
growing because today's customers are looking for good value when they buy
merchandise and services. Price is the easiest and quickest variable to change.

4) TARGET AUDIENCE:

"Consumer the prime mover" "Consumer Pull", however, seems to be the most
important driving factor behind the sustenance of the industry. The purchasing power
of the customers has increased to a great extent, with the influencing the retail industry

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to a great extent, a variety of other factors also seem to fuel the retailing boom.

5) SCALE OF OPERATIONS:

Scale of operations includes all the supply chain activities, which are carried out in the
business. It is one of the challenges that the Indian retailers are facing. The cost of
business operations is very high in India.

Modern Retail- SWOT Analysis

SWOT analysis is a tool for analyzing modern retailing. In this analysis, a study can be
made regarding the strength, weaknesses, opportunities and threats of retail industry.

Strength of Modern Retail

The benefits of larger organized retail segments are several. The consumers get a better
product at cheaper price. So consumers get value for their money. Employment
opportunities both direct and indirect have been increased. Farmers get better prices for
their products though improvement of value added food chain. A large young working
population with median age of 24 years, nuclear families in urban areas, along with
increasing working women population and emerging opportunities in the service sector
are going to be the key growth drivers of the organised retail sector in India. It has also
contributed to large scale investments in the real estate sector with major national and
global players investing in devolving the infrastructure and construction of the retailing
business.The trends that are driving the growth of the retail sector in India are low share
of organised retailing and falling real estate prices.Increase in disposable income and
customer aspirations are important factors. Increase in expenditure for luxury items is
also vital.The governments of states like Delhi and National Capital Region (NCR) are
very upbeat about permitting the use of land for commercial development thus increase
the availability of land for retail space.
The growth of sachet revolution emerges for reaching to the bottom of the pyramid.The
annual growth of departmental stores is estimated at 24%.The size of Indian organised

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retail industry reached at Rs.1,30,000 crore in 2006.Ranked second in Global Retail

Development Index of 30 developing countriesdrawn up by AT Kearney.

Weakness of Modern Retail

The rapid development of retail sector is the sharp improvement in the availability of
retail space. But the current rally in property prices, retail real estate rentals have
increased remarkably, which may render a few retailing business houses unavailable.
Retail companies have to pay high rentals which are blockage in the turn of
profits.Small size outlets are also one of the weaknesses in the Indian retailing. 96% of
the outlets are lesser than 500 sq.ft. The retail chains are also smaller than those in the
developed countries for instance, the superstore food chain, food world is having only
52 outlets where as Carrefour promotes has 8800 stores in 26 countries.The volume of
sales in Indian retailing is also very low. India has largest population in the world and a
fast growing economy.

Opportunities of Modern Retail

Global retail giants take India as key market .It is rated fifth most attractive retail
market. The organised retail sector is expected to grow stronger than GDP growth in
the next five years driven by changing lifestyles, increase in income and favourable
demographic outline. Food and apparel retailing are key drivers of growth.Rural
retailing is still unexploited Indian market.It can become one of the largest industries in
terms of numbers of employees and establishments.Indian retail industry has come
forth as one of the most dynamic and fast paced industry with several players entering
the market.

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Threats of Modern Retail

One of the greatest barriers to the growth of modern retail formats are the supply chain
management issues. No major changes are needed in the supply chain for FMCG
products; these are well developed and efficient. For perishables, the system is too
complex. Government regulations, lack of adequate infrastructure and inadequate
investment are the possible bottlenecks for retail companies. The supply chain for
staples is less complicated than the net groceries. But staples have a unique problem of
non- standardization. Organized retailing in India is yet to get an industry status.100%
Foreign Direct Investment (FDI) is not permitted in retailing in India. Ownership of
retail chain is allowed only to the extent of 49% but without FDI, the sector is deprived
of access to foreign technologies and faster growth.
Lack of uniform tax system for organized retailing is also one of the obstacles.
Inadequate infrastructure is likely to be an obstacle in the growth of organized
retails.The unorganized sector has dominance over the organized sector in India
because of low investment needs.
Labour rules and regulation are also not followed in the organized retails. The sector is
unable to employ retail staff on contract basis.Problem of car parking in urban areas is
serious concern.
Difficult to target all segments of society.Emergence of hyper and super markets trying
to provide customer with –value,variety and volume.Heavy initial investment is
required to break even with other companies and compete with them.Retail today has
changed from selling a product or a service to selling a hope, an aspiration and above
all an experience that a consumer would like to repeat.Retail chains are yet to settled
down with proper merchandise mix for the small outlets. Retailing today is not about
selling at the shop, but also about researching and surveying the market, offering
choice, competitive prices and retailing consumers as well.

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New Opportunities Due to Growth of the Retail Industry

Opportunities for Sourcing Companies

As India's basket of production increases, retailers, brands and importers can explore
specific opportunities suited to their business. A large base of European and
American customers are already served from India, with almost 70% of apparel exports
headed to the US and EU. Even as these companies are growing their sourcing from
India, other customers are also starting to build up their presence, directly or through
indirect relationships. Even while the sun sets on the quota regime Indian exporters are
also targeting non-quota market, including Australia, Japan, West Asia, South Africa
and Latin America.

Opportunities for Consumer Brands

India has one of the largest and one of the fastest growing economies in the world. It
has averaged an annual growth rate of GDP over 6% over the last several years, and
this is improving the overall prosperity of the population.The consumer market was
already relatively well-developed which is improving further with favourable factors
such as rationalisation of taxes,reduced import tariffs, and a growing young segment
that is willing to spend more. International brands already present in the market include
Benetton,Lacoste, Levi Strauss, Crocodile, Dockers, Lee, Wrangler, Nike,Reebok,
Adidas, Zegna, Marks & Spencer etc.

There is also a boom in retail development: organised retailing projected to grow from
a 0.8% share to 5% by 2005, of a $170 billion market (in absolute terms) [a $935
billion market, in PPP terms]. This is being enabled by development of retail
infrastructure e.g. mall space. However, as many companies have discovered in the last
ten years, this opportunity needs to be qualified. Depending on the product and its
price, the market may be half-a-million people in 6 cities, or 20 million in 25 towns.
Very few companies, such as Unilever, can actually aim to reach out to 500 million

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Indian consumers or more. The lesson is that, while the consumer market is sizeable
and certainly growing, it is important that each company carries out a structured
assessment of the potential for their products, before beginning to build any
expectations.

Other things done by these stores to cater the needs of the people are

1.Good Price: price is certainly the important factor but it is self defeating that all
customers are only looking for price. People today look for quality, after sales, product
reliability, pleasant shopping experience, cordiality of sales person and adherence to
commitments etc. As this sector is growing fast big companies are doing their best to
curb this

2.The people factor: Today big store are doing their best to provide the good overall
experience to the customer by providing special training to its sale team

3.The technology edge: Technology would have a much bigger role to play in
retailing then its current role. For e.g. what kind of system do we need to develop for
better serving of customers? And in this field too big stores are way ahead by providing
hassle free shopping to the customers.

4.Giving value to customer: This entails to anticipation of the customer expectation

and fulfilling them effectively. This is also done by the big stores by providing and
communicating with the customers relating to products

5.Special strategies: Emerging marketers and consumers are very well developed
along some dimensions and totally new among others. For e.g. a friendly neighborhood
retailer understand the business of customer relationship management very well but is
totally innocent about the strategies say how to capture supply chain surpluses

6.Coping with the changes: Brands are no longer products- they are associated with
life style and people aspirations. One of the challenges is not to fear changes but to
encompass it and lead the process of change trough the organization but big companies

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can cope with the changes due to ample flow of money but traditional stores cant do
because of low and concentrated flow of money are only concentrated to some
metropolitan cities and few in numbers. Also most of the Indian population (60+) is
living in the rural areas and women are the main who Shoppe for the home and also
they do not have any means of traveling other then the foot so they only prefer to buy
from the neighbor hood shops.

Most of the population lives in villages and small cities where income is
seasonal (incase of village) or monthly (incase of small towns) people prefer to buy on
credit and these store to whom they have friendly relation provide the goods on credit
without any hesitation.

The other reason why these stores are still in race or will remain in race for the
next many yeas are

The family relation with the customer. People buy the thing from the same realties from
which there for fathers buy and this make a family type relation and Indians as we all
knows are very emotional no they prefer to buy the product from the same retailer.

They like to touch and fell the merchandise which is only possible with the small stores
because for the security threat like theft of products reason big stores do not provide
this option. They enjoy to scouting for options: Indians for the long time very sensitive
to price so they are regularly in the search of good alternatives/options.

Like to be served: We Indians like the attention of the person of the store and this is
only provided by the small shop owners because they are present in the shop. We like
to be served

¬ food and otherwise

¬ preferably from the same sales man each time

¬ want attention from all members of the group including the owner

¬ In close by pace

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So from the above it is clear that there is a threat to the old traditional players by the
entrance of big Houses in this sector but still it is very early to say that whether these
store will remain in the market or not. Organized retail is in the nascent state in India
and is growing phenomenally. The old players who are close to the buyer knows their
mind so they curb their problem easily

Contribution of Retail Industry in India

The effects of retail on Indian economy are:

Employment Generation

Retailing provides employment to making 8% workforce in India, because it is highly

labour intensive. It has also patented to generate an additional eight million jobs, direct
and indirect.

Development of small scale units.

Retailing also helps small scale units to easy access market. They provide a platform
for small scale unit’s goods. Retailing in India support 4 lakh plus medium handcraft
manufacturers.

Growth of real estate

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The requirement of space is one of the biggest demands, so the real estate has also
grown over the last years. In the years to come Indian economy will also see the real
estate sector climbing the steps of organized retail estate sector.

Future prospect in retail business

FDI helps to meet the global economies, societies and domestic players to a closely
integrative traditional village i.e. one is for all and all for one. By the end of 2010, 100
million sq.ft of small space is expected to be available.Division of labour,
specialization, developing competition and innovation lead to economic growth.
Liberalization of trade and cross border merges and joint ventures have also driving
forces.A significant size in the organized retail and is expected to grow from 3% to50%
in the coming year.Technology, management, expertise, market intelligence are also
some of the opportunities to domestic business.

Conclusion
Consumers are always hungry for modern ways of shopping. Indian retail sector is
growing fast and its employment potential is growing fast. The retail scene is changing
really fast. Retailers are rethinking their approaches towards the suppliers so that they
can get the best pricing strategies for them. There is no surprise why from an Abani to
Mittal,Godrej to Birla, everybody is ready with them plans to kick start retail revolution
in India. Apart from above, retail sector in India is also catalyst for the growth of
staling tactics of below the line marketing used by major retail players Like Spencer,
big bazaar, reliance fresh etc. For tapping customers by creating points of sales
displays. So we can say that India is a rising star and going to be one of the fastest
growing regions of the future.

Most of the consumer belongs to urban area rather than rural areas. Retail Outlets are
more a fashion and that is more likely to attract the students or young generation. As
the trend is just started more and more people have started visiting Retail Outlets. Most

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of the respondents have a knowledge regarding organized and unorganized

Retail. Retail Outlets are more a fashion and that is more likely to attract the students or
young generation. As the trend is just started more and more people have started
visiting Retail Outlets.

More and more consumer like to visit malls, and spend more that 5 hours there. Many
of the consumers shop for their daily needs as more are there for window shopping. The
main attractions are the branded clothes and that every commodity available under one
roof.

Bibliography

Books

Malhotra Naresh, ‘Marketing Research’, Prentice Hall of India, 2008.

Tata McGraw Hill edition ‘Business Research Methods’, 2009.

C.R Kothari, ‘Research Methoogy’ , 2008, II Edition.

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Website:

http://www.franchiseek.com/Market_ Trends_Retail_0304.htm

http://www.etretailbiz.com/

http://www.amec.com.mx/revista

http://www.researchandmarkets.com

http://www. retailindia.typepad.com

http://icm.icfai.org/casestudies/catalogue/marketing
.

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