Professional Documents
Culture Documents
1. Industry Overview 05
3. Origin of retail 13
6. Specialty stores 25
10. Challenges 55
19. Conclusion 89
21. References 94
Industry Overview
Industry analysis of the Indian retail sector:
Modern retailing has entered India in form of malls and huge complexes offering shopping,
entertainment, leisure to the consumer as the retailers experiment with a variety of formats, from
continue to score over modern formats mostly due to the convenience factor i.e. near to their
house.
This organized segment typically comprises of a large number of retailers, greater enforcement of
taxation mechanisms and better labour law monitoring system. It's no longer about just stocking
and selling but about efficient supply chain management, developing vendor relationship quality
customer service, efficient merchandising and even the labour class is also in the working process
timely promotional campaigns. The modern retail formats are encouraging development of well-
established and efficient supply chains in each segment ensuring efficient movement of goods
from farms to kitchens, which will result in huge savings for the farmers as well as for the nation.
The government also stands to gain through more efficient collection of tax revenues. Network
marketing has been growing quite fast and has a few large players today. Gas stations are seeing
action in the form of convenience stores, ATMs, food courts and pharmacies appearing in many
outlets.
In the coming years it can be said that the hypermarket route will emerge as the most preferred
format for international retailers stepping into the country. Estimates indicate that this sector will
have the potential to absorb many more hypermarkets in the next four to five years
List of retailers that have come with new formats:
Traditionally, the kirana retailing has been one of the easiest ways to generate self-employment,
as it required minimum investment in terms of land, labour and capital. These store are not
affected by the modern format of retailing. In order to keep pace with the modern formats, kiranas
have now started providing more value-added services like stocking ready to cook vegetables and
other fresh produce. They also provide services like credit, phone service, home delivery etc.
The organized retailing has helped in promoting several niche categories such as packaged fruit
juices, hair creams, fabric bleaches, shower gels, depilatory products and convenience and health
foods, which are generally not found in the local kirana stores. Looking at the vast opportunity in
this sector, big players like Reliance has announced its plans to become the country's largest
Apart from metro cities, several small towns like Nagpur, Nasik, Ahmedabad, Aurangabad,
Sholapur, Kolhapur and Amravati has seen the expansion of modern retails. Small towns in
Maharashtra are emerging as retail hubs for large chain stores like Pantaloon Retail because
many small cities like Nagpur have a student population, lower real estate costs, fewer power cuts
However, retailers need to adjust their product mix for smaller cities, as they tend to be more
conservative than the metros. In order for the market to grow in modern retail, it is necessary that
steps are taken for rewriting laws, restructuring the tax regime, accessing and developing new
India 62 34 91 80 1st
Russia 52 58 71 92 2nd
China 68 40 53 90 4th
Turkey 51 56 66 65 9
Thailand 64 41 59 71 12
Malaysia 70 49 58 40 18
Egypt 51 35 85 30 25
Brazil 52 56 57 20 29
India’s
Rank 24th 14th 1st 7th 1st
Socio demographic factors will lead to faster growth of Organized
retail in India:
0%
1991 1996 2001 2006 2010E
0-19 Yrs 20-34 Yrs 35-54 Yrs 55+ Yrs
ORGANIZED RETAIL
Emerging Retail Markets:
India, Russia, China and Vietnam top the list of the most attractive emerging markets for retailers'
investment in 2010, While India and Russia have held the top two spots since 2007, China's
booming consumer spending, together with retailers moving into second-tier cities, helped it rise to
No. 3 from its No. 5 spot last year, according to the 2007 Global Retail Development Index from
The study based its results on four variables: 'country risk', measuring political risk, debt and credit
ratings; 'market attractiveness', encompassing retail sales per capita, population, infrastructure
The higher the ranking, the more urgency for retailers to enter the market, according to the study,
which ranks the top 30 emerging countries for retail development and focuses on mass-merchant
"If you want to be an international player in retail, these are the markets that demonstrate the
characteristics (where) you can be successful," said Laura Gurski, a co-author of the study and
India has already attracted the attention of global retailers like Wal-Mart Stores Inc., which is
working with India's Bharti Enterprises to set up a joint venture for a cash-and-carry business. In
India, foreign multiple-brand retailers, which sell diverse brands under one roof, are limited to
report said. "Once India's window closes for grocery retailers, there will be little opportunity for
The country's growing population of young urban professionals with disposable incomes and the
nouveau riche has also made India attractive for luxury retailers. India has attracted "the low end
and the high end because of the breadth of the consumer segments that are available," said
Gurski.
When variables stay constant, Gurski said, do-it-yourself, apparel and electronics retailers usually
enter emerging markets some two years after international grocers establish themselves. Middle
Eastern countries are also represented on the list, with Saudi Arabia ranking No. 10
India has emerged as the world's most attractive destination for mass merchant and food retailing,
maintaining its 2005 position in an annual study of retail investment attractiveness among 30
emerging markets.
India was given the top ranking in management consulting company AT Kearney's 2006 Global
Retail Development Index (GRDI). "The Indian retail market is gradually but surely opening up,
while China's market becomes increasingly saturated," said Fadi Farra, a principal in AT
Kearney's Consumer Industries and Retail Practice and leader of the GRDI study. Much to the
surprise of market observers, China was ranked fifth in this year's tally, declining one more place
since 2005. While China remains very attractive, the market is becoming increasingly saturate as
and United Arab Emirates No. 18. Gap Inc announced last week it had struck a deal with two
franchisees to open Gap stores in Saudi Arabia starting at the end of this year. Dubai has
capitalized on consumer desire for a more Western lifestyle and has established itself as a retail
mecca, Gurski said. Despite its focus on luxury, Dubai is "just beginning to be populated by the
bread-and-butter retailers of the United States and the Western world," she said. Retailers that
have already established a presence in major Chinese cities like Shanghai and Beijing, or those
that have been slow to gain a foothold there, are now looking at less developed markets in
second-tier cities, the study found. "If the markets are saturated, they're looking to make profits in
But she cautioned that a separate strategy is needed for the smaller markets since consumer
tastes, ability to spend and willingness to embrace new formats may be different than in larger
urban areas.
International retailers rush to establish a presence and build market share, the study reveals.
According to the study, Asia with a large 40 per cent of the top 20 markets has surpassed Eastern
"The learning is that timing is the most important source of competitive advantage for global and
regional retailers in the globalization race. Knowing when to enter emerging retail markets is the
key to success," said Farra. Powering Asia's charge are Vietnam, which has risen five places to
third place, and countries like Thailand, South Korea and Malaysia, all of which are in the top 15,
After topping the ranking for two consecutive years in 2008 and 2009, Russia slipped to second
place behind India last year and remained there in 2010 too.
Origin of Retail Sector
Early Trade:
When man started to cultivate and harvest the land, he would occasionally find himself with a
surplus of goods. Once the needs of his family and local community were met, he would attempt
to trade his goods for different goods produced elsewhere. Thus markets were formed. These
early efforts to swap goods developed into more formal gatherings. When a producer who had a
surplus could not find another producer with suitable products to swap, he may have allowed
others to owe him goods. Thus early credit terms would have been developed. This would have
led to symbolic representations of such debts in the form of valuable items (such as gemstones or
The Retail Trade is rooted in two groups, the peddlers and producers. Peddlers tended to be
opportunistic in their choice of stock and customer. They would purchase any goods that they
thought they could sell for a profit. Producers were interested in selling goods that they had
produced.
General Store:
This division continues to this day with some shops specializing in specific areas, reflecting their
origins as outlets for producers (such as Pacific Concord of Hong Kong), and others providing a
broad mix, known as General Store (such as Casey's in the Midwest of the U.S.A.).
Although specialist shops are still with us, over time, the general store has increasingly taken on
specialist products. Customers have found this to be more convenient than having to visit many
shops - thus the term "Convenience Store" has also been applied to these shops. As the
popularity of general stores has grown, so has their size. This combined with the advent of Self-
Early Markets:
Over time, producers would have seen value in deliberately over-producing in order to profit from
selling these goods. Merchants would also have begun to appear. They would travel from village
to village, purchasing these goods and selling them for a profit. Over time, both producers and
merchants would regularly take their goods to one selling place in the centre of the community.
Thus, regular markets appeared. The First Shop: Eventually, markets would become permanent
fixtures i.e. shops. These shops along with the logistics required to get the goods to them were,
Defined as sales of goods between two distant parties where the deliverer has no direct interest in
the transaction, the earliest instances of distance retailing probably coincided with the first regular
delivery or postal services. Such services would have started in earnest once man had learned
When individuals or groups left their community and settled elsewhere, some missed foodstuffs
and other goods that were only available in their birthplace. They arranged for some of these
goods to be sent to them. Others in their newly adopted community enjoyed these goods and
demand grew. Similarly, new settlers discovered goods in their new surroundings that they
dispatched back to their birthplace, and once again, demand grew. This soon turned into a regular
trade. Although such trading routes expanded mainly through the growth of traveling salesmen
and then wholesalers, there were still instances where individuals purchased goods at long
distance for their own use. A second reason that distance selling increased was through war. As
armies marched through territories, they laid down communication lines stretching from their home
base to the front. As well as garnering goods from whichever locality they found themselves in,
they would have also taken advantage of the lines of communication to order goods from home.
Origins of Retail
It is likely that, as markets became more permanent fixtures they evolved into shops. Although
advantageous in many respects, this removed the mobility that a peddler or traveling merchant
may still have enjoyed. For some shopkeepers, it made sense to obtain extra stock and open up
another shop, most probably operated by another family member. This would recover business
from peddlers and create new business and the greater volume would allow the shopkeeper to
strike a better deal with suppliers. Thus the retail chain would have started. Its thought that this
process would have started in china over 2200 years ago with a chain of shops owned by a trader
called Lo Kass.
This all changed in 1915 when Albert Gerrard opened the Groceteria in Los Angeles, the first
documented self-service store. This was soon followed a year later by the Piggly Wiggly® self-
This new type of shopping was more efficient and many customers preferred it. Although personal
service stores remain to this day, this new concept started a rapid growth of self-service stores in
the United States. Other countries were slow to take up the idea, but there has been a steady rise
Efficiency
These entrepreneurs noticed that their staff had to spend a great deal of time taking grocery
orders from customers. The groceries were stacked on shelves allowing customers to walk around
and browse, collecting their shopping in a basket that was supplied. The shopkeeper would only
need to tot up the final bill at the end of the process and transfer the goods from the basket to the
Although retail chains would have been mostly run by families, as some chains grew, they would
have needed to employ people from outside of their family. This was a limiting factor as there
would have been a limit to the amount of trusted non family members available to help run the
chain. Another, even more definite limiting factor was the distance the furthest shop would have
been from the original shop. The greater the distance, the more time and effort would have been
needed to effectively manage outpost shops and to service them with goods. There was,
therefore, a natural barrier to expansion. That was the case until transport and communications
became faster and more reliable. When this happened towards the end of the 19th century, chains
became much bigger and more widespread. Many of these businesses became more structured
Today, retailing doesn’t involve just dealing or marketing from shops, it includes analyzing the
market in an effort to provide reasonable prices together with an array of options and experience
to customers. The sole purpose of all this is retaining the brand loyalty of customers. Indian retail
is currently a US$ 245 billion market and is anticipated to extend to almost US$ 385 billion mark
by the next five years. The Indian retail sector is currently sporting a brand new look and together
with a 46.64 per cent three-year Compounded Annual Growth Rate (CAGR), Conventional
marketplaces are paving way for new shopping malls, the likes of superstores, shopping plazas,
supermarkets and brand label stores. International style shopping centers have started dotting the
skyline of cities and smaller towns, acquainting the Indian customer to a unique shopping
experience. The retail industry in India is split up into the unorganized and organized retail
segments.
The unorganized retail sector includes the big, average and modest grocery stores and the
chemist shops. A changeover is taking place from the conventional retail sector to organized
retailing. But the unorganized segment still dominates and leads the industry. By 2010, the Indian
retailing sector is anticipated to become an Rs12.5 trillion market. The share of organized retailing
is supposed to jump to about 10 per cent from the existing three per cent. The anticipated
staggering growth in organized retailing provides an opportunity to expand the market for both
established and new players. According to the latest report India Retail Sector Analysis
(2006ñ07)I by RNCOS, the total retail market is primarily focused in rural regions, which makes up
55 per cent or US$ 165 billion of the overall retail market as opposed to urban segment, which
represents 45 per cent or US$ 135 billion of the gross retail market. The rural market is spread
over 627,000 villages, even though its centre of attention is focused around a core group of
India represents the most compelling international investment opportunity for mass merchant and
food retailers looking to expand overseas, according to management consulting firm AT Kearney's
2009 Global Retail Development Index (GRDI), an annual study of retail investment attractiveness
among 30 emerging markets. India is rated as the fifth largest emerging retail market and is seen
as a potential goldmine. Driving global brands into India is the greatly improved investment climate
due to the recent relaxation of direct ownership restrictions on foreign retailers. The country's retail
market totals $330 billion, is vastly underserved and has grown by 10 per cent on an average over
the past five years. The message for retailers on India is clear – move now or forego prime
locations and market positions that will soon become saturated. Global retailers that missed
Though India has more than five million retail outlets, they are greatly unorganized. There is no
supply chain management perspective. In fact, out of the entire retail sector in India, the organized
sector is only 25 per cent and the rest is unorganized. 96 per cent of the retail outlets are smaller
in area than the standard norms. The retail industry is divided into organized and unorganized
sectors. Organized retailing refers to trading activities undertaken by licensed retailers who are
registered for sales tax and income tax. These include corporate backed hypermarket and retail
chains and so on. Unorganized retailing is the traditional low-cost shops, handcarts and
pavements and is by far the prevalent form of trade in India. The efficiency of organized sector in
produce is cleaner, fresher, well packed and often cheaper than the local shopkeeper. This is
possible because of the far more efficient distribution system, which organized retail chains are
employing, by cutting the layers of middlemen involved. There are other benefits too, of
transforming the unorganized retail sector into an organized sector. Firstly, a number of new jobs
will be created, far better paid than the underage labor working in the local shops. Secondly, the
benefits to the producer and consumer through better prices and lesser wastage; throwing up
exportable surpluses, which will also benefit the economy as a whole. Thus one can see that
The Big Bazaars and Spencer’s, the huge unorganized retail sector is finally beginning to see the
Taxation policies also push you to automate and the push is even harder for those looking to
Though it’s early days yet to measure it penetration in the unorganized retail industry, interest
levels are surely raising fast. “It’s good to at least answer their questions. Though the interest is
Software available to the retailers is ShawMan’s RetailMagiK, which takes care of the front-end
store needs, as well as the back-end warehouse requirements. “It would surely help the
unorganized sector to get into technologies like bar-coding, which will make their operations more
efficient. Some other features are a user-defined billing screen and discount with control
mechanism from the head-office, delivery order management, batch control and quick information
search, among others. The product is a simple to use. The screen design and the functionality are
designed in such a way that the user need not press too many keys to get things done,” says
To begin with, most retailers look at decent entry-level solutions starting at Rs 25,000. However,
there are cheaper quick-fix solutions available too. One can even deploy a computer and start with
Small retailers seem next in line and vendors are also warming up to the opportunity. At the low-
end however, smart inexpensive solutions are the need of the hour. And solutions providers like
Microsoft, Polaris and Shawman are now working on developing smart tools for the retail
enthusiasts. For small players with just one store, the investment on retail solutions go really low,
anywhere between Rs 10,000 to Rs 25,000. Most of the time these solutions are developed by
local firms, who at times compete with the big names in the industry.
According to Oberoi of Polaris, generally the mom-and-pop stores like to go for technology, which
will get their work done at a reasonable cost. They avoid the high-end technology, and consider
these as frills. “They are not even bothered about upgrading, so the cheap systems are more than
welcome. These solutions might not work for the mid-sized retailers with five stores, as then one
need to scale it up and take care of inventory and supply chain management,” he says.
Comparing the case with China, Vedamani suggests India is on the right track. “In China, we find
the organized sector to be 20-23% of the total industry. Here, the technology has advanced in
Department organized into different departments such as One stop shop catering to
toys, etc.
One stop shop catering to
Supermarkets Extremely large self-service retail outlets
varied consumer needs
Stores offering discounts on the retail price
Discount
through selling high volumes and reaping Low Prices
Stores
economies of scale
Larger than a supermarket, sometimes with a Low prices, vast choice
RPG Retail Supermarket (Foodworld) Hypermarket (Spencer's)Specialty Store (Health and Glow)
Department Store
Piramal's Discount Store (TruMart)
(Piramyd Megastore)
Small format outlets
(Shoppe) Supermarket(FoodBAZAR)
Pantaloon Retail
Department Store Hypermarket (Big Bazaar) Mall (Central)
(Pantaloon)
Department Store
(Crossword)
Department Store
Tata/ Trent Hypermarket (Star India Bazaar)
(Westside)
Department Store
Landmark Group Hypermarket (TBA)
(Lifestyle)
Discount Store (Subhiksha, Margin Free, Apna Bazaar), Supermarket (Nilgiri's),
Others
Specialty Electronics
Retailing formats in India
1. Malls:
The largest form of organized retailing today. Located mainly in metro cities, in
proximity to urban outskirts. Ranges from 60,000 sq ft to 7,00,000 sq ft and above. They lend an
ideal shopping experience with an amalgamation of product, service and entertainment, all under
2. Specialty Stores:
Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer Crossword,
RPG's Music World and the Times Group's music chain Planet M, are focusing on specific market
3. Discount Stores:
As the name suggests, discount stores or factory outlets, offer discounts on the MRP through
selling in bulk reaching economies of scale or excess stock left over at the season. The product
4. Department Stores:
Large stores ranging from 20000-50000 sq. ft, catering to a variety of consumer
needs. Further classified into localized departments such as clothing, toys, home, groceries,
etc
5. Department Stores:
Departmental Stores are expected to take over the apparel business from exclusive
brand showrooms. Among these, the biggest success is K Raheja's Shoppers Stop, which started
in Mumbai and now has more than seven large stores (over 30,000 sq. ft) across India and even
6. Hypermarts/Supermarkets:\
Large self service outlets, catering to varied shopper needs are termed as
Supermarkets. These are located in or near residential high streets. These stores today contribute
to 30% of all food & grocery organized retail sales. Super Markets can further be classified in to
mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets ranging from of
3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personal sales.
7. Convenience Stores:
These are relatively small stores 400-2,000 sq. feet located near residential areas. They
stock a limited range of high-turnover convenience products and are usually open for extended
periods during the day, seven days a week. Prices are slightly higher due to the convenience
premium.
8. MBO’s :
Multi Brand outlets, also known as Category Killers, offer several brands across a single
product category. These usually do well in busy market places and Metros.
SPECIALITY STORES
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
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.
Kids retail:
International brand Zapp tied up with Raymond to foray into kids' apparel.
Pantaloon's joint venture with Gini & Jony will set up a retail chain to market kids' apparel.
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.
content from Spacetoon Media Group, Middle East's largest kids' entertainment brand for
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'
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
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.
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
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.
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,
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-
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
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.
Supermarkets:
Large self service outlets, catering to varied shopper needs are termed as Supermarkets. These
are located in or near residential high streets. These stores today contribute to 30% of all food &
grocery organized retail sales. Super Markets can further be classified in to mini supermarkets
typically 1,000 sq ft to 2,000 sq ft and large supermarkets ranging from of 3,500 sq ft to 5,000 sq
ft. having a strong focus on food & grocery and personal sales.
Supermarkets are relatively new entrants in the market. They are so called pioneers in organized
food retailing and go by the western model in look and feel and format. This is what everybody
Franchise outlets:
Like Tommy Hilfiger and Wal Mart, other US retailers are firming up their India entry strategies
and if they are already in, they are undergoing rapid expansion. Fashion brands DKNY is also al
set to foray into the Indian fashion Industry through a franchisee agreement with Indian company,
Like Tommy Hilfiger and Wal-Mart, other US retailers are firming up their India entry strategies
and if they are already in, they are undergoing rapid expansion. Fashion brand DKNY is also all
set to foray into the Indian fashion Industry through a franchisee agreement with Indian company,
S Kumar’s.Starbucks recently expressed their interest in entering India through the franchise
route, like their AmericanF&B counterparts Pizza Hut, Subway, and the very successful
McDonald’s. McDonald’s has major expansion plans lined up; in the next 3 years, it plans to open
Hypermarket:
A very large commercial establishment that is a combination of departmental store and a
supermarket.
The specific features of a hypermarket are the wide range of goods offered, quality service, quality
display of goods on the shelves and complex systems providing for customers loyalty.
Hypermarket is known for a wide range of goods offered. It consist of dozens of thousands of
items, while similar goods can be offered in several forms. In order to work with such an
assortment it is necessary to group it into categories and sub categories that would unite goods
Shopping Malls:
The new shopping malls that have been expanding their footprint across Indian cities are well
designed, built on international formats of retailing and integrated with entertainment and
restaurants to provide a complete family experience. Over 300 malls are expected to be
built over the next two years and most Indian cities with over a million populations will be
Shopping malls have existed in India since several decades but were designed and built to house
several shops in a single facility. These malls also known as Shopping Arcades offered only rows
of shops, most of which were small stores that promised bargains for their various wares. These
Shopping Arcades tried to maximize on their store space and did not offer any areas for recreation
and entertainment.
The present day malls are a creation of the past few years post 2000. They are designed
professionally using a lot of international experience and combine shopping with a lot of brand
building, recreation, food and entertainment. Malls also have a large format store that serves as
their anchor for shopping and a prominent restaurant that anchors the food needs of visitors. Most
malls also feature a multiplex cinema that offers entertainment to the visitors of the mall. Finally
the mall has large atria and open spaces to allow visitors and families to hang-out.
Organized Retail Sector
Product Segments:
The organized retail business in India is very small. This is despite the fact that India is one of the
biggest markets. Retail business contributes around 10-11 per cent of GDP. India also has the
largest number of retailers, about 12 million, though they are mostly small. Most of the organized
retailing in the country has just started recently, and has been concentrated mainly in the metro
cities. Organized retailing in India has a huge scope because of the vast market and the growing
consciousness of the consumer about product quality and services. Organized retail only accounts
for 3% of the total retail industry as yet and is estimated to grow to $64 billion by the year 2015. As
a result, the retailing space in the country will also rise by 15-20% by 2010. 50 million sq ft of
quality space under development 7 major cities to account for 41 million sq ft development 300
malls, shopping centre and multiplexes under construction To open 35 hypermarkets, 325 large
department stores, 1500 supermarkets and over 10,000 new outlets To add US $ 10 billion of
business to organized retail. ASSOCHAM president, Anil K Agarwal says:” The organized sector
retailing is all set to grow at much faster speed than unorganized sector and the higher growth
speed will alone be responsible for its higher market share which has been projected for $17
billion by 2010-11. Cities and metropolis in which retailing will show booming prospects include
Mumbai, Delhi, Chennai, Kolkata, Bangalore and Kanpur, said Agarwal adding that the popular
mode adopted for building shopping malls in these cities will be based on build, operate, lease
The 4 major organized retail sectors are Food & Grocery, Clothing, Consumer Durables
and Books & Music. In 2003-04, private consumption expenditure in India amounted to Rs
1,690,000 crores (USD 375 billion) of which, retail sales constitute about 61% (USD 230 billion).In
terms of penetration by the organized retail sector, footwear is the highest category, followed by
clothing. Footwear is driven by the dominance of home –grown players like Liberty as well as the
15% market share that MNC retailer Bata Commands. Foreign Presence, especially through the
franchisee route, e.g. Adidas, Reebok, Nike etc. adds to this slice of the pie. Franchisee activity in
Nanz in North India, Nilgiris in the South, Pantaloon in the East and Crossroad in the West were
the pioneers of the retail revolution in India. Nanz faced several obstacles in their business and
had to finally down their shutters. Nilgiris, due to some strange reason, did not see any logic to
expand beyond the southern frontiers. Pantaloon went to scale up and become bigger and bigger
to form the Future Group, that is now omnipresent in almost all formats right from small groceries
to e-tailing. Crossroads in Mumbai imparted some valuable lessons to their parent, the Piramyd
Group, who has since then gone on an expansion drive with other formats of retailing in different
cities.
The big players in Indian retail landscape now are the Future Group, Shoppers Stop, Westside,
Subiksha and RPG Spencer. The newcomers who are knocking at the gates are Reliance Retail,
Bharti Walmart and Aditya Birla Trinethra. Here, we intend to do a brief profiling of the major
The V++ Group, which was earlier known as PRIL (Pantaloon Retail India Limited) began as a
trouser manufacturer in the mid 1980s. The V++ Group is divided into six verticals – V++ Retail,
V++ Capital, V++ Brands, V++ Space, V++ Media and V++ Logistics. The V++ Group started
operations in the mid 1987s by incorporating the company as Manz Wear Private Limited. The
company went on to manufacture ready made trousers under the “Pantaloons” brand name. It
came out with a public issue in 1991 and later changed their name to Pantaloon Fashions (India)
Limited (PFIL).
The first exclusive men’s store called Pantaloon Shoppe was inaugurated in 1992. Pantaloons
went for a franchisee route to expand the number of retail outlets and by 1995, it had reached to a
crucial number of 70. The first departmental store called Pantaloons was opened in Kolkata in
1997 with an investment of Rs 0.7 million. The store was a success and recorded revenues of Rs
100 million within the first year of operations. In 1999, the company’s name was changed to
The success of Pantaloons departmental stores encouraged PRIL to come up with other retailing
formats such as “Big Bazaar” to retail low cost general merchandising, and “Food Bazaar” to retail
food products. As of 2005, the V++ Group has 3.5 million sq ft of retail space and over 100 stores
across 25 cities in India. It employs more than 12,000 people and has a customer base of more
Kishore Biyani, the promoter of the group who likes to address himself as “Chief Knowledge
Officer” has plans to launch 18 formats and over 3,340 stores, thereby turning the V++ Group into
a US$7 billion company with over US$1 billion in profits by the year 2010.
6. RPG Spencer
RPG’s Spencer presently has 125 stores across 25 cities covering a retail trading area of half a
million square feet and with a clientele of 3 million customers a month. Spencer's has a national
footprint with seven hypermarkets, three supermarkets and 70 daily use outlets, called Dailies.
All the newly opened Spencer's stores stock every conceivable product that is required by a
household on a daily basis. At Spencer's Daily shoppers can get fresh fruits, vegetables, fast-
moving consumer goods, household items, groceries, with regular offers and discounts.
Spencer's outlets are divided in to three retail formats. These are, Spencer's Hyper, the over
25,000-sq ft hypermarkets stocking over 25,000 items. The 8,000sq ft to 15,000-sq ft mini hyper
stores, branded as Spencer's Super and the daily purchase 4,000-sq ft to 7,000-sq ft Spencer's
Daily for groceries, fresh food, chilled and frozen products, bakery and weekly top up shopping.
8. Bharti Wal-Mart
Bharti Retail (Pvt.) Ltd. unveiled the roadmap for its retail
venture on 19th February, 2007 envisaging an investment of $2.5 billion with expectation of
revenue of $4.5 billion (about Rs. 20,000 crore) from this business by 2015. The first retail outlet is
Bharti’s plan is to invest $2.5 billion by 2015 and open stores across all major cities. This
investment would be only for setting up front-end stores. The modalities for its back-end linkage,
including its joint venture with the world's largest retailer Wal-Mart, are in the process of being
worked out.
A high-level team from Wal-Mart was visited India in the later part of February to work out the
details of the back-end chain. While Bharti would manage front-end of the retail venture, Wal-Mart
would be involved in the back-end, including logistics, supply chain and cash-and-carry, he added.
The JV was presently scouting for 10 million sq. ft. of retail space, which would include
hypermarkets, supermarkets and convenience stores and would provide employment to about
60,000 people. The company would open multi-format retail outlets in all cities with a population
of about one million. Bharti is now conducting a massive consumer survey to take a final decision
However, Bharti and Wal-Mart have been facing stiff opposition from the left parties and other
political outfits who fear that the entry of the Bentonville giant will make life difficult for the small
grocers and create massive unemployment. They also expect Wal-Mart to take a tough stance on
lowering prices and force farmers to sell their produce at lower rates. A lurking fear of monopolistic
regime in the retail sector is also enhancing their fears. Both Bharti and Walmart are presently
having a tough time in convincing the ministers, politicians, agriculturists, the NGOs and other
pressure groups that their business model would serve to work in the best interests of all the
stakeholders.
9. VISHAL RETAIL :
Vishal is one of fastest growing retailing groups in India. Its outlets cater to almost all price
ranges. The showrooms have over 70,00 products range which fulfills all your household needs,
and can be catered to under one roof. It is covering about 1282000 sq. ft. in 18 state across India.
Each store gives you international quality goods and prices hard to match. The cost benefits that
is derived from the large central purchase of goods and services is passed on to the consumer.
What started as a humble one store enterprise in 1986 in Kolkata(erstwhile, Calcutta) is today a
conglomerate encompassing 51 showrooms in 39 cities. India’s first hyper-market has also been
opened for the Indian consumer by Vishal. Situated in the national capital Delhi this store boasts
of the singe largest collection of goods and commodities sold under one roof in India. The group’s
The Vishal stores offer affordable family fashion at prices to suit every pocket. The group’s
philosophy is integration and towards this end has initiated backward integration in the field of high
fashion by setting up a state of the art manufacturing facility to support its retail endeavors.
Company has already tied up for 5-lakh sq ft space and is looking for more. Company will come
up with 32 new stores this year. Company is doing research on more formats. Company is
looking for opportunities of expansion in the South. Contribution of apparels business at 53% may
slightly come down to 50%. India is a big country and there is huge space for four-five big retail
players. Vishal can always sustain growth in this big market. Company can sustain margins as it is
going for backward integration. Currently manufacturing contributes 10% of the business, which in
the next two to three years, will go up to 25%. Company is increasing its focus on the non-apparel
and FMCG segment. The current share of FMCG at 15% could go up to 20-25%. Apparel sales
currently at 63% in the next 2-3 years should come down to 50% as the company is now also
focusing on different segments. With growth in volumes, the cost of sourcing will come down in
the near future. Company will venture wherever it gets real estate space. Currently, it has very
little space in the south India. Eventually, it will have a pan-India set up.
THE GROWTH DRIVERS
years of age.
• Double Incomes: Increasing instances of Double Incomes in most families coupled with the
• Plastic Revolution: Increasing use of credit cards for categories relating to Apparel,
• Urbanization: increased urbanization has led to higher customer density areas thus
enabling retailers to use lesser number of stores to target the same number of customers.
Aggregation of demand that occurs due to urbanization helps a retailer in reaping the
economies of scale.
• Covering distances has become easier: with increased automobile penetration and an
easier than before. Now a customer can travel miles to reach a particular shop, if he or she
Space is no more a constraint for growth. India is on the radar of Global Retailers and suppliers /
brands world-wide are willing to partner with retailers here. Further, large Indian corporate groups
like Tata, Reliance, Raheja, ITC, Bombay Dyeing, Murugappa & Piramal Groups etc and also
foreign investors and private equity players are firming up plans to identify investment
opportunities in the Indian retail sector. The quantum of investments is likely to sky-rocket as the
inherent attractiveness of the segment lures more and more investors to earn large profits.
Investments into the sector are estimated at INR 20 – 25 billion in the next 2-3 years, and over
Stocks in the retail sector are also becoming increasingly attractive from an investor's point of
view. Successful development of value based concepts as well as development of retail space in
smaller cities and towns shall drive the organized retail into the next levels of cities. Retailers have
and supermarkets in the new pockets of growth. Prominent ‘tier-II' cities and towns which are
witnessing a pick-up in activity include Surat, Gorakhpur, Dehra Dun, Vijaywada, Bhopal, Indore,
With consumption in metros already being exploited, manufacturers and retailers of products such
as personal computers, mobile phones, automobiles, consumer durables, financial services etc
are increasingly targeting consumers in tier II cities and towns. In addition, petro-retailing efforts of
petroleum giants scattered through out the country's landscape have also ensured that smaller
thereby, creating quality space for retailers to fulfill their aggressive expansion plans. Thus, the
‘retail boom', 85% of which has so far been concentrated in the metros is beginning to percolate
down to smaller cities and towns. The contribution of these tier-II cities to total organized retailing
international exposure, availability of increasing quality retail space, wider availability of products
and brand communication are some of the factors that are driving the retail in India. Over the last
few years, many international retailers have entered the Indian market on the strength of rising
affluence levels of the young Indian population along with the heightened awareness of global
brands and international shopping experiences and the increased availability of retail real estate
pace.
Development of India as a sourcing hub shall further make India as an attractive retail opportunity
for the global retailers. Retailers like Wal-Mart, GAP, Tesco, JC Penney, H&M, Karstadt-Quelle
etc stepping up their sourcing requirements from India and moving from third-party buying offices
to establishing their own wholly owned / wholly managed sourcing & buying offices shall further
growing clout of the retailers as a shift in bargaining power from the former to the latter becomes
more discernible. Already, a number of manufacturers in India, in line with trends in developed
markets, have set up dedicated units to service the retail channel. Also, instead of viewing
retailers with suspicion, or as a ‘necessary evil' as was the case earlier, manufacturers are
beginning to acknowledge them as channel members to be partnered with for providing solutions
In India they do not have to face this dilemma largely because rapid urbanization, increase in
demand, presence of large number of young population, any number of opportunities are available
. The bottom line is that Indian market is changing rapidly and is showing unprecedented
1. Income
2. Socio-Economic status
3. Age demographics
4. Geographical dispersion
SWOT OF THE MARKET
STRENGTH
8) Most of the entrants to organized retail come from 3 main categories, and have ventured into
• Corporate Houses
• Manufacturers/Exporters
WEAKNESSES
OPPORTUNITIES:
3) Social factors like dual household income have enhanced spending power.
5) Availability of old industrial lands-prime real estate locked in sick industrial units.
THREATS:
3) Poor monsoons and low GDP Growth could affect consumer spending drastically.
CHALLENGES
Retailing in its traditional form has been existing in India for decades. But retail management in
the true sense (as retailing is known in the west) is a relatively new discipline in India. It is unlike
other forms of marketing and the traditional marketing rules do not apply. In retailing, as in service,
there is a fifth P added to the existing 4 of marketing, the People. Therefore the contact person
(whom the
Consumers interact with) becomes a doubly important entity. The most important difference is that
where marketing has the classic 4 Ps (Product, Promotion, Price and place), in retailing a fifth P,
people is added which is critical. They are critical to a service business like retailing both as
employees who execute the business and the customers with whom retailers must interact.
• Large transactions: Retailers need to handle smaller transactions in large numbers and still be
• Low price strategy: The Indian consumer being value-conscious, a key to success for many
• Aggressive sales, discount and collection schemes (say, credit facilities.) and thus keep the
enthusiasm going.
• Indian consumer behaviors - Retailers need to conduct MRs and behavioral studies into the
Indian psyche simply because he is so different from those in the west and in fact, different from
• Use of information technology (IT) in developing a supply chain and integrating all the retailing
As somebody rightly pointed out, India remains one of the last frontiers of modern retailing.
Conquering the retailing in India will be a major challenge, given the complications that the
unorganized sector poses those of the supply chain and consumer behavior as well as the glaring
complexities of such a vast a market with all kinds of consumer segments thrown in. A wise
retailing hawk would set up special cells; committees to track retailing industry throughout the
country. Benchmarking the best in the country and seeing oneself as to where exactly he wants to
be in the complicated perceptual map would be a fine starter. Any retail chain needs to experiment
and re-orient to cater to the local needs and preferences. Given that these chains come with huge
asset bases and financing from their international operations, this is not a difficult task. While
Indian markets still beckon a large retail chain, the success of anyone foraying into the land of
snake-charmers and maharajas ultimately depends on how well and in-depth understanding they
have of the conditions, the people, the supply Retailing in India chain dynamics, the poorer (but
We feel that fraud in going to be one of the retail sector’s primary challenges in the future.
Fraud and theft, including employee pilferage, shoplifting, vendor frauds and inaccuracy in
supervision and administration costs the Indian retail industry about Rs 550-600 crores every
year. This is despite the fact that most large modern format retailers use standard security
features such as CCTV’s, POS systems and anti shoplifting systems for greater control over fraud
and theft. In financial terms, cost of this fraud constitutes about 2% of the organized retail sector’s
revenues.
We believe that the implications and size of this loss will be more significant as retailers continue
India is a large and highly fragmented country, with 29 states and 18 officials’ languages. A bulk of
its population, 66.1%, lives in rural retail potential We feel that private logistics companies offering
specialized services, refrigerated transport and ware house facilities across the country, along
TYPES OF LOCATIONS
virtually impossible to reach this virtually untapped market. Distribution, or lack of it, is a major
hindrance for retailers in India. The lack of quality infrastructure across the country and a non-
existent distribution sector results in inefficient logistics systems. Infrastructure is the weakest link
in India’s path to progress and there is urgent need to address issues plaguing this area.
indicator of the urgent need for highway development, for instance, is the fact that average daily
traffic volume on highways of 39,000 Passenger car units (PCU’s) far exceeds the highway
capacity of 15,000 PCU’s. Transport is a major concern, with a deteriorating railway system and a
limited highway network .In contrast to the global standards, the average load carried by trucks in
India around 7 tons_ is very low. However, the Indian Government is presently investing heavily in
the state highway system. This will help in an overall decline in logistics a cost which is currently
10-12% of total GDP. 10,000 MW of power needs to be added every year for next decade. Growth
in air passenger traffic, estimated at 20% p.a. for next two years, necessitates quadrupling of
airport capacities. Ports will witness 38% increase in tonnage in next -3 years and hence, port
c. Has stores that are generally found in clusters based on product categories.
a. Does not have a high footfall rate (customer traffic needs to be pulled I through the store’s
Once a geographical market has been chosen, the next step in formulating the retail business
plan is to select a site for the store. The importance of this decision is summarized by a favorite
saying of retailers: "There are three vitally important things in retailing - location, location, and
location."
In assessing the desirability of various available locations, note the positive and negative aspects
of each. Once again, analysis of trends is important. No location is static; it is either improving or
Store design and layout of the store's interior and exterior help determine the store's image
and character. In planning a new store or remodeling of an old one, there is plenty of room for
creativity. This part of the plan takes a lot of thought and consideration. Some bad decisions made
in the planning stage can be corrected, but mistakes made in the area of store design and layouts
Retailers can get specialized assistance from merchandise suppliers, local architects, and
store planning consultants. Display windows, fixtures, lighting, and storage are examples of areas
covered in this part of the retail business plan. Store layout involves such considerations as
allocation of space, customer traffic flow throughout the store, and maximizing profit per square
foot.
Planning a retail business has several advantages. A well thought out plan not only makes
Retailing is a challenging and dynamic field. The retailer draws on knowledge from such areas as
marketing, psychology, finance, accounting and management. From the field of management, we
learn that planning is one of the most important functions of the retailer. It is a function often
neglected under the pressure of day-to-day business activity, but it is so important that the
inventories. In order to use these resources in the most productive way, the retailer plans for the
future.
The most important planning occurs before a retail store even opens for business. Careful
planning at this time can greatly enhance a store's chances of success. By gathering and
synthesizing the relevant information into a retail business plan, the retailer can make better
decisions. A workable retail business plan should be detailed, specific, and in writing. Indeed, a
major advantage of planning is that it forces the retailer to put ideas in writing.
Without planning, there is no predetermined course of action, and with out some predetermined
course of action, retailers do not know what to do, where to do, or why it should be done. They
waste their own energies and the resources of the store. Planning involves selecting objectives
and developing specific program’s, policies, and procedures for achieving them.
Setting objectives-
Planning begins with objectives. Stores can have many different objectives: survival, growth,
market share increase, high return on investment, and development of a good store image. Some
objectives are more important than others. Profit, of course, is a primary objective for any retail
organization. Social concerns, however, must often be given consideration, too, if the store is to
Objectives are difficult to apply to real situations and decisions if they are stated in vague
terms. An objective should establish a measurable goal - a yardstick to compare results with
efforts. Goals or objectives such as "to increase sales by 18 per cent this year" or "to break even
in the first year of operation" are examples of clearly defined and measurable objectives. They
must be supported with concrete plans that are specific for reaching these goals.
oriented while setting objectives; it is one of the keys to successful retailing. Do not lose sight of
these objectives once they are formulated. Schedule quarterly, or if appropriate, monthly reviews
Financial planning:
Financial planning is an important part of the retail business plan. In fact, inadequate financial
planning is a frequent cause of store failure.Financial statistics on the type of business under
consideration is often available from trade associations. This information can be invaluable to the
manager in the initial planning stages. The retailer must make a sales forecast, calculate a break-
even point, and estimate the capital requirements of the business. Asset planning, another
essential part of financial planning, involves inventory, accounts receivable, equipment and
fixtures, and cash. Often, these assets must be financed in part with funds obtained from outside
What are the strengths and weakness of the business? By assessing these factors, a retailer can
maximize the use of all available assets and can limit or eliminate the handicaps imposed by the
Sufficient working capital to meet the costs of doing business the first year is another.
At least as important as knowing the strengths of the business is analyzing its weaknesses.
Awareness of weak areas is the first step in overcoming them. Some weaknesses can be
overcome by hiring an outside expert in areas in which the retailer's knowledge and experience
are limited. Additional training and outside reading are other answers to many weak areas.
A retailer with general retailing experience but little knowledge of, say, the shoe business,
could benefit greatly by hiring experienced shoe salespeople if she is planning to open a shoe
store. A retailer who is weak in the areas of financial planning and control needs to work closely
with a good accountant. Even during the planning stage, an accountant can be helpful in setting
What type of customer, or what segment of the market, does the store cater to? Is there enough
demand for the products to provide sufficient sales volume? These are some of the main
The key factors in market assessment are: first, the number of people living in the trade
area, and second, the buying power of these people. An extreme example of poor market
assessment would be trying to sell expensive fur coats in a poor mining town. Even the age
Competition is a good thing. It leads to better products and services at lower prices. It can inspire
a retailer to do a better job. However, numerous and / or aggressive competitors are costly to the
retailer in many ways. Price wars eat away profits. Too many similar stores serving too few
For some types of stores, however, the best strategy can be to locate as close as possible to the
competition. Competing stores located in the same area may increase customer traffic. Some
cities, for example, have an area with many antique shops. Customers are drawn to the area
because of this convenience, and each store's traffic helps the other stores. Retailers should not
be afraid of competition, but they should try to find a market where there is an unfilled demand for
Other assessments:
Local laws, tax rates, and the labour force are other areas that can affect the retail store. The
In this preliminary work, be aware of trends as well. For example, demand for the products
may look very promising in a certain area, but the population of this area might be declining. On
the other hand, an area with slightly lower market potential at present could be growing very fast
and provide a better long-run market for a particular store. These assessments are often difficult
to make, but the effort put into planning at this stage will pay off handsomely when store
Once a geographical market has been chosen, the next step in formulating the retail business
plan is to select a site for the store. The importance of this decision is summarized by a favorite
saying of retailers: "There are three vitally important things in retailing - location, location, and
location."
In assessing the desirability of various available locations, note the positive and negative
aspects of each. Once again, analysis of trends is important. No location is static; it is either
improving or declining in such things as traffic flow and potential market area.
Store design and layout of the store's interior and exterior help determine the store's image
and character. In planning a new store or remodeling of an old one, there is plenty of room for
creativity. This part of the plan takes a lot of thought and consideration. Some bad decisions made
in the planning stage can be corrected, but mistakes made in the area of store design and layout
Retailers can get specialized assistance from merchandise suppliers, local architects, and
store planning consultants. Display windows, fixtures, lighting, and storage are examples of areas
covered in this part of the retail business plan. Store layout involves such considerations as
allocation of space, customer traffic flow throughout the store, and maximizing profit per square
foot.
By organizing, the retailer establishes relationships among people, materials, and other
resources to get a job done. Labour is organized and divided, and responsibility is delegated.
Staffing entails the recruitment and selection of employees. It is a vitally important function
because the employees of a store represent that store to the public. People can really be the
achieve their maximum potential, while at the same time accomplishing the goals of the
organization. Because leadership means understanding people, it is one of the most creative and
challenging aspects of a retailer's job. The retailer's professionalism and attitudes set the tone for
Controlling is the follow-up function of retail management. Actual performance is compared with
Knowledge on buying
For established retail operations, past sales data are very helpful in knowing how much to buy.
For a new retail business, these past data are not available. However, if a sales forecast and
desired inventory turnover rate have been determined, the beginning inventory figure can be
calculated. A balance between meeting customers' needs and high inventory carrying costs must
be found.
Knowing how much to buy goes hand in hand with knowing what to buy. Successful retailing
involves having the right merchandise in the right place, at the right time, and at the right price for
the customer.
Information from store records is a valuable aid in knowing what to buy. In the absence of
this information, an understanding of the target customer's shopping habits and motivations is
helpful. Information from suppliers can provide valuable input for the store buyer. Once the
inventory has been obtained, a unit control system must be set up to keep track of the stock.
Pricing
The goals of retail pricing are fourfold. First, the goods must sell at a satisfactory rate. Second,
inventory costs and expenses must be covered. Third, a desired profit must be made, and fourth,
There are different pricing strategies for different types of stores, from the discount store to the
exclusive shop with quality merchandise and expanded customer services. Pricing in retailing is
markdown, and psychological pricing. Pricing is, naturally, closely related to financial planning.
A store's location, layout, design, and product lines affect its overall image. Advertising is another
key element of the store's image in the minds of customers. Advertising can be thought of as
want what the retailer has to offer, and to persuade the customer to take action to satisfy the
Besides advertising, retailers send messages to customers through personal selling, sales
promotion, and packaging. Information channels beyond the direct control of the retailer are
By giving careful consideration to defining who the advertisement is directed at (the "target
customer"), retailers can get more mileage out of advertising spend. The content of an
Sales promotion and display techniques are a major promotional tool. Sales promotions
can have various objectives, such as generation of immediate sales, attracting customers to the
merchandise the store carries, and to project the image of the store. Because window displays
are so visible, they should be given the attention, care, and creative input they deserve. Interior
displays can be informative, can stimulate impulse buying, or can suggest uses of a product. In
addition, they can enhance the store's image. Other sales promotion strategies include special
The salesperson is a communicator: This person translates product features into benefits and
satisfactions for the customer. But most important, the salesperson is the representative of the
The unique quality that distinguishes personal selling from other promotion activities is the
opportunity for feedback between customer and salesperson. Good advertising and promotion
can get people into a store. Good salespeople and good value keep them coming back.
The importance of employee selection and training cannot be overstated. Many retailers
are surprised to learn that monetary compensation, although important to employees, is usually
not their most important concern. Fairness, security, honesty, and opportunity are often more
Services
An enlightened retailer realizes that the customer is the pivot around which all retailing activities
revolve. This attitude is expressed to the customer through shopping conveniences, services,
employee attitudes, and fair values. As part of the retail business plan, decisions must be made
about the types of services to be offered. Services, and handling of credit policies and customer
Information and control play an important role in the internal operation of a retail business. Good
records are the basis for guiding and controlling a retail business. They are the tools a manager
Financial statements, such as balance sheets and income statements, are summaries of
the financial strength and profitability of the retail business. They tell how well a business is doing,
and give evidence about the quality of management decisions. Financial planning in the form of
Information
One information tool in particular has been a real boon to retailers, and that is the computer. More
and better information is available to the retailer now than ever before, because of computers.
This means that better and faster decisions can be made. Computers offer speed and accuracy of
from basic store records or is provided by a computer system. Another source of information for
the retailer is marketing research, such as the market assessment. Most of the research involved
in formulating the retail business plan is in fact, marketing research. Research can also help
increase, technology evolved rapidly to support this growth. The hardware and software tools that
have now become almost essential for retailing can be into 3 broad categories.
Point of sale systems use scanners and bar coding to identify an item, use pre-stored data
to calculate the cost and generate the total bill for a client. Tunnel Scanning is a new
concept where the consumer pushes the full shopping cart through an electronic gate to the
point of sale. In a matter of seconds, the items in the cart are hit with laser beams and
scanned. All that the consumer has to do is to pay for the goods.
• Payment
Payment through credit cards has become quite widespread and this enables a fast and
easy payment process. Electronic cheque conversion, a recent development in this area,
consumer's bank. Rather than manually process a cheque, the retailer voids it and hands it
back to the consumer along with a receipt, having digitally captured and stored the image
• Internet
Internet is also rapidly evolving as a customer interface, removing the need of a consumer
Various ERP vendors have developed retail-specific systems which help in integrating all
the functions from warehousing to distribution, front and back office store systems and
merchandising. An integrated supply chain helps the retailer in maintaining his stocks,
getting his supplies on time, preventing stock-outs and thus reducing his costs, while
• CRM Systems
The rise of loyalty programs, mail order and the Internet has provided retailers with real
access to consumer data. Data warehousing & mining technologies offers retailers the tools
they need to make sense of their consumer data and apply it to business. This, along with
the various available CRM (Customer Relationship Management) Systems, allows the
retailers to study the purchase behavior of consumers in detail and grow the value of
APS systems can provide improved control across the supply chain, all the way from raw
material supplier’s right through to the retail shelf. These APS packages complement
existing (but often limited) ERP packages. They enable consolidation of activities such as
long term budgeting, monthly forecasting, weekly factory scheduling and daily distribution
scheduling into one overall planning process using a single set of data.
Leading manufactures, distributors and retailers and considering APS packages such as
Demographics and buying patterns of residents of an area can be used to compare various
possible sites for opening new stores. Today, software packages are helping retailers not
only in their location decisions but in decisions regarding store sizing and floor-spaces as
well.
• Visual Merchandising
The decision on how to place & stack items in a store is no more taken on the gut feel of
the store manager. A larger number of visual merchandising tools are available to him to
evaluate the impact of his stacking options. The SPACEMAN Store Suit from AC Neilsen
and Modal CAD are example of products helping in modeling a retail store design.
Investment Opportunities
• Potential For Investment: The total estimated Investment Opportunity in the retail sector is
• Location: with modern retail formats having made their foray into the top cities namely
there exists tremendous potential in two tier towns over the next 5 years.
• Sectors with High Growth Potential: Certain segments that promise a high growth are
Clothing
Pharmacy
• Fastest Growing Formats: Some of the formats that offer good growth potential are:
Hyper Market
Discount stores
Department Stores
Logistics.
• Rural Retail: Retail sector offers opportunities for exploration and investment in rural areas,
with Corporates and Entrepreneurs having made a foray in the past. India's largely rural
population has caught the eye of retailers looking for new areas of growth. ITC launched
the country's first rural mall ' Chaupal Sagar', offering a diverse product range from FMCG
destination for all of their needs. There has been yet another initiative by the DCM Sriram
Group called the ' Hariyali Bazaar’ that has initially started off by providing farm related
inputs and services but plans to introduce the complete shopping basket in due course.
Other corporate bodies include Escorts and Tata Chemicals (with Tata Kisan Sansar)
setting up agri-stores to provide products/services targeted at the farmer in order to tap the
• Wholesale Trading: wholesale trading also holds huge potential for growth. German giant
Metro AG and South African Shoprite Holdings have already made headway in this
Mumbai respectively. These new-format cash-and-carry stores attract large volumes from a
sizeable number of retailers who do not have to maintain relationships with multiple
Greater level of exports due to increased sourcing by major players Sourcing by Wal-Mart from
China improved multifold after FDI permitted in China Similar increase in sourcing observed for
Metro in India
Investment in technology Cold storage chains solves the perennial problem of wastage. Greater
investment in the food processing sector technology Better operations in production cycle and
distribution.
Better lifestyle Greater level of wages paid by international players usually More product variety
Newer product categories Economies of scale to help lower consumer price. Increased
Manpower and skill development through retail training and Greater managerial talent inflow from
other countries
RESEARCH METHODOLOGY
Objectives of study
towards exclusive and multi brand retail outlets and to determine the factors that influence
• This study is also aimed at finding out the relation between major demographic variables
• To study the preference given by consumers in term of quality, ambience, service, scheme
Research Design:
It will be collected with the help of Questionnaire Method and Survey Research.
As well as unstructured observation will also come in use at some part (topic) of study.
Secondary Data - It will be collected with the help of Internet, books, journals, articles of
newspapers & magazines and research papers related to booming organized retail sector.
Data Analysis:
1. Questionnaire method
2. Method of observation
Sampling Design:
brand retail outlet that will be helpful to find out the factors that influence the satisfaction
level of customer.
• It will be helpful to know the connection between demographic factors of consumer like
age, income, education and choice of people for different types of product.
• The present study is limited to the growth of retail sector in india only.
Delivery Method:
Two hard copies in form of booklets and two softcopies in form of CDs.
This research analysis is based on the answers given by the sample customers of
0-2 K 35
2-5 K 10
5-10K 4
10-20 K 1
20-50K 0
>50k 0
0%
8% 2% 0%
0-2 K
20% 2-5 K
5-10K
10-20 K
20-50K
70% >50k
Interpretation-
The below given was the interpretation of the average monthly shopping budget for the sample
size in the project survey. In the sample size most of the people (i.e. 70%) were able to do
Spencer 15
V++ 3
Sahara 1
Vishal Mega mart 15
Any other 16
16 15
3
1
15
Interpretation-
The store location, its customer services, discount schemes and offers, its quality are the
important factors for the awareness of the any retailing company or brand but apart from all
these the most important thing which influence the awareness of any particular brand is it’s
advertising and other promotional activities. Spencer & Vishal mega mart of future group in
Gorakhpur is very well known brand among the people of sample because of it’s pricing,
attractive offers and discounts and its very good promotional and marketing activities. The
Vishal Mega Mart is also famous because of its reach in the various areas of the city.
24%
Spencer
42%
V++
Sahara
6%
2% Vishal Mega
mart
26% Any other
Interpretation-
Because of it’s attractive pricing and good schemes and offers people like to visit other retail
shop most often. Vishal Mega Mart & Spenser are also giving attractive discount on formal
wear so it is also known for good footfall. Sahara & V++ do not have discount offers and
schemes but it still likes to some of people in sample size because of its ambience, shopping
28%
38% Spencer
V++
Sahara
4% Vishal Mega mart
Any other
2%
28%
Interpretation-
Because of it’s attractive pricing and good schemes and offers people like to visit other retail store
most often. Vishal Mega Mart & Spencer are also giving attractive discount on formal wear so it is
also known for good footfall. Sahara &V++ do not have discount offers and schemes but it still
likes of some of people in sample size because of its shopping comfort and good customer
services.
8% 10%
20%
34%
12%
16%
Interpretation-
The consumers of sample size were visiting the big retail outlets most because of their wide
range of choice, attractive pricing and for their discount schemes and free offers. After that
they also go there for the quality experience. The location of the store is also a big concern for
the consumers. Thereafter they are also looking for good customer services. They want to get
well treated by the sales persons of the stores. Ambience came in last for all of them.
6. How much time do you spend in the retail chain on every visit?
0-30 Minutes 18
30-60 Minutes 20
1-2 Hour 10
2-3 Hours 2
3-4 Hours 0
4-5 Hours 0
<5 Hours 0
0%
0%
4% 0%
20%
0-30 Minutes
36%
30-60 Minutes
1-2 Hour
2-3 Hours
3-4 Hours
4-5 Hours
<5 Hours
40%
Interpretation-
The above pie charts we have find that most of the people have no time for shopping. They are
always hurrying in shopping. The chart showing that 36% people has given 30 minutes for
4% 8%
18%
30%
40%
Strongly Agree Agree Neither Agree Nor Disagree Disagree Strongly Disagree
Interpretation-
As we have seen the pie chart showing 40% people are disagree from the question that
emergence of retail chains will create unemployment problems. They think that emergence of
retail chain increases the employment and Give broader chance for growth in this sector.
Strongly Agree 0
Agree 4
Neither Agree Nor Disagree 20
Disagree 15
Strongly Disagree 11
0% 8%
22%
40%
30%
Strongly Agree Agree Neither Agree Nor Disagree Disagree Strongly Disagree
Interpretation-
the pie chart showing no of the peoples have majority to saying that emergence of retail chain will
not destroy the social harmony, they think that the growing sector of retail chains improve the
quality of services & goods and also play a important role for Indian market so how can they
prices:
Strongly Agree 3
Agree 7
Neither Agree Nor Disagree 10
Disagree 20
Strongly Disagree 10
6%
20%
14%
20%
40%
Strongly Agree Agree Neither Agree Nor Disagree Disagree Strongly Disagree
Interpretation-
when we ask this question to the people 20% people disagree ,and 6% people are strongly agree
and saying that the emergence of retail chains will cause the monopolistic control over prices
because emergence of retail chain increases the possibility of collusion so it increases the
Strongly Agree 2
Agree 16
Neither Agree Nor Disagree 20
Disagree 10
Strongly Disagree 2
4% 4%
20%
32%
40%
Strongly Agree Agree Neither Agree Nor Disagree Disagree Strongly Disagree
Interpretation-
The pie chart showing that 40% peoples have neither neither agrees nor disagrees from this
question. But 32% peoples are agree and 4% peoples are strongly agree, because of FDI (foreign
direct investment), Entry of foreign players must be gradual and social safeguards so that the
Conclusion
The consumer’s preferences are changing rapidily and becoming highly diversified. It is difficult
for the retail stores to satisfy all the needs of the customers. The most of the consumer’s want to
get some attractive prices, good schemes, credit facility and offers on every purchases and a
shopping comfort as well. Those who are able to purchase their needs and want for a month in a
bulk prefer to go to the retail chains. Because of competitions in the market the branded formals
are also became cheaper so the younger generation prefers to purchase from the retail outlets.
Only the big retail chains are able to satisfy all these needs of the new age consumers where as
there is still some consumers mostly of the old age are willing to purchase from the local kirana
store. Some of them have perception that these big stores are too costly to afford and some of
them are not able to make purchases in a bulk so they do not want to waste their time to go
especially in the big store for 2-3 items purchase. In the case of other items like wristwatches,
branded jewelry, mobiles, gift items and other, they prefer to take it from where they are getting
cheap prices, after sales services and the goodwill of the store.
After studying the customer survey questionnaire statistically and theoretically we are trying to
observing the consumer’s mood and their preferences. Big Retail store has a capacity for
satisfying the highly diverse needs of the Indian population. As a result, we can say that the big
retail stores should co-exist with small retail store. Because the small retail stores play also very
APPENDIX
CONSUMER SURVEY QUESTIONNAIRE RETAIL CHAINS
The objective of this survey is to collect tangible information about shopping
in Retail Chains. This questionnaire is being administered to people like you
who have visited and bought products in Retail Chains. Please let us know
your spontaneous response to the questions that pertain to your shopping
experience in Retail Chains. All information provided by you shall be kept
confidential and we shall only be publishing the outcomes. Please provide us
your unbiased and frank opinions.
1. What is your monthly shopping budget?
Spencer
V++
Sahara
Spencer
V++
Sahara
Spencer
V++
Sahara
Vishal Mega mart
Attractive Prices
Discount Schemes
Free Offers
Customer Service
r Megamart e
Attractive Prices
Range of Choices
Price Discounts
Freebies
Salespeople
Behavior
Parking Facilities
Convenience
Home Delivery
_______________________________________
_______________________________________
_______________________________________
_______________________________________
8. Which products do you normally buy from your local grocery store?
_______________________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________
10. How much time do you spend in the retail chain on every visit?
Disagree
12. The emergence of retail chains will destroy social harmony:
Disagree
13. The emergence of retail chains will cause monopolistic control over prices:
Disagree
Disagree.
Demographics
1. Name: ______________________________________________________
References
• www.indiabiznews.com
• www.fashion2fibre.com
• www.indiainfoline.com
• www.equitymaster.com
• www.economywatch.com
• www.google.com
• www.rediff.com
Newspapers
• Financial Express
• Business Line
• Business World