EFFECTS ON MALLS ON LOCAL RETAIL OUTLETS IN FARDABAD

SUBMITTED TO ABHILASHA MAM

SUBMITTED BY AMAN SATIJA SAURABH PAL

ACKNOWLEDGEMENT

PREFACE

TABLE OF CONTENT

INTRODUCTION

The latest trend in the corporate universe is of the emergence of the shopping malls.

Shopping malls
Are emerging trend in the global arena? The first thing that comes in our mind about the shopping malls is that it is a big enclosed building housing a variety of shops or products. According to historical evidences shopping malls came into existence in the middle ages, though it was not called so. The concept of departmental stores came up in the 19th century with the Industrial Revolution.

Consumers

Wanted a better shopping experience and this demand gave rise to the emergence of shopping malls in India. Originally the first of the shopping malls was opened in Paris. Then the trend followed in the other metros over the world, and there was a spree of shopping malls coming up at various places. In this age of mass production and mass consumption, the concepts of shopping malls is most modern method of attracting consumers. The concept of

shopping
was altered completely with the emergence of these shopping malls. Shopping was no longer limited to a mere buying activity - it has becomesynonymous with splurging time and money. People simply go about roaming through the shopping mall in order to peep through the window of the shop and often ending up buying something they like. The consumers desire a combination of comfort and suitability which the

Shopping malls
Cater to, and so this format of shopping has become so popular all over the world, and especially so in India. The inclusion of amenities like restaurants, multiplexes, and car

parks attract more and more crowds to shopping malls, that are considered family hangout zones.

Retail trade contributes around 10-11% of Indias GDP and currently employs over 4crore people. Within this, unorganized retailing accounts for 97% of the total retail trade.Traditional forms of low-cost retail trade, from the owner operated local shops and general stores to the handcart and pavement vendors together form the bulk of this sector.In the absence of

any significant growth in organized sector employment in India in the manufacturing or services sector, millions are forced to seek their livelihood in the informal sector. Retail trade, which has been a relatively easy business to enter with low capital and infrastructure needs, has acted as a refuge source of income for the unemployed. Organized retailing has witnessed considerable growth in India in the last few years and is currently growing at a very fast pace. A recent KPMG survey report prepared for theFICCI states that organized retail, estimated as a $ 6.4 billion industry in 2006, Is projected to reach $ 23 billion by 2010. The share of organized retail in overall retail sales is projected to jump from around 3% currently to around 9-10% in the next three years. A number of large domestic business groups have entered the retail trade sector and are expanding their operations aggressively. Several formats of organized retailing

like hypermarkets, supermarkets and discount stores are being set up by big business groups besides the ongoing proliferation of shopping malls in the metros and other large cities. This has serious implications for the livelihood of millions of small and unorganized retailers across the country .Need to Regulate Organized Retail Large format retailing is controlled and regulated across the world. The experiences of Western European as well as South East Asian countries are particularly relevant in this regard.

However, an appropriate regulatory framework for the organized retail sector in India has to be framed keeping in mind the Indian specificities. India has the highest shop density in the world with 11 shops per 1000 persons, much higher than the European or Asian countries. The potential social costs of the growth and consolidation of organized retail, in terms of displacement of unorganized retailers and loss of livelihoods is enormous. Regulation in India therefore needs to be more stringent and restrictive. There are broadly three ways in which the adverse impact of the rapid and unbridled expansion of organized retail can be felt:1. Around 95% of the 12 million shops in India have a floor area of less than 500 square feet. The impact of the growing market share for organized retailers is being manifested in the falling sales for the unorganized retailers in several places. The NSSO surveys already indicate a significant decline of more than 12.5 lakhs in the number of

self-employed retailers in urban India (by current weekly status) between 1999-2000 and2004-05.

Further acceleration in the growth of organized retail would eventually result in making business unviable for a large number of unorganized retailers, particularly in the event of a slowdown in consumption growth and retail sales. In the backdrop of huge unemployment and underemployment persisting in India, small-scale retailing still provides livelihood security to around 20 million urban workers and 12 million rural workers. Their displacement would further worsen the unemployment scenario.2. Giant organized retailers use their monopoly buying power to squeeze small producers of agricultural as well as manufactured products. The experience of the farmers of

developing countries with the giant food retailers has been particularly bad. The farmersbecome dependent upon the inputs, credit and technology supplied by the food retailersand end up being at their mercy in terms of prices for their produce and quality standards.Contract farming, which is the preferred mode of operations as far as the agribusinesscorporations and food retailers are concerned, has led to agrarian distress in many places.Moreover, uncontrolled diversification in agriculture away from foodgrains can imperilfood security. In the backdrop of the

crisis being already faced in Indian agriculture, theentry of large retailers with monopsonistic control can aggravate the situation.

The proliferation of large format retail outlets reshapes the urban landscape in myriadways. Land use patterns change drastically, often in violation of city plans. Given theunplanned and chaotic path of urban development witnessed in India over the past decadeand a half, and the pathetic state of urban infrastructure, the proliferation of large formatretailers will only accelerate the undesirable trends of predatory real estate developmentand unsustainable pressures on urban infrastructure and the environment. Rather thanenhancing choices for the consumers, especially the lower income groups, proliferationof large format retail stores would kill competition, lead to closure of neighbourhoodmarkets and make consumers solely dependent upon the organized retailers. This wouldalso increase the propensity to use private vehicles for shopping thus leading to morepollution.Regulation of the organized retail sector has to address all these areas of concernmentioned above. Organized retail cannot be allowed to grow in a way, which displacesexisting unorganized retailers, jeopardizing livelihoods in the absence of otheremployment opportunities.

The interests of the small producers, especially farmers, alsohave to be protected by preventing the emergence of local monopolies/monopsonies. Ithas to be ensured that competition is not stifled and potentially monopolistic practices incredit, input and output markets are not encouraged by the entry of large corporateretailers. Moreover, undue pressure on urban infrastructure and the environment arisingout of the proliferation of large format retailers has to be prevented.

METHODOLOGY

finding out various details of our project we have to find the various factorswhich is making the shopping malls so attractive to the customer. is it the hugevariety attainability, effortless business, service variety ambience, active marketingand cleanliness . we have to also find out

the what is the impact of these malls on thesmall retail shops. We have to visit various shopping malls and by observation method we have to find out the various factors which is making these malls so attractive to the customer, wealso need to interview the customer and ask them about their choice and preferenceslike what are the thing they like about the shopping malls that includes (variety, priceshopping environment, service, cleanliness, attainability) etc.And for finding out the impact of these malls on the small retailers we need tointerview some small retailer and know their opinion and position.

In addition, on most customer satisfaction projects we look to: Define customer service

Measure customer expectations Measure customer perceptions Identify gaps between expectations and perceptions Identify priorities for improvement SWOT analysis of retail

SWOT Analysis of retail(shopping malls) A SWOT analysis of the Indian organized retail industry is presented below:

Strength:

1.

Retailing is a " technology-intensive" industry. It is technology that will help theorganized retailers to score over the unorganized retailers. Successful organized retailerstoday work closely with their vendors to predict consumer demand, shorten lead times,reduce inventory holding and ultimately save cost. Example: Wal-Mart pioneered theconcept of building competitive advantage through distribution & information systems inthe retailing industry. They introduced two innovative logistics techniques

? cross-docking and EDI (electronic data interchange).2. On an average a super market stocks up to 5000 SKU's against a few hundreds stockedwith an average unorganized retailer.

Weakness: 1. Less Conversion level : Despite high footfalls, the conversion ratio has been very lowin the retail outlets in a mall as compared to the standalone counter parts. It is seen thatactual conversions of footfall into sales for a mall outlet is approximately 20-25%.

2.

On theother hand, a high street store of retail chain has an average conversion of about 50-60%.As a

result, a stand-alone store has a ROI (return on investment) of 25-30%; in contrastthe retail majors are experiencing a ROI of 8-10%. Customer Loyalty: Retail chains are yet to settle down with the proper merchandisemix for the mall outlets. Since the stand-alone outlets were established long time back, sothey have stabilized in terms of footfalls & merchandise mix and thus have a highercustomer loyalty base.

opportunity : 1. The Indian middle class is already 30 Crore & is projected to grow to over 60 Crore by2010 making India one of the largest consumer markets of the world. The IMAGES-KSAprojections indicate that by 2015, India will have over 55 Crore people under the age of 20 - reflecting the enormous opportunities possible in the kids and teens retailingsegment.

Organized retail is only 3% of the total retailing market in India. It is estimated to growat the rate of 25-30% p.a. and reach INR 1,00,000 Crore by 2010.3. Percolating down : In India it has been found out that the top 6 cities contribute for66% of total organized retailing. While the metros have already been exploited, the focushas now been shifted towards the tier-II cities. The 'retail boom', 85% of which has so farbeen concentrated in the metros is beginning to percolate down to these smaller cities andtowns. The contribution of these tier-II cities to total organized retailing sales is expectedto grow to 20-25%.4.
3.

Rural Retailing: India's huge rural population has caught the eye of the retailerslooking for new areas of growth. ITC launched India's first rural mall "Chaupal Saga"offering a diverse range of products from FMCG to electronic goods to automobiles,attempting to provide farmers a one-stop destination for all their needs." Hariyali Bazar"is started by DCM Sriram group which provides farm related inputs & services.

TheGodrej group has launched the concept of 'agristores' named "Adhaar" which offers agricultural

products such as fertilizers & animal feed along with the required knowledgefor effective use of the same to the farmers. Pepsi on the other hand is experimenting with the farmers of Punjab for growing the right quality of tomato for its tomato purees &pas

Threats :

1. If the unorganized retailers are put together, they are parallel to a large supermarketwith no or little overheads, high degree of flexibility in merchandise, display, prices andturnover.

2. Shopping Culture: Shopping culture has not developed in India as yet. Even now malls are just a place to hang

around with family and friends and largely confined to window-shopping.