Project Report

on

“ Transformation Era in Indian Retail

Market”

Submitted for partial fulfilment for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Under the guidance of: Submitted by:

Manisha Mani Jaishree

Assistant Professor MBA 4th Semester
Department of Management Roll No. 15000102015
Ch. Bansi Lal University, Bhiwani

___________________________________________________________________________

Ch. Bansi Lal University, Bhiwani

Session: 2015-2017
 CH. BANSI LAL UNIVERSITY, BHIWANI

DEPARTMENT OF MANAGEMENT

DECLARATION

I, Jaishree, Roll No 15000102015, MBA 4th Semester of the Department of

Management, CBLU, Bhiwani hereby declare that the Project Report entitled
“Transformation Era In Indian Retail Market” is an original work and the same
has not been submitted to any other Institute for the award of any other degree.
A seminar presentation of the Project Report was made on
_______________________ and the suggestions as approved by the faculty
were duly incorporated.

Signature of Supervisor Signature of Candidate

 CERTIFICATE

It is certified that the Project entitled “Transformation Era In Indian

Retail Market” submitted to Ch. Bansi Lal University, Bhiwani. In fulfilment of
the requirement for M.B.A (IV Semester) course has been carried under my
supervision.

It is further certified that this is record of bonafide and original work done
by Jaishree for the award of the said degree purpose only.

Ms. Manisha Mani

Assistant Professor

Department of Management

Ch. Bansilal University, Bhiwani

 ACKNOWLEDGEMENT

A project is never the soul product of the person whose name appears on
the cover. There is always the help, guidance and suggestion of many in the
preparation of such a project. It gives me great pleasure to express my gratitude
towards all individuals who have directly or indirectly helped me in completing
this project.

First of all I express my gratefulness to Ms. Manisha Mani who gave me

an opportunity to work on the Project “Transformation Era In Indian Retail
Market” as well as providing me guidance cooperation and support with
valuable suggestions during the project.

My heartiest thanks also to all the faculty members for their kind support,
useful suggestions and constant encouragement during the entire period of my
study finally I am grateful to my family &friend for encouraging me to do better
at every step.

(JAISHREE)
 PREFACE

In recent years, rural markets have attained significance, as the overall

growth of the economy has resulted into substantial increase in the purchasing
power of the rural communities. We see a huge thrust by marketers in to rural
markets triggered by saturating urban markets and huge rural potential very
much reflected in growing demand. This upsurge in the rural demand has its
genesis in people’s recognition of their otherwise latent needs brought to their
consciousness largely by their marketer’s efforts. And their own increased
interaction riding on the growing reach of media, of course apart from increased
purchasing power. Television allows marketers to show and tell a wide audience
your business, product, or service. This project is an attempt to find out the
impact of advertisement on the buying behaviour of rural consumers. The
results indicate that the advertisements provide much knowledge to the
consumers about the products and also influence them in purchasing the
product.
 Chapter-1:
Introduction
 1. INTRODUCTION
The Indian Retail Industry is the largest among all the industries, accounting for over
10 per cent of the country’s GDP and around 8 per cent of the employment. The Retail
Industry in India has come forth as one of the most dynamic and fast paced industries with
several players entering the market. In 2012, the retail sector was worth USD 500 billion and
was among the largest employers in the country and by 2019, the sector is likely to touch US
D 900 billion, indicating a CAGR of more than 12%.

The India Retail Industry is gradually inching its way towards becoming the next
boom industry. The total concept and idea of shopping has undergone an attention drawing
change in terms of format and consumer buying behaviour, ushering in a revolution in
shopping in India. Modern retailing has entered into the Retail market in India as is observed
in the form of bustling shopping centres, multi-storeyed malls and the huge complexes that
offer shopping, entertainment and food all under one roof. A large young working population,
families in urban areas, along with increasing working women and emerging opportunities in
the service sectors are the key factors in the growth of organized Retail sector in India. The
growth pattern in organized retailing and in the consumption made by the Indian population
is poised to grow at a spectacular pace in the times to come with the government policies
becoming more favourable and the emerging technologies facilitating operations.

The Indian retail industry is now beginning to evolve in the line with the
transformation that has swept other large economies. It witnesses tremendous growth with the
changing demographics and an improvement in the quality of life of urban people. The
growing affluence of India’s consuming class, the emergence of the new breed of
entrepreneurs and a flood of imported products in the food and grocery space, has driven the
current retail boom in the domestic market.

The concept retail which includes the shopkeeper to customer interaction, has taken
many forms and dimensions, from the traditional retail outlet and street local market shops to
upscale multi brand outlets, especially stores or departmental stores. Though at this moment,
it is still premature to say that the Indian retail market will replicate the success stories of
names such as Wal-Mart stores, Sainsbury and Tesco but at least the winds are blowing in the
direction of growth.
 Store Retailing as the departmental store, which is a store or multi brand outlet,
offering an array of products in various categories under one roof, trying to cater to not one or
two but many segments of the society and Nonstore Retailing as the direct selling, direct
marketing, automatic vending. Therefore, this concept of retail marketing through
departmental stores, which is coming up in a big way in India was decided to be studied in
detail, through an exploratory and conclusive research.

In India the vast middle class and its almost untapped retail industry are the key
attractive forces for global retail giants wanting to enter into newer markets, which in turn
will help the India Retail Industry to grow faster. Indian retail is expected to grow 25 per cent
annually. Modern retail in India could be worth US$ 220-250 billion by 2025. The Food
Retail Industry in India dominates the shopping hub. The Mobile phone Retail Industry in
India is already a US$ 16.7 billion business, growing at over 20 per cent per year.

Organized Retailing refers to trading activities undertaken by licensed retailers and

Unorganized retailing refers, on the other hand, refers to the traditional formats of low-cost
retailing, for example, the local kirana shops, convenience stores, hand cart and pavement
vendors, etc. Retailing is the set of activities that markets products or services to final
consumers for their own personal or household use. It does this by organizing their
availability on a relatively large scale and supplying them to customers on a relatively small
scale. Retailer is a person, Agent, Agency, Company, or Organization who is instrumental in
reaching the goods, merchandise, or services to the end user or the ultimate consumer. The
Indian retailing industry is becoming extremely competitive, as more and more players are
targeting for the same set of customers. The major retail players are Pantaloon Retail,
Shoppers Stop, Reliance, etc.

India has some 12 million retail outlets, but many of these act merely as subsistence
providers for their owners and survive on a cost structure where labor and land is assumed to
be free and taxes nil. Compare this with the global retail industry, which is one of the world’s
largest organized employers, is at the cutting edge of technology, and which leverages scale
and scope to offer value-added services to its customers.

However, only recently has there been an awakening in this sector, with more
organized retailers starting to make an impact. The liberalization of the consumer goods
industry, initiated in the mid-80s and accelerated through the 90s has begun to impact the
structure and conduct of the retail industry. Backed by changing consumer trends and
metrics, liberalization in mindsets driven by media, new opportunities and increasing wealth,
retailing in India, presents a vast opportunity for a variety of businesses - real estate, store
design & operations, visual merchandising logistics and communications, B2C service
providers, and FMCG companies who can add to their offers by partnering this revolution.

RETAIL SCENE IN INDIA

Finally
Followed by Manufacturing
Kirana Stores; era
Hawkers Mom and necessitated
carried out Popup Stores the small
the first stores and
Currency Retailing in specialty
was Push Carts stores .
exchanged
with goods
Barter
and
System
services

A retailer is one who stocks the producer’s goods and is involved in the act of selling
it to the individual consumer, at a margin of profit. As such, retailing is the last link that
connects the individual consumer with the manufacturing and distribution chain. Indian retail
sector comprises of organized and unorganized sector.

Organised retailing refers to trading activities undertaken by licensed retailers, that is,
those who are registered for sales tax, income tax, etc. These include the corporate-backed
hypermarkets and retail chains, and also the privately owned large retail businesses.

Unorganised retailing, on the other hand, refers to the traditional formats of low-cost
retailing, for example, the local kirana shops, owner manned general stores, paan/beedi
shops, convenience stores, hand cart and pavement vendors, etc.

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

However, only recently has there been an awakening in this sector, with more
organized retailers starting to make an impact. The liberalization of the consumer goods
industry, initiated in the mid-80s and accelerated through the 90s has begun to impact the
structure and conduct of the retail industry. Backed by changing consumer trends and
metrics, liberalization in mindsets driven by media, new opportunities and increasing wealth,
retailing in India, presents a vast opportunity for a variety of businesses - real estate, store
design & operations, visual merchandising logistics and communications, B2C service
providers, and FMCG companies who can add to their offers by partnering this revolution. It
is one of the fastest growing sectors in the nation that caters to the world's second largest
consumer market. Retail boom is unabating and the middle class drives retailing anywhere in
the world and this segment should have reasonable income. The next driver is availability of
variety of goods, products and brands. The third one is “sense of awareness”.

The Indian retail industry has grown at a Compounded Annual Growth Rate (CAGR)
of 16.2% for the period FY08-14. The growth in the Indian economy since the last decade
and the change in consumption pattern of the Indian populace in terms of higher proportion
of middle class population, greater proportion of working women etc can unarguably be
linked to the growth of the Indian retailing industry. Of all the segments in retail, the
contribution of ‘food & grocery’ remained the highest at 58% of the total retail sales during
FY12, with the ‘clothing & footwear’ segment remaining the second largest contributor
occupying 12% of the total retail pie during the same period. However in terms of growth
figures, the ‘entertainment, books & sports goods equipment' segment outperformed the other
retail segments registering a CAGR of 30.5% during the period FY08-14.

Purchasing power of Indian urban consumer is growing and branded merchandise in

categories like Apparels, Cosmetics, Shoes, Watches, Beverages, Food and even Jewellery,
are slowly becoming lifestyle products that are widely accepted by the urban Indian
consumer. Indian retailers are ready to take advantage of this growth, diversify and introduce
new formats and are emphasizing on the brand building process. In their preparation to face
fierce competitive pressure, Indian retailers must come to recognize the value of building
their own stores as brands to reinforce their marketing positioning, to communicate quality as
well as value for money. Sustainable competitive advantage will be dependent on translating
core values combining products, image and reputation into a coherent retail brand strategy.

In spite of the growth, the industry remains largely fragmented with the organized
retailing still at a nascent stage. In case of overall retailing revenues, the food & grocery
segment accounted for the highest share at 59% of the total retailing pie aggregating Rs.12.70
lakh crore during FY14. In the organised retailing, the food & grocery segment stood as the
second largest contributor with revenues aggregating Rs.28427 crore during the same period.
However, the organised retail penetration of other segments such as clothing & footwear,
entertainment & books and furniture & furnishing surpassed that of the food & grocery
segment.

A number of large corporate houses Tata’s, Raheja’s, Piramals, Goenka have already
made their foray into this arena, with beauty and health stores, supermarkets, self-service
music stores, new age bookstores, every-day-low-price stores, computers and peripherals
stores, office equipment stores and home/building construction stores. Today the organized
players have attacked every retail category. The Indian retail scene has witnessed too many
players in too short a time, crowding several categories without looking at their core
competencies, or having a well thought out branding strategy.

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

India has witnessed a frenetic pace of retail growth over the past five years. Goldman
Sachs has estimated that the Indian Economic growth could actually exceed that of China by
2015. The generic growth is likely to be driven by changing lifestyles and by strong surge in
income, which in turn will be supported by favorable demographic patterns. Development of
mega malls in India is adding new dimensions to the booming retail sector. There is
significant development in retail landscape not only in the metros but also in the smaller
cities. Even ITC went one-step ahead to revolutionize rural retail by developing ‘Choupal
Sagar’; a rural mall, for the Rural India.

The retail sector in India is witnessing a massive revamping exercise as traditional

markets make way for new formats such as departmental stores, hypermarkets, supermarkets
and specialty stores. Rated the fifth most attractive emerging retail market, India is being seen
as a potential goldmine. A recent McKinsey study titled “India’s Retailing Comes of Age”
has predicted a retail revolution in India. While India is the last among the large Asian
economies to liberalize its retail sector, the ‘licensing raj’ has well and truly passed. Hence,
focusing on two aspects of retail marketing i.e. Store Retailing and Non-store Retailing. Store

Retailing as the departmental store, which is a store or multi brand outlet, offering an
array of products in various categories under one roof, trying to cater to not one or two but
many segments of the society and Non-store retailing as the direct selling, direct marketing,
automatic vending. Most of these stores believe in creating not just a marketing activity with
its customers, but rather favor relationship building with him to convert first time customers
into a client. Shopping in India has witnessed a revolution with the change in the consumer
buying behavior and the whole format of shopping also altering. Industry of retail in India,
which has become modern, shopping centers, and sprawling complexes, which can be seen
from the fact that there are multi- stored malls, huge offer food, shopping, and entertainment
all under the same roof.

The Indian Retailing Industry stands poised to take off into the 21st century. It is one
of the fastest growing sectors in the nation that caters to the world's second largest consumer
market. Retail boom is unabating. India has five million retailers with a business volume of
$180 million growing at 5 to 7 per cent a year. The middle class drives retailing anywhere in
the world and this segment should have reasonable income. The next driver is availability of
variety of goods, products and brands. The third one is “sense of awareness”.

In other developing economies, this transformation has already begun. In many of

these countries, organized retail already has a 40 percent share of the market, compared to
India’s current levels of 2 percent. As India goes through this transformation, new businesses
with sales of 1billion – 2 billion US $ will be created in grocery and of 250million -
500million US $ in apparel. Smaller but still interesting opportunities will be created in other
sectors like books, electronics, and music. This transformation will also impact the supply
chain in agriculture, the tax collections from trade and the way people shop.

In the last 10 years, all Southeast Asian countries like Indonesia, Malaysia, Taiwan
and Korea have gone through similar phases. China, with a per capita income of $650-700
per annum, is going through the same phase what India is also facing now. Europe went
through this phase of retail revolution about 40-50 years ago. It is believed that when a
country’s per capita income reaches the level of $1,200 per annum, organized retailing begins
to takeover. Though India has a per capital income of $ 400, on the basis of purchasing power
parity (PPP) it has already hit the $1200 level. This does strengthen the belief that probably,
the right time for organized retailing to click in India has come.

The Indian retail industry has witnessed rampant growth over the last decade.
However, during the economic recession, the retailers especially in the organised segment
suffered a set-back in the form of declining revenues and halt in their capex plans. The
unemployment situation, further aggravating the fear of job losses during the recession,
resulted in muted consumer spending with the consumers choosing to spend on necessities
rather than discretionary items; the industry thus witnessed decline in footfalls, conversion
rate, which was especially apparent in the decline of same store sales. Even though, post
recession, the industry is witnessing a gradual turnaround, it is met by a few stumbling blocks
that constitute the challenges ahead for the Indian retail industry viz. higher store rentals as
compared to retailers globally, taxation & other policy regulations, inefficiencies in supply
chain management and higher rate of shrinkage.

In spite of the said challenges, CARE Research expects the Indian retail industry to
grow on the backdrop of expectant rise in the country’s Gross Domestic Product (GDP)
during the period FY17-FY18. The rise in income level of the Indian populace, in turn, is
expected to fuel the domestic consumption ultimately resulting in higher revenues for the
Indian retailers. Importantly, CARE Research expects the penetration of organised retail in
the total retail pie to increase by FY18 owing to the expanding reach of the retailers to tier-II
& III cities accompanied by higher consumer spend on discretionary items. Also, in an
attempt to increase margins, CARE Research expects the retailers would restore to adapting
measures such as increasing the share of private labels in the total store sales, reducing store
level operating expenses etc.

This report aims at providing an insight into the emerging trends in the industry and
the barriers to change and a perspective on what this industry could become, using the global
industry as the backdrop.

1.2 Overview of the Global Retail Industry

Retail: world largest industry

Retail, with total sales of $ 6.6 trillion, is the world’s largest private industry ahead of
financial industries $ 5.1 trillion. It is also home to a number of the world’s largest
enterprises. Over 50 of the Fortune 500 companies, and around 25 of the Asian top 500
companies, are retailers. The industry accounts for over 8 percent of the GDP in western
economies.

Retail: Largest private industry in the world economy

A Study by Mc Kinsey states that organized retail accounts for just around 2 percent (out of
which modern retail formats account for 7 percent of trade) presently is set to grow at
exponential exceeding 35 percent. Fitch estimates the current share of organized retail to
grow from 8 percent presently to around 15 to 20 percent by 2020.

Table 1: Big Players in Indian retail (Sector wise)

Retail Consumption areas US $ billion Existing Companies in the organized sector

Food Retailing 130 Food Bazaar (Pantaloon) Food World
Subhishka.
Clothing & Apparel 12 Pantaloon Westside, Shoppers Stop
Jewelry, Watches 7 Tanishq, Titan, Gold Bazaar (Pantaloon)
Home Furnishing 5 Home Store, Arcus (Pantaloon)
Foot wear 1.7 Bata, Woodland
Beauty Care 3.6 VLCC, Health & Glow

Source: economic time’s industry report

OBJECTIVES OF THE STUDY

i. To study and analyse the History and Past Trends of retailing in India
ii. To study the structure of Retail Industry in India
iii. To study the transformation of Indian Retail Industry from Unorganized Retail to
Organized Retail.
RESEARCH METHODOLOGY:
Research methodology is the systematic method/process dealing with identifying problem,
collecting of facts of data, analyzing these data and reaching at certain conclusion either in
the form of solution towards the problem concerned or certain generalization for some
theoretical formulation.

Research is a procedure of logical and systematic application of the fundamentals of

science to the general and overall questions of a study and scientific technique which provide
precise tools, specific procedure and technical rather than philosophical means for getting and
ordering the data prior to their logical analysis and manipulation. Different type of research
designs is available depending upon the nature of research project, availability of able
manpower and circumstances.

It also comprised of a number of alternative approaches and inter-related and

frequently overlapping procedures and practices. Since there are many aspects of research
methodology, the line of action has to be chosen from a variety of alternative. The choice of a
suitable method can be arrived at through assessment of objectives and comparison of various
alternatives. Research methodology used in the present study is as under:

3.1.1 Type of research and data collection:

Present study is exploratory can descriptive in nature and I have used historical
approach and grounded theory where I procured secondary data for my research.

Data collection is the process of gathering and measuring information on targeted

variables in an established systematic fashion, which then enables one to answer relevant
questions and evaluate outcomes. The data collection component of research is common to all
fields of study including physical and social sciences, humanities and business. While
methods vary by discipline, the emphasis on ensuring accurate and honest collection remains
the same. The goal for all data collection is to capture quality evidence that then translates to
rich data analysis and allows the building of a convincing and credible answer to questions
that have been posed.
My research is based on the Published data which I obtained from various sources like
books, magazines, newspapers, journals and periodicals etc. I also used Electronic Data like
movies, documentaries and television programs and Government Records that were available
in the form of government surveys, tax records, census data and other statistical reports. I also
relied on the most important source of secondary data, i.e. Internet. Internet in today’s world
is the fastest growing source of information, as it has become mature and today you can get
any information from the internet. Most of the books are available on the internet in e-book
format. You can get information while staying at home. The information can be obtained
faster than you can obtain from any other source. On the internet you can get e-books, e-
journals, e-periodicals and e-magazines. The internet is a multiple source of information as
all of the above mentioned sources can be obtained from the internet.

This is a conceptual report and hence it is based on secondary data only. This data is
collected from various reference books by various authors. Also researcher has visited
various websites which provided information on retail industry in India. The secondary data
was collected through: Online research material of various institutions and outlets directly or
indirectly involved with retail industry. Secondary data used in external source of
information like internet, magazine, and newspaper articles, etc. Information has been
mainly sourced from books, magazines, newspapers, trade journals, industry portals, etc.
 Chapter-2:
Key Players in Indian
Retail
2. KEY PLAYERS IN INDIAN RETAIL SECTOR

 Pantaloon Retail (India) – The first Pantaloon store was opened at Gariahat in
Kolkata in the year 1997 covering 8,000-square-feet area. Over the years, the store
has undergone several transitions. When it was launched, the store mostly sold
external brands. Gradually, it started retailing an eclectic mix of external brands as
well as private labels. Initially, it positioned itself as a family store targeted across age
and gender groups but later it shifted its focus towards being a fashion store and gave
more emphasis on the youth. As on Dec 2010, Pantaloons had around 44 stores spread
across major cities in India.

 Shopper’s Stop- A menswear store owned by K Raheja in the Mumbai suburb of

Andheri in 1991 has now transformed into Shopper’s Stop, with 27 departmental
stores. The company entered airport retailing in a joint venture with the Nuance
Group. It also launched India’s largest hypermarket, hyper city. In 2005, it bought the
Crossword bookstore chain.

 Lifestyle-Growing from one store in Bahrain in 1973, the NRI-led Landmark Group
today operates over 5 million sq ft in the Middle East and India. The group’s first
Lifestyle store in India opened in Chennai in 1999. Now it has 325,000 sq ft in
Chennai, Hyderabad, Bangalore, Gurgaon and Mumbai. Its first hypermarket, branded
as ‘Max’, is expected to open soon.

 Reliance Retail- Reliance Retail Ltd, a subsidiary of Reliance Industries Ltd, has
an aggressive plan to expand its retail network across India. It entered the food and
grocery segment in November 2006 through its convenience store format Reliance
Fresh. The store offers a range of fruits, vegetables, personal care, home care and
kitchen utensils. It focuses on building a strong relationship with the agri-business
value chain and sources directly from wholesalers. Reliance Retail also plans to invest
Rs 25,000 crore on hypermarkets, supermarkets and specialty stores in the next four
years.

 Aditya Birla Retail-The Company, which will operate under the brand ‘More’,
has selected two formats – hypermarkets and supermarkets – for its initial foray. The
 first store has opened in Pune. Last January, the company acquired Trinethra Super
Retail, which has given it more than 5, 00,000 sq ft and a strong presence in the
South. The Birlas’ outlay for the business over the next three years is Rs 9,000 crore.

 Bharti Retail- The world’s largest retailer Wal-Mart, which is entering India,
chose Sunil Mittal’s Bharti Enterprises as its partner in India. The venture has already
started with the cash & carry (wholesale) format, which could be extended to retail
operations once foreign direct investment is allowed in multi-brand retail, as is
expected.

The Indian retail sector can be broadly classified into:

a) FOOD RETAILERS
There are large number and variety of retailers in the food-retailing sector. Traditional
types of retailers, who operate small single-outlet businesses mainly using family labour,
dominate this sector .In comparison, super markets account for a small proportion of food
sales in India. However the growth rate of super market sales has been significant in
recent years because greater numbers of higher income Indians prefer to shop at super
markets due to higher standards of hygiene and attractive ambience.
b) HEALTH & BEAUTY PRODUCTS
With growth in income levels, Indians have started spending more on health and beauty
products. Here also small, single-outlet retailers dominate the market. However in recent
years, a few retail chains specializing in these products have come into the market.
Although these retail chains account for only a small share of the total market , their
business is expected to grow significantly in the future due to the growing consciousness
of the buyers towards health and appearance.

c) CLOTHING & FOOTWEAR

Numerous clothing and footwear shops in shopping centres and markets operate all Over
India. Traditional outlets stock a limited range of cheap and popular items, in contrast,
modern clothing and footwear stores have modern products and attractive Displays to lure
customers. However, with rapid urbanization, and changing patterns of consumer tastes
and preferences, it is unlikely that the traditional outlets will survive the test of time.

d) HOME FURNITURE & HOUSEHOLD GOODS

Small retailers again dominate this sector. Despite the large size of this market, very few
large and modern retailers have established specialized stores for these Products.
However there is considerable potential for the entry or expansion of specialized retail
chains in the country.

e) DURABLE GOODS
The Indian durable goods sector has seen the entry of a large number of foreign
Companies during the post liberalization period. A greater variety of consumer Electronic
items and household appliances became available to the Indian customer. Intense
competition among companies to sell their brands provided a strong impetus to the
growth for retailers doing business in this sector.

f) LEISURE & PERSONAL GOODS

Increasing household incomes due to better economic opportunities have encouraged
consumer expenditure on leisure and personal goods in the country. There are specialized
retailers for each category of products (books, music products, etc.) in this sector.
 Another prominent feature of this sector is popularity of franchising agreements between
established manufacturers and retailers.

Traditionally, most retailers have had very localized operations. This localized nature
of the industry is changing as retailers face low rates of growth and threatened profitability at
home. New geographies will help them sustain top-line growth as well as permit global
sourcing. Profits in retail have steadily been rising and have generated 18 percent shareholder
returns between 1994 and 1999. Significantly, retail is also one of the world’s largest
employers, accounting for instance 16 percent of the US workforce, Poland 12 percent, China
8percent, India 10 percent and Brazil 6percent. Factors such as scale in sourcing,
merchandising, operational effectiveness and ambience have driven the spread of organized
retail.

Grocery, electronics are examples of categories that compete on the strength of better
pricing, which in turn is driven by superior sourcing and merchandising and cost-efficient
operations. Wal-Mart, Home Depot and Kingfisher are benchmark retailers in these fields.

In apparel, home furnishings and furniture, the advantage is driven by the marketers’ ability
to provide better products in a comfortable ambience at affordable prices. In these cases
sourcing capability has to be backed by strong design capability and store management.
IKEA and GAP are good examples of this model of retailing.

Over the last few decades, retail formats have changed radically. The basic department stores
and co-operatives of the early 20th Century have given way to mass merchandisers,
hypermarkets, warehouse clubs, category killers, discounters and convenience stores. Each of
these formats has been driven by marketer’s need to offer relevant, distinctive and economic
propositions to an evolving consumer base.

Global retailers have also reached a position of strength that enables their brand to be
leveraged across a wide range of services. Many of them have expanded their offering, over
the years to include fuel retail, car retail, convenience services and personal financial
services. This has put them in a position where they are not only beginning to capture growth
from geographical expansion, but are also entering large new areas of business.
The recent evolution of the Internet has helped further broaden the scope of operations of
large retailers. Further, a large number of retailers are pursuing innovative aggregation and
supply chain-streamlining initiatives using B2B technology.

Key Drivers of Retail Market in India

1) Changes in demographics- India has the lowest median age of 24 as compared to

developed countries. The composition of the Indian population is shifting towards the age
group of 20-49 i.e. the working population with purchasing power. Thus, India has the
largest ‘young’ population in terms of sheer size and this young segment is the major
driver of consumption as they have the ability and willingness to spend.

2) Increased credit friendliness- There has been a radical change in the Indian consumers’
mindset regarding credit. With the easy availability of credit and declining interest rates,
personal credit has witnessed growth. The boom in financing has resulted in an increase
in spending on housing and consumer durables such as two-wheelers and cars etc. Also
the use of plastic money has led to a significant increase in consumers engaging into
shopping and eating out.
3) Rising Incomes- India is the second fastest growing economy in the world. A larger
number of households are getting added to the consuming class with growth in income
levels. Increasing instances of double incomes in most families coupled with the rise in
spending power is further fuelling the growth of retail sector. Though this growth is most
evident in urban areas, it has also taken place in rural markets.

4) Media- There has been an explosion in media as well during the past decade. This media
bombardment has exposed the Indian consumer to the lifestyles of more affluent countries
and raised their aspirations and expectations from the shopping experience — they want
more choice, value, service, experience and convenience.

5) Consumer Behaviour- The growth of modern retail is linked to consumer needs,

attitudes and behaviour. Rising income levels, education and global exposure have
contributed to the evolution of the Indian middle class. As a result, purchasing and
shopping habits have been inculcated and are increasing day by day. Today, people are
 willing to try new things and look different, which has increased spending on health and
beauty products apart from apparels, food and grocery items.

6) Rural Market- The rural market is beginning to emerge as an important consumption

area, for most key consumer durables and non-durable products. In response,
manufacturers of consumer goods have begun developing new products and marketing
strategies with the rural consumer in mind.

7) Supply Chain- The consumer goods sector has been transformed by increased
liberalization, continuous reduction in customs duty, a shift from quota to tariff-based
systems for imports and sophistication in manufacturing over the past few years. Entry
restrictions for multinationals have been removed in nearly all sectors. All this has
enabled chain retailers to enjoy better range, depth and sourcing options as well as
improved average margins. There has been a proliferation in the range across all
categories, with a simultaneous increase in the supply of products and quality retail space.

8) Entry of Corporate- In contrast to the situation a decade ago, the level of interest in
retailing as a growth opportunity has increased visibly now. Large conglomerates like the
Tata’s & ITC have initiated investment in retailing. Big business houses today are in a
position to provide the Indian masses with shopping satisfaction, entertainment, quality
products, educated salespersons, product information and discounts.

9) Foreign Retailers- The increasing attractiveness of the sector has drawn the interest of a
number of global retailers. With the opening up of the economy, more and more MNCs
have entered the Indian business arena through joint ventures, franchisees or even self-
owned stores.
While foreign retailers cannot start operations on their own mainly because of FDI
restrictions on the sector, a number of companies, are exploring entry options. In apparel,
Benetton, Lifestyle and Zegna are already in business, and Dairy Farm has a number of
retailing joint ventures in India.

10) Technology- The computerization of the various operations in a retail store —including
inventory management, billing and payments as well as database management,
widespread use of bar coding, point-of-sale terminals has changed the face of retailing
 drastically. Apart from providing the retailers with better and timely information about
their operations, the technology also performs tasks such as preventing theft, promoting
the store's goods and creating a better shopping environment. This is done with the help
of closed-circuit televisions, video walls, in-store video networks, and other forms of
interactive applications ranging from CD-ROMs to virtual reality to let customers select
and buy products.

Key Challenges

Factors Description Implications

Barriers to -100% FDI not permitted -Absence of global players

FDI -Franchisee arrangement -Limited exposure to best
allowed practices
Lack of -Government does not - Restricted availability of
Industry recognize the finance
Status industry -Restricts growth and scaling
up
Structural - Lack of urbanization -Lack of awareness of Indian
Impediments -Poor transportation consumers
infrastructure - Restricted retail growth
-Consumers habit of buying - Growth of small, one-store
fresh food’s formats, with
administered pricing unmatchable cost structure
- Wastage of almost 20%-
25% of farm produce
High Cost of - Pro-tenant rent laws - Difficult to find good real
Real - Non-availability of estate in terms of
Estate government land, location and size
zoning restrictions - High land cost owing to
- Lack of clear ownership constrained supply
titles, high stamp duty (10%) - Disorganized nature of
transactions

Supply Chain -Several segments like food - Limited product range

Bottlenecks and apparel - Makes scaling up difficult
reserved for SSIs - High cost and complexity of
-Distribution, logistics sourcing & planning
constraints – - Lack of value addition and
 Restrictions of purchase and
movement of
food grains, absence of cold
chain infrastructure
- Long intermediation chain
Complex - Differential sales tax rates
Taxation across states
System - Multi-point octroi
- Sales tax avoidance by
smaller stores
Multiple - Stringent labour laws
Legislations governing hours of
work, minimum wage
payments
- Multiple licenses/clearances
required
Customer -Local consumption habits
Preferences - Need for variety
- Cultural issues
Availability of - Highly educated class does
Talent not consider retailing a
profession of choice
- Lack of proper training
Manufacturers - No increase in margins
Backlash
increase in costs by
almost 15%
- Added cost and complexity
of distribution
- Cost advantage for smaller
stores through tax
evasion
- Limits flexibility in
operations
- Irritant value in establishing
chain operations;
adds to overall costs
- Leads to product
proliferation
- Need to stock larger number
of SKUs at store level
- Increases complexity in
sourcing & planning
- Increases the cost of store
management
- Lack of trained personnel
- Higher trial and error in
managing retail operations
- Increase in personnel costs
- Manufacturers refuse to
disinter mediate and
pass on intermediary margins
to retailers
 Chapter-3:
The History and
Evolution of Retail
HISTORY OF INDIAN RETAILING
The Indian Retailing of lifestyle goods dates back to prehistoric period, as there are
evidences of ornaments, designer apparels, foot wares, handicrafts, paintings and sculpture
are found in the excavations at Mohenjo-Daro and Harappa. Since ancient period the
diversity exist in food and clothing habits in India. In the ancient period the diversity in
clothing and food habits was largely depending upon the climate, physical features and
traditions in the respective regions. There is vast difference between the habits of ancient
Indian life and modern Indian life. The commonality is found in the retailing practices. The
common is about the retailers who were selling in ancient period and who are selling in
modern times also. In both the times they are found catering to the demands of the customers.
In medieval times the customers were found more commanding. The customers in medieval
India were found to be worthy of setting the rules of marketing. Indian Lifestyle goods were
always in demand in India and abroad. Evidences are found that trade flourished in India
since ancient times and urbanization of Indian towns has roots in the growth of trade. Paithan
in Maharashtra and Warangal in Andhra Pradesh were flourished mainly due to the
production of fine cloths.

Evolution of Indian Retailing:

(Evolution of Indian Retail; Source: Technopark Research 2015)

With the boom of the service sector and increased industrial output, the growth pace has
spiralled in the last decade. This has set a sustainable platform for consumerism and rising
per capita spend leading to an inclusive growth

Indian retail has evolved into a major growth opportunity

Retailing Industry in India is estimated at INR 15.5 trillion growing at CAGR of 15 to

20 % Organized Retail accounts for 5 -8% which is lowest compared to its peers in BRIC
countries - Brazil (38%), Russia (33%) and China (20%). The Organized Retail has been
growing at 35% CAGR The retail and wholesale sector in India accounts for approx 14% of
GDP In terms of employment, the sector is second largest employer providing over 10% of
all formal jobs

The Retail Marketing Revolution

By 2025, the list of India's top 10 retailers will have at least 5 Indian corporate. Retail
Marketing will go through a tremendous change in India this millennium. It will change
India's cities, its people, and its households. The Indian consumer is reportedly the largest
spender in Singapore and London. It is, therefore, strange that there have, so far, been few
efforts to present the product in the right kind of environment in India. Indeed, the right
shopping experience does induce Indian consumers to spend more. This is evident from the
experiences of retail-outlets like Shoppers' Stop, Pantaloons, Reliance Trends, Spencers,
Chroma, Big Bazaar, Crosswords, The Home Store, Ebony, Bigjo’s, Vijay Store and Janaki
Das & Sons, Westside etc.

Source: Technopak Advisors Pvt Ltd, BCG, TechSci Research (2016)

However, the development of organized retail is dependent on the efforts of several

agencies and institutions. The first among these is the government. In a country as big as
India and with as many states as ours, it is imperative that the Central government and all
state governments bring in Value Added Taxation or a unified taxation system to ensure that
the tax-regimes are the same across the country. The laws governing retail real estate should
also be looked into, so that it is possible to develop retail-estate beyond the city-limits.

Apart from providing entertainment and retail opportunities, this will also decongest
the city center and facilitate the development of suburbs. The relevant rules should also be
amended to allow retail-stores to operate 7 days a week, 12 hours a day. Given the hours
most urban consumers keep at work, and keeping in mind the increase in the number of
nuclear families, this may, indeed, make sense. This will also help people enjoy their
evenings, out at malls.

The second group, whose participation is essential in making retail a boom-sector in

this millennium, comprises developers. Most properties are developed without considering
the end user; thus, we sometimes find high-ceilinged offices and low-ceilinged retail stores.
Often, the shopper's convenience is not taken into consideration while the property is
constructed.

Another area of concern is the way in which developers sell their space. The only
consideration is the price, not the usage pattern or the nature of the product that is to be sold.
In contrast, internationally, mall-management is treated as a specialized discipline of retail
management. This is what we have to focus on in this millennium. The third constituency that
has a role to play in the fortunes of organized retail this century is the education-sector. Retail
is a people-intensive business, and there is a huge opportunity for retail institutes in India.

For manufacturers, retailing will present an attractive opportunity. Organized retail

allows them to expose their products to a large volume of customers in an environment
conducive to buying. Already, several transnational retail giants have established their
presence in India; others, notably Chinese retailers, have visited India and studied the Indian
market. There's a lot at stake here: even so early in the 21st Century, India is too large a
market to be ignored by transnational retail giants.

From the manufacturing company's perspective, the focus should be on producing

good products, and forging relationships with organized retail. Manufacturers need to draw a
plan of producing quality products and tie in with retailers. Indeed, the birth of organized
retail will also engender the creation of private labels and store-brands. Thus, if a
manufacturing company lacks the resources to build a brand, it can supply to a retail-chain
that has the resources to create a brand of its own. A glimpse of the last 2 decades of the
previous century proves illuminating. Large-format retailing started with outlets
like Vivek's and Nalli's in Chennai and Kidskemp in Bangalore, and, at another level, with
manufacturer-retail brands like Bata, Bombay Dyeing, and Titan.

The last decade of the millennium witnessed the emergence of lifestyle brands and the
plastic culture. Liberalization and increasing awareness of the world around us created the
Indian yuppie, who aspired to own everything we saw on TV, or in shops during jaunts
abroad. New lifestyle brands offered traditional retail-outlets an opportunity to convert
themselves into exclusive stores, franchised or otherwise. And even as these developments
were taking place, the Indian consumer became more mature. Customer-expectations zoomed

Thus, at the beginning of the New Millennium, retailers have to deal with a customer
who is extremely demanding. Not just in terms of the product-quality, but also in terms of
service, and the entire shopping experience. Today, the typical customer who shops in a
retail outlet compares the time spent at the check-out counter with that at an efficient petrol
station, and the smile of the counter-person to that decorating the face of a Jet Airways' crew
member. To cope with the new customer, manufacturers have to focus on product quality and
brand building. And retailers, in turn, have to focus on the quality of the shopping experience.

Internationally, retailing is a large business; you find at least one retailer amongst the top 10
companies in every country. In the US, it is Wal-Mart with a turnover in excess of $ 120
billion. In the UK, it is Marks and Spencer's with close to £ 10 billion; and, in Germany, it
is Karstadt with a turnover in excess of dm 10 billion.

Table 2: Top 10 Retailers Worldwide

Rank Retailer No of stores Sales in US$ Millions
owned
1 Wall-Mart Stores Inc. (USA) 4178 $180,787
2 Carrefour Group (France) 8130 $61,047
3 The Kroger Co. (USA) 3445 $49,000
4 The Home Depot, Inc. (USA) 1134 $45,738
5 Royal Ahold (Netherlands) 7150 $45,729
6 Metro AG (Germany) 2169 $44,189
7 Kmart Corporation (USA) 2105 $37,028
8 Sears, Roebuck and Co. (USA) 2231 $36,823
9 Albertson's, Inc. (USA) 2512 $36,726
10 Target Corporation (USA) 1307 $36,362

Source: Economic Times industry report

 Studies by consulting firms like A.T. Kearney, KSA Technopak, and McKinsey &
Co. in India have indicated a huge potential for retailing in the country. Drawn by the magic
number of Rs 1, 60, 000 crore that is expected to be the size of the retail industry by the end
of the first decade of this millennium, several companies from the organized sector have also
jumped into the fray.

In this millennium, like in the last, customers will want to spend time with their
family and friends. They may like to visit malls on weekends where everything will be
available under one roof. India will benefit from these developments because of increased
consumption through retailing and the corresponding increase in employment created by
retailing.

It is in retailing that very drastic changes have occurred during the last two decades.
Some institutions have disappeared whereas newer ones have been added. This process of
deletion / addition still continues in newer forms. There are large -scale retailing shops
together with very small units, both working simultaneously. They have from hawkers and
peddlers, who have no permanent place, to well-organised, settled retail shops like chain
stores, departmental stores, etc.

Grocery, electronics are examples of categories that compete on the strength of better
pricing, which in turn is driven by superior sourcing and merchandising and cost-efficient
operations. Wal-Mart, Home Depot and Kingfisher are benchmark retailers in these fields.

In apparel, home furnishings and furniture, the advantage is driven by the marketers’
ability to provide better products in a comfortable ambience at affordable prices. In these
cases sourcing capability has to be backed by strong design capability and store management.
IKEA and GAP are good examples of this model of retailing.

Over the last few decades, retail formats have changed radically. The basic
department stores and co-operatives of the early 20th Century have given way to mass
merchandisers, hypermarkets, warehouse clubs, category killers, discounters and convenience
stores. Each of these formats has been driven by marketer’s need to offer relevant, distinctive
and economic propositions to an evolving consumer base.
 Global retailers have also reached a position of strength that enables their brand to be
leveraged across a wide range of services. Many of them have expanded their offering, over
the years to include fuel retail, car retail, convenience services and personal financial
services. This has put them in a position where they are not only beginning to capture growth
from geographical expansion, but are also entering large new areas of business.

The recent evolution of the Internet has helped further broaden the scope of
operations of large retailers. Further, a large number of retailers are pursuing innovative
aggregation and supply chain-streamlining initiatives using B2B technology.

Retail Marketing

Retail Marketing includes all the activities involved in selling goods or services
directly to final consumes for personal, non-business use. Any organization selling to final
consumers -- whether a manufacturer, wholesaler, or retailer – is doing retailing. It does not
matter how the goods or services are sold (by Person, Mail, Telephone, Vending Machine, or
Internet) or where they are sold (in a store, on the street, or in the consumer’s home). There
are many approaches to understanding and defining retail marketing; most emphasize retail
marketing as the business activity of selling goods or services to the final consumer, but what
we emphasized upon is defined as follows:

“Any business that directs its marketing efforts towards satisfying the final consumer based
upon the organization of selling goods and services as a means of distribution”

The concept assumed within this definition is quite important. The final consumer
within the distribution chain is a key concept here as retailers are at the end of the chain and
are involved in a direct interface with the consumer.

A retailer or retail store is any business enterprise, whose sales volume comes
primarily from retailing. Retail organizations exhibit great variety and new forms keep
emerging. There are store retailers, non-store retailers, and retail organizations. Consumers
today can shop for goods and services in a wide variety of stores. The best-known type of
retailer is the department store. Japanese department stores such as Takashimaya and
Mitsukoshi attract millions of shoppers each year. These stores feature art galleries, cooking
classes, and children’s playgrounds.
 A retailer is at the end of the distributive channel. He provides goods and service to
the ultimate consumers. This he does through his small organization, with the help of a few
personnel. In an individual retail store there is not much scope for organization except in the
sense that the shopkeeper has to organize and apportion his time and resources. The need for
organization becomes essential as soon as he hires people and enters into partnership or takes
the help of members of his family in running his store. A retailer deals in an assortment of
goods to cater to the needs of consumers. His objective is to make maximum profit out of his
enterprise. With that end in view he has to pursue a policy to achieve his objective.

This policy is called retailing mix. A retailing mix is the package of goods and
services that store offers to the customers for sale. It is the combination of all efforts planned
by the retailer and embodies the adjustment of the retail store to the market environment.
Retailing mix, a communication mix and a distribution mix. The maximum satisfaction to the
customers is achieved by a proper blend of all three. The success of the retail stores,
therefore, depends on customers’ reaction to the retailing mix which influences the profits of
the store, its volume of turnover, its share of the market, its image and status and finally its
survival.

There are three main phases in the life of a retailing institution. These are: -

 Innovation (Entry)
 Trading Up
 Vulnerability

In the entry stage, a new retailer enters with new price appeal, limiting product
offerings, Sparton Stores & Limited services. Its monopoly power over the others is its price
advantage, which means that it offers products at low prices so as to get a competitive edge
over its competitors.

In the trading up stage, the retailer starts expanding. It expands in terms of product
offering, better services, and improved interiors. With all these, it starts charging a bit higher
prices.

In the vulnerability stage, there is a gap in the market leaving some space for the
new players to come in. this is due to increase in the prices by the retailer. Normally these
stages are there in the life of a retail institution. But all these may not be necessarily there in
every retail institution. For instance, any retail institution targeting the upper class may start
itself with a large variety & high price.

This brings to broadly identify and categorize the types of retail marketing, which are defined
as follows:

1. Store Retailing

2. Non store Retailing

2.2 Types of Retail Marketing

Store Retailing

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

Specialty Stores

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

Departmental Store

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

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

Convenience Stores

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

Off - Price Retailer

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

Discount Store

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

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

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

Catalogue Showroom
Catalogue showrooms generally sell a broad selection of high-markup, fast-moving, brand-
name goods at discount prices. These include jewelry, power tools, cameras, luggage small
appliances, toys, and sporting goods. Catalog showrooms make their money by cutting costs
and margins to provide low prices that will attract a higher volume of sales. Catalog
showrooms have been struggling in recent years to hold their share of the retail market.
 Chapter-4:
Retail Scene in India
 RETAIL SCENE IN INDIA
India has some sometimes been called a nation of shopkeepers. This epithet has its
roots in the huge number of retail enterprises in the country totaling 12 million, about 78
percent of these are small family owned businesses utilizing only household labour. even
among retail enterprises that hire workers the bulk of them hire less than 3 workers .India’s
retail sector appears backwards not only by standards of industrialized countries but also in
comparison to several other emerging markets in Asia and elsewhere. There are only 14
companies that run departmental stores and mere two with hypermarket operations. While the
number of businesses operating supermarkets is higher, most of these had only 1 outlet, the
number of companies with supermarket chains was less than 10.

2.3 Major Formats of Retailing

Table 3: Major formats of In-Store Retailing have been listed as below:
Format Description The Value Proposition
Branded Stores Exclusive showrooms either owned or Complete range available for a
franchised out by a manufacturer. given brand, Certified product
quality.
Specialty Stores Focus on a specific consumer need; Greater choice to the consumer,
carry most of the brands available. comparison between brands
possible
Department Stores Large stores having a wide variety of One stop shop catering to
products, organized into different varied consumer needs.
departments, such as clothing, house
wares, furniture, appliances, toys, etc.

Supermarkets Extremely large self-services retail One stop shop catering to

outlets. varied consumer needs.
Discount Stores Stores offering discounts on the retail Low prices.
price through selling high volumes and
reaping the economies of scale.
Hyper-mart Larger than a Supermarket, sometimes Low prices, vast choice
with a warehouse appearance, available including services as
generally located in quieter parts of cafeterias.
the city
Convenience Stores Small self-service formats located in Convenient location and
crowded urban areas. extended operating hours.
Shopping Malls An enclosure having different formats Variety of shops available close
of in-store retailers, all under one roof. to each other.

Source: India info line

Non-store Retailing

It is another type of retail marketing. Different types of non-store retailing are given below:

Direct Selling

Direct selling which started centuries ago with itinerant peddlers has burgeoned into a $9
billion industry, with over 600 companies selling door to door, office to office, or at home
sales parties. A variant of direct selling is called multilevel marketing, whereby companies
such as Amway recruit independent businesspeople who act as distributors for their products,
who in turn recruit and sell to sub distributors, who eventually recruit others to sell their
products, usually in customer homes.

Direct Marketing

Direct marketing has its roots in mail-order marketing but today includes reaching people in
other ways than visiting their homes or offices, including telemarketing, television direct
response marketing, and electronic shopping.

Automatic Vending

Automatic vending has been applied to a considerable variety of merchandise, including

impulse goods with high convenience value (cigarettes, soft drinks, candy, newspaper, hot
beverages) and other products (hosiery, cosmetics, food snacks, hot soups and food,
paperbacks, record albums, film, T-shirts, insurance policies, and even fishing worms).

2.4 Organized Retail Formats in India

Each of the retail stars has identified and settled into a feasible and sustainable business
model of its own.

 Shoppers' Stop - Department store format

 Westside - Emulated the Marks & Spencer model of 100 per cent private label, very
good value for money merchandise for the entire family
 Giant and Big Bazaar - Hypermarket/cash & carry store
 Food World and Nilgiris – Supermarket format
 Pantaloons and The Home Store - Specialty retailing
 Tanishq has very successfully pioneered a very high quality organized retail
business in fine jewellery.
Structure of the retailing industry according to ownership patterns:

 An unaffiliated or independent retailer

 A chain retailer or corporate retail chain
 A franchise system
 A Leased Department (LD)
 Vertical Marketing System (VMS)
 Consumer Co-operatives

A new entrant in the retail environment is the 'discounter' format. It is also is known
as cash and-carry or hypermarket. These formats usually work on bulk buying and bulk
selling. Shopping experience in terms of ambience or the service is not the mainstay here.
RPG group has set up the first 'discounter' in Hyderabad called the Giant. Now Pantaloon is
following suit. Two categories of customers visit these retail outlets.

1. The small retailer. For example, a customer of Giant could be a dhabawala who needs to
buy edible oil in bulk.

2. The regular consumer who spends on big volumes (large pack sizes) because of a price
advantage per unit.

Retailing in India is still evolving and the sector is witnessing a series of experiments
across the country with new formats being tested out; the old ones tweaked around or just
discarded

2.5 Trends in Retail Marketing

At this point, I can summarize the main development retailers and manufacturers need to take
into account as they plan their competitive strategies.

In India the trends are mainly in three sectors. These sectors are:

Trends in retail marketing

1. New retail forms and combinations continually emerge. Bank branches and ATM counters
have opened in supermarkets. Gas stations include food stores that make more profit than the
gas operation. Bookstores feature coffee shops.
Even old retail forms are reappearing: In 1992 Shawna and Randy Heniger introduced
peddler’s carts in the Mall of America. Today three-fourths of the nation’s major malls have
carts selling everything from casual wear to condoms. Successful carts average $ 30,000 to $
40,000 a month in sales and can easily top $ 70,000 in December. With an average start-up
cost of only $3,000, push carts help budding entrepreneurs test their retailing dreams without
a major cash investment. They provide a way for malls to bring in more mom-and-pop
retailers, showcase seasonal merchandise, and prospect for permanent tenants.

2. New retail forms are facing a shorter life span. They are rapidly copied and quickly lose
their novelty.

3. The electronic age has significantly increased the growth of non store retailing, consumers
receive sales offers in the mail and over television, computers, and telephones, to which they
can immediately respond by calling a toll-free number or via computer.

4. Competition today is increasingly intertype, or between different types of store outlets.

Discount stores, catalog showrooms, and department stores all compete for the same
consumers. The competition between chain superstores and smaller independently owned
stores has become particularly heated. Because of their bulk buying power, chains get more
favorable terms than independents, and the chains’ large square footage allows them to put in
cafes and bathrooms. In many locations, the arrival of a superstore has forced nearby
independents out of business. In the book selling business, the arrival of a Barnes & Noble
superstore or Borders Books and Music usually puts smaller bookstores out of business. Yet
the news is not all bad for smaller companies. Many small independent retailers thrive by
knowing their customers better and providing them with more personal service.

5. Today’s retailers are moving toward one of two poles, operating either as mass
merchandisers or as specialty retailers. Superpower retailers are emerging. Through their
superior information systems and buying power, these giant retailers are able to offer strong
price savings. These retailers are using sophisticated marketing information and logistical
systems to deliver good service and immense volumes of product at appealing prices to
masses of consumers. In the process, they are crowding out smaller manufacturers, who
become dependent on one large retailer and are therefore extremely vulnerable, and smaller
retailers, who simply do not have the budget of the buying power to compete. Many retailers
are even telling the most powerful manufacturers what to make; how to price and promote;
when and how to ship; and even how to reorganize and improve production and management.
Manufacturers have little choice: They stand to lose 10 to 30 percent of the market if they
refuse.

6. Marketing channels are increasingly becoming professionally managed and programmed.

retail organizations are increasingly designing and launching new store formats targeted to
different lifestyle groups. They are not sticking to one format, such as department stores, but
are moving into a mix of retail formats.

7. Technology is becoming critical as a competitive tool. Retailers are using computers to

produce better forecasts, control inventory costs, order electronically from suppliers, send e-
mail between stores, and even sell to customers within stores. They are adopting checkout
scanning systems, electronic funds transfer, and improved merchandise-handling systems.

8. Retailers with unique formats and strong brand positioning are increasingly moving into
other countries. McDonald’s, The Limited, Gap, and Toys “R” Us have become globally
prominent as a result of their great marketing prowess. Many more Indian retailers are
actively pursuing overseas markets to boost profits.

9. There has been a marked rise in establishments that provide a place for people to
congregate, such as coffeehouses, tea shops, juice bars, bookshops, and brew pubs. Denver’s
two Tattered Covered bookstores host more than 250 events annually, from folk dancing to
women’s meetings. Brew pubs such as New York’s Zip City Brewing and Seattle’s Trolley
man Pub offer tasting and a place to pass the time. The Discovery Zone, a chain of children’s
play spaces, offers indoor spaces where kids can go wild without breaking anything and
stressed-out parents can exchange stories. There are also the now-ubiquitous coffeehouses
and espresso bars, such as Starbucks, whose numbers have grown from 2,500 in 1989 to a
forecasted 13,000 by 2001. And Barnes & Noble turned a once-staid bookstore industry into
a fun-filled village green.
 Chapter-5:
Review of Literature
 Literature studies on Unorganized and Organized
Retailing In India

A. UNORGANIZED RETAILING IN INDIA

In India, the most of the retail sector is unorganized. In India, the retail business
contributes around 15 percent of GDP. Of this, the organized retail sector accounts only for
about 8 percent share, and the left over share is contributed by the unorganized sector, which
is mostly a family owned business in India.

The major challenge facing the organized sector is the competition from unorganized
sector. Unorganized retailing has been there in India for centuries, these are named as mom-
pop stores. The major advantage in unorganized retailing is consumer familiarity that runs
from generation to generation. It is a low cost structure; they are mostly operated by owners,
has very low real estate and labour costs and has low taxes to pay.

B. ORGANIZED RETAILING IN INDIA

In late 1990, the retail sector has witnessed a level of transformation. Retailing is
being perceived as a beginner and as an attractive commercial business for organized
business, i.e. the pure retailer is starting to emerge now. Organized retail business in India is
very small but has tremendous scope. Organized retailing will grow faster than unorganized
sector and the growth speed will be responsible for its high market share, which is expected
to be $ 17 billion by 2010-11. Retailing will show fine prospects in cities like Mumbai, Delhi,
Chennai, Kolkata, Bangalore and Kanpur.

After Dubai, Singapore and Hong Kong, In India Delhi will be the next big retail
destination, According to Confederation of Indian Industries whose findings have shown that
Delhi has the good resources and suitable conditions for the retail sector. Out of the total
earnings of the Government of Delhi Rs 11,000 crore, Rs 6,500 crore is achieved from the
retail sector. The organized sector is expected to grow faster than GDP growth in next few
years driven by favorable demographic patterns, changing lifestyles, and strong income
growth. This organized retail sector mix includes supermarkets hypermarkets discounted
stores and specialty stores, departmental stores.
 “Organized and unorganized retail not only coexist but also grow substantially. “The
reason behind that the retail sector is gradually growing on an overall basis hence the benefit
of this growth goes to both the sectors, according to report of ICRIER.

The traditional markets are transforming themselves in new formats such as departmental
stores, hypermarkets, supermarkets and specialty stores Kearney, (2006). The kirana shops‟
being affected by malls is only a myth. He further concluded that in spite of the available
opportunities to the organized retail to grow in India these kirana shops also were benefited
from this growing economy Munjal, Kumar, & Narwal, (2011). Nagesh (2007) describes
that Indian retailing will see a sea of change in the next five years driving consumption boom
never seen in the history of any country. From a drought situation we will see a flood of
modern retail, So Indian retail will be on a steady ground of sustained growth year after year
and thereafter.

Mohanty & Panda (2008) opines about retailing as a sector of India occupies
important place in the socio-economic growth strategy of the country. India is witnessing
retailing boom being propelled by increasing urbanization, rising purchasing power parity
(PPP) of ever growing India’s middle class, changing demographic profiles heavily tilted
young population, technological revolution, intense globalization drive etc.

Sahu (2010) describes that a rise in consumer confidence, improvement in

profitability and aggressive expansion plans signal better tidings for listed players in the
organized retail space. Moreover, analysts believe listed retailers could attract foreign
investments by spinning off their subsidiaries into separate companies which can provide a
great opportunity for the improvement of this sector.

The impact of organized retailers was clearly visible on the business of unorganized
retailers in terms of sales, profit and employment. Due to their financial infirmity, these small
retailers continuously struggled to introduce changes in their existing retail practices. Some
kind of intervention was required for their future existence Sivaraman P, (2011). The
consumers shopping behaviour was influenced by their income and educational level while
gender and age had no significant impact on their behaviour Ali, Kapoor, & Moorthy, (2010).

The perception of service quality was influenced by various natures among various
customers and some of the general factors like personal interaction, physical aspects on
which customer perception remained constant and common Nair & Nair, (2013). The
customer preferences for grocery shopping were gradually shifting from local kirana stores to
organized convenience stores. Brand choice and credit card facilities were the main
determinants, which influenced preferences from kirana to organized retail. Payment through
credit cards increased purchases from organized retail store Singh & Agarwal, (2012).

“The customer perception of retail service quality is an important segment to the

emerging and the existing retailers in the market as the study reveals that perception of
service quality influenced by the various nature with various customers even some of the
general factors like Personal interaction, physical aspects are the dimensions on of the
customer perception remains constant and common to all the customer on a majority basis so
the retail outlets have to frame their own strategies In order to attract the customers on a
longer basis” William & Prabakar (2012).

Growing Retail

Modern retailing is more facilitative and providing as compared to what was seen in
traditional stores. A study by Kaushesh (2006) on the past and the present trends in retailing
has shown that the traditional stores mostly base their marketing strategies on two factors,
viz., low price and convenience. He describes that the strategies of modern formats are based
more on value, customer relationship and customer experience rather than mere price and
convenience.

In order to provide full value for money to the customers, the retailers must recognize
their customers’ expectations and offer something more than their expectations such as
discounts, free coupons, a free gift, after sales service or free home delivery, delights the
customers. There is more investment, more innovation, more opportunities, more challenges
as well as more demand in the modern/organized retailing.

Retail Outlook, a report by Technopak Advisors Pvt. Ltd. in 2007 describes that the
Indian retail sector is all set to narrate a very fascinating story in the coming few years which
will be embedded with characters like radical changes, shattering of paradigms, large
investments and few failures as well". The expert advisors associated with the report have
made an effort to put forward a minor viewpoint regarding some of the projected trends that
the Indian retail sector may exhibit in the coming years.
Modern Retail vs. Traditional Retail

One set of thought advocates the idea that the growth of organized retail and the entry
of the foreign brands may cause eradication of the traditional stores. The business tactics used
by both, the modern and traditional, retailing vary as they are recognized by their core
characteristics. Where the modern stores are able to provide the customers with better
affordable prices due to presence of large formats; the traditional stores are more convenient
to approach with the presence of a trustworthy relation between the retailer and the customer.
But instead of eradication of one, the experts foresee the coexistence of both modern and
traditional retailing. They also opine that the organized retailers will also come out as a big
support to these traditional mom-and-pop stores.

It is observed that the traditional formats like hawkers, grocers and small bania shops
effectively coexist with the modern store formats like supermarkets and department stores,
and non-store retailing formats such as e-retailing and telemarketing. “It is considered that
modern formats have higher levels of sales per unit of space, stock turnover and gross margin
but lower levels of net margins as compared to traditional formats” (Mulky and Nargundkar,
2003, p.5). They strategically focus on upgrading their businesses in relation to market, cost,
knowledge and customer. Retail experts like Amit Mitra, mentioned in FICCI Report, 2007
that the retail sector does not foresee any conflicts between organized and unorganized
retailing because of huge number of unorganized retailers. While modern (organized) retail
will register exponential growth from around 4% ($ 12 billion) to around 20-22% (or 90
billion) by 2010. It will not happen at the cost of unorganized retail. Even unorganized
(traditional) retail, during the next three years, will grow from present $ 316 billion to $ 340
billion (FICCI Report, 2007).

Even if share of modern retail grows from current level of 4% to the estimated 16% in
next five years, the absolute market size of traditional retail will grow from around US$ 324
billion in 2006 to A quarterly report Retail Outlook issues by Technopak in 2007 has also
projected an immense growth in the Indian retail sector. It has been observed that where the
organized sector is registering increasing growth rate, the unorganized sector is also
indicating huge rise in its market share.
 Emergence of Private Retail Brands
The competition from domestic as well as foreign brands has forced retailers to come
up with products with their own brands. In order to increase profit margins and enjoy cost
economies, many big corporate houses like Big Bazaar, Food Bazaar, Spencer Hyper,
Reliance Super, etc. have started shelving their own-label products. It has helped them to
offer the products at marginal prices with acceptable quality which they say is at par with
other branded products that they are providing.

The format is defined as a type of retail mix, used by a set of retailers. It is the store
'package' that the retailer presents to the customer and can be defined in terms of location,
layout, size, design, merchandise, service, experience etc. (Sinha, 2004).

The major purpose of these stores is to offer a variety of products at affordable prices
in various product categories. The experiment of own-label brand has been a success as
people are increasingly accepting these new private labels. This concept has initially put its
foot forward in selective product categories such as clothing, home care products, electrical
appliances and groceries. For example, Food Bazaar provides not only comparatively lower
priced commodities but also something more, to strengthen its relation with the customers.
This includes “live chakki”, “fresh juice counter”, “live dairy” and “live kitchen” (Sinha
and Banerjee, 2004). Similarly, retailers are planning to experiment in other product
categories also.

Store Formats

Departmental Stores: The stores are organized into many separate departments such
as apparel, cosmetics, accessories, household items, electronics, etc. (Sinha , 2004). Though
operating in many different categories of products, these stores for some reason have been
observed to mainly focus on the apparel section.

Shopping Malls: The boom in the retail sector is also associated with the development
of malls in India. It has brought tremendous changes in the psyche of consumers. Shopping
malls have emerged to fulfill the time and convenience requirement of the shoppers.

Supermarkets: With appealing surroundings, hygienic ambience, better product

display along with the availability of a wide variety of brands, these supermarkets have
changed the shopping ways of the Indian consumer who now prefers to shop at the
supermarkets instead of neighbourhood kirana stores (India Retail Report, 2007).
Hypermarkets: The hypermarket format represents the features of both a supermarket and a
department store. These are large formats having combination of food (60-70%) and general
merchandise (30-40%) (India Retail Report, 2007). The products they offer generally include
groceries, hardware, furniture, books, electronic appliances, house ware/kitchenware, apparel,
etc. The large scale operations and bulk buying help to provide shoppers goods at
comparative low prices, giving them value for money.

Specialty Stores: A store specializing in a particular type of merchandise or single product of

durable goods (that is, household goods and consumer electronics) or a range of normal
complementary product categories is termed as specialty store (Kaushesh, 2006). Also known
as exclusive stores, these store formats generally specialize in the merchandise they offer.
Some examples of these stores in India can be named as Park Avenue, The Gap, Planet M,
Music World, Benetton, Wills Life Style, Grasim, Lee, John Players, VanHeusen, etc.
Specialty stores can be further classified into (i) Drugstores (ii) Category Killers and (iii) DIY
Stores, as discussed by (Sinha, 2004). These formats are described as follows:

(i) Drugstores – these specialty stores specialize not only in a good range of
merchandise but also in health care products. Occasionally, some of the well-
established stores also provide assistance/consultancy on these health care
products. Examples of such stores are Planet Health, Apollo Pharmacy, etc.
(ii) Category killers – these stores usually provide merchandise at discounts and
specialize in a few goods. “By offering a complete assortment in a category at low
prices, category specialists can ‘kill’ a category of merchandise for other retailers”
(Sinha and Banerjee, 2004). Examples of category killer store are Nalli Silks and
Royal Sporting House.
(iii) DIY (Do-It-Yourself) stores – this category of stores focuses on providing
consumers with merchandise, which is generally used for making home
improvements and furnishings. Consumers are generally provided with assistance
or live demonstrations by the salespeople to help them select a product. Most
suitable example in India is Home Town.
Automatic Vending: Automatic vending through machines is a non-store retailing format,
which involves selling of products through purely/fully-automated machines. Customers put
coins or credit cards, enter item code and the right quantity of the product automatically
comes out of the outlet of the dispensing machines. This form of retailing through machines
has its origin in the western countries with ‘bubble gum balls’ as the first product (Kaushesh,
2006).
The retail market in India has grabbed the attention of many global bigwigs. It has
become one of the most attractive investment destinations among international retail giants.
According to a report (2009) by A T Kearney, the Indian retail sector with the support of
foreign investments is expected to grow at a very rapid rate in the coming future. The Indian
retail market, which is the fifth largest retail destination globally, has been ranked as the most
attractive emerging market for investment in the retail sector by AT Kearney's eighth annual
Global Retail Development Index (GRDI), in 2009.
The increasing growth rate in the retail sector is not only attracting major domestic
corporate players but is also marking its place in the preference list of global retailers and
inviting them for investments. Consumers’ rising demands for the retail goods has supported
this sector to grow further and has attracted many retailers in this sector. A McKinsey report
The Rise of Indian Consumer Market estimated that the Indian consumer market is likely to
“grow four times” by 2025.
 Chapter-6:
Retail Marketing in
India
RETAIL MARKETING IN INDIA

Retail marketing is the most important part of the entire logistics chain in a business
especially in consumer related products. Without proper retailing the companies can't do their
business. Retailing is the process of selling goods in small quantities to the public and is not
meant for resale. Retail is derived from the French word retailer, meaning to cut a piece off or
to break bulk.

There are various ways of making goods available to consumers like:

 Company to distributor to wholesaler to retailer to consumer

 Company to salesperson to consumer
 Company to consumers (online/ phone/ catalog ordering)

These three are among the most common ways of making the goods available to consumers.
But in India the three layered system of distributor, wholesaler and retailer, forms the
backbone of the front-end logistics of most of the consumer-good companies. In this system
the company operating on all India basis appoints hundreds of distributors across the country
that supplies to various retailers and wholesalers. Wholesalers in turn can either directly sell
in the market or can supply to retailers. The current retailing system prevalent across the
country is highly fragmented and unorganized. Anyone with some money and some real
estate can open a small shop and become a retailer catering to the locality in which he opens
the shop. There are a number of reasons behind this fragmented retail market. Some of the
major reasons being:

 Poverty and lower literacy levels.

 Low per capita income.
 Savings focused and less indulgence mindset.
 Poor infrastructure facilities like roads etc.
 Restrictions on intra-state good movement.
 High taxes.
 No exposure to media.
 High import duties on imported goods.
 FDI in retailing is not allowed.
 Retailing is not considered as a business or industry by the government.
 Hitherto none of the business schools in India were offering specialized courses on
retailing.
 Expensive supply chain.
 Besides this there is other reasons too, which led to stifling of growth of organized
segment of retailing sector and which instead led to highly fragmented market.

Today in India we have more than 12 million retail outlets and most of them are family run
and locally owned. There are very few nationally present retail stores. In India the process of
buying and selling at these unorganized retail outlets, is highly characterized by bargaining
and negotiations. But slowly with increasing influence of media and urbanization the market
is shifting towards organized segment. Seeing the huge market size of retail business in the
country and the current level of organized segment, many players have jumped into the fray
and many are waiting for the right opportunity to enter it.

3.1 Retailing in 1990s

On account of the liberalization drive in the 1990s, several structural and

demographic changes that are taking place are helping the industry to grow. The GDP has
grown by 8 percent in the last decade resulting in increased income levels and higher
purchasing power for the population.

Increasing literacy levels, increasing number of working women, increasing

urbanization, higher international travel by Indian population and increasing media
penetration has raised aspiration levels of the population, resulting in demand for better
shopping experience and larger variety of goods. India has close to 54percent of population
below the age of 25, which translates into higher prospects for increased consumption levels
in the future. Finally, interest rates have also declined in the past few years further propelling
the consumption demand.

These factors were the key drivers for the retail wave in the country. Notable among
the early entrants were players like Shoppers Stop, Pantaloon, Ebony, Foodworld, Subhiksha,
etc. Initially, the growth in organized retail was very slow and concentrated mainly in metros,
with south India holding its ground as the pioneer in organized retail growth, on account of
the low cost of real estate. Due to the high investments required in the early stages and the
fact that real estate was the key deciding factor for success of stores, real estate developers
have been the major players in the industry (see Table).
 Table 5: Sponsors

Group Retail Business

Rajan Raheja – Real Estate Developer
K, Raheja - Real Estate Developer
Hiranandani - Real Estate Developer
Tata – Diversified Business House
DS Group - Real Estate Developer
RPG – Diversified Business House
DLF – Real Estate Developer
ITC - Diversified Business House
Source: Fitch
Globus – Chain of departmental stores
Shopper’s Stop - Chain of departmental stores
Haiko supermarket, Loft shoe stores and
Hakone mall
Westside – chain of department stores
Ebony - chain of department stores
Foodworld supermarkets, Giant hypermarkets, Health
& Glow beauty and health stores
DLF malls
Wills Sport – Chain of apparel stored.

In the early 1990s, as the players were lower down on the learning curve many
faltered in their models, and growth of the industry remained slow. The second half of 1990s
saw several players making losses and exiting from the business.

The worst years for the industry were 2000 and 2001, as the stock market downturn,
which reduced customer confidence and spending, had a direct impact on the performance of
the industry. The industry recovered starting 2002. It now appears the efforts and learning’s
of the players in the last decade are beginning to pay off; the organized retail industry has
established firm roots and is beginning to grow.

3.2 Present Retail Scenario In India

 Retail experts find Indian industry promising

 Retail sales to touch Rs. 80,000 crore by 2020
 Mall Mania: The developing mall culture in India
 Emergence of region-specific formats
 Emergence of discount formats
 Entry of international players
Retail experts find Indian industry promising

The retail movement in India has acquired the critical mass that is required for rapid
acceleration in terms of industry growth as well as geographical spread. The Indian retail
industry can no longer be called nascent. The spread of super stores to the northern cities
such as Delhi, Chandigarh, Jaipur and Kolkata is evidence of the fact that organized retailing
in India has emerged from its southern bastion.

The retailing boom is being driven by increased expectations as well as changing

shopping behaviour of the urban Indian consumer. With the increasing number of nuclear
families, working women, greater work pressure and increased commuting time, consumers
are looking for convenience. And, convenience is defined as having everything under one
roof, longer hours and multiplicity of choice.

On the supply side, the current inefficient supply chain in India, particularly for food
items has led a few players to consolidate their operations to take advantage of economies of
scale and match consumer expectations in terms of delivery as well as space. So, we have a
situation where both demand and supply side dynamics are fuelling the growth of organized
retailing in India, although improvements in the supply chain are yet to fully match with
consumer expectations.

The future growth need not necessarily come only from the big metros, where there
already exists a good retail network. The fact that big Indian retail chains are moving into
places like Indore or Chandigarh is an important indicator of future growth. For the Rs. 5000-
crore organized retail industry it is, perhaps, time to tap the relatively smaller cities. The
share of organized sector in total retail sales will grow from one per cent now to six per cent
by 2005.While projections can be slippery, hard facts point to exciting growth ahead for this
sector.

According to KSA, organized retailing is focusing on only SEC-A cities, India’s 23

largest cities. That is where a large portion of the country's urban population exists. Today 82
per cent of organized retailing comes from the top six cities and 12 per cent from the next
four. KSA says the top 10 cities provide 94 per cent of organized retail sales in India.
 By 2020, KSA projects the top six cities will account for 72 per cent of total
organized retailing and the next four for 20 per cent. The top 10 cities will account for 86 per
cent of organized retail sales. There could be variations in growth patterns in different
segments. The second half of the top 10 cities will provide large growth for food and
groceries, while the top six would still be the growth centers for consumer durables, believes
KSA.

The spread of organized retailing is unlikely to be a national phenomenon yet. This

appears to be the case so far. South India, particularly Chennai, Hyderabad and Bangalore,
have seen the emergence of chain stores or large format stores. While garment stores have
been around for some time, other segments like food and groceries, consumer durables and
even books and music have witnessed the emergence of organized players in large cities in
South India. The lack of trained manpower or alternatively the tremendous scope the sector
has to provide employment is another issue.

Mall Mania: The Developing Mall Culture in India

Modern malls made their entry into India in the late 1990s, with the establishment of
Crossroads in Mumbai and Ansals Plaza in Delhi. By early 2001, several mall projects were
announced. According to market estimates, close to 12 million sq. ft. of mall space were
developed across several cities in the country, of which 10 million sq. ft became operational
(see Table below). With this, rentals for retail properties have shown a marked decline, which
has brought down the break-even levels of the retail projects. Moreover, retailers would now
have access to retail-specific properties, which will increase their efficiencies.

Table 6: Mall Development in India

Mall Location Rate / Sq. ft.

Crossroads Tardeo, Mumbai 225-250
Ansals South Ex, Delhi 175-200
Nirmal Lifestyle Mulund, Mumbai 75-90
Runweals Mall Mulund, Mumbai 75-90
Karnavat Mall Thane, Mumbai 65-85
Raheja Mind space Malad, Mumbai 60-80
Jog’s Mall Andheri, Mumbai 55-75
Cable Corporation Borevali, Mumbai 55-75
 Ansals East Delhi 75
Sahara Gurgaon 50-70
MGF Malls – Metroplitian & Plaza Gurgaon 65-85*
DLF Gurgaon 65-85
Shipra Noida 80-180
Forum KolKotta 100
City Center KolKotta 55
Rave 3 Kanpur 45-55
Inox Baroda 75
Forum Bangalore 70-90
Spencers Plaza Phase III Chennai 70
Indore, Nasik and Jaipur Malls 45-55
Hyatt, Mumbai & Leela, 175-300
Phoenix Malls Lower Parel, Mumbai 100-125
*average for the metropolitian is Rs. 60 per sq. ft..
Source: Chesterten Meghraj. Industry Reports

Till some time back, there were only few international style shopping malls in India --
Spencer in Chennai, Crossroads in Mumbai, Ansals Plaza in New Delhi and Sriram’s Arcade
in Kolkata. By the end of 2004, that number jumped to many.

It looks like a virtual stampede, major players with a cumulative investment of Rs 375
crore are set to change cityscapes across India. In the next one year, close to 70 lakh square
feet of retail space will be developed. In three years, this will rise to 90-lakh sq ft. As the
retail industry evolves, consumers want more variety before making their purchase decision.

A study on consumer outlook suggests that over 80 percent of consumers want a wide
range of products at hand while shopping. This signifies that people are finally ready for
multi-option complexes. Many old-time corporates are seriously considering using their idle
assets. It makes sense for landowners to develop it and keep the returns rather than sell it
outright or even lease it, especially when there is opportunity here. It is perhaps the best way
to use an idle real estate asset.

The limited kitty of brands has yet another significant knock on effect on the typical
size of Indian malls. In the US and South-East Asia, malls are as large as 50 lakh sq ft.
Spencer is by far the largest mall in India - it occupies 7 lakh sq ft and even that is dwarfed
by Asia's largest mall, the 4-million sq ft mega mall in Malaysia. Even the 26 malls that are
being planned are likely to measure between 50,000 sq ft and 2 lakh sq ft.

The Indian mall cannot offer too many choices in terms of brands. So, developing a
very large mall can never be sustainable. There's a flip side though -malls even as small as
80,000 sq ft, like Shopper's City in Kolkata or the Esplanade Mall at Kochi, can be sustained.

Emergence of Region-Specific Formats

For the first time in 10 years, the industry is witnessing the development of region-
specific formats. With organized retail penetrating into B class towns, retailers have started
differentiating in the sizes and formats of stores. For example, in departmental store format,
while most A class cities and metros have larger stores of 50,000 plus sq. ft. sizes, stores in B
class towns have stabilized in the 25,000-35,000 sq. ft. range. Most players have started
operating these two formats across various cities, which has helped them to standardize the
merchandise offering across the chain.

Emergence of Discount Formats

Larger discount formats, popularly known as hypermarkets, are now emerging as

major competitors to both unorganized and organized retailers. Penetration of organized retail
into the lower strata of income groups and consumer demand for increased value-for-money
has improved the prospects of these formats. These formats span across the entire range of
merchandise categories. Big Bazaar, promoted by Pantaloon and Giant, promoted by the RPG
Group, are examples of this format.

Entry of International Players

A large number of international retailers have evinced interest in India, despite the
absence of favourable government policy for foreign players (see Table below). A number of
the major brands have entered the country through licensing agreements with Indian players
to capitalize on the opportunities available in the sector.
 Table 7: International players

International Players Retail Ventures In India

Landmarc Group, Dubai Lifestyle Chain of Departmental Stores
Metro, Germany Hypermarket
Shoprite, South Africa Supermarket, Hypermarket
Nanz, Germany Supermarket
Marks & Spencer, UK Apparel Retailer
Mango, Spain Apparel Retailer
McDonalds, USA Food Retailer
Dominos USA Food Retailer
Tricon Restaurant, USA Food Retailer
Source: Industry Reports

Food Markets and India

Upto the year 1995 Indian food market was predominantly dominated by the
traditional dhabas, potential restaurants in the customer’s colony and some restaurants in a
five star hotel. Having fast food i.e., burgers, pizzas etc., was considered to be an option for
eating out. It was not synonymous with the American concept of fast food as a quick
takeaway bite or a substitute for lunch. Apart from fast food being available at the local
colony restaurants and at some five star restaurants, Nirulas was the only fast food chain
existing in the country with its restaurants expanding with every passing year since its
inception. Nirula’s was the first one to bring fast food to India in the 1950’s and since then it
has evolved into a common hangout for all age groups.

The Indian fast food market is growing at around 30-35 percent per annum and
generates over 4800 Crores in sales. Fast Food Market in India is anticipated to reach around
INR 162 Billion by 2020, growing at a CAGR of around 35% during 2011-2016 Fast-food
restaurants seem to be big business in India, and so a many foreign chains have made an entry
into the market to join the early movers like McDonald's or KFC.

According to “Indian Fast Food Market Analysis”, although the market has witnessed
a robust growth in the past couple of years, it remains largely under penetrated and
concentrated into metropolitan cities. India is the world’s second largest producer of food
next to china, and has the potential of being the biggest with the food and agricultural sector.
The total food production in India is likely to double in next ten years. The foreign players
look to dominate the Indian fast food industry and have large plans for expansion.

For instance, Domino's is planning to open 60-65 outlets every year for the next three
years. With greater plans to explore the Indian market, Yum Brands plans to open 1000 fast
food outlets by 2020. McDonald's has set an invest goal of nearly $35 Million to double its
store count to nearly 350 in India. Multinational chains like McDonald's, Pizza Hut, KFC or
home grown ones like Sagar Ratna, Yo! China, Haldiram's, Bikanervala or Nirula's, they are
all racing to open new restaurants. McDonald's, which had 20 outlets in India till 2002, has
more than 200 today. It plans to open 200 more over five years with an investment of Rs 500
crore. Yum! Restaurants, owner of the KFC and Pizza Hut brands, plans to add 15 and 20
outlets respectively.

The eating out market is on an upswing. The rising number of working women and
nuclear households, and an increase in general affluence have led to higher discretionary
spending on food.

Retail consultancy Tech-nopak Advisors says the expenditure on eating out at 11 per
cent is second only to groceries for Indian households. Growth isn't the only change in the
food business. The shift from unorganised or street food towards a cleaner, more hygienic
environment is one, even as the proliferation of stalls selling steamed corn, doughnuts and
even sushi across malls, along with the success of South Indian cuisine in Delhi and butter
chicken in the South shows that Indians are willing to experiment.

Each of the foreign food joints that have come into the country has their own strategy
lined up to differ from the rest. Each of these studied the Indian tastes and style and thereby
targeted the Indian customer. An average Indian restaurant goer is no convenience eater,
unlike the Americans.

Growth Drivers of India’s food Industry

The growth of the food industry is driven by:
 Higher disposable incomes
 Change in spending pattern
 Increasing organised food retailing
 Increasing export opportunities
 Porter’s 5 force model

Potential Entry Bargaining Buyer Bargaining Industry Rivalry Threats of

•Relatively high initial Power of Power of Buyers •Low pricing power substitutes
capital outlay Customers •Regional franchises •Low margins •High product
•Growing industry exhibit market power •Market consolidation differentiation (e.g.
•Fragmented
consolidation •Many substitute meal solutions)
customer base
•Economies of scale suppliers •Many local industry
•Relatively low
•Logistics learning average purchase •Low operator brand players (e.g.,
curve loyalty independent
•Rising segment of
•Low switching costs •Low switching costs caterers)
discerning consumers
for customers (e.g. distribution •Few global industry
channels) players (e.g., KFC,
McDonalds etc.).
•Low switching costs
for customers

SWOC Analysis

Strengths

1. Quick Service: - one of the biggest strengths of fast food is that it provides quick
service. The biggest advantage of this is that it saves a lot of time. And in this modern
world time is money hence quick service is the biggest strength
2. Affordable: - Usually fast food is priced at a very affordable rate which starts from
rupees 2. Though the prices are low in the fast food industry, the quantity is more and
hence value for money.
3. Attraction: - The advertisements of fast food are very flashy and appealing especially
to the youth and the younger generation. One of the most important people in the
buying decision is the kids who are influenced by ads on TV who in turn influence
their parents. Hence it boosts the sales.
 Weakness

1. Different Preferences: - India is a land of diversity. People in India have different

preferences and taste. The fast food industry cannot cater to all the tastes and
preferences of people. For e.g. some people eat Non – Veg and some don’t eat non –
veg, thus creating a problem. Such problems have risen at KFC and McDonalds.
Another difference in preference can be seen in the choice of the type of food. Some
people prefer South Indian while some prefer North Indian. So a south Indian joint
selling masala dosa cannot start selling chole bature as per customers’ preference.

2. Lack of customization: - Fast food is usually pre-made and pre-packed and not fresh
from the oven. So once the dish is made it cannot be altered according to the
customer’s choice or preference. For e.g. a McDonalds burger is prepared much
before the customer purchases it and he has to buy it as it is. Even if the customer
wants the burger without onion or cheese still he has to purchase it due to lack of
customization.
3. Unhygienic and unhealthy: - Most of the times though being tasty the oil content in
fast food is very high. Hence people are now moving away from fast food. The fast
food prepared is also unhygienic especially at the road side joints. Hence these are
considered weaknesses to the fast food industry.

Opportunities

1. Growing nuclear families: - Nowadays it is said to be the age of the fast food.
Parents and kids especially prefer fast food due to its quick service and for its
satisfying appetite at affordable prices. This is a growing opportunity for the industry
because families nowadays prefer eating out, rather than cooking at home.
2. Growing urban lifestyle: - The growth story of India is not limited to metro cities.
Now it has also found its way into some rural areas and some semi– urban cities. Fast
food joints are not a thing of big cities now. People in cities and towns are now having
additional incomes in their pockets. Eating out now is a normal thing for the homely
people in the semi urban areas.
 Challenges

1. Oppositions from various organizations: - Due to the various preferences in the

food some opposition is received by the fast food industry. As reported in the papers
organizations like PETA are opposing the use of beef fat in the items of McDonalds.
There was also a huge hullabaloo when Kentucky Fried Chicken (KFC) was being
introduced to India. This is a major threat to the fast food industry.
2. Location: - One of the major threats in India is from the location point of view. Fast
food joints can’t be opened in certain locations even though there might be evidence
of major consumer demand in the area. For e.g. a Hindu dominated area might pose a
threat to joints serving beef related products since the cow is considered sacred to
them.
3. Ready- to-eat: - Nowadays ready to eat products are more in demand in the market
owing to the fact that consumers have to take minimum trouble in preparation out of
which the results are healthy food, rich nutritional value, easy on pockets and higher
value for money as compared to the foods available in a fast food joint.
4. Health Concerns: - Due to the low quality ingredients used in the majority of local
fast food joints, the sanitation and the hygiene factors which are mostly not
maintained, have given cause to various medical and other health related
organizations and certain NGO’s who have taken it up to voice these issues and bring
it to the attention of the general public. Thus directing the attention of the public to
change the tastes to foods that are more hygienic and safe. Here canned foodstuffs
stand to gain advantage.
 Chapter-7:
Information
Technology in Retail
INFORMATION TECHNOLOGY IN RETAIL

Over the years as the consumer demand increased and the retailers geared up to meet this
increase, technology evolved rapidly to support this growth. The hardware and software tools
that have now become almost essential for retailing can be divided into 3 broad categories:

Customer interfacing systems

Bar coding and scanners: 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,
processes a cheque electronically by transmitting transaction information to the retailer and
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 and image of
the cheque, which makes the process very fast.

Internet: Internet is also rapidly evolving as a customer interface, removing the need of a
consumer physically visiting the store.

Operation support systems

ERP System: 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
servicing the customer better.

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 individual consumers to their businesses.

Advanced Planning and Scheduling Systems: APS systems can provide improved control
across the supply chain, all the way from raw material suppliers 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 those from i2, Manugistics, Bann, Mercial incs and Sterling-Douglas.

Strategic decision support systems

Store Site Location: 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 locational 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 Nielsen and Modacad are example of products helping in modeling a retail store
design.

Foreign Touch in Indian Retail

The chief of Marks & Spencer has been making trips to India over the past year. Global
investment bank Warburg Pincus is awaiting the Indian government's clearance to pick up a
25.1 per cent stake, worth $13 million, in Shoppers Stop.

Dairy Farm International and Jardine Matheson are present here, through tie-ups with
the RPG Group. Fast food major McDonalds have already made a dent in the marketplace
and in Indian palates.
 The Dubai-based Landmark group is making its presence felt in Chennai through its
Lifestyle mega store of over 30,000 sq ft. Landmark is owned by Mukesh Jagtiani, a non-
resident Indian. Lifestyle International Private Limited, formed in India recently, is a wholly-
owned subsidiary of the Mauritius-based Lifestyle International which, in turn, is wholly-
owned by the Landmark group. In India, according to Lifestyle International's marketing
manager, Roshan Mathew, the target is to "have 12 to 16 stores by 2005." These stores will
sell all lifestyle products, barring furniture, under one roof.

Immediate plans include opening a 46,000 sq ft store in Hyderabad, which Mathew

terms "The Millennium Store". The Hyderabad store will have additional sections for books
and music, unlike the Chennai store. Besides, as soon as Lifestyle gets a keenly awaited
Foreign Investment Promotion Board clearance for a Rs 100 crore investment, it will create
outlets in Bangalore, Pune, Mumbai, Delhi and Ahmedabad.

The Hong Kong-based Dairy Farm International, a 125 year old retail major with around
1,300 outlets across nine countries, recently converted its technical tie-up (since 1996) with
the RPG group's Spencer & Company for Foodworld into a 49:51 joint venture. The new
venture is called Foodworld Supermarkets Limited. DFI also has a 50:50 joint venture with
the Indian group in RPG Guardian. DFI is the retail arm of Jardine Matheson.

In Western markets, a familiar sight is the McDonalds golden arch. In India too
McDonalds has maintained its unique selling proposition -- providing the same quality of
food and the same ambience as anywhere in the world. Its raw material requirements are
totally out-sourced. But what it has taken care of is world class quality in all its raw material
sourcing, with specifications ensured strictly.

The chain has been smart enough to tailor its products to the Indian environment, adding
fare for the large number of vegetarians who love fast food, and avoiding certain beef and
pork in deference to social sensitivities. In a market place where Kentucky Fried Chicken
failed to make an impact, McDonalds seems to be finding its place slowly but surely.
 Chapter-7:
Conclusion and
Future Prospects of
Retail in India
 The Indian retail industry has emerged as one of the most dynamic and fast-paced
industries due to the entry of several new players. It accounts for over 10 per cent of the
country’s Gross Domestic Product (GDP) and around 8 per cent of the employment. India is
the world’s fifth-largest global destination in the retail space. The Indian retail industry is one
of the fastest growing in the world.

Retail industry in India is expected to grow to US$ 1.3 trillion by 2020, registering a
Compound Annual Growth Rate (CAGR) of 16.7 per cent over 2015-20. India is the fifth
largest preferred retail destination globally. The country is among the highest in the world in
terms of per capita retail store availability. India’s retail sector is experiencing exponential
growth, with retail development taking place not just in major cities and metros, but also in
Tier-II and Tier-III cities. Healthy economic growth, changing demographic profile,
increasing disposable incomes, urbanisation, changing consumer tastes and preferences are
the other factors driving growth in the organised retail market in India.

India’s Business to Business (B2B) e-commerce market is expected to reach US$ 700
billion by 2020. Online retail is expected to be at par with the physical stores in the next five
years. Further, India's e-commerce market is expected to reach US$ 220 billion in terms of
gross merchandise value (GMV) and 530 million shoppers by 2025, led by faster speeds on
reliable telecom networks, faster adoption of online services and better variety as well as
convenience.

India’s population is taking to online retail in a big way. The online retail market is
expected to grow from US$ 6 billion to US$ 70 billion during FY15-FY20. Increasing
participation from foreign and private players has given a boost to Indian retail industry.
India’s price competitiveness attracts large retail players to use it as a sourcing base. Global
retailers such as Walmart, GAP, Tesco and JC Penney are increasing their sourcing from
India and are moving from third-party buying offices to establishing their own wholly-
owned/wholly-managed sourcing and buying offices.

The Government of India has introduced reforms to attract Foreign Direct Investment
(FDI) in retail industry. The government has approved 51 per cent FDI in multi-brand retail
and increased FDI limit to 100 per cent (from 51 per cent) in single brand retail, and plans to
allow 100 per cent FDI in e-commerce, under the arrangement that the products sold must be
manufactured in India to gain from the liberalised regime.

Sector's High Growth Potential is Attracting Investors

 India has occupied a remarkable position in global retail rankings; the country has
high market potential, low economic risk, and moderate political risk
 India’s net retail sales are quite significant among emerging and developed nations;
the country is ranked third (after China and Brazil)
 Overall, given its high growth potential, India compares favourably with global peers
among foreign investors
 With investment of around US$ 511.76 billion, the first half of 2016 witnessed the
highest annual private equity (PE) in the retail sector, since 2008.

Rising Prominence of Online Retail

 Online retail business is the next generation format which has high potential for
growth in the near future. After conquering physical stores, retailers are now foraying
into the domain of e-retailing
  E-commerce is expected to be the next major area supporting retail growth in India.
The industry is projected to touch US$ 100 billion by 2020 growing from US$ 30
billion in 2016
 With growth in the e-commerce industry, online retail is estimated to reach US$ 70
billion by 2020 from US$ 3 billion in 2014

STRATEGIES ADOPTED BY INDIAN RETAILERS FOR SALES MAXIMISATION

 Offering discounts: Most retailers have advanced off-season sales from 15 days to a
month with discounts of 20-70 per cent on certain products. They also provide higher
discounts & other value – added services for members.
 Lowering prices: Certain retailers adopt ‘first price right’ approach as they do not
offer discounts under this strategy; rather they directly compete on the selling price by
offering a best price without any markdowns
 Offering value-added services: Innovative value – added services, such as customer
loyalty programmes & happy hours on shopping deals. Offers for senior citizens,
contests for students & lottery gains are now very common
 Leveraging partnerships: retailers are now pitching to partner with manufacturers,
service providers, financial companies, etc . to create a buzz around certain product
categories
 Strong supply chain: Innovative solutions like performance management, frequent
sales operation management, demand planning, inventory planning, production
planning & lean systems can help retailers to get advantage over competitors
 Joint Ventures: To diversify the product offerings & tab the growing luxury retail
segment, retailers are forming joint ventures with foreign luxury brands

By 2020, food & grocery segment is expected to account for 66 percent of the total
revenues in the retail sector, followed by apparel segment Pulse candy maker, Dharampal
Satyapal (DS) Group, registered sales of USD 44.62 million, since its launch in mid 2015
The company is giving a hard competition to its rival brands such as Perfetti, Parle, etc Even
the demand for Western outfits & readymade garments has been growing at 40 – 45 per cent
annually; apparel penetration is expected to increase to 30 – 35 per cent by 2018.
Investment Scenario

The Indian retail trading has received Foreign Direct Investment (FDI) equity inflows
totalling US$ 935.74 million during April 2000–December 2016, according to the
Department of Industrial Policies and Promotion (DIPP).

With the rising need for consumer goods in different sectors including consumer
electronics and home appliances, many companies have invested in the Indian retail space in
the past few months.

 US apparel retail major Gap Inc, has tied up with Arvind Group’s fashion portal
NNNow.com to sell its products online, which will help the retailer expand its
presence beyond metros and tier-I cities.
 Hamleys, has stated that India is one of the most important markets for Hamleys
globally, and outlined plans of opening six more stores, taking its total store count in
the country to 32 by the end of March 2017.
 Roche Bobois Group, outlined plans of opening new stores in cities like Hyderabad,
Chennai, Pune, Kolkata and Ahmedabad, in order to make India one of its top five
markets by 2022.
 A joint venture between Dutch asset manager APG Asset Management and real estate
asset platform Virtuous Retail, has acquired a portfolio of three shopping malls for
 US$ 300 million, and has committed an additional US$ 150 million as equity capital
to expand the portfolio.
 Future Consumer Ltd has formed a joint venture (JV) with UK’s largest wholesaler,
Booker Group, with an investment of Rs 50 crore (US$ 7.5 million), to set up 60-70
cash-and-carry stores in India in the next 3-4 years.
 Adidas India Private Limited, outlined plans of opening around 30-40 big flagship
stores across Delhi, Mumbai and Bengaluru, by 2020.
 Mad Over Donuts (MoD), outlined plans of expanding its operations in India by
opening nine new MOD stores in Hyderabad and Chennai by March 2017.
 Switzerland’s luxury retail brand Bally, plans to re-enter the Indian market in a joint
venture with Reliance Brands Ltd, by opening its first store in New Delhi in March
2017, and thereafter aiming to expand to four stores in Delhi, Mumbai, Kolkata and
Chennai over the next 3 to 4 years.
 Urban Ladder, an online furniture store, is in advanced talks to raise around US$ 25-
30 million from existing investors Kalaari Capital, SAIF Partners and Sequoia
Capital, along with one new investor, which will be used to fund its expansion plans.
 Hennes & Mauritz (H&M), the Sweden-based clothing retailer, is in advanced talks
with Mumbai-based Prakhhyat Infraprojects Pvt Ltd to lease around 275,000 square
feet of space at Bhiwandi, Maharashtra, to set up its first warehousing hub in India.
 Future Group has partnered with UK clothing and hardware retailer Laura Ashley to
make and sell merchandise as well as wholesale distribution in India.
 Parle Agro Pvt Ltd is launching Frooti Fizz, a succession of the original Mango
Frooti, which will be retailed across 1.2 million outlets in the country as it targets
increasing its annual revenue from Rs 2800 crore (US$ 0.42 billion) to Rs 5000 crore
(US$ 0.75 billion) by 2018.
 Mr Amit Agarwal, Country Head, Amazon, has stated that India continues to be
viewed as a long-term opportunity and the company would continue to invest
aggressively in Indian operations.
 International Finance Corporation (IFC), the investment arm of The World Bank,
plans to invest up to Rs 134 crore (US$ 19.86 million) in Kishore Biyani's Future
Consumer Enterprises Ltd, which is expected to aid the company in driving its growth
plans.
 Amazon India has opened six new fulfillment centres across Chennai, Coimbatore,
Delhi, Jaipur and Mumbai, which will open up 5.5 million square feet of storage
space for sellers on the marketplace who use the ‘Fulfilled by Amazon’ service.
 IKEA, the world’s largest furniture retailer, plans to invest Rs 10,500 crore (US$ 1.56
billion) to set up 25 stores across India and hire over 15,000 permanent employees
and 37,500 temporary employees to assist in running its stores.
 Aditya Birla Fashion and Retail Limited (ABFRL) has announced that it will acquire
exclusive online and offline rights of Forever 21, an American fast fashion brand, in
the Indian market.
 Massimo Dutti, a premium fashion brand from Spain offering sophisticated
womenswear, menswear, footwear and accessories, has entered India by opening its
first store at the Select Citywalk mall in New Delhi.
 Lenskart, India's largest online eyewear retailer, has raised Rs 400 crore (US$ 59.3
million) in series D round of funding led by World Bank's investment arm
International Finance Corporation (IFC), which will be used to enhance its
technology, supply chain, lens manufacturing, and expand the reach of its high-quality
eyewear products across Tier-3 and Tier-4 cities of India.
 Neil Barrett, one of the leading Italian fashion brands, has forayed into the Indian
market by establishing its retail presence through an exclusive partnership with
Fervour, a multi-brand boutique that stocks international designer brands.
 New York-based designer brand Kate Spade will be launched in India later this year
and will set up a network of stand-alone stores across major cities, thus becoming one
more global brand entering the Indian retail space after the Government of India
relaxed single brand retail norms recently.
 KartRocket, a Delhi based e-commerce enabler has completed its US$ 8 million
funding round by raising US$ 2 million from a Japanese investor, which will be used
to enhance Kraftly, a mobile-first online-to-offline marketplace targeting small
sellers, individuals and home-based entrepreneurs in India in product categories such
as apparel and accessories.
 PurpleTalkInc, a US based mobile solutions company, has invested US$ 1 million in
Nukkad Shops, a Hyderabad based uber-local commerce platform that helps
neighbourhood retail stores take their businesses online through a mobile app.
  Mumbai-based baby care and kids products e-tailer, Hopscotch.in, has raised US$ 13
million in a Series C round of funding from Facebook co-founder Mr Eduardo
Saverin, which will help the firm in growth and expansion of its technology platform.
 Gurgaon-based e-commerce firm Shopclues has raised US$ 150 million from
Singapore government's GIC and its existing investors Tiger Global and Nexus
Venture Partners, at a valuation of US$ 1.1 billion, thereby becoming the latest among
several e-commerce companies from India reaching a billion dollar valuation.
 Adidas AG, renowned for its Adidas and Reebok sports brands, has become the first
foreign sports company to get government approval to open 100 per cent foreign-
owned stores in India.
 Walmart India plans to add 50 more cash-and-carry stores in India over the next four
to five years.
 Aeropostale, an American teen fashion retailer, has chosen to enter India over China,
and expects India to be among its top three markets over the next four years with
revenue target of Rs 500 crore (US$ 74.12 million).
 Opinio, a hyperlocal delivery start-up, has raised US$ 7 million in a Series-A funding
from Gurgaon-based e-commerce fulfilment service firm Delhivery along with
investment from Sands Capital and Accel Partners.
 Textile major Arvind Limited has announced a partnership with Sephora, owned by
LVMH Moet Hennessy Louis Vuitton, a French luxury conglomerate, in order to
enter into the beauty and cosmetics segment.
 Abu Dhabi-based Lulu Group plans to invest Rs 2,500 crore (US$ 370.6 million) in a
fruit and vegetable processing unit, an integrated meat processing unit, and a modern
shopping mall in Hyderabad, Telangana.
 Aditya Birla Retail, a part of the US$ 40 billion Aditya Birla Group and the fourth-
largest supermarket retailer in the country, acquired Total hypermarkets owned by
Jubilant Retail.
 US-based Pizza chain Sbarro plans an almost threefold increase in its store count from
the current 17 to 50 over the next two years through multiple business models.

Government Initiatives

The Government of India has taken various initiatives to improve the retail industry in India.
 Government of India has allowed 100 per cent Foreign Direct Investment (FDI) in
online retail of goods and services through the automatic route, thereby providing
clarity on the existing businesses of e-commerce companies operating in India.

 The Government of Andhra Pradesh signed pacts worth Rs 1,500 crore (US$ 222.36
million) in a wide range of sectors including retail and steel and gas with Walmart
India, Future Group, Arvind Lifestyle Brands Ltd and Spencer’s Retail, during the
Partnership Summit in Visakhapatnam, while also unveiling a retail policy aimed to
attract retail businesses to invest in the state.
 The Ministry of Urban Development has come out with a Smart National Common
Mobility Card (NCMC) model to enable seamless travel by metros and other transport
systems across the country, as well as retail purchases.
 IKEA, the world’s largest furniture retailer, bought its first piece of land in India in
Hyderabad, the joint capital of Telangana and Andhra Pradesh, for building a retail
store. IKEA’s retail outlets have a standard design and each location entails an
investment of around Rs 500–600 crore (US$ 74–89 million).
 The Government has approved a proposal to scrap the distinctions among different
types of overseas investments by shifting to a single composite limit, which means
portfolio investment up to 49 per cent will not require government approval nor will it
have to comply with sectorial conditions as long as it does not result in a transfer of
 ownership and/or control of Indian entities to foreigners. As a result, foreign
investments are expected to increase, especially in the attractive retail sector.

Ample Growth Opportunities in Indian Retail Industry

Large number of retail outlets

Rural markets offer significant
growth potential
Private label opportunities

Sourcing base

Luxury retailing

Road Ahead

E-commerce is expanding steadily in the country. Customers have the ever increasing
choice of products at the lowest rates. E-commerce is probably creating the biggest revolution
in the retail industry, and this trend would continue in the years to come. Retailers should
leverage the digital retail channels (e-commerce), which would enable them to spend less
money on real estate while reaching out to more customers in tier-2 and tier-3 cities. Both
organised and unorganised retail companies have to work together to ensure better prospects
for the overall retail industry, while generating new benefits for their customers.
Nevertheless, the long-term outlook for the industry is positive, supported by rising incomes,
favourable demographics, entry of foreign players, and increasing urbanisation.

Top 7 retail trends for 2017

 Unique customer experience –a buying experience the customer can’t

get from your competition and will cherish
 Personalization-tailored shopping experiences customers can really
connect with
 Same day shipping -instant gratification of customer purchases
 Omni-channel–unifying the experience of the online and brick-and-
mortar world
 Data driven retailing –applying data-backed analysis and decision for
various retail processes
 Mobility–integration of mobile technology into retail processes
 Retail-tech–technology and retail become inseparable

Retail Trends 2017

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 http://in.reuters.com/article/india-retail-factbox-idINDEE85A02K20120611
 https://www.ibef.org/uploads/industry/Infrographics/large/Retail_2016.png
 https://www.slideshare.net/hemanthcrpatna/a-project-report-on-retail-industry-in-
global-environment
 https://www.slideshare.net/EtailingIndia/learn-essentials-of-multichannel-strategy-in-
retail-70804535