AN OVERVIEW OF Retail Industry in India: ITS

Growth, Challenges and Opportunities

SATYAJIT ROY

MBA EIILM University, Sikkim

INDIA ………..a nation on the move

India’s GDP which currently stands at USD 690 billion is slated to touch USD 740
billion by the end of 2006. India is the world’s 4th largest economy as regards GDP (in
PPP terms) and is expected to rank 3rd by 2010, just behind the US and China. The
country is on the brink of becoming an economic powerhouse ready to unleash its
largely untapped potential for those who are willing to take the right step forward.

In the retail sector, in spite of a 1.07 billion strong population, the target consumer
base for most retailers in India stands at about 405 million. Of this, about 30 million
have a combined purchasing capacity of USD 230 billion. The country’s 6 million ‘rich’
population shops worth USD 28.36 billion every year.

INTRODUCTION

The Indian retail industry is divided into organized and unorganized sectors. Organized
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.
Unorganized 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.

Electronic copy available at: http://ssrn.com/abstract=1750794

India’s retail sector is wearing new clothes and with a three-year compounded annual
growth rate of 46.64 per cent retail is the fastest growing sector in the Indian economy.
Traditional markets are making way for new formats such as departmental stores,
hypermarkets, supermarkets and specialty stores. Western-style malls have begun
appearing in metros and second-rung cities alike, introducing the Indian consumer to an
unparalleled shopping experience.

The Indian retail sector is highly fragmented with 97 per cent of its business being run
by the unorganized retailers like the traditional family run stores and corner stores. The
organized retail however is at a very nascent stage though attempts are being made to
increase its proportion to 9-10 per cent by the year 2010 bringing in a huge opportunity
for prospective new players. The sector is the largest source of employment after
agriculture, and has deep penetration into rural India generating more than 10 per cent
of India’s GDP.

The Larger Picture

India is the 4th largest economy as regards GDP (in PPP terms) and is expected to rank
3rd by 2010 just behind US and China. On one hand where markets in Asian giants like
China are getting saturated, the AT Kearney's 2006 Global Retail Development Index
Corporate Catalyst India A report on Indian Retail Industry (GRDI), for the second consecutive
year Placed India the top retail investment destination among the 30 emerging markets across the
world.
.
Over the past few years, the retail sales in India are hovering around 33-35 per cent of
GDP as compared to around 20 per cent in the US.

The table gives the picture of India’s retail trade as compared to the US and China.

Trade (US$ Employment (%) Shops (million) Organized sector

billions) share (%)
INDIA 180-394 7 12 2-3
CHINA 360 12 2.7 20
US 3800 12.6-16 15.3 80

The last few years witnessed immense growth by this sector, the key drivers being
changing consumer profile and demographics, increase in the number of international
brands available in the Indian market, economic implications of the Government
increasing urbanization, credit availability, improvement in the infrastructure, increasing
investments in technology and real estate building a world class shopping environment
for the consumers. In order to keep pace with the increasing demand, there has been a

Electronic copy available at: http://ssrn.com/abstract=1750794

hectic activity in terms of entry of international labels, expansion plans, and focus on
technology, operations and processes.
This has lead to more complex relationships involving suppliers, third party distributors
and retailers, which can be dealt with the help of an efficient supply chain. A proper
supply chain will help meet the competition head-on, manage stock availability; supplier
relations, new value-added services, cost cutting and most importantly reduce the
wastage levels in fresh produce.

Large Indian players like Reliance, Ambanis, K Rahejas, Bharti AirTel, ITC and many
others are making significant investments in this sector leading to emergence of big
retailers who can bargain with suppliers to reap economies of scale. Hence, discounting
is becoming an accepted practice. Proper infrastructure is a pre-requisite in retailing,
which would help to modernize India and facilitate rapid economic growth. This would
help in efficient delivery of goods and value-added services to the consumer making a
higher contribution to the GDP.

International retailers see India as the last retailing frontier left as the China’s retail sector
is becoming saturated. However, the Indian Government restrictions on the FDI are
creating ripples among the international players like Walmart, Tesco and many other
retail giants struggling to enter Indian markets. As of now the Government has allowed
only 51 per cent FDI in the sector to ‘one-brand’ shops like Nike, Reebok etc. However,
other international players are taking alternative routes to enter the Indian retail market
indirectly via strategic licensing agreement, franchisee agreement and cash and carry
wholesale trading (since 100 per cent FDI is allowed in wholesale trading).
PERCENTAGE OF ORGANISED AND UNORGANISED RETAIL
ACROSS THE WORLD:

STRATEGIES, TRENDS AND OPPORTUNITIES 2007

Retailing in India is gradually inching its way toward becoming the next boom industry. The
whole concept of shopping has altered in terms of format and consumer buying behavior,
ushering in a revolution in shopping in India. Modern retail has entered India as seen in
sprawling shopping centers, multi-storied malls and huge complexes offer shopping,
entertainment and food all under one roof. The Indian retailing sector is at an inflexion point
where the growth of organized retailing and growth in the consumption by the Indian
population is going to take a higher growth trajectory. The Indian population is witnessing a
significant change in its demographics. A large young working population with median age of 24
years, nuclear families in urban areas, along with increasing workingwomen population and
emerging opportunities in the services sector are going to be the key growth drivers of the
organized retail sector in India.
GROWTH OF INDIAN RETAIL:

According to the 8th Annual Global Retail Development Index (GRDI) of AT Kearney,
India retail industry is the most promising emerging market for investment. In 2007, the
retail trade in India had a share of 8-10% in the GDP (Gross Domestic Product) of the
country. In 2009, it rose to 12%. It is also expected to reach 22% by 2010.

According to a report by Northbridge Capita, the India retail industry is expected to grow
to US$ 700 billion by 2010. By the same time, the organized sector will be 20% of the
total market share. It can be mentioned here that, the share of organized sector in 2007
was 7.5% of the total retail market.

The trends that are driving the growth of the retail sector in India are

 Low share of organized retailing

 Falling real estate prices

 Increase in disposable income and customer aspiration

 Increase in expenditure for luxury items (CHART)

Another credible factor in the prospects of the retail sector in India is the increase in the young
working population. In India, hefty pay packets, nuclear families in urban areas, along with
increasing working-women population and emerging opportunities in the services sector. These
key factors have been the growth drivers of the organized retail sector in India which now boast
of retailing almost all the preferences of life - Apparel & Accessories, Appliances, Electronics,
Cosmetics and Toiletries, Home & Office Products, Travel and Leisure and many more. With this
the retail sector in India is witnessing rejuvenation as traditional markets make way for new
formats such as departmental stores, hypermarkets, supermarkets and specialty stores. The
retailing configuration in India is fast developing as shopping malls are increasingly becoming
familiar in large cities. When it comes to development of retail space specially the malls, the
Tier II cities are no longer behind in the race. If development plans till 2007 is studied it shows
the projection of 220 shopping malls, with 139 malls in metros and the remaining 81 in the Tier
II cities. The government of states like Delhi and National Capital Region (NCR) are very upbeat
about permitting the use of land for commercial development thus increasing the availability of
land for retail space; thus making NCR render to 50% of the malls in India .
The total concept and idea of shopping has undergone an attention drawing change in terms of
format and consumer buying behavior, 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 centers, multi-storied malls and the huge complexes that offer shopping,
entertainment and food all under one roof. A large young working population with median age
of 24 years, nuclear families in urban areas, along with increasing workingwomen population
and emerging opportunities in the services sector are going to be the key factors in the growth
of the organized Retail sector in India. The growth pattern in organized retailing and in the
consumption made by the Indian population will follow a rising graph helping the newer
businessmen to enter the India Retail Industry. 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$ 175-200
billion by 2016. The Food Retail Industry in India dominates the shopping basket. The Mobile
phone Retail Industry in India is already a US$ 16.7 billion business, growing at over 20 per cent
per year. The future of the India Retail Industry looks promising with the growing of the market,
with the government policies becoming more favorable and the emerging technologies
facilitating operations.

India is being seen as a potential goldmine for retail investors from over the world and latest
research has rated India as the top destination for retailers for an attractive emerging retail
market. India vast middle class and its almost untapped retail industry are key attractions for
global retail giants wanting to enter newer markets. Even though India has well over 5 million
retail outlets, the country sorely lacks anything that can resemble a retailing industry in the
modern sense of the term. This presents international retailing specialists with a great
opportunity. The organized retail sector is expected to grow stronger than GDP growth in the
next five years driven by changing lifestyles, burgeoning income and favorable demographic
outline.

MAJOR RETAILERS IN INDIA:

PANTALOON
Pantaloon is one of the biggest retailers in India with more than 450 stores across the
country. Headquartered in Mumbai, it has more than 5 million sq. ft retail space located
across the country. It's growing at an enviable pace and is expected to reach 30 million
sq. ft by the year 2010. In 2001, Pantaloon launched country's first hypermarket ‘Big
Bazaar’. It has the following retail segments:

 Food & Grocery: Big Bazaar, Food Bazaar

 Home Solutions: Hometown, Furniture Bazaar, Collection-I
 Consumer Electronics: e-zone
 Shoes: Shoe Factory
 Books, Music & Gifts: Depot
 Health & Beauty Care: Star, Sitar
 E-tailing: Futurebazaar.com
 Entertainment: Bowling Co

TATA GROUP
Tata group is another major player in Indian retail industry with its subsidiary Trent,
which operates Westside and Star India Bazaar. Established in 1998, it also acquired
the largest book and music retailer in India ‘Landmark’ in 2005. Trent owns over 4 lakh
sq. ft retail space across the country.

RPG GROUP
RPG Group is one of the earlier entrants in the Indian retail market, when it came into
food & grocery retailing in 1996 with its retail Food world stores. Later it also opened the
pharmacy and beauty care outlets ‘Health & Glow’.
RELIANCE

Reliance is one of the biggest players in Indian retail industry. More than 300 Reliance
Fresh stores and Reliance Mart are quite popular in the Indian retail market. It's
expecting its sales to reach Rs. 90,000 cores by 2010.

AV BIRLA GROUP
AV Birla Group has a strong presence in Indian apparel retailing. The brands like Louis
Philip, Allen Solly, Van Heusen, and Peter England are quite popular. It's also investing
in other segments of retail. It will invest Rs. 8000-9000 cores by 2010.

RETAIL FORMATES IN INDIA

Modern retailing has entered India in form of sprawling malls and huge complexes
offering shopping, entertainment, leisure to the consumer as the retailers experiment
With a variety of formats, from discount stores to supermarkets to hypermarkets to
specialty chains.
However, kiranas still continue to score over modern formats primarily due to the
convenience factor. The organized segment typically comprises of a large number of
retailers, greater enforcement of taxation mechanisms and better labour law monitoring
system. It's no longer about just stocking and selling but about efficient supply chain
management, developing vendor relationship quality customer service, efficient
merchandising and timely promotional campaigns. The modern retail formats are
encouraging development of well-established and efficient supply chains in each segment
ensuring efficient movement of goods from farms to kitchens, which will result in huge
savings for the farmers as well as for the nation. The Government also stands to gain
through more efficient collection of tax revenues. Along with the modern retail formats,
the non-store retailing channels are also witnessing action with HLL initiating Sangam
Direct, a direct to home service. Network marketing has been growing quite fast and has
a few large players today. Gas stations are seeing action in the form of convenience
stores, ATMs, food courts and pharmacies appearing in many outlets.
In the coming years it can be said that the hypermarket route will emerge as the most
preferred format for international retailers stepping into the country. At present, there
are 50 hypermarkets operated by four to five large retailers spread across 67 cities
catering to a population of half-a-million or more. Estimates indicate that this sector will have the
potential to absorb many more hypermarkets in the next four to five years.

LIST OF RETAILERS THAT HAVE COME WITH NEW

FORMATES

RETAILER CURRENT FORMAT NEW FORMATES

Shopper stop Department Store Quasi-mall
Ebony Department Store Quasi-mall, Smaller outlets
Crossword Large Book Store Corner Shops
Pyramid Department Store Quasi-mall, Food retail
Pantaloon Own Brand Store Hypermarkets
Subhiksha Supermarket Considering moving to service
Vitan Supermarket Suburban discount store
Food world Food Supermarket Hypermarket
Glob us Department Store Small fashion store
Bombay Bazaar Aggregation of Karan’s
Efoodmart Aggregation of Karan’s
Metro Cash and Carry
S Kumar’s Discount store

Traditionally, the small store (kirana) retailing has been one of the easiest ways to
generate self-employment, as it requires minimum investments in terms of land, labour
and capital. These stores are not affected by the modern retailing as it is still considered
very convenient to shop. In order to keep pace with the modern formats, kiranas have
now started providing more value-added services like stocking ready to cook vegetables
and other fresh produce. They also provide services like credit, phone service, home
delivery etc.

The organized retailing has helped in promoting several niche categories such as
packaged fruit juices, hair creams, fabric bleaches, shower gels, depilatory products and
convenience and health foods, which are generally not found in the local kirana stores.
Looking at the vast opportunity in this sector, big players like Reliance and K Rahejas
has announced its plans to become the country's largest modern retainers by establishing
a chain of stores across all major cities.
Apart from metro cities, several small towns like Nagpur, Nasik, Ahmedabad,
Aurangabad, Sholapur, Kolhapur and Amravati as witnessing the expansion of modern
retails. Small towns in Maharashtra are emerging as retail hubs for large chain stores like
Pantaloon Retail because many small cities like Nagpur have a student population, lower
real estate costs, fewer power cuts and lower levels of attrition. However, retailers need
to adjust their product mix for smaller cities, as they tend to be more conservative than
the metros.

In order for the market to grow in modern retail, it is necessary that steps are taken for
Rewriting laws, restructuring the tax regime, accessing and developing new skills and
Investing significantly in India.

MERGER AND ACQUSITION ACTIVITY

India witnessed a record number of M&A deals in the first half of 2006, which were
Collectively worth US$ 25.6 billion. A significant number of deals have being carried out
In the Indian retail sector in the past few months in order to acquire a larger share in the
Growing domestic market and to compete against the prospective global and domestic
Players

THE TABLE BELOW SHOWS SOME RECENT DEALS THAT

HAVETAKEN PLACE IN THE INDIAN RETAIL SECTOR :

YEAR Acquired/JV Acquire Nature of Stake (%) Consideration(US$

company/Target
Business Millions)
2005 Liberty Shoes Future Group Retail(footwear) 51 3
2005 Indus-League Future Group Retail(clothing) 68 5
Clothing
2005 Odyssey India Deccan Leisure retail 100 14
Chronicle chain
Holdings
2005 Landmark Tata Trent Books, Music 74 24
2006 Bistro Hospitality TGI Fridays Restaurant 25 N/A
2006 Indus-League Etan Group, Women’s wear 50(JV) 8
Clothing France retiling
INVESTMENT POLICY AND INITIATIVES:

FDI Policy in the Retail Sector

India has kept the retail sector largely closed to outsiders to safeguard the livelihood of
Nearly 15 million small storeowners and only allows 51 per cent foreign investment in single brand
Retail with prior Government permission. FDI is also allowed in the wholesale
Business. Single-brand retailers such as Louis Vinton, Fendi, LLadro, Nike and Toyota can
Operate now on their own. Metro is already operating through the cash-and-carry wholesale
mode.

The policy makers continue to explore areas where FDI can be invited without hurting the
interest of local retail community. Government is considering opening up of the retail
trading for select sectors such as electronic goods, stationery, sports goods, and building
Equipment.

Foreign direct investment (FDI) in retail space, specialized goods retailing like sports goods,
electronics and stationery is also being contemplated. The Government has to walk a
tightrope to ensure a `level playing field' for everyone.

The policy of permitting 51 per cent FDI in single-brand product retailing has led to the
entry of only a few global brands such as Nike (footwear), Louis Vuitton (shoes, travel
accessories, watches, ties, textiles ready-to wear), Lladro (porcelain goods), Fendi (luxury
products), Damro (knock-down furniture), Argenterie Greggio (silverware, cutlery,
Traditional home accessories and gift items) and Toyota (retail trading of cars), into retail
trading. A 12-billion euro French luxury industry is also eyeing the domestic luxury segment
to make a presence through retailing directly.

Business models for entry in Indian markets

Due to the FDI restrictions the international players are looking for alternative avenues to
enter the Indian markets. However FDI restrictions in retailing have not deterred prominent
international players from setting up shops in India.

In recent developments, the Australian retail giant Woolworth Ltd made in innovative entry
in India’s retail space, with India’s Tata group. The Tata group has floated Infiniti Retail Ltd,
in venture with which will sell consumer goods and electronics across the country. Infiniti
Retail will be a 100 per cent subsidiary of Tata Sons and will receive an initial equity infusion
of Rs 4 billion. This Tata retail venture joined hands with Australian retail giant Woolworths
Ltd, which currently operates more than 2,000 stores in 12 different formats.
While Infiniti will own and run retail operations in India, Woolworths, which has attained
notable success in selling electronics and consumer goods through its Dick Smith
Electronics chain, will provide technical support and strategic sourcing facilities from its
global network.

At present entry into India’s retail sector can be done through three different routes. The
chart below shows the current formats permitted by the Government of India for the
international players.

Current entry options for

foreign players

• Most widely used entry route by multinational retailers

Franchise agreements • Fast food retailer Domino’s entered India through master
franchise root while Pizza Hut entered through regional
franchisee
• 100% FDI is allowed in wholesale trading which involves
Cash and Carry building of a large distribution infrastructure to assist local
wholesale trading manufacturers
• The wholesaler deals only with smaller retailers and not
consumers
• Metro AG of Germany was the first significant global
player to enter India through this route
• Foreign company enters into a licensing agreement with a
Strategic licensing domestic retailer
Agreements
• Mango, the Spanish apparel brand has entered India
through this route with an agreement with Pyramid,
Mumbai
• SPAR entered into a similar agreement with Radhakrishna
Foodland’s Pvt. Ltd

INDIAS NUMBER OF DOMESTIC GROCERY CHAINS AND EARLY FOREIGN

ENTRANTS RECENT TRENDS :

Retailing in India is witnessing a huge revamping exercise as can be seen in the graph

India is rated the fifth most attractive emerging retail market: a potential goldmine .
Estimated to be US$ 200 billion, of which organized retailing (i.e. modern trade) makes up 3
percent or US$ 6.4 billion

As per a report by KPMG the annual growth of department stores is estimated at 24%

Ranked second in a Global Retail Development Index of 30 developing countries drawn up by

AT Kearney.

Multiple drivers leading to a consumption boom:

o Favorable demographics

o Growth in income

o Increasing population of women

o Raising aspirations: Value added goods sales

Food and apparel retailing key drivers of growth

Organized retailing in India has been largely an urban


Phenomenon with affluent classes and growing number of double-income households.

More successful in cities in the south and west of India. Reasons range from differences in
consumer buying behavior to cost of real estate and taxation laws.

Rural markets emerging as a huge opportunity for retailers reflected in the share of the rural
market across most categories of consumption
o ITC is experimenting with retailing through its e-Choupal and Choupal Sagar rural
hypermarkets.

o HLL is using its Project Shakti initiative leveraging women self-help group’s to explore the
rural market.

o Mahamaza is leveraging technology and network marketing concepts to act as an aggregator

and serve the rural markets.
IT is a tool that has been used by retailers ranging from Amazon.com to eBay to radically
change buying behavior across the globe.

Retailing slowly making its presence felt.

 RETAIL SALES IN INDIA

OPPORTUNITIES AND CHALLENGES:

Investment Opportunities in the Retail Sector

AT Kearney’s study on global retailing trends found that India is the least competitive as
well as least saturated of all major global markets. This implies that there are significantly
low entry barriers for players trying to setup base in India, in terms of the competitive
landscape. The report further stated that global retailers such as Walmart, Carrefour,
Tesco and Casino would take advantage of the more favourable FDI rules that are likely
in India and enter the country through partnerships with local retailers. Other retailers
such as Marks & Spencer and the Benetton Group, who operate through a franchisee
model, would most likely switch to a hybrid ownership structure.

A good talent pool, unlimited opportunities, huge markets and availability of quality raw
materials at cheaper costs is expected to make India overtake the world's best retail
economies by 2042, according to industry players.

The retail industry in India, according to experts, will be a major employment generator
in the future. Currently, the market share of organised modern retail is just over 4 per
cent of the total retail industry, thereby leaving a huge untapped opportunity.

The Potential of the Indian Retail Sector:

The high growth projected in domestic retail demand will be fuelled by:
� The migration of population to higher income segments with increasing per capita
incomes
� An increase in urbanization
� Changing consumer attitudes especially the increasing use of credit cards
� The growth of the population in the 20 to 49 years age band

There is retail opportunity in most product categories and for all types of formats
� Food and Grocery: The largest category; largely unorganized today
� Home Improvement and Consumer Durables: Over 20 per cent p.a. CAGR
estimated in the next 10 years
� Apparel and Eating Out: 13 per cent p.a. CAGR projected over 10 years

Opportunities for investment in supply chain infrastructure: Cold chain and logistics.

India also has significant potential to emerge as a sourcing base for a wide variety of
goods for international retail companies
� Many international retailers including Wal-Mart, GAP, JC Penney etc. are already
procuring from India.

The sector is expected to see an investment of over $30 billion within the next 4-5 years,
Catapulting modern retail in the country to $175-200 billion by 2016, according to
Technopak estimates.
 Of the total organized retail market of Rs 550 billion, the business of fashion accounts
for Rs 300.80 billion, which translates into nearly 55 per cent of the organised retail
segment in the country.
Total fashion sector was estimated at Rs 1,914 billion and forms about 15 per cent of the
country's retail market of Rs 12,000 billion.
Commanding such a large chunk of the organised retail business in India, fashion
retailing has indeed been responsible for single-handedly driving the business of retail in
India.

Challenges in Retailing

The industry is facing a severe shortage of talented professionals, especially at the

middle-management level.

Most Indian retail players are under serious pressure to make their supply chains more
efficient in order to deliver the levels of quality and service that consumers are
demanding. Long intermediation chains would increase the costs by 15 per cent.
Lack of adequate infrastructure with respect to roads, electricity, cold chains and ports
has further led to the impediment of a pan-India network of suppliers. Due to these
constraints, retail chains have to resort to multiple vendors for their requirements,
thereby, raising costs and prices.

The available talent pool does not back retail sector as the sector has only recently
emerged from its nascent phase. Further, retailing is yet to become a preferred career
Option for most of India’s educated class that has chosen sectors like IT, BPO and
financial services.

Even though the Government is attempting to implement a uniform value-added tax

across states, the system is currently plagued with differential tax rates for various states
leading to increased costs and complexities in establishing an effective distribution
network.

Stringent labor laws govern the number of hour’s worked and minimum wages to be paid
leading to limited flexibility of operations and employment of part-time employees.
Further, multiple clearances are required by the same company for opening new outlets
adding to the costs incurred and time taken to expand presence in the country.
The retail sector does not have ‘industry’ status yet making it difficult for retailers to rise
finance from banks to fund their expansion plans Government restrictions on the FDI are leading
to an absence of foreign players resulting into limited exposure to best practices.

.
Non-availability of Government land and zonal restrictions has made it difficult to find a
good real estate in terms of location and size. Also lack of clear ownership titles and high
Stamp duty has resulted in disorganized nature of transactions.

THE FUTURE

The retail industry in India is currently growing at a great pace and is expected to go up to US$
833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018 at a
CAGR of 10%. As the country has got a high growth rates, the consumer spending has also
gone up and is also expected to go up further in the future. In the last four year, the consumer
spending in India climbed up to 75%. As a result, the India retail industry is expected to grow
further in the future days. By the year 2013, the organized sector is also expected to grow at a
CAGR of 40%.

CONCLUSITION

. In the 2005 India Economic Summit, delegates conveyed mixed message about FDI but one
final message was loud and clear that India’s retail development is inevitable. Most of the
organized retailers in India are harping on quality, service, convenience, satisfaction and
assured benefits to lure shoppers into the store. Retailers should create value for the consumer
and must decide suitable vehicle to deliver desired consumer value. No doubt that retail format
is one of the vehicles to deliver value proposition and also it helps to position the store in the
mind of target shoppers. Probably in a growing market no one finds difficulty in pulling
customer into store but that may not be sufficient to operate profitably. Retailers need to find
out what matches consumer requirement and offer better than competition. Retailers certainly
need to be innovative in designing the value proposition and deciding the format to deliver that
to the consumer. It is not all about deciding the format but all about serving the consumer
better, faster and at less cost. Retailers can use their store as an indicator of what they stand
for and what value they offer. Retailers have to out think consumer in providing service and
value. At this juncture, most of the retailers are concerned about growth in number of stores
rather than creating value for consumer. Some companies like Pantaloon Retail has gone one
step ahead to start e-tailing format along with brick and mortar formats. The most important
issue in e-tailing is credibility and trustworthiness of the supplier. If Pantaloon Retail India gets
the same credibility and trust it is able to find from current customer base it is highly probable
that the new format is going to be successful. Again some of the product categories books are
highly successful on internet as those categories require less feel and touch. Our conclusion is
that consumer is the focus of retail business and the retailers should serve the consumer
better, faster and at less cost.

The India Retail Industry is the largest among all the industries, accounting for over 10 per
cent of the country 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. But all of them have not yet tasted success because of the heavy initial
investments that are required to break even with other companies and compete with them.
The India Retail Industry is gradually inching its way towards becoming the next boom industry.