Executive Summary

Retailing is emerging as a sunrise industry in India and is presently the largest employer after agriculture. In the year 2004, the size of Indian organized retail industry was Rs 28,000 Crore, which was only 3% of the total retailing market. Retailing in its present form started in the latter half of 20thCentury in USA and Europe and today constitutes 20% of US GDP. It is the 3rd largest employer segment in USA. Organized retailing in India is projected to grow at the rate of 25%-30% p.a. and is estimated to reach an astounding Rs 1,00,000 Crore by 2010. The contribution of organized retail is expected to rise from 3% to 9% by the end of the decade. The projection for the current year ie 2005 is Rs 35,000 Crore. In India it has been found out that the top 6 cities contribute for 66% of total organized retailing. With the metros already been exploited, the focus has now been shifted towards the tier-II cities**. The 'retail boom', 85% of which has so far been concentrated in the metros is beginning to percolate down to these smaller cities and towns. The contribution of these tier-II cities to total organized retailing sales is expected to grow to 20-25%. In the year 2004, Rs 28,000 Crore organized retail industry had Clothing, Textiles & fashion accessories as the highest contributor (39%), where as health & beauty had a contribution of 2%. Food & Grocery contributed to 18% whereas Pharma had a contribution of 2%.

Introducton
Retailing is considered the world's largest industry with US $ 6.6 trillion sales annually. In India, retailing is considered the largest employer after agriculture employing over 8% of the population. India has the highest outlet population in the world with over 12 million outlets. The Indian Retail Industry is still evolving as an 'Industry', and it has a long way to go. The evolution of the Indian Retail market is quite interesting to be studied. It has its origins in the village weekly markets and melas, the convenience stores, the Khadi stores and the Cooperative stores before graduating to the present day forms of retailing. The retail sector in India can be broadly classified into the formal and the informal retail sectors. The informal retail sector typically consists of small-time retailers with tax evasions and non-conformance to labour laws. The formal retail sector, which typically consists of large retailers, ensures greater measures of tax enforcements and also a high level of labour usage monitoring. The retail market size in India is estimated to be around $180 billion. Retailing provides jobs to almost 15 percent of employable Indian adults and it is perhaps the largest contributor to India's GDP. But the flip side is that the average size of each of the retail outlets in India is only 50 square feet and though a large employer, the industry is very unorganized, fragmented and with a rural bias. India's status as a good IT hub for outsourcing by U.S. companies has led to young Indians between 20 to 24 years old taking up call center jobs straight out of college. This is a consumer base that typically lives at home, with the family. They have disposable income that is totally discretionary and about 20 to 30 percent higher than prevailing wages.

"We have tripled our sales in Bangalore city in the last three years," says Shumone Chatterjee, marketing director, Levi Strauss India. And he believes this is largely due to the effect of disposable income coming into the hands of the 18-22 age group employed in BPO jobs. The important thing is that most of the income earned is basically 'pocket money'. Many of the people in this segment live at home, so rent and food is taken care of. BPO is just one example. From retail to insurance entry level jobs are aplenty. IT firms added 55,000 mostly engineering graduates. Infosys alone recruited 10,000. This segment is very brand-conscious.

Global Scenario
Retail stores constitute 20% of US GDP & is the 3 rd largest employer segment in USA. China on the other hand has attracted several global retailers in recent times. Retail sector employs 7% of the population in China. Major retailers like Wal-Mart & Carrefour have already entered the Chinese market. In the year 2003, Wal-Mart & Carrefour had sales of US $ 70.4 Crore & US $ 160 Crore respectively. The global retail industry has traveled a long way from a small beginning to an industry where the world wide retail sales is valued at $ 7 x 10 5 Crore. The top 200 retailers alone accounts for 30 % of the worldwide demand. Retail turnover in the EU is approximately Euros 2,00,000 Crore and the sector average growth is showing an upward pattern. The Asian economies (excluding Japan) are expected to grow at 6% consistently till 2005-06. On the global Retail stage, little has remained same over the last decade. One of the few similarities with today is that Wal-Mart was ranked the top retailer in the world then & it still holds that distinction. Other than Wal-Mart's dominance, there's a little about today's environment that looks like the mid-1990s. The global economy has changed, consumer demand has shifted & retailers' operating systems today are infused with far more technology than was the case six years ago. Given below a list of World's top 15 retailers: DT Rank 04 1 Country of Origin US Company name Formats 2003 retail sales (US $ Crore) 25,632.9

Wal-Mart

France

Carrefour

Discount, Hypermarket, Supermarket, Superstore, Warehouse Discount, Hypermarket, Supermarket,

7,979.6

3 4

US Germany

Home Depot Metro

US

Kroger

UK

Tesco

US

Target

Netherlands Ahold

9 10 11

US Germany Germany

Costco Aldi Einkauf Rewe

12

France

Intermarche

Specialty, Convenience, Cash & Carry DIY 6,481.6 Hypermarket, 6,050.3 Superstore, Specialty, Convenience, Cash & Carry, Departmental, DIY, Food Service Discount, 5,379.1 Convenience, Supermarket, Super center, Warehouse, Specialty Department, 5,153.5 Hypermarket, Supermarket, Superstore, Convenience Department, 4,678.1 Discount, Super center Discount, 4,458.4 Hypermarket, Supermarket, Specialty, Convenience, Cash & Carry, Drug Warehouse 4,169.3 Discount, 4,006.0 e Supermarket Hypermarket, 3,893.1e Superstore, Super market, Specialty, Convenience, Cash & Carry, Departmental, DIY, Food Service, Discount, Drug Superstore, Super 3,747.2e market, Specialty,

13 14 15

US US US

Sears Safeway, Inc. Albertsons

Convenience, Cash & Carry, DIY, Food Service, Discount Department, mail 3,637.2 order, Specialty Supermarket 3,555.3 Convenience, Drug, 3,543.6 Supermarket e= estimate.

Indian Scenario
Retailing in India is the largest employer after agriculture. It employs almost 7% of the total work force in India and has a contribution of 14% to the national GDP. In the year 2004 , the size of Indian organized retail industry was Rs 28000 Crore, which was only 3% of the total retailing market. Organized retailing is projected to grow at the rate of 25%-30% p.a. and is estimated to reach an astounding Rs 1,00,000 Crore by 2010. The contribution of organized retail is expected to rise from 3% to 9% by the end of the decade. The projection for the year 2005 is Rs 35000 Crore. Though with a population of a billion and a middle class of 300 million (upper middle class= 40, Middle class =150 & lower middle class = 110), organized retailing is still at its infancy in India. The great Indian middle class is estimated to grow to over 60 Crore by 2010 making India one of the largest consumer markets of the world. It is projected that by the year 2010, 65% of the Indian population will be in the age group of 10-49 years, which makes the scenario even more attractive. India has the largest retail network with 1.2 Crore outlets but only 4% of them are larger than 500 sq. feet in size. USA on the other hand has 9 Lakh outlets catering to more than 13 times the total retail market size of India. Thus India has the highest number of outlets per capita in the world with a widely spread retail network but with the lowest per capita retail space (@ 2 sq.ft. per person). AT Kearney has ranked India as the 2nd most attractive retail market after Russia, in its Global Retail Development Index 2004 report. Retailing, one of the largest sectors in the global economy, is going through a transition phase in India. For a long time, the corner grocery store was the only choice available to the consumer, especially in the urban areas. This is slowly giving way to international formats of retailing. Let us look at the evolution process:

Detailing reasons why Indian organized retail is at the brink of revolution, the IMAGES-KSA report says that the last few years have seen rapid transformation in many areas and the setting of scalable and profitable retail models across categories. Indian consumers are rapidly evolving and accepting modern formats overwhelmingly. Retail Space is no more a constraint for growth. India is on the radar of Global Retailers and suppliers / brands worldwide are willing to partner with retailers here. Further, large Indian corporate groups like Tata, Reliance, Raheja, ITC, Bombay Dyeing, Murugappa & Piramal Groups etc and also foreign investors and private equity players are firming up plans to identify investment opportunities in the Indian retail sector. The quantum of investments is likely to skyrocket as the inherent attractiveness of the segment lures more and more investors to earn large profits. Investments into the sector are estimated at INR 2000 - 2500 Crore in the next 2-3 years, and over INR 20,000 Crore by end of 2010.

Few of India's top retailers are:

1. Big Bazaar-Pantaloons: Big Bazaar, a division of Pantaloon Retail (India) Ltd is already India's biggest retailer. In the year 2003-04, it had revenue of Rs 658.31 crores & by 2010; it is targeting revenue of Rs 8,800 Crore. 2. Food World : Food World in India is an alliance between the RPG group in India with Dairy Farm International of the Jardine Matheson Group. 3. Trinethra : It is a supermarket chain that has predominant presence in the southern state of Andhra Pradesh. Their turnover was Rs 78.8 Crore for the year 2002-03. 4. Apna Bazaar : It is a Rs 140-crore consumer co-operative society with a customer base of over 12 lakh, plans to cater to an upwardly mobile urban population.

5. Margin Free : It is a Kerala based discount store, which is uniformly spread across 240 Margin Free franchisees in Kerala, Tamil Nadu and Karnataka. Wholesale trading is another area, which has potential for rapid growth. German giant Metro AG and South African Shoprite Holdings have already made headway in this segment by setting up stores selling merchandise on a wholesale basis in Bangalore and Mumbai respectively. These new-format cash-and-carry stores attract large volumes from a sizeable number of retailers who do not have to maintain relationships with multiple suppliers for all their needs.

Retailing in Kerala
Retailing in Kerala is a subject too subtle and relevant; as Kerala is know of more as a consumer state rather than a producer state. The introduction of Margin Free Markets have turned out to be grand success resulting in it becoming one of the largest retail chains in the country.

GROWTH RATE
The scope of the Indian retail market is immense for this sector is poised for the highest growth in the next 5 years. The India retail industry contributes 10% of the countries GDP and its current growth rate is 8.5%. In the Indian retail market the scope for growth can be seen from the fact that it is expected to rise to US$ 608.9 billion in 2009 from US$ 394 billion in 2005. The organized retailing sector in India is only 3% and is expected to rise to 25- 30% by the year 2010. There are under construction at present around 325 departmental stores, 300 new malls, and 1500 supermarkets. This proves that there is a tremendous scope for growth in the Indian retail market. The growth of scope in the Indian retail market is mainly due to the change in the consumers behavior. For the new generation have preference towards luxury commodities which have been due to the strong increase in income, changing lifestyle, and demographic patterns which are favorable. The scope of the Indian retail market have been seen by many retail giants and thats the reason that many new players are entering the India retail industr

SEGMENTS
Segments in Indian Retail Industry

1. 2. 3. 4. 5. 6.

Food and Grocery Specialty Retailing Non-Store Retailing Fashion and Apparel General Merchandise Retailing Pharma Retailing

Food & Grocery In 2007, the food and grocery segment was valued at Rs 7,920 billion, and it enjoyed a dominant market share of 62% in the total Indian retail sector; however, there was a completely opposite scenario in the organised retail segment. The food and grocery segment is the second-largest in the organised retail and has an 11.5% share that is valued at Rs 90 billion. Initially this segment grew at a slow pace due to the presence of an established retailing system led by kirana stores, a highly-fragmented food supply chain, and the lack of a developed food processing industry. Nilgiri was one of the earliest retailers that started a chain or stores in different parts of the country. However, the growth of Nilgiris stores was limited as it was challenged by a weak supply chain and an under-developed food processing industry. Postliberalisation, organised retailers saw a renewed opportunity in the food and grocery segment. Current Challenges: Increasingly sophisticated demands from suppliers and customers require the ability to forecast demand accurately and provide the right category mix. Access to accurate information on real-time inventory levels at stores and distribution centers is critical for intelligent replenishment and to get fresh food offers right. What TCS Provides: Advanced technology solutions that optimize prices, incorporate intelligent inventory planning, and implement high-powered POS systems to speed checkout and enhance customer experience. Monitoring and analyzing real-time inventory, forecasting accurate sales,

optimizing store and shelf replenishment to reduce stock outs, and providing advanced customer analytics: We help food and grocery retailers do all of the above in ways that optimize costs and improve productivity. Specialty Retailing Current Challenges: Changing consumer demands, short product life cycles and higher customer expectations combined with managing complex supply chains and competition from exclusive brands and mass merchandisers What TCS Provides: Winning competitive strategies that help specialty retailers meet unique challenges pertaining to their niche segment, and that drive real business results. TCS helps identify the most effective technology to respond to consumer demands in real-time, differentiate products, optimize logistics costs and provide outstanding customer service through multiple channels.

Non-Store Retailing Current Challenges: Increasingly well-informed consumers are demanding higher value for a lower cost through a variety of new channels, spotlighting e-tail. What TCS Provides: Technology solutions to drive online retailing business that create synergy between online and offline value propositions. Our business and technology expertise helps you succeed in your online initiatives. From helping you create effective, user-friendly, and secure websites to managing effective supply chains and offering comprehensive sets of IT services for B2B and B2C sites and data management solutions, we help you provide an engaging experience for online shoppers that ensures customer loyalty and provides a distinct competitive edge. Fashion & Apparel

Current Challenges: Changing trends, short life cycle products, fluctuating seasonal demands, technology evolution and high customer churn often require that fashion retailers transform their infrastructure and processes. Managing complex supply chains, real-time collaboration, advanced analytics to forecast demand for short life cycle products and new product introductions are all mission-critical. What TCS Provides: We understand the challenges in fashion and apparel retailing and provide technology solutions that will help you enhance customer responsiveness and introduce new products faster. We also offer advanced data analytic solutions to forecast market trends and consumer demands and comprehensive product life cycle management solutions. From realtime collaboration of supply chain entities to merchandizing solutions around price optimization, we help you solve complex business problems and drive real business results. General Merchandise Retailing Current Challenges: Increasing competition, reduced brand loyalty and shrinking margins are just few of the reasons that general merchandize retailers must enhance their supply chain efficiencies, improve customer analytics and excel in service delivery. Other priorities include improving demand forecasting to optimize stock levels and enhancing customer knowledge through data analysis to target the right customer segments. What TCS Provides: We work with the leading retail companies to help you optimize merchandize management. From supply chain automation, CRM and data analysis to ecommerce solutions to comprehensive set of store solutions and customer support solutions, we provide your enterprise with the means to collaborate and streamline operations, enhance customer experience across multiple retailing channels and improve synergy across assortment of product categories. Pharma Retailing In 2007, the pharmaceuticals market had a 3.5% share and was valued at Rs 488 billion in the total retail market; however, its share in the organised retail market accounted for merely 2.0% share at Rs 15.4 billion during the same period. The organised pharmaceutical retailer is known

to implement innovative concepts and global standards to provide customers with an experience that is completely different from what an unorganised retailer offers. Margin Free Markets Margin Free Markets is the largest retail chain in the state of Kerala and one of the leading retail chains in India. The first outlet of this chain started functioning on 26th January 1994 at Thiruvananthapuram. There are currently more than 275 franchisees of Margin Free Markets spread all over south India. The outlets are franchises and are not actually owned by the chain. The Consumer Protection & Guidance Society currently control margin free markets, which is a registered charitable institution that started functioning in 1993. The consumers are assured of quality, quantity and the fair price of the goods sold through the Margin Free Markets. Any retailer can upgrade his shop into a Margin Free outlet, by sending in an application to this society. If his application is accepted, he has to make the necessary investment required. These shops deal in the entire gamut of goods required by a home for its monthly consumption, viz., grocery, food and non-food FMCG items, fruits and vegetables, consumer goods & household articles. Margin Free outlets are typical discount stores, offering one-stop-shop convenience and self-service facility at significant discount to its customers. Most of these customers, in time turn out to be its permanent customers, by taking discount cards, which permit them to obtain larger discounts than the non-card holders. The necessity to offer protection against the rising prices gave birth to the idea of 'Margin Free Markets'. An enthusiastic entrepreneur named Mr. N. Ravikumar conceived the idea. The idea turned out to be an instant success in Kerala especially because Kerala is more of 'consumer' state than a 'producing' state. Kerala depends on her neighbouring states for her consumer needs. Due to the large number of intermediaries involved and the transportation costs, the prices are high and there is a wide fluctuation in prices of groceries, fruits and vegetables. Groceries and FMCG goods are brought directly from the production units of the neighboring states. In the process of direct purchase from farmers and manufactures, the intermediaries are removed and a part of the margin or 'profits' earned is disbursed among the consumers. The distribution to the different outlets under the chain is taken as a collective responsibility and is done with the objective to reduce the total transportation costs. The baseline of the chain of supermarkets run by the society is `making consumer the king'. " The wide acceptance gained by this concept over a very short span of time speaks for itself," says R. Gopakumar, the founderpresident and one of the key members of the Society. And when one juxtaposes the fact that the people of Kerala are one of the most price and quality conscious consumers in the country, the larger impact of this movement dawns upon us. From a solitary shop in downtown Thiruvananthapuram, the society has grown into a full-fledged retail supermarket chain with a presence all over Kerala. "While thousands of retailers and stockists slug it out in the market place to lure the consumer back through lower prices, one thing is clear for the moment in Kerala. The consumer will definitely have the last laugh! " www.indiainfoline.com June 30, 2000. Though the landscape of Retailing in Kerala has changed to a very large extend it still holds true, to a large extend even today.

Food World Food World is one of the biggest retail chains in India. The RPG group opened the first Food World outlet on May 9 1996 at Chennai, which was a 2400 square feet store. It is the only national chain, having Foreign Direct Investment to the extent of 49% that is permitted in India. Now Food World, operates as a 51:49 joint venture with Dairy Farm International of the Jardine Matheson Group, a US $ 4.5 billion retail giant operating in the Asia-Pacific markets with the requisite experience. Food World has decided to concentrate more on Food World has decided to concentrate more on local areas rather than to go for a nationwide presence in its expansion plans at the beginning. South India was chosen, with focus on Bangalore and Chennai and later in Hyderabad. They identified areas within the city with more than 4000 households in a 2kilometer radius with an average monthly income more than Rs. 4000. The important variables considered while setting up an outlet are choosing the right location, sourcing the merchandise and recruiting a trained workforce. A typical store is between 3000-3500 sq. ft. in size and carries about 5500 items. Food world handles on average 600 customers per day per store, which translates to 1.5 million transactions per month. It is estimated that the chain serves more than three lakh families. Ms. Mala Morris, Manager-Marketing of Food World says that as on 1st November 2003, Food World has 89 outlets spread across Tamil Nadu, Karnataka, Andhra Pradesh, Kerala and Maharashtra (Pune). Speaking on the product portfolio, she said that, "Our strategy is to provide all the monthly household requirements under one roof. Our product Portfolio includes grocery of all kinds, fresh foods viz., fruits and vegetables in fresh/chilled/frozen form, food that can be directly consumed, food and non-food FMCG products, general merchandise required in homes like buckets, cups, shelves etc. Indian Made Foreign.Liquor is also sold at certain outlets. " Speaking on the pricing strategy followed, she said, " We follow the strategy to sell around 100-120 items at any point of time at below Maximum Retail Price (MRP) rates. These are generally the key necessary items or the items for which the customer attaches more value. In addition there are also lots of schemes and offers to attract and retain customers". "For procurement we follow a strategy of 'Hub and Spoke". The purchasing for each state is done collectively to reduce costs. The distribution to each outlet is done by Food World in such a way as to reduce the total handling costs." To source its daily requirement of fruits and vegetables, Food World participates in the early morning auctions at the major wholesale markets and has a set of suppliers who then grade, clean, pack and label the products in time for early morning dispatch to the stores. At peak season, the Fruit & Vegetable shelf in a Food World store stocks around 125 items; making it the widest range available under one roof in this category. Food World's share of the organized retail market in the cities in which it operates is 62%, clearly a dominant share. The firm expects the number of Food World stores to increase to 125 by the end of 2005. A smaller version, Food World Express is also planned to be launched in future. Supply Co

The Kerala State Civil Supplies Corporation (Supplyco), is a statutory body established in 1974. It procures rice, wheat products, sugar, pulses, vegetables and a range of consumer goods independently from the open market and distributes them through a network of 663 retail outlets called Maveli Stores, 11 supermarkets in district headquarters and 21 mobile Maveli vans operating on designated routes. The Government decides the price of articles sold by Supplyco through these shops, and has used it as a highly effective mechanism, cutting out middlemen and controlling prices in the open market. Its effects on the market are most evident during the festival seasons. It is a festival that remembers the golden reign of the legendary King Mahabali, during whose reign Kerala is believed to have prospered. Significantly, the Kerala State Civil Supplies Corporation (Supplyco), through its Maveli chain of retail stores, has contributed to bringing back those golden days by assuring fair price, quality products and insulation against evil trade practices. Maveli offered a new experience to Keralites, which helped it and Supplyco become household names in no time. Quality products and subsidised pricing are the twin advantages that Supplyco extends to the consumer. E tendering, introduced by the Corporation, enables participation of more tenders from anywhere in the world, thereby increasing competition. This ensures the entry of genuine suppliers from the production centres of other States. The introduction of a payment system at the receiving depot itself also enables spot payment to suppliers. The supplier will get ready payment on the same day as delivery of goods through a demand draft couriered to them. This reduces unnecessary delay and complexity in payment procedure, which again results in the reduction of purchase cost. The Kerala State Civil Supplies Corporation ( Supplyco ) has introduced the privilege card facility in Supplyco supermarkets and Labham fair-price shops from the first week of April 2005. An official spokesman said the card would be given free of cost to those who make purchases for Rs. 500 and above. Others would have to pay Rs 5 for the card. The cardholders will get a discount of 2 per cent for every purchase made. Jewellry Jewellery retail is another major part of the retailing business in Kerala. The leaders in this business include, Allappat Jewellers, Allukas Jewellers, Josco Fashion Jewellers, and Thrissur Jewellers among many others. Each of these Jewellers can be considered as retail chains as they have outlets in different parts of the State, the neighbouring states and some even in the Middle East. Automobiles In the automobile segment, the first real retailer could be thought of as Benz automobiles who started off in 1978, Now the state can boast of a host of retailers specialising in automobiles including big names like Indus Motors, Maraikar Motors, and Kulathungal Motors among others.

Retailing includes all activities involved in selling goods or services directly to final consumers for personal, non-business use. A retailer or retail store is any business enterprise whose sales volume comes primarily from retailing. 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 store, on the street, or in consumer's home). There are 3 types of retailers: 1. Store retailer 2. Non Store retailer 3. Retail Organization From the assortment point of view, Store retailers* are of 5 types: 1. Specialty Store 2. Departmental Store 3. Super market 4. Convenience Store 5. Discount Store * = Definition of the store retailer types is provided in the glossary. From customers service point of view: 1. Self-service retailing: Many customers are willing to carry out their own locate-compareselect process to save money. 2. Self-selection retailing : Customers find their own goods, although they can ask for assistance. 3. Limited service retailing: These retailers carry more shopping goods, and customers need more information and assistance. The stores also offers services such as credit & merchandisereturn privileges. 4. Full service retailing: Salespeople are ready to assist in every phase of the locate-compareselect process. Although majority of goods & services is sold through stores, non-store retailing has been growing much faster than store retailing.

Major non-store retailer types: 1. Direct Selling: It deals with door-to-door or at home sale parties i.e. it involves one-to-one or one-to-many selling. Example > Eureka Forbes, Amway, Mary Kay Cosmetics. 2. Automatic Vending: Example > ATM 3. Buying services: Is a store less retailer serving a specific clientele-usually employees of large organizations-who are entitled to buy from a list of retailers who have agreed to give them discounts in return for membership. Example > Amazon.com 4. Direct marketing: It involves direct response marketing. The different forms of direct marketing are: Direct mail, catalog marketing, telemarketing, television direct response marketing and electronic shopping. Example: Dell Computers Retail Organization mainly falls into 4 major categories: 1. Corporate chains: Example > Pantaloons, Westside 2. Retail Co-operative: Example > Amul, Samavaika, Khadi Gram Yudog 3. Consumer Co-operative: Example > Apna Bazar 4. Franchise Organization: Example > Monginis, Caf Coffee day. 2. Specialty Store: Narrow product line with deep assortment, viz apparel stores, book stores etc. A clothing store would be a single line store, men's clothing store would be limited line store & men's custom-shirt store would be a super specialty store. Example: The limited, The Body Shop. Departmental Store: Several product lines-typically clothing, household goods, home furnishings- with each line operated as a separate department managed by specialist buyers or merchandisers. Example: Sears, Bloomingdale's. Supermarkets: Relatively large, low-cost, low-margin, high volume, self-service operation designed to serve total needs for food, laundry & household maintenance products. Example: Kroger, Safeway. Convenience Stores: Relatively small store located near residential area, open long hours, seven days a week and carrying a limited line of high-turnover convenience products at slightly higher prices. Example: 7-Eleven, Circle K.

Discount Store: Standard merchandise sold at lower prices with lower margins and higher volumes. True discount stores regularly sell merchandise at lower prices and offer mostly national brands. Example: Wal-Mart, Kmart. Off-price retailer: Merchandise bought at less than regular wholesale prices & sold at less than retail; often-leftover goods, overruns and irregulars obtained at reduced prices from manufacturers or other retailers. Factory outlets are owned and operated by manufacturers and normally carry the manufacturer's surplus, discontinued or irregular goods. Example: Mikasa(dinnerware), Dexter (shoes) Independent off-price retailers are owned & run by entrepreneurs or by divisions of larger retail corporations. Example: T.J.Maxx, Filene's Basement. Warehouse clubs (or wholesale clubs) sell a limited selection of brand name grocery items, appliances, clothing and other goods sold at deep discounts to members who pay an annual membership fees. Warehouse clubs serve small businesses & group members from government agencies, nonprofit organizations and some large corporations. They operate in huge, lowoverhead, warehouse like facilities & offer few frills.They offer rock bottom prices- typically 20% to 40% below super market and discount stores prices but make no home deliveries and accept no credit cards. Example: Sam's Clubs, Max Clubs. Superstore: Averages 35,000 square feet of selling space traditionally aimed at meeting consumers' total needs for routinely purchased food and non food items. Usually offer services such as laundry, dry cleaning, shoe repair, check cashing & bill paying. A new group called "category killers" carries a deep assortment in a particular category & a knowledgeable staff. Example: Borders books & Music, IKEA. Combination stores are a diversification of the supermarket store into the growing drug-andprescription field. Combination food & drug stores average 55,000 square feet of selling space. Example: Jewel & Osco stores. Hypermarkets range between 80,000 and 220,000 square feet and combine supermarket, discount & warehouse retailing principles. Product assortment goes beyond routinely purchased goods & includes furniture, large & small appliances, clothing items and many other items. Bulk display & minimum handling by store personnel with discounts offered to customers who are willing to carry heavy appliances and furniture out of the store. Hypermarkets originated in France.

Example: Carrefour and Casino (France), Pyrca, Continente and Alcampo (Spain), Meijer's (Netherlands).

OPPORTUNITY
The sector offers employment opportunity to educated youth KOCHI: After a silent revolution that ushered in multifarious changes in telecom, it is apparently the retail sector that may witness a transformation. The wind is already blowing and the entire scenario is set for a rapid change in the months ahead. While the local traders are afraid of being wiped out in the huge retail wave set to lash the Indian shores, international giants such as Wal-Mart are said to be eying the large consumer market in India. Indian companies too have realised their strengths and have launched initiatives before the foreign giants start exerting their influence on the internal retail segment. Reliance has already launched a chain of retail outlets in Andhra Pradesh and is planning to extend the activity to other States. The company will open its outlets in Kerala in January, according to Anil Kumar, Head of Reliance Retail, Kerala. Mr. Kumar said good opportunity awaited the people of Kerala in the opening up of the retail segment. Neither heavy industries that polluted the environment nor projects that needed large tracts of land were suitable for Kerala. A well-spread retail chain would go hand in hand with Kerala's economy, he said. The State's strength lies in its human resources. The growth of retail sector would provide an opportunity to employ hundreds of youngsters. "The employability of those who have passed 10th class and 12th class will increase. Children of low income groups will be beneficiaries", he said. Reliance Retail was planning to recruit 8,000 people in one year in Kerala, he said. Quoting surveys conducted in Kerala, he said there had been 100 per cent increase in the number of students who had completed secondary education in the last five years. Thus, offering employment to this category would serve a social purpose, he said. The company started the recruitment drive, but was finding it difficult to get experienced candidates for higher cadres. Once this sunrise sector achieved the projected growth, it would effectively reduce unemployment by 5 per cent in the country, he said. The company would recruit more than 8 lakh all over India by 2010. Trinetra Super Retail Limited, a food and retail chain which started operations in Kochi, was keen on expanding its activity to various other locations in the State. The group is planning to become the largest retail chain in Kerala, according to a top executive of the group. The group, established in 1986, bought over Fabmall India Private Limited, a Bangalore-based retail chain in 2004. Starting with a modest turnover of Rs.158 lakh, the group moved up to a level of Rs.17,000 lakh by March, 2006, according to company sources. This perhaps

indicated the potential of the retail sector. The growth of the retail sector would spur development in allied sectors like logistics and cold storage. It was pointed out that the retailers were keen to ensure an efficient food supply chain and it would result in tie-ups with transporters. A chain of suppliers would support the retail giant and this situation was expected to provide a splendid opportunity for the local suppliers. The rise of the retail sector will also reflect in the cargo traffic to various places, according to experts. Apart from the internal traffic, the cargo movement from abroad may move up because of the demand for international brands. The Gulf Air freighters operating from destinations in the Gulf countries to South India were recording growth, according to Rajeev Nambiar, the airline's General Manager. Though the consignments cater to different sectors, the consumer market could be considered as the driving force behind the growth, according to experts. Not withstanding the winds of change in the sector, many among the established traders are apprehensive of their future. The traders under the banner of Kerala Samsthana Vyapari Vyavasayi Samithy chalked out a path of agitation against the opening up of the sector. About 5 crore retailers presently earn a living out of the trade and they have a bleak future according to the Samithy. Retail sector will create 50,000 jobs a year: Study (News Paper Report) back to top

THE size of the retail market in the country is projected to more than double by 2008 growing at around 36 per cent every year till 2008. Thus the overall size would be Rs 14,79,000 crore by 2008 from its current size of Rs 5,88,000 crore, according to a Study conducted by The Associated Chambers of Commerce and Industry of India ( Assocham ). The size of the organised sector retailing will witness about three-fold growth which will balloon to Rs 15,000 crore by end of 2008 from its present estimated size of Rs 5,000 crore, says the study. According to the Chamber, unorganised retailing would continue to have its edge over organised retailing till the time foreign direct investment is allowed in the sector. Initiatives of the Central and State Governments like allocation of land at concessional rates, grants of loans at liberalised interest rates to promoters of shopping malls as also rationalisation of state levies are prime factors that will aggressively inspire entry of organised sector into retailing in the next few years, says the study. According to Chamber estimates, the retail sector will create 50,000 jobs a year in the coming five years. The retail sector is the second largest source of employment and the job market is hugely receptive to this with more and more business schools focusing on the sector and large retailers setting up retail academies. The study points out that franchising will also emerge as a popular mode of retailing in the coming years and will lead to a proliferation of brands with foreign and Indian companies acquiring a strong brand equity for their products. Franchising has been growing at the rate of 14-16 per cent since 1999. In 2003-04, there were over 6,000 franchised outlets. The other major retailing organisation format `chain stores' in India will also multiply in future. In 2003-04, there were about 2,500 chain stores. Among the various organisational formats, sales of chain stores grew at the

fastest pace, with sales growth during 1999-2003-04 averaging 28 per cent per year.

Trends Affecting Retail Businesses:

- Mobile marketing and social media - Flat panel displays are at an all time low cost - Demise of some larger chains - Economy driven changes in consumer buying power and behavior; slow recovery - Reinvigoration of credit card purchasing - Stop'n'Shop are experimenting with shopping wands

1. Growth Strategy. Consumers, not products or channels, create the basis for growth strategies. 2. New Retail IT Model. The Omni-Channel Consumer directs a new Retail IT model for the industry O3. 3. Innovative & Efficient. Retailers will race to innovate and will operate more efficiently. 4. Synchronicity. Retailers will synchronize the supply chain with the clock speed of their customers. 5. Brand Experiences. Retailers will create great brand experiences by enabling engaged employee experiences. 6. Customer Engagement. Planning paradigms will begin to evolve to support genuine customer brand engagement strategies. 7. Assortment Planning. Continuous assortment planning (AP) orchestrated for space becomes the planning hub. 8. Store Evolution. The store evolves welcome to the Omnichannel Store.

9. Social Conversations. Customer experience improvements that boost online conversion will go beyond the web store. 10. Delivery Models. eCommerce delivery models will fragment.

SWOT Analysis A SWOT analysis of the Indian organized retail industry is presented below: Strength: 1. Retailing is a " technology-intensive" industry. It is technology that will help the organized retailers to score over the unorganized retailers. Successful organized retailers today work closely with their vendors to predict consumer demand, shorten lead times, reduce inventory holding and ultimately save cost. Example: Wal-Mart pioneered the concept of building competitive advantage through distribution & information systems in the retailing industry. They introduced two innovative logistics techniques cross-docking and EDI (electronic data interchange). 2. On an average a super market stocks up to 5000 SKU's against a few hundreds stocked with an average unorganized retailer. Weakness 1. Less Conversion level : Despite high footfalls, the conversion ratio has been very low in the retail outlets in a mall as compared to the standalone counter parts. It is seen that actual conversions of footfall into sales for a mall outlet is approximately 20-25%. On the other hand, a high street store of retail chain has an average conversion of about 50-60%. As a result, a stand-alone store has a ROI (return on investment) of 25-30%; in contrast the retail majors are experiencing a ROI of 8-10%. 2. Customer Loyalty: Retail chains are yet to settle down with the proper merchandise mix for the mall outlets. Since the stand-alone outlets were established long time back, so they have stabilized in terms of footfalls & merchandise mix and thus have a higher customer loyalty base. Opportunity

1. The Indian middle class is already 30 Crore & is projected to grow to over 60 Crore by 2010 making India one of the largest consumer markets of the world. The IMAGESKSA projections indicate that by 2015, India will have over 55 Crore people under the age of 20 - reflecting the enormous opportunities possible in the kids and teens retailing segment. 2. Organized retail is only 3% of the total retailing market in India. It is estimated to grow at the rate of 25-30% p.a. and reach INR 1,00,000 Crore by 2010. 3. Percolating down : In India it has been found out that the top 6 cities contribute for 66% of total organized retailing. While the metros have already been exploited, the focus has now been shifted towards the tier-II cities. The 'retail boom', 85% of which has so far been concentrated in the metros is beginning to percolate down to these smaller cities and towns. The contribution of these tier-II cities to total organized retailing sales is expected to grow to 20-25%. 4. Rural Retailing: India's huge rural population has caught the eye of the retailers looking for new areas of growth. ITC launched India's first rural mall "Chaupal Saga" offering a diverse range of products from FMCG to electronic goods to automobiles, attempting to provide farmers a one-stop destination for all their needs." Hariyali Bazar" is started by DCM Sriram group which provides farm related inputs & services. The Godrej group has launched the concept of 'agri-stores' named "Adhaar" which offers agricultural products such as fertilizers & animal feed along with the required knowledge for effective use of the same to the farmers. Pepsi on the other hand is experimenting with the farmers of Punjab for growing the right quality of tomato for its tomato purees & pastes. Threat 1. If the unorganized retailers are put together, they are parallel to a large supermarket with no or little overheads, high degree of flexibility in merchandise, display, prices and turnover. 2. Shopping Culture: Shopping culture has not developed in India as yet. Even now malls are just a place to hang around with family and friends and largely confined to window-shopping.

CHALLENGES Automatic approval is not allowed for foreign investment in retail. Regulations restricting real estate purchases, and cumbersome local laws . Taxation, which favors small retail businesses . Absence of developed supply chain and integrated IT management.

 Lack of trained work force. Low skill level for retailing management. Pricing pressures increased supply-chain complexity consolidation market evolution financial volatility have led pharmaceutical retail companies to invest in technology solutions that help them track real-time data on customer drug usage, improve compliance, streamline operations and stay ahead of competition.

Conclusion The future of Retailing in Kerala looks bright, with the proposed entry of majors like Hasbro Clothing Pvt Ltd (Genesis and Basics) and many others. The government of India is already thinking of allowing FDI of upto 76% in the grocery and food segment of the retail chains. According to governmental Estimates, retailing is growing at a rate of 5.7% at the national level, even though the organised retail sector is just 3% of the total industry. This would intern generate good revenues for the companies and is likely to affect the lifestyle of the people as Kerala is know as a consumer state rather than a producer state.

To conclude, it can be said that though the global retail industry has reached its maturity, the Indian retail industry is still at its infancy. But with the huge potentiality existing in the Indian market, it is expected to grow in leaps and bounds in the near future. Instead of comparing the total global retail industry with the Indian retail industry, lets compare Wal-Mart alone with the Indian retail industry & put forward few interesting facts: 1. Retail Sales of Wal-Mart for the year 2003 was US $ 25,632.9 Crore; higher than the size of Indian retail industry. 2. The size of any Wal-Mart store is much higher than the size of any existing shopping mall in India.

3. Wal-Mart has over 4,800 stores, which is unparallel to any of the India's large format store. 4. New stores opened annually by Wal-Mart are about 420, much higher than all organized Indian retailers put together. 5. The sales per hour of $2.2 Crore are incomparable to any retailer in the world. 6. Wal-Mart has around 30,000 suppliers throughout the world and more than 600,000 SKU's on its web site, a number that cannot be compared. 7. Daily customers are about 1.57 Crore (almost equivalent to Mumbai's entire population). 8. Time between each Barbie Sale at Wal-Mart is just two seconds (same rate at which babies are produced in India!)

Overall, it can be said that " Retail Industry" in India will emerge as one of the best 5 Business sectors in this decade.