Indian Retail Industry

INDIAN RETAIL INDUSTRY ­ insights  INDIA – A Vibrant Economy & Resplendent Market · 4 th Largest economy in PPP terms after USA, China & Japan · To be the 3 rd largest economy in terms of GDP in next 5 years. · 2 nd fastest growing economy in the world. · The US $ 580 billion economy grew 8.2 percent in the year 03-04 · Among top 10 FDI destinations · Stable Government with 2 nd stage reforms in place · Growing Corporate Ethics (Labour laws, Child Labour regulations, environmental protection lobby, intellectual and property rights, social responsibility). · Major tax reforms including implementation of VAT. · US $ 130 billion investment plans in infrastructure in next 5 years · 2 nd Second most attractive developing market, ahead of China · 5th among the 30 emerging markets for new retailers to enter A country with the largest young population in the world- over 867 million people below 45 years of age! More English speaking people in India than of in the whole of Europe 300 million odd middle class - the Real consumers - is catching the attention of the world With over 600 million effective consumers by 2010 India to emerge as one of the largest consumer markets of the world by 2010. Retailing in India Total Consumer Spend in the Year 03-04 – INR 9300 billion ( USD 375 billion) growing over 5% annually Retail sales – 55% at INR 280 billion (USD 205 billion) Organised Retail – Only 3% but growing at 30% Organised retail to cross INR 1000 billion mark by 2010 INR 200 billion investment in the pipeline Top 6 cities account for 66% of total organized retailing. Overwhelming acceptance of modern retail formats. Fashion drives organized retail. 2004 figures : Organised retail : Rs. 280 billion Clothing, Textiles & Fashion accessories: 39% Footwear 9% Jwellery & watches 7% Mobile hand sets & accessories 3%

Health & Beauty (including services) 2% Food & Grocery 18% Durables 13% Books, Music & Gifts 3% Home 3% Pharma 2% Entertainment 1% 2005 Projection for Organised Retail – Rs. 350 billion Indian Retail – Where it stands Five Reasons why Indian Organized Retail is at the brink of Revolution : > Scalable and Profitable Retail Models are well established for most of the categories > Rapid Evolution of New-age Young Indian Consumers > Retail Space is no more a constraint for growth > Partnering among Brands, retailers, franchisees, investors and malls > India is on the radar of Global Retailers Suppliers Looking Ahead Many strong regional and national players emerging across formats and product categories Most of these players are now geared to expand far more rapidly than the initial years of starting up Most have regained / improved profitability after going through their respective learning curves Malls in India · A decade ago – not a single mall · A year ago – less than half a dozen · Today – 40 malls · 2 years from now – 300 malls INDIA RETAIL BY 2006-07 50 million sq ft of quality space under development 7 major cities to account for 41 million sq ft development 300 malls, shopping centres and multiplexes under construction To open 35 hypermarkets, 325 large department stores, 1500 supermarkets and over 10,000 new outlets posted by Shailesh Naik @ 9:26 PM      1 Comments: •

At 6:09 PM, Kannan K said…

The article is very informative.Thanks. It would be higly appreciated if  articles on apparel ­brandwise sales,segmentwise, yearwise, is given  later. thanks, with regards, Kannan K  [email protected]    SATURDAY, FEBRUARY 25, 2006 5 Principles to Cement Customer Trust  Have you ever second­guessed yourself, on purpose? I imagine all of us have  from time to time. Sometimes it is about a decision we have made or those we  fail to make. Frequently, in our minds, we hold ourselves accountable. There are  times, I am sure, that every single one of us have said, "If I only had it to do all  over again", I would have done such and such differently.  But life does not allow us that option. I believe that everything happens for a  reason to allow us to grow and become the person we are to be, with our faults  and assets, failures as well as accomplishments. We are here "on purpose!"  My purpose in my business is to encourage organizations and people to   find a way to trust again. "Trust is probably the most basic human value," says  Fred Rogers, Nothing is harder to regain, than lost trust.  I believe people do business with people they trust. I believe people do business  with people who are knowledgeable, efficient and will deliver what they promise. 

As the holiday season approaches, I am already hearing retailers questioning  what type of season it will be. The downfall of large corporations looms large and  the stock market is the fastest roller coaster ride I have ever seen. And even  Martha Stewart is starting to look a little tarnished. So the question is, who will  the consumer plan to spend their carefully allocated holiday dollars with this year.  I believe it will be with those businesses that have earned the customers trust.  How did those companies develop and cement that trust? They promised and   delivered the following principles of building and maintaining trust.  T ­ Truth Trust and solid relationships are built on telling the truth. Companies must  maintain this principle both with internal and external customers. It is imperative  that this value is represented in everything a company does. We have seen how  the lack of solid ethics can crumble even the largest of companies.  R ­ Responsibility Trust is built when everyone within an organization realizes what their  responsibilities are and that they are held accountable for them. Choose to  schedule reviews quarterly for every member of the company to make sure they  are aware of their responsibilities. Take ownership of mistakes and be diligent to  find ways to make corrections.  U ­ Unselfishness Trust is built when employees give of their time and talent in the workplace and  do it, unselfishly. Customers appreciate the employee who goes out of their way  to satisfy the customer. Customers don't appreciate hearing how badly the  employee wants to go home, or how they didn't get a break, or how awful their  schedule is.  S ­ Security Trust is built on a feeling of security. Good lighting in the parking lot and store  entrance, fitting rooms with doors that lock, employees that handle ringing up a 

sale with accuracy, and alarm systems that are visible are all ways to make the  customer feel safe in your place of business. Employees want to feel a sense of  job security and that they are appreciated for the job they do.  T ­ Teamwork Trust is built when everyone within the organization feels a sense of ownership.  How well do your employees work together? Are they willing to go out of their  way to help each other out? Do the managers roll up their sleeves to help when  the workload is overwhelming? Is there a reward system in place that encourages  employees to want to excel? Most importantly, are there cheerleaders within the  organization to keep the momentum going when times are tough?  We are at a time when gaining a customers' trust is critical. It is a daily process,  on purpose. It is a time to maximize potential, ethically and to deal with conflict  and problems, with credibility.  It is a time not to look back but look forward. It is a time not to say, "if only", but to  daily say, "I am proud of what we did". And we achieved it, on purpose!  About the Author Anne M. Obarski is the "Eye on Retail Performance". She is an author,  professional speaker, retail consultant and Executive Director of Merchandise  Concepts. Anne works with companies who are performance, profit and people  focused and she helps leaders see their businesses through their customers’  eyes. Anne’s mystery shoppers have secretly "snooped" over 2000 stores  searching for excellence in customer service. To reach Anne or learn more, visit  www.merchandiseconcepts.com. 

AN IMAGES SPECIAL REPORT "The success of a retail chain begins & ends with quality committed people, both at the back & front office, and not just with the commonly used terms of 'Location Product Pricing-Promotion'. In fact, the last three terms solely depend on People, while Location is a one-time decision." Rakesh Biyani, Director, Pantaloon Retail India Ltd. WARNING - SPEEDBREAKER AHEAD! The first potholes are already up in retailing's action-packed landscape and subtle caution signs against mindless expansion are in evidence. The catch? Workforce is in terribly short supply and one of the most labour-intensive industries in the world is being told that personnelsupply in India doesn't look like getting close to matching demand in the immediate future. Hold your horses, while we locate the classrooms... Retailing - the most promoted and hyped industrial revolution since the Information Technology hysteria, and the second largest employer in India after agriculture. By no means is it a new profession; in fact, its genesis can be traced back to the time man invented money and financial transactions replaced the barter system of purchase. Now, what was earlier unorganised and simple in logistics is extremely organised, highly automated and a complex network of entities within a logistical framework. There is of course no contesting that retailing is one of the fastest growing industries in the world - it's the second largest industry in the US both in number of establishments and number of employees; more than 22 million Americans and over $3 trillion in annual retail sales make it a highly opportunity-ridden sector. Indian retailing, though still in early days, already displays an interesting blend of promoters. From corporate giants like the RPG group (Foodworld, Health & Glow, Music World), the Rahejas (Shoppers Stop and Globus), the Tatas (Westside chain of stores), the Piramals (Crossroads) in the big box formats to long standing operators in the South (Viveks, Nilgiris, Saravanna, Subhiksha, Margin Free Markets, the interest groups are as diverse as the retail categories themselves. PROJECTIONS It is estimated that six to eight per cent of the Indian work force is

currently employed in retailing. If and when Retailing is opened up to FDI, recruitment is expected to gather momentum - employment in the sector to go up to as high as 20 per cent of the work force. Market gurus across organisations agree on one thing; in the next five years, Retailing will be unmatched in terms of its potential for employment generation, both in numbers and quality of professionalism. As organised retailing develops into a full-fledged industry, it will require a more sophisticated set of store staff and new, mature managerial level requirements. Going by KSA Technopak's guesstimate of the organised retail sector employing in excess of 250,000 individuals directly and perhaps 8-10 times as many indirectly in the supply chain by the year 2005, this sector promises to be hiring professionals by truckloads in the near future. In the course of ascertaining authoritative figures on employment projections, IMAGES discovered that the figure could lie anywhere between 50,000 in organised formats a year to as many as a million jobs in the industry over the next five years, including those in the unorganised sector. Jobs in the organised sector include those at Malls, Discount Formats, Stop-Over Formats such as those within petrol bunks, departmental stores, brand retail chains, specialty retailers, hypermarkets, supermarkets in a cross section of products and services - fashion, food, grocery, consumer durables, FMCG, lifestyle goods etc. Newer formats like the cellular/mobile shops, Retailing by IT voice and video applications, etc. will be dominant in offering jobs in retail - especially front-end sales and customer service jobs. Assuming that for every Rs.10 crore turnover, there would be about 75-100 jobs created, and going by the projection of Rs.35,000 crore retail turnover by the year 2005, about three lakh professionals will step into the industry. While jobs at the shop floor level will be pretty much evenly distributed across product categories, the majority of managerial jobs - about 60 per cent -are expected to be in the area of Fashion/ Lifestyle, followed by food/ groceries at 20-25 per cent followed by Consumer Durable Retail and others. CURRENT SCENARIO As for now, managerial positions are being taken up by MBAs. A food supermart like FoodWorld prefers graduates from the Institute of Rural Management at Anand. A marketing MBA from a reputed institute is the next best choice. As of now, designers are also doubling up as visual merchandisers but a specialisation comes handy. "Shoppers'

Stop recruits fashion designers who are inclined to get into retail," says Brigitta George, customer care associate and general manager, human resources, at the group. While at an executive level, larger retailers like Westside and Shoppers' Stop have been recruiting MBAs from top management institutes, at the shop floor level, they have been forced to institute in-house training programmes. Stumped by scarce human resource, others like the RPG Group, Ebony and The Home Stores have turned academicians and commenced with their own retail institutes to develop professionals, primarily for their individual requirements. In an overall context, fashion has driven the retail boom in India, except in the South where organised formats have come up mainly in the food & grocery category.Explaining why fashion institutes such as NIFT and the Pearl Academy of Fashion have been inspired to develop retail-based curriculae in their course offering.Happy projections aside, as it stands now, Human Resource availability is fast replacing Real Estate as the biggest deterrent facing Indian retailers, and the larger retailers are finding out that real crunch is in finding the right people to run the show. This article is aimed at gauging the level of professional competence in the industry, while also putting a benchmark on the employment prospects and academic developments to further retail education. In the course of discussions with leading retailers, academicians and independent consultants, IMAGES also identified how the retail sector, which effectively started evolving since the late 80's, has begun to spawn a generation of dynamic professionals. On the one hand, it has created an environment that provides an alternative mode of employment that is challenging as well as paying, but on the other, retail promoters have failed to participate in the development of specialised human resource, except for themselves. The emerging demand-supply gap best exemplifies this - India Retail Inc. is sitting on a HR Pandora's Box waiting to explode. The quality of workforce is today considered the top determinant of retail success, but the relatively low attention to people skills is already evident amongst the organised retail companies. At two per cent share of retailing in India, organised retail is way below 80 per cent in USA, 40 per cent in Thailand and 20 per cent in China. But, already organised Indian retailing sector is facing a crunch for skilled manpower. Prompting retail pundits to assert that in the present situation, the best education can be had on-the job, for one to begin as a shop floor assistant and work up the ladder. "The generation of sufficient knowledgeable manpower is a challenge

facing most Indian retailers today," nods Raghu Pillai, President & Chief Executive, Retail Sector - RPG Enterprises.At other retailers like Arcus, since no readymade retail professionals are available, people with a service mindset are being recruited and then trained in-house to be consumer focussed."While brand-led chains, department stores and malls have emerged over the last five years, services such as providing quality manpower, specialised staff for setting up new stores and changes in retailing and building retail in a larger way, has not kept pace," admits Bijou Kurien, COO, Titan Industries Ltd. SKILL SETS: BUYING & MERCHANDSING Merchandise Management is one of the most important functions in Retail. While the buying function includes interaction with vendors, creating promotion and store display plans, Merchandisers are responsible for developing plans plus inventory management. SKILL SET REQUIRED Product exploration through catalogues, periodicals, directories etc., Trends analysis, Inventory Analysis, Quality analysis, Range Planning, Assortment Planning, Stock Planning etc. EXISTING GAP The existing gap is to a great extent because of the circumstance in which buyers and merchandisers work. Constraints include : Information Systems: Merchandise management is an information intensive job. Skills such as Trends analysis, Assortment Analysis, Inventory analysis can only be practiced if only the pool of data is available to the Merchandiser. Such is not the case. While India might be emerging as a leader in providing IT services, it is still far behind the International Retailers in utilising IT services. Communication Medium: Quick and efficient communication is imperative for effectiveness in the highly dynamic Retail environment. Once again coordination skills are lacking in Indian Managers, due to lack of communication infrastructure. Information Sources: Merchandisers and Managers do not have access to enough information resources, which in turn affects their skill of identifying vendors and suppliers. SOLUTION Training / Workshops for Statistical analysis skills, Trend Analysis, Planning Techniques, Assortment, Range and Inventory, Negotiation skills, Coordination Skills, Infrastructure Development, IT systems, Information Sources, Communication Networks Sanjiv Goenka, Vice Chairman, RPG Enterprises hammers in the point, "The success of India's retail revolution will depend largely on skilled

people with specialised training. Only they can provide the muchneeded competitive advantage & bring about professionalism to retailing,". PROBLEMS - MINDSETS Human Resource in Retail is in shape of a vicious cycle. And it begins with mindsets. Typically, Indians look down upon jobs in retailing as menial and low-paid, and meant for those with no particular skills or education. This mindblock puts a damper even before one can begin. And there is a reason for this - retailing cuts across products, income groups and regions. A miniscule cigarette vendor is also a retailer as is Shoppers' Stop in Mumbai. And unlike engineering, law or medicine, getting into retail doesn't warrant a degree or institutional recognition. "Yes, as of now retailing is considered a low end, low skilled and low paid job," says M P Chandran, CEO of The Retail Academy in Ahmedabad. "But, once the awareness on the potential for both wealth and employment generation of this industry spreads, there would be a clamour among the better talents to join the industry. This would also help in changing the power equation between the manufacturer and the retailer." With the prevailing focus on retail hard-sell to consumers, the entire exercise of selling the Retail proposition to those who are to finally do the selling has been on a back seat. Ideally, the proposition should have been simultaneously promoted on both sides of the counter. "For India Plc to be competitive on the global scale, old misconceptions will have to be eradicated. Once the industry starts to make positive statements about the profession of retailing and seek to recruit, train and reward good quality staff, the old attitudes will be removed," asserts Patrick Casey, Regional Marketing & Business Development Manager (South Asia and the Gulf) of the UK-based City & Guilds International. FACULTY Hard as well-equipped retail professionals are to find, academicians are apparently even harder to locate. "Education is a distant dream. Where is the faculty?" asks Arif Sheikh, President of THS which in April launched the Indian Institute of Retail (IIR) in New Delhi. The company's failure to put together a qualified and knowledgeable faculty in fact contributed to the IIR launch being put off several times over the past 18 months. "Even if one talks of retail practitioners in teaching mode, most have come up the

corporate ladder and may not be technically qualified and conversant with modern retail systems and terminology to educate freshers," he points out. Gauri Kumar, Director General of NIFT, agrees, "In today's cut throat competition, a strong teaching crew is hard to source. The reason being, in financial benefits and exposure, most see greater advantages in being part of operations rather than academics." This then means a classic Catch 22 - the absence of faculty retarding the transmission of education and skills, which then restricts retailers' sources of professionals for the business. This is directly responsible for the high turnover rates in Indian retailing - and poaching on each other's staff is rampant. Sheikh paints a grim picture, "The real crunch will be when the foreign retailers come in. The Walmarts and Carrefours will not compromise on HR. Either they will import manpower or poach senior people from local retailers, with superior pay packets and rewards. What then?" At it stands now, if a retailer were to recruit personnel from non-retail backgrounds, the qualifications being asked for are: Entry Level: Standard XII/ Graduate. Good communication skills. Excellent Customer orientation a must. A Diploma in retail management is an added advantage. Remuneration range: Rs.30,000 to Rs.1,00,000 p.a. Mid Level: MBA or Graduates with 5-8 years in sales/marketing in retail/FMCG/Consumer Durables/Hospitality. Good communication skills. Excellent Customer orientation a must. Remuneration range: Rs.2,00,000 to Rs.4,00,000 p.a. Senior Level: MBA with 8-12 years of retail experience of which 4-5 years would have been in charge of 5-6 stores or as Regional Manager managing regional profit centres. Remuneration range : Rs 5,00,000 p.a. and upwards THE HEADHUNTERS INC. Currently, most recruitment is based either on an applicant's experience and area of expertise or graduates and postgraduates with specialisations in business administration/ management are also considered. However, key players in the retail industry hint at an increasing need to employ those with a specialisation degree in the subject. SKILL SETS: CUSTOMER SERVICE Indian culture promotes hospitality and service. Customer Service is an area which can emerge as a significant area of specialisation for the

Indian Market. SKILL SET REQUIRED Customer Service is an area which essentially requires a few basic skills such as Cash Management, Product Handling, Product Knowledge and Communication Skills. EXISTING GAP The biggest gap that exists today in Customer Service is professional Communication Skills. SOLUTION Training on the Steps of Selling, Communication Skills Development, Handling Customer Complaints, On the job training for Product Knowledge. SKILL SETS: STORE MANAGEMENT Store managers look into the working of the various staff within the store. This includes Customer Service Associates, Housekeeping, Cashiers, Stock Inventory associates and floor managers. Depending on the size of the store specialisation is undertaken. For eg. For a single large store, there may be floor managers or department managers who work under the store manager. SKILL SET REQUIRED The primary role of store managers is of a supervisory nature. Thus People handling skills, administrative qualities and stock management skills are the most important skills required by a store manager. EXISTING GAP Most store managers begin their careers as Sales Clerks or customer service professionals. Since, typically there has been no professional training given to these individuals, most managers are equipped only with 'on the job' learning and therefore lack the broader understanding of modern management principles. SOLUTION Classroom Training on issues like Inventory Management, Customer Service and Administration can be of great use to these individuals. "The understanding of retail management - what format to employ, how to structure the chain, building brand personalities, setting up back end logistics, manpower support, display and merchandising, sophisticated retail tracking systems and building vendor relationships are issues which are learnt over time rather than taught. There certainly is an opportunity to set up a dedicated Retail management programme or an Institute to cater to these needs," says Kurien.

SKILL SETS: INFORMATION TECHNOLOGY Information Technology is an emerging area for the Retailers in India. It is also one area where there are many existent lacunae. Effective Supply Chain Management, Merchandise Planning and Analysis, Space Planning are all dependent on Proper IT base, for their effectiveness. SKILL SET REQUIRED Supply Chain Management Techniques, Customer Relationship Management Techniques, E- Commerce Transaction, In-depth understanding of Business Process. EXISTING GAP The biggest gap in the IT department lies in their limited understanding of business process and ineffective coordination with relevant departments such as Logistics and Merchandising. SOLUTION Since every retailer's operations are distinct, therefore Customised software training alongside extensive information on backroom operations is a must. Adds Chandran, "Even the self-help formats need to train their personnel not only to ensure non-manipulative selling, but also provide the right amount of guidance to the customer to buy according to his needs." In recent years, dedicated institutes offering professional certificates, diplomas and degrees in retailing have been structured by NIFT, Pearl Academy of Fashion, RPG Institute of Retail Management, The Retail Academy in Ahmedabad, the Ebony Retail Academy, Amity Business School, The CRM Foundation, Indian Institute of Retail in New Delhi and the Welingkars School of Retail Management. MBA-territory manager, Indian Institute of Management now sees the benefits of devising customised education for retailing and the Lucknow centre is shortly to roll out a Retail Management course for interested aspirants. "Retail education is starting to become structured in India. The training schools with the entrepreneurial spirit have already identified the need for international benchmark standards for the industry. It will be essential that the training and its delivery is based on Competence Based systems of Education and Training (CBET), as opposed to more academic forms of learning," says Casey at City & Guilds. One of the first-movers in retail education is the RPG Institute of Retail Management (RIRM), which draws its synergy from the four retail formats of the RPG Group namely Foodworld, Music World, Health & Glow and Giant. Started in July 1996 in Chennai, the Institute is managed by the National Retail Education Trust, which functions as a

social entity. With its base in Chennai and extended to Bangalore, Hyderabad and Pune, plans are underway to extend RIRM education to others parts of the country. The Institure offers three kinds of programmes to cater to different levels of retail competence. SKILL SETS: SUPPLY CHAIN MANAGEMENT Supply chain and Logistics is another area of extreme importance. Supply Chain/ Logistics / distribution Managers are responsible for ensuring that the right product reaches the right place at the right time. They work in close coordination with the Merchandise Department. SKILL SET REQUIRED Coordination with stores, warehouses and transportation companies. EXISTING GAP Proper Logistics models Ineffective coordination and scheduling skills for managers. SOLUTION Developing Communication Infrastructure Training on International Models of Logistics Management.

Tailored for frontline professionals is the Certificate of Retail Education operations (CORE). This 3-month programme provides training in customer service, merchandising and store display, in-store management and product knowledge. On successful completion, the candidates are awarded a Certificate and could be absorbed in the RPG Group's retail stores. Foundation In Retail Management (FIRM) covers operational areas at the supervisory level. The curriculum encompasses all Retail Management Concepts and is conducted in affiliation with Loyola Institute of Vocational Education (LIVE), Chennai. This course prepares one to take on supervisory and store level responsibilities. The 6-month programme is backed by placement assistance to qualifying students. RIRM also offers training solutions for corporates under Specialized Training for the Accomplished Retailer (STAR). These are customised programmes for individual retail business segments and are characterised by substantial experiential learning on the job. NIFT Delhi is now a forerunner in imparting professional knowledge for retailing. In 1999, it commenced with one-year diploma in Fashion Retail Management & Technology (FRMT). Freshers as well as 10 + 2 with a minimum of three-year experience in Apparel industry were selected on the basis of personal interviews. With its course content of Fashion marketing, Product knowledge, Developing retail mixes, Brand management, Retailing distribution & organisation, Retail advertisement & promotions, Visual merchandising, Retail service mix

& salesmanship, Retail technology & automation, Retail logistics & supply chain management, etc., FRMT is aimed at covering the complete service chain in a retail set-up. Says D K Batra, Chairperson of the FMS department at NIFT Delhi, "FRMT takes students through shop floor to back-end management. Typically, most applicants want to get a degree and enter into backend offices; we make sure even those destined to reach the managerial positions, know what shop floor is all about." Currently, the course is offered at Delhi, but as Batra says, it will reach other centres in the near future. Meanwhile, New Delhi's Pearl Academy of Fashion (PAF) is exploring avenues to spin-off its Retail Studies Department into a fullfledged retail institute. A K G Nair, Executive Director, PAF says the institute is seriously exploring avenues for establishing a retail academy, which may have over 200 students in its various retail management programmes by 2003. PAF is already offering two prgrammes in Retail management - a 36 month undergraduate programme in Fashion Retail Marketing Management (FRMM) and an 18-month post-graduate programme- Fashion Retail Management (FRM) in association with LDT Nagold German Retail Institute. SKILL SETS: VISUAL MERCHANDISING Visual Merchandising is a highly creative and aesthetic field. For effectiveness in Visual Merchandising, the employee requires an aesthetic inclination and at the same time an eye for cost control. SKILL SET REQUIRED Key skills include window display techniques, product display techniques, understanding of color harmony and various lighting techniques. EXISTING GAP In all the above components, there is a huge gap in the skill set. SOLUTION Persistent Training in the areas of Store Design, Window Displays, Space Productivity

IMAGES RETAIL REPORT 2002 In April 2002, the Indian Institute of Retail commenced with a Certificate in Retail Management (CRM) programme with the aim of "turning sellers into retailers". The institute aim to provide theoretical and practical training at retail stores and training on retail management. Says Arif Sheikh, "IIR is an initiative to create awareness about the potential of retail employment in India. We would like to promote retailing as a science rather than an act of selling." The sole purpose behind the institute is to create main resource centre for all kinds of retail manpower for the industry. The training programme involves a three-tier structure, which include a three week intensive orientation programme, a three months certificate in retail management and a one year retail training programme. However, most of the students are expected to be absorbed at the various THS retail ventures, including the flagship home chain, Sabka Bazar and Super Sabka Bazar hypermarkets. Retail chain Ebony academic venture had it genesis in a supply crunch. Over the course of next two years, Ebony was to roll out stores across India and it was already envisaging an HR crunch. An alliance with NIS Sparta helped to structure a 3-month certificate course in retail sales at the Ebony Retail Academy in the year 2000. With about 100 people required for front office and back end management at each of the Ebony stores, this course was aimed to prepare executive skills, floor management and customer relationship pros. The 3-month module in front office management spans areas such as economic and social behavior, communication skills, retail selling, consumer behavior, customer relations, personal development, sales promotional activities, merchandising/ window display, retail marketing, planning and time management. On course completion, candidates are placed usually in front office positions at the various Ebony outlets. So far, four certificate courses have been run in Delhi and one in Ludhiana. The 125 'graduates' have been absorbed in the various Ebony stores across the country, informs H S Kohli, COO, Ebony Retail Holdings. Leading business schools like the Indian Institute of Management are also realising the need to develop retail specialisation courses with their central theme of Marketing. For instance, the two-year Post Graduate Diploma in Marketing programme at the Amity Business

School in NOIDA is now offering three specialisation streams under Marketing Marketing & Sales, Customer Relationship Management and Retail & Supply Chain Management. In the first semester of the second year, a set of four traditional courses - Consumer Behavior, Product & Brand Management, Services Marketing & Management, and Advertising & Sales Promotion is offered to all the Marketing students to choose any three from. In the second semester, a package of four specialisation courses is offered under each stream; under Marketing & Sales Management, there are Sales Management, Distribution & Logistics Management, Industrial & Rural Marketing, and Global Marketing; under Retail & Supply Chain Management, there are Retail Marketing & Management, Supply Chain Management, Industrial & Rural Marketing, and Distribution & Logistics Management; and, under Customer Relationship Management, there are CRM technology, Direct Marketing and Call Centre Management. CONCLUSION Moral of the story - Retailing is not up there with Engineering, Medicine, Law, IT and other exalted professions, and it needs to get there real quick. A few years back, NASSCOM's unprecedented campaign to position IT as a highly desirable career option, literally spawned the genesis of a huge pool of skilled professionals, to fit into every rung of a software organisation and firmly placed IT-based options in every educated Indian's job map. The beneficiaries of this phemonenal marketing drive ranged from students to firms to academia, including the thousands of cybercafes and training schools set up over the last decade. If the 90s was the decade of IT in India, the 21st century promises to open with a mega celebration of consumerism, in the shape of a comprehensive retail boom. With over 50,000 job slots to be filled every year in organised retail alone, and only a handful with any kind of theoretical or practical knowledge, an employment gap seems almost certain. A proactive move could be the formation of a kind of industry Professional Forum, comprising practitioners, to stem the yawning chasm. Of course, development of education is not possible overnight - the industry needs educationists, to start with. Case studies (plenty of those around) can play the role of course material. Students are ready and waiting. May we begin the class, teacher? Forthcoming IMAGES issues will feature international academic instances, with the aim to provide role models to the domestic fraternity.

Indian Retail: An Overview As organised retailers carve out a bigger piece of the retail pie for themselves it’s an exciting time for the retail sector. By Dominic K Emerging markets such as India and China are the final frontier for retail taking the focus away from saturated Western markets. Since 2001, 49 global retailers entered 90 new markets, but at the same time, 17 retailers left markets in 2005. The Indian retail industry in valued at about $300 billion and is expected to grow to $427 billion in 2010 and $637 billion in 2015. Only three percent of Indian retail is organised. Retailers of multiple brands can operate through a franchise or a cash-and-carry wholesale model. Retail is India’s largest industry, accounting for over 10 percent of the country’s GDP and around eight percent of employment. Retail in India is at the crossroads. It has emerged as one of the most dynamic and fast paced industries with several players entering the market. That said, the heavy initial investments required make break even hard to achieve and many players have not tasted success to date. However, the future is promising; the market is growing, government policies are becoming more favourable and emerging technologies are facilitating operations. Retailing in India is gradually inching its way to 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. Modern retail has entered India as seen in sprawling shopping centres, multi-storeyed 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 organised retail and growth in the consumption by Indians is going to adopt 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 working-women population and emerging opportunities in the services sector are going to be the key growth drivers of the organised retail sector.

Initially, this was about Indian corporate houses rolling out malls and supermarkets, but with Wal-Mart coming into the Indian market, the era of the superstore is dawning. Unlike the kirana stores that served us for decades, this new breed of retail chains is heavily dependent on IT. Wal-Mart, the world’s largest retailer, and Bharti Enterprises have signed a Memorandum of Understanding (MoU) to explore business opportunities in the Indian retail industry. This joint venture will mark the entry of Wal-Mart into the Indian retailing industry. The biggest competitor for Bharti-Wal-Mart is likely to be Reliance Retail, the retail wing of Reliance, which had planned to establish 10,000 stores by 2010. It had already opened 11 pilot stores under the “Reliance Fresh” format in Hyderabad. All these trends and developments present a great business opportunity for software and hardware vendors from across the globe. Indian solution providers are targeting this segment have reason to rejoice. For while organised retail occupies a miniscule two to three percent of the overall Indian retailing industry, that is poised to change. In spite of the prospects being good things aren’t quite as rosy when it comes to awareness of IT systems. In most cases, organised retailers in India have installed solutions that help them automate transactional systems. With the retail sector in India undergoing a transformation due to the entry of large corporate houses, IT managers and CIOs are now looking forward to know how IT can help them achieve the business goals of their organisations. Standards-based architecture and software support all kinds of mission-critical IT applications for enabling greater efficiency, significant cost savings, and new business value. The critical activities that can be handled by IT are finance and accounting, business intelligence, vendor development and management, supply chain management, merchandising and inventory management, facilities management, stores management, customer relationship management, branding, marketing, sales promotion and HR. Like any other vertical, retail also stands to benefit from elaborate IT set-ups. However, this is subject to the scale and size of the

organisation, as well as an objective assessment of its requirements. Key common challenges that can be tackled through IT implementations include accurate merchandising, improved planning, increasing profitability, enhancing customer experience, strengthening store operations, improved workforce management, and improving the supply chain. This is in fact one of the key imperatives facing retailers in India, to have a robust and scalable supply chain that will facilitate rapid growth. Since a basic objective is to make data available to users and customers, proper IT implementation and superior IT infrastructure ensure that in spite of getting minimal details, the retailer captures the right information, which flows to everyone from the back office staff to the head office managers. The entire information flow must be seamless. A retail business works on a network environment because the stores connect to one another as well as to supplier sites. This is because in the retail business quick response is the key to success. Proper IT implementation also ensures that investment in retail reduces substantially. Retailing in India: Trends and opportunities Priya Chandrasekhar Business Line: Catalyst Thursday, February 15, 2001 Retailing - no marks for guessing this is the most active and attractive sector of the last decade. While the retailing industry itself has been present through history in our country, it is only the recent past that has witnessed so much dynamism. It's the latest bandwagon that has witnessed hordes of players leaping onto it. While international retail store chains have caught the fancy of many travelers abroad, the action was missing from the Indian business scene, at least till recently. The emergence of retailing in India has more to do with the increasing purchasing power of buyers, specially post- liberalisation, increase in product variety, and the increasing economies of scale, with the aid of modern supply and distribution management solutions. A definition of retailing is essential in order to be in a position to assess the impact of retailing and its future potential. The current retailing revolution has been provided an impetus from multiple sources. These `revolutionaries' include many conventional stores upgrading themselves to modern retailing, companies in competitive environments entering the market directly to ensure exclusive visibility for their products and professional chain stores coming up to meet the

need of the manufacturers who do not fall into either of the above categories. Attractiveness, accessibility and affordability seem to be the key offerings of the retailing chain The emerging sectors Retailing, one of the largest sectors in the global economy, is going through a transition phase not only in India but the world over. 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. The traditional food and grocery segment has seen the emergence of supermarkets/grocery chains (Food World, Nilgiris, Apna Bazaar), convenience stores (ConveniO, HP Speedmart) and fast-food chains (McDonalds, Dominos). It is the non-food segment, however that foray has been made into a variety of new sectors. These include lifestyle/fashion segments (Shoppers' Stop, Globus, LifeStyle, Westside), apparel/accessories (Pantaloon, Levis, Reebok), books/music/gifts (Archies, MusicWorld, Crosswords, Landmark), appliances and consumer durables (Viveks, Jainsons, Vasant & Co.), drugs and pharmacy (Health and Glow, Apollo). The emergence of new sectors has been accompanied by changes in existing formats as well as the beginning of new formats: o o o o

Hypermarts: Large supermarkets, typically 3,500-5,000 sq. ft. Mini supermarkets, typically 1,000-2,000 sq. ft. Convenience stores, typically 750-1,000sq. ft.

o

Discount/shopping list grocer

The traditional grocers, by introducing self-service formats as well as valueadded services such as credit and home delivery, have tried to redefine themselves. However, the boom in retailing has been confined primarily to the urban markets in the country. Even there, large chunks are yet to feel the impact of organised retailing. There are two primary reasons for this. First, the modern retailer is yet to feel the saturation' effect in the urban market and has, therefore, probably not looked at the other markets as seriously. Second, the modern retailing trend, despite its cost-effectiveness, has come to be identified with lifestyles. In order to appeal to all classes of the society, retail stores would have to identify with different lifestyles. In a sense, this trend is already visible with the emergence of stores with an essentially `value for money' image. The attractiveness of the other stores actually appeals to the existing affluent class as well as those who aspire for to be part of this class. Hence, one can assume that

the retailing revolution is emerging along the lines of the economic evolution of society. Spread of organised retailing: Organised retailing is spreading and making its presence felt in different parts of the country. The trend in grocery retailing, however, has been slightly different with a growth concentration in the South. However, the Mecca of retailing is undoubtedly Chennai. What was considered a `traditional', conservative' and `cost-conscious' market, proved to be the home ground for most of the successful retail names - FoodWorld, Music World, Health and Glow, Vitan, Subhiksha and Viveks -to name a few. The choice of Chennai as the `retail capital' has surprised many, but a variety of factors acted in its favour. Chennai, in spite of being a rapidly growing metropolis offers reasonable real estate prices, one of the most critical elements for the industry. Chennai has been witnessing a high industrial growth and increasing presence of the MNCs, both in the IT sector as well as outside it. The industrial boom has led to the emergence of new residential areas with aggregation of professionals as well as a rapid increase in the number of `double-income' households and growth of the nouveau riche/upper middle class with increased purchasing power. This has been combined with the increasing need for touch and feel shopping (especially for the large migrant population). All the factors have acted favourably in nurturing the industry.

Consumer- the prime mover A variety of factors seem to influence the growth in the retailing industry. `Consumer Pull', however, seems to be the most important driving factor behind the sustenance of the industry. In this context, A. F. Ferguson & Co. had carried out a brief survey among consumers across income segments to understand their spending pattern. An analysis of the `monthly purchase basket of the consumers surveyed indicated that the average monthly household spend on food and grocery related items varied across income segments. For instance, in the case of upper income households, the average spend was around Rs 4,200 per month. As against this, the average spend in the case of a middle income household was around Rs. 2,850 and lower income households Rs. 1,250 per month. (This is computed from a sample of 100 customers having an average family size of four.)

Based on the distribution of the more than 15 lakh households in Chennai across income segments and the average spend, a conservative estimate of the grocery retailing potential at Chennai will be around Rs. 300 crores. Besides increasing purchasing power, a variety of other factors also seem to fuel the retailing boom. With increase in double-income households and working women, there is an increasing pressure on time with very little time being available for leisure. In this scenario, consumers are seeking the convenience of one-stop shopping, whereby they could have better utility of time. They are also seeking speed and efficiency in processing, as a result. Being more aware, consumers are on the look-out for more information, better quality and hygiene as well as increased customer service. These changes in consumer behaviour also augur well for the retailing industry. However, in India there are no uniform trends with respect to consumer buying behaviour. There are visible differences in the shopping pattern of consumers across income segments as shown in the table. Organised retailing has definitely made headway in the upper class. However, even in this segment, items such as milk, fruits, vegetables and a significant portion of `through-the-month' purchases seem to be done at traditional outlets. The middle income class prefer shopping for processed food and personal care in supermarkets and fall back on traditional outlets for bulk shopping. Organised retail outlets seem to be associated with branded items/special purchases. Organised retailing does not seem to have made an impact on the lower class, except for `curiosity' shopping. The biggest question before organised retailers therefore, is whether this really means a huge untapped potential for the organised retailers and whether the conversion in mindset going to be easy. Emerging trends The single most important evolution that took place along with the retailing revolution was the rise and fall of the dotcom companies. A sudden concept of `non-store' shopping emerged, which threatened to take away the potential of the store. More importantly, the very nature of the customer segment being addressed was almost the same. The computer-savvy individual was also a subsegment of the `store' frequenting traffic. Internationally, the concept of Net shopping is yet to be proven. And the poor financial performance of most of the companies offering virtual shopping has resulted in store-based retailing regaining the upper hand. Other forms of nonstore shopping including various formats such as catalogue/mail order shopping, direct selling, and so on are growing rapidly. However, the size of the direct

market industry is too limited to deter the retailers. For all the convenience that it offers, electronic retailing does not suit products where `look and see' attributes are of importance, as in apparel, or where the value is very high, such as jewellery, or where the performance has to be tested, as of consumer durables. The most critical issue in electronic retailing, especially in a country such as ours, relates to payments and the various security issues involved. Retail management skills It is a fact that the retailing industry is in its starting phase in our country. The benefits of organised retailing will only be felt once an equitable scale is achieved. This to a large extent depends on the store size, the walkthroughs, bills per customer per year, average bill size and the revenue earned per sq. ft. But besides resources and bottomline, a variety of other aspects need to be in place for tasting success. The need for qualified and trained manpower is of utmost importance. The need for specialised skills is increasingly felt in the areas of: •

Strategic management - strategising, targeting and positioning, marketing and site selection, among others

•

Merchandise management - Vendor selection, inventory management, pricing and so on

•

Store management - Layout, display, customer relationship, inventory management, etc.

•

Administrative Management - Human resources, finance, marketing and so on

With the need for specialised skill set, retailing has become a specialised area of knowledge and training. The RPG School of Retailing and the introduction of specialised retailing courses at various business schools, including the IIMs, stand testimony to this. Technology impact The other important aspect of retailing relates to technology. It is widely felt that the key differentiator between the successful and not so successful retailers is primarily in the area of technology. Simultaneously, it will be technology that will help the organised retailer score over the unorganised players, giving both cost and service advantages.

Retailing is a `technology-intensive' industry. It is quoted that everyday at least 500 gigabytes of data are transmitted via satellite from the 1,200 point-of-sales counters of JC Penney to its corporate headquarters. Successful retailers today work closely with their vendors to predict consumer demand, shorten lead times, reduce inventory holding and thereby, save cost. Wal-Mart pioneered the concept of building a competitive advantage through distribution and information systems in the retailing industry. They introduced two innovative logistics techniques cross-docking and electronic data interchange. Today, online systems link point-of-sales terminals to the main office where detailed analyses on sales by item, classification, stores or vendor are carried out online. Besides vendors, the focus of the retailing sector is to develop the link with the consumer. `Data Warehousing' is an established concept in the advanced nations. With the help of `database retailing', information on existing and potential customers is tracked. Besides knowing what was purchased and by whom, information on softer issues such as demographics and psychographics is captured. Retailing, as discussed before, is at a nascent stage in our country. Most organised players have managed to put the front ends in place, but these are relatively easy to copy. The relatively complicated information systems and underlying technologies are in the process of being established. Most grocery retailers such as FoodWorld have started tracking consumer purchases through CRM. The lifestyle retailers through their `affinity clubs' and `reward clubs' are establishing their processes. The traditional retailers will always continue to exist but organised retailers are working towards revamping their business to obtain strategic advantages at various levels - market, cost, knowledge and customer. With differentiating strategies - value for money, shopping experience, variety, quality, discounts and advanced systems and technology in the back-end, change in the equilibrium with manufacturers and a thorough understanding of the consumer behaviour, the ground is all set for the organised retailers. The bottomline could look brighter, after all! It would be important to note, however, that the retailing industry in India is still a `protected industry'. It is one of the few sectors which still has restrictions on FDI. Given the current trend in liberalisation, it will not be long before the retailing sector is also thrown open to international competition. This will see a further segregation of the international retailing brands and the domestic retailers, thereby injecting much greater dynamism into the market. That will be when the real action will begin. In the second article on retailing, we uncover a model for retailers to handle the emerging scenario. (To be concluded)

(The author is a senior consultant at A. F. Ferguson & Co, Chennai. Feedback can be mailed to [email protected])

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Getting closer to the customer Organised retailers are employing IT to know their customers better. This was the case when CRM was implemented at Raymond. By Kushal Shah One of India’s oldest textile manufacturers and retailers, Raymond India operates across cities and deals with different cultures and people. Knowing all these customers and doing business accordingly is not a cakewalk. To deal with this scenario Raymond India decided to implement CRM (customer relationship management) across most of its retail outlets. Know thy customer Retail is all about knowing your customers thoroughly in order to serve them better. It is an age old philosophy of Indian businessmen that if you know your customers better, you can enjoy a better competitive position in the market. Before making extensive use of IT at its outlets, Anil Arora Raymond’s business used to run on a manual basis. In order to know its customers better, a team was formed to survey prospective buyers as well as existing customers. After surveying them they would know the pattern of their purchases, their likes and dislikes etc.

This process was cumbersome for the surveying team and at times people were apprehensive about replying to questions related to their personal choices. With the growing use of IT in the retail segment, Raymond decided to implement CRM to know its customers better and in a more sophisticated way. “The need was to understand the customers and provide services suitable to them,” says Anil Arora, Sr. Manager – Information Technology, Raymond Limited. The Solution Customer Relationship Management was implemented by Raymond to solve the problems of knowing the customers better. CRM helps the company understand the colour and design preferred by a particular age group or why a particular group or individual did not buy or did buy a particular product. As a result of the implementation, regular customers get a premium card which has all the details of a particular customer and the purchase patterns of that person can be studied efficiently. The CRM implementation is named ‘Premium Circle’. Customers using it are known as premium users and are given a premium card. This is offered to Raymond customers at 265 out of 365 Raymond Shops in India. With the help of this solution, a central repository of information is created about premium customers whose details are accessible at any retail outlet where this system has been implemented. In a Nutshell Project

: Customer Relationship Management (CRM) implementation

Aim

: To understand customers better and provide services suitable to them.

Vendor

: Proximity

Time taken

: About three months

Scale

: Implemented across 265 retail shops

The implementation

The technology part of the CRM implementation was outsourced to Proximity which owns the infrastructure that provides touch points to the customer through the Web site. Raymond’s in-house team was responsible for devising the schemes and plans. Since only the technology part was given to a third party to manage, cost and quality of service provided by the vendor were considered while short listing a vendor. The Retail head from the business side was the champion of the project and he was assisted by the IT department to provide the technological expertise that was required. About the Company Raymond India's retail face is The Raymond Shop, a chain of retail stores offering wardrobe solutions for men. This includes brands like Raymond, Park Avenue, Parx, Manzoni and now ColourPlus. Started about five decades ago, Raymond has been one of the pioneers of Indian retail. The Raymond Shop network started with a small corner shop in Ballard Estate, Mumbai. It has grown multi-fold with a dedicated team making it the largest retail store chain in the country with over 300 stores in prime locations in 150 Indian cities. They have also extended their network overseas with around 25 shops in 15 plus cities of the Middle East, Sri Lanka, Bangladesh and Nepal. The Raymond Shop retail chain occupies a space of 1 million square feet built-up area. The Raymond Shop offers over 3,000 qualities, shades and designs of Raymond fabric. Three principles “The aim of this implementation was to ensure three principles— availability, reliability and scalability of the solution,” says Arora. Concentrating on availability meant that the solution had to be available at all times and that downtime had to be negligible. Failsafe software would ensure the reliability aspect of the solution. Lastly scalability ensured that the system would work efficiently irrespective of the number of locations at which it was rolled out. With organised

retail in the midst of a boom, it is natural that the number of outlets will grow rapidly putting more pressure on ensuring scalability acrossthe chain. Phases The time line for the entire project was close to three months and it was completed in three phases. The first phase consisted of the Proof of concept. In this phase the project was cleared through internal research to prove that the core ideas were workable before going any further. This use of proof of concept helps establish viability, technical issues are uncovered, and overall direction is set. It also helps in providing feedback for budgeting and other forms of commercial discussion and control. The second phase involved running a pilot model created by the project team. This was to ensure that the core solution has been developed satisfactorily and was running as per the requirements. In the final phase, the entire Web based project went live across 265 shops. Initially only 10 shops went live but soon 265 shops were on the network. Hardware The entire solution runs on HP servers on Windows Server with the SQL Server database. The database for the CRM is located on a web database server hosted by the vendor at an ISP IDC. The servers are in high availability mode with redundancy at the server link level. In case of a breakdown of the link, the recovery time is approximately an hour. Customer Response Since this project was Web based, many customers are using it across India. This project helped evaluate customer choices to a large extent. With the use of this software, the product lines kept changing according to the customer needs and patterns and the end result has been satisfied customers. The repeat visits made by each customer increased with the help of CRM solution. The only time customers were left a bit dissatisfied was when the database of that customer was not updated properly during

the initial days after going live. The overall happiness of the customer has boosted business by a substantial margin. Enhancements Looking at the success of this CRM implementation Raymond decided to extend the similar exercise to its other product lines and brands such as kids wear. This implementation is going to be implemented across 1,000 shops whenever Raymond decides to reach that figure.

ORGANIZED RETAIL IN INDIA POISED TO REACH Rs.2000 BILLION MARK. EMPLOYMENT GENERATION FOR 12 MILLION PEOPLE COMMERCE & INDUSTRY MINSITER KAMAL NATH RELEASES INDIA RETAIL REPORT 2007; LAUNCHES INDIARETAILING.COM New Delhi, 9 th January 2007, Organised retail in India has the potential to add over Rs 2,00,000 crore ($45 billion) business by the Year 2010 generating employment for some 2.5 million people in various retail operations and over 10 million additional workforce in retail support activities including contract production & processing, supply chain & logistics, retail real estate development & management etc., said Mr. Kamal Nath, Commerce & Industry Minister releasing the IMAGES India Retail Report 2007 at a high powered industry and media meet at Udyog Bhawan today

After leading the IT bandwagon, India is poised to grow as a Retail hub. It is imperative to sustain the modernization of the retail sector and dispel the myth that the game is big Vs small or traditional Vs modern or organized Vs unorganized or local Vs foreign . What is needed is to create an appropriate environment to propel retail where all benefit, he said. India's huge population, he said, has the potential for mammoth consumption if given the power of spending and that is only possible through large scale development generating employment which is already happening with retail as the driving force.

Talking about the key challenge areas for the retail growth Mr. Nath expressed concern over escalating real estate cost, scarcity of skilled workforce and structured supply of merchandise which he assured would be tacked in co-operation with the retail industry and the support organizations. Revealing key figures from the India Retail Report 2007, Amitabh Taneja, Chief Convenor of India Retail Forum said that the organised sector accounted for Rs. 55,000 crore ($12.4 billion) business at current prices in the calendar year 2006 increasing its share to 4.6% of the total Indian Retail Value that stood at Rs. 12,00,000 crore ($270 billion). Moving forward, organized retailing is projected to grow at the rate of about 37 per cent in 2007 and 42 per cent in 2008. “Going by the current growth trend and considering the fact that existing prominent players in organised retail have stepped up their expansion drive with Reliance announcing big plans and other Indian corporate houses too evincing keenness on investing heavily in this sector as also the inking of the joint-venture between the world's largest retailer Wal-Mart and Bharti – The organised retail in India has indeed gained top speed and is now on the verge of take-off, Taneja added. According to IMAGES India Retail Report 2007, of the Rs.12,00,000 crore retail market, food & grocery retail is by far the single largest block estimated to be worth a whopping Rs.7,43,900 crore, but more than 99 per cent of this market is dominated by the neighbourhood kirana stores.

Deliberating on the advantages of the organized retail, Mr Nath talked about the increasing efficiencies in the agricultural sector by removing intermediaries in the food supply chain. While urban customers benefit from reduced prices of farm sector goods, rural farmers benefit by way of higher returns for their produce. With several States allowing retailers direct access to farm produce, there is a new revolution taking shape in rural India. Farmers are cultivating crops as per specifications and requirements of retail companies such as Reliance, ITC, Godrej and many others. More than 2,000 small farmers, for instance, are benefiting from such arrangements in Andhra Pradesh, he said. Talking about the global perception about India, about its economic might and potential in terms of market size, Mr. Kamal Nath said that there had been a drastic change over the last few years. While the buoyant manufacturing and services sectors had contributed in fuelling consumption demand in urban as well as rural areas, the government on its part remained committed to improving infrastructure and providing a congenial environment for indigenous business modules to blossom and harness domestic as well as foreign investment to optimum levels. Economic prosperity also meant higher standards of living and higher consumption levels, and only an efficient and organised Retail sector could ensure and sustain this growing demand of the evolved consumer. “But unlike the experiences in most other countries, growth of Indian retail is not going to be a staggered and time-taking process: India has already shown the world how quick it can adapt to hitech products and services and will again set a record of sorts in setting up world class retail formats across the country in record time. In the next five years India should have retail entities strong enough to compete with the best in the world”, added Mr. Nath. At present, he said, India's retail sector is largely unorganized, with about 15 million tiny outlets catering to consumer needs across the country – it employs the second-largest number of people after agriculture. Organised retail is now focused primarily on the 300 million urban "middle classes''

and an additional 200 million rural rich, who form a consumer market worth more than US$100 billion. So, there is enough ground for the modern and the traditional formats to co-exist. Narrating India's economic growth story Mr. Nath highlighted three important things: One - that here is a society in which the fruits of development are more evenly spread, in which democracy is more real and palpable to the mass of the population, which makes for a stable social environment that is attractive and reassuring; Two - that India is an enormous market, of which you are seeing only the tip of the iceberg; And Three - the tremendous resilience of India: we survived the zooming oil prices, the fluctuating dollar and global recession, with barely a hiccup. The Indian economy is integrating with the world, and yet it simultaneously has its own dynamics, which cushion global shocks as in no other country. India had 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 Vuitton, Fendi, LLadro, Nike and Toyota can operate now on their own. Metro is already operating through the cash-and-carry wholesale mode. The issue of Foreign Direct Investment (FDI) has been debated time and again as the Indian Government has been under pressure to open up further. The policy makers continue to explore areas where FDI can be invited without hurting the interest of local retail community. Mr. Kamal Nath confirmed that the Government is considering opening up of the retail trading for select sectors such as electronic goods, stationery, sports goods, and building equipment. “To understand the reasoning and implications of such moves it was vital to size up the entire retail market in various segments and consumption levels across product categories with share of the organized segment and it was just the right time for India Retail Forum to take the initiative of researching the scope of retail businesses in India”, said R S Roy, Editorial Director, Images India Retail report 2007. Mr. Nath commended the pioneering efforts of the Images Group and India Retail Forum in compiling and pooling together relevant yet highly scattered and difficult to get information on this vital sector, which helps investors get a better understanding of the unfolding scenario. India Retail Report 2007 will set benchmark figures on consumer spend, retail market size across key categories and segments with scope and also performance of key players and their expansion plans. In his address Dr. Ajay K Dua, Secretary, Department of Industrial Policy & promotion, Ministry of Commerce & Industry said, “The growth of the Indian economy is now manifesting itself in the growing purchasing power of its citizens. A ten to twelve per cent increase in the economy's disposable income and a much higher one in urban areas is also reflecting itself in the way goods and services are bought and sold”. “There would be a real revolution in the Indian retail industry, if the changes being witnessed in the metropolitan and other tier-one towns percolates to all the 784 urban settlements, with populations above 50,000 persons. This is likely to happen as the real estate prices in the large metropolitan towns are increasingly becoming prohibitive and consequently giving distinct advantage to those who are already in the business of retailing, viz., the traditional mom & pop stores. Rural and semiurban incomes are also expectedly to grow much faster in future, once the agriculture growth rate pushes up. Our civic laws concerning construction and property development also need to be relooked, as the earlier convenience-stores get replaced by shopping malls and other formats of organized retail trade”, he added. Expressing concern over the consumption and mall development trend, Editorial Director of this mega research of India retail research, R S Roy called upon the entire retail fraternity, concerned Govt. departments and the supporting organizations to work towards giving Indian retail - a face of

India. “ India Brand Story can travel across the globe with 'Delhi Hat' type shopping cum entertainment centres opening not only across India but all over the world. Public private partnership can revitalise the formats like Khadi Bhawans that runs one of the largest retail networks in the world, and also govt. state run emporia,” he said. As India emerges as one of the most potential markets for global brands and retailers and retail reinvents the way modern Indians celebrate their spending power, India that takes pride in its rich culture, heritage, art, craft and variety of wares must capitalize on this ever escalating consumerism and channelise the spending towards healthy consumption for overall development of the country. Initiated by India Retail Forum and Images F&R Research, world's some of the top global research & consulting firms like AT Kearney, Ernst & Young, PWC, Technopak, KPMG, ICICI, AC Nielsen-ORG Marg, Synovate, Cushman & Wakefield etc. contributed for the India Retail Report 2007 research. IMAGES India Retail report 2007 sizes up the entire retail market in various segments and consumption levels across product categories with share of the organized segment . Profiling formats and retailers therein, the study, full of facts and figures, is expected to reveal many interesting facets of the Indian retail industry that could open up newer avenues of business both for the established players and the new comers as well. A truly international presentation in a coffee table format, the IMAGES India Retail Report 2007 also carries visionary thoughts of Shri Kamal Nath, Dr. Ajay K Dua, and over 40 thought leaders from the retail industry covering almost every aspect of retail business. The occasion also saw the launch of a path breaking retail information interface portal Indiaretailing.com by Mr. Kamal Nath. “Indiaretailing.com has an ambitious philosophy personified by these words: “The Home Page of the Indian Retailing Industry”. Indiaretailing.com is being designed to be just that – with a 24/7 update and news feed team that gets you the retail intelligence that affects your business in every way,” said Pallav Moitra, Head of this revolutionary concept. “In the evolution of Indian retail in-time information will be vital to keep the industry and all its stakeholders abreast of the developments across. This exceptional portal is also aimed at the retailing community around the globe, giving a wide angle view and analysis of the business of Retail in India. Alongside interactive features such as interviews, chats and business development tools, it will also contain exclusive and investigative editorial content that we can promise, no other media has access to”, he added. Besides retail news feeds, indiaretailing.com will boast an exclusive database of retailers, retail real estate developers, retail technology and systems firms, retail finance outfits, store design and shopfit pros, human resource sourcing and jobsite management, exclusive video interviews, live coverage of retail events and many more. The portal is expected to have around 200000 page views in the very first month of operation and is strongly geared up to enjoy a very high and filtered subscriber number. To begin with the subscription number for daily News Letters is expected to reach over 25000 key people in the retail industry. For details contact : R India IMAGES S New Direct Board Fax

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