Pushpesh Report

A SURVEY REPORT ON

“EMERGING TRENDS OF INDIAN RETAIL INDUSTRY & PROSPECTS FOR VISHAL MEGA MART”

SUBMITTED IN THE PARTIAL FULLFILMENT OF POST GRADUATE DIPLOMA IN RETAIL MANAGEMET (2008-2010) SCHOOL OF MANAGEMENT SCIENCES

SUBMITTED TO -

PREPARED BY -

Mr.Amitabh Pandey PUSHPESH KUMAR Sr.Lecturer PGDRM/02/35

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SMS,Varanasi SCHOOL OF MANAGEMENT SCIENCES

SCHOOL OF MANAGEMENT SCIENCES VARANASI - 221005 Date:

30/10/09

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DECLARATION

I hereby declare that this field survey project report on “Emerging Trends Of Indian Retail Industry & Prospects For Vishal Mega Mart” is record of my own work that was carried out by me under the guidance of Mr. Avinash Tomar, Store Manager of Vishal Mega Mart, Agra-2 & Mr. Amitabh Pandey,Sr.Lecturer of School of Management Sciences. The report has been prepared in partial fulfilment of requirements towards the award of PGDRM, School of Management Sciences – Varanasi. I further declare that this project has not been submitted earlier to any other university or institution for the award of any other degree or diploma.

Pushpesh Kumar PGDRM/02/35

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ACKNOWLEDGEMENT I owe gems of words of thanks to my guide MR. Amitabh Pandey,Sr.Lecturer, School of Management Sciences & Mr. Avinash Tomar, Store Manager of Vishal Mega Mart, Agra-2 for

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allowing me to do my summer training under his kind and able guidance. My efforts in accomplishing this project are a result of constant motivation and patient listening support by him. The knowledge provided by him has been a great value addition for me and will go a long way in shaping our promising careers. I also extend my gratitude to MR. RAVINDRA NAGAR,AREA COORDINATOR,VISHAL MEGA MART for permitting me to do my research work on the topic of “EMERGING TRENDS OF INDIAN RETAIL INDUSTRY & PROSPECTS FOR VISHAL MEGA MART”. Also I would like to express my special thanks to all the faculty members for their constant help for the completion of the project. Their ever available encouragement and enlightening guidance has been of immense help towards the successful completion of the project. Above all, I would like to express my deep gratitude to my parents, friends & specially to my brother for providing me the moral support without which it was impossible to complete the project

Any suggestion or opinion in favor of this project report would be kindly accepted.

Pushpesh Kumar

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PREFACE It gives me immense pleasure to present this report on “A STUDY ON EMERGING TRENDS OF INDIAN RETAIL INDUSTRY & PROSPECTS FOR VISHAL MEGA MART”.

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This report covers the aspects of changing patterns of retail industry. The concept of organized retailing which is of recent origin in India needs the proper judgment of its emerging trends for its growth. It’ll will be helpful for retailers to know where they are lacking. This report is submitted as a part of course curriculum of School of Management Sciences, Varanasi. This report is written in an easy and comprehend-able language using systematic methodology. I have ensured my best to cover all the aspects related to this topic and make the report purposeful.

Pushpesh Kumar PGDRM/02/35 School of Management Sciences, Varanasi

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TABLE OF CONTENTS Page No •

INTRODUCTION OF TOPIC

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OBJECTIVES

11-12

•

INTRODUCTION

13-72

 Vishal Mega Mart Review

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 Company Profile

14-17

 Overview of Global & Indian Retail Scenario

18-29

 Industry evolution

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 Structure of retail industry

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 Segment of retail industry

32-35

 Recent trends in retailing

36-50

 Newer concept-Farm retailing

51-64

 Opportunity in retail industry

65-72

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RESEARCH METHODOLOGY

73-74

 Type of research  Sampling technique  Size of sample  Universe  Type of data  Data collection instrument

 Data analysis technique  Sources & Statistical analysis •

DATA ANALYSIS, FINDINGS & INTERPRETATION

75-93

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SUGGESTIONS

94-96

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CONCLUSIONS

97-100

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LIMITATIONS

101-102

•

BIBLIOGRAPHY

103-104

•

ANNEXURE

105-109

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INTRODUCTION OF THE PROJECT

This project work deals with the topic: “A STUDY ON EMERGING TRENDS OF INDIAN RETAIL INDUSTRY & PROSPECTS FOR VISHAL MEGA MART”.

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OBJECTIVES 1. To evaluate the recent trends of Indian retail industry in order to come out with prospects for India’s one of leading retail chains – Vishal Mega-Mart. 2.

Simultaneously to know the people perceptions towards retail outlets.

3. To know the consumer’s expectations from Vishal Mega Mart. 4. To come out with conclusions & suggestions based on the analysis & interpretation of the data.

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COMPANY PROFILE V

I

S

H

A

Value

Increase

Shopping

Hypermarket

Affordable

L Low Price

• Founded in1986 in Kolkata. • 180 showrooms in 100 cities/24 states. • Opened as Indian 1st hyper-market. • Turnover : 2005 - Rs. 1463.12mn 2006 - Rs. 2884.43mn 2007 - Rs. 6026.53mn 2008 – Rs. 1,005.31mn • •

It has over 70,000 products range. Covering about 29,90,146 sq. ft. in 24 states across india. VISHAL Apparels Brands

Zeppelin :

Mens Shirts & Trousers

Fizzy Babe :

Ladies & Kids Girls

Kitaan Studio :

Mens Shirts & Trousers

Jasmine :

Ladies & Kids Girls

Blues & Khakis

Mens Trousers

Zero Degree :

Kids Boys

Paranoia :

Mens Shirts & T-Shirts

Soil :

Mens Shirts

Chlorine :

Mens Shirts

Massa Bay :

Mens Trousers & Bermudas

Fume :

Mens Shirts, T-Shirts, UnderGarments.

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Any place that calls itself ‘Vishal’ – which means big – and also, adds a ‘mega’ to its name must be gigantic, right? Wrong! The only thing big about this place is its name. The rest would give a pimple an inferiority complex. Just goes to show you the magnitude of their extremely inflated egos that they have to call themselves such a thing. Fine, now that we are in, let’s check out what they have to offer. The clothes look decent, feel decent and are also decently priced, but decency isn’t actually a virtue now-a-days. Despite the absence of any well known brands, their range is pretty diversified and well maintained. They stack clothes for men – two floors of it, by the way – women and children and most new designs find mention. You’d have to actually take the plunge and buy stuff to discover whether they would last though. The place on the whole is worth a visit, for the clothes, if not for anything else. Started as a humble one store enterprise in 1986 in Kolkata(erstwhile, Calcutta) is today a conglomerate encompassing 180 showrooms in 100 cities / 24states. India’s first hyper-market has also been opened for the Indian consumer by Vishal. Situated in the national capital Delhi this store boasts of the singe largest collection of goods and commodities sold under one roof in India.

Vishal Retail is one of the fastest growing retail chain in Indian Retail market. The chain has currently 180 showrooms in 24 states. The vishal brand is known for great modern style for men, women, and children. Vishal offers high level fashion styling. Since 1986, the name vishal has been synonymous quality, value, and fashion integrity. The company was started under the leadership of Mr. Ram Chandra Agarwal, a dynamic personality.

Vishal offers an unparalleled collection of cloths for the entire family. . Each garment is hand selected for quality and contemporary styling. Vishal manufactures majority of its own garments and out sources some under its direct quality supervision.

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This enables us to offer the lowest possible and most reasonable prices.

Its goal is to provide a range of fashion wear to suit every pocket. Our product mix represents the most current fashion trends in tops, bottoms, formals and accessories for men, women and kids. Our courteous staff will ensure that consumers get a perfect fit. All vishal’s stores are air conditioned and tastefully decorated with easy excess to the products, giving to customers a unique shopping experience. Vishal’s trained staff will be able to help you select the garment of your choice and also help you color coordinates the accessories that you may want to buy. The group is today Rs. 6026.53 million company. The group’s prime focus is fashion retailing. The Vishal stores offer affordable family fashion at prices to suit every pocket.

The group’s philosophy is integration and towards this end has initiated backward integration in the field of high fashion by setting up a state of the art manufacturing facility to support its retail endeavors.

Vishal is one of fastest growing retailing groups. Vishal’s outlets cater to almost all price ranges. Our showrooms have a product range so wide that all your household needs can be catered under one roof. Our stores give you international quality goods and prices hard to match. The cost benefits that we derive from our large central purchase of goods and services are passed on to the consumer.

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Our loyalty programme gives the Indian consumer of being rewarded every time he makes a purchase at any of our stores anywhere in the country. Consumers can make purchases at any store and accumulate points at a central level. These points are redeemable at any of our stores. You can accumulate points even when you make a purchase while traveling and redeem points at any store. So no matter where you are in India you can partake in our loyalty programme.

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RETAIL INDUSTRY

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The India Retail Industry is the largest among all the industries, accounting for over 10 per cent of the country’s GDP and around 8 per cent of the employment. The Retail Industry in India has come forth as one of the most dynamic and fast paced industries with several players entering the market. But all of them have not

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yet tasted success because of the heavy initial investments that are required to break even with other companies and compete with them. The India Retail Industry is gradually inching its way towards becoming the next boom industry. The total concept and idea of shopping has undergone an attention drawing change in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. Modern retailing has entered into the Retail market in India as is observed in the form of bustling shopping centers, multi-storied malls and the huge complexes that offer shopping, entertainment and food all under one roof. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing workingwomen population and emerging opportunities in the services sector are going to be the key factors in the growth of the organized Retail sector in India. The growth pattern in organized retailing and in the consumption made by the Indian population will follow a rising graph helping the newer businessmen to enter the India Retail Industry. In India the vast middle class and its almost untapped retail industry are the key attractive forces for global retail giants wanting to enter into newer markets, which in turn will help the India Retail Industry to grow faster. Indian retail is expected to grow 25 per cent annually. Modern retail in India could be worth US$ 175-200 billion by 2016. The Food Retail Industry in India dominates the shopping basket. The Mobile phone Retail Industry in India is already a US$ 16.7 billion business, growing at over 20 per cent per year. The future of the India Retail Industry looks promising with the growing of the market, with the government policies becoming more favorable and the emerging technologies facilitating operations.

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The Global Retail Scenario

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Large format retail businesses dominate the retail landscape in the United States and across Europe, in terms of retail space, categories, range, brands, and volumes. Indian retail industry cannot hope to learn much by merely looking at the Western success stories in retail. Their scales of operations are very huge, the profit margins that they earn are also much higher and they operate in multiple formats like discount stores, warehouses, supermarkets, departmental stores, hypermarkets, convenience stores and specialty stores.. The economy and lifestyle of the West is not in line with that of India and hence the retailing scene in India has not evolved in the same format as the West nor can we learn valuable lessons from their style of operations. In retailing, the conventional wisdom used to be, that, the critical success factor was location. But precise location no longer matters and geo-demographics is increasingly becoming irrelevant. The leading multiple chain retailers, superstores and malls create their own centers of gravity, attracting customers by car, bus, train or even by plane to wherever they are located. The growth of multiple chain retailers has been relentless for many years in the west and this has been accompanied by the development of retail names as brands in their own right. Discount retailer Walmart has catapulted to the top of the Fortune 500 rankings in the U.S. with a turnover of $258 billions (2003 revenues – the basis for 2004 rankings), ahead even of oil major Exxon Mobil and the mammoth manufacturing giant General Electric. Wal-Mart is the world’s largest retailer. Already the world’s largest employer with over 1million associates, Wal-Mart displaced oil giant Exxon Mobil as the world’s largest company when it posted $219 billion in sales for fiscal 2001. Wal-Mart has become the most successful retail brand in the world due its ability to leverage size, market clout, and efficiency to create market dominance. Wal-Mart heads Fortune magazine list of top 500 companies in the world. Forbes Annual List of Billionaires has the largest number (45/497) from the retail business.

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A ruthless policy, of, ‘Always Low prices - Always’ has brought Walmart to the top. On the day after Thanks giving in November 2002, Wal-Mart sales hit $1.43 billion in one single day. Walmart and Nordstrom in the U.S. and Sainsbury’s and Marks & Spencer in the U.K. have grown by rapid geographic expansion in their own countries. Specialists like Benetton of Italy and IKEA of Sweden and The Body Shop of the UK are international and the fast food chains like McDonald’s and Pizza Hut are everywhere. The same products are increasingly available from the same names on every continent. Retailers worldwide have immensely benefited from the sustained growth of the disposable income of their global consumers. Retail has played a major role world over in increasing productivity across a wide range of consumer goods and services. The impact can be best seen in countries like U.S.A., U.K., Mexico, Thailand and more recently China. Economies of countries like Singapore, Malaysia, Hong Kong, Sri Lanka and Dubai are also heavily assisted by the retail sector. Retail is the second-largest industry in the United States both in number of establishments and number of employees. It is also one of the largest world-wide. The retail industry employs more than 22 million Americans and generates more than $3 trillion in retail sale annually. Retailing is a U.S. $7 trillion sector.

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Geographic Saturation: The end of the nineties has signified a turning tide of retailer power. The limit to retail ambition is geographic saturation. There is already a fear that the U.S is ‘over- malled’, that available shopping space exceeds customer demand for products. The retailer logic that ‘if we build new stores they will come’, is being belied. Many retailers have started postponing their store expansion plans. The track record of some of their international store expansions is also not promising. Category Killer Competition: The threat of saturation is accompanied by a new competition from the low cost category killers. Specialist competition is eating away at the market share and forcing down the prices and gross margins of the multiple chains. The success of the giant killers in the toys segment – Toys R Us and in home furnishings – Home Depot, in the area a case in point. Alternative Shopping Channels: The newest retail format that is showing growth in the U.S., and is more frightening for retailers than for consumers, is the Internet. The potential for online shopping which is growing in the U.S. questions retailers’ investments in more

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physical sites and stores and makes it imperative that they too explore the new agenda of ‘E-retailing’ or ‘e-tailing

The Indian Retail Scenario Retail is India's largest industry. It accounts for over 10 per cent of the India's GDP and around eight per cent of the employment. Retail sector is one of India's fastest growing sectors with a 5 per cent compounded annual growth rate. India's huge middle class base and its untapped retail industry are key attractions for global retail giants planning to enter newer markets. Driven by changing lifestyles, strong income growth and favorable demographic patterns, Indian retail is expected to grow 25 per cent annually. The Indian retail industry is expected to grow to $427 billion in 2010 and $637 billion in 2015. Retailers of multiple brands can operate through a franchise or a cash-and-carry wholesale model. It is expected that retail in India could be worth US$ 175-200 billion by 2016. India is the country having the most unorganized retail market. Traditionally it is a family’s livelihood, with their shop in the front and house at the back, while they run the retail business. More than 99% retailers function in less than 500 square feet of shopping space. Global retail consultants KSA Technopak, have estimated that organized retailing in India is expected to touch Rs 35,000 crore in the year 2005-06. The Indian retail sector is estimated at around Rs 900,000 crore, of which the organized sector accounts for a mere 3 per cent indicating a huge potential market opportunity that is lying in the waiting for the consumer-savvy organized retailer. 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 organized retail industry in India had not evolved till the early 1990s. Until then, the industry was dominated by the un-organized sector. It was a sellers market, with a limited number of brands, and little choice available to customers. Lack of trained manpower, tax laws and government regulations all discouraged

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the growth of organized retailing in India during that period. Lack of consumer awareness and restrictions over entry of foreign players into the sector also contributed to the delay in the growth of organized retailing. Foundation for organized retail in India was laid by Kishore Biyani of Pantaloon Retails India Limited (PRIL). Following Pantaloon's successful venture a host of Indian business giants such as Reliance, Bharti, Birla and others are now entering into retail sector. A number of factors are driving India's retail market. These include: increase in the young working population, hefty pay-packets, nuclear families in urban areas, increasing working-women population, increase in disposable income and customer aspiration, increase in expenditure for luxury items, and low share of organized retailing. India's retail boom is manifested in sprawling shopping centers, multiplex- malls and huge complexes that offer shopping experience, complete entertainment and different types of food all under one roof. But there is a flip side to the boom in the retail sector. It is feared that the entry of global business giants into organized retail would make redundant the neighbourhood kiryana stores resulting in dislocation in traditional economic structure. Also, the growth path for organized retail in India is not hurdle free. The taxation system still favours small retail business. With the intrinsic complexities of retailing such as rapid price changes, constant threat of product obsolescence and low margins there is always a threat that the venture may turn out to be a loss making one. A perfect business model for retail is still in evolutionary stage. Procurement is very vital cog in the retail wheel. The retailer has to fight issues like fragmented sourcing, unpredictable availability, unsorted food provisions and daily fluctuating prices as against consumer expectations of round-the-year steady prices, sorted and cleaned food and fresh stock at all times. Trained human resource for retail is another big challenge. The talent base is limited and with the entry of big giants there is a cat fight among them to retain this talent. This has resulted in big salary hikes at the level of upper and middle management and thereby eroding the profit margin of the business. All the companies have laid out ambitious expansion plans

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for themselves and they may be hampered due lack of requisite skilled manpower. But retail offers tremendous for the growth of Indian economy. If all the above challenges are tackled prudently there is a great potential that retail may offer employment opportunities to millions living in small town and cities and in the process distributing the benefits of economic boom and resulting in equitable growth. Purchasing power of Indian urban consumer is growing and branded merchandise in categories like Apparels, Cosmetics, Shoes, Watches, Beverages, Food and even Jewellery, are slowly becoming lifestyle products that are widely accepted by the urban Indian consumer. Indian retailers need to advantage of this growth and aiming to grow, diversify and introduce new formats have to pay more attention to the brand building process. The emphasis here is on retail as a brand rather than retailers selling brands. The focus should be on branding the retail business itself. In their preparation to face fierce competitive pressure, Indian retailers must come to recognize the value of building their own stores as brands to reinforce their marketing positioning, to communicate quality as well as value for money. Sustainable competitive advantage will be dependent on translating core values combining products, image and reputation into a coherent retail brand strategy. There is no doubt that the Indian retail scene is booming. A number of large corporate houses — Tata’s, Raheja’s, Piramals’s, Goenka’s — have already made their foray into this arena, with beauty and health stores, supermarkets, self-service music stores, new age book stores, every-day-low-price stores, computers and peripherals stores, office equipment stores and home/building construction stores. Every retail category has been attacked, by the organized players today. The Indian retail scene has witnessed too many players in too short a time, crowding several categories without looking at their core competencies, or having a well thought out branding strategy. As the corporates – the Piramals, the Tatas, the Rahejas, ITC, S.Kumar’s, RPG

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Enterprises, and mega retailers- Crosswords, Shopper’s Stop, and Pantaloons race to revolutionize the retailing sector, retail as an industry in India is coming alive. Retail sales in India amounted to about Rs.7400 billion in 2002, expanded at an average annual rate of 7% during 1999-2002. With the upturn in economic growth during 2003, retail sales are also expected to expand at a higher pace of nearly 10%. Across the country, retail sales in real terms are predicted to rise more rapidly than consumer expenditure during 2003-08. The forecast growth in real retail sales during 2003- 2008 is 8.3% per year, compared with 7.1% for consumer expenditure. Modernization of the Indian retail sector will be reflected in rapid growth in sales of supermarkets, departmental stores and hyper marts. Sales from these large-format stores are to expand at growth rates ranging from 24% to 49% per year during 2003-2008, according to a latest report by Euro monitor. In a developing country like India, a large chunk of consumer expenditure is on basic necessities, especially food-related items. Hence, it is not surprising that food, beverages and tobacco accounted for as much as 71% of retail sales in 2002. The share of food related items had, however, declined over the review period, down from 73% in 1999. This is not unexpected, because with income growth, Indians, like consumers elsewhere, have started spending more on non-food items compared with food products. Sales through supermarkets and department stores are small compared with overall retail sales. Nevertheless, their sales have grown much more rapidly, at almost a triple rate (about 30% per year during the review period). This high acceleration in sales through modern retail formats is expected to continue during the next few years, with the rapid growth in numbers of such outlets due to consumer demand and business potential. The factors responsible for the development of the retail sector in India can be broadly summarized as follows: • Rising incomes and improvements in infrastructure are enlarging consumer markets and accelerating the convergence of consumer tastes. Looking at income

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classification, the National Council of Applied Economic Research (NCAER) classified approximately 50% of the Indian population as low income in 1994- 95; this is expected to decline to 17.8% by 2006-07. • Liberalization of the Indian economy which has led to the opening up of the market for consumer goods has helped the MNC brands like Kellogs, Unilever, Nestle, etc. to make significant inroads into the vast consumer market by offering a wide range of choices to the Indian consumers. • Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc. • The internet revolution is making the Indian consumer more accessible to the growing influences of domestic and foreign retail chains. Reach of satellite T.V. channels is helping in creating awareness about global products for local markets. About 47% of India’s population is under the age of 20; and this will increase to 55% by 2015. This young population, which is technology-savvy, watch more than 50 TV satellite channels, and display the highest propensity to spend, will immensely contribute to the growth of\ the retail sector in the country. As India continues to get strongly integrated with the world economy riding the waves of globalization, the retail sector is bound to take big leaps in the years to come. The Indian retail sector is estimated to have a market size of about $ 180 billion; but the organised sector represents only 2% share of this market. Most of the organised retailing in the country has just started recently, and has been concentrated mainly in the metro cities. India is the last large Asian economy to liberalize its retail sector. In Thailand, more than 40% of all consumer goods are sold through the super markets and departmental stores. A similar phenomenon has swept through all other Asian countries. Organised retailing in India has a huge scope because of the vast market and the growing consciousness of the consumer about product quality and services.

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A study conducted by Fitch, expects the organized retail industry to continue to grow rapidly, especially through increased levels of penetration in larger towns and metros and also as it begins to spread to smaller cities and B class towns. Fuelling this growth is the growth in development of the retail-specific properties and malls. According to the estimates available with Fitch, close to 25mn sq. ft. of retail space is being developed and will be available for occupation over the next 36-48 months. Fitch expects organized retail to capture 15%-20% market share by 2010. A McKinsey report on India says organised retailing would increase the efficiency and productivity of entire gamut of economic activities, and would help in achieving higher GDP growth. At 6%, the share of employment of retail in India is low, even when compared to Brazil (14%), and Poland (12%).

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.

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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.

• Traditionally retailing in India can be traced to – The emergence of the neighborhood ‘Kirana’ stores catering to the convenience of the consumers. – Era of government support for rural retail: Indigenous franchise model of store chains run by Khadi & Village Industries Commission • 1980s experienced slow change as India began to open up economy. • Textiles sector with companies like Bombay Dyeing, Raymond's, S Kumar's and Grasim first saw the emergence of retail chains

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• Later Titan successfully created an organized retailing concept and established a series of showrooms for its premium watches • The latter half of the 1990s saw a fresh wave of entrants with a shift from Manufactures to Pure Retailers. • For e.g. Food World, Subhiksha and Nilgiris in food and FMCG; Planet M and Music World in music; Crossword and Fountainhead in books. • Post 1995 onwards saw an emergence of shopping centers,– mainly in urban areas, with facilities like car parking • Emergence of hyper and super markets trying to provide customer with 3 V’s Value, Variety and Volume • Expanding target consumer segment: The Sachet revolution - example of reaching to the bottom of the pyramid. • At year end of 2000 the size of the Indian organized retail industry is estimated at Rs. 13,000 crore

STRUCTURE OF RETAIL INDUSTRY IN INDIA The retail industry continued in India in the form of Kiranas till 1980. Soon, following the modernisation of the retail sector in India, many companies started pouring in the retail industry in India like Bombay Dyeing, Grasim etc. As has been mentioned earlier the retail sector in India can be widely split into the organised and the unorganized sector. The unorganized sector is predominant.

Unorganized Retail Sector The unorganized retail sector basically includes the local kiranas, hand cart, the vendors on the pavement etc. This sector constitutes about 98% of the total retail trade.

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Organised Retail Sector The organised sector trading is undertaken by the licensed retailers who have registered themselves to sales as well as income tax. The organised retail sector have in their ambit, corporate backed hypermarkets and retail chains. The private large business enterprises are also included under the organised retail category. The organised retail sector can be further subdivided into: In-store Retailers This type of retail format is also known as the brick and mortar format. These retail stores are in the form of fixed point sale outlets. They are specially designed to lure the customers. There are different types of stores through which the instore retailers operate. Branded Stores appear in the form of exquisite showrooms. Here the total range of a particular brand is available and the quality is certified by the government. There are also multi brand specialty stores that sell a series of brands so that the consumers are free to choose from the wide variety of available brands.

SEGMENT OF RETAIL

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The Indian retail industry is diversified into different segments such as clothing, textile, jwelery, wathches, footwear, health and beauty product, consumer durables, Mobile, furniture,food & grocery, book, music etc.In terms of retail sale the major contribution is of food & grocery, followed by clothing and textile, jwelery etc. Now if we look at the table above then it is evident that in organised retail sale, clothing, textile & fashion accessiories dominates in terms of sale followed by food and grocery sale. The total contribution of organised retail is just 3 % of total retailing. In percentage terms clothing, textile & fashiopn accessiories dominates the organised reatil sale. So

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one thing can be concluded here that inspite of having good retail sale in food and grocery ,organised retail contributes only 11% .

Grafical representation of expenditure on consumption If we look at the Indian consumption and expenditure than it become quite obivious that majar share of expenditure on consumption is being utilised in retail sales. From the above graph is clear that out of the Rs 16,90,000 cr expenditure in final consumption the major share is retail sale. It is 55% (ie. Rs. 9,30,000 out of

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Rs 16,90,000) of the total expenditure. This graph also tell us the story of lion, which being the fast moving consumer goods in the retail sector. The US$ 6.1 billion Indian foods industry, which forms 44 per cent of the entire FMCG sales, is growing at 9 per cent and has set the growth agenda for modern trade formats.

The Indian retail sector can be broadly classified into: a) FOOD RETAILERS There are large number and variety of retailers in the food-retailing sector. Traditional types of retailers, who operate small single-outlet businesses mainly using family labour, dominate this sector .In comparison, super markets account for a small proportion of food sales in India. However the growth rate of super market sales has being significant in recent years because greater numbers of higher income.

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b) HEALTH & BEAUTY PRODUCTS With growth in income levels, Indians have started spending more on health and beauty products .Here also small, single-outlet retailers dominate the market However in recent years, a few retail chains specializing in these products have come into the market. Although these retail chains account for only a small share of the total market , their business is expected to grow significantly in the future due to the growing quality consciousness of buyers for these products . c) CLOTHING & FOOTWEAR Numerous clothing and footwear shops in shopping centers and markets operate all over India. Traditional outlets stock a limited range of cheap and popular items; in contrast, modern clothing and footwear stores have modern products and attractive displays to lure customers. However, with rapid urbanization, and changing patterns of consumer tastes and preferences, it is unlikely that the traditional outlets will survive the test of time. d) HOME FURNITURE & HOUSEHOLD GOODS Small retailers again dominate this sector. Despite the large size of this market, very few large and modern retailers have established specialized stores for these products. However there is considerable potential for the entry or expansion of specialized retail chains in the country. e) DURABLE GOODS The Indian durable goods sector has seen the entry of a large number of foreign companies during the post liberalization period. A greater variety of consumer electronic items and household appliances became available to the Indian customer. Intense competition among companies to sell their brands provided a strong impetus to the growth for retailers doing business in this sector. f) LEISURE & PERSONAL GOODS

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

RECENT TRENDS IN RETAILING

Earlier in the Retail industry growth rate graph is is quite clear that retail industry is growing at a steady pace of 8-9 %.bUt the organised retail is growing at a very

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fast pace ie, 30%. So it is estimated that by the year ending 2010 the total volume of organised retail will be near to Rs 100,000 cr. “Structural changes in retail will surely start affecting a large number of small retailers at some stage, be it after one or two decades, especially when the overall size of the organized retail in food reaches about 25-30%,” said the report prepared by researchers of the International Food Policy Research Institute (IFPRI) and Michigan State University (MSU). The emerging structural transformation in retail trade would benefit the society as a whole, but noted that “the gains will accrue early to consumers

Malls in India

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The largest form of organized retailing today. Located mainly in metro cities, in proximity to urban outskirts. Ranges from 60,000 sq ft to 7,00,000 sq ft and above. They lend an ideal shopping experience with an amalgamation of product, service and entertainment, all under a common roof. Examples include Shoppers Stop, Piramyd, and Pantaloon. Over the last 2-3 years, the Indian consumer market has seen a significant growth in the number of modern-day shopping centers, popularly known as ‘malls’. There is an increased demand for quality retail space from a varied segment of large-format retailers and brands, which include food and apparel chains, consumer durables and multiplex operators. Shopping-centre development has attracted real-estate developers and corporate houses across cities in India. As a result, from just 3 malls in 2000, India is all set to have over 220 malls by 2005. Today, the expected demand for quality retail space in 2006 is estimated to be around 40 million square feet. While previously it was the large, organised retailers – with their modern, up-market outlets, and direct consumer interface- who had been a key factor driving the growth of organized retail in the country, now it is the malls which are playing the role. Factors such as availability of physical space, population densities, city planning, and socio-economic parameters have driven the Indian market to evolve, to a certain extent, its own definition of a ‘mall’. For example, while a mall in USA is 400,000 to 1 million sq.ft. in size, an Indian version can be anywhere between 80,000 sq.ft. and 500,000 sq.ft. By 2005, total mall space in the 6 cities of Mumbai, Bangalore, Hyderabad, Chennai, Kolkata, and National Capital Region (Delhi, Noida, Gurgaon) is expected to increase to over 21.1 million sq. ft. Compared to other big cities, Kolkata and Hyderabad are relatively new entrants in the mall segment, but are witnessing quick growth. Smaller cities like Pune, Ahmedabad, Lucknow, Ludhiana, Jaipur, Chandigarh and Indore, are also expected to see a formidable growth in the growth of malls in the near future. But malls in India need to have a clear positioning through the development of

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differential product assortment and differential pricing, in order to compete effectively in a growing mall market. Segmentation in malls, like up-market malls, mid-market malls, etc. , proper planning, correct identification of needs, quality products at lower prices, the right store mix, and the right timing, would ensure the success of the ‘mall revolution’ in India.

• Supermarkets (Foodworld,Spencer’s) • Hypermarkets (Big Bazaar,Trent ) • Department Stores (Shoppers Stop,LifeStyle) • Specialty Chains (Spar) • Discount Chains (Subhiksha) • Cash ‘N’ Carry (Metro) • Petro Convenience (In & Out, Shell) • Kiranas: Traditional Mom and Pop Stores • Kiosks • Street Markets • Exclusive /Multiple Brand Outlets

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Hyper marts/Supermarkets Large self-service outlets, catering to varied shopper needs are termed as Supermarkets. These are located in or near residential high streets. These stores today contribute to 30% of all food & grocery organized retail sales. Super Markets can further be classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets ranging from of 3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personal sales.

Department Stores Large stores ranging from 20000-50000 sq. ft, catering to a variety of consumer needs. Further classified into localized departments such as clothing, toys, home, groceries, etc. products catering to all basic needs to luxurious items as well. Departmental Stores are expected to take over the apparel business from exclusive brand showrooms. Among these, the biggest success is K Raheja's Shoppers Stop, which started in Mumbai and now has more than seven large stores (over 30,000

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sq. ft) across India and even has its own in store brand for clothes called Stop.

Specialty Stores Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer Crossword, RPG's Music World and the Times Group's music chain Planet M, are focusing on specific market segments and have established themselves strongly in their sectors.

Discount Stores As the name suggests, discount stores or factory outlets, offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left over at the season. The product category can range from a variety of perishable/ nonperishable goods.

Convenience Stores These are relatively small stores 400-2,000 sq. feet located near residential areas. They stock a limited range of high-turnover convenience products and are usually open for extended periods during the day, seven days a week. Prices are slightly higher due to the convenience premium

MBO’s Multi Brand outlets, also known as Category Killers, offer several brands across a single product category. These usually do well in busy market places and Metros.

Trade parks

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Trade parks are basically business complexes that promote international trade. The global players here have access to the top Indian exporters. To the buyers this would prove to be a boon since they do not have travel to far off towns to enter into business deals with the exporters, especially in places where infrastructure is very poor. By this the exporters not only enhance their visibility but they also enjoy a host of other advantages. They can design libraries, studio etc, in order to attract potential customers.

Forecourt Retailing This type of retailing is done by the oil companies in order to increase their revenue. They not only deliver fuel but also offer other services to its customers.

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Retailing in India is witnessing a huge revamping exercise as can be seen in the graph • India is rated the fifth most attractive emerging retail market: a potential goldmine. • Estimated to be US$ 200 billion, of which organized retailing (i.e. modern trade) makes up 3 percent or US$ 6.4 billion • As per a report by KPMG the annual growth of department stores is estimated at 24% • Ranked second in a Global Retail Development Index of 30 developing countries drawn up by AT Kearney.

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Multiple drivers leading to a consumption boom: Favorable demographics Raising aspirations : Value added goods sales. Growth in income Increasing population of women • Food and apparel retailing key drivers of growth • Organized retailing in India has been largely an urban phenomenon with affluent classes and growing number of double-income households. • More successful in cities in the south and west of India. Reasons range from differences in consumer buying behavior to cost of real estate and taxation laws . • Rural markets emerging as a huge opportunity for retailers reflected in the share of the rural market across most categories of consumption – ITC is experimenting with retailing through its e-Choupal and Choupal Sagar – rural hypermarkets. – HLL is using its Project Shakti initiative – leveraging women self-help groups – to explore the rural market. – Mahamaza is leveraging technology and network marketing concepts to act as an aggregator and serve the rural markets. • IT is a tool that has been used by retailers ranging from Amazon.com to eBay to radically change buying behavior across the globe. • ‘e-tailing’ slowly making its presence felt. • Companies using their own web portal or tie-sups with horizontal players like Rediff.com and Indiatimes.com to offer products on the web.

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The above two pictures shows us that how service to customer has changed during the due course of time. In earlier days the retailing format allows the customers to purchase product from specific counter they are not allowed to look for different products by themselves, so ultimately they are bound to purchase goods from the shop as per the recommendation of the retailer. But this form of retailing i.e. counter service is overtaken by self service. In this new pattern the customers to alllowed to roam inside the premise of the shop to collect different types of goods, which they wish to purchase. So this type of self service pattern has increased the buying experience of the customer and this has also increase the sale volume of the retail outlet.

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So, this change in retailing trends has tremendously increased the number of customer towards the retail outlet.

A Stock Keeping Unit, or SKU as an initialism is a unique identifier for each of the distinct products and services that can be ordered from a supplier.SKUs are often assigned and serialized at the merchant level. All merchants using the SKU method will have their own approach to assigning the numbers based on regional or national corporate data storage and retrieval strategies. Over the past 30 years, the role of the warehouse has changed dramatically as customer and vendor compliance issues have surfaced and a greater emphasis has been placed on supply chain visibility and customer satisfaction.

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There for the stock keeping units, or SKU has increased so many folds. In older days the number of SKU’s used to be lass than 200. But now a days it has matamorfised to 8,000-10,000 SKU’s. this has increased the visibility of the products in the ware house.

If we go foe the size of a retail outlet than it is quite obvious from the above two pictures that the size of shop has increased from few hundred sq ft. shop to few thousand sq. ft. shop. Earlier the shops were kirana stores, pop and mom stores which were very less in terms of size. These stores are specially meant for catering the needs of nearby localites. So naturally the no of shops were more as compared to the new format of shops But if we look at the big size outlets such as hypermarkets, supermarkets,etc. there size is 50,000 sq. ft. and more. Now the new size of outlet i.e. lakh sq. ft. outlets

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are in pipeline. In this new big size retail outlets goods are displayed in an orderly manner, for example different corners for catering different sets of peoples. Now every big business houses is in process of entering into this type of big space retail business, eg. Bharti is foraying in this type of retail after reliance had made their entry.

Now retailing has changed it’s pattern in terms of gadgets application. Earlier the shops were using very less gadgets which are manually operated. In some cases there were no use of gadgets in retailing. But with the elipse of time gadgets are being incorporated in retailing day by day.

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Now each type of retailing sector,it may be textile, grocery, food and beverage e.t.c has incorporated advanced gadgets in their retail sales. For Ex. In food and beverages retailing refrigrators, Proper lighting e.t.c used frequently. In milk retailing today refrigetator vachile are being used for sale. Now even grocery are being sold in new type of gadgets. So the application of gadgets has increased the fresness of goods and increased the diplay of products helping

Retailing sector has undergone a mammoth change over the last decade. The late nineties saw a how the modern day computers, printers, and scanners, etc have replaced the traditional bahikhatas.

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So fast and smooth has been this change that in no time, cities ranging from the metropolitan background to the most mediocre background, have already accepted this change with open arms. In the years to come, we perhaps might see more such changes coming our way and expect a similar fashion of acknowledgement and acceptance from its users.

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In early days business were run without using Bar code. This type of operation is being performed by the retailer manually. Now a days Bar coding is frequently used by the retailer in there business operations. Barcoding helps business streamline operations by automating data collection. In recent times bar code is replaced by advanced RFID . It helps the retailer in augemented sales operation Both bar coding and RFID are quite similar; both are intended to provide rapid and reliable item identification and tracking capabilities. The primary difference between the two technologies is that bar coding scans a printed label with optical laser or imaging technology, while RFID scans, or interrogates, a tag using radio frequency signals. Because of the low cost of bar code labels, established standards, and global deployment, bar coding is a widely accepted, mature technology, while, in the past, RFID had been limited to niche applications.

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Shopping has never been such interesting, thanks to the latest efforts of the retail chains, that today people create time to shop around, rather than finding time to shop, as in before this retail boom. They have increased the buying experience by introducing shoppertainment. Today it is perceived as one of the most look after shopping. Retail chains have pulled every trick from their hat, to lure the customers, hold their imaginations, and provide them interesting options consistently. And they have been successful so far, but let’s see how long…………

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NEWER CONCEPT- FARM RETAIL The New Middle Man

The food and grocery business offers a beguiling prospect, although estimates vary widely. The India Retail Report 2007, put together by leading Indian and foreign consultancies, estimates that the retail pie was worth Rs 1,200,000 crore in 2006, with food and groceries accounting for a whopping 63 per cent. But the share of organised retail in this sector was negligible. According to Crisil Research, food and grocery (F&G) items account for a significant 74 per cent of total retail sales, which it places at Rs 12,80,000 crore (Rs 14.8 trillion) in 2008. However, F&G accounts for only 18 per cent of the total organised retail market, as the penetration of organised retail in the F&G vertical is a mere 1 per cent.

What it means is that the “opportunity in agriculture is very, very big” as Rakesh Bharti Mittal, vice chairman of Bharti Enterprises, says. The company, which revolutionised telecom in the 1990s by expanding its reach to millions of customers, is hoping to do the same with its foray into agriculture, specifically vegetables and fruits. It has launched Field Fresh Foods in partnership with EL. Ro Holdings India, an

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investment company of the Rothschild family, and expects a turnover of $1 billion (Rs 4,100 crore) in five years. Mittal will be invest Rs 10,000 crore ($ 2.5 billion) to cover 10 million sq. ft. of retail space by 2015. By then, they hopes to cover all cities with a population of one million and above. The underlying philosophy, the company says, is to link Indian farms to the world “by creating the country’s first global outsourcing opportunity in fresh produce”. Its 300-acre farm leased from the Punjab Agricultural University has been experimenting with exotic vegetables destined for the European market. Snow peas, cherry tomatoes, bell peppers and sugar snap peas are being tested out at the Ladowal farm close to Ludhiana, which is the lynch pin of its farming initiative. The numbers get bigger with RIL. Officials have refused to discuss its retail plans with media, but company sources say it is setting aside Rs 50,000 crore to build its farm-tofork linkage. Reliance has drawn up plans for a presence in 784 towns and 6,000 mandi (wholesale market) towns with 1,600 rural business hubs to service these. It has already rolled out 177 Reliance Fresh stores across major towns in 11 states. According to a company report, RIL is targeting a turnover of Rs 40,000 crore in the next few years. All of a sudden, the farmer is in demand. Retail chains want his produce — they also want his farm. Companies from DCM to the Tatas to Triveni are investing big to help the country’s notoriously inefficient and hamstrung agriculture to scale up production, modernise farm practices and persuade farmers to use the best seeds and improved irrigation system so that they get good returns .

If India Inc is expected to invest more in agriculture, many of the existing acts need to be amended. Till the Agricultural Produce Marketing Committee (APMC) Act is amended, farmers cannot sell their produce in the open market, but only in the mandis (wholesale markets). The mandi is controlled by the arthiyas (commission agents) and mashokars (middle men) who pay a fee to the government for the upkeep of the market and improving the infrastructure.

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So far, 16 states have amended the Act but until these states frame the rules under the amended Act it remains a legislative exercise that does not change ground realities. Delhi has once again extended the deadline to March 2008 for all 29 states to amend the law.Till that happens, India will remain one of the most fragmented markets for agriculture produce. The amendment of the Act has paved the way for contract farming in a numbers of states although there is a restriction on the lease period. Under the model law on contract farming, a farmer can lease out his land for a minimum of 11 months and a maximum of 30 months. Companies getting into retail complain that 30 months is too short a time to recoup investments. Farmers are wary of longer leases because they fear they would lose their land rights. The corporate entrants have been seeking an amendment in the Revenue Act so that they can lease land for up to 10 years. Says Rakesh Mittal: “We need to amend the law so that farmers can lease land on long tenure without alienating their ownership rights.” Currently, only three states — Punjab, Haryana and Maharashtra allow farmers to lease land. Here too, farmers are now leasing out their land for 30 months. In the wake of the agitation against the special economic zones however, companies are finding it very difficult almost impossible to pick up land for agricultural purposes.

For most, one of the inspirations has been PepsiCo. The food subsidiary of the US soft drink company has been successful in transforming agriculture in a part of Punjab where Pepsi pioneered the concept of contract farming for bulk procurement of crops like potato, tomato, groundnut, chilli and paddy. In partnership with the Punjab Agriculture University and Punjab Agro Industries Corporation, it used locationspecific R&D to boost yields of tomato and chilli by almost three times. It is the same idea that is driving the latter-day corporate farm evangelists. Mittal says drip irrigation methods will be promoted to stop the wastage of water which he terms “an ecological nightmare”. Other good practices are part of the package that companies are offering farmers across the country: improved seeds, fertilisers and pesticides,

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technical support on multi-cropping, better irrigation methods.

All of which would raise farm incomes by at least 30 per cent. Even better, farm

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employment would go up since horticulture is labour-intensive and would keep more people employed on the farm than other crops. Alongside, this would come an impressive network of infrastructure from pre-coolers and pack houses to cold stores and refrigerated trucks. For Indian agriculture, this could be a Godsend as it struggles to move up the value chain. Horticulture growth rates in India have been dismal at 4 per cent for the last decade compared with a staggering 56 per cent globally. A 2 percent increase in growth of production in the last two years has brought total production to 184.8 million tonnes. India is the second largest producer of fruits and vegetables (15 per cent and 11 percent respectively) but way behind China which accounts for 34 percent of world output. Fortuitously for the farmers, retail interest is happening at the right time when the interests of big business, the farmer and the consumer are coinciding. And as it happened with the Green Revolution, a public-private partnership is falling into place. Since 2004, the agriculture ministry has been taking more than a cursory interest in this sector and set up the national horticulture mission to give the much needed thrust to the farm-to-fork campaign. S. K. Pattanayak, joint secretary in the agriculture ministry, says the basic effort is to help farmers equip them to meet domestic and export demand more efficiently. A star feature of this plan is the terminal market, a one-stop shop that will offer state-of-the art facilities for grading, storing and transport of perishables, besides banking. The first of these is coming up in Chandigarh and Reliance is among the four companies that have been shortlisted by the Punjab agriculture department. Eight of these terminal markets are coming up in the country in an initiative that is being monitored by Yes Bank as the consultant to the project. For both farmers and the retail chains, these markets will be linked to a number of collection centres in key centres. Why should the entry of big companies in F&G mean good news for the farmer, 75 per cent of whom are small and marginal cultivators with less than a hectare of land? The

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simple reason is that almost all of these companies are planning huge backend operations to create captive agricultural bases, either for their retail outlets or for supply. For starters, it means that farmers can sell directly to these retailers or aggregators such as Trikaya Agriculture and break free of the regulated mandis (see ‘Restrictive laws’). In this scheme of things, the farmer’s share in the retail price is as little as 12-15 per cent compared with 40 per cent for farmers in Thailand. The World Bank believes that huge investments by the retail biggies in the supply chain infrastructure could usher in a service revolution that would shorten the distance that fresh produce travels to reach the consumer. In a supply chain analysis of 13 high value commodities that covered 1,400 farmers, 200 commission agents and 65 exporters across the country, the Bank found that high transport costs and multiple players in the linear supply chain were crippling horticulture. India is a large low-cost producer of fruits and vegetables but is unable to compete in the global market on account of what it terms the logistics tax on fresh farm produce. The inefficiencies in the system also mean that 25-30 per cent of the produce (valued at Rs 50,000-52,000 crore) is wasted, imposing additional burden on both the grower and the consumer. Big retail’s plans to clean up the back-end may change all this. Trikaya Agriculture and Mahindra Shubhlabh are just waiting for organised agro-retail business to take off. According to the Central Potato Research Institute of India (CPRII), India produces 25 million tonnes of potatoes. For those who can link the supply chain from the farm to the shelf, a business worth Rs 2,500 crore is up for grabs. Mahindra Shubhlabh is upbeat about this development and is already testing different supply chain models to link agro-retail firms. It would either enable the transportation of farm products to a store or become what are known as “aggregators” of farm produce. This term is used when the retailer leases out a small section of a store to the aggregator, whose business is to collect produce from different farms and fill up empty shelves in the store. The profit sharing margins on the particular space leased in the store would depend on the retailer. The aggregator could use a mix of warehouses, cold storage facilities and refrigerated trucks depending on the kind of product that is to be put on the shelf. He

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will also bear the loss in the case of perishable items when in transit. Tesco in Europe has 7 per cent of its $40 billion business being managed by ‘aggregators’ and ‘distributors’. “If this happens in India with agro-retail, there is a lot of money for us,” says Vikram Puri. Mahindra Shubhlabh is already working in 100,000 acres of farmland, which includes contract farming. They have also leased 55 acres from farmers in Punjab for the same purpose. In the process of setting up the retail networks, these large corporations are changing the domestic agricultural landscape. For starters, they are introducing the Indian farmer to better seeds, new technology, supply chain management and food processing. These companies have already brought in technology that increases the shelf life of fruits and vegetables. Primarily, there are three models being worked on by India Inc. First, a model farm like Bharti’s FieldFresh. Second, contract farming. Third, contact farming. In contract farming, the farmer is supplied seeds and other ingredients by the company. The contractor buys the entire farm produce at a pre-fixed price. However, in case there is a supply shortage and the price offered by the government is higher than the price contracted by the company, the farmer can sell it all to the government. Contact farming is a more complicated. Here, a farmer takes land on lease from other farmers. He is generally paid Rs 15,000 per acre every year, while the marginal farmer is employed to work on his land for which he is paid a monthly salary. But Bharti says it is switching to contract farming because of the complexities of contact or collaborative farming. Not surprisingly, Punjab is ground zero for both Bharti and Reliance’s food retail ventures. After all, Punjab is where the Green Revolution changed the face of Indian agriculture in the mid-1970s. Punjab is also the first state to set up the terminal market that will act as a major catalyst for farm growth.

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In other parts of the country too, companies —like farmers — will be benefiting from the groundwork done by the government to promote precision farming in horticulture. Companies from Mumbai are making a beeline for Tamil Nadu’s Dharmapuri village, which has made a signal success of its fruit and vegetable production, thanks to government support. It has corporates with big retail plans knocking on the doors. Officials from Reliance and the Aditya Birla group have visited the village recently especially for looking to source vegetables directly. These retail chains are sourcing produce through three routes. One, from village markets or mandis. Second, from APMC yards. And, third, by linking directly with farmers. Food Bazaar has links with farmers growing potatoes and fruits. It has even gone on to link farmers in the dairy business with the help of a company called Dynamic Dairy in Maharashtra. It has also sourced produce from farmers growing exotic vegetables like red pepper, mushroom, etc. In Ratnagiri, Maharashtra, farmers have formed cooperatives and regularly supply mangoes to retail chains. “We sold 35,000 tonnes of mangoes from Ratnagiri last year. The farmers managed to get 90 per cent of the original cost,” says Arvind Chaudhary, CEO Pantaloon Retail’s food business. If they had gone to a mandi they would have realised only 70 per cent of the cost. This year, Pantaloon’s Food Bazaar is planning to buy 100,000 tonnes of mangoes. The supply chain is managed such that mangoes are transported to the store a week before they become ripe. Cold chain is used only in the case of potatoes, where 5,000 tonnes are stocked in UP. Pantaloons food business is growing at 25 per cent in the entire Big Bazaar chain, which also sells FMCG products. However, there are certain issues that agro-retail chains will have to address before they can make the farmer smile. “Hurdles such as bad infrastructure, high cost logistics management, the middleman and the limiting APMC Act will have to be crossed if retail has to assist the farmer,” says Choudhary. Since the existing supply chain allows them to connect with only those farms that are nearest to the cities, those living in the

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hinterland still have no access to markets. Importantly, the best of these stores shy away from commenting on the investments. Godrej Agrovet on the other hand has tactfully used its marketing experience in rural areas by opening advice centres called ‘Aadhar’. These centres will enable the farmer to increase his production from 40 tonnes per acre to 100 tonnes per acre. This year, the company will cover 2,500 villages and farms in these villages will be directly linked to its retail business, Nature’s Basket, in Mumbai. “The proposition here is to remove the intermediary who is adding more cost than value,” says C.K. Vaidya, managing director of Godrej Agrovet. Godrej too does not use the cold chain. A modern supply chain, including refrigerated trucks and warehouses, would come at a high cost and the burden is borne by the consumer. “The consumer should be prepared to pay this cost,” Vaidya says. This development poses two challenges for retail firms. First, they would have to squeeze the supply chain in order to offer the best prices. Here, the farmer will have to bear the brunt and could end up sacrificing more than he can in terms of price realisation. Second, the consumer is left with no choice but to pay a higher cost for getting fresh farm products. This is an issue that retail stores will grapple with and only certain items such as oranges and potatoes will be stored in the cold chain. Importantly, they will stick to proximity. Access to farms within a 4-5 hour reach will determine pricing and the product mix in the agro-retail business. This apart, there has been a call to set up an exchange market for agricultural produce. This free market principle, CEOs feel, will liberate the farmer in terms of actual price realisation and keep him out of debt for the coming season. The National Spot Exchange Limited, an exchange which is dedicated for agri-produce, is supposed to create a benchmark even for the small farmer who can sell only one quintal. “The price in the exchange will be determined by many buyers around the country and not the local trader,” says Anjani Sinha, managing director and CEO of NSEL. The NSEL is in the process of setting up 117 warehouses and cold chains of 700,000 metric tonnes capacity each to make the exchange operational.

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Though farmers are upbeat about selling directly, they are still wary. “They (corporate retail chains) wanted to ink a deal with us and were even talking about a partnership model. But we need a fixed price over a certain period,” they say. Right now, companies are mostly dealing with farmers on the periphery of cities but analysts say they would ultimately have to invest in cold chains and move into the interiors. Whether companies — except for those with deep pockets like Reliance — will have the courage to do that is in question. According to the confederation of Indian industry, if India has to double fruits and vegetables production to 300 million tones by 2012, it would require pumping in close to Rs 20,000 crore. But analysts warn that such investment may not pay dividend since it doubles the cost of transportation.

So, how will retail chains be able to pay the farmer a higher price, subsidise the cold chain and yet give it cheap to consumers in the long run? Most vegetables and several fruits don’t need cold chains, says S. Sivakumar, ITC’s chief executive, agri businesses. “Vegetables are grown in the periphery of towns and they can move in

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ambient chains. What’s required is better coordination along the chain to minimise wastage.” But, for the moment, retail chains continue to side-step the key question: Will farmers benefit? “It is competition that will bring down the margins but the savings will be pocketed by the retailers themselves. But the savings could very well be pocketed by the retailers themselves,” concedes Siva Kumar. “It’s a different universe out there,” says he. “Companies need to empathise with the farmer and build relationships on a win-win wicket. Otherwise, it just won’t work.” Putting

the

farmer

under

contract

Behind the squeaky clean showrooms of the new food retail outlets that are dotting the cityscape, dirty wars are being fought. There is poaching of staff and suppliers, and aggressive price discounting as rival retail chains try to win custom and destroy competition. Most of the grubby skirmishes are over farmers - and their produce. Suddenly, the humble grower of veggies and fruits is being sought out and wooed as corporate India's biggest names try to secure enough supplies to feed their rapidly

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proliferating chains. In this mad scramble, loyalty is at a discount. That's what the cooperative sector giant Mother Dairy is discovering to its chagrin. The milk cooperative, which diversified into fruits and vegetables (F & V) in the 1980s, is losing its traditional suppliers as retail chains with deep pockets woo them with hefty premiums. Increasingly, Mother Dairy's back end, built up painstakingly over the past two decades, is coming under strain. The farmers who have been growing F & V specifically for its Safal outlets have been selling their produce to the new chains which are ready to pay that much more. This has come as a rude shock for Mother Dairy which has cast itself in the role of the farmer's saviour. An old hand of the National Dairy Development Board (NDDB), Mother Dairy's parent organisation, laments farmers' collectives that were put together after "years of blood, sweat and tears". NDDB set up the Safal F & V unit in 1988, using the milk model to bring good quality vegetables at low prices to Delhi consumers. The turnover on this was Rs 200 crore last year. Over the years, it has cobbled together a network of 10,000 famers on the periphery of Delhi to form associations that supply 350 tonnes of F&V to the city. These are mainly marginal farmers with an average holding of three acres. The farmers work to a monthly crop plan prepared by Safal's procurement team and are given seeds and fertilizer from a support division which also send out extension workers to the farms. So far the system has worked well. Farmers tend to be loyal because Mother Dairy is an assured buyer. "We never say no to farmers, whatever they bring," says Sunil Bansal, the new CEO of the F&V unit. If there is a glut, a median price is struck, ensuring that the farmer is not put to a loss while ensuring that consumers benefit from the low prices. But things are changing for the cooperative enterprise. Private players, desperate for supplies and footfalls are offering big premiums to farmers coupled with hefty discounts to customers. Sometimes, the supply of a certain vegetable or fruit just doesn't reach the collection centres; it is bought up by the corporate rivals. At other times, Safal is unable to match

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the price offered by the new chains. This in turn would affect its turnover and, subsequently, its ability to pay the farmer. What can Safal do in the circumstances? Nothing much really. Bansal might claim that farmers will largely remain loyal to an organisation that has stood by them through thick and thin and that the farmer will "see through the entry strategy" that the corporate chains are employing. The reality is that supplies cannot be guaranteed unless buyers have some kind of lien on the crop, say the experts. In short, contract farming. (Corporate farming on a commercial is ruled out for the moment given India's laws on land holdings and usage). There is one school of thought which believes there is a certain inevitability to contract farming. "The agriculture model has to change because the stakes are so high," says Devangshu Dutta, chief executive, Third Eyesight, a Delhi-based consultancy focussed on retail and consumer products. And going by the experience, he thinks that contract farming is the solution since it has worked well for a number of companies in several crops, such as wheat, gherkins, tomatoes and potatoes. Not everyone agrees the contract farming is the only way forward. S. Sivakumar, ITC's chief executive, agribusiness, says that while contracting does help, it is not a precondition. "If the prices are volatile, and the products have a ready market, then contracts tend to fail because one party gains by reneging," he points out. Setting up buying centres closer to villages would be the best option for most companies. But then not everyone has ITC's rural pedigree: 100 years of tobacco farming and another 30 years in oilseeds. This has given ITC enviable farm linkages. To feed its initial foray into retail - that's just three cash and carry stores in Hyderabad, Pune and Chandigarh - the agri division works with 600 farmers spread across the same three clusters on everyday vegetables such as tomato, gourds, cabbage, cauliflower, brinjal and potato. For its export business ITC works with grape and mango farmers, some 3,000 in all to procure about 25,000 tonnes. This number will go up as the stores expand. The more stunning numbers are to be found in the non-perishables that go into ITC's

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branded foods business. In spices and wheat, it partners with 100,000 farmers (for 700,000 tonnes) and an even larger number for its grain & oilseed exports: three million farmers for procuring two million tones. With such experience behind it, it is easy for ITC to maintain that contract farming is not important. But for new entrants in the retail food business which includes every big name from the petroleum giant Reliance Industries to the telecom biggie Mittal contract farming, such figures provide an indication of the scale of operations that are required. As companies look at the challenges of managing the rural environment it is prompting them to seek more safeguards for their nascent enterprises. This has increased the pressure on states to amend the state Agricultural Produce Marketing Committee (APMC) Act that would not only enable the farmers to sell their produce directly but also facilitate contract farming. So far only three states have eased the rules on this. This is a political hot potato since the Left opposes contract farming ideologically, while the Congress has remained ambivalent. Those who champion it say that India is ideally placed to pursue contract farming since the market is changing from a supplydictated production system to demand-driven value chains. However, the debate has tended to get stuck on the contract violations that have taken place in the past. Both the contracting company and the farmer are known to have reneged on contracts on account of market fluctuations. While corporate clients are known to have backtracked on paying the agreed price when the markets have slumped, farmers have also been guilty of refusing to make the contracted supplies when the markets have shown an upswing. But there have been excellent success stories, too. The seed industry and poultry are good examples of farmers and agri-related businesses working well without a written contract. And that has operated for three decades. It is commonsense that contract farming succeeds when there is "natural reciprocal dependency between the contracting parties", says Siva Kumar, who is regarded as the guru of agribusiness. The basic

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caveat: never let it become a zero sum game. His formula for successful contract farming includes the following enablers: * market institutions that provide risk transfer mechanisms (again, the game is not zero sum) * protection through crop/weather insurance (this increases the risk-taking ability of the contracting parties by spreading the same to the market) * an environment does not allow one party to exploit the disadvantaged counterparty. All of this means that government would have a significant role to play. It would have to set up a regulatory framework to facilitate registration of contracts and quick resolution of disputes. Siva Kumar, in fact, believes the government should be a party to the contracts so that farmers are not taken for a ride. But the fact is there is no law on contract farming, only a model regulation under the APMC Act that the ministry of agriculture has offered as a guideline for the states. Some state governments have allowed the companies to increase the lease of farms from 11 months to 30 months but none of them has so far thought of bringing the farmer into the debate on contract farming. It is largely the companies that are pushing the drive for a more liberal approach to this initiative -and for a simple reason. For companies, contract farming would be part of their cost structure and as such their focus will be on minimising the costs. According to one reckoning, such an enterprise is unlikely to be a profit centre for corporate investors since it would take as long as 79 years for them to recoup their costs. For the farmers, on the other hand, it could very well be a life and death matter. That's why agriculture minister Sharad Pawar needs to give some attention to this issue and prod state governments to take the right measures to protect the small cultivator. So while contract farming offers a great opportunity to transform several hundred million

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from subsistence farmers to partners in a prosperous endeavour, the authorities need to ensure they are guarded from the hidden traps. With some thought, Dutta says the government can help create what he calls a wave of Agriculture Product Outsourcing as it pushes its farm-to-fork initiative. But he warns that there are no quick fixes. "It's going to be a struggle and will take quite a few years for things to stabilise." In recent weeks, Usha Tandon's routine has changed slightly. It is a small but significant shift in buying patterns and offers a clue as to why the biggest names in corporate India, from Reliance Industries (RIL), the oil and petrochemicals behemoth, and the AV Birla group to the Mittals of telecom fame, Pantaloon Retail and RPG group to a host of smaller players have jumped into retailing of fresh vegetables and fruits along with other groceries. They have joined a clutch of slightly older firms like Mahindra Shubhlabh Services, Godrej Agrovet and R. Subramanian and associates who promote the standalone Subhiksha chain.

Opportunity in Indian Retail Standing on the threshold of a retail revolution and witnessing a fast changing retail landscape, India is all set to experience the phenomenon of a global village. India presents a grand opportunity to the world at large, to use it as a business hub. A ‘Vibrant Economy’, India tops A T Kearney’s list of emerging markets for global retailers for the 3rd consecutive year. The 2nd fastest growing economy in the world, the 3rd largest economy in terms of GDP in the next 5 years and the 4th largest economy in PPP terms after USA, China & Japan, India is rated among the top 10 FDI destinations.

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With a stable Government with 2nd stage reforms in place, India can be reasonably proud of having put in place some of the most widely accepted Corporate Ethics (Labour Laws, Child Labour Regulations, Environmental Protection Lobby, Intellectual Property Rights, and Social Responsibility) and major tax reforms including implementation of VAT, all of which make India a perfect destination for business expansion. India is the fastest-growing market in Asia Pacific for international tourist spending, according to latest Visa Asia Pacific release. The economy is growing by over 8 per cent a year and India’s growth rate can actually exceed that of China by 2015. The Indian economy is expected to grow larger than Britain’s by 2022 and Japan’s by 2032 to become the third-largest economy in the world after China and US and finally become the second largest economy after China by 2050.

Investments 51% FDI allowed in single brand retailing FDI Laws relatively liberal in wholesale trade Metro AG and Shoprite already operating • More Foreign Retailers eyeing possibilities in wholesale • Tesco and Carrefour expected to operate soon • Wal-Mart has already sined a JV with the Bharti Group • Woolworths (Dick Smith Electronics - durable retail arm) recently started their operations through a JV with Tatas with plans to open 60 Croma stores by 2009. • French retailer Geant is also expected to begin operations in India soon. A report by investment banker Goldman Sachs, credits India with the potential to deliver the fastest growth over the next 50 years. According to Standard & Poor's,

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foreign direct investment (FDI) to India is likely to grow the fastest in next few years. As targeted FDI is to hit $13 billion in the 12 months ending March 2007, more than double India’s previous best of $5.5 billion hit in the previous year. India is investing over US $130 billion in infrastructure by the end of this decade. Indian retail industry itself has attracted investment of over INR 200 billion (over $4 billion) in creating infrastructure, systems & shop-fit. The additional retail space is expected to add INR 300 billion ($ 6.67 billion) of business to organised retail. India’s stock market continues to rise at unprecedented levels and foreign investors are flooding in. The quantum of investments is likely to skyrocket as the inherent attractiveness of the segment lures more and more investors to earn large profits.

The Indian Consumer With the largest young population in the world - over 890 million people below 45 years of age! India is indeed a resplendent market. India has more English speaking people than in the whole of Europe taken together. Its 300 million odd middle class, the “Real” consumers, is catching the attention of the world. As the economy grows so does India's middle class. It is estimated that 70 million Indians earn a salary of over INR 800,000 ($18,000) a year, a figure that is set to rise to 140 million by 2011. The number of effective consumers is expected to swell to over 600 million by 2010 – sufficient to establish India as one of the largest consumer markets of the world .

Private Consumption & Retail With the changing face of retail, the Indian consumer is in for a rapid transformation. While the consumer spending continues to grow at double digit figures, leading retailers have recorded an increase in sales between 50 to 100 percent in the calendar year 2006 over the previous year.

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According to India Retail Report 2007, the total private consumption touched INR 20,000 billion (US $ 445 billion) at current prices in the calendar year 2006 with organised sector accounting for INR55,000 crore ($12.4 billion) business increasing its share to 4.6 per cent of the total Indian Retail Value that stood at INR12,000 billion ($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. Organised retail in India has the potential to add over INR 2,000 billion ($45 billion) business by the Year 2010. The consumer spending is ultimately pushing the economy into a growth-andliberalisation mode. The Indian market is becoming bolder by the day, with the economy now expected to grow at over 8 per cent and average salaries being hiked by about 15 per cent, there will be lot more consumption.

Opportunity for Global Players Favourable demographic and psychographic changes relating to India’s consumer class, international exposure, availability of quality retail space, wider availability of products and brand communication are some of the factors that are driving the retail in India. Over the last few years, many international retailers have entered the Indian market on the strength of rising affluence levels of the young Indian population along with the heightened awareness of global brands, international shopping experiences and the increased availability of retail real estate space. Development of India as a sourcing hub shall further make India as an attractive retail opportunity for the global retailers. Retailers like Wal-Mart, GAP, Tesco, JC Penney, H&M, Karstadt-Quelle, Sears (Kmart), etc stepping up their sourcing requirements from India and moving from third-party buying offices to establishing their own wholly owned / wholly managed sourcing & buying offices shall further make India an attractive retail opportunity for the global players. Manufacturers in industries such as FMCG, consumer durables, paints etc are waking up to the growing clout of the retailers as a shift in bargaining power from the former to the latter becomes more discernible. Already, a number of manufacturers in India, in line with trends in developed markets, have set up

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dedicated units to service the retail channel. Also, instead of viewing retailers with suspicion, or as a ‘necessary evil’ as was the case earlier, manufacturers are beginning to acknowledge them as channel members to be partnered with for providing solutions to the end-consumer more effectively. Though lucrative opportunities exist across product categories, food and grocery, nevertheless, presents the most significant potential in the Indian context as consumer spending is highest on food. Further, ‘wet groceries’ i.e. fresh fruits and vegetables is the most promising segment within food and grocery as very few organized retailers have tapped this opportunity in spite of wet groceries being the preferred choice of most Indian households. The next level of opportunities in terms of product retail expansion lies in categories such as apparel, jewellery and accessories, consumer durables, catering services and home improvement. These sectors have already witnessed the emergence of organized formats though more players are expected to join the bandwagon. Some of the niche categories like Books, Music and Gifts offer interesting opportunities for the retail players. Currently the fashion sector in India commands a lion’s share in the organised retail pie. This is in line with the retail evolution in other parts of the world, where fashion led the retail development in the early stages of evolution and was followed by other categories like Food & Grocery, Durables etc. Fashion across lifestyle categories makes up for over 50 per cent of organised retail and with the kind of retail space growth that India is witnessing we can certainly foresee a very healthy prospect for the fashion industry. As nations become richer, their people start appreciating luxury goods and fine dining. India has over one million such people and this number is expected to triple by 2010. A recent report divides consumers for luxury goods into four categories – luxuriated: source of affluence is largely traditional and inherited; New rich: adequate spending power and are acquiring orientation to luxury; Getting there: acquiring spending power and spend mainly on education, housing and large automobiles; Mid-affluent: are also acquiring orientation to luxury but unlikely to indulge beyond a limit.

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The most important categories for luxury goods consumers are housing, travel, education, higher end automobiles, electronics and other home improvement products besides fashion, lifestyle and fine dining. The most important reason for luxury retail not taking off in India so far has been the lack of luxury retail environment. The presence has been primarily confined to luxury hotels’ with shopping plazas.

Retail Space Growth 100 mn sq ft of quality shopping centre space by 2007-08 To generate retail sales of over Rs. 50,000 cr ($ 11 bn) Rs. 20,000+ cr ($ 4 bn+) investment in pipeline for retail infrastructure, systems & shop-fit Space for 15,000+ new outlets, 100 hypermarkets, 500 department stores and 2000 supermarkets Over 10,000 small and big existing outlets to undergo complete facelift By the Year 2010-11 this space will grow to 300 million sq. ft. offering business worth over $17 billion for Design, Shop Fit and support systems.

Plans of Some of the Large Retailers:

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Pantaloon : Expansion into all possible formats of retail across categories and segments. 30 mn sq.ft by FY10, foray in insurance, real estate and consumer finance the turnover is expected to touch Rs. 30,000 cr ($ 6.67 bn) in FY10-11. Reliance : Rs. 30,000 cr ($ 6.67 bn) investment to set up multiple retail formats with expected sales of Rs. 90,000+ cr ($ 20 bn) by 2009-10 RPG : Planning IPO, 450+ MusicWorld, 50+ Spencer’s Hyper covering 4 mn sq ft by 2010 Lifestyle : Rs. 450+ cr ($ 90 mn) investment in next 5 years to expand on Max Hypermarkets & value retail stores, Home & Lifestyle Centres. Rahejas : Shoppers’ Stop, Crossword, Inorbit Mall, ‘Home Stop’ and recently lunched hypermarket named ‘Hypercity’. 55 hypermarkets across India, by 2015. Subhiksha : 1000 stores and Rs. 1000+ cr ($ 240 mn) sales by Dec 2007. Piramyd : 1.75 mn sq ft of retail space and 150 stores in next 5 years. Trent : Trent to open 27 more stores across its retail formats adding 1 mn sq ft of space in the next 12 DLF malls. Trinethra : Recently acquired by the AV Birla group, Trinethra (currently with two formats - Trinethra and Fabmall) plans 220 stores with a turnover of over Rs. 300 cr ($667 mn) this fiscal. Vishal Group : Plans include an IPO and investment close to Rs. 1250 cr ($ 278 mn) by 2010, targeting 220 outlets, taking its cumulative retail space to 5 mn sq ft and sales turnover of Rs. 5000 cr ($ 1 bn+). Bharati Group : Plans Rs. 31,500 cr (US$ 7 bn) investment in creating retail network in the country including 100 hypermalls and several hundred small stores

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FACTS OF THE AGRA VISHAL STORE:

STORE NAME:

ADDRESS:

VISHAL MEGA MART AGRA-2 537-38, NEAR TULSI TALKIES BHAGWAN TALKIES CROSSING, AGRA DELHI HIGHWAY

REGION:

R2(U.P)

ZONE:

NORTH

TOTAL SERVICE AREA:

2000

TOTAL RETAIL AREA:

20077

AREA OF THE STORE:

22077

NUMBER OF FLOORS:

2 (GROUND FLOOR,1ST FLOOR,.)

NO. OF GANDOLAS: 478 OPENING DAYS:

7

79

SHWROOM TIMINGS:

10:00am TO 10:00pm

TOTAL SKU

20540 (11290 + 9250 own brands )

TOTAL STAFF STRENGHT:

75(70+5 LPO)

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RESEARCH METHODOLOGY

Type of research :

Descriptive research

Sampling technique :

Restricted random sampling

Size of the sample :

250

Universe

All customers of store

Type of data :

Primary data

Data collection instrument

Questionnaire method

Data analysis tech

Quantitative

Sources & statistical analysis

Through chart & table

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Q1. How frequently you visit Vishal Mega Marts? a)

More than once in a week

b)

Once in a week

c)Once in a month d)

Not estimated

More than once in a week

Once in a

Once in a

Not

week

month

estimated

81

54

102

No. of Respondent

13

s

83

Interpretation:

This question was designed in order to study the buying

pattern of the consumers. The findings showed that 40.8% consumers most of them are not random in their buying. Although there are 32.4% & 21.6% people who visit Vishal Mega Mart once in a week and month respectively. We can say around half of the buying in Vishal Mega Mart is frequent & random and the rest is vice-versa.

Q2. Which type of retail outlet would you prefer for shopping? a) Mom & pop shops b) Retail as separate outlet c) Shopping malls d) Anyone of them

84

Mom & pop shops No. of

00

Retail as separate outlet 59

Shopping

Anyone of

malls

them

124

67

Respondents

Interpretation:

This question was asked in order to know the preference

of the consumers among the various available options. The findings were quite surprising that none of them prefer Mom & pop shops, although 26.8% people are ready to choose anyone of them. This shows the increased attraction towards complete shopping experience which consumers get in shopping malls.

Q3. How deep is your attachment with Vishal Mega Marts?

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a) Loyal b) Loyal to some extent (first choice) c) Depends upon the requirements and convenience d) Disloyal Loyal

Loyal to

Depends

some extent

upon the

Disloyal

requirements & convenience No. of

18

76

Respondent s

86

156

00

Interpretation:

This is a very important question due to the fact that it not

only shows the level and pattern of attachment but also the level of satisfaction of consumers. The results showed that a large no. of respondents (62.4%) keep their options open and decide according to their requirements and convenience. Although lots of people (30.4%) find themselves loyal to some extent and 7.2 % are loyal. We can say that overall consumer behavior is inclined towards loyalty depending upon our ability to provide complete range, quality, service and convenience.

Q4. Level of satisfaction in Vishal Mega Mart from – Ambience :

1) a)

Very Good b)

Good c)

Average d)

Poor

No. of Respondents

Very Good

Good

Average

Poor

04

79

149

18

87

Interpretation:

Findings show that from the ambience of Vishal Mega

Mart the level of satisfaction of 59.6% consumers is average & of 31.6% consumers is good. Only 1.6% customers are well satisfied & 7.2% are unsatisfied also. Ambience is having extremely important role to visit the retail outlet & willingness to buy products. 2)

Customer Dealing : a) Very good b) Good c) Average d) Poor Very Good

Good

88

Average

Poor

No. of Respondents

14

Interpretation:

76

157

03

Customer dealing is a very crucial factor behind success

of any retail outlet & in this question their level of satisfaction from customer dealing shows that some of them (36%) are satisfied up to some extent, nevertheless most of them (64%) are not properly dealed by sales executives of Vishal Mega Mart.

3)

Product Quality : a) Very good b) Good c) Average

89

d) Poor Very Good

Good

Average

Poor

16

173

61

00

No. of Respondents

Interpretation: Quality of product is as important factor for any business as blood for human life & he findings shows that most of the consumers are satisfied by the quality aspect of Vishal Mega Mart. 4)

Schemes : a) Very good b) Good c) Average

90

d) Poor Very Good

Good

Average

Poor

83

71

96

00

No. of Respondents

Interpretation:

It can not be neglected that schemes help to increase

footfalls & sales in any retail outlet. & this is good that Vishal Mega Mart provide different-different schemes to their customers always & most of its customers are satisfied from it. 5)

After Sales service : a) Very good b) Good

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c) Average d) Poor Very Good

Good

Average

Poor

48

163

39

00

No. of Respondents

Interpretation:

Results are quite favorable for Vishal Mega Mart. Most of

the customers are satisfied by their after sales services, which influence them to visi the store again. We can say that after sales services play a complementary role in decision making process as they play very influential role in evaluating various retail stores. 6)

Security Measures : a)

Very good

92

b) Good c) Average d) Poor

No. of Respondents

Very Good

Good

Average

Poor

57

132

61

00

Interpretation:

Results show that security measures of Vishal Mega Mart

are also in a good position, which make mind of consumers free of tension & they can do their shopping easily & more comfortably.

Q5. To locate your preferred product in Vishal Mega Mart is

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a) Very easy b) Easy c)A little bit tough d) Tough Very easy

Easy

A little bit

Tough

tough No. of

42

106

Respondent s

94

84

18

Interpretation: Findings show that approx. 50% of the respondents can locate their preferred product easily,but in the other hand half of the respondents are not comfortable to locate easily,which shows executive’s inefficiency in Display & Visual Merchandising. So, Availability of products are also very important point,which should be kept in mind by retailers.

Q6. Do you purchase the in store brand’s products of Vishal Mega Mart in Food mart section? a) Always b) Mostly c) Sometimes d) No Always

Mostly

Sometimes

No

08

46

129

67

No. of Respondent s

95

Interpretation: Results show that there are very few customers, who purchase the Vishal in store brand’s products in food mart section, which is not the favorable condition for Vishal Mega Mart.

Q7. If no, what’s the reason? a) Quality b) Price c) Brand Loyalty d) Awareness Quality No. of

04

Price 00

Respondent

96

Brand Loyalty 14

Awareness 49

s

Interpretation:

This question is designed to know why customers are

not interested in Vishal in store brand’s product ? & the result is quite surprising that 73.13% of them are unknown to their in store brand’s products. .

Q8. Would you prefer home delivery services if Vishal Mega Mart offers ? a) Yes b) Somewhere c) Can’t say now d) No

97

Yes

Somewhe re

Can’t say now

No

No. of Respondent

43

189

18

00

s

Interpretation: This question was asked in order to forecast the future of “Home delivery services”, if Vishal Mega Mart provides it to its customers & the results proved that large no. of people (93.2%) are willing to use this service in future according to their convenience.

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Q9. Do facilities like Fun stations, Play stations, Junk food stalls, PVRs attract you to go to any mall or retail store ? a) Yes b) No c) Doesn’t matter d) Can’t say Yes

No

Doesn’t matter

Can’t say

No. of Respondent

153

36

s

99

61

00

Interpretation: For most of the respondents (61.2%) facilities like Fun stations, Play stations, Junk food stalls, PVRs affect positively their choice of retail outlet or mall. Definitely this denotes the importance of these facilities as it is the driving force for most of the respondents and people want a complete shopping experience.

Q10. How you grade Vishal Mega Mart as a big retail chain ? a) b) c) d) e)

The best Better Good Bad worst The best

Better

Good

100

Bad

Worst

No. of Responde nts

00

Interpretation:

43

207

00

00

T& Finally this question was asked in order to identify the

level of grading of Vishal Mega Mart by its customers in comparison to other retail chains. & the result shows that most of the respondents (82.8%) are giving it good position, which is only one step greater than bad & according to very few respondents (17.2%) it is better than other retail chains.

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SUGGESTIONS • First of all, Vishal Mega Mart should provide Fun stations, Play stations, Junk food stalls etc. to its consumers that they could get a complete shopping experience, what they actually want. •

It should start some customer loyalty programs for its regular customers. For instance : If a customer does a shopping of 1000,he’ll get 10% discount on next purchasing or, there may be lucky draw, gift coupons etc. for them.

•

The next effort should be to make some investment in improving the interiors of their respective establishments to make shopping an enjoyable experience for the customer.

•

Sales executives should be trained properly about how to deal with customers, proper Display of products & Visual Merchandising, Colour Blocking, so that customers could easily locate their preferred products.

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•

It should use different kind of Sales Promotion Tools to make aware to its customers about their in store brand’s products.

•

It should start home delivery services on the order of more than 5000 Rs.

•

It should provide more hygienic and attractive environment & ambience to its customers.

• As its target segment is lower-middle income group, but nowadays it should target the middle & middle-upper income group also due to more chances of profit from them.

• The message, therefore, for the Vishal Mega Marts is to closely examine what changes are taking place in their immediate vicinity, and analyse whether their current market offers a potential redevelopment of the area into a more modern multi-option destination.

• It also needs to make substantial investments in understanding/acquiring some advanced expertise in developing more accurate and scientific demand forecasting models.

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CONCLUSIONS 1)

From the above research done on the trends of Indian retail industry, following conclusion will be drawn:-

 Indian retail industry has metamorphosed from kirana’s (pop and mom stores) to big space super markets.

 The unorganized retailing has overtaken by the organized retailing though the share of organized retailing is very less in current scenario.

 Organized retailing is mostly seen in urban areas due to more disposable income of this population.

 Now the format of retailing has changed a lot to give more buying experience to consumers.

 Indians prefer to shop at modern trade (super markets, hypermarket etc.) due to higher standards of hygiene and attractive ambience.

 Changes in lifestyle – demand for “global” trends have given thrust on the growth of specialty shops etc.

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 Consumer durables are another promising sector because, with increasing purchasing power, consumers tend to spend the most on this category.

 As government is continuing its plans to liberalize FDI in the retail sector in India, foreign companies like Wal-Mart are waiting on the threshold.

 Malls have mushroomed in various locations and they become the centre’s of entertainment for the new generation.

 Rural markets emerging as a huge opportunity for retailers reflected in the share of the rural market across most categories of consumption.

2)

On the basis of the study of consumer behavior of

Vishal Mega Mart, it can be safely concluded that various factors affect buying behavior of retail consumers differently at different levels. These factors have to be taken in consideration while deciding and targeting the consumers. If the Vishal Mega Mart focuses and targets on recent trends of Indian Retail Industry priority wise, definitely the outcome will be very favorable for them. The conclusions drawn from the study of their consumer behavior is as follows:

 Today customers want a complete shopping experience rather than only to go & purchase the products & to get

107

this shopping experience they prefer to go to malls or those retail chains, which provide it to them.

 Some of the consumers of Vishal Mega Mart are loyal towards it,but loyalty of most of them depends on their requirements & convenience.

 Their level of satisfaction from – •

Ambience : Average

•

Customer dealing : Good & Average

•

Product quality : Good

•

Schemes : Very good, Good & Average

•

After sales services : Good

•

Security measures : Good

 Some of its customers are able to locate their preferred product easily, but some of get it tough too, which shows the inefficiency in display & Visual Merchandising of their employee.

 The survey shows that there are many of the customers, who are unaware of their in store brand’s products in food mart section.

 A very large no. of consumers are willing to use home delivery services in future, if Vishal Mega Mart provides it to its consumers.

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 Fun stations, Play stations, Food junctions, PVRs etc. are some of those factors, whish provides the customers a complete shopping experience.

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LIMITATIONS

 The reliability always depends upon the responses of respondents how sincerely they have given answer.

 Constraint of time and resources limited the scope of study.

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BIBLIOGRAPHY BOOKS



RESEARCH METHODOLOGY by C. R. Kothari



INDIAN RETAIL SECTOR:A Primer by Mehrotra, Nitin



RETAIL INDUSTRY :SHANGING TRENDS by Kesksr, Dhananjay.

LINK: 

www.vishalmegamart.net

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www.imagesretail.com

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www.indiaretailbiz.com

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www.india-reports.com

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www.business.mapsofindia.com

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www.retailindustry.about.com

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

www.marketresearch.com

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ANNEXURE Dear Sir/Madam, I, Pushpesh Kumar, student of PGDM-Retail Management, 2nd semester at School of Management Sciences, Varanasi. As a part of our curriculum, we are required to do a primary data based field survey. You are kindly requested to cooperate by filling up the questionnaire. Let me assure you that the survey is purely academic in nature. The data provided by you and findings will not be disclosed to outsiders.

Personal Details Name :

Age :

Gender :

Occupation :

Address :

Contact number :

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QUESTIONNAIRE

Dear Sir/Madam,

Q1. How frequently you visit Vishal Mega Marts? a) More than once in a week b) Once in a week c)

Once in a month

d) Not estimated Q2. Which type of retail outlet would you prefer for shopping? a) Mom & pop shops b) Retail as separate outlet c) Shopping malls d) Anyone of them Q3. How deep is your attachment with Vishal Mega Marts? a)

Loyal

b)

Loyal to some extent (first choice)

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c)

Depends upon the requirements and convenience

d)

Disloyal

Q4. Level of satisfaction in Vishal Mega Mart from –

Very good

Good

Average

Poor

1) Ambience 2) Customer Dealing 3) Product Quality 4) Schemes 5) After Sales Services 6) Security Measur es

Q5. To locate your preferred product in Vishal Mega Mart is a) Very easy

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b) Easy c)A little bit tough d) Tough Q6. Do you purchase the in store brand’s products of Vishal Mega Mart in Foodmart section? a) Always b) Mostly c) Sometimes d) No Q7. If no, what’s the reason? a) Quality b) Price c) Brand Loyalty d) Awareness

Q8. Would you prefer home delivery services if Vishal Mega Mart offers ? a) Yes b) Somewhere c) Can’t say now d) No

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Q9. Do facilities like Fun stations, Play stations, Junk food stalls, PVRs attract you to go to any mall or retail store ? a) Yes b) No c) Doesn’t matter d) Can’t say

Q10. How you grade Vishal Mega Mart as a big retail chain ? a) b) c) d) e)

The best Better Good Bad worst

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