Retail Industry In Global Environment

PROJECT ON

RETAIL INDUSTRY IN GLOBAL ENVIRONMENT (WITH REFERENCE TO RETAIL OUTLET IN THE MARKET)

PROJECT SUBMITTED TO ANNAMALAI UNIVERSITY, IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION IN APPLIED MANAGEMENT By

Name: - Amit Kumar Sharma

DIRECTORATE OF DISTANCE EDUCATION ANNAMALAI NAGAR 2008

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1

DECLARATION

I hereby declare that the project entitled “RETAIL INDUSTRY IN GLOBAL ENVIRONMENT” submitted for the Degree of Master of Business Administration in Applied Management is my original work and the project has not formed the basis for the award of any degree, diploma, associate ship, fellowship or similar other titles.

It has not been submitted to any other

university or Institution for the award of any degree or diploma.

Place: Date:

Name: Amit Kumar Sharma Enrolment No.:

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ACKNOWLEDGEMENT

It is with real pleasure that, I record my indebtedness to my academic Guide, Mr. Sunil K. Singh for his counsel and guidance during the preparation of this project. I am grateful to Centre Head Mrs. Tultuli Gupta. I wish to record my sincere and special thanks to Mr. Rakesh Sharma, Mr. Vikram Pawar and Mr. Deepak Sharma. My thanks are due to Mr. Manish Goyal and Mr. Bharat Kuldeep to give me great and valuable support.

Place

Name: Amit Kumar Sharma

Date:

Enrolment No:

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CERTIFICATE

Certified that the project is a work done by Mr. Amit K. Sharma during the period of his study under my guidance, and that the project has not previously formed the basis for the award of any degree, diploma, associates hip, fellowship or similar other titles and that it is an independent work done by his.

Place:

Name: Sunil K. Singh

Date:

The NIS Academy,

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TABLE OF CONTENT Chapter

Content

Page No.

Acknowledgement

II

List of Tables

VI

List of Diagrams

VII

(1)

Introduction 1.1

1.2

01-44

Retail Industry

02-19

•

What is Retail Industry?

02-05

•

Structure of Retail Industry

06-11

•

Evolution of Retailing

12-13

•

Indian Scenario of Retail Industry

14-16

•

Retail Worldwide scenario

Objectives and Role of Retail Industry

1.3 Review of Literature

17-19

20 21-27

•

Major / Minor Challenges in Industry

21-26

•

Example of Some Published Issue’s

27

1.4 Hypothesis

28-39

•

Past/ Present/ Future of Industry

28-35

•

Impact of Retail Industry in India

36-39

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5

1.5

Limitations of the Study 40-42

1.6 Methodology

(2)

•

Source of Data

43

•

Other Source

44

Significance of the study 2.1 Opportunities of the Western Retailers in India

(3)

43-44

45-48 46

2.2

Contribution of ‘FDI’ In Retailing 48

47-

2.3

Benefits To The Indian Consumer

48

Research and Analysis

49-69

3.1

Latest Trends in Retail Sector

50-53

3.2

Major Player of Retail Industry

54-69

(4)

Finding & Conclusion

70-73

(5)

Bibliography

74-76

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6

Table No. Page No.

Title of the Table

1.1.

Growth of Retail Industry

1.2.

Continuation of GDP

1.3.

World Organization Trade

08 14 18 1.4.

Comparison of Retail Industry

29

3.1.

World-Wide Retail

66

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7

Table No.

Title of the Diagram

Page No.

1.1.

Indian Retail Market

03

1.2.

Map of Income Classes

05

1.3.

Organized Retail Market

06

1.4

.

Growing Format in India

1.5

.

Retailing Map in India

10 11 1.6.

Journey of Organized Retail

13

1.7.

Total Retail Sales 2007

16

1.8.

US Retailing Format

18

1.9

Penetration of Retail

19 1.10

Challenges in Retail Market

21

1.11

Retail Challenge

25

3.1

Retail Analysis

3.2

Retail Market

51 52 3.3

Retail Segment

53

3.4

Retail Touches Economy

73

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Chapter (1)

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9

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Part-1.1 RETAIL INDUSTRY The word "Retail" originates from a French-Italian word. Retailersomeone who cuts off or sheds a small piece from something. Retailing is the set of activities that markets products or services to final consumers for their own personal or household use. It does this by organizing their availability on a relatively large scale and supplying them to customers on a relatively small scale. Retailer is a Person or Agent or Agency or Company or Organization who is instrumental in reaching the Goods or Merchandise or Services to the End User or Ultimate Consumer.

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. It is expected that retail in India could be worth US$ 175-200 billion by 2016. 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

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retailers entered 90 new markets, but at the same time, 17 retailers left markets in 2005. The Indian retail industry in valued at about $300 billion and is expected to grow to $427 billion in 2010 and $637 billion in 2015. Only three percent of Indian retail is organized. Retailers of multiple brands can operate through a franchise or a cash-and-carry wholesale model. The Indian retail environment has attained $ 210bn quiche, witnessing a strong development pace of five percent per year as per latest survey by Price Waterhouse Coopers. As per the estimation 200 malls, presenting additional 50mn sq ft of retail space will be ready in next two years. Existing retail space in 160 malls is nearly 32mn sq ft

1.1 Indian Retail Market The analysts foresee bright future of the retail sector. A huge number of shopping malls, nearly 100, have come up in the recent past, generating 20mn sq ft. retail space, extending more space of about 12mn sq ft to it. Nearly 60

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malls are on the verge of completion and may be operational by the end of current financial year. A forecasted number of nearly 200 malls, in a move to make additional 50mn sq ft of retail space, will be completed within the next two-years. India retail industry is expanding itself most aggressively, as a result a great demand for real estate is being created. Indian retailers preferred means of expansion is to expand to other regions and to increase the number of their outlets in a city. It is expected that by 2010, India may have 600 new shopping centers. In the Indian retailing industry, food is the most dominating sector and is growing at a rate of 9% annually. The branded food industry is trying to enter the India retail industry and convert Indian consumers to branded food. Since at present 60% of the Indian grocery basket consists of non- branded items. The global retail giants like Wal-Mart, Gap, Tesco, Versace, KMart/SEARS, Carrefour, ZARA, FCUK, Fendi, NEXT, Mother Care, lKEA, Trussardi, DKNY and Debenhams have made plans to march in the Indian market. ESPRIT, GUESS, Chanel, Mango and many other global marked their presence in India by implementing licensing and franchisee agreements. The global retailers on the line of control, awaiting the green signal from Govt. to enter Indian retail market. However, the current scenario has encouraged Indian players to speed up retail expansion and fresh retail ventures.

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Companies like Shoppers Stop, Trent, Reliance, Lifestyle, Pantaloons Tanishq, Crossroads, Akbarallys' and Tanishq already have planned to invest over Rs 5,000cr. Trent is on the edge to take both its brands 'Star India Bazaar' and 'Westside' to new cities, meanwhile Shoppers' Stop has recently geared up for expansion of present ones and to add 11 new stores including two hypermarkets. Also, Pantaloon has planned to add eight 'Big Bazaar' malls within the next 6 to 8 months. After partition, Reliance Industries Ltd (RIL) is substantially getting ready to enter in field of retailing. RIL is poised to emerge as the single largest player in this sector. On the other hand, Tosco’s, Wal-Marts or Safeway does ultimately enter in the country. So finally, Shoppers' Stops, Westside, Pantaloons and West sides in coming years have will face stiff competition.

1.2 Map of Income Classes

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STRUCTURE OF RETAIL INDUSTRY The retail industry continued in India in the form of Kiranas till 1980. Soon, following the modernization 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 organized and the unorganized sector.

Organized Retail Sector After 50 years of unorganized retailing and fragmented Kiranas stores, the Indian retail industry has finally begun to move towards modernization, Systematization and consolidation. Today, modernization is the catch phrase and the key to understanding retail in the next decade. Traditionally retailers

2006-07

1.3 Organized Retail Market Have had localized operations. This localized nature of the industry is Changing as retailers face lower growth rates and threatened profitability in home Markets. New geographies help them sustain top line growth in Addition to

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enabling global sourcing and encasing on global advantages of getting the best products at optimum prices. There has been a boom in retail trade in India owing to a gradual increase in the disposable incomes of the middle class households, as a result of good performance of IT, Service and Infrastructure sectors. More and more players are entering the retail business in India to introduce new formats like malls, supermarkets, discount stores, department stores and even changing the traditional looks of bookstores, chemist shops, and furnishing stores. Organized retail formats prevalent globally Supermarkets: Self-service 4000-20000 sq ft stores with shopping carts typically focused on regular groceries, household goods and personal care

Hypermarkets: Huge stores over 40000 sq ft situated outside the town with ample parking space aimed for bulk purchases stocking electronics, furniture and clothing. Carrefour is the global major in this format.

Mass merchandisers: Large destination stores that sell everything at competitive prices. They have cross-country chain operations with centralized sourcing and a hub-and-spoke distribution. Makro and Sam's Club are leading players in this format.

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Discounters: Aimed at bargain buyers offering less choice but deep discount on bulk sourcing deals through controlled inventory. Aldi is the world leader in this format.

Convenience Stores: Small stor es located at convenient points like

petrol

stations

working

round the clock.

1.1 Growth of Retail Industry

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. As 70% of the employment is generated in Agriculture sector, hence this form of retailing is widely seen in those areas and of course to some parts of the urban. There is a lot of hue and cry in the sector for opening of sector for direct investment from the foreign players, but government can not neglect the interests of small players. One of main reason of not opening this sector to FDI is it may shrink the employment in the unorganized sector and expand that in the organized.

RETAILING FORMATS IN INDIA Page No. 17

 Malls: 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, Pyramid, and Pantaloon  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/ non perishable goods

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

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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.  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.  Mob'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.

1.4 Growing Format in India

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RETAILING MAP IN INDIA 1.5 Retailing Map

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EVOLUTION OF RETAILING Retailing, one of the largest sectors in the global economy, is going through a transition phase in India. For a long time, the corner grocery store was the only choice available to the consumer, especially in the urban areas. This is slowly giving way to international formats of retailing. The traditional food and grocery segment has seen the emergence of supermarkets/grocery chains, convenience stores and fast-food chains.

The traditional grocers, by introducing self-service formats as well as value-added services such as credit and home delivery, have tried to redefine themselves. However, the boom in retailing has been confined primarily to the urban markets in the country. Even there, large chunks are yet to feel the impact of organized retailing. There are two primary reasons for this. First, the modern retailer is yet to feel the saturation' effect in the urban market and has, therefore, probably not looked at the other markets as seriously. Second, the modern retailing trend, despite its cost-effectiveness, has come to be identified with lifestyles.

In order to appeal to all classes of the society, retail stores would have to identify with different lifestyles. In a sense, this trend is already visible with the emergence of stores with an essentially `value for money' image. The attractiveness of the other stores actually appeals to the existing affluent class as

Well as those who aspire to be part of this class. Hence, one can assume that the retailing revolution is emerging along the lines of the economic evolution of society.

It was only in the year 2000 that the economists put a figure to it: Rs. 400,000 crore which is expected develop

to

around

Rs.

800,000 crore by the year

1.6 Journey of Organized Retail

2005 – an annual increase of 20 per cent. Retailing in India is unorganized with poor supply chain management perspective. According to a recent survey by some of the retail consulting bodies, an overwhelming proportion of the Rs. 400,000 crore retail markets are UNORGANISED. In fact, only a Rs. 20,000 crore segment of the market is organized. As much as 96 per cent of the 5 million-plus outlets are smaller than 500 square feet area. This means that India per capita retailing space is about 2 square feet in comparison to 16 square feet in the United States. India's per capita retailing space is thus the lowest in the world.

INDIAN SCENARIO OF RETAIL INDUSTRY The present value of the Indian retail market is estimated by the India Retail Report to be around Rs. 12,00,000 crore($270 billion) and the annual growth rate is 5.7 percent. Retail market for food and grocery with a worth of Rs. 7,43,900 crore is the largest of the different types of retail industries present in India. Furthermore around 15 million retail outlets help India win the crown of having the highest retail outlet density in the world. The contribution of retail sector to GDP has been manifested below: Country India USA China Brazil

Retail Sector's share in GDP (in %) 10 10 8 6

1.2 Continuation to GDP As can be clearly seen, retailing in India is superior to those of its contenders. Retail sector is a sunrise industry in India and the prospect for growth is simply huge. There are many factors that have stimulated the rise of the shopping centers and multiplex-malls in a jiffy. Some of them can be listed as follows:

1. Rise in the purchasing power of Indians- the rise in the per capita income in the last few years has been magnificent. This has led to the generation of insatiable wants of the upper and middle class. The demand of new as well as

second hand durables has risen throughout the country thus providing the incentive for taking up retailing. 2. Favorable to farmers- retailing has helped in removing the middlemen and has thus enhanced the remuneration to farmers. This is a new revolution in the agricultural sector in India and will go a long way in amending the condition of agriculture, a major concern among policy makers. 3. Use of credit- a typical Indian is most conversant with using credit cards than carrying money. This is led to shift of the consumer base towards supermarkets

and

make

the

payments

in

the

form

of

credit.

4. Comfortable Atmosphere- a visit to a retail store appears to be more soothing for the generation-Y. People and kids prefer to shop in an air conditioned. The retail industry is the second largest employer in India. It currently employs about 7 percent of the total labor force in India. Finance Minister P. Chidambaram's recent statement “salaries ought not to be legislated” is a welcome move as most of the organized retail is in private hands. Only 4.6% of the total retail trade is into organized sector. It generates about Rs.55,000 crore ($12.4 billion). The major and minor players desperately need to work hard in this direction so that next time the figures look more decent. The government must also make an attempt to ameliorate the situation as political instability and infrastructure namely power and roads are the major roadblocks in the path of smooth functioning of the market.

PRESENT INDIAN SCENARIO * Unorganized market: Rs. 583,000 cores * Organized market: Rs.5, 000 cores * 5X growth in organized retailing between 2000-2005 * Over 4,000 new modern Outlets in the last 3 years * Over 5,000,000 sq. ft. of mall space under development * the top 3 modern retailers control over 750,000 sq. ft. of retail space * Over 400,000 shoppers walk through their doors every week * 47 global fortune companies & 25 of Asia's top 200 companies are retailers * Biggest player in India is Pantaloon Retail India Limited * Growth in organized retailing on par with expectations and projections of the last 5 Years: on course to touch Rs. 35,000 corers (US$ 7 Billion) or more by 2005-06

1.7 Total Retail Sales 2007



RETAIL : WORLDWIDE SCENARIO

China- the total sales from retail market in China reached US$755 billion in 2005. However organized retailing in China accounts for only 20% of it. Also the fragmentation of China's retail market is so high that top 100 retailers make up for only 10.5% of the total market. The registered sales of department stores grew by 25.7% and that of convenience stores grew by 36.5% in 2005. The Chinese retail market is expected to reach new highs as the population of strong middle class is expected to double by 2020 and mergers and acquisitions among retailers are3 going in great guns. The WTO restrictions are also expected to have a favorable impact on its retail sector. Key Players Analyzed This section covers the key facts about players currently operating in the China retail industry including Shanghai Bailian Group, Beijing Gome Electric, Carrefour, Wal-Mart Stores, Wuhan Zhongbai Group, and China Paradise Electronics Retail.

Japan- total annual sales for the Japanese retail industry for 2003 amounted to JPY 133,273 billion. Japan had 1.2 million retail establishments in June 2004 and there were 42,738 specialty superstores. The year 2002 to 2004 the annual sales per store increased by 3.8%. The growth was mainly driven by the grocery superstores but the number of superstores specializing in clothes gradually came down. The organized retail sector in Japan couldn't perform at its full efficiency because of collapse of the 'bubble economy' in the early 90s

Spain- Spain Energy Industry Spain energy consumption is estimated to have reached 165 Million Tons of Oil Equivalent in 2006. Fossil fuels are the major sources for energy in Spain especially Oil (49.5%) & Natural Gas (19.9%). With the Spanish objective of energy security & diversity, and clean energy sources, renewable sources are expected to grow at rapid pace. Key Findings § Spain is a net energy importer, with imports accounting for 99% of its total annual oil and natural gas consumption and 50% of its coal consumption key players in Spain energy such as Gas Natural Group, CEPS Group, Repsol YPF, Endesa S.A. and Gamesa.

1.3 World Trade Organization

United State- Retail is the second-largest industry in the U.S. by number of businesses and number of employees. Retail sales in the U.S. (total retail sales include the categories of gasoline,

1.8 US Retailing Format

automobiles, and food service) were up about 3.8% in 2007, to $4.49 trillion (Plunkett Research estimate). The 2007 growth was driven partly by higher gasoline costs as well as by deep price discounting during the Christmas season by mass merchandisers and year-long discounting by automobile dealers.

Brazil- Emerging as one of the world's largest retail markets. The sales in the industry have been growing strongly since 2003 and are expected to continue at this momentum only over the next few years as constantly declining inflation rate allows for continued expansion of real incomes (increasing demand for non durable consumer goods) and credit conditions ease (sustaining demand for durable goods). A process of consolidation of the retail industry has been underway but overall, the market remains relatively fragmented, indicating substantial scope for the larger players to grow their market share in future. The top five supermarket chains account for approximately 40% of total sales.. All the market values have been converted to US$ at May 2007 exchange rate where, 1 Brazil Real (BRL) = US$ 0.494 (Approx).

Part 1.2

1.9 Penetration of Retail

 OBJECTIVES & ROLE OF RETAIL INDUSTRY Retail is clearly the sector that is poised to show the highest growth in the next five years. The sector is set for a revolution, as both the present players and new entrants are gearing up to explore the market. This sector contributes 10% of India's GDP and the current growth rate is 8.5%. The present size of the organized retailing sector is approximately 3% and is expected to grow to 2530% by the year 2010. There are about 300 new malls, 1500 supermarkets and 325 departmental stores currently under construction. Many players are coming up with huge investments, due to which the present 12 million mom-and-pop shops and Kiranas stores fear losing their business. Most predictions say that the sector might reach to US$ 400-600 billion by the year 2010

The retail sector has played a phenomenal role throughout the world in increasing productivity of consumer goods and services. It is the second largest industry in the United States of America in terms of numbers of employees and establishments. Wal-Mart, the largest retailer in the United States is also the largest employer in the United States with annual sales over $ 284 Billion. There is no denying the fact that most of the developed economies are very much relying on their retail sector as a locomotive of growth. Analysts, CEOs, and others are using consumer spending and consumer confidence data originating from the retail sector as an indicator to gauge the status of the economy

Part 1.3 CHALLENGES OF RETAIL INDUSTRY The big challenge for the Indian retailing industry is the heterogeneity of the market. It is up to us retailers to evolve with consumers, predict where and what they will spend on, be there and take the highest share of their wallet and use this last leg of the economic chain to build India. At Panta-loon, through our delivery formats, we touch 52% of the customer’s wallet. My vision is to capture where this new, young and emergent India is going to spend and capture as close to 100% of their shopping. So

far,

modern-format

retail has scaled up its presence in the metros and a few cities. However, the future will see tier-II and,

1.10 Challenges in Retail Market

maybe, even tier-III cities attract more retail outlets. Consumer mindset and behavior is changing in these cities. A growing base of affluent, upwardly mobile consumers have similar needs and desires as their urban counterparts and they are looking for instant gratification. With satellite television, internet and mobile communication available in smaller cities, people are increasingly exposed to how the ‘West’ lives. Tier-II

and tier-III cities present an enormous growth potential over the next five years and are the future of modern retail in India

MAJOR CHALLENGES 1. Amalgamation or Confusion- According to TATA Strategic Management Group, India has a high density retail structure of 1 retail outlet per 90 people and is the 9th largest retail market in the world. But the structure of the retail industry in India is in utter jumble. The parallel operation of convenience stores, supermarkets, hypermarkets and specialty stores in the economy is bewildering. According to the 'Wheel of Retailing Theory', certain loopholes in one of the forms of marketing can get communicated to other forms also.

2. What to sell- Another bemusement is the category of items to be offered. According to researches, 41 percent of total consumption expenditure goes to the segment of food and groceries and it accounts for 77 percent of total retail sales. So it is obvious that this is the most preferred section of retailers. But unfortunately the foible taste bias for 'wet market' (i.e. fresh food available through hawkers) has marred this prospect also. Therefore supply chain management, storage of fresh perishable foods and persuading the customers that the food is inexpensive despite being fresh are genuine challenges to the newcomers. Diversifying the product base to consumer products such as readymade garments, furniture’s, mobiles and computers can mitigate the losses, if any from food marketing and also broaden the reach to consumers.

3. Nostalgia- Indian shopping habits are no different. People tend to attach qualities like honesty, fair price, good behavior etc. to shopkeepers with whom they have been dealing right from childhood. They find no reason to go to a distant megaspore without any genuine reason. This problem is difficult to deal with as it demands a change in long-formed mindset. Organized retail outlets can overcome this problem by employing eligible local peoples who can interact in vernacular language and win the confidence of people.

4. Information Technology- This is a major problem and India must act fast if it wishes to create a smooth field for organized retailing. Digitization of services will make transfer of goods easy and an improvement in supply chain management will definitely play a significant role in attracting more consumers and less consumer grievances. Besides, it will generate easier payments option for customer and easier money movement for the CEOs of these highly diversified malls.

MINOR CHALLENGES 1. Human resource crunch- the concern for insufficient manpower in the industry has been in news for the last few months. This fear is somehow unfounded. The retail industry according to recent reports is growing at a rate of

100 percent. Kishore Biyani's Future Group i.e. the Big Bazaar chain of retail outlet alone provides employment to more than 18,000 people and is planning to expand its employment base to 34,000 by June 2008. If we add to this the foray by mega players like Reliance and Bharti-Walmart then the fear can surely turn into a misperception. Retailing mainly deals with hard-selling of space, trade of stocks and building of relationships. Since most of the openings are for front line shop people, a graduation will suffice. Nowadays many institutes also provide post-HSC and post-graduate retail-specific courses.

2. Hindrances from government- Some political parties want the government to amend laws and improve curbs so that the mega players can't openly decimate the unorganized retail sector. This is a conclusion based on a myopic outlook and must be amended for a long term strategy. The fear is baseless because of the reasons mentioned above. The mega stores will no doubt provide employment to the less educated masses. Also taking business away especially from small food vendors is more easily said than done. Instead the limiting move will send wrong signals to the investors and will ward off investments when the states need it most. Allowing 51 percent retail FDI in single brand retailing is a welcome move in this direction. It is expected that the government will create further opportunities for the organized retail to come up as home grown investment is always sweeter than foreign investment.

OTHER CHALLENGES: (1)

LOCATION:

"Right Place, Right choice" Location is the most important ingredient for any business that relies on customers, and is typically the prime consideration in a customers store choice. Locations decisions are harder to change because retailers have to either make sustainable investments to buy and develop real estate or commit to long term lease with developers. When formulating decision about where to locate, the retailer must refer to the strategic plan: * Investigate alternative trading areas. * Determine the type of desirable store location * Evaluate alternative specific store sites 2)

MERCHANDISE:

The primary goal of the most retailers is to sell the right kind of merchandise and nothing is more

1.11 Retail Challenge

central to the strategic thrust of the retailing firm. Merchandising consists of activities involved in acquiring particular goods and services and making them available at a place, time and quantity that enable the retailer to reach its goals.

Merchandising is perhaps, the most important function for any retail organization, as it decides what finally goes on shelf of the store.

3)

PRICING:

Pricing is a crucial strategic variable due to its direct relationship with a firm's goal and its interaction with other retailing elements. The importance of pricing decisions is growing because today's customers are looking for good value when they buy merchandise and services. Price is the easiest and quickest variable to change.

4)

TARGET AUDIENCE:

"Consumer the prime mover" "Consumer Pull", however, seems to be the most important driving factor behind the sustenance of the industry. The purchasing power of the customers has increased to a great extent, with the influencing the retail industry to a great extent, a variety of other factors also seem to fuel the retailing boom.

5)

SCALE OF OPERATIONS:

Scale of operations includes all the supply chain activities, which are carried out in the business. It is one of the challenges that the Indian retailers are facing. The cost of business operations is very high in India.

 SOME PUBLISHED ISSUE OF RETAIL INDUSTRY

 The retail industry is expected to grow into a USD 427 billion industry by 2010- FICCI

 India’s retail industry, which is in the middle of rapid growth, has already scripted success stories fit to be the subject of a Bollywood film-Business

Standard

 The impact of organized retailers that have seen swarming of malls lately, on the “mom-n-pop stores” in 20 Indian cities- Indian Council of

Research in International Economic Relations (ICRIER)

 Modern Retailing Comprehensive policy vital- The Hindu

 Retail boom triggers ancillary industry growth- The Times of India

Part 1.4 

PAST/ PRESENT/ FUTURE OF RETAIL INDUSTRY Before the decade of eighties, India with hundreds of towns and cities

was a nation striving for development. The evolution was being witnessed at various levels and the people of India were learning to play different roles as businessmen and consumers. Retail-which literally means to put on the market, is a very important aspect of every city. Without a well organized retail industry we would not have our necessities and luxuries fulfilled. Be it our daily groceries or fashion accessories and everything in between, retail industry brings us the blissful experience of shopping. Though organized retailing industry began much earlier in the developed nations, India had not actively participated. However with its vast expanse and young population, India in the 21st century emerges as a highly potential retail market. The journey of retailing in India has been riveting and the future promises further growth. Here is a complete picture deciphering the past, present and future trends of Indian Retail Market. It is widely accepted that the retail industry has undergone a drastic change in last five years and there is yet more to come. Let us compare the image of Indian retailing in 2004-05 to that of its status in 2007-08 in the following table:

Magnification of the Indian Retail Industry Yardstick Situation in 04-05 Value of retail sales Rs. 10,20,000 crore Annual growth rate 5% Value of organized market Rs 35,000 crore Share of organized market in the 3.4%

Situation in 07-08 Rs 12,00,000 crore 5.7% Rs 55,000 crore 4.6%

sector Forecasts (after 5 years) about Over Rs. 1,00,000

Rs. 2,00,000 crore

size of organized retail market Forecasts about growth rate of

crore Around 30%

Around 40%

organized retail market 1.4 Comparison of Retail Industry

The above table clearly shows that the retail market as well as the mindset required for it has experienced a thorough revisal in the last three years. This is just the beginning and Indians are sanguine that the sector will see rosy days in the future. This confidence has helped India acquire the No.1 position among 30 most attractive retailing destinations in the world according to the Global Retail Development Index of 2005 (by AT Kearney, India). Among emerging markets, India holds the second position after China in the list of most favored retail destinations

Past – Retail Industry in India Before the decade of eighties, India with hundreds of towns and cities

was a nation striving for development. The evolution was being witnessed at various levels and the people of the nation were learning to play different roles as businessmen and consumers. The foundation for a strong economy were being laid, youth were beckoning new awareness in all spheres. And this brought in an opportunity for retail industry to flourish. First in the metros and major cities later to impact sub urban and rural market as well. Retailing in India at this stage was completely unorganized and it thrived as separate entities operated by small and medium entrepreneurs in their own territories. There was lack of international exposure and only a few Indian companies explored the retail platform on a larger scale. From overseas only companies like Levi's, Pepe, Marks and Spencer etc. had entered targeting upper middle and rich classes of Indians. However as more than 50 % population was formed by lower and lower middle class people, the market was not completely captured. This was later realized by brands like Big Bazaar and Pantaloons who made their products and services accessible to all classes of people and today the success of these brands proves the potential of Indian retail market. A great shift that ushered in the Indian Retail Revolution was the eruption of Malls across all regional markets. Now at its peak, the mall culture actually brought in the organized format for Retailing in India which was absent earlier.To your surprise there was not a single mall in India a decade before and just a few years ago only a handful of them were striving, today there are more

than 50 malls across different cities and 2 years from now around 500 malls are predicted to come up.

Present – Retail Industry in India At present the Retail industry in India is accelerating. Though India is still not at an equal pace with other Asian counterparts, Indian is geared to become a major player in the Retail Market. The fact that most of the developed nations are saturated and the developing ones still not prepared, India secures a great position in the international market. Also with a highly diverse demography, India provides immense scope for companies brining in different products targeting different consumers. According to the Global Retail Development Index, India is positioned as the foremost destination for Retail investment and business development. The factor that is presently playing a significant role here is the fact that a large section of Indian population is in the age group of 20-34 with a considerably high purchasing power; this has caused the increase in the demand in the urban market resulting in consistent growth in the Retail business. And though the metros and other tier 1 cities continue to sustain Retail growth, the buzz has now shifted from these great cities to lesser known ones. As the spending power is no longer limited to metros, every tier 2 city in the country has good market for almost every product or service. Due to this, tier 2 cities like Chandigarh, Coimbatore, Pune, Kolkatta, Ahmedabad, Baroda,

Hyderabad, Cochin, Nagpur, Indore, Trivandrum etc. provide a good platform for a brand to enter Indian market. However there are a few precautions for every brand that explores Indian market. As Indian consumers are very curious and have a broad perspective, they respond well to a new product or concept and there are very fair chances of a brand surviving well, but every Indian consumer be it an urbanite or a small town dweller needs a feeling of value for money. Although labeled as tight fisted, Indian consumers are great spenders once they realize that they are getting value for their money. Also new product /service concepts from the western world are better adopted first by the urban Indians, the smaller markets respond well to the need based retailing rather than luxury concepts. As the Indian retailing is getting more and more organized various retail formats are emerging to capture the potential of the market. * Mega Malls * Multiplexes * Large and small supermarkets * Hypermarkets * Departmental stores are a few formats which flourishing in the both big and small regional markets. As the major cities have made the present retail scenario pleasant, the future of the Indian Retailing industry lies in the rural regions. Catering to these consumers will bring tremendous business to brands from every sector.

However as the market expands companies entering India will have to be more cautious with their strategic plans.

Future – Retail Industry in India According to a study the size of the Indian Retail market is currently estimated at Rs. 704 crores which accounts for a meager 3 % of the total retail market. As the market becomes more and more organized the Indian retail industry will gain greater worth. The Retail sector in the small towns and cities will increase by 50 to 60 % pertaining to easy and inexpensive availability of land and demand among consumers. Growth in India Real estate sector is also complementing the Retail sector and thus it becomes a strong feature for the future trend. Over a period of next 4 years there will be a retail space demand of 40 million sq. ft. However with growing real estate sector space constraint will not be there to meet this demand. The growth in the retail sector is also caused by the development of retail specific properties like malls and multiplexes. According to a report, from the year 2003 to 2008 the retail sales are growing at a rate of 8.3% per annum. With this the organized retail which currently has only 3% of the total market share will acquire 15-20 % of the market share by the year 2010. Factors that are playing a role in fuelling the bright future of the Indian Retail are as follows:

 The income of an average Indian is increasing and thus there is a proportional increase in the purchasing power.  The infrastructure is improving greatly in all regions is benefiting the market.  Indian economy and its policies are also becoming more and more liberal making way for a wide range of companies to enter Indian market.  Indian population has learnt to become a good consumer and all national and international brands are benefiting with this new awareness.  Another great factor is the internet revolution, which is allowing foreign brands to understand Indian consumers and influence them before entering the market. Due to the reach of media in the remotest of the markets, consumers are now aware of the global products and it helps brands to build themselves faster in a new region However despite these factors contributing to the growth of Indian retail Industry, there are a few challenges that the industry faces which need to be dealt with in order to realize the complete scope of growth in Indian market. Foreign direct investment is not allowed in retail sector, which can be a concern for many brands. But Franchise agreements circumvent this problem. Along with this regulations and local laws and real estate purchase restrictions bring up challenges. And with Good Planning, Timely Implementation and a media campaign that touches Indian consumers any brand can go far ahead in the Indian Retail Revolution.

 IMPACT OF RETAIL INDUSTRY IN GLOBAL WORLD Organized retailing is spreading and making its presence felt in different parts of the Country. The trend in grocery retailing however, has been slightly different with a Growth concentration in the South. Though there was traditional family owned retail Chains in South India such as Nilgiri’s as early as 1905, the retail revolution happened With the RPG group starting the Food world chain of food retail outlets in South India With focus on Chennai, Hyderabad and Bangalore markets, preliminarily. The Experiment has reaped rich dividends and the group is now foraying into other Territories as well as. Owing to the success of Food world model of RPG group, several new models such as Trinethra, Subhiksha, Margin Free and others have made their foray into this sector albeit at regional levels. Today the food retail sector in India is about Rupees Ten Lakh Crores (USD 200 billions) of which the organized food retail segment is about 1 per cent and increasing at a pace of over 20% year to year. To be successful in food retailing in India essentially means to draw away shoppers from, the roadside hawkers and Kiranas stores to supermarkets. This transition can be achieved to some extent through pricing, so the success of a food retailer depends on how best he understands and squeezes his supply chain. The other major factor is that of Convenience shopping which the supermarket has the edge over the traditionalKiranas Stores. On an average a

supermarket stocks up to 5000 SKU’s against few hundreds stocked at an average Kiranas stores.

Though with excellent potential, India poses a complex situation for a retailer, as this is a Country where each State is a mini-Country by itself. The demography’s of a region Vary quite distinctly from others. In order to appeal to all classes of the society, retail Stores would have to identify with different lifestyles. Hence we may find more of Regional players and it would take enormously long time before nation wide successful Retail chains emerge. This is the main reason as to why the successful retail chains in the Countries today operate at regional segments only and are not aiming at nation wide Presence, at least for the time being.

In the organized retail industry, the gestation periods are long, institutional funding is Difficult, and there is none or little Government support. But the belief among top Retailer chains in the country is that the industry will see large investments coming once. The current ban on foreign direct investment is lifted. But that could be two-three years Away. Food and grocery retailing is a tough business in India with margins being very Low and consumers not dissatisfied with existing shops where they buy. For example, the next-door grocery shopkeeper is smart and delivers good customer service, though not value.

As of now, while Chennai has about five organized food and grocery retail chains, other big cities such as Delhi, Bangalore, and Mumbai average only two-three such chains. Almost all food retail players have been regionspecific as far as geographical presence is concerned in the country. To illustrate with examples, the RPG Group's Food World, Nilgiri’s, Margin Free, Giant, Varkey's and Subhiksha, all of which are more or less spread in the Southern region; Sabka Bazaar has a presence only in and around Delhi; names such as Haiko and Radhakrishna Food-land are Mumbai-centric; while Adani is Ahmedabad-centric. Industry topography in India is such that spreading presence across cities is a tough call. As pointed out by many experts, organized food and grocery retailing chains going national requires significant investments. Retailing within this sector is not just about the front-end, but involves complex supply chain and logistics issues as well.

The trend and mindset of the present retailer chains in India can be best understood by studying Food-World as an example, which came in first in the food and grocery retailing sector. The chain has no plans to venture beyond the Southern region just yet. Current plans are to focus on the Southern markets and achieve saturation. The intention is that by 2005, they could look at the other regions. Subhiksha, a Chennai based discount chain, too wants to be the principal store of purchase for at least 40 per cent of all consumers living within

500-750 meters of the store, that is, within walking distance. This makes the point very clear that the strategy among most existing retail chains of various formats is to completely saturate the markets where they are already established players and then move on to virtually untouched areas where the challenge of sourcing resources and extending their supply chain model to best suit the size and expanse of the market would be a challenging task.

Meanwhile, the RPG group plans to take its new formats such as Giant Hypermarkets national over the next three years. Grocery is a large component of this format, but not the only one. To elaborate on the hurdles of going panIndian, fundamentally, the way a basic grocery retailing model works is that the high set-up costs in terms of setting up buying/ distribution infrastructure is gradually amortized over a larger number of stores. The back-end costs without distribution centre costs, or what in retail jargon is called retail administration costs, should stabilize at around 2.5 per cent to 3 per cent of sales.

Part-1.5 There are many problems face by Retail industry in Indian Market. They are following:The format does not suit rural India: While the format suits the urban areas, it does not suit the rural areas in a country like India. Today, in Indian, organized retailing is confined to class A cities, the 23 largest cities. About 82 per cent of organized retailing comes form the top six cities and another 12 percent from the next four. Thus, the top 10 cities account for 94 per cent of all organized retailing in India. The scattered location of consumers has been the main deterrent to the rapid spread of the idea in the rural areas. Purchasing patterns not very conducive:

Even in urban centers, the

purchasing patterns of the Indian consumers differ form those of westerners. Whereas in the west, the purchases are spread better over the month, in India. Purchases are by and large made in the first week of the month. Theirs perhaps has a correlation to patterns of payment of wages; Purchasing patterns differ also because of the difference in the eating habits of people. Inadequate growth of brands: Inadequate growth of brands is another factor, In India, branding was almost not-existent in convenience products until recently; this has naturally inhibited retailing through sophisticated chains. Supply chain problems: As suppliers are not properly organized in the country, replenishment of stock poses problems for large chains. Source development also poses special problems.

Being family businesses, retailing enterprises have limitation in expansion; Yet another reason for the slow pick up of mega retailing idea in India is that all along retail enterprises have been family concerns. And, family businesses usually have a limitation in expansion, Example of Vivek’s; The Vivek’s (Formerly Vivek’s & Co. ) of Chennai, is an example. For the past several years, it remained rather small because of its family character. During the three decades from 1965 to 1995, it had just three showrooms. It was a family concern and remained for a long time, a single store outfit, managed by the father and assisted by his three sons. Once the father grew old, the sons started managing the business, and because there were three sons engaged in the business, the enterprise went in for three showrooms. In recent years, however, it has emerged as a major chain, as it has shed its family business character, now it is actually the largest consumer durable chain in the country. It has big sales volumes and multiple locations. Real estate problems; Real estate is an integral requirement of large scale chain store operation. One needs a large number of stores in each city to achieve optimum scale. Also, big chains have to operate in several cities. Real estate thus becomes crucial. That is why groups that have been in real estate and hotel businesses are more comfortable in branching off into retailing. Fro other firms, real estate development are a problem; they don not command property in prime locations.

Other Limitation of Retail Industry  The organized retail industry in India is faced with stiff competition from the unorganized sector.  There is a shortage of quality real estate and infrastructure requirements in our country.  Opposition to Foreign Direct Investment from small traders affects retail industry.  A very high stamp duty on transfer of property affects the industry.  Shortage of retail space in central and downtown locations also hinders the growth of retail industry.  Presence of strong Pro-tenancy laws makes it difficult to evict tenants and this is posing problems.  Land-use conversion is time consuming and becoming complex.  For settling property disputes, it consumes lot of time.  Non residents are not allowed to own property except they are of Indian origin.  Inadequacies in infrastructure such as lack of high quality road networks, power shortages and insufficient storage spaces  The retail industry loses to the tune of US$120 to US$130 million every year in frauds ,thefts and employee pilferage, shop lifting, vendor frauds or inacc

urate supervision despite using standard and modern security features.

Part 1.6  SOURCE OF DATA Data’s are the useful information or any forms of document designed in a systematic and standardize manner which are used for some further proceedings. One of the important tools for conducting marketing research is the availability of necessary and useful data. Some time the data are available readily in one form or the other and some time the data are collected afresh. The sources of Data fall under two categories, Primary Source and Secondary Sources.

Primary Data-

the primary data was collected through the following

activities: Filled the Retail Industry related questionnaire to managers of a select group of companies And Paper Conversation

Secondary Data- the secondary data was collected through the following: Online Research material of the Various Institution/Outlets directly or indirectly involved with Retail Industry, Secondary Data used in External Source of Information Like internet, magazine, paper cutting

 OTHER SOURCE  Information Sources Information has been sourced from namely, books, newspapers, trade journals, and white papers, industry portals, government agencies, trade associations, monitoring industry news and developments, and through access to access to more than 3000 paid databases.

 Analysis Method The analysis methods include the following: Ratio Analysis, Historical Trend Analysis, Linear Regression Analysis using software tools, Judgmental Forecasting and Cause and Effect Analysis etc.

Chapter (2)

Part 2.1  OPPORTUNITIES OF THE WESTERN RETAILERS IN INDIA The retail industries in the western countries have reached a point of saturation and there is no way of expanding. In this backdrop the retail giants are trying to make their mark in the retail market of countries that still have untapped potential of expansion. India happens to be one of them. AT Kearney has constructed the Global Retail Development Index which has helped the western retailers to identify the countries in which investments could be made. Opportunities in India have attracted the western retailers like Wal-Mart, Euroset, and Supervalu who have plans to enter as single branded retailers. In gauging whether to enter, the companies keep into account the timing factor that is whether the consumers are ready to accept the products that are offered by them. It is highly possible that there are potentials in the market but the consumer preferences are skewed against the products that are offered.

Part 2.2  CONTRIBUTION OF ‘FDI’ IN RETAILING Permitting Foreign Direct Investment in the retailing sector can have immense benefits. It can generate huge employment for the semi-skilled as well as illiterate population which otherwise can't be employed in the already confined rural and organized sector. The retail sector is highly dependent on the rural sector. Thus it can facilitate the improvement of the standard of living of farmers by purchasing commodities at a reasonable cost. It also stems out an indirect employment generation channel by training and employing people in the transportation and distribution sectors such as drivers, mechanics etc. It is also evident that real estate is a genuine challenge for organized retailing. Traditional retailers can use this situation in their favor by taking franchisees of the mega players of this industry. On the other hand, the consumer gains from the wide variety of choices and a more diversified basket of prices available under one roof. Secondly the indirect benefits like better roads, online marketing, expansion of telecom sector etc. will give a 'big push' to other sectors including the rural one itself. Last but not the least the huge tax revenue generated from these retail biggies and collected in government coffers will gradually wipe out the ugly looking fiscal and revenue deficits. Besides the transaction in foreign currencies by these MNCs will create a balance in exchange rate and will

bring in stable funds in the economy as opposed to FII's hot money. This will in turn act as a boost to the developing (or 'transforming', as suggested by the USAID) economy of India.

Part 2.3  BENEFITS TO THE INDIAN CONSUMER: One has to agree that the entrance of big players will ensure the higher quality of service and produce being sold to the consumers. There are other indirect benefits in terms of choice and pricing that will be passed along to the consumers as the big retailers will compete with each Other for greater share of the market.

Chapter (3)

Part 3.1 LATEST TRENDS IN RETAIL SECTOR Today, retail in India is huge, close to $200 billion, of which organized retail accounts for just $6 billion. This $200 billion should become $300 billion in the next five to six years. This is a time when organized retailing is just getting into full steam and the opportunity is huge. Organized retail in India is expected to grow at 40% for the next five years, thanks to the nascent stage of modern retail and the ‘malling’ of India.

It is expected that by 2016 modern retail industry in India will be worth US$ 175- 200 billion. India retail industry is one of the fastest growing industries with revenue expected in 2007 to amount US$ 320 billion and is increasing at a rate of 5% yearly. A further increase of 7-8% is expected in the industry of retail in India by growth in consumerism in urban areas, rising incomes, and a steep rise in rural consumption. It has further been predicted that the retailing industry in India will amount to US$ 21.5 billion by 2010 from the current size of US$ 7.5 billion. The retail sector would generate employment for more than 2.5 million people by the year 2010, says an analysis by Ma Foi Management Consultants Ltd. And A KPMG report says that the organized retail would grow at a higher rate than GDP in the next five years

Recent Trends & Changes • 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

• Multiple drivers leading to a consumption boom: • Favorable demographics • Growth in income • Increasing population of women • Raising aspirations : Value added goods sales

3.1 Retail Analysis • Organized retailing in India has been largely an urban phenomenon with affluent classes and growing number of double-income households.

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

• Companies using their own web portal or tie-sups with horizontal players like Rediff.com and Indiatimes.com to offer products on the web

• Spencer's is also planning to set up 500 more stores by June 2008 with an investment of nearly US$ 125.89 million

• DLF plans to invest US$ 4.02 billion over four years to develop about 20 large shopping malls across the country

•Israeli mall developer Plaza Center NV plans to invest US$ 1.25 billion over the next five-seven years to set

3.2 Retail Market Size

up 50 malls in India.

• Reliance Retail is going ahead with plans worth an investment of US$ 3.77 billion for setting up 205 stores

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

• Experimentation with formats: Retailing in India is still evolving and the sector is witnessing a series of experiments across the country with new

formats being tested out. Ex. Quasi-mall, sub-urban discount stores, Cash and carry etc

• Unorganized retailing is getting organized: To meet the challenges of organized retailing such as large cineplexes, and malls, which are backed by the corporate house such as 'Ansals' and 'PVR‘ the unorganized sector is getting organized. 25 stores in Delhi under the banner of Provision mart are joining hands to combine monthly buying. Bombay Bazaar and E-food mart formed which are aggregations of Kiranas.

• Emergence of discount stores: They are expected to spearhead the organized retailing revolution. Stores trying to emulate the model of WalMart. Ex. Big Bazaar, Bombay Bazaar, RPGs

3.3 Retail Segments

Part 3.2 MAJOR PLAYER OF RETAIL INDUSTRY The Indian retail sector has been euphoria over the last five years. India topped the A.T. Kearney's Global Retail Development Index for two consecutive years and this has infatuated Indian as well as foreign retail players to go gaga on the merchandising track. According to geographical expansion, Delhi/NCR and Mumbai are the felicitated regions as the top companies have rated the spending potential of consumers in the vicinity of the national capital and the financial capital as excellent. Other metros such as Kolkata, Chennai, Hyderabad and Bangalore have caught the sight of investors but their fortunes are yet to be illuminated. Companies like the Future Group, Reliance, BhartiWalmart, DLF etc. have shown the way for other to enter. The countries are expecting a surge in the growth sprint and let’s hope for the best.

Top Companies: An analysis

Big Bazaar is a chain of department stores in India, currently with 75 outlets. It is owned by the Pantaloon Retail India Ltd, Future Group. It works on the same economy model as Wal-Mart and has considerable success in many Indian cities and

small towns. The idea was pioneered by entrepreneur Kishore Biyani, the CEO of Future Group. Currently Big Bazaar stores are located only in India. It is the biggest and the fastest growing chain of department store and aims at being 350 stores by the end of year 2010. It offers all types of household items such as home furnishing, utensils, fashion products etc. It has a grocery department and vegetable section known as the Food Bazaar and its online shopping site is known as FutureBazaar.com. The real estate fund management company promoted by the Future Group expects to develop more than 50 projects across India covering a combined area of more than 16 million sq. ft. On April 1 2007, Big Bazaar had to shut its outlets in Mumbai as the 120 retrenched employees called a strike with the support of Bhatia Kamgar Sena (the trade Union wing of Shiv Sena). Later the management agreed to reinstate the sacked workers

Pantaloon Retail India Ltd, is India’s leading retail company with presence across food, fashion, home solutions and consumer electronics, books and music, health, wellness and beauty, general merchandise, communication products, E-tailing and leisure and entertainment. Headquartered in Mumbai (Bombay), has over 450 stores across 30 cities in India and employs over 18,000 people. Pantaloon founded by Mr. Kishore Biyani. The company owns and manages multiple retail formats catering to a

wide cross-section of the Indian society and its width and depth of merchandise helps it capture almost the entire consumption basket of the Indian consumer. Founded in 1987, as a garment manufacturing company, Pantaloon Retail forayed into modern retail in 1997 with the opening up of a chain of department stores, Pantaloons. In 2001, it launched Big Bazaar, a hypermarket chain, followed by Food Bazaar, a supermarket chain. It went on to launch Central, a first of its kind, seamless mall located in the heart of major Indian cities. Some of its other formats include, Collection I (home improvement products), E-Zone (consumer electronics), Depot (books, music, gifts and stationeries), all (fashion apparel for plus-size individuals), Shoe Factory (footwear) and Blue Sky (fashion accessories). It has recently launched its retailing venture, futurebazaar.com. In India's chaotic markets, Kishore Biyani is the unchallenged king of retail. He has the knack of catching rivals off-guard and striking where it hurts most. And now that he's set himself the task of retaining control of the largest retail space in the country, he won't let anyone - suppliers or international promoters included - catch him slacking. The latest to face the wrath of the 43-year-old is South African hypermarket Shop rite, which opened shop in Mumbai last month through a franchise agreement with local company Normal Lifestyle. The hypermarket began retailing products from big boys Nestle, Unilever and Procter & Gamble at consumer discounts of 20-30 per cent, lower than even Biyani's purchase prices in his Big Bazaar and Food Bazaar stores.

Reliance Fresh is the retail chain division of Reliance Industries of India which is headed by Mr.Mukesh Ambani. Reliance has entered into this segment by opening new retail stores into almost every metropolitan and regional area of India. Reliance plans to invest Rs 25000 cores in the next 4 years in their retail division and plans to begin retail stores in 784 cities across the country. The Reliance Fresh supermarket chain is RIL’s Rs 25,000 crore venture and it plans to add more stores across different g, and eventually have a pan-India footprint by year 2011. The super marts will sell fresh fruits and vegetables, staples, groceries, fresh juice bars and dairy products and also will sport a separate enclosure and supply-chain for non-vegetarian products. Besides, the stores would provide direct employment to 5 lakh young Indians and indirect job opportunities to a million people, according to the company. The company also has plans to train students and housewives in customer care and quality services for part-time jobs. Reliance Fresh recently (24th Jan, 2007) opened several "Fresh" outlets in Chennai, New Delhi, Hyderabad, Jaipur, Mumbai, Chandigarh, Ludhiana increasing its total store count to 40. Reliance is still testing its retail concepts by controlled entry beginning in the southern states

Subhiksha is an Indian retail chain with more than 760 outlets selling groceries, fruits, vegetables, medicines and mobile phones. It was started and is managed by Mr. R. Subramaniam, IIM Ahmedabad alumni. He also plans to invest Rs.500 crore to increase the number of outlets to 2000 across the country by 2009. Derived from the Sanskrit word, Subhiksham or "giver of all things good", It opened its first store in Thiruvanmiyur in Chennai in March, 1997 with an investment of about Rs. 5 lakh. The retail chain has seen a considerable growth by offering goods at cheaper rates and there by increasing its customer base. It is also dubbed as India's largest retail chain. Vision to deliver consistently better value to Indian consumers, has guided Subhiksha to deliver savings to all consumers on each and every item that they need in their daily lives, 365 days a year, without any compromise on quality of goods purchased. Subhiksha now has the pan Indian presence with stores across Delhi, UP, Punjab, Hariyana, Gujarat, Maharashtra, AP, Karnataka and TN. It has recently commenced operation in Kerala also. Today, it is a multi-location, professionally managed and vibrant organization. Subhiksha now has even opened Specialized Mobile shops called Subhiksha Mobile where mobiles are sold at a discounted price Subhiksha is India's largest supermarket, pharmacy and telecom chain. Started in 1997 as a single store entity in South Chennai, it is now present nationally across 1000 outlets and spread across more than 90 cities. You can now locate

the nearest Subhiksha store in your area with the Store Locators. ICICI Venture Capital has a 24% stake in Subhiksha.

Food world is a chain of supermarket stores. It was started in May 1996 as a division of Spencer & Co, a part of the RPG Group. In August 1999 it became a separate company. Currently it operates 89 stores in Bangalore, Chennai, Coimbatore, Erode, Hyderabad, Kodai, Pondichery, Pune, Secunderabad, Salem, Trivandrum and Vellore

DLF Retail Developers Ltd. is one of the troikas of the DLF Group. Besides being India's largest real estate developer, DLF is also of the leaders in innovating shopping malls in India. It caught public eye when it launched the 2, 50,000 sq ft. shopping mall in Gurgaon. It has brought a dramatic change in the lifestyles and entertainment with its City Centers and DT Cinemas. DLF has plans to invest Rs. 2000-3000 crore in all the emerging areas from metros to class cities in the next two years. Till last year the company was involved in building 18 malls out of which 10 were in the NCR region. Future plans of DLF involve opening up of 100 malls (specialty malls, big box retailing and integrated malls) across 60 cities in next 8-10 years. They are slowly

transforming into

'lease' and 'revenue share' models.

Local players like ITC, the A.V. Birla Group and Tatas have given the hints to

enter organized retail. France’s Carrefour SA and Britain’s Tesco too were recently in news for their future plans to explore the Indian retail market

Bharti Retail, a wholly owned subsidiary of Bharti Enterprises. Has announced two joint ventures (JV)with the international retailing behemoth, Wal-Mart. The first JV ensures cash and carry business, in which 100 percent FDI is permitted and it can sell only to retailers and distributors. The second JV concerns the franchise arrangement. Sunil Mittal, Chairman of the Bharti Group assured that the ventures will use “low prices every day” and “best practices for the satisfaction of the customer”. Processed foods and vegetables will be delivered by Bharti Field Fresh, Bharti's JV with Rothschild. Bharti Retail aims to foray every city with a population exceeding 1 million. It has plans to come up with an investment of more than $2 billion in convenience stores, supermarkets and hypermarkets spread over an aggregate 10 million sq. ft. The expansion drive looks ambitious but analysts are worried that Bharti may face stiff competition from Pantaloon and Reliance as they too have sanguine plans to flood the markets with thousands of retail outlets in the coming five years. Bharti Telecom also has plans to offer all its fixed and mobile telecom products and services from a single window to the SMB (Small and Medium Business) enterprises under the Bharti Infotel division...

Lifestyle is part of the Landmark Group, a Dubai-based retail chain. With over 30 years’ experience in retailing, the Group has become the foremost retailer in the Gulf. Positioned as a trendy, youthful and vibrant brand that offers customers a wide variety of merchandise at exceptional value for money, Lifestyle began operations in 1998 with its first store in Chennai in 1999 and now has 13 Lifestyle stores, 5 Home Centers and 1 Baby shop store across Chennai, Hyderabad,

Bangalore,

Gurgaon,

Delhi,

Mumbai

and

Ahmedabad.

Business World-IMRB Most Respected Company Awards Survey has rated Lifestyle as the Most Respected Company in the Retail Sector in 2003 and 2004. Lifestyle has also been awarded the ICICI-KSA Technopak Award for Retail Excellence in 2005, the Reid & Taylor Retailer of the Year Award for 2006 and more recently, the Lycra Images Fashion Award for the Most Admired Large Format Retailer of the Year in 2006

The foundation of Shopper's Stop was laid on October 27, 1991 by the K. Raheja Corp. group of companies Shoppers’ Stop aims to position itself as a global retailer. The company intends to bring the world’s best retail technology, retail practices and sales to India. Currently, they are adding 4 to 5 new stores every year with an immense amount of expertise and credibility, Shopper's Stop

has become the highest benchmark for the Indian retail industry Shopper's Stop in the only retailer from India to become a member of the prestigious Intercontinental Group of Departmental Stores (IGDS). With its wide range of merchandise, exclusive shop-in-shop counters of international brands and world-class customer service, Shoppers’ Stop brought international standards of shopping to the Indian consumer providing them with a world class shopping experience. The stores offer a complete range of apparel and lifestyle accessories for the entire family. From apparel brands like Provogue, Color Plus, Arrow, Levi’s, Scullers, Zodiac to cosmetic brands like Lakme, Chambor, Le Teint Ricci etc., Shoppers’ Stop caters to every lifestyle need. Shoppers' Stop retails its own line of clothing namely Stop, Life, Kashish, Vettorio Fratini and DIY. The merchandise at Shoppers’ Stop is sold at a quality and price assurance backed by its guarantee stamp on every bill. Their motto: “We are responsible for the goods we sell”.

Vishal Mega Mart is one of fastest growing retailing groups in India. Its outlets cater to almost all price ranges. The showrooms have over 70,000 products range which fulfills all your household needs, and can be catered to less than one roof. It is covering about 1996592 lac sq. ft. in 18 states across India. Each store gives you international quality goods and prices hard to match. The cost benefits that is derived from the large central purchase of goods and services is passed on to

the consumer the group had a turnover of Rs. 1463.12 million for fiscal 2005, under the dynamic leadership of Mr. Ram Chandra Aggarwal. The group had of turnover Rs 2884.43 million for fiscal 2006 and Rs. 6026.53 million for fiscal 2007.the group’s prime focus is on retailing. The Vishal stores offer affordable family fashion at prices to suit every pocket.

Welspun Retail Limited (W.R.L.) was established in 2003 as a part of Welspun Group, one of the fastest growing business conglomerates in India. Welspun is a U.S. $1 billion group, into diverse businesses, industries, regions and has six companies under the umbrella brand. Our International Home Textiles Company; Welspun India Limited (W I L) launched its Indian retail division, WRL with an aim to capture the Home Textiles market in 2003. The Retail brands, SPACES- Home & Beyond has carved its niche with its fashion driven model in the country's major metros, while Welhome targets a larger audience with its value for money model. The turn over of the Retail division stands at 100 crore, expected to double in the next 5 years

Key Differentiating Attributes  W.R.L. is the first Retailer of soft furnishing for "Home" in India.  W.R.L. has two models that cater to both, the aspiration clientele and the value for money conscious clientele.  Launched Spaces -Home & Beyond and Welhome (Welspun Factory Outlet) in the same year.

 Phenomenal growth anticipated in FY 2007-08.  Design Studio ranks amongst the best in the country.  Panel of International Designers for the new collections.  Offer specialized products at affordable prices, Bed sheets starting at Rs. 199, towels starting at Rs. 79 and Curtains starting at Rs. 99

Trent is the retail arm of the TATA group. Started in 1998, Trent operates Westside, one of the many growing retail chains in India. The foresight of the TATA Group, which invested in retail relatively early, is paying high dividends as retail is one of the booming sectors in India. The company has a turnover of Rs. 357.6 crores (FY 2005-2006) and currently operates 22 stores in the major metros and mini metros of India. An international shopping experience, a perception of values, and offering the latest styles, has created a loyal following for Westside's own brand of merchandise. Westside was named the 'Most Admired Large Format Retail Chain of the Year' by the Lycra Images Fashion Awards 2005.Westside operates stores in Mumbai, Ahmedabad, Bangalore, Delhi, Chennai, Kolkata, Hyderabad, Pune, Surat, Vadodara, Indore, Noida, Gurgaon, Ghaziabad, Mysore, Jaipur, Lucknow, Nagpur.

Wal-Mart Stores, Inc. is an American public corporation that runs a chain of large, discount department stores. It is the world's largest public corporation by revenue, according to the 2007 Fortune Global 500. Founded by Sam Walton in 1962, it was incorporated on October 31, 1969. It opened its home office and first distribution center in Bentonville, Arkansas. It had 38 stores operating with 1,500 employees and sales of $44.2 million .Wal-Mart is the largest grocery retailer in the United States, with an estimated 20% of the retail grocery and consumables business, as well as the largest toy seller in the U.S., with an estimated 22% share of the toy market. Wal-Mart is the largest private user of electricity in the US. Owns a subsidiary electric company in Texas, and will possibly move into the power business. It is also undertaking a number of environmentally conscious initiatives to reduce energy usage and waste. Wal-Mart operates in Mexico as Walmex, in the UK as ASDA, and in Japan as Seiyu. It has wholly-owned operations in Argentina, Brazil, Canada, Puerto Rico, and the UK. Wal-Mart's investments outside North America have had mixed results: its operations in South America and China are highly successful, but it sold its retail operations in South Korea and Germany in 2006 after sustained losses. On September 12, 2007, Wal-Mart introduced new advertising with the slogan, "Save Money Live Better," replacing the "Always Low Prices, Always" slogan, which it had used for the previous 19 years. Global Insight, which conducted the research that supported the ads, found that Wal-Mart's price level reduction resulted in savings for

consumers of $287 billion in 2006, which equated to $957 per person or $2,500 per household

3.1 World-Wide Retailers

Carrefour SA is a French international hypermarket chain, with a global network of outlets. The group was created by Marcel Fournier and Denis Deffore in 1957. It is the second largest retail group in the world in terms of revenue after Wal-Mart. Carrefour operates mainly in Europe, Brazil, Argentina, Dominican Republic and Colombia, but also has shops in North Africa and Asia. Carrefour means crossroad in French. Carrefour is active in many types of retail distribution: hypermarkets, supermarkets, Discount Store, Grocery Stores, Cosmetics, and Cash & Carry. Recently The $130 billion French retail Carrefour has set up a 100 percent-owned arm to enter the wholesale merchandise business in India and will opt for the franchising route to open multi-brand retail stores in the

country, Carrefour WC&C India will also enter these areas where the Indian franchisee can get the same technical expertise that go into running the retail trade stores of the French company across the globally.

The Kroger Co. is an American retail supermarket chain and parent company, founded by Bernard Henry Kroger in 1883 in Cincinnati, Ohio. It reported over US$66 billion in sales during fiscal year 2007 and is currently the second-largest grocery retailer in the country by volume and third-place general retailer in the country, with Wal-Mart and The Home Depot filling slots one and two, respectively. Kroger operated, either directly or through its subsidiaries, 2,500 grocery stores, 579 of which had fuel centers, nearly 800 convenience stores, 400-plus jewelry stores, and 42 manufacturing facilities in 32 states; we employ a growing family of more than 290,000 associates coast-to-coast and presently Kroger is active in many other Retail Distribution like Bakery, Banking, beer, dairy, wine etc…. The slogan of Kroger co. is “Right Store. Right Place”. Kroger’s recently launched Perishable Donations Partnership will bring critically needed perishable food items into the food bank process. The company-wide program will increase the number of stores in the Kroger family that donate safe, perishable food to Second Harvest food banks that are equipped to safely handle and distribute fresh food. Kroger’s goal is to donate 50 million pounds of nutritious, fresh food across the country.

Latest News of Retail Market in India 

Israeli Giants Enter Indian Retail Sector Israeli mall giants, owners of retail-linked realty assets across the world,

are buying into India’s money minting retail sector. Tel Aviv-based mall giant Gazit Globe has tied up with one of the HDFC funds to pump in $150 million into developing assets, including supermarket anchored retail play. Big Shopping Group, of Israel’s biggies has teamed up with Lehman Brothers Real Estate Private equity to set up ‘open malls’ in tier I and tier II cities. Israeli tycoons and families, which raked in money from core real estate developments in the US, have turned their attention to retail assets from Sao Paulo to Macedonia, as mall ownership and management provides attractive 20% plus annualised returns in developing markets. Billionair eChaim Katzman, at the helm of Gazit Globe, is no exception as he went on acquiring shopping centers from market to market

Us Retail Major Kroger Plans Entry into Indian Real Estate The $66-billion US based grocery giant, Kroger is all set to enter into Real Estate India. According to reports, the company representatives have already met 3-4 prominent real estate companies of India for joint ventures. Some prominent sources said that Kroger is primarily interested in jointly developing new FDI-compliant commercial projects or buying into existing

ones. Interestingly, America No. 3 general retailer behind Wal-Mart and The Home Depot runs all its nearly 2,500 supermarket stores in the US  Reliance

Retail plans to turn Adani outlets into specialty

Stores Reliance Retail will be changing the format of its recently purchased Adani Retail stores into specialty stores for jewelry, medicines, eyeglasses, home furnishings, telecom and consumer electrical stores. The company has also taken in some of the executives onto its own team. According to a senior executive, the stores cannot be converted to Reliance Fresh stores as they are too small, ranging from 2,000-3,000 sq ft, while most Reliance Fresh stores are around 4,000 sq ft in size.

Source: The Economic Times  Pantaloon

Retail pulls out from Gini & Jony Pantaloon Retail India Ltd (PRIL) has officially pulled out of

Gini & Jony, a children’s wear brand and one of the first brands that Kishore Biyani, MD of Pantaloon had invested in. Sources report that while the financial arrangement with Gini & Jony will continue, it will break off all operational ties. Pantaloon had invested in the company with the thought that it would “drive business on its own” but unfortunately, it has not been able to work in a cohesive manner with Pantaloon and become dependant on it. Ultimately Pantaloon had to even depute top management, including the

CFO

to

take

Source: The Economic Times

care

of its functioning.

Chapter (4)

MAJOR FINDINGS (1) The Retail Sector in India can be split up into two, the organized and the unorganized. The organized sector whose size is expected to triple by 2010 can be further split up into departmental stores, supermarkets, shopping malls. (2) In terms of value the size of the retail sector in India is $300 billion. The organized sector contributes about 4.6% to the total trade. (3) The retail sector in India contributes 10% to the Gross Domestic Product and 8% to the employment of the country. (4) In terms of growth the FMCG retail sector is the fastest growing unit and the retail relating to household care, confectionery etc, have lagged behind. (5) The foreign retail giants were initially restricted from making investments in India. But now FDI of 51% is permitted in India only through single branded retail outlets. Multi brand outlets are still beyond their reach. Again they can only enter the market through franchisees,. This was

how

Wal-Mart had entered joining hands with Bharti Enterprises.

(6) On line retailing is still to leave a mark on the customers due to lacunae that we have already mentioned. (7) Cultural and regional differences in India are the biggest challenges in front of retailers. This Factor deters the retailers in India from adopting a single retail format.

(8) Hypermarket is emerging as the most favorable format for the time being in India

 CONCLUSION For a start, these retailers need to invest much more in capturing more specific market. Intelligence as well as almost real-time customer purchase behavior information. The retailers also need to make substantial investment in understanding/acquiring some advanced expertise in developing more accurate and scientific demand forecasting models. Re-engineering of product sourcing philosophies-aligned more towards collaborative planning and replenishment should then be next on their agenda. The message, therefore for the existing small and medium independent retailers is to closely examine what changes are taking place in their immediate vicinity, and analyze Whether their current market offers a potential redevelopment of the area into a more modern multioption destination. If it does, and most commercial areas in India do have this potential, it would be very useful to form a consortium of other such small retailers in that vicinity and take a pro-active approach to pool in resources and improve the overall infrastructure. The next effort should be to encourage retailers to make some investments in improving the interiors of their respective establishments to make shopping an enjoyable experience for the customer. As the retail marketplace changes shape and competition increases, the potential for improving retail productivity and cutting costs is likely to

decrease. Therefore, it will become important for retailers to secure a distinctive position in the marketplace based on value, relationships or experience. Finally, it is important to note that these strategies are not strictly independent of each other; value is function of not just price, quality and service but can also be enhanced by Personalization and offering a memorable experience. In fact, building relationships with customers can by itself increase the quality of overall customer experience and thus the perceived value. But most importantly for winning in this intensely competitive marketplace, it is critical to understand the target customer's definition of value and make an offer, which not only delights the customers but also is also difficult for competitors to replicate.

3.5 Retail Touches Economy

Chapter (5)

 V S Ramaswamy, S Namakumari “Marketing Management”, Macmillan Business Book, Delhi  Philips Kotler “Marketing Management” 11th Edition, Eastern Economy Edition  Ramanuj Majumdar “Product Management In India” 2nd Edition, Eastern Economy Edition.  Christopher Lovelock “Service Marketing” 5th Edition, Pearson Education  Dr. S L Gupta “Sales & Distribution Management”, Excel Books  Business and Marketing Magazine “4ps Business & Marketing”  Business Magazine “Business Today”  “Changing Consumer Interface of Market Driven Innovations”- Report by Tarun Arora, Bharti Retail  “Retail Industry -Where does India stand?”- Report by Sanjeev Kumar, Delamore Consulting Ltd.  “Retail Scenario in India-Unlimited Opportunity”- Report by CII  “Retail Outlook for China 2005”- Report by KPMG in Hong Kong,  “Global Powers of Retailing 2006”- Report by Stores Magazine, National Retail Federation (NRF)  “The Great Indian Retail Story” –Report by Ernst & Young India  “Indian Retail Industry”- Report by www.Rocsearch.com  “Global Retail Industry Facts and Figures”- Report by UNEP

 http://www.indianretalling.com  http://www.pantaloon.com  http://www.financialexpress.com  http://www.thehindubusinessline.com  http://www.channeltimes.com  http://www.cxotoday.com  http://www.indiainbusiness.nic.in/  http://www.deloitte.co.uk  http://www.rncos.com  http://www.researchandmarkets.com/reports/323895  http://timesofindia.indiatimes.com/articleshow  http://www.retailspice.com  http://www.MarketResearch.com Special Thanks to: Wikipedia, the free encyclopedia.htm  http://www.google.com  http://www.economywatch.com/business-and-economy/retail-industry  http://www.fibre2fashion.com/industry-article  http://rohanrrao.blogspot.com/2007/10/retail-scenario-in-india.html