Retailing

About us: Subhash thej. M & Raffi shaik, Bankatlal Badruka college for information technology (BBCIT), Hyderabad. RETAILING IN INDIA Introduction: Wiki: Etymology Retail comes from the French word retaillier which refers to "cutting off, clip and divide" in terms of tailoring (1365). It first was recorded as a noun with the meaning of a "sale in small quantities" in 1433 (French). Its literal meaning for retail was to "cut off, shred, paring". Like the French, the word retail in both Dutch and German (detailhandel and Einzelhandel respectively) also refer to sale of small quantities or items. Retailing consists of the sale of goods or merchandise from a fixed location, such as a department store or kiosk, or by post, in small or individual lots for direct consumption by the purchaser.[1] Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, a retailer buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy. Shops may be on residential streets, shopping streets with few or no houses, or in a shopping center or mall, but are mostly found in the central business district. Shopping streets may be for pedestrians only. Sometimes a shopping street has a partial or full roof to protect customers from precipitation. In the U.S., retailers often provided boardwalks in front of their stores to protect customers from the mud. Online retailing, also known as e-commerce is the latest form of non-shop retailing (cf. mail order). Shopping generally refers to the act of buying products. Sometimes this is done to obtain necessities such as food and clothing; sometimes it is done as a recreational activity. Recreational shopping often involves window shopping (just looking, not buying) and browsing and does not always result in a purchase. Retail is India’s largest industry, accounting for over 10 per cent of the country’s GDP and around eight per cent of the employment. Retail industry in India is at the crossroads. It has emerged as one of the most dynamic and fast paced industries with several players entering the market. But because of the heavy initial investments required,

break even is difficult to achieve and many of these players have not tasted success so far. However, the future is promising; the market is growing, government policies are becoming more favorable and emerging technologies are facilitating operations. Retailing in India is gradually inching its way toward becoming the next boom industry. The whole concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. Modern retail has entered India as seen in sprawling shopping centers, multi-storied malls and huge complexes offer shopping, entertainment and food all under one roof. The Indian retailing sector is at an inflexion point where the growth of organized retailing and growth in the consumption by the Indian population is going to take a higher growth trajectory. The Indian population is witnessing a significant change in its demographics. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing working-women population and emerging opportunities in the services sector are going to be the key growth drivers of the organized retail sector in India. Retailing is one of the pillars of the economy in India and accounts for 35% of GDP.(1) The retail industry is divided into organized and unorganized sectors. Over 12 million outlets operate in the country and only 4% of them being larger than 500 sq ft (46 m²) in size. Organized retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporatebacked hypermarkets and retail chains, and also the privately owned large retail businesses. Unorganized retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc. Body: Growth of retail in India: An increasing number of people in India are turning to the services sector for employment due to the relative low compensation offered by the traditional agriculture and manufacturing sectors. The organized retail market is growing at 35 percent annually while growth of unorganized retail sector is pegged at 6 percent. (3) The Retail Business in India is currently at the point of inflection. Rapid change with investments to the tune of US $ 25 billion is being planned by several Indian and multinational companies in the next 5 years. It is a huge industry in terms of size and according to management consulting firm Technopak Advisors Pvt. Ltd., it is valued at about US $ 350 billion. Organized retail is expected to garner about 16-18 percent of the total retail market (US $ 65-75 billion) in the next 5 years.(4)

India has topped the A.T. Kearney’s annual Global Retail Development Index (GRDI) for the third consecutive year (5), maintaining its position as the most attractive market for retail investment. The Indian economy has registered a growth of 8% for 2007. The prediction for 2008 is 7.9%. (6) The enormous growth of the retail industry has created a huge demand for real estate. Property developers are creating retail real estate at an aggressive pace and by 2010, 300 malls are estimated to be operational in the country.(7) With over 1,000 hypermarkets and 3,000 supermarkets projected to come up by 2011, India will need additional retail space of 700,000,000 sq ft (65,000,000 m²) as compared to today. Current projections on construction point to a supply of just 200,000,000 sq ft (19,000,000 m²), leaving a gap of 500,000,000 sq ft (46,000,000 m²) that needs to be filled, at a cost of US$15-18 billion. (8) The Indian Retail Market Indian market has high complexities in terms of a wide geographic spread and distinct consumer preferences varying by each region necessitating a need for localization even within the geographic zones. India has highest number of outlets per person (7 per thousand) Indian retail space per capita at 2 sq ft (0.19 m²)/ person is lowest in the world Indian retail density of 6 percent is highest in the world. (9) 1.8 million households in India have an annual income of over 45 lakh (10) Delving further into consumer buying habits, purchase decisions can be separated into two categories: status-oriented and indulgence-oriented. CTVs/LCDs, refrigerators, washing machines, dishwashers, microwave ovens and DVD players fall in the status category. Indulgence-oriented products include plasma TVs, state-of-the-art home theatre systems, iPods, high-end digital cameras, camcorders, and gaming consoles. Consumers in the status category buy because they need to maintain a position in their social group. Indulgence-oriented buying happens with those who want to enjoy life better with products that meet their requirements. When it comes to the festival shopping season, it is primarily the statusoriented segment that contributes largely to the retailer’s cash register. (11) The break-up of organized retailing sales into various product categories (12) Books, Music & Gifts: 3% Mobile Handsets: 3% Clothing & Textile: 39% Food & Grocery: 11% Consumer Durables: 9% Footwear: 9% Furniture & Furnishings: 8% Catering Services: 7% Jewellery & Watches: 7% Others: 4% Major Indian Retailers Indian apparel retailers are increasing their brand presence overseas, particularly in developed markets. While most have identified a gap in countries in West Asia and Africa, some majors are also looking at the US and Europe. Arvind Brands, Madura Garments, Spykar Lifestyle and Royal Classic Polo are busy chalking out foreign expansion plans through the distribution route and standalone stores as well. Another denim wear brand, Spykar, which is now moving towards becoming a casualwear

lifestyle brand, has launched its store in Melbourne recently. It plans to open three stores in London by 2008-end. (13) The low-intensity entry of the diversified Mahindra Group into retail is unique because it plans to focus on lifestyle products. The Mahindra group is the fourth large Indian business group to enter the business of retail after Reliance Industries Ltd, the Aditya Birla Group, and Bharti Enterprises Ltd. The other three groups are focusing either on perishables and groceries, or a range of products, or both. (14) RPG Retail-Formats: Music World, Books & Beyond, Spencer’s Hyper, Spencer’s Super, Daily & Fresh Pantaloon Retail-Formats: Big Bazaar, Food Bazaar, Pantaloons, Central, Fashion Station, Brand Factory, Depot, aLL, E-Zone etc. The Tata Group-Formats: Westside, Star India Bazaar, Steeljunction, Landmark, and Titan Industries with World of Titans showrooms, Tanishq outlets, Chroma. K Raheja Corp Group-Formats: Shoppers’ Stop, Crossword, Hyper City, Inorbit Lifestyle International-Lifestyle, Home Centre, Max, Fun City and International Franchise brand stores. Pyramid Retail-Formats: Pyramid Megastore, TruMart Nilgiri’s-Formats: Nilgiri's’ supermarket chain Subhiksha-Formats: Subhiksha supermarket pharmacy and telecom discount chain. Trinethra- Formats: Fabmall supermarket chain and Fabcity hypermarket chain Vishal Retail Group-Formats: Vishal Mega Mart BPCL-Formats: In & Out Reliance Retail-Formats: Reliance Fresh Reliance ADAG Retail-Format: Reliance World German Metro Cash & Carry Shoprite Holdings-Formats: Shoprite Hyper Entry of MNCs The world's largest retailer by sales, Wal-Mart Stores Inc and Sunil Mittal's Bharti Enterprises have entered into a joint venture agreement and they are planning to open 10 to 15 cash-and-carry facilities over seven years. The first of the stores, which will sell groceries, consumer appliances and fruits and vegetables to retailers and small businesses, is slated to open in north India by the end of 2008. (15) Carrefour, the world’s second largest retailer by sales, is planning to setup two business entities in the country one for its cash-and-carry business and the other a master franchisee which will lend its banner, technical services and know how to an Indian company for direct-to-consumer retail. (16) The world’s fifth largest retailer by sales, Costco Wholesale Corp (Costco) known for its warehouse club model is also interested in coming to India and waiting for the right opportunity. (17) Opposition to the retailers' plans have argued that livelihoods of small scale and rural vendors would be threatened. However, studies have found that only a limited number of

small vendors will be affected and that the benefits of market expansion far outweigh the impact of the new stores.(18) [edit] Challenges To become a truly flourishing industry, retailing needs to cross the following hurdles: (19) Automatic approval is not allowed for foreign investment in retail. Regulations restricting real estate purchases, and cumbersome local laws. Taxation, which favours small retail businesses. Absence of developed supply chain and integrated IT management. Lack of trained work force. Low skill level for retailing management. Intrinsic complexity of retailing – rapid price changes, constant threat of product obsolescence and low margins. Challenges: Automatic approval is not allowed for foreign investment in retail. Regulations restricting real estate purchases, and cumbersome local laws. Taxation, which favours small retail businesses. Absence of developed supply chain and integrated IT management. Lack of trained work force. Low skill level for retailing management. Intrinsic complexity of retailing – rapid price changes, constant threat of product obsolescence and low margins Conclusion: Economy of India Currency 1 Indian Rupee (INR) (₨) = 100 Paise Fiscal year April 1–March 31 Trade organisations WTO, SAFTA Statistics: GDP (PPP) $5.21 trillion (PPP) (2008 est.) $1.250 trillion (nominal) (2008) (12th (nominal) ; 3rd (PPP)) GDP growth 9.6% (2006/07) GDP per capita $1,089 (nominal); $4,543 (PPP) [2] GDP by sector agriculture: 19.9%, industry: 19.3%, services: 60.7% (2006 est.) Inflation (CPI) 3.5% (2008 est.) Population below poverty line 25% (2002 est.) [3] Labour force 509.3 million (2006 est.)

Labour force by occupation: agriculture: 60%, industry: 12%, services: 28% (2003) Unemployment 7.8% (2006 est.) Main industries: textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software, services External Exports $125 billion (Financial Year 2006-2007) Export goods:textile goods, gems and jewelry, engineering goods, chemicals, leather manufactures, services Main export partners: US 18%, the People's Republic of China 8.9%, UAE 8.4%, UK 4.7%, Hong Kong 4.2% (2005) Imports: $187.9 billion f.o.b. (2006 est.) Import goods: crude oil, machinery, gems, fertilizer, chemicals Main import partners: the People's Republic of China 7.2%, US 6.4%, Belgium 5.1%, Singapore 4.7%, Australia 4.2%, Germany 4.2%, UK 4.1% (2005) Gross External Debt {{{gross external debt}}} Public finances Public debt $132.1 billion (2006 est.) Revenues $109.4 billion (2006 est.) Expenses $143.8 billion; including capital expenditures of $15 billion (2006 est.) Economic aid recipient: $2.9 billion (FY98/99) Reffence: Main data source: CIA World Factbook All values, unless otherwise stated, are in US dollars

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