Food constitutes 62% of the total consumption expenditure of Indian

consumers, forming the single largest category spend. Considering the size,
opportunity and challenges in this segment, the company has outlined a
strategic roadmap for developing a formidable and profitable business in this
category. eading the company!s presence in this category, Food "azaar
#itnessed healthy expansion during the year 2$$%&$', by adding (% stores
during the year under revie#. )he total count of Food "azaars as on *une
2$$' stood at +,6 stores. In order to build a dominant presence in the food
category, the company decided to explore both the premium and bottom&end
of the mar-et, in addition to the mid&mar-et presence through Food "azaar. In
the premium segment, Food "azaar piloted ./ourmet! in 0elhi for the
discerning customer see-ing richer experience. )his store celebrates lots of
impulse and destination categories pac-ing in #ide assortment of foods 1both
local and imported2. )he store also presents fresh food experience #ith an
extensive assortment of ba-ery and customised snac-ing options.
Food "azaar private brands have been very successful during the year 2$$%&
$' and have provided tough competition to established brands. 3rivate brands
of Food "azaar created a strong hold in the consumer mind&set, offering
better value for money proposition, and resulting in the company deriving
better margins in the business.
In order to cater to the very mass segment, a crucial development during the
financial year 2$$%&$' has been the launch of 4"!s Fairprice and its
aggressive expansion plan. 4"!s Fairprice is designed as a lo#&frills, small
format convenience store located in lo#&income neighborhoods in metros.
5imilar to immensely successful 6ldi chain in /ermany, 4"!s Fairprice stoc-s
1
only ,$$ 547s, comprising of basic necessities, isn!t air&conditioned and
#or-s on a very lo# operational cost structure. aunched in 6ugust 2$$% in
0elhi, by *une 2$$', the company operated +$+ stores in 0elhi, 8umbai,
9yderabad, "angalore and 6hmedabad. 9aving met #ith a very enthusiastic
response from its target customer group, the company intends to have a very
aggressive expansion plan for the format #ith a planned opening of 2$ stores
every month. )he format is expected to garner a large share of the customer
segment, yet untouched by modern retail formats. 6dding more value to the
food business is that the share of o#n brands as a percentage of total Food
"azaar revenue has increased significantly and comprises nearly 6$
merchandise categories #ith more than ,2$ 547s across the F8C/
landscape. 0uring the year under revie#, +( ne# products #ith ,2 547s
#ere launched, through private brands.
)he buying teams of F8C/ #ere re&structured around brand relationships to
exploit full potential of category gro#th initiatives in F8C/ #orld. 3erpetual
Inventory system #as set up across all stores to regularize #ee-ly stoc- ta-e
of )op +$$ high shrin- articles. )his has built rigour into the stoc- integrity of
the stores.
6 number of ne# businesses and strategic steps ta-en at the group level is
helping the company derive more value in the food category. )he most crucial
development has been the group!s ac:uisition of a controlling sta-e in /odre;
6dhar, a rural retail chain in 6< villages across India. )his net#or- not only
provides a channel to capture rural consumption but is also being scaled up
an efficient sourcing net#or- for rural agri&produce that can serve Food
"azaar. In addition, the group!s partnership #ith 8y0ollar 5tore franchise in
2
India is helping our net#or- offer ne#, aspirational imported brands to
consumers. )he group!s logistics arm, Future ogistics is also exploring tie&
ups #ith ma;or international food brands for distribution in India.
)he group, through its venture capital and private e:uity arms is exploring
opportunities to invest and partner #ith small and medium food brands and
manufacturers that #ill help build synergies for its food business. 6n
investment has already been made in Capital Foods, a company that mar-ets
brands li-e 5mith = *ones and Ching!s 5ecret.
In the forthcoming financial year, Futurebrands #ill significantly increase its
investments in the private brands in the food category. )hus, the critical
aspects of the food chain, sourcing logistics, brand development and supplier
engagement is helping the company build a more consolidated strategy
to#ards dominating the food consumption space.
Food "azaar, the supermar-et variant of 3antaloon >etail 1India2 td, has
adopted the ?negotiated and predetermined? model to source vegetables and
fruit from farmers across states. )he company uses the model to procure
potatoes from farmers in 7ttar 3radesh #here the :uantity and :uality of the
produce is predetermined. )he company decides the price after the harvest to
give maximum benefit to the farmer. @f the ',$$$ stoc- -eeping units
available across the stores, +$% constitute the farm fresh segment, #hile the
international standard is around +2%. )he company #ants to push the former
to +<% in the next three years. In 8aharashtra, the company has started
procuring 6lphonso mangoes from farmers. It has tied up #ith the
8aharashtra 5tate 6gricultural 8ar-eting "oard 18568"2 to buy directly from
3
RETAIL
INDUSTRY
ORGANISED UNORGANISED
the farmers. )he farmer and the retailer fix the price ;ointly. 6lmost 2$% of the
cost is saved if the produce is procured directly from the farmers. )he
company is already sourcing bananas and oranges from the state. )hey are
sourcing pineapples and potatoes from Aest "engal.
PROFILE OF RETAIL INDUSTRY
>etailing is defined as a definite set of activities or steps used to sell a product
or a service to consumers for their personal or family use. It is responsible for
matching individual demands of the consumer #ith supplies of all the
manufacturers. >etail is India!s largest industry, accounting for over +$% of
the country!s /03 and around eight per cent of the employment.
Unorganized Retail
Counter stores, 4ios-s, 5treet 8ar-ets and Bendors, #here the o#nership
and management rest #ith one person, are classified as traditional or
unorganized retail outlet. )hese formats typically re:uire employees #ith lo#
s-ills and account for 97% of the sectors output 7norganized >etail industry
constitutes about C,2$ million. )hese are highly competitive outlets, #ith
minimal rental cost 1unregistered 4ios-s or traditional property2, cheap labour
1family members #or-ing2 and negligible overheads and taxes.
4
LPG Revolution
"ut the scenario has been changed after the 3/ revolution. In late D$!s,
government of India tried to create the bubble by allo#ing the /lobal players
in the >etail 6rena. )he /overnment allo#s +$$ per cent foreign direct
investment 1F0I2 in cash and carry through the automatic route and <+ per
cent in single brand.
/overnment policies are becoming more favorable and emerging
technologies are facilitating operations. )he #hole concept of shopping has
altered in terms of format and consumer buying behavior, ushering in a
revolution in shopping
5o because of favorable /overnment 3olicies, people are getting more
varieties and this has led to increase in spending po#er of consumers.
Follo#ing graph depicts this
5
Organized Retail
5o to meet the needs of emerging India, there comes
.)he Ee# >etail andscape
/limpses of the @rganizational Challenges!
8odern retail has entered India as seen in spra#ling shopping centers, multi&
storeyed malls and huge complexes offer shopping, entertainment and food
all under one roof. i.e. @>/6EI5F0 >F)6IIE/ C68F IE 3IC)7>F.
6
But the tor! i et to "hange##
>etailing is going through a transition phase in India. For a long time, the
corner grocery store #as the only choice available to consumers. "ut as the
corporate & the Piramals, the TATA, the Rahejas, ITC, S.Kumars , RPG
Enterprises and mega retailers - crssrads, Shppers Stp and
Pantalns race to revolutionize the retailing sector, retail as an industry in
India is coming alive. 6 small share of only ,% is generating ,$% gro#th on y&
o&y basis.
Driver o$ Organized Retailing
+. Favorable demographics
2. Changing attitude to#ards spending
,. 5hifting customer preference to#ards organized retailers
(. IncreasingGeasier availability of :uality mall space
)he organized retail sector is driven by the factors li-e changing lifestyle,
income gro#th and favorable demographic pattern. 6nd it is said, that
organized retailing in India is evolving as a star, and three&to&four years do#n
the&line #ill shine on the Indian mar-ets.
%urrent Statu
>etail 6dvancementsH Fuelling the "oom
Ee# formats meet the consumer re:uirements better
Ee# needs enabled #hich other#ise could not be enabled
F.g. in the leisure and entertainment areas
9igher value addition in the retail chain e.g. food versus dining out
7
5o there is fundamental shift in retail, a very significant change in organized
retail
Retail %hange& An i'(a"t )e!ond
Fxpectations
+. 6 #idespread social and economic impact
2. 6n impact on consumers trends an consumption
,. 6 change in business opportunities for manufacturers.
TRANSFOR*ATION IN T+E RETAIL SE%TOR
5o due to changing needs of consumers there are 4ey Challenges for
8anufacturers so this has led to a significant organizational impact #hich led
to the changing mar-et dynamics.
1. Ne, ale tea' and ale (ro"ee
Eo# the sales systems has been changed retailer purchases directly
from manufacturer or do contract farming #ith farmers so due to that
the distribution chain can be reduced and cost can be saved, but
previously long supply chain #as there #hich increases the cost of
production.
8
2. Ne, logiti" !te' to deliver
Ee# logistical systems help firms to reduce cost and thereby provide
customers products at the lo#est cost
3. Ne, (rodu"t and "o'(etitive e-uation
3reviously customers are getting only price and :uality from a product
but due to competition the scenario has been change, no# customer
not only #ant lo# price but also #ants the follo#ing things given belo#.
%hanging "o'(etitive E-uation
Balue I 3rice J Kuality J "enefits J Convenience J 5ervice J
6mbience
. P/S IN RETAIL *AR0ETING
12 PRODU%T&
3roduct and merchandise management is a -ey activity in the management of
retail business. It drives the business strategy of the retailer and has immense
cost and profit implications. Ahile product management deals with issues
related
3roduct management, in the context of retailing, may be
defined as a set of decisions related to the selection and removal of
products from the retailers! portfolio, along #ith the related product and
mar-et analysis.
)he selection of the right :uantity of the product and ensuring
its availability at the right place and time.
9
)his involves a careful planning of products mix and its financial
implications are reflected in the products budget.
)o the -ind of products sold by the retailer,
Follo#ing are the points every retailer #ill consider during planning of 3roduct
8ixH
+. 3ariet!& Bariety is the very important point #hile planning the product mix
because variety creates the demand and #hich automatically attracts the
consumer to#ards the retail store. 6s consumers are of different -inds one
#ants the products of a good :uality and another #ants the same at lo#
price. Companies are no# extending their product lines to provide huge
verities to consumers.
E2g2 In malls customer even can get a huge variety of a single product li-e
in case of fruits and vegetables, consumers can get different grades of
fruits and even imported fruits.
2. 4ualit!& In organized sector consumer not only considers price but also
focus on the :uality. 6 better :uality provides the consumer satisfaction
#hile consuming the goods. 6s retail outlets provides lots of varieties in
products so consumer #ould able to ;udge the :ualities in different
products.
E2g2 For apparels, In spy-ar store, customer #ould find only apparels
1;eans2 of spy-ar brands, but in ifestyle 1a 8"@2. Customer #ould find
various brands and types of apparels.
,. Pa"5aging& 3ac-aging gives more satisfaction to the customers to#ards
the :uality of the products. In retail outlets the product pac-aging gives
more preference as it attracts the customer!s mindset.
10
E2g2 Ahen any -ind of hyper mar-ets, try to sell the 3erishable goods li-e
grocery items then customer expecting more freshness in that items so
that outlets provide a good and air tight pac-aging to satisfy the
consumers.
62 PLA%E *I7&
3lace mix is the very important aspect, a service provider has to consider
because if service provider don!t -no# #here he has to serve than the target
people can!t be accessible. )he t#o main important things service provider
has to consider #hile deciding place are Lo"ation and ue o$ Ditri)ution
%hannel.
>etail is the thing #here retailers serve the products to the customers and for
them location and distribution Channels are very important thing to consider,
as location helps to determine target customers accessibility of retailer to
serve them. Ahere as distribution channel helps to determine availability at
right time, place and right price.
+. Lo"ation& For deciding location retailer has to loo- after target customer.
6s retail service is people based so there must be interaction bet#een the
customer and provider. 6part from this retailer also has to loo- after upon
the strategies of competitors.
E2g2 )oday the organized retail has ta-en the footprint in cities across the
country but very fe# at negligible amount. )here are many reasons but
infrastructure a facility, target customers and government policies
interrupts #hile deciding location. "ut no# many retailers are going in rural
areas by different distribution channels that #e #ill see in next point.
E2g2 73 /overnment banned the retail stores.
11
2. Ditri)ution %hannel& 6fter choosing the location the second important
decision is to decide the distribution channel. 6s the retailer!s main
ob;ective is to reduce the price of their products offering, it can be
achieved only by reducing the intermediates in the distribution channel.
)here are types of distribution channels li-e
+. Fran"hiing & In franchising, franchise sells the product of service firm
and gets a fixed percentage on the sell. E2g2 4outons, >eebo-,
6ddidas, and )he 8obile 5tore @f Fssar /roup.
2. Agent and Bro5er& In this big retailers use agents and bro-ers #ho
are having good contacts and distribution services in their location.
,. %ah and %arr!& It is a form of trade in #hich goods are sold from
#holesale #arehouse operated either on a self&service basis, or on the
basis of samples 1#ith the customer selecting from specimen articles
using a manual or computerized ordering system but not serving
himself2 or a combination of t#o. Customers 1retailers, professional
users etc2 settle the invoice on the spot and in cash, and carry the
goods a#ay themselves. "iggest examples of cash and carry are as
follo#sH
+. Aal&8art and "harti
2. 8etro in south
82 PRI%ING&
>etail service providers offer a range of service at different price levels to
cater to the needs of different target segments that may have different levels
of purchasing po#er. 5etting the right price can influence the :uantities of
various products or services that consumers #ill buy, #hich in turn determines
12
the total revenue and the profit of the retail store, in short, the right price for
the product or service is the price that the consume is #illing to pay for it.
6 retailer needs to understand the price sensitivity of customers that form his
target segment. )he price sensitivity of customers is based on various
personal, social or geographical factors and presents a ma;or challenge for
retailers #hile setting prices.
Pri"ing o)9e"tive&
6 >etailer should frame the proper pricing ob;ectives to -eep in mindH
+. Competitive oriented
2. /ro#th in the mar-et
,. Customer affordability
(. 8aximise profit
<. Farn a good mar-et share
6. eadership in service :uality
E2g2 In 6pparels, "rand named L36E)6@@EM only caters the needs of high
income level of consumer segment and provides premium brands and sets
the prices according to the 6pparel :uality. )heir pricing starts >s.+$$$. 5o,
this #ould only target premium class.
@n the other side, "rand named L/@"75M. )hey are targeting all income
groups their pricing starts from >s. 2$$ to >s. 2$$$$ for an apparel. 5o this
pricing strategy gives customer more variety, flexibility and durability. 6nd
helps the retailer to grab the larger pie of the ca-e.
*ethod o$ (ri"ing in retail ervi"e&
+. De'and )aed (ri"ing& In retailing, service provider has to set the
ob;ectives of pricing as per the demand situation in the mar-et. )his is
13
generally used #here the services are price sensitive. In this cost is not
considered but the service providers allo#s the demand to determine
price.
E2G., In apparels segment, basically in summer season, prices of
apparels are very high as the demand is more of cotton cloths. "ut
as #inter comes, the demand for cotton cloth is lo# so that retailer
sells that apparels at a discounted price.
2. %o'(etition )aed (ri"ing& In this method of pricing, the price is
determined on the basis of competitor!s price. 3rice under such
situation s may be used to gain short&term competitive advantage over
rivals.
E2G2 "I/ "6N66>, Future group!s store, al#ays provides a discount
offer of <$% on Independence 0ay and republic day. 6nd from that
large revenue has bagged. 6nd also helps to gain the competitive
advantage for the short and long term.
:2 PRO*OTION *I7&
)he retail sector is one of the most competitive in India after 3/, and so
effective promotion strategy is needed in order to be successful. 9o#ever,
many retailers get caught up in the day&today running of their companies and
don!t use all their business strategy expertise to push their business for#ard.
If you are in the retail business, then you need to #a-e up and thin- carefully
about your current promotion strategy.
14
If you don!t then you could find yourself trailing behind the competition and
losing business to other retailers. If you #ant to improve your retail promotion
strategy, then here are some techni:ues to promote your business.
INDIRE%T *ET+OD
Indirect method represents the indirect #ay of reaching to the consumers to
promote the products by using various communication vehicles li-e
advertising, internet, and broachers.
Advertie'ent
)his the another #ay to reach to the great number of customers through a
single medium that is advertisements on television, radio, etc. advertising on
the television and radio, etc. reaches a huge audience 1including people #ho
#ould be unli-ely to be reached in any other #ay2, and raises a#areness of
the issues as #ell as attracting support.
15
RETAIL
PROMOTION
INDIRECT
METHOD
DIRECT OR P-O-P
METHOD
Advertisemet
Iteret
I St!re Advertisi"
Medi#
Dis$%#&
'r!#()ers I(etives !r O**ers
Internet
Aith the Internet increasing in popularity all the time, it is extremely important
to use Internet mar-eting as a #ay to improve mar-et share. In order to
improve your access to customers, create a #eb site #here customers can
vie# your merchandise and possibly buy products online. 5elling your
products online is a great #ay of expanding your business #ithout having to
spend lots of money on ne# premises or retail locations. 9o#ever, if you don!t
#ant to develop online business, then you can still advertise your business
online. Fffective mar-eting strategy should use all mediums available to
improve business exposure, and #ith online advertising a lo# cost and
effective medium it ma-es sense to ta-e advantage of the opportunity.
Broa"her
)his is another #ay to reach to customers it is basically used #hen ne# retail
store or ne# variety is introduced in the mar-et, as it needs more
advertisement and it is very effective to reach the people of locality very
easily.
DIRE%T OR P;O;P *ET+OD
)he retail point of purchase represents the time and place at #hich all the
elements of the sale&the consumer, the money, and the product&come
together. "y using various communications vehicles, including displays, sales
promotions, in&store advertising, the retailer hopes to influence the
consumer?s buying decision #hich can provide them #ith a competitive edge.
16
In;tore advertiing 'edia
>etailers can use a number of innovative approaches for reinforcing brand
a#areness and delivering advertising messages at the point of purchase.
)hese includeH
+. Commercials broadcast over in&store sound systems.
2. 8oving message display units #ith changeable electronic messages.
,. Customer&activated videotapes and video dis-s that sho# merchandise
such as furniture that are too bul-y to be displayed on the department
floorO the videotapes can also be played in #indo# displays to present,
for example, designer fashion sho#s.
(. )elevision sets installed over cash registers to sho# #aiting customers
commercials for products that are usually available nearby.
<. 6dvertisements on carts used in supermar-ets and other self&service
outlets.
6. 6ffordable change displays that use available air space rather than
limited floor space.
Di(la!
For one thing, they can use #ell designed displays are as follo#sH
+. )hey attract consumer attention,
2. Facilitate product inspection and selection,
,. 6llo# the access of several customers at once,
(. Inform and entertain, and stimulate unplanned expenditures.
<. )hey reduce store labour costs by facilitating shelf stoc-ing and
inventory control, minimising out&of&stoc- items, and lo#ering the
re:uired level of bac-&room inventory
17
6s additional display space can expand sales #ithout any change in retail
price, consumer goods retailers increased their spending on displays. Aell&
designed displays respond to the needs of both the retailer and the consumer.
In"entive or O$$er
)o attract the customers and to motivate them to come again and again
retailer can offer various incentives or offers li-eH
+. Free a'(le might be mailed, delivered door&to&door, placed in bins
in retail stores, or attached to or inserted in another pac-age.
2. %ou(on are certificates #hich, #hen presented for redemption at a
retail store, entitle the bearer to a stated savings on the purchase of a
specific product.
,. *one!;re$und o$$er are propositions in #hich a sum of money
Goccasionally the full purchase price2 is returned by mail to participants
#ho mail in proof of purchase such as a box top.
(. Pri"e;o$$ deal offer consumers a certain amount of money off the
regular price of a product, and state the amount on the product?s label.
<. Pre'iu' are items of merchandise offered free or at a lo# cost as a
bonus to purchasers of a particular product.
6. %ontet are also ma;or consumer&oriented promotion devices. )hese
differ in that in a contest participants compete for a prize or prizes on
the basis of their s-ill in fulfilling a certain re:uirement, usually
analytical or creative.
%. Free;good deal, an offer of a certain amount of a product to
customers at no cost to them but dependent on the purchase of a
stated amount of the same or another product.
18
De'ontration 1i.e., sho#ing products in use2 is another common consumer
promotion device.
<2 PEOPLE&
In retail business, thus retailer has a good technology and all facilities but yet
it may not be able to provide satisfactory customer service due to lac- of
interpersonal relationship bet#een service provider and customer. )hat
means, retailer has to focus on improvement in internal staff so that they #ill
satisfy the customer in a better #ay.
19
RETAILER
INTERNAL STA++
,+RONT LINE
STA++-
EMPLOYEES.
CUSTOMER OR
CONSUMER
G!!d tr#ii"/
(0st!mer- !rieted
#ttit0de
C0st!mer s#tis*#(ti!
I* (0st!mer s#tis*ied/ t)e
(0st!mer 1!0%d ret#i
In >etail, Customer #ants more interaction #ith the employees to get the
-no#ledge regarding products #hich they are going to purchase. 6lthough in
employer point of vie# there is only one method i.e.
%uto'er %onta"t E'(lo!ee& )hey are -no#n as front line staff as
they come in direct contact #ith the customers in the process of
service delivery
E2g2 Front office staff in 8"@!s these contact employees are very
important because they represent the organisation and can directly
influence the customer satisfaction by giving them a convenience. "ut
no# comes that ho# much degree of personnel goes for customer
satisfaction level are as follo#sH
+. 9igh contact personnelH )hey are re:uired #hen the physical
presence and the interaction of the customer #ith the employees
for the longer time F./. 6n orgnanisation, mar-eting their product
in the 9yper 8ar-et.
2. o# Contact 3ersonnelH )hey are re:uired #hen the physical
presence and interaction #ith the customer is for the lesser time.
F.g. Fmployees in an >etail outlet serving their customer only for
the product information, not for the product mar-eting. 5o they
spend very lesser time #ith customer.
20
=2 PRO%ESS&
5ervice process refers to ho# a service provided or delivered to customer. For
providing a services, there is one methodology or a process to give
convenience to customer by ma-ing a user P friendly and a simple process. In
retail sector, someone finds self service is a consumer friendly process and
another finds it hectic process for finding the things in the retail outlet.
>etailers al#ays try to ma-e the process more friendly and simple. For this
they provide trollies and hand&bag #here consumer can shop very easily, but
in the pea- time, retailer cannot satisfy the consumer by the payment ma-ing
process as consumers are in a larger cues. For ma-ing more convenient to
customer there are three different types of processes adopted by the retailers,
#hich are very usable no# a days.
+. E'ergen"e o$ Online Sho((ing& In this technological era, everybody
is friendly #ith latest communication technology i.e. Internet. Ahich is
fastest #ay of getting product information #here consumer can get the
information. "ut the many I) companies ma-e the online shopping
processes for the customer, and customer can purchase the product by a
clic-.
E2g2 F&"ay, indiatimes online shopping and sify shop et al.
2. %uto'er Parti"i(ation& In this process, #here the customer
participation is exist in the shopping. From this productivity can be
increased and cost can be reduced.
E2g2 8alls and super mar-ets.
21
,. +o'e deliver! (ro"e& Eo#, the customer can get the products
easily by the process of 0ial P a P 3hone concept, #here many retailers
are using
E2g2 )his process is used in the food and be#erages segment, li-e 8c
0onalds and domino!s pizza.
.2 P+YSI%AL E3IDEN%E&
3hysical evidence means Lthe en!irnment in "hich the ser!ice is
deli!ered and "here the #irm and custmer interact$ and an% tangi&le
cmmdities that #acilitate per#rmance cmmunicatin # ser!ice.'
It includes all the efforts ta-en by the service provider to tangibles services
they includeH
A')ient $a"tor
6ir conditioning
Fxcellent ventilation
Deign $a"tor
7niform appearance
Fxtensive par-ing lot
5pacious interiors
So"ial $a"tor
Aell dressed employees
Courteous
friendly
Flite and up mar-et cro#d
22
Family atmosphere
In retail sector as far as unorganized stores are concerned due to limited
margins they cannot afford these all services to their customer. )hese all
things you #ill find only in the organized retail shops. F.g.
+. 8ac0onald.
2. Cafe Coffee 0ayH )he physical appearance of the outlet is very
attractive, so they every customer #ould li-e to go over there.
0ue to lac- of sufficient area in the metro cities it is very difficult to arrange for
the par-ing lots over there. )herefore they started multistorey building in
#hich par-ing facility is provided.
SEG*ENTATION OF ORGANI>ED RETAIL SE%TOR IN INDIA
5pecialty stores cater to a specific vertical, #hich is sho#n in 5F/8FE) I.
)#o or more stores from segment one come together to form segment t#o
stores. Food and grocery and households goods from the segment one
together form supermar-ets 15F/8FE) II2. 5ome super mar-ets also stoc-
23
SEGMENT I
Food and Grocery
FMCG
Apparel
Footwear
Beauty Product
Fa!"on Acceor"e
#lectron"c
Conu$er %ura&le
'ewellery
(o$e decor
SEGMENT II
)uper Mar*et
(yper Mar*et
%epart$ent tore
SEGMENT III
MA++)
pharmaceuticals. 5imilarly a hypermar-et stoc-s food and grocery, apparel,
household items, durables, foot#ear, accessories, electronics, furniture, etc. 6
department store stoc-s products #ith a lifestyle proposition and branded
clothes, foot#ear, home dQcor, durables, high end ;e#ellery and #atches.
5F/8FE) III is made up of malls. )hese #ill have stores from both
5F/8FE) I=II. In addition to these, malls also have beauty parlours,
restaurants, and food courts, entertainment zones and multiplexes #ith huge
area.
For'at De"ri(tion The 3alue Pro(oition
5pecialty
5tores
Focus on a specific consumer need,
carry most of the brands available
/reater choice to the
consumer, comparison
bet#een brands is possible
0epartment
5tores
arge stores having a #ide variety of
products, organized into different
departments such as clothing, house
#ares, furniture, appliances, toys, etc.
@ne stop shop catering to
variedG consumer needs.
5upermar-ets
Fxtremely large self&service retail
outlets
@ne stop shop catering to
varied consumer needs
0iscount
5tores
5tores offering discounts on the retail
price through selling high volumes
and reaping economies of scale
o# 3rices
9yper& mart
arger than a supermar-et,
sometimes #ith a #arehouse
appearance, generally located in
:uieter parts of the city
o# prices, vast choice
available including services
such as cafeterias.
5hopping
8alls
6n enclosure having different formats
of in&store retailers, all under one
roof.
Bariety of shops available to
each other.
%+ARA%TERISTI%S OF RETAIL INDUSTRY
)he spectrum of >etail Industry is :uite #ide in nature. >etail serves
consumers through a small grocery store to a huge departmental store. >etail
Industry is heavily dependent on consumer spending. In fact 2G, of 75 /03 is
coming from >etail business. >etail is the second largest industry in 75. It
has employed 2, 8illion people . 0uring economic slo# do#n consumer
24
spending decreases and it poses threat to the >etail industry. Consumers
confidence is one of the -ey drivers of the industry.
De"line in S'all Store
It is observed that small independently o#ned stores are gradually loosing
their foothold in the mar-et place. )hese stores are generally called L8om and
3opM stores and they offer limited merchandise to the consumer. )hese store
are facing stiff competition from the large departmental stores or superstores
and in this process they are closing do#n their shutters. In many locations the
arrival of a superstore has forced nearby independents out of business. In the
boo- selling business "arnes = Eoble superstore or "orders "oo-s and
music usually puts smaller boo-stores out of business. )his is a ma;or
characteristic prevailing #orld#ide. "ut it is also true that many small
independent outlets still thrive by -no#ing their customers better and
providing them #ith more personalized service.
Internet and E;%o''er"e
Internet the ubi:uitous medium has opened a ne# avenue in front of the
>etailers. It has offered an opportunity to the consumers to shop from the
home. 6s it stands today overall >etail sales through internet may not be that
significant but gradually it is gaining popularity amongst consumers.
6mazon.com is the company #hich is very successful in this F commerce
domain.
Re(oitioning o$ De(art'ental Store
)he appeal of big departmental store is in the #ane and they are trying to
reposition themselves. )hey are repositioning their product lines to survive in
this highly competitive mar-et eg. 6 departmental stores #hich is supplying
25
general merchandise to the consumer is changing themselves to a giant
apparel store.
Rie in Di"ount tore
5upremacy of 0iscount store is also one of the distinct characteristics of
>etail Industry today. 0iscount stores offer money bac- guarantee, every day
lo# price etc to lure customers. )hey also provide floor help and easy access
to the merchandise to facilitate the consumer. Aal& 8art the #orlds largest
>etailer comes under this category of >etail store.
%ategor! 0iller
)here are >etailers #ho actually concentrate on one particular product
category and grab a lion!s share of that mar-et and outperform their
competitors. )hey are called Category 4illers. )oys > 7s 1)oy mar-et 2, 9ome
0epot 19ome Improvement2 , 5taples 1@ffice 5upplies2 are the examples of
such >etailers #ho have grabbed a ma;or mar-et share in that product
category and they have forced a reduction in the number of players in that
product segment. )his is also a distinct trend observed in the current >etail
mar-et. )en years bac- there #ere number of players in the toy mar-et and
no one #as controlling more than <% of mar-et share but no# the number of
players has come do#n to six and )oys > 7s is en;oying 2$% mar-et share.
Dire"t *ar5eting
Aith the advancement of technology >etailers have found another sales
channel through #hich they can reach the consumer and this is direct
mar-eting. 0irect mar-eting has their root in direct mail and catalog mar-eting
1and!s Fnd and "ean2. It includes telemar-eting, television direct
response mar-eting. 19ome shopping net#or-, KBC2 . 6lthough an
26
over#helming ma;ority of goods and services is sold through stores, non store
>etailing is also gro#ing at a faster rate. 0irect selling is CD "illion industry
#ith around 6$$ companies selling door to door. 6von ,Flectrolux
,5outh#estern company ,)upper#are and 8ary -ey cosmetics are the
examples #ho have adopted this strategy successfully.
De'ogra(hi" %hange
>etail industry is impacted by the demographic changes. 6s a result of this
change taste of the consumer is undergoing a change and it creates a
demand for certain products. Aorld #ide >etailers are -eeping a close #atch
on this change and they are trying to realign themselves #ith this change.
*erger and A"-uiition
>etailers #ho #ant to dominate the mar-et place have adopted the strategy of
mergers and ac:uisitions. )his is also one of the distinct trends in /lobal
>etail Industry today. Instead of achieving an organic gro#th >etailers can
gro# significantly #ith the help of mergers and ac:uisitions. )his helps them
to occupy more shelf space in the mar-et place. 6s the volume increases they
are establishing better control over their suppliers and they are reducing the
procurement cost and in that #ay they are boosting their profitability. )his is
driven by the economic gro#th factors, size ,revenue pattern and the
customer demand. 5ears and and!s Fnd merger is one of the significant
mergers #hich has happened in recent times. 6nother important example
#ould be Ei-es ac:uisition of 9urley, a #ell -no#n surfing brand. )his has
helped Ei-e to enter in to a ne# mar-et segment.
27
OPERATIONAL ISSUES
In order to survive in this Industry, #hich is driven by the consumer demand
>etailers need to successfully counter the operational issues. If the >etailers
fail to diagnose and address those operational issues their existence #ill be
;eopardized.
Su((l! %hain *anage'ent and Logiti"
)he process of getting goods to the customer has been traditionally -no#n as
3hysical 0istribution. 3hysical 0istribution starts at the factory and it ends at
the store. Eo#adays the definition of 3hysical distribution is expanded and a
broader concept has come #hich is 5upply Chain 8anagement. Ideally
5upply Chain 8anagement encompasses the material flo# from supplier!s
suppliers to the final destination. >etailers need to have a grip on that #hole
chain in order to control the procurement and delivery cost. )his #ill help them
to choose the right supplier for the merchandise. >etailers need to come out
of the constricted vie# about the supply chain #hich is vie#ing the mar-et as
a point to point destination, instead they need to consider the holistic picture
#hich is a part of 8ar-et ogistics. 8ar-et ogistics involves physical flo# of
materials from point of origin to the point #here it meets the customers
re:uirement.
)his 0emand Chain orientation can help them to cut do#n the procurement
cost to a great extent. I4F6 the global furniture retailing giant has successfully
addressed this issue and they are able to sell :uality furniture at a much lo#er
cost than his competitors.
28
Pri"ing
In >etailing environment pricing has become a burning issue to the retailers.
Customer!s expectation from a >etail store has become very high and
customers are loo-ing for more and more bargain prices. )his situation can be
referred as 3rice drought . 3rice deflation is ta-ing hold in the >etail
environment and any reduction in volume is complicating the scenario further.
)his trend is :uite evident in 6pparel and Consumer goods mar-et. 3ricing
seems to be a -ey positioning factor and must be decided in relation to the
target mar-et , 6ssortment mix and competition. 5trategic pricing has become
an important strategic tool to the retailers. 6irlines
Industry started this strategic pricing techni:ue #here the underlying
philosophy is not all consumers #ant a particular product at the same time
and the degree of demand #ill also vary. Aith this idea in mind different
consumers are charged different prices for the same product or service.
>etailers need to adopt the right pricing tactics in this environment of fierce
competition. >etail stores mar-do#n the price for some items to attract
people, this is called traffic building. )hey also run store#ide reduction sell.
It is observed that a shoe >etail outlet sells <$% of the product at normal
mar- up , 2<% of the product at ($% mar- up and remaining 2<% at cost.
5ome >etailers have done a#ay #ith sales pricing and they are resorting to
everyday lo# price 1F032. It leads to lo#er advertising cost , greater pricing
stability and higher >etail profits. Aal& 8art uses this -ind of pricing strategy.
29
Sale %hannel
0esign of sales channel is also a -ey operational issue in today!s >etail
industry. )echnology has become one indispensable business component and
>etailers need to ma-e use of this successfully. >etailer needs to come out
from the mindset of traditional store retailing and they need to use all available
channels to reach a #ider consumer community. 6mongst Eon store >etail
channels Internet and F commerce is gradually gaining popularity. Consumers
do not need to come to store for buying goods or service they can do that
over a clic- of a button from their dra#ing room. >etailers need to derive
benefit from that .
8ar-eting through call centre or catalogue mar-eting is also an emerging
trend .
>etailers need to choose sales channels carefully and need to use all those
channels effectively to ac:uire more customer centricity. 7ltimate ob;ective
here is to offer a consumer a tailor made shopping experience and to provide
more easy access to his product and service offering.
STRATEGIES IN RETAIL
6 business firm can not travel in an unplanned #ay . )o encounter the
business challenges in a highly competitive environment and to find out a
sustainable gro#th road map >etailers need to realize the importance of
strategic planning. 5trategic planning can be vie#ed as a stream of decisions
and activities #hich lead to Fffective business strategies #hich help the
organization to fulfill its ob;ectives.
30
>etail landscape is changing rapidly and in this changing economic
environment >etailers need to find out the right strategy #hich #ill help them
to cope up #ith this environment and empo#ers them to ta-e right decisions
for the future. 6dopting correct strategy #ill help the >etailers to optimize their
resources and also it #ill give an edge over its competitors. 8argin and
)urnover are the t#o important parameters of >etail Industry and the >etail
operations can be classified into four groupsG:uadrants.
i2 9igh 8argin and 9igh )urnover eg. a convenience food store
ii2 o# 8argin and 9igh )urnover eg. a discount store
iii2 o# 8argin o# )urnover i.e .a dying business
iv2 9igh 8argin o# )urnover eg. an up mar-et specialty store.
>etail business needs to formulate the suitable strategy after considering its
strengths and #ea-nesses. 9ence 5A@) analysis #ill be an effective tool in
determining the correct strategy for the particular category of retail business.
5ome of the strengths and #ea-nesses of the >etail industry are outlined
belo#.
Strength &
)hese are the areas on #hich success stories have been built and therefore
retailers need to capitalize on that.
i2 5upremacy of 0iscount store
ii2 6dvancement in the area of Information )echnology
iii2 Ee# sales channels li-e F&commerce and direct mar-eting.
iv2 6vailability of consumer credit. Fxplosion of financial institutions
31
?ea5ne&
i2 5lo# performance of Chain 5tores
ii2 6dvent of Category 4illers.
O((ortunitie H
i2 "ric- and clic- H 6 combination of traditional store retailing along
#ith non store retailing li-e Internet and F commerce.
ii2 3remium 3riced 5tore H 3remium priced stores are targeting the
high income group customers and earning healthy profits .
)iffany and Co is an example of such premium priced store.
iii2 Fntertainment in >etail H Fntertainment Industry and >etail
Industry are #or-ing hand in hand to attract larger section of
consumers. 5ony Copr has opened some huge entertainment
complexes in 756 and so many retail outlets are also housed in
the same building and they are complementing each other and
both are doing :uite #ell.
Threat&
i2 0emise of Independent small stores
ii2 0emographic Changes
IT IN RETAIL
Information )echnology has become a -ey business driver in today!s #orld.
>etailers are also trying to reap in the benefits of the technology. )hus
technology has become a critical and competitive tool for surviving in the
business. >etailers are using soft#are systems to manage and plan their
inventory , to reduce the procurement costs , electronic ordering , electronic
fund transfer , e mail communication and for many other things. I) is poised to
32
ta-e a much bigger role in >etail Industry ho#ever the high implementation
cost of I) pro;ects has restricted many >etailers to go for proper I) solution. I)
gro#th areas in >etail are mentioned belo#.
Su((l! %hain *anage'ent&
5upply chain is one of the focus areas for the >etailers and immense
opportunity of business process improvement and scope of technological
empo#erment is there in this area. In today!s tough economic climate
customers have become price sensitive and there is a price draught in the
mar-et . >etailers are struggling to control the cost and in this environment
effective 5upply Chain 8anagement can act as a big contributor. It helps
them to integrate #ith their suppliers and through collaborative planning
retailers can reduce the cost. 5C8 solutions #ill enable >etailers to trac- their
inventory movement from supplier!s premises to the point of sale. It gives a
better visibility in the area of demand planning, forecasting and inventory
management. Aorlds largest >etailer Aal P8art has adopted a state of the art
5C8 system #hich not only trac-s the inventory but also it increases the
efficiency of the process. Aal P8art has also introduced the >adio Fre:uency
Identification 1>FI02 of merchandise.
%R*
C>8 continues to be a gro#th area for I) in >etail sector. 6dvancement in
this field helps to maintain sophisticated customer database and systems that
can maximize multi channel returns. )his helps the retailers to understand the
customers demand pattern and enables them to offer a tailor made shopping
experience.
33
Internet
Internet has unfolded lot of opportunities to the >etailers. >etailers can do
business over internet. It can also be used as a communication medium.
5uccessful >etail community uses internet technology for reliable
communication bet#een >etailers , customers and suppliers.
Buine Intelligen"e
"usiness Intelligence is an effective analytical tool #hich helps the >etailers
to understand the eco system of retail business . It helps the business
community to ta-e mission critical business decisions #hich #ill help them to
navigate in the right direction. In today!s #orld >etailers e:uipped #ith such
data mining or data #arehousing tool can have the micro level understanding
of customer demand.
IT PLAYERS IN RETAIL FIELD
Retali@ &
>etalix is one of the leading soft#are providers in the >etail sector. It!s Eorth
6merican head:uarters is located in 0allas ,)exas. >etalix soft#are is
designed to be modular, scalable to large transaction volumes ,capable of
handling rapid scanning #ith high reliability. )he product is compatible #ith
multiple store format and hard#are systems.
>etalix is fulfilling the role of a true strategic technology partner, helping their
clients to adapt to rapidly changing mar-et re:uirements by using the multi
format >etail solution . Aith the help of constant industry interaction they fine
tune their solution portfolio continuously.
34
)he breadth of functionality and versatility of >etalix solutions has enabled
>etalix to achieve a sizeable mar-et penetration. Aith installations in more
than 2<,$$$ stores and :uic- service restaurants across (( countries >eatalix
has emerged as a significant player in this mar-et.
Ora"le &
6fter a fierce battle #ith 563 ,@racle has recently completed its ac:uisition of
>ete-, one of the leading soft#are product vendors in >etail sector. Aith the
help of this ac:uisition @racle has gained a competitive edge in the mar-et
place. @racle!s >etail solution a combination of technology and
comprehensive business application helps the retailers to do their forecasting
and demand planning in a more accurate manner. It streamlines the supply
chain operation and helps the business to reduce the supply chain costs and
to accelerate the inventory turn over process. It has the capability of handling
different -inds of pricing and promotions. Fffective supplier collaboration is
also possible through @racle!s solution.
SAP &
563 #orlds most successful F>3 vendor is also a front runner in the >etail
Industry segment. 563!s >etail solution is an Industry specific solution that is
tailored to the specific standards, process and challenges of >etail industry. It
delivers rich functionality productivity building tools through out the
organization and they help the business to adopt the best business practices
that 563 has developed in over ,$ years of #or-ing #ith industry leaders
#orld#ide. 563!s solution is modular in nature and it gives the flexibility to the
business to select the building bloc-s and it ensures faster implementation.
563 offers easy integration and virtually unlimited scalability.
35
563 has more than 2%$$ customers in the >etail industry #orld#ide.
563 has recently completed the ac:uisition of )riversity. 6ccording to the
mar-et analysts 563 #ill be able to extend its mar-et leadership #ith the help
of this ac:uisition.
For nearly t#o decades, )riversity has been a leader in the #orld#ide retail
mar-etplace #ith solutions deployed in ,2 countries. )riversity delivers
flexible, comprehensive, retail mar-et&leading solutions that include traditional
and enterprise point&of&sale, store inventory management, 3@5 loss
prevention, customer loyalty, stored value, store bac-&office and in&store and
multi&channel customer service. )hese solutions are highly complementary to
563!s existing retail solution offering, and 563 and )riversity already have a
strong list of ;oint customers including )he "ody 5hop, Casa ey, Indigo
"oo-s, Aa#a and )rader *oe!s.
RETAIL S%ENARIO IN INDIA
Overvie, &
Fconomic liberalization has brought about distinct changes in the life of urban
people in India. 6 higher income group middle class is emerging in the Indian
society. 0emographic changes have also made palpable changes in social
culture and lifestyle . In this environment Indian >etail Industry is #itnessing
rapid gro#th . 6) 4earney has ran-ed India as fifth in terms of >etail
attractiveness. )he industry has got tremendous potential but it also re:uires
sufficient capital flo#. Current Foreign 0irect Investment policy of Indian
/overnment does not allo# any foreign direct investment in this sector
ho#ever different global retail players are seriously eying this mar-et.
36
Indutr! %hara"teriti"H
Indian >etail Industry is the largest employer after 6griculture 1around '% of
the population2 and it has the highest outlet density in the #orld ho#ever this
industry is still in a very nascent stage. )he #hole mar-et is mostly
unorganized and it is dominated by fragmented 4irana stores. 6 poor, supply
chain and bac-#ard integration has #ea-ened the #hole process. @rganized
corporate retailers contribute only a negligible percentage of the overall retail
business. @rganized and trained >etail #or-force is not available in India and
the overall s-ill level is lo# mainly because of the lo# maturity level of the
Industry.
Buine O((ortunitie
9o#ever India can unveil significant business opportunity to the >etailers.
Indian retail sector is estimated to have a total mar-et size of C +'$ "illion. 6
8c4insey report on India says organized retailing #ould increase the
efficiency and productivity of entire gamut of economic activities, and #ould
help in achieving higher /03 gro#th.
)he factors responsible for the development of the >etail sector in India can
be broadly summarized as follo#sH
+. >ising incomes and improvements in infrastructure are enlarging
consumer mar-ets and accelerating the convergence of consumer
tastes. oo-ing at income classification, the Eational Council of 6pplied
Fconomic >esearch 1EC6F>2 classified approximately <$% of the
Indian population as lo# income in +DD(&D<O this is expected to decline
to +%.'% by 2$$6&$%.
37
2. iberalization of the Indian economy #hich has led to the opening up of
the mar-et for consumer goods has helped the 8EC brands li-e
4ellogs, 7nilever, Eestle, etc. to ma-e significant inroads into the vast
consumer mar-et by offering a #ide range of choices to the Indian
consumers.
,. 5hift in consumer demand to foreign brands li-e 8c0onalds, 5ony,
3anasonic, etc.
*a9or Retail Pla!er in IndiaH
>etailer Current )urn @ver in >s. Crore
3antaloon %$$
>3/ <<$
5hopper 5top ($$
ife style 2,$
Aestside +2$
Fbony '<
3iramyd %2
India!s retail mar-et #hich is seen as )9F /@08IEF by global players has
grabbed attention of the most developed nations. )his is no #onder to the one
#ho -no#s that the total Indian retail mar-et is 75 C,<$bn. 1+6, $$,$$$ crore
IE> approx.2 of #hich organized retailing is only around , percent i.e. 75
C'bn 1,6,$$$ crore IE> approx2.
L>etailing includes all activities involved in selling goods or services directly to
final consumers for personal, non&business use. 6 retailer or retail store is any
business enterprise #hose sales volume comes primarily from retailing.M
>etail is India?s largest industry, accounting for over +$ per cent of the
country?s /03 and around eight per cent of the employment. >etail industry in
India is at the crossroads. It has emerged as one of the most dynamic and
fast paced industries #ith several players entering the mar-et.
38
)he presence of +<million -irana stores brings into light the very fact that the
Indian retail industry is highly fragmentedG unorganized. >etailing in India is
gradually inching its #ay to#ard becoming the next boom industry, organized
retailing in particular. )he #hole concept of shopping has altered in terms of
format and consumer buying behavior, ushering in a revolution in shopping in
India. 8odern retail has entered India as seen in spra#ling shopping centers,
multi&storeyed malls and huge complexes offer shopping, entertainment and
food all under one roof.
)he future of Indian retailing may even #itness the concept of 2( hour
retailing. Fven though this concept has been in existence in fe# retail
segments li-e pharmaceuticals and fuel, it still remains to be a challenge for
other segments li-e food and groceries, apparel etc to adopt this trend.
6lthough the organized retailing in India is coming up in a big #ay, it cannot
simply ignore the competition from the conventional stores because of various
factors li-e reach, extending credit facility and other intangible factors li-e the
human touch #hich are provided only by the conventional stores.
)he urban retail mar-et has been embracing various ne# formats and the
malls turned out to be the trend setters by promising the concept of
shoppertainment. )he trends in the rural mar-et also have been changing
from the old 9aats and 8elas to the rural malls li-e .Chaupal 5agar! launched
by I)C, 0C8 5hriram /roups one&stop shopping destination called .9ariyali
"azaar!, /odre; groups agri store .6dhar! etc.
39
FINDINGS AND ANALYSIS
Food retailing in India is highly compartmentalized and predominantly consists
of small independent, o#ner&managed shops R consumers visit different
shops or open mar-ets for different products. Eo one outlet supplies all the
shopper!s needs. arger supermar-ets are visited once or t#ice a month to
stoc- up on staples, #hile smaller outlets such as the local provisions shop
are visited on average every other day for odds and ends. /enerally, the food
outlets fall in the follo#ing categoriesH fair&priced shops, grocery stores,
general merchants and vendors and, more recently convenience stores and
supermar-ets. )here are no hypermar-ets or club #arehouses.
6lmost all retail stores sell products at the maximum allo#ed retail price
18>32 printed by the manufacturers on every item and enforced by the
government. Bery little price competition exists bet#een the various types of
stores. )he 8>3 often dictates the margin for not only the retailer but also the
distributor, #holesaler, and other middlemen. @ne important exception to this
rule is fair&price shops, government&sponsored outlets #hich sell medium&
:uality staple products 1mostly rice, #heat, coo-ing oil, and sugar2 at prices
generally lo#er than the mar-et. )hese stores offer no fresh produce and no
refrigerated or frozen foods. )hey are generally located in rural areas,
constituting an essential and one of the very fe# elements of the
government!s safety net for the poor. )he number of stores outside the fair&
price shops is significant, and comprises most of the food retailers in India.
5mall neighbourhood, family&o#ned grocery stores #ith an average size of
2<$ s:uare feet mainly sell food commodities. Consumer loyalty is strong,
40
based on convenience and added services such as credit and free home
delivery. )hese stores usually sell unbranded products, #hich are individually
#eighed and pac-ed. 5uch stores are often simply counters on the side#al-
behind #hich o#nerGmanagers ta-e orders.
/eneral merchandise stores are similar to grocery stores but are some#hat
larger, #ith an average size of <$$ s:uare feet. )hey stoc- a #ider range of
products as #ell as branded items, snac- foods, and confections. 3roducts
are generally prepac-aged, and services such as home delivery and credit
are also available.
Convenience stores are also on virtually every street corner and range in size
from -ios-s of <$ to 6$ s:uare feet to larger shops of +$$ to +<$ s:uare feet.
)hey carry an impressive range of products, including imported ;ams,
confectionery products, snac- foods, magazines, toiletries, and even frozen
seafood. 9o#ever, these convenience stores cater to an extremely small
percentage of the population.
Bendors 1ha#-ers2 sell fresh fruits and vegetables on open stalls or
handcarts along every side#al- in the city. @ften the selection of fruits and
vegetables is limited and the :uality poor.
5elf&serve supermar-ets are a more recent phenomenon in India, although
there are still no supermar-ets in the Aestern sense of the #ord. 8ost are
large grocery LchainsM operating in ma;or cities in the south, resembling 7.5.
supermar-ets ($ years ago. )hese ,,$$$& to <,$$$&s:uare&foot, self&service
stores stoc- a #ide range 1by Indian standards2 of groceries, snac-s,
processed foods, confectionery items, and cleaning and personal care
products. 5ome have small ba-ery sections, and some sell fresh produce and
41
dairy products. )he produce is either displayed in&store or immediately
outside the door, often this space is leased to another company. Frozen foods
are often available as #ell, although selection is very limited. Frozen foods are
relatively ne# to retailers, featured in small, top&loading freezers o#ned and
placed by the supplier. 3roducts include small pac-s of frozen fish stic-s and
patties, pra#ns, processed chic-en patties, frozen chic-en parts, chic-en and
lamb samosas, pre&cut vegetables, and french fries. It!s estimated
supermar-ets typically account for + to 2 percent of the sales of consumer
goods in a particular city.
Consumer response to supermar-ets has been moderate because most do
not have access to transportation to a supermar-et and are still in the habit of
buying fresh produce daily from local stores. )his is mostly due to the
convenience 1proximity to homes2 personal service of local stores. 8any
shoppers also have the perception that prices are higher at supermar-ets
because they are large, brightly lit, and air&conditioned. arge retail formats
are also faced #ith high overhead costs 1e.g., high rental prices for ne#
entrants2 and the existing supply chain economies. >eal estate prices are
high 1compared to older, rent &controlled shops2 and restrict ne# entrants from
opening large retail outlets in established mar-ets. In addition, expansion in
this sector is hampered by the lac- of reliable nation #ide transportation,
complex taxation bet#een states, and limited cold storage facilities.
Eevertheless, the number of supermar-ets is expected to gro# in coming
years, as higher&income consumers focus more on convenience and :uality
and more foreign investors are attracted to this sector.
42
%onu'er Pur"haing Behavior
8any Indians are vegetarian by traditionO moreover, many can only afford a
vegetarian diet. 8eat may be regularly consumed by less than ,$ percent of
the Indian population, due to its higher cost and a predominance of
vegetarianism and 9induism. 9o#ever, only 2$ percent of the population is
strictly vegetarian. Eon&vegetarians typically consume meat only once or
t#ice per #ee-.
9igher income consumers rely almost entirely on domestic help for their
shopping. )he domestic help buys staples, vegetables, and fresh foods from
local small grocers and vendors, and other products from a variety of general
merchants. )he middle class has diverse purchasing habits. 8any families on
the upper end use part&time domestic help to do their shopping, often
necessitated by a gro#ing pattern of households #ith t#o #or-ing parents.
8any families at the lo#er end of the middle class continue to do their o#n
shopping. )he poorer segments of the Indian population tend to buy basic
staples #ith the first part of their paychec-s, #hich typically are distributed on
the first fe# days of each month. 0uring the month, the poorer customers #ill
buy #hatever fresh foods and consumer goods they can afford, often filling in
at the end of the month #ith some additional staples purchased on credit. In
all classes, #omen do most of the shopping and ma-e most of the food
purchase decisions.
8ost consumers prefer local shops to larger supermar-ets because of
proximity, personal attention, and lo#er prices. Eearly D< percent of
consumers purchase fresh fruits and vegetables from a local mar-et or street
43
vendor. 6dditionally, traditional mar-ets are considered the freshest source for
foods.
Indians have a strong preference for freshly prepared foods, and most have a
definite pre;udice against pac-aged, branded, or processed foods, believing
them to be lo#er in flavor and nutrients. 8any households #ill not even reheat
foods, and ma-e only enough for one meal. )his is mainly to avoid #aste, but
also to ensure freshness since refrigeration is available only in #ealthier
households. 9o#ever, #ith urbanization, rising incomes, more #or-ing
#omen, the arrival of large food multinationals, and a proliferation of fast food
outlets, acceptance of pac-aged food products is increasing. 3ac-aging of
imported goods is typically better than that of domestic goods.
6lso, India has many regional differences in food tastes and preferences. For
example, residents of 8umbai 1formerly -no#n as "ombay2 are more #illing
to try ne# foods than those in other Indian cities. 6s 8umbai is home to a
more progressive and s-illed labor force than other parts of India, many
multinational corporations test mar-et ne# products in that city.
Food Ditri)ution
India has both organized and unorganized channels for distributing goods.
)he food distribution system is fre:uently inefficient and is complicated by a
number of factors, including lac- of ade:uate refrigeration, pac-aging,
efficient transportationO and the presence of numerous independent
intermediaries.
6 lac- of modern refrigeration in both #arehouse facilities and delivery truc-s
is perhaps the most constraining factor in developing the mar-et for fresh
fruits and vegetables. )he costs of building cold storage facilities are very high
44
because many of the facilities are small by global standards and thus do not
ta-e advantage of economies of scale. 6 typical frozen cold store in India, for
frozen food application, is ($,$$$ cubic feet, compared to the 2$$,$$$ cubic&
foot units typical of Aesternized countries. In addition, Indian cold storage
firms tend to rely exclusively on storage revenue. In Aestern countries, cold
storage firms derive a good share of their revenue by offering a range of
servicesH handling, freezing, inventory management, delivery, palletizing,
labeling, load mixing, and so on. )he lac- of ade:uate cold storage facilities is
also due in part to the lo# demand for cold chain facilities. 8any consumers
simply do not place an added value on refrigerated foods and often are not
#illing to pay more for them. 6lso, the lac- of refrigeration is in part due to the
high cost and limited availability of electricity.
3ost&harvest produce losses 1#hich can run as high as ,< percent2 reportedly
are :uite significant for imports as #ell. )o overcome this problem, some of
the bigger retail operations are beginning to have their o#n cold storage
facilities and refrigerated truc-s. 9o#ever, once produce arrives at the retail
level, it is unli-ely it #ill be -ept under refrigeration.
Ahile some produce, such as grapes and stra#berries, is pac-ed in modern
facilities in cardboard boxes or plastic clamshells, most produce is not
pac-aged. @ften the produce is not pac-aged at all. Instead, it may be pac-ed
in #ood boxes #ith stra# and old ne#sprint around the edges or bet#een the
layers of produce.
ac- of ade:uate transportation infrastructure ma-es it extremely difficult to
move perishable agricultural items to cold storage in a timely manner.
Currently, it is illegal to use large refrigerated truc-s 1over D tons2 in India.
45
Interstate movement is often unreliable due to the failure of shipping
companies devote attention and resources to product handling.
)here are numerous intermediaries #ho have little appreciation of consumer
demands. )he intermediaries lead to unnecessary handling #aste, and an
inevitable drop in the :uality of the product. For example, it is not uncommon
for there to be six or seven intermediaries in the fruit and vegetable sectors.
9o#ever, in spite of the number of intermediaries involved they are important
because they partially ma-e up for the lac- of infrastructure providing
functions normally performed by transport companies, commodity processors,
and cooperatives in other countries.
Fruits and vegetables are typically supplied to mar-ets through #holesale
centers, better -no#n as 6gricultural 3roduce 8ar-et Committees 1683C!s2.
638C!s are :uasi&governmental organizations established to regulate
mar-eting of agricultural products at the #holesale level to create price
transparency. 638C!s are set up for gro#ers to mar-et their products and
usually represent an area that gro#s similar crops. In addition, they are
responsible for dissemination of mar-et&related information, such as
production, storage, transportation, and movement of commodities.
/ro#ers have the option of selling their produce not only through a local
638C, but also through other 638C mar-ets or directly to retailers.
>egardless of #ho buys the produce, the buyer has to pay the + percent
CF55 tax, #hich goes bac- to the 638C. Ahile #holesale mar-ets are
important lin-s in the distribution chain for domestic produce, they are less
li-ely to figure prominently in the distribution of imported produce. 5ome
importers have their o#n distribution net#or-s delivering the produce from
46
their o#n cold storage facilities directly to the hotels, restaurants, and retail
outlets. 8ost of the produce imports are funneled through 638C!s for
distribution.
0espite the large number of intermediaries in the Indian retail mar-et, typically
the retailer has the option of either buying food products from a #holesaler or
distributor, another retailer, an importer, or directly from overseas suppliers.
Ahile #holesalers and distributors sell to stores of all sizes, licensed
importers are more li-ely to sell only to large retailers. )he Indian importer
may also act as a #holesaler or distributor, and :uite often the larger retailers
sell food products to the smaller retailers. 9o#ever, established distribution
patterns are slo#ly giving #ay to more streamlined operations, #ith the larger
retailers increasingly buying directly from exporters and farmers.
47
0EY FINDINGS
SI>E
India is one of the ten largest retail mar-ets in the #orld
>etail sales #ere 75C2%$ billion in 2$$6, over ,$% of /03
@rganised >etail! constitutes only (.6% of total retail sales & about
75C+2.( billion p.a.
9o#ever, .organised retail! has been gro#ing at over ($% p.a. in the last
2 years
STRU%TURE
)he Indian >etail sector is highly fragmentedH mostly o#ner&run .8om
and 3op! outlets
@ver +< million retail outlets
>etail chains such as 3antaloon, )rent and >3/ >etail have been
gro#ing rapidly, #hile >eliance, "harti and 6ditya. "irla /roup have
announced investments to the tune of 75CD billion in the sector
0airy Farm, 8etro, 5hoprite and 8ar-s = 5pencer are some of the ma;or
international retail chains in India
POLI%Y
+$$% F0I is allo#ed in Cash and Carry Aholesale formats. Franchisee
arrangements are also permitted in retail trade
<+% F0I is allo#ed in single brand retailing
/overnment is examining further liberalisation of F0I in retail trade
48
To( Pla!er in the Retail Indutr!
Pla!er Revenue
$or
6AA=;A.
in USB
'illion
Retail
S(a"e a
on *a!
6AA. CS-2
$t2D
For'at
Future /roup
13antaloon >etail2
%$( 6,6,$,$$$ F=/, 5pecialty
>ahe;a /roup
15hoppers! 5top2
22$ +,<D$,$$$ F=/, 5pecialty
)ata /roup 1)rent,
Infiniti >etail2
+++ ''$,$$$
5peciality >etail,
Flectronics, 9yper 8ar-ets
>3/ >etail +(6 '+$,$$$ F=/, 5pecialty
6ditya B "irla 6+ 'D$,$$$ F=/
Source: TSMG
OUTLOO0
)he overall retail mar-et is expected to gro# from 75C2%$ billion to
about 75C66$ billion by 2$+<, #ith organised retail at 75C+$$ billion
1approximately +<% of total retail sales2
India is expected to be among top < retail mar-ets in the #orld in +$
years. India identified as the most attractive destination for retail in 6)
4earney!s /lobal >etail 0evelopment Index
POTENTIAL
)he high gro#th pro;ected in domestic retail demand #ill be fuelled byH
)he migration of population to higher income segments #ith increasing per
capita incomes
6n increase in urbanisation
Changing consumer attitudes especially the increasing use of credit cards
)he gro#th of the population in the 2$ to (D years age band
49
)here is retail opportunity in most product categories and for all types of
formats
Food and /roceryH )he largest categoryO largely unorganised today
9ome Improvement and Consumer 0urablesH @ver 2$% p.a. C6/>
estimated in the next +$ years
6pparel and Fating @utH +,% p.a. C6/> pro;ected over +$ years
@pportunities for investment in supply chain infrastructureH Cold chain and
logistics
India also has significant potential to emerge as a sourcing base for a #ide
variety of goods for international retail companies
8any international retailers including Aal&8art, /63, *C 3enney etc. are
already procuring from India
50
FEG Retail Pro9e"tion For 6A1A;11
>eliance FreshH )o cover %$ cities, %'( urban to#ns and 6,$$$&odd
rural mandis
Future /roup H 2<$ Food "azaars #ith 2.< million s:. ft. in <$ cities
>3/ /roup H <$$ 5pencer?s Fresh, 0aily, 5uper and 9yper
Aadha#an /roup H +,<$$ 5pinachG5&8artG5ab-a "azaar outlets in +$$
cities
5ubhi-sha H 2,<$$ neighbourhood outlets across the nation
@ther ma;or players firming up 3an&India plans include "harti&Aalmart,
6B "irla /roup 1)rinethraG8ore2, 9eritage Foods 1Fresh S, 9ypercity,
0airy Farm, 1Food#orld2, Eilgiris, >adha-rishna Foodland, Influx,
andmar- /roup 15par2, 8other 0airy = 5afal = region specific
expansion by *ubilant /roup 1*umbo 5aver = 8onday 2 5unday2,
9opcoms = 8argin Free in south, 6danis in east and 6rambagh
Foodmart in Fast India among others.
6lmost all ma;or Indian = 8EC retailers #ill foray in to cash and carry
model to structure bac-end and ta-e full advantage of large scale
production, procurement, processing and also to put supply chain =
logistics mechanism in place.

51
FOOD BA>AAR ; FUTURE GROUP
4ishore "iyani led the company!s foray into organized retail #ith the opening
up of the "ig "azaar in the year 2$$+.
It is a unit of 3antaloon >etail 1India2 td and caters to the /reat Indian 8iddle
Class. It #as started as a hypermar-et format in 8umbai #ith approx. <$,$$$
s:ft of space. Its values and missions are to be the best in Balue >etailing by
providing the cheapest prices and hence goes the tag&line
LIs se sasta aur achcha -ahin nahinM
It sells variety of merchandise at affordable rates, the prices of #hich it claims
are lo#est in the city. 7sually the items are clubbed together for offers as on
the lines of Aal&mart and Carrefour and it also offers #ee-end discounts. It
currently operates out of more than +$$ stores and top 2< stores register a
cumulative footfall of ,$ la-h a month on an average.
PRODU%T&
"ig "azaar offers the maximum variety for each category of product. )he product
is the same in every store in the city but the brand options are more in "ig
"azaar. 6lso, the :uantity for each product is not limited to large pac-s only. )he
commodities sold by the retail chain also includes its Lo#n productsM #hich get a
ready distribution net#or-. )he o#n products of "ig "azaar include 8y Aorld
fashion magazine #hich is not available any#here else. 5o costs are lo# for
such products.
52
PRI%E&
3rice is the critical point in a competitive industry. "ig "azaar #or-s on a lo#
cost model. It considers its discounted price as its 753. )here is an average
discount of %&'% on all items in respect to their 8>3. 3rices of products are lo#
because it is able to secure stoc- directly from the manufacturer. )here are huge
synergies in terms of bul- purchasing, central #arehousing and transportation.
)hese all factors help the retailer to -eep lo# prices.
PLA%E&
3lace means the location of the business. "ig "azaar has al#ays #or-ed on
lo#&cost locations. It targets semi&urban population #ith its placement. Its
strategy is to find a cheap location and it never goes for hot spots in the city. It
relied on promotional activities to ma-e up for unattractive locations. 6nother
strategy used by "ig "azaar to overcome location disadvantage is use of
internet. It has launched a merchandise retailing #ebsite ###.futurebazaar.com
#hich targets high&end customers ready to use credit cards. )he promotion of
this #ebsite is done through advertisement on /oogle. )he #ebsite is put as
sponsored lin-.
PRO*OTION&
"ig "azaar has huge promotion budgets. )he biggest idea behind all
advertisements is to ma-e people do bul- shopping. )here are 2 types of
promotional strategies of big bazaar. @ne is the holistic advertisement #hich
promotes the brand and creates a#areness among people. It is not targeted at
promoting each store but only creates an image of "ig "azaar as lo#&cost
shopping option. )he store has advertised through )B, road sho#s and also
started reality sho#&typed promotional campaign L)he "ig "azaar Challenge.M
53
3romotions li-e L5abse 5asta 0inM are a very successful strategy to get footfall.
In this products across categories such as apparels, furniture, electronics,
utensils and food products at the lo#est possible prices, coupled #ith attractive
promotional schemes. 5ome of the most attractive offers being a 2$&litre
branded micro#ave oven #ith grill for >s 2,(DD, ;eans and trousers for >s +DD
and 9C laptops for >s 22,DD$.
@ther type of promotion is the particular store oriented promotion #hich includes
spea-ing on the loudspea-er in nearby bloc-s. eaflets are given in local
ne#spaper. )here are promotional efforts even inside the store. "uy 2 /et +
Free type of promotions are very common. @riginal prices are cut do#n and ne#
prices are sho#n, of #hich customer ta-es :uic- notice. )here are loyalty
schemes #hich re#ard regular clients. 3romotion is also done through co&
branded credit cards #ith ICICI ban-.
Big Bazaar/ Ne, *ar5eting Strateg!&
"ig "azaar has launched ne# mar-eting strategy #hich is based on /uerrilla
8ar-eting. /uerrilla mar-eting #arfare strategies are a type of mar-eting
#arfare strategy designed to #ear&do#n the enemy by a long series of minor
attac-s, using principles of surprise and hit&and&run tactics. 6ttac-, retreat,
hide, then do it again, and again, until the competitor moves on to other
mar-ets. 9erein guerrilla force is divided into small groups that selectively
attac- the target at its #ea- points. In the #orld of cut throat competition,
corporate use extension of the same strategy in mar-eting. Corporate li-e
Co-e, 3epsi, etc have been using the same for :uite some time no# and the
latest entrant is our very o#n .Future /roup!& "ig "azaar, 3antaloons, Future
54
"azaar, eNone are all part of this group and they are ta-ing on the biggies li-e
5hoppers 5top, ifestyle, and )ata!s Aestside.
In order to do the same, Future /roup have come up #ith , catchyGcoc-y and
chee-y ad campaigns #hich surely do catch our eyes and surely one can!t
resist appreciating the same.
0ee( ?et;aSide2 *a5e a 'art "hoi"eF
Sho((erF Sto(2 *a5e a 'art "hoi"eF
%hange Your Li$et!le2 *a5e a 'art "hoi"eF
Future E@(e"tation&
"ig "azaar is planning to have ,$$ hypermar-ets in the country by 2$+$&
++. )he company may also increase its annual turnover to >s. +,,$$$ crore
by 2$+$&++, up from >s. ,,6$$ crore last fiscal on the bac- of its expansion.
)he company has also gone on record saying that it #ould have another ,<
stores by the end of its fiscal in *une 2$$D to ta-e the total number to +,<. )o
achieve this they are targeting a turnover of >s. <,$$$ crore in the current
fiscal year and have formulated plans for reaching a figure of >s. +,,$$$ crore
by 2$+$&++ fiscal.
For the expansion, the company #ould be loo-ing at both the metros and )ier
I cities, besides )ier II cities = smaller cities.
)he mar-eting strategy seems to be perfectly on trac- as the "ig "azaar
hypermar-ets had a footfall of ++ crore last fiscal and the company is aiming
for an increase in the numbers up to +( crore this year. )he average size of a
"ig "azaar hypermar-et is ,$,$$$ s: ft to one la-h s: ft.

55
Advertiing&
)he departmental store chain "ig "azaar has launched a commercial
sometime bac- to promote ?)he /reat Fxchange @ffer?. )he commercial
portrays ho# customers can exchange any old and bro-en items 1;un-2 and
get ne# products at a discounted price from "ig "azaar.
)he ,$ seconds film unfolds through the eyes of a cabbie in a busy city street,
he is intrigued by the disruptive visual of a #ell&dressed office executive
carrying a bundle of old ne#spaper and #al-ing through a cro#ded place.
)he cabby then notices a young office going lady in #estern #ear carrying a
rusty buc-et filled #ith bro-en utensils, the cabbie is absolutely confounded
but continues to follo# her #ith a bro-en tyre in his hand and comes across
another absurd situation of a highly placed executive in a chauffeur driven car
#ith a bro-en commode on the top of the car.
3enultimate situation reveals everybody is heading to#ards "ig "azaar for the
exchange offerO the cabbie comes out of the store happy and excited after
getting an amazing deal for his ;un- tyre.
8oving images are interspersed #ith supers that hi&light the amazing prices a
consumer can get for his ;un-. )he sound trac- uses a typical kabada guy?s
shout as he #al-s through City 5treet calling for ;un-.
)he month of *anuary and February is generally a lo#&-ey affair in terms of
customer footfalls and revenue generation. Innovative, out of the box
promotions is one of the effective #ays to dra# customer attention and shore
up the revenue. 9istorically Fxchange schemes have been used to induce
better sales, it also has a strong appeal #ith the Indian mindset of getting
value even for their ;un-, states an official release from "ig "azaar.
56
Brand A')aador&
6 brand ambassador is a celebrity 1or an attractive or interesting person2 used
to help advertise a product or services.
"ig "azaar, has roped in cric-eter 8ahendra 5ingh 0honi as the "rand
6mbassador for its ne# range of fashion apparel. 0honi #ould feature in a
series of advertisements across all media. 0honi and "ig "azaar have a lot of
synergies as the Indian one&day international team!s captain stands for the
aspirations of youths, #hile "ig "azaar is loo-ed up to by millions of Indians to
fulfill their aspirations.
In this #ay, "ig "azaar ma-e full use of the mar-eting mix for a ne# venture
#hich earlier belongs to the unorganized retail sector i.e. -irana stores.
6pplication of the best mar-eting practices helps "ig "azaar in a great #ay.
57
FOOD BA>AAR
ife is all about good taste and food bazaar aims to ensure the same. Aith the
lo# prices, a #ide selection of products and guaranteed freshness, you are
bound to find it irresistible. Food "azaar invites you for a shopping
experience, uni:ue by its ambience. 6t Food "azaar you #ill find a hitherto
unseen blend of a typical Indian "azaar and International supermar-et
atmosphere.
Flagged off in 6pril!$2, Food "azaar is a chain of large supermar-ets #ith a
difference, #here the best of Aestern and Indian values have been put
together to ensure your satisfaction and comfort #hile shopping.
)he #estern values of convenience, cleanliness and hygiene are offered
through pre pac-ed commodities and the Indian values of T5ee&)ouch&FeelT
are offered through the Lbazaar&li-eM atmosphere created by displaying
staples out in the open, all at very economical and affordable prices #ithout
any compromise on :uality.
)he best of everything offered #ith a seal of freshness and purity #ill definitely
ma-e your final buying decision a lot easier.
58
STORES IN DEL+I
>ohini
Addre & Bi-as 5urya 5hopping 8all, 8anglam 3lace, 3lot Eo. +', 5ector ,,
Eear 824 8ultiplex, >ohini, Ee# 0elhi
Inderlo- HH Aith "ig "azaar
Addre & 3arsvanath 8etro 8all 08>C 5tation, Inderlo-, Ee# 0elhi
Aazirpur HH Aith "ig "azaar
Addre & Eeta;i 5ubhash 3lace, 8etro 5tation 6nsal 8/F 8etro 3laza,
Aazirpur
5elect City Aal- HH 5a-et
Addre & 5elect City Aal-, 3lot Eo. 6 & , = 3+", 0istrict & Centre, 5a-et
Funcity 8all HH 5hahadara HH Aith "ig "azaar
Addre & Funcity 8all, 3lot Eo. 2D and ,+, C"0 5hahadara, @pp. 5ura;mal
Bihar
B,5 8all HH Ee# 0elhi
Addre & B,5 8all, 2nd Floor, 3lot Eo.+2, axmi Eagar, Ee# 0elhi
Basant 5:uare 8all HH Ee# 0elhi HH Aith "ig "azaar
Addre & Basant 5:uare 8all, 3lot Eo. 6, Community Centre, Basant 4un;,
Ee# 0elhi
>a;ouri /arden HH 0elhi HH Aith "ig "azzar
Addre & >a;ouri /arden, Aest /ate 8all, 5hiva;i Eagar
5halimar "agh HH Ee# 0elhi
Addre & ,rd Floor, 0F City Center 8all, 63 "loc-, 5halimar "agh Eear
3etrol 3ump
59
. P/ OF FOOD BA>AAR
3roduct
Fresh fruits and vegetables
5taples
/roceries
Fresh ;uices
0airy products
3rice
Eot much discount on 8>3 of pac-aged goods li-e competitors
3lace
+$ stores in 0elhi
3romotion
585
eaflets
In&store visits
Aord of 8outh
@thers
3rocess
Farm&to&for- business model
"ac-#ard Integration
3hysical Fvidence
ayout
60
5tore and shelves
"ill counters
5helves
Customer loyalty cards
3eople
3eople 3hilosophy
3rofit Centers
61