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The retail scenario is one of the fastest growing industries in India over the last couple of
years. India retail sector comprises of organized retail and unorganized retail sector.
Traditionally the retail market in India was largely unorganized; however with changing
consumer preferences, organized retail is gradually becoming popular. Unorganized
retailing consists of small and medium grocery store, medicine stores, subzi mandi,
kirana stores, paan shops etc. More than 90% of retailing in India fall into the
unorganized sector, the organized sector is largely concentrated in big cities. Organized
retail in India is expected to grow 25-30 per cent yearly and is expected to increase from
Rs35, 000 crore in 2004-05 to Rs109, 000 crore ($24 billion) by 2010.
* The top five companies in retail hold a combined market share of less than 2%.
* The Indian retail market has been ranked by AT Kearney's eighth annual Global
Retail Development Index (GRDI), in 2009 as the most attractive emerging market for
investment in the retail sector.
* Currently the share of retail trade in India's GDP is around 12 per cent, and is
estimated to reach 22 per cent by 2010.
* India continues to be among the most attractive countries for global retailers.
According to the Department of Industrial Policy and Promotion, approximately US$
47.43 million was the amount of Foreign Direct Investment (FDI) inflow as on
September 2009, in single-brand retail trading.
More than 80% of the retail sector in the country is concentrated in the large cities. A
study reveals that among the more than 20 locations, for organized retail in India,
Mumbai was found to be the most preferred location followed closely by Bengaluru in
the second position.
Key Players in Indian Retail Sector
* AV Birla Group has a strong presence in apparel retail and owns renowned brands
like Allen Solly, Louis Phillipe, Trouser Town, Van Heusen and Peter England. The
company has investment plans to the tune of Rs 8000 – 9000 crores till 2010.
* Trent is a subsidiary of the Tata group; it operates lifestyle retail chain, book and
music retail chain, consumer electronic chain etc. Westside, the lifestyle retail chain
registered a turnover of Rs 3.58 mn in 2006
* Landmark Group invested Rs. 300 crores to expand Max chain, and Rs 100 crores on
Citymax 3 star hotel chain. Lifestyle International is their international brand business.
* K Raheja Corp Group has a turnover of Rs 6.75 billion which is expected to cross
US$100 million mark by 2010. Segments include books, music and gifts, apparel,
entertainment etc.
* Reliance has more than 300 Reliance Fresh stores; they have multiple formats and
their sale is expected to be Rs 90,000 crores ($20 billion) by 2009-10.
* Pantaloon Retail has 450 stores across the country and revenue of over Rs. 20 billion
and is expected to touch 30 million by 2010. Segments include Food & grocery, e-tailing,
home solutions, consumer electronics, entertainment, shoes, books, music & gifts, health
& beauty care services.
The global economic slump has had its impact on the India retail sector. One of the
earliest players in the Indian retail scenario Subhiksha's operations came to a near
standstill and required liquidity injection. Vishal Retail secured corporate debt
restructuring (CDR) plan from its lenders while other players like the Reliance Retail run
by Mukesh Ambani and Pantaloon led Kishore Biyani by went slow on expansion plans
and even scaled down operations. However, during the last quarter a bit of confidence
was restored as the economy showed signs of growth.
Future Trends
* Shoppers Stop has plans to invest Rs250 crore to open 15 new supermarkets in the
coming three years.
* Pantaloon Retail India (PRIL) plans to invest US$ 77.88 million this fiscal to add up
to existing 2.4 million sq ft retail space. PRIL intends to set up 155 Big Bazaar stores by
2014, raising its total network to 275 stores.
* Timex India will open another 52 stores by March 2011 at an investment of US$ 1.3
million taking its total store count to 120. In the first six months of the current fiscal
ending September 30, 2009, the company has recorded a net profit of US$ 1.2 million.
* Australia's Retail Food Group is planning to enter the Indian market in 2010. It has
plans to clock US$ 87 million revenue in five years. In 20 years they expect the India
operations to be larger than the Australia operations.
Industry experts predict that the next phase of growth in the retail sector will emerge
from the rural markets. By 2012 the rural retail market is projected to have a total of more
than 50 per cent market share. The total number of shopping malls is expected to expand
at a compound annual growth rate of over 18.9 per cent by 2015. According to market
research report by RNCOS the Indian organized retail market is estimated to reach US$
50 billion by 2011.
India Industry
Retailing 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 organised and unorganised sectors. Over 12 million
outlets operate in the country and only 4% of them being larger than 500 sq ft (46 m2) in
size. Organised retailing refers to trading activities undertaken by licensed retailers, that
is, those who are registered for sales tax, income tax, etc. These include the corporate-
backed hypermarkets and retail chains, and also the privately owned large retail
businesses. Unorganised 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.[2] In India, a
shopkeeper of such kind of shops is usually known as a dukandar.
Most Indian shopping takes place in open markets and millions of independent grocery
shops called kirana. Organized retail such supermarkets accounts for just 4% of the
market as of 2008.[3] Regulations prevent most foreign investment in retailing. Moreover,
over thirty regulations such as "signboard licences" and "anti-hoarding measures" may
have to be complied before a store can open doors. There are taxes for moving goods to
states, from states, and even within states.[3]
Growth
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.[4]
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. Organised retail is expected to garner about 16-18 percent of the
total retail market (US $ 65-75 billion) in the next 5 years.
India has topped the A.T. Kearney’s annual Global Retail Development Index (GRDI) for
the third consecutive year, maintaining its position as the most attractive market for retail
investment. The Indian economy has registered a growth of 8% for 2007. The predictions
for 2008 is 7.9%.[5] 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.[6]
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.[7]
According to the Icrier report, the retail business in India is estimated to grow at 13%
from $322 billion in 2006-07 to $590 billion in 2011-12. The unorganized retail sector is
expected to grow at about 10% per annum with sales expected to rise from $ 309 billion
in 2006-07 to $ 496 billion in 2011-12.[8]
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 (US$ 102,150)[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 status-oriented segment that contributes largely to the retailer’s cash
register.[11]
While India presents a large market opportunity given the number and increasing
purchasing power of consumers, there are significant challenges as well given that over
90% of trade is conducted through independent local stores. Challenges include:
Geographically dispersed population, small ticket sizes, complex distribution network,
little use of IT systems, limitations of mass media and existence of counterfeit goods.[12]
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.
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.[14]
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.[15]
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.[16]
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.[17]
Tesco Plc., plans to set up shop in India with a wholesale cash-and-carry business and
will help Indian conglomerate Tata group to grow its hypermarket business.(19)
[edit] Challenges
To become a truly flourishing industry, retailing needs to cross the following hurdles:[18]
To overcome some of the challenges faced by modern retail, the country is developing a
support infrastructure in form of specialised retail schools. One such skill development
initiative has been taken by TKWs Group. Its TKWs Retail School has already training
over a thousand students and retail professionals for different retail skills. TKWs Retail
School is also associated with government projects like enhancing retail experience of
foreign tourists, improving retail of handicraft and local produce, skill development of
village youth.
Exclusive brand outlets, hypermarkets and supermarkets, department stores and shopping
malls
• Malls: These are the largest form of retail formats. They provide an ideal
shopping experience by providing a mix of all kinds of products and services,
food and entertainment under one roof. Examples are Sahara Mall, TDI Mall in
Delhi.
• Specialty Stores: The retail chains, which deal in specific categories and provide
deep assortment in them are specialty stores. Examples are RPG's Music World,
Mumbai's bookstore Crossword, etc.
• Discount stores: These are the stores or factory outlets that provide discount on
the MRP items. They focus on mass selling and reaching economies of scale or
selling the stock left after the season is over.
• Hypermarkets/ Supermarkets: These are generally large self-service outlets,
offering a variety of categories with deep assortments. These stores contribute
30% of all food and grocery organized retail sales. Example: Big Bazaar.
• Convenience stores: They are comparatively smaller stores located near
residential areas. They are open for an extended period of the day and have a
limited variety of stock and convenience products. Prices are slightly higher due
to the convenience given to the customers.
• E-tailers: These are retailers that provide online facility of buying and selling
products and services via Internet. They provide a picture and description of the
product. A lot of such retailers are booming in the industry, as this method
provides convenience and a wide variety for customer. But it does not provide a
feel of the product and is sometimes not authentic. Examples are Amazon.com,
Ebay.com, etc.
• Vending: This kind of retailing is making incursions into the industry. Smaller
products such as beverages, snacks are some the items that can be bought through
vending machines. At present, it is not very common in India.
The biggest challenge facing the Indian organized retail sector is the lack of
retail space. With real estate prices escalating due to increase in demand from the Indian
organized retail sector, it is posing a challenge to its growth. With Indian retailers having
to shell out more for retail space it is effecting there overall profitability in retail.
Trained manpower shortage is a challenge facing the organized retail sector in India. The
Indian retailers have difficultly in finding trained person and also have to pay more in
order to retain them. This again brings down the Indian retailers profit levels.
The Indian government have allowed 51% foreign direct investment (FDI) in the India
retail sector to one brand shops only. This have made the entry of global retail giants to
organized retail sector in India difficult. This is a challenge being faced by the Indian
organized retail sector. But the global retail giants like Tesco, Wal-Mart, and Metro AG
are entering the organized retail sector in India indirectly through franchisee agreement
and cash and carry wholesale trading. Many Indian companies are also entering the
Indian organized retail sector like Reliance Industries Limited, Pantaloons, and Bharti
Telecoms. But they are facing stiff competition from these global retail giants. As a result
discounting is becoming an accepted practice. This too bring down the profit of the
Indian retailers. All these are posing as challenges facing the Indian organized retail
sector.
The challenges facing the Indian organized retail sector are there but it will have to be
dealt with and only then this sector can prosper.
Retail Industry in India:challenges
Opportunties and Strategies
Introduction
Retailing involves all activities incidental to selling to ultimate consumer for their
personnel family and household use. It does this by organizing their availability on a
relatively large scale and supplying them to a customers on arelatively smallscale.
Retailer is any person/organization instrumental in reaching the goods or merchandise oer
services to the end users.Retailer is a must and cannot be eliminated.
The Indian retailing industry is becoming intensely competitive, as more and more payers
are Vying for the same set of customers. The major retail players are Pantaloon Retail,
Shoppers Stop, Reliance,etc..,
Retailing is one of the biggest sectors and it is witnessing revolution in India. The new
entrant in retailing in India signifies the beginning of retail revolution. India's retail
market is expected to grow tremendously in next few years. According to AT Kearney,
The Windows of Opportunity shows that Retailing in India was at opening stage in 1995
and now it is in peaking stage in 2006. India's retail market is expected to grow
tremendously in next few years. India shows US$330 billion retail market that is
expected to grow 10% a year, with modern retailing just beginning. India ranks first in
2005. In fact, in 2005 and 2006, India is the most compelling opportunity for retailers,
because now India is in peaking stage.
This window of opportunity is useful for executives who plan their market-specific
strategies; the four stages or the lifecycle of this industry is as as follows:
Introduction:
An introduction is the opening phase of a market and is one that is just entering the
GRDI, Global Retail Development Index This index is based on more than 25 macro-
economic and retail –specific variables.for instance ,the country risk includes parameters
like political risk,economic performance,debt indicators,credit ratings,access bank
finance and business risk.The market attractiveness covers reail sales per capita ,urban
population ,laws and regulations and business efficiency.
Iin this stage all, which are outside the top 30 markets, falls in this stage. At this stage,
retailers should monitor and performing high-level assessments, they should plan for their
entry strategies. India in the late 1990's is a good example in the opening stage, while in
2006, Kazakhstan is the country in introduction stage.
Stategy suggested:A rapid penetration strategy is suggested at this stage i>e low price and
high promotion.
Growth:
In growth stage, the market is developing quickly and also ready for modern retailing.
Countries, which are in Peaking stage, are India, Ukraine and Vietnam. Retailers entering
this stage have the best chance for long-term success. Retailers at this stage should enter
through local representations, sourcing offices and new stores. Wal-Mart success in china
in the late 1990's and early 2000's gives us the importance of committing to a promising
high-growth market at right time.
Strategy suggested: The strategy of adopting quality and styled products with new models
and shift of advertising from product awareness to product preference Eg the big bazaar
advt says surf exel is cheaper than the market price.The idea behind adopting strategy is
to strengthen against competitors.
Maturity:
In this stage the market is still big and growing, but the space for new entrants will
become tighter and retailers should act quickly at this stage because retailers at this stage
have limited time to explore, and also their margin for error is thin. In general , they
should act according to the established rules and should be open to face the competition
from international retailers. This stage generally lasts longer than the previous two stages.
Strategy suggested: Enter new market segments that is either enter new geographic areas
eg vishal megha mart has opened stores in smaller cities tier II and III cities
Decline:
The window of opportunity is closing fast and modern retail share is reaching 40 to 60
percent. Though the opportunity is closing the existing retailers can enter with new
formats such as discount models or non-food formats such as consumer electronics and
apparel.
Window of opportunity ends for about 5 to 10years before a market enters the closing
phase and reaches saturation level. India for example, was in the opening stage in 1995
and entered peaking stage in the year 2003 and reached number 1 rank in2005.
Strategy suggested: Identifying weak segments, maintaining investment level selectively.
Unorganized retailing in India
In India, the most of the retail sector is unorganized. In India, the retail business
contributes around 11 percent of GDP. Of this, the organized retail sector accounts only
for about 3 percent share, and the remaining share is contributed by the unorganized
sector. The main challenge facing the organized sector is the competition from
unorganized sector. Unorganized retailing has been there in India for centuries, theses are
named as mom-pop stores. The main advantage in unorganized retailing is consumer
familiarity that runs from generation to generation. It is a low cost structure, they are
mostly operated by owners, has very low real estate and labor costs and has low taxes to
pay.
Organized retailing in India
In late 1990's the retail sector has witnessed a level of transformation. Retailing is being
perceived as a beginner and as an attractive commercial business for organized business
i.e. the pure retailer is starting to emerge now. Organized retail business in India is very
small but has tremendous scope. The total in 2005 stood at $225 billion, accounting for
about 11% of GDP. In this total market, the organized retail accounts for only $8 billion
of total revenue. According to A T Kearney, the organized retailing is expected to be
more than $23 billion revenue by 2010.
In organized retailing will grow faster than unorganized sector and the growth speed will
be responsible for its high market share, which is expected to be $ 17 billion by 2010-11.
Retailing will show good prospects in cities like Mumbai, Delhi, Chennai, kolkata,
Banglore and Kanpur. After Dubai, Singapore and Hong Kong, In India Delhi will be the
next big retail destination, According to Confederation of Indian Industries whose
findings have shown that Delhi has the good resources and good conditions for the retail
sector. Out of the total earnings of the Government of Delhi Rs 11,000 crore, Rs 6,500
crore is achieved from the retail sector.
- Share of Organised Retail
The organized sector is expected to grow faster than GDP growth in next few years
driven by favorable demographic patterns, changing lifestyles, and strong income growth.
This organized retail sector mix includes supermarkets, hypermarkets discounted stores
and specialty stores, departmental stores. For example, Spencer network has 69 stores,
which includes seven Spencer hypermarkets, three Spencer super markets and 49 Spencer
Dailys. Now the company is planning to open 20 stores in 10 cities in six months. The
top 10 retailers account only for 2% of total market, today modern retailing is expected to
enter a boom phase, which has major players and these players might capture 10% of
total market, within next five years. The retail sales in India for future are shown below
(data from 2005-2008 is based on estimates):
PRESENT INDIAN SCENARIO
* The first challenge facing the organized retail sector is the competition from
unorganized sector.
* In retail sector, Automatic approval is not allowed for foreign investment.
* Taxation, which favors small retail businesses.
* Developed supply chain and integrated IT management is absent in retail sector.
* Lack of trained work force.
* Low skill level for retailing management.
* Intrinsic complexity of retailing- rapid price changes, threat of product obsolescence
and low margins.
* Organized retail sector has to pay huge taxes, which is negligible for small retail
business.
*Cost of business operations is very high in India.
Conclusion
Many agencies have estimated differently about the size of organized retail market in
2010. The one thing that is common amongst these estimates is that Indian organized
retail market will be very big in 2010. The status of the retail industry will depend mostly
on external factors like Government regulations and policies and real estate prices,
besides the activities of retailers and demands of the customers also show impact on retail
industry.
As the retail market place changes shape and competition increases, the potential for
improving retail productivity and cutting costs is likely to decrease. Therefore it is
important for retailers to secure a distinctive position in the market place based on values
relationships or experience.
Finally it is important to note that these strategies are not strictly independent of each
other; value is function of not just price quality and service but can also be enhanced by
personalization and offering a memorable experience
INTRODUCTION:
This research is basically done to find out the training needs of the sales people in the
retail industry and how they are being fulfilled. The retail industry in our country is at
boom and getting organized day by day, the demands of customers are not just great
products but also great shopping experience and to make this possible a retail outlet
should have well trained sales people. This study is made to know how well the sales
people of retail industry in INDIA are trained to meet the customer expectations and
global standards.
The retail industry in INDIA has changed its face and approach. Sales people working in
this industry play major role in handling the customers effectively. This study is done to
evaluate the training system used by the retail industry in INDIA and also to understand
training aspects which keeps the sales force of retain industry fit and ready to face any
kind of challenges, particularly due to increasing domestic and international competition.
The word retail is derived from the French word ‘retailer’, meaning ‘to cut a piece off’ or
‘to break bulk’. Retailing involves a direct interface with the customers and the
coordination of business activities from end to end. The retail scenario in India is unique.
Much of it is in the unorganized sector. With over 12 million retail outlets of various
sizes and formats. Almost 96% of these retail outlets are less than 500sq.ft. In the size
and the percapita retail space in India being 2 sq.ft compared to the U.S. figure of 16sq.ft.
India’s percapita retailing space is the lowest in the world. With more than 9 outlets per
1000 people, India has the largest number in the world. Most of them are independent
and contribute as much as 96% to total retail sales. There is an incredible amount of
activity in terms of creation of retail-oriented space across India. As per some estimates,
there are over 200 retail mall projects under construction or under active planning stage
spanning over 25 cities. This may translate into over 25 million sq. f t. of new retail space
in the market within next 24 months.
• The top 3 modern retailers control over 750,000 sq. ft. of retail space
• Growth in organized retail on par with expectations and projections of the last 5 Years
on course to touch Rs. 35,000 crores (US$ 7 Billion) or more by 2005-06
Retail and real estate are the two booming sectors of India in the present times. And if
industry experts are to be believed, the prospects of both the sectors are mutually
dependent on each other. Retail, one of India’s largest industries, has presently emerged
as one of the most dynamic and fast paced industries of our times with several players
entering the market. Accounting for over 10 per cent of the country’s GDP and around
eight per cent of the employment retailing in India is gradually inching its way toward
becoming the next boom industry. As the contemporary retail sector in India is reflected
in sprawling shopping centers, multiplex- malls and huge complexes offer shopping,
entertainment and food all under one roof, the concept of shopping has altered in terms of
format and consumer buying behavior, ushering in a revolution in shopping in India. This
has also contributed to large scale investments in the real estate sector with major
national and global players investing in developing the infrastructure and construction of
the retailing business. The trends that are driving the growth of the retail sector in India
are
· Low share of organized retailing
CONCLUSION
The government is now set to initiate a second wave of reforms in the segment by
liberalizing investment norms further. This will not only favor the retail sector develop in
terms of design concept, construction quality and providing modern amenities but will
also help in creating a consumer-friendly environment. Retail industry in India is at the
crossroads but the future of the consumer markets is promising as the market is growing,
government policies are becoming more favorable and emerging technologies are
facilitating operations in India. And this upsurge in the retail industry has made India a
promising destination for retail investors and at the same time has impelled investments
in the real estate sector. As foreign investors cautiously test the Indian Markets for
investments in the retail sector, local companies and joint ventures are expected to be
more advantageously positioned than the purely foreign ones in the evolving India's
organized retailing industry
LARGE RETAILERS, BE they domestic players like Reliance Retail or MNCs like Wal-
Mart (of course in conjunction with the Bharti group), it is feared, will spell doom for the
traditional mom-and-pop stores before long. This will lead to job losses since mom-and-
pop stores provide job opportunities to semi-skilled and unskilled people. One of the
small retailers I interviewed went as far as to claim, “it hardly matters whether I am
deprived of my livelihood by Reliance Retail or Wal-Mart or Subhiksha; the fact is I’ll
lose my livelihood”. Is this an overreaction or the truth?
Suraksha and Shruti, college students, maintain that they are spoilt for choice when they
shop at a large retailer. But things are different with a Kiranawallah. “You ask for a
Kilogram of rice and I bet the Kiranawallah will weigh out only 950 gm although you do
not get to notice it. Additionally, they do not mind dumping stale and adulterated stuff on
you”, they assert. Since everything is available under one roof, bulk purchases can be
made at monthly intervals.
Rajiv and Harpreet, a working couple (both are from the advertising industry) prefer
organised retail for the sheer range of products they can access there. All the same, the
Kiranawallah will continue to be patronised, opines Rajiv. According to him the
Kiranawallah can offer customised services which the large retailers cannot. The
mushrooming of organised retailers need not sound the death knell for small
retailers. There is space for both in a country like India. “One complements the other”,
maintains his wife Harpreet.
What does the beleaguered Kiranawallah say? Ashwath, who has been running a grocery
store hardly 100 feet away from the Subhiksha outlet, asserts that small retailers sell
items like pulse, rice, sugar and edible oil much cheaper. It is only in respect of
established brands which are popular at the national level that large retailers are price-
competitive, thanks to almost total disintermediation. In respect of regional brands or
local brands, the large retailers get the suppliers to mark up the price significantly on
which the large retailer offers a huge discount subsequently. But in net terms, the price
turns out to be the same as the small retailers quote. He feels that by encouraging the
growth of large retail trade, the government is administering ‘slow poison’ to the extant
small retailers. The job losses that will arise when the small retailers wind up business
will be on the high side. The jobs that the so-called organised trade will create will be
abysmally few. Fortunately for large retailers, these days, the affluent younger generation
which puts in 12 hours of work per day does not like to be ‘weighed down’ by ‘shopping
responsibility’. As long as parking lot is available for the car and all household items are
available under one roof on the premises of the large retailer, the younger generation will
not complain. Factors like quality, price, and personalised service take a back seat. “We
fought not long ago to drive foreigners out of our land. Today, we are welcoming them
back so they can usurp our economy. Small retailers empathise with what the customer is
going through because of the personal touch; if the customer cannot settle the monthly
bill owing to a strike in his factory, we bear with him and still keep the credit line open so
he need not starve.
What do present-day economists and institutions do? They persuade him to take a loan or
opt for a credit card and apply usurious rate of interest; they employ ruffians to collect the
money if the customer cannot pay the monthly instalment even for reasons beyond his
control. This is because with the credit card, the customer sometimes buys things he does
not need with money he does not have.”
Retail Landscape
Mumbai
Pune
Ahmedabad
North
South
Chennai
Banglore
Hyderabad
East
Kolkata
Bata India Ltd, Big Bazaar, Crossword, Ebony Retail Holdings Ltd., Food Bazaar,
Globus Stores Pvt. Ltd., Liberty shoes Ltd., Music World Entertainment Ltd., Pantaloon
Retail India Ltd., Shoppers Stop, Subhiksha, Titan Industries, Trent and the new entrants
penetrating the market soon will include Reliance Retail Ltd, Wal-Mart Stores, Carrefour,
Tesco, Boots Group, etc.
Current Scenario
USA - 85%
Taiwan - 81%
Malaysia - 55%
Thailand - 40%
Brazil - 36%
Indonesia - 30%
Poland - 20%
China - 20%
India - 3%
Key Trends
The existing players like Big Bazaar, Shoppers' Stop, Piramyd are expanding to smaller
towns and cities. Many other business houses are planning to enter the retail sector either
on their own or through partnerships. New entrants like Reliance Retail Ltd and Wal-
Mart are going to enter the market soon. Even rural areas will provide a huge opportunity
to be explored.
The industry is estimated to be more than US$ 400 billion by a study of McKinsey.
The Economist Intelligence Unit (EIU) estimates the retail market in India to increase
to US$608.9 billion in 2009 from US$394 billion in2005.
A KPMG report says that the organized retail would grow at a higher rate than GDP
in the next five years.
The retail sector would generate employment for more than 2.5 million people by the
year 2010, says an analysis by Ma Foi Management Consultants Ltd.
Indian Consumerism
The Indian consumer behaviour is rapidly changing with a shift in new generation's
preference towards luxury commodities
The Indian retail sector is ready to take on challenges from global retail players such as
Wal-mart and Carrefour because unlike them, they have a better understanding of the
Indian consumer’s psyche. Ultimately, a successful retailer is one who understands his
customer.The Indian customer is looking for an emotional connection, a sense of
belonging. Hence, to be successful any retail outlet has to be localised. The customer
should feel that it is a part of his culture, his perceived values, and does not try to impose
alien values or concepts on him. Indian customer is not keen to buy something just
because it is sold by an international company. Ultimately, it boils down to how much
localisation and adaptation the company is willing to do for India. Other than tremendous
money power, global companies have nothing extra or special that the Indian retail
business does not have.We live in exciting times. Only two percent of India’s retail
market is organised. The future shows tremendous potential for growth in the retail
sector. Almost all large companies worldwide are looking to establish a base or stake in
the Indian market. In this scenario, the Indian retail sector itself must seize the initiative
to realise the dreams of contributing to a prosperous and booming economy. The focus
should be on the Indian horizon before looking for retail opportunities in other countries
because India itself is a big retail market.In the near future India will see a phenomenal
growth of shopping malls and speciality retail stores. The speciality stores will cater for
home, electronics, furniture, watches, sunglasses and assorted items. There will be more
fashion stores for youth. Speciality retail stores and malls are the future of Indian retail
market.
The Indian retail sector is ready to take on challenges from global retail players such as
Wal-mart and Carrefour because unlike them, they have a better understanding of the
Indian consumer’s psyche. Ultimately, a successful retailer is one who understands his
customer.The Indian customer is looking for an emotional connection, a sense of
belonging. Hence, to be successful any retail outlet has to be localised. The customer
should feel that it is a part of his culture, his perceived values, and does not try to impose
alien values or concepts on him. Indian customer is not keen to buy something just
because it is sold by an international company. Ultimately, it boils down to how much
localisation and adaptation the company is willing to do for India. Other than tremendous
money power, global companies have nothing extra or special that the Indian retail
business does not have.We live in exciting times. Only two percent of India’s retail
market is organised. The future shows tremendous potential for growth in the retail
sector. Almost all large companies worldwide are looking to establish a base or stake in
the Indian market. In this scenario, the Indian retail sector itself must seize the initiative
to realise the dreams of contributing to a prosperous and booming economy. The focus
should be on the Indian horizon before looking for retail opportunities in other countries
because India itself is a big retail market.In the near future India will see a phenomenal
growth of shopping malls and speciality retail stores. The speciality stores will cater for
home, electronics, furniture, watches, sunglasses and assorted items. There will be more
fashion stores for youth. Speciality retail stores and malls are the future of Indian retail
market.