Professional Documents
Culture Documents
Acknowledgement …………………………………………………..……2
Preface……………………………………………………………………….3
Abstract…………….…………………………………………………………4
An introduction………………………………………………………………5
FDI in retail…………………………………………………………………..23
Research methodology…………………………………………………….40
Analysais………………………………………………………………………42
Conclusion……………………………………………………………………53
Limitations……………………………………………………………………54
Bibliographie………………………………………………………………….55
Annexure……………………………………………………………………..56
Total no of Tables------7
Total no of Figure------10
Preface
Abstract
Introduction
An Overview
R etail has played a major role world over in
increasing productivity across a wide range of
consumer goods and services .The impact can be best seen
in countries like U.S.A., U.K., Mexico, Thailand and more
recently China. Economies of countries like Singapore,
Malaysia, Hong Kong, Sri Lanka and Dubai are also heavily
assisted by the retail sector.
Retail is the second-largest industry in the United States
both in number of establishments and number of employees.
It is also one of the largest worlds wide. The retail industry
employs more than 22 million Americans and generates
more than $3 trillion in retail sale annually. Retailing is a U.S.
$7 trillion sector.
Wal-Mart is the world’s largest retailer. Already the world’s
largest employer with over 1million associates, Wal-Mart
Global Retail
1999 2002 2005
Total Retail (US$ 150 180 225
Billion)
5 Metro Germany
Table no. -3
2%
Books, Music &
3% Gifts
7% Home Decore
7%
Jewellery &
40% watches
9%
Footwear
Durables
13%
Food & Grocery
19%
Cloathing, Textiles
& Fashion
Accessories
(Business Today December 31.2006)Category wise share in organized retail Source CII
Kearney Report
Figure no.-1
• As much as 96 per cent of the 5 million-plus outlets are smaller than 500
square feet in area. This means that India per capita retailing space is about 2
square feet (compared to 16 square feet in the United States). India’s per capita
retailing space is thus the lowest in the world (source: KSA Technopak (I) Pvt
Ltd, the India operation of the US-based Kurt Salmon Associates).
• From a size of only Rs.20, 000 crore, the organized retail industry will
grow more than Rs. 160,000 crore by 2007. The TOTAL retail market, however,
as indicated above will grow 20 per cent annually from Rs. 400,000 crore in
2000 to Rs. 800,000 crore by 2005.
• The first challenge facing the organized retail industry in India is:
competition from the unorganized sector. Traditional retailing has established in
India for some centuries. It is a low cost structure, mostly owner-operated, has
negligible real estate and labor costs and little or no taxes to pay. Consumer
familiarity that runs from generation to generation is one big advantage for the
traditional retailing sector.
• The above should not be seen as a gloomy foreboding from global retail
operators. International retail majors such as Benetton, Dairy Farm and Levis
have already entered the market. Lifestyles in India are changing and the
concept of “value for money” is picking up.
• India’s first true shopping mall – complete with food courts, recreation
facilities and large car parking space – was inaugurated as early as in 1999 in
Mumbai. (This mall is called “Crossroads”).
• An FDI Confidence Index survey done the most attractive sectors for FDI
(foreign direct investment) in India and foreign retail chains would make an
impact circa 2003.
Store Retailing
2. Non-store Retailing:
• Direct Selling
Direct selling which started centuries ago with itinerant peddlers has burgeoned
into a $9 billion industry, with over 600 companies selling door to door, office to
office, or at home sales parties. A variant of direct selling is called multilevel
Business, whereby companies such as Amway recruit independent
businesspeople who act as distributors for their products, who in turn recruit and
• Direct Business
Direct Business has its roots in mail-order Business but today includes reaching
people in other ways than visiting their homes or offices, including tale Business,
television direct response Business, and electronic shopping.
• Automatic Vending
Retail Revolution
FDI in retail
Indian retail trade is of enormous size ($180 billion), nearly 10 per cent of GDP,
employing 21 million persons, which is about 7 per cent of the labor force. It is six
About 96 per cent of these shops have 500 sq. ft or less of space with limited
stock or choice to offer. During all these years, instead of shedding tears for
indigenous trade and resisting FDI, had the government declared it an industry, it
would done the trade a world of good. Now it is being said that allowing FDI in
retail trade would destroy this commerce! Will it?
Modern retailing is designed not only to provide consumers with a wide variety of
products under one roof, but also of assured home delivery and information
feedback between consumers and producers. A modern retail outlet will also
make it easy to buy on credit and provide for servicing and repair of products
sold.
With IT application, the modern retail store can cut transaction costs such as due
to inventory, delivery and handling. That is precisely how the US based Wal-Mart
grew to be a giant because it reduced its distribution costs to 3 per cent of sales
compared to 4.5 per cent of others.
India is today the only major economy that still does not permit FDI in retail trade.
In China, 35 of the world’s top 70 retailers have already entered and set up
business. They have helped boost exports. Wal-Mart alone exported in 2002
India is targeting for its GDP to grow by 8 to 10 per cent per year. This requires
raising the rate of investment as well as generating demand for the increased
goods and services produced. Exports are one way of generating that demand.
Encouraging private consumption expenditure is another way.
These retail giant houses can bring their better managerial practices and IT-
friendly techniques to cut wastage and set up integrated supply chains to
gradually replace the presented disorganized and fragmented retail market.
According to McKinsey, India wastes nearly Rs. 50,000 crore in the food
chain itself. These international retail outlets can help develop the food
processing industry, which requires $28 billion of modern technology and
infrastructure.
FDI in retail trade has forced the wholesalers and food processors to improve,
raised exports, and triggered growth by outsourcing supplies domestically. The
availability of standardized products has also boosted tourism in these countries.
• At the start of 1999, the size of the middle class was unofficially
estimated at 300 million people.
• The middle class comprises an estimated 150 million people, each with
PPP incomes of US$20,000 per year each.
• The middle classes on the whole (i.e. upper middle + middle middle
lower middle classes) are expected to grow by 5 to 10 percent annually.
Opportunity
Population: India’s population estimated at 1,055 million is expected to grow by
1.7 % year by year. Growing urbanization is key trend in the country, with rural
population growth average 17.9 % and urban growth at 30.7% for the period
1991 to 2001. Today (12 Mar 2007 at 10.03) the population of India is
1,110,480,374.
Right now the population of Key static with regard to population growth ant the
urban and rural split is set out bellow
Figure no.-2
• In the period between 1996-2016, population in the:
1. Age group 15-59 will increase from 519 to 800 million
2. Age group < 15 yrs will decline from 353-350 million
3. Age group > 60 yrs will increase from 62.3 to 112.9 million
Table no.-6
Source: Market Participants, Fitch
Trends in Retailing
New retail forms and combinations continually emerge.
Bank branches and ATM counters have opened in
supermarkets. Gas stations include food stores that make
more profit than the gas operation. Bookstores feature
coffee shops.
Even old retail forms are reappearing: In 1992 Shawna
and Randy Heniger introduced peddler’s carts in the Mall of
America. Today three-fourths of the nation’s major malls
have carts selling everything from casual wear to condoms.
Successful carts average $30,000 to $40,000 a month in
sales and can easily top $70,000 in December. With an
average start-up cost of only $3,000, pushcarts help budding
entrepreneurs test their retailing dreams without a major
cash investment. They provide a way for malls to bring in
more mom-and-pop retailers, showcase seasonal
merchandise, and prospect for permanent tenants.
EMERGING TRENDS:
1. Forward integration / alternate channels: In bid to close the distance
between the company and the end consumer by cutting down the distribution
channel, some manufacturers of consumer goods are establishing company
owned stores and service formats and exploring the store in store concept to
enhance margins and increase customer value.
2. Sourcing: The CPG industry is following the It outsourcing trend. Indian
subsidiaries of global CPG players have proved them self in term of quality
and production capabilities. This had led several international companies to
source from India. For example Hindustan lever the subsidiary of Unilever
exports a wide range of products like soap, detergents, oral care and skin care
products to other Unilever subsidiaries. A new export Oriented unit is being
set up by Hindustan lever in Pune, to cater to the need of this business.
Unilever is also setting up a global sourcing office in India to buy products
and raw material from low cost location for its subsidiaries across the world.
India is moving towards embracing global patent and trademark standard that
will facilitate outsourcing by CPG companies.
With quotas in textiles sector also being relaxed, global retailers are increasingly
focusing their sourcing efforts (both apparel and non apparel) from India. Wal-Mart
has announced it will increase it an annual sourcing from India from USD5 billion.
This trend is likely to be followed by most big retailers.
3. Rapid expansion and format migration: After making years of investment
in customer acquisition, setting up of systems / process and consequent
operational loose, many leading retailers have passed their “learning” phase
and are getting in to the consolidation/aggressive rollout phase. Today few of
them are making modest money out of the business. This provides confidence
to the investors to infuse much needed capital in the businesses and will lead
the further expansion and format migration. For example the department store
chain, Shoppers Stop, will soon have its Initial Public Offer (IPO) and use all
the fund raised, for rapid expansion in existing format and roll out of grocery
stores. Other leading retailers such as Tent (West side) and Landmark Group
(life style) are also considering new formats in home improvement and
hypermarkets.
T
and
he following survey was mainly done with an
objective to know the state of mind of an individual
their preference of organized retail. And their
satisfaction level towards these outlets.
RESEARCH METHODOLOGY
Primary data
100 people were surveyed to know their purchase behavior with organized retail
for daily need items. And factors, which motivated them to go for organize retail.
Secondary data
Secondary data was collected by visiting libraries and associations the major
being.
• Internet
• Different News Paper & Magazines
• Journals
•
40
35 S eries2
No. of respondants
30
25
20 18
14
15 12
10 8
5 3
0
Service Price Dealing of Variety of theBrand nam e Proper
the s ales products product
pers on dis play
Fa ctors tha t influe nce de cision m a king
Figure no.-3
The data which is collected by questionnaire is very well showing that the people of
middle class are very price conscious. And the price factor influence their decision
while going for purchase of daily need items. After that Variety of the product and
brand name effect a lot in decision making .Other factor like service proper product
display has not much importance while purchase of daily need items. But apart of
daily need items in the sample size of 100 people 45% people is influenced for daily
purchase by price. That is a reason that lots of organize retailer are focusing their
store on the basis of price. The best examples are Subhiksha, Reliance Fresh, Big
Baazar and also Bharti Wal-Mart is also going to penetrate Indian
Malls/Departmental
Malls/Depar Store
No
tmental
particular
Store
preference Co-operative Stores
20%
20%
Kirana Stores/
Convenience store
No particular
preference
Co-operative
Stores
15%
Kirana
Stores/
Convenienc
e store
45%
Figure no.-4
For daily need items generally people prefers Kirana
stores/Convenience store because they gives the reason that
the positioning of kirana stores for daily need items is much
more convenient. According to chart 45% of people prefer
kirana stores/Convenience. 20% People prefer to go Malls/
Departmental stores for daily need items, generally these
people are those who purchase product in bulk for a full
month Behind this they give reason that they don’t have
much time to visit shop daily. Shopping from these stores
120
100 12
25 30 20
80 50 45 40 40
60
60
40 80 88
75 70
50 55 60 60
20 40
0
nd
y
Lo ice
Di ce
ty
Hi rice
nt
om ng
ss
er
rie
ou
Do Bra
i
ne
rv
pr
Pr ppi
liv
p
Va
sc
Se
de
pt
gh
o
sh
or
in
n
Fu
YES NO
Figure no.-5
In the process of filling questionnaire done by respondents
when I interacted with people then I found that when I asked
Once in a
week
25%
Figure no.-6
Basically the reason of asking this question from
respondents is to understanding their frequency of visiting of
the shop which helps us to understand how often they visit
the shop for daily need items. Generally people purchase
items like milk, bred, cigarette and vegetables daily, 40% of
total respondents say that they daily go for shopping. 25 out
of 100 say that they go purchase of daily need items for
once week. 25% people visit for these items for thrice a
month and rest of 10% people go for these items for once a
month because they don’t have time to go daily for these.
Again these people are people from upper middle class. So
those people generally purchase in a bulk for a month. More
than 55% people from those prefer organized retail because
from purchase in bulk they get big discount. Reliance fresh,
Big Bazaar, Spancers and Subhiksha are generally preferred
5) How much portion of your fix income you dispose in shopping / month for
daily need items (In Thousands)?
more than 7
thousand
0-2
10%
5-7 thousands
thousand 20%
15%
2-5
thousand
55%
Figure no.-7
The reason of asking this question from the respondents is
to understand their purchasing behavior towards daily need
items. In the sample size of 100, 55% of people invest
between 2 to 5 thousands, so this is again an opportunity for
shop keepers to earn. After analysis of data it has found that
on those 60% of people who invest more than average they
mostly prefers organized retail stores because of variety,
quality and discount . That is also positive point for organize
retailer.
Poor
Average
30%
Good
Very Good
Excellent
35%
11% 11%
Poor
17%
17% Average
Good
Very Good
Excellent
44%
Figure no.-8
No
45%
Yes
55%
Yes No
Figure no.-8
From the sample size of 100, 55% people are satisfied
with organized retail. More than 50% respondents had given
their view in favor of organized retail stores. About organized
retail shop they feel that shopping with these stores
Can't say
20%
Yes
40%
No
40%
Figure no.-9
Figure no.-10
The aim of asking this question from respondents is to conclude the research of
“The Preference of middle class for Organized Retail For daily need items” This
question sumup all the research which is showing that for daily need items
generally use local Kirana stores in comparison to organized retail But for other
items generally people prefer variety and quality oriented store that is organize
retail store. But if we understand the consumer behavior of middle class then we
will find that rapidly they are shifting kirana stores to organized retail shop. If we
would have asked this question to respondent then we would have find decision
in favor of kirana stores. Currently Indian middle class is showing a big change
in their buying behavior and becoming Variety & quality conscious. That is again
a type of victory for organized retailers.
Conclusion
• The time factor was a great limitation while the time of 2 month research project.
• Due to less knowledge of site of NCR, I visited few areas of NCR so research is
based on according to the customer of that area.
• Sample size of 100 is not sufficient to finish this project in moredescriptive
manner.
• During our meeting part with customer we consider only our potential customer
who was middle class people.
Books
Web sites
http://en.wikipedia.org/wiki/Retail
http://www.indiaonestop.com/retailing.htm
http://www.ibef.org/artdisplay.aspx?cat_id=375&art_id=13997
http://www.ibef.org/artdisplay.aspx?cat_id=375&art_id=3974
http://www.reportbuyer.com/consumer_goods_retail/country_overv
iew_consumer_goods_retail_/indian_organized_retail_industry_2005
_2007_.html#top.
http://populationcommission.nic.in/facts1.htm
http://www.indiatogether.org/2005/jul/eco-palaces.htm
Annexure
QUESTIONNAIRE
Yes No
Fun in shopping
Promptness
Service
Low price
High price
Discount
Variety
Brand
Door delivery
Yes No
Why......................................................................................
...................................
Respondent Details
Sex Male Female
Age Qualification