IN INDIA

BY T.MOHANRAJ MBA 720811631027 Date :4-4-2012

What is retailing?
Retailing is a distribution channel function, where one organization buys products from supplying firms or manufactures products themselves, and then sells these directly to consumers. In majority of retail situations, the organization, from whom a consumer buys, is a reseller of products obtained from others, and not the product manufacturer. However, some manufacturers do operate their own retail outlets in a corporate channel arrangement.

RETAILING:

GROWTH OF ORGANISED RETAIL FORMAT:

During the last few years, the Indian retail market has seen considerable growth in the organised segment. Major domestic players have entered the retail arena and have ambitious plans to expand in the future years across verticals, formats, and cities. For example, companies like Reliance, Tata, Bharti, Adani Enterprise, have been investing considerably in the booming Indian retail sector. Besides, a number of transnational corporations have also set up retail chains in collaboration with big Indian companies

ORGANISED RETAIL FORMAT:

GROWTH OF INDIAN RETAIL:

Today India is the fifth largest in the world in terms of Retail Industry. Comprising of organized and unorganized sectors, Indian retail industry is one of the fastest growing industries, especially over the last few years. Though initially, the retail industry in India was mostly unorganized, with the change of tastes and preferences of the consumers, the industry is getting more popular these days and getting organized as well. With growing market demand, the industry is expected to grow at a pace of 2530% annually.

GROWTH OF AN ORGANISED RETAIL SECTOR:

In the next few years the organised Retail Sector in India is expected to triple its size. The food and grocery retail sector is expected to multiply five times in the same time frame. The market size of Indian retail industry is about US $312 billion. The organised retailing comprises only 2.8% of the total retailing market and is estimated at around US$ 8.7 billion and the organised retail sector is expected to grow to US $ 70 billion.

EVOLUTION OF ORGANISED RETAIL

The share of organised retail in developed countries is much

higher than developing countries like India. the share of organised retail in the US was around 85%, in Japan it was 66%, in the UK it was 80%, while in developing countries like India, China and Russia it was 6%, 20% and 33%, respectively. The concept of organised retail had occurred much later in developing economies than the developed economies. Modern day retail came into existence in three successive waves. The first wave took place in the early to mid-1990s in South America, East Asia excluding China, North Central Europe and South Africa. The second wave of organised retail occurred during mid-to-late 1990s in Mexico, Central America, South-east Asia and South Central Europe. The third wave of organised retail boom started in the late 1990s and early 2000 in some parts of Africa, Central and South America, South-east Asia, China, India and Russia and continues to grow at a rapid pace

Rising household expenditure in developing countries drives organised retail:

The household expenditure in Brazil, Russia, India and China, or

the BRIC countries, is growing at a faster rate than the developed countries like the US, UK, Japan, Germany, and France, indicating the higher growth potential for the retail sector in these countries that have a large consumer base. Household expenditure (at constant prices) in developed countries like the US, UK, Germany, and Japan has witnessed an average annual growth of 3.2%, 2.5%, 0.2%, and 1.0%, respectively, but the expenditure in the BRIC countries has been much higher. The developed countries are witnessing a continuous fall in domestic demand and high dependence on export earnings, which are the reasons for lower household expenditure. In current times, the global demand is weakening, owing to economic slowdown, and this worry is looming large over the retail sector.

REASON FOR INCREASE IN RETAIL MARKET IN INDIA

Modern retailing has entered into the country and as is observed in the form of bustling shopping centers, multi-storied malls and the huge complexes that offer shopping, entertainment and food all under one roof. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing working women population and emerging opportunities in the services sector are the key factors in the growth of the organized Retail sector in India.

TOP RETAILORS IN INDIA:

Pantaloon Retail (India)
Pantaloons managing director Kishore Biyani believes in changing the rules. When Pantaloon started the Big Bazaar discount stores in 2002, malls were not part of the shopping culture. Big Bazaar became a hit, as it combined the look and feel of Indian bazaars with aspects of modern retail like choice, convenience and quality. Headquartered in Mumbai, the Rs 3,500-crore company now operates over 5 million sq ft across 40 cities.

 Reliance Retail Mukesh Ambanis 15,000-people Reliance Retail has opened 250 convenience stores, branded as Fresh, across the southern states. It is now planning to launch 30 such outlets in Mumbai. Reliance Retail plans to invest Rs 25,000 crore on hypermarkets, supermarkets and specialty stores in the next four years. The first hypermarket will be up in Ahmedabad by the end of July.

 Bharti Retail

The worlds largest retailer Wal-Mart, which prefers to go it alone outside the US, chose Sunil Mittals Bharti Enterprises as its partner in India. The venture will start with the cash & carry (wholesale) format, which could be extended to retail operations once foreign direct investment is allowed in multi-brand retail, as is expected. The entity is yet to start operations as the formal agreement has not been inked.

EMPLOYNMENT OPPORTUNITIES
The retail sector has also contributed to 8% of the employment in the

country. Indian Retail Industry would generate employment for more than 2.5 million people, predicts an analysis by Ma Foi Management Consultants Ltd. Today the modern retail/retail services sector has the potential of creating over 2 million new (direct) jobs within the next 6 years in the country (assuming only 8-10% share of organized retailing), according to various analysts. Retail can create as many new jobs as the BPO/ITES sector in India. A strong retail front-end can also provide the necessary fillip to agriculture & food processing, handicrafts, and small & medium manufacturing enterprises, creating millions of new jobs indirectly. Through its strong linkages with sectors like tourism and hospitality, retail has the potential of creating jobs in these sectors also.

BACKBONE OF EVERY NATION:

COUNTRIES

INDIA

CHINA

INDONESIA

US

BRAZIL

JAPAN

GERMAN

AGE BELOW 25

53%

42%

30%

30%

29%

27%

26%

An organized retail store in Ahmedabad:

INNER LOOK OF AN ORGANISED RETAIL STORE:

COMPARISION OF ORGANISED RETAIL BETWEEN TWO LEADING DEVELOPING COUNTRIES:

GROWTH OF RETAIL MARKET: