NOTES FOR MBA STUDENTS

1. Manoj Patel Asst. Professor
JHUNJHUNWALA BUSINESS SCHOOL, FAIZABAD
Q.1. What do you mean by “Retailing”? Explain the emerging trends, opportunities, challenges and
functions of Indian retailing.
Ans.: Retailing: Retail marketing is the range of activities undertaken by a retailer to promote awareness and
sales of the company’s products. This is different from other types of marketing because of the components of
the retail trade, such as selling finished goods in small quantities to the consumer or end user, usually from a
fixed location. Retail marketing makes use of the common principles of the marketing mix, such as product,
price, place and promotion. A study of retail marketing at university level includes effective merchandising
strategies, shopping and consumer behavior, branding and advertising. Retail marketing is especially important
to small retailers trying to compete against large chain stores.
More recently, technological, cultural and economic changes have shifted the balance of power to retailers,
according to Sullivan and Adcock. For example, retailers now can track customer shopping data, which
provides an important source of consumer research that manufacturers can’t directly access. Also, retail stores
have launched in-store brands, making them viable competitors with major manufacturers. In other words, as
retailers have increased their capabilities and power, being able to work with retailers has become increasingly
important for any manufacturer whose business model depends on being visible to the typical consumer.
Retailing in India:
 India retail industry is the largest industry in India, with an employment of around 8% and contributing
to over 10% of the country's GDP.
 Retail industry in India is expected to rise 25% yearly being driven by strong income growth, yearly
being driven by strong income growth, changing lifestyles, and favorable demographic patterns.
 A further increase of 7-8% is expected in the industry of retail in India by growth in consumerism in
urban areas, rising incomes, and a steep rise in rural consumption
 It is the second fastest growing economy of the world
 Potential to be the third largest economy in terms of GDP in next few years
 It ranks high amongst the top 10 FDI destinations of the world
 Fastest growing tourist market in Asia
 World bank states, India to be world’s second largest economy after China by the year 2050
 Stable and investor friendly Central Government at the helm of affairs
 Introduction of Value Added Tax or VAT and tax reforms
 High degree of professionalism and corporate ethics
SYLLABUS
UNIT IV- Retail Management: An Overview Concept and Evolution; Functions and Role of Retailing in
Distribution; Social and Economic significance of Retailing; Formats of Retailing; Organized Retailing;
Technology in Retailing; Present Indian Retailing Scenario.

2. Manoj Patel Asst. Professor
JHUNJHUNWALA BUSINESS SCHOOL, FAIZABAD
 Excellent Investment opportunities in Indian retail sector and in allied sectors; sure and high returns on
investments.
Evolution of Indian retail: Traditional family run convenience stores are too well established in India. The
retail stores in India are essentially dominated by the unorganized sector or traditional stores.
In fact the traditional stores have taken up to 98 percent of the Indian retail market. Now stores run by families
are primarily food based and the setup is as Kirana or the' corner grocer' stores. Basically they provide high
service with low prices. If the stores are not food based then the type of retail items available are local in
nature. The tough competition for convenience stores are coming from organized retail stores dealing in food
items.
Emerging trends: There is a fantastic rise in the Indian organized retail sector in a very short period of time
between 2001 and 2006. Eventually, out of the shadows of the unorganized retail sector, India has a chance of
tremendous economic growth, both in India and tremendous economic growth, both in India and abroad. The
relaxation by the government on regulatory controls on foreign direct investments has added to the process of
the growth of the Indian organized retail sector. With the arrival of the Transnational Companies (TNC), the
Indian retail sector will undergo a transformation. At present the Foreign Direct Investments (FDI) is not
encouraged in the Indian organized retail sector but once the TNC'S get in they inevitably try to oust their
Indian counterparts. This would be challenging to the retail sector in India.
The trends to follow in the future: The Indian Organized retail sector will grow up to 10% of total retailing
by 2010. No one single format can be assumed as there is a huge difference in cultures regionally. The most
encouraging format now would be the hyper marts. The hyper mart format would be further encouraged with
the entry of the TNCs.
Growth factors in Indian organized retail sector: The growth factors in Indian organized sector are various
but it is mainly due to the fact that India's economy is booming.
Also, the rise in the working population which is young, pay young, pay--packets which are hefty, more
nuclear packets which are hefty, more nuclear families in urban areas, rise in the number of women working,
more disposable income and customer aspiration, western influences and growth in expenditure for luxury
items. All these are the factors for the growth in Indian organized retail sector. Many Indian companies have
entered the retail industry in India and this is also a factor in the growth of Indian organized retail sector.
Opportunities in Indian retail sector: The various opportunities in the organized retail sector in India are
mainly there for the Indian consumers behavior pattern has changed. Now the Indian consumer gets more hefty
pay-packages, is younger, a large number of women are working, western influences, and more working,
western influences, and more disposable income have opened a lot of opportunities in Indian organized retail
sector. The Indian consumer wants to shop, eat and get entertainment in one place and is having also given
Indian organized retail sector an opportunity to grow.

3. Manoj Patel Asst. Professor
JHUNJHUNWALA BUSINESS SCHOOL, FAIZABAD
Many Indian companies seeing the various opportunities in organized retail sector in India has entered it.
Pantaloons have decided to increase its retail space to 30 million square feet with an investment of US $ 1
billion. Reliance Industries Limited is targeting for annual sales of US $ 25 billion by 2011.
The opportunities in the organized retail sector in India have also increased with the desire of many global
retail giants to setup shop here. The global retail giants who are entering the Indian organized retail sector are:
1. Tesco
2. Wal-Mart
3. Metro AG
4. Carrefour SA
The retail companies are found to be rising in India at are mark able speed with these ears and this have
brought a revolutionary change in the shopping attitude of the Indian customers. The Growth of Retail
Companies in India is facilitated by certain factors like-
 Existing Indian middle classes with an increased purchasing power
 Rise of upcoming business sectors like the IT and engineering firms
 Change in the taste and attitude of the Indians
 Effect of globalization
 Heavy influx of FDI in the retail sectors in India
Challenges Facing the Indian Organized Retail Sector: The behavior patterns of the Indian consumer have
undergone a major change. This has happened for the Indian consumer is earning more now, western
influences, women working force is increasing, desire for luxury items and better quality. He now wants to eat,
shop, and get entertained under the same roof. Eat, shop, and get entertained under the same roof. All these
have lead the Indian organized retail sector to give more in order to satisfy the Indian customer.
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
 Trained manpower shortage is a challenge facing the organized retail sector in India. The Indian
retailers have difficulty 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 governments have allowed 51%
foreign direct investment (FDI) in the India retail sector to one brand shops only. This has 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

4. Manoj Patel Asst. Professor
JHUNJHUNWALA BUSINESS SCHOOL, FAIZABAD
retail giants. As a result discounting is becoming an accepted practice. This too brings down the profit
of the Indian retailers. All these are posing as challenges facing the Indian organized retail sector.
Q.2. Explain the Information Technology in Retailing. Also describe the format of retailing.
Ans.: Information Technology in Retailing: Over the years as the consumer demand increased and the
retailers geared up to meet this increase, technology evolved rapidly to support this growth. The hardware and
software tools that have now become almost essential for retailing can be divided into 3 broad categories:
Customer interfacing systems
 Bar coding and scanners: Point of sale systems use scanners and bar coding to identify an item, use
pre-stored data to calculate the cost and generate the total bill for a client. Tunnel Scanning is a new
concept where the consumer pushes the full shopping cart through an electronic gate to the point of
sale. In a matter of seconds, the items in the cart are hit with laser beams and scanned. All that the
consumer has to do is to pay for the goods.
 Payment: Payment through credit cards has become quite widespread and this enables a fast and easy
payment process. Electronic cheque conversion, a recent development in this area, processes a cheque
electronically by transmitting transaction information to the retailer and consumer's bank. Rather than
manually process a cheque, the retailer voids it and hands it back to the consumer along with a receipt,
having digitally captured and stored and image of the cheque, which makes the process very fast.
 Internet: Internet is also rapidly evolving as a customer interface, removing the need of a consumer
physically visiting the store.
Operation support systems
 ERP System: Various ERP vendors have developed retail-specific systems which help in integrating
all the functions from warehousing to distribution, front and back office store systems and
merchandising. An integrated supply chain helps the retailer in maintaining his stocks, getting his
supplies on time, preventing stock-outs and thus reducing his costs, while servicing the customer
better.
 CRM Systems: The rise of loyalty programs, mail order and the Internet has provided retailers with
real access to consumer data. Data warehousing & mining technologies offers retailers the tools they
need to make sense of their consumer data and apply it to business. This, along with the various
available CRM (Customer Relationship Management) Systems, allows the retailers to study the
purchase behavior of consumers in detail and grow the value of individual consumers to their
businesses.

5. Manoj Patel Asst. Professor
JHUNJHUNWALA BUSINESS SCHOOL, FAIZABAD
 Advanced Planning and Scheduling Systems: APS systems can provide improved control across the
supply chain, all the way from raw material suppliers right through to the retail shelf. These APS
packages complement existing (but often limited) ERP packages. They enable consolidation of
activities such as long term budgeting, monthly forecasting, weekly factory scheduling and daily
distribution scheduling into one overall planning process using a single set of data.
Leading manufacturers, distributors and retailers and considering APS packages such as those from i2,
Manugistics, Bann, Mercial incs and Sterling-Douglas.
Strategic decision support systems
 Store Site Location: Demographics and buying patterns of residents of an area can be used to compare
various possible sites for opening new stores. Today, software packages are helping retailers not only
in their locational decisions but in decisions regarding store sizing and floor-spaces as well.
 Visual Merchandising: The decision on how to place & stack items in a store is no more taken on the
gut feel of the store manager. A larger number of visual merchandising tools are available to him to
evaluate the impact of his stacking options. The SPACEMAN Store Suit from AC Nielsen and
Modacad are example of products helping in modeling a retail store design.
Retail Format: This brings to broadly identify and categorize the types of retail marketing, which are defined
as follows:
1. Store Retailing
2. Non store Retailing
Types OF Retail Marketing
 Store Retailing: Store retailing provides consumers to shop for goods and services in a wide variety
of stores and it also help the Consumers to get all the needed goods and services from one shop only.
The different types of store retailing are given below.
 Specialty Stores: These stores focus on leisure tastes of different individuals. They have a narrow
product line with deep assortment such as apparel stores, sporting goods stores, furniture stores,
florists and bookstores. These stores are usually expensive and satisfy the needs of selected consumers
who have liking or preference for exclusive things.
 Departmental Store: These stores are usually built in large area and keep variety of goods under one
shed. It is usually divided into different sections like clothing, kids section, home furnishings,
electronic appliances and other household goods. In a departmental store a consumer can buy variety
of goods under one shed.

6. Manoj Patel Asst. Professor
JHUNJHUNWALA BUSINESS SCHOOL, FAIZABAD
 Supermarket: These stores are relatively large, low cost, low margin, high volume, self service
operations designed to serve total needs for food, laundry and household maintenance products.
Supermarkets earn an operating profit of only 1 percent on sales and 10percent on net worth.
 Convenience Stores: These are relatively small stores located near residential area, open for long
hours seven days a week, and carrying a limited line of high turnover convenience products at slightly
higher prices than departmental stores. Many such stores also have added takeout sandwiches, coffee
and pastries.
 Off - Price Retailer: These stores sell goods at low price with lower margins & higher volumes.
These stores sell goods with deteriorated quality. The defects are normally minor. This target at the
persons belonging to the lower income group, though some have a collection of imported goods aimed
to target the younger generation. The company owned showroom selling the seconds products is a
typical example of off - price retailer.
 Discount Store: These stores sell standard merchandise at lower prices by accepting lower margins
and selling higher volumes. The use of occasional discounts or specials does not make a discount
store. A true discount store regularly sells its merchandise at lower prices, offering mostly national
brands, not inferior goods.
In recent years, many discount retailers have “traded up”. They have improved decor, added new lines and
services, and opened suburban branches—all of which has led to higher costs and prices and as some
department stores have cut their prices to compete with discounters. Not only that, discount stores have moved
beyond general merchandise into specialty merchandise stores, such as discount sporting goods stores,
electronics stores, and bookstores.
 Catalog Showroom: Catalog showrooms generally sell a broad selection of high-markup, fast-
moving, brand-name goods at discount prices. These include jewelry, power tools, cameras, luggage
small appliances, toys, and sporting goods. Catalog showrooms make their money by cutting costs and
margins to provide low prices that will attract a higher volume of sales. Catalog showrooms have been
struggling in recent years to hold their share of the retail market.
India has some sometimes been called a nation of shopkeepers. This epithet has its roots in the huge number of
retail enterprises in the country totaling 12 million, about 78 percent of these are small family owned
businesses utilizing only household labour. even among retail enterprises that hire workers the bulk of them
hire less than 3 workers .India’s retail sector appears backwards not only by standards of industrialized
countries but also in comparison to several other emerging markets in Asia and elsewhere. There are only 14
companies that run departmental stores and mere two with hypermarket operations. While the number of
businesses operating supermarkets is higher (425 in 2004 ) most of these had only 1 outlet, the number of
companies with supermarket chains was less than 10.

7. Manoj Patel Asst. Professor
JHUNJHUNWALA BUSINESS SCHOOL, FAIZABAD
Format Description The Value Proposition
Branded Stores Exclusive showrooms either owned or
franchised out by a manufacturer.
Complete range available for a given
brand, Certified product quality.
Specialty
Stores
Focus on a specific consumer need; carry
most of the brands available.
Greater choice to the consumer,
comparison between brands possible
Department
Stores
Large stores having a wide variety of
products, organized into different
departments, such as clothing, house wares,
furniture, appliances, toys, etc.
One stop shop catering to varied
consumer needs.
Supermarkets Extremely large self-services retail outlets. One stop shop catering to varied
consumer needs.
Discount Stores Stores offering discounts on the retail price
through selling high volumes and reaping the
economies of scale.
Low prices.
Hyper-mart Larger than a Supermarket, sometimes with a
warehouse appearance, generally located in
quieter parts of the city
Low prices, vast choice available
including services as cafeterias.
Convenience
Stores
Small self-service formats located in crowded
urban areas.
Convenient location and extended
operating hours.
Shopping Malls An enclosure having different formats of in-
store retailers, all under one roof.
Variety of shops available close to each
other.
Non-store Retailing
It is another type of retail marketing. Different types of non-store retailing are given below:
 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 marketing, whereby companies such as Amway
recruit independent businesspeople who act as distributors for their products, who in turn recruit and
sell to sub distributors, who eventually recruit others to sell their products, usually in customer homes.
 Direct Marketing: Direct marketing has its roots in mail-order marketing but today includes reaching
people in other ways than visiting their homes or offices, including telemarketing, television direct
response marketing, and electronic shopping.
 Automatic Vending: Automatic vending has been applied to a considerable variety of merchandise,
including impulse goods with high convenience value (cigarettes, soft drinks, candy, newspaper, hot

8. Manoj Patel Asst. Professor
JHUNJHUNWALA BUSINESS SCHOOL, FAIZABAD
beverages) and other products (hosiery, cosmetics, food snacks, hot soups and food, paperbacks,
record albums, film, T-shirts, insurance policies, and even fishing worms).
Short type question-
Q.1. Briefly describe the functions of retaining?
Ans.: 1. Buying: A retailer buys a wide variety of goods from different wholesalers after estimating customer
demand. He selects the best merchandise from each wholesaler and brings all the goods under one roof. In this
way, he performs the twin functions of buying and assembling of goods.
2. Storage: A retailer maintains a ready stock of goods and displays them in his shop.
3. Selling: The retailer sells goods in small quantities according to the demand and choice of consumers. He
employs efficient methods of selling to increase his sales turnover.
4. Grading and Packing: The retailer grades the goods which are not graded by manufacturers and
wholesalers. He packs goods in small lots for the convenience of consumers.
5. Risk-bearing: A retailer always keeps stock of goods in anticipation of demand. He bears the risk of loss
due to fire, theft, spoilage, price fluctuations, etc.
6. Transportation: Retailers often carry goods from wholesalers and manufacturers to their shops.
7. Financing: Some retailers grant credit to customers and provide the facility of return or exchange of goods.
In some cases, home delivery and after sale service are provided by retailers.
8. Sales promotion: A retailer displays goods. He carries out publicity through shop decoration, window
display, etc. He maintains direct and personal contacts with consumers. He persuades consumers to buy goods
through personal selling.
9. Information: Retailers provide knowledge to consumers about new products and uses of old products. They
advise and guide consumers in better choice of goods. They also provide market information to wholesalers
and manufacturers.
 Providing Assortments: Supermarkets typically carry 20,000 to30, 000 different items made by over
500 companies. Offering an assortment enables their customers to choose from a wide selection of
brands, designs, sizes, colors, and prices at one location.
 Breaking Bulk: To reduce transportation costs, manufacturers and whole seller typically ship cases of
frozen dinners or cartons of blouses to retailers. Retailers then offer the products in smaller quantities
tailored to individual consumers and household’s consumption patterns.
 Holding Inventory: A major function of retailers is to keep inventory that is already broken into user-
friendly sizes so that products will be available when consumers want them. Thus, consumers can keep
a smaller inventory of products at home because they know local retailers will have the products
available when they need more. By maintaining an inventory, retailers provide a benefit to
consumers; they reduce the consumers cost of storing products.
Q.2. Write short notes on retail distribution.

9. Manoj Patel Asst. Professor
JHUNJHUNWALA BUSINESS SCHOOL, FAIZABAD
Ans.: Retail Distribution channel: The characteristic that sets a retailer apart from other members of its
distribution channel is that the retailer is the party who ultimately sells the product to its end user or consumer.
As you know if you’ve ever shopped for anything, retailers come in many shapes and sizes, so to speak.
Retailers may be grouped according to any of the following four categories:
 Ownership: Every brick-and-mortar retailer can be classified as a large, national chain store; a
smaller, regional chain store; an independent retailer; or a franchisee.
 Pricing philosophy: Stores are generally either discounters or full-price retailers. Within the
“discounter” category, there are several subcategories such as factory outlets, consignment stores,
dollar stores, specialty discount stores, warehouse membership clubs, and so on.
 Product assortment: The breadth and depth of product lines carried by the store depends a lot on its
ownership. An Ann Taylor store, for example, sells Ann Taylor branded clothing—not much breadth
of product line there, but extensive depth in that line. A Kmart, on the other hand, carries thousands of
brands, but perhaps does not have much depth (not many brands) in any given category of product.
 Service level: The more exclusive or specialized the store, the more types of services it will generally
offer-from a name-branded credit card, to on-site alterations, to liberal return policies for its loyal
customers. With the “big box” discounters, on the other hand, customers pay for convenience and
bypass traditional service, by bagging their own groceries and the like. These distinctions between
various types of stores will be important as we discuss their participation in certain distribution
channels.
Q.3. Define the non-store retail format.
Ans.: Non-store Retailing: The selling of goods and services without establishing a physical store is
known as Non-Store Retailing. It includes such services as vending machines, direct-to-home selling,
telemarketing, catalog sales, mail order, and television marketing programs.
The fastest growing method used by retailers to sell products is through methods that do not have
customers physically visiting a retail outlet. In fact, in many cases customers make their purchase from
within their own homes. A large majority about 80% of retail transactions are made in stores. However, a
growing volume of sales is taking place away from stores. It has estimated that non-store sales account for
almost 20% of total retail trade.
There is no physical existence of the store and in non-store retailing; customers do not go to a store to buy.
This type of retailing is growing very fast. Among the reasons are;
 Customers are no longer willing to spend as much time on shopping,
 Hectic and fast lifestyle,
 Increasing the number of working women,
 Double Income Family,

10. Manoj Patel Asst. Professor
JHUNJHUNWALA BUSINESS SCHOOL, FAIZABAD
 Situational factors, etc.
Types of Non-Store Retail Format:
Following are the six types of non-store retailing:
 Direct selling,
 Telemarketing,
 Online retailing,
 Automatic vending,
 Direct marketing, and
 E- Tailing.
Advantages of Non-Store Retailing:
 Shopper liberated from a physical visit of a retail store.
 The high fixed costs of operating retail outlets are eliminated.
 The breadth of customer coverage is considerably wider than is possible with an individual retail
location.
 Companies do not have to spend large sums or dilute stock building new locations, or acquiring them.
 This truly gives the non-store retailer a global market from a cheap, centralized location.
Q.4. What is automatic vending machine?
Ans.: Vending Machine: The sale of products through a machine with no personal contact between buyer and
seller is called automatic vending.
The appeal of automatic vending is convenient purchase. Products sold by automatic vending are usually well-
known presold brands with a high rate of turnover. The large majority of automatic vending sales comes from
the "4 C's" : cold drinks, coffee, candy and cigarettes.
Automatic vending is a unique area in non-store merchandising because the variety of merchandise offered
through automatic vending machines continues to grow. Initially, impulse goods with high convenience value
such as cigarettes, soft drinks, candy, newspapers, and hot beverages were offered. However, a wide array of
products such as hosiery, cosmetics, food snacks, postage stamps, paperback books, record albums, camera
film, and even fishing worms are becoming available through machines.
Advantages and disadvantages:
Vending machines can expand a firm's market by reaching customers where and when they cannot come to a
store. Thus vending equipment is found almost everywhere, particularly in schools, work places and public
facilities. Automatic vending has high operating costs because of the need to replenish inventories frequently.
The machines also require maintenance and repairs.

11. Manoj Patel Asst. Professor
JHUNJHUNWALA BUSINESS SCHOOL, FAIZABAD
Future Expectations: The outlook for automatic vending is uncertain. The difficulties mentioned above may
hinder future growth. Further, occasional vending-related scams may scare some entrepreneurs away from this
business.
Vending innovations give reason for some optimism. Debit cards that can be used at vending machines are
becoming more common. When this card is inserted into the machine, the purchase amount is deducted from
the credit balance. Technological advances also allow operators to monitor vending machines from a distance,
thereby reducing the number of out-of-stock or out-of-order machines.
Q.5. Define the supermarket.
Ans.: Super Market: Unlike western countries where supermarkets are prominently visible, in our country
this is lacking. The supermarkets largely concentrate on selling food related products and are considerably
smaller in size compared to hypermarkets. Their value proposition is also different from the hypermarkets. The
supermarkets offer relatively less assortments but focus on specific product categories. They do not play the
game on price rather use convenience and affordability as their salient features. In India this role is played by
the provision stores and sweet shops. Interestingly the fresh vegetables and fruits are sold on the foot path and
in open markets. Traditionally consumers feel conservative to buy fruits and vegetables from air conditioned
supermarkets. They prefer to buy either from the local mobile vegetable sellers or from the nearest sabji
market. Probably that works as deterrent factor for the growth of supermarkets in India. But the situation is
changing and slowly supermarket operators are coming to their own.
A super market normally sells grocery, fresh, cut vegetables, fruits, frozen foods, toiletries, cosmetics, small
utensils, cutlery, stationery and Gift items. In India Food World, Food Bazaar, Nilgiri (30 plus stores), and
Adani are the leading super market operators. One of the biggest super market operators in the western India is
Adani Retail Limited which operates Adani super market plans to continue its journey to reach total 19 cities
with the store strength of 60 plus in the state of Gujarat. ARL also plans to expand its operation in the
neighbouring states of Rajasthan, Madhya Pradesh, Maharashtra and Chhattisgarh. Subhiksha is one of the
leading super market operators, who largely operates in the southern part of India is expanding to western
India. One more retailer Reliance Retail is on the move and this retailer opened its Reliance Fresh-a super
market chain with 11 stores in Hyderabad in November 2006 and is planning to enter 70 more cities within 2
years. Fabmall a part of Trinetra Super Retail Limited is also expanding. By June 2006 Fabmall had 28 super
markets in some cities and the retailer is planning to open 25 outlets in Kerala by March 2007.
Food Bazaar operates in major cities in India with a floor space ranging from 6,000 sq ft to 16,000 square feet
and the format sells both food and non-food items. The non-food items contribute about 22 per cent of total
sales and rest is contributed by the food related items. A Food Store stocks an average of 7,000 stock keeping
units (SKUs) and over 50,000 articles. The SKU's are divided into the broad categories - staples, fresh produce
Q.6: Explain the socio-economic significance of retail in India.

12. Manoj Patel Asst. Professor
JHUNJHUNWALA BUSINESS SCHOOL, FAIZABAD
Ans.: The Retail Sector of Indian Economy is going through the phase of tremendous transformation. The
retail sector of Indian economy is categorized into two segments such as organized retail sector and
unorganized retail sector with the latter holding the larger share of the retail market. At present the organized
retail sector is catching up very fast. The impact of the alterations in the format of the retail sector changed the
lifestyle of the Indian consumers drastically. The evident increase in consumerist activity is colossal which has
already chipped out a money making recess for the retail sector of Indian economy.
With the onset of a globalized economy in India, the Indian consumer's psyche has been changed. People have
become aware of the value of money. Nowadays the Indian consumers are well versed with the concepts about
quality of products and services. These demands are the visible impacts of the Retail Sector of Indian
Economy.
Since the liberalization policy of 1990, the Indian economy, and its consumers are getting whiff of the latest
national & international products, with the help of print and electronic media. The social changes with the
rapid economic growth due to trained personnel’s, fast modernization; enhanced availableness of retail space is
the positive effects of liberalization.
The growth factors of the retail sector of Indian economy:
 Increase in per capita income which in turn increases the household consumption
 Demographical changes and improvements in the standard of living
 Change in patterns of consumption and availability of low-cost consumer credit
 Improvements in infrastructure and enhanced availability of retail space
 Entry to various sources of financing
The infrastructure of the retail sector will evolve radically. The emergence of shopping malls is going steady in
the metros and there are further plans of expansion which would lead to 150 new ones coming up by the year
2008. As the count of super markets is going up much faster than rate of growth in retail sector, it is taking the
lions share in food trade. The non-food sector, segments comprising apparel, accessories, fashion, lifestyle felt
the significant change with the emergence of new stores formats like convenience stores, mini marts, mini
supermarkets, large supermarkets, and hyper marts. Even food retailing has became an important retail
business in the national arena, with large format retail stores, establishing stores all over India. With the entry
of packaged foods like MTR, ITC Ashirbad, fast foods chains like McDonald's, KFC, beverage parlors like
Nescafe, Tata Tea, Café Coffee and Barista, the Indian food habits has been altered. This stores have earned
the reputation of being 'super saver locations'. With the arrival of the Transnational Companies (TNC), the
Indian retail sector will confront the following round of alterations. At present the Foreign Direct Investments
(FDI) is not encouraged in the Indian organized retail sector but once the TNC'S get in they would try to
muscle out their Indian counterparts. This would be challenging to the retail sector in India.
The future trends of the retail sector of Indian economy:
 The retail sector of Indian economy will grow up to 10% of total retailing by the year 2010.

13. Manoj Patel Asst. Professor
JHUNJHUNWALA BUSINESS SCHOOL, FAIZABAD
 No one single format can be assumed as there is a huge difference in cultures regionally.
 The most encouraging format now would be the hypermarts.
 The hypermart format would be further encouraged with the entry of the TNC's