Projectsformba.blogspot.com A Dissertation Report On “INDIAN RETAIL INDUSTRY TRENDS” Submitted For the Partial Fulfillment of Two Year Full Time Post Graduate Diploma in Management 2010 JAIPURIA INSTITUTE OF MANAGEMENT NOIDAProjectsformba.blogspot.com
Projectsformba.blogspot.com DECLARATIONI declare that dissertation entitled “Indian retail industry trends’’ is my own workconducted under the supervision of ………………..I further declare that to the best of my knowledge the dissertation does not contain anypart of my work, which has been submitted for the award of any diploma either in thisinstitute or any other institute without proper citationSignature of supervisor Signature of candidateProjectsformba.blogspot.com
Projectsformba.blogspot.com ACKNOWLEDGEMENTSI am deeply indebted to all who have inspired, guided and helped me in the successfulcompletion of the project. I owe debt of gratitude to them, who were so generous withtheir valuable time and expertise.I wish to express my deep sense of gratitude to my Internal Guide, …………….., for hisable guidance and useful suggestions, which helped me in completing the project work,in time.Needless to mention that ……………….., who had been a source of inspiration and forhis timely guidance in the conduct of my project work. I would also like to thank………………………. for his efforts in completing my project.Finally, yet importantly, I would like to express my heartfelt thanks to my belovedparents for their blessings, my friends/classmates for their help and wishes for thesuccessful completion of this project.Projectsformba.blogspot.com
Projectsformba.blogspot.com EXECUTIVE SUMMARYIndia is undergoing a retail revolution from the unorganized to the organized sector.There are now more modern retail formats such as hypermarkets, supermarkets andmalls. Several international companies such as Wal-Mart, Carrefour, and Tesco areplanning their entry and establishment into the Indian market while several domesticcompanies are setting up their retail setups, exclusive showrooms and large format storessuch as Reliance, Tata and the whole concept of shopping has altered in terms of formatand consumer buying behavior, ushering in a revolution in shopping in India.These trends indicate that retailing, as an industry, has come into its own. According to astudy by the Confederation of Indian Industry organized retail sales in India were a mereRs. 135 billion in 2000 but today with over 15 million outlets, that provide employmentto over 74 million people (7% of the population), the size of the retail industry stands atUSD 350 billion and it is expected to grow at a compounded 30% over the next 5 years.Retailing is an important infrastructure perquisite for modernizing India and can facilitaterapid economic growth. Modernization of all retail services would enable efficientdelivery of goods and value-added services to the consumer, making a highercontribution to the Gross Domestic Product.This project focuses on taking an in-depth analysis of retail scenario & consumer trendsas they are emerging and identify the various retailing models that would work, in theIndian retail market. The analysis is done by looking at Global retail trends vis-à-vis theones in India, the current state of the Indian retail industry, industry characteristics andEconomic drivers of change, to understand the consumer buying behavior and what itforetells about the nature of the Industry. To predict the kind of retail models that wouldwork in India, besides analyzing the existing ones, the attempt has been to predictpotentially promising formats.Projectsformba.blogspot.com
Projectsformba.blogspot.com TABLE OF CONTENTSProjectsformba.blogspot.com
S.NO. PARTICULARS P. NO. Projectsformba.blogspot.com Certificate from the mentor I Acknowledgement III Executive summary IV List of Tables VII List of Figures VIII 1. INTRODUCTION 1-13 Retailing 2 1.1.1 Origin of retail sector 3 1.1.2 How retail developed 4 1.1.3 Family business to formal structure 6 1.2 Top ten retailers 7 1.3 Traditional retail scene in India 8 1.4 Scenario of retail in India 9 1.4.1 Rural retail 11 1.4.2 Luxury retail 12 1.4.3 E-tailing 12 1.4.4 Retail franchising 13 1.4.5 Innovative retail concept 13 1.4.6 Government initiative 13 2. 14-49 RETAIL INDUSTRY STRUCTURE 2.1 The emerging section 17 2.2 Share of organized retailing 19 2.3 Sourcing hub for giant foreign retailing 20 2.4 Opportunities 21 2.5 Prevailing organized retail format 22 2.6 key challenges 24 2.7 Present Indian scenario 25 2.8 Major industry players 26 2.9 Retailing formats in India 42 REVIEW OF LITERATURE 50-58 3. 3.1 Report highlight 54 3.2 Organized retail: India vs. china 56 3.3 Growth in organized retailing 57 3.4 Unorganized Retail- The big brat 60 3.5 The Urban youth 62 OBJECTIVE AND RESEARCH 63-64 4. METHODOLOGY 4.1 Objectives and Sub-objectives of the study 63 4.2 Scope of the project 63 Projectsformba.blogspot.com 4.3 Research methodology 64 4.3.1 Exploratory Research 64 4.3.2 Research Design 64 64
Projectsformba.blogspot.com List of TablesTable 2.0: Indian Retail structure 15Table 2.1: Sector wise organized retailing in India 16Table 2.8: Formats of Major Retail Industry Players 49Table 3.4: Total Grocery Market in India 61Table 5.1.1: Monthly budget of consumer and the frequency of shopping 66Table 5.1.2: Price range available and the product range available in the store 67Table 5.1.3: Price range available and the paying extra for the well known 68 brandTable 5.1.4: Product range available in the store and the reference of the 69 friends from where he buysTable 5.1.5: Parking facility available in the store and the location of the 70 outletTable 5.1.6: Delivery facilities available for the consumer and the location of 71 the OutletTable 5.1.7: Helpful sales staff and the remember me on next visit 72Table 5.1.8: Age of the respondent & frequency of shopping 73Table 5.1.9: Age of the respondent & paying extra for well known brands 74Table 5.2.1: Average monthly shopping budget of consumer 75Table 5.2.2: Awareness of different retail sector 76Table 5.2.3: Retail chain customer like to visit often 77Table 5.2.4: Customer preference from shopping from Retail chain 78Table 5.2.5: Frequency of shopping 79Table 5.2.6: Paying extra for well known brand 80Table 5.2.7: Buys from where my friend buys 81Projectsformba.blogspot.com
Projectsformba.blogspot.comFigure 1.1.3: Family business to formal structure 7Figure 1.4: Percentage Share of retail segments in total retail sector 11Figure 1.4: Rural-Urban Share in Retail Market 12Figure 2.2: Share of Organized Retail 19Figure 2.5: Different Formats at Different Stages 23Figure 2.8.1: Pantaloons 27Figure 2.8.2: Shoppers stop 29Figure 2.8.3: Westside 31Figure 2.8.4: Piramyd 33Figure 2.8.5: Reliance fresh 35Figure 2.8.6: Bharti Wal-mart 36Figure 2.8.7: More 37Figure 2.8.8: Vishal retail 39Figure 2.8.9: Metro cash & carry 40Figure 2.8.10: Viveks 41Figure 2.9: Retail formats available in India 47Figure 3.5: Largest young Population 62 List of figures Projectsformba.blogspot.com
Projectsformba.blogspot.com CHAPTER 1 INTRODUCTIONIn 2004 a study conducted by McKinsey titled “India’s Retailing Comes of Age” hadpredicted a definite retail revolution in India. This is turning out to be very true. India isthe last among the large Asian economies to liberalize its retail sector. The “licensing raj”is long over. A number of Indian and international retailers are entering this nascent,though dynamic market. Market liberalization and increasingly assertive consumers aresowing the seeds of a retail transformation that will bring bigger Indian and multinationalplayers on to the scene. The market is huge at US $350 billion overall. The entry ofmultinational companies (MNC) has certainly transformed this sector. The supply chain,and consumer interest and awareness in branded products have been built from scratch.Presently, global players are entering India, indirectly, via the licensee/franchisee route,and more recently through joint ventures with Indian companies as partners. But as theChinese experience clearly indicates allowing FDI (with restriction) would add buoyancyto the retail sector All the major Indian cities have major commercial projects underconstruction for retail purposes. In fact, the retail sector has provided the primary boost,to the commercial property market all over India. Presently, there are over 55 largeshopping malls under development all over India. The retail sector is also gettingacceptance in the job market with more and more business schools focusing on the sectorand large retailers setting up retail academies. This sector is estimated to create 50,000jobs per year in the next five years. The Indian consumers are divided into two categories, viz., high-income urbanconsumers and low-income urban and rural consumers. The high-income urbanconsumers are willing to pay a higher price for having the choice of quality products andthe complete shopping experience in the large retail stores. But, the low-income urbanand rural consumers will go for the price sensitive products which are easily available inProjectsformba.blogspot.com
Projectsformba.blogspot.comthe smaller stores located nearby. The markets in both categories are very large andhence, there is little direct competition between the two retail sectors.As the awareness and disposable incomes increase in India, the two categories will mergeslowly, before the competition actually begins. But till then along with modern retailformats the traditional network especially the kirana stores would coexist. In fact unlikeany other “mature” retail market what will develop in India would be its own homegrownunconventional marketing mix. Since the consumer market is diverse & traditional retailhas deep socio-cultural roots it would be imprudent to emulate blindly the retail growthpath of any other country.India remains one of the last frontiers of modern retailing. The complexities of the vastand varied market will be a challenge. But the retailer who can shape the nascent retailmarket as well as adapt to India’s unique characteristics will reap larger rewards over thelong term. Industry experts say there is no magic formula that can make an averageretailers business boom.The key to generating growth lies in the willingness to invest money for some years andexperiment with different retail formats. Pantaloons Managing Director Kishore Biyaniis a case in point. From departmental store Pantaloon and the hypermarket discount storeBig Bazaar, he has diversified into other concepts, including a seamless mall calledCentral and the food and grocery home delivery vehicle called Food Bazaar on Call. Andhe says more retail concepts are welcome. So, it appears that like in any other business,he who takes the risk and innovates is most likely to succeed in retail as well!1.1RetailingThe word "Retail" originates from a French-Italian word. Retailer someone who cuts offor sheds a small piece from something. Retailing is the set of activities that marketsproducts or services to final consumers for their own personal or household use. It doesthis by organizing their availability on a relatively large scale and supplying them tocustomers on a relatively small scale. Retailer is a Person or Agent or Agency orProjectsformba.blogspot.com
Projectsformba.blogspot.comCompany or Organization who is instrumental in reaching the Goods or Merchandise orServices to the End User or Ultimate Consumer.Retailing is the final step in the distribution of merchandise - the last link in the SupplyChain - connection the bulk producers of commodities to the final consumers. Retailingcovers diverse products such as apparels, consumer goods, financial services and leisure.A retailer, typically, is someone who does not affect any significant change in the productexecs breaking the bulk. He/ She is also the final stock point who makes products orservices available to the consumer whenever require. Hence, the value proposition aretailer offers to a consumer is easy availabilities of the desired product in the desiredsizes at the desired times.In the developed countries, the retail industry has developed into a full-fledged industrywhere more than three-fourths of the total retail trade is done by the organized sector.Huge retail chains like Wall-Mart, Carr four Group, Sears, K-Mart, McDonalds, etc havenow replaced the individual small stores. Large retail formats, with high quality ambianceand courteous, and well-trained sales states are regular features of these retailer.1.1.1 Origin of Retail Sector:Early Trade:When man started to cultivate and harvest the land, he would occasionally find himselfwith a surplus of goods. Once the needs of his family and local community were met, hewould attempt to trade his goods for different goods produced elsewhere. Thus marketswere formed. These early efforts to swap goods developed into more formal gatherings.When a producer who had a surplus could not find another producer with suitableproducts to swap, he may have allowed others to owe him goods. Thus early credit termswould have been developed. This would have led to symbolic representations of suchdebts in the form of valuable items (such as gemstones or beads), and eventually money.Projectsformba.blogspot.com
Projectsformba.blogspot.com1.1.2 HOW RETAIL DEVELOPED:Peddlers and Producers:The Retail Trade is rooted in two groups, the peddlers and producers. Peddlers tended tobe opportunistic in their choice of stock and customer. They would purchase any goodsthat they thought they could sell for a profit. Producers were interested in selling goodsthat they had produced.General Store:This division continues to this day with some shops specializing in specific areas,reflecting their origins as outlets for producers (such as Pacific Concord of Hong Kong),and others providing a broad mix, known as General Store (such as Caseys in theMidwest of the U.S.A.).Although specialist shops are still with us, over time, the general store has increasinglytaken on specialist products. Customers have found this to be more convenient thanhaving to visit many shops - thus the term "Convenience Store" has also been applied tothese shops. As the popularity of general stores has grown, so has their size. Thiscombined with the advent of Self-Service has lead to the Supermarket, or Superstore.Early Markets:Over time, producers would have seen value in deliberately over-producing in order toprofit from selling these goods. Merchants would also have begun to appear. They wouldtravel from village to village, purchasing these goods and selling them for a profit. Overtime, both producers and merchants would regularly take their goods to one selling placein the centre of the community. Thus, regular markets appeared. The First Shop:Eventually, markets would become permanent fixtures i.e. shops. These shops along withthe logistics required to get the goods to them were, the start of the Retail Trade.Projectsformba.blogspot.com
Projectsformba.blogspot.comThe Birth of Distance Retailing:Defined as sales of goods between two distant parties where the deliverer has no directinterest in the transaction, the earliest instances of distance retailing probably coincidedwith the first regular delivery or postal services. Such services would have started inearnest once man had learned how to ride a camel, horse etc.When individuals or groups left their community and settled elsewhere, some missedfoodstuffs and other goods that were only available in their birthplace. They arranged forsome of these goods to be sent to them. Others in their newly adopted communityenjoyed these goods and demand grew. Similarly, new settlers discovered goods in theirnew surroundings that they dispatched back to their birthplace, and once again, demandgrew. This soon turned into a regular trade. Although such trading routes expandedmainly through the growth of traveling salesmen and then wholesalers, there were stillinstances where individuals purchased goods at long distance for their own use. A secondreason that distant selling increased was through war. As armies marched throughterritories, they laid down communication lines stretching from their home base to thefront. As well as garnering goods from whichever locality they found themselves in, theywould have also taken advantage of the lines of communication to order goods fromhome.Origins of RetailIt is likely that, as markets became more permanent fixtures they evolved into shops.Although advantageous in many respects, this removed the mobility that a peddler ortraveling merchant may still have enjoyed. For some shopkeepers, it made sense to obtainextra stock and open up another shop, most probably operated by another family member.This would recover business from peddlers and create new business and the greatervolume would allow the shopkeeper to strike a better deal with suppliers. Thus the retailchain would have started. Its thought that this process would have started in china over2200 years ago with a chain of shops owned by a trader called Lo Kass.Projectsformba.blogspot.com
Projectsformba.blogspot.comThe First Self-Service Store:This all changed in 1915 when Albert Gerrard opened the Groceteria in Los Angeles, thefirst documented self-service store. This was soon followed a year later by the PigglyWiggly® self-service store, founded by Clarence Saunders in Tennessee in the U.S.Growth:This new type of shopping was more efficient and many customers preferred it. Althoughpersonal service stores remain to this day, this new concept started a rapid growth of self-service stores in the United States. Other countries were slow to take up the idea, butthere has been a steady rise in the global amount of self-service stores ever since.EfficiencyThese entrepreneurs noticed that their staff had to spend a great deal of time takinggrocery orders from customers. The groceries were stacked on shelves allowingcustomers to walk around and browse, collecting their shopping in a basket that wassupplied. The shopkeeper would only need to tot up the final bill at the end of the processand transfer the goods from the basket to the customer and receive payment.1.1.3 Family Business to Formal Structure:Although retail chains would have been mostly run by families, as some chains grew,they would have needed to employ people from outside of their family. This was alimiting factor as there would have been a limit to the amount of trusted non familymembers available to help run the chain. Another, even more definite limiting factor wasthe distance the furthest shop would have been from the original shop. The greater thedistance, the more time and effort would have been needed to effectively manage outpostshops and to service them with goods. There was, therefore, a natural barrier toexpansion. That was the case until transport and communications became faster and morereliable. When this happened towards the end of the 19th century, chains became muchProjectsformba.blogspot.com
Projectsformba.blogspot.combigger and more widespread. Many of these businesses became more structured andformalized, leading to the retail chain that we see today.Fig: 1.1.3 Source-Indian retail report-2004 (www.imagesretail.com)1.2 Top Ten Retailers WorldwideRank Retailer No of stores owned Sales in FY-00 US$ Millions1 Wall-Mart Stores Inc. (USA) 4178 $180,7872 Carrefour Group (France) 8130 $61,0473 The Kroger Co. (USA) 3445 $49,0004 The Home Depot, Inc. (USA) 1134 $45,7385 Royal Ahold (Netherlands) 7150 $45,7296 Metro AG (Germany) 2169 $44,1897 Kmart Corporation (USA) 2105 $37,0288 Sears, Roebuck and Co. (USA) 2231 $36,8239 Albertsons, Inc. (USA) 2512 $36,726Projectsformba.blogspot.com
Projectsformba.blogspot.com10 Target Corporation (USA) 1307 $36,362Source: (www.india-reports.com/retail-reports.aspx)Broadly the organized retail sector can be divided into two segments, In-Store Retailers,Who operate fixed point-of-sale locations, located and designed to attract a high volumeof walk-in customers, and the Non-Store Retailers, who reach out to the customers attheir homes or offices.Apart from using the internet for communication (commonly called e-tailing), Non-Storeretailers did business by broadcasting of infomercials, broadcasting and publishing ofdirect-response advertising publishing of traditional and electronic catalogues, door-to-door solicitation, a temporary displaying of merchandise (stalls).1.3 TRADITIONAL RETAIL SCENE IN INDIAIndia is the country having the most unorganized retail market. Traditionally the retailbusiness is run by Mom & Pop having Shop in the front & house at the back. More than99% retailers function in less than 500Sq.Ft of area. All the merchandise was purchasedas per the test & vim and fancies of the proprietor also the pricing was done on ad hockbasis or by seeing at the face of customer. Generally the accounts of trading & home arenot maintained separately. Profits were accumulated in slow moving & non-movingstocks which were to become redundant or consumed in-house. Thus profits werevanished without their knowledge. The Manufactures were to distribute goods through C& F agents to Distributors & Wholesalers. Retailers happen to source the merchandisefrom Wholesalers & reach to end-users. The merchandise price used to get inflated to agreat extent till it reaches from Manufacturer to End-user. Selling prices were largely notcontrolled by Manufacturers. Branding was not an issue for majority of customers. Morethan 99% customers are price sensitive & not quality or Brand Sensitive at the same timethey are Brand conscious also. Weekly Bazaar in many small tows was held & almost allthe commodities were on the scene including livestock. Bargaining was the unwritten lawof market. Educational qualification level of these retailers was always low. Hencemarket was controlled by handful of distributors &/or Wholesalers. Virtually there wasProjectsformba.blogspot.com
Projectsformba.blogspot.comonly one format of retailing & that was mass retail. Retailer to consumer ratio was verylow, for all the categories without exception. Varity in terms of quality, Styles were onregional basis, community based & truly very low range was available at any given singleplace. Almost all the purchases / (buying) by mass population was need oriented & nextturn may be on festivals, Marriages, Birthdays & some specific occasions.Impulsive buying or consumption is restricted to food or vegetables etc. Having extra pairof trousers or Shirts or Casuals & Formals & leisure wear & sports wear & different pairof shoes for occasions is till date is a luxury for majority population except for thoseliving in Metros. Purchasing power of Indian urban consumer is very low and that ofBranded merchandise in categories like Apparels, Cosmetics, Shoes, Watches,Beverages, Food, Jewellery, are slowly seeping into the lifeline of Indian City folks.However electronic & electrical home appliances do hold appropriate image into theminds of consumers. Brand name does matter in these white goods categories. In thecoming times also majority of organized retailers will find it difficult to keep balancewith rest of the unbranded retail market which is very huge.1.4 SCENARIO OF RETAILING IN INDIARetailing is the most active and attractive sector of last decade. While the retailingindustry itself has been present since ages in our country, it is only the recent past that ithas witnessed so much dynamism. The emergence of retailing in India has more to dowith the increased purchasing power of buyers, especially post-liberalization, increase inproduct variety, and increase in economies of scale, with the aid of modern supply anddistributions solution.Emerging markets such as India and China are the final frontier for retail taking the focusaway from saturated Western markets. Since 2001, 49 global retailers entered 90 newmarkets, but at the same time, 17 retailers left markets in 2005.Projectsformba.blogspot.com
Projectsformba.blogspot.comThe Indian retail industry in valued at about $300 billion and is expected to grow to $427billion in 2010 and $637 billion in 2015. Only three percent of Indian retail is organized.Retailers of multiple brands can operate through a franchise or a cash-and-carrywholesale model.Retail is India’s largest industry, accounting for over 10 percent of the country’s GDPand around eight percent of employment. Retail in India is at the crossroads. It hasemerged as one of the most dynamic and fast paced industries with several playersentering the market. That said, the heavy initial investments required make break evenhard to achieve and many players have not tasted success to date. However, the future ispromising; the market is growing, government policies are becoming more favorable andemerging technologies are facilitating operations.Retailing in India is gradually inching its way to becoming the next boom industry. Thewhole concept of shopping has altered in terms of format and consumer buying behavior,ushering in a revolution in shopping. Modern retail has entered India as seen in sprawlingshopping centers, multi-storied malls and huge complexes offer shopping, entertainmentand food all under one roof.The Indian retailing sector is at an inflexion point where the growth of organized retailand growth in the consumption by Indians is going to adopt a higher growth trajectory.The Indian population is witnessing a significant change in its demographics. A largeyoung working population with median age of 24 years, nuclear families in urban areas,along with increasing working-women population and emerging opportunities in theservices sector are going to be the key growth drivers of the organized retail sector.Indian retailing today is at an interesting crossroads. The retail sales are at the highestpoint in history and new technologies are improving retail productivity. Though there aremany opportunities to start a new retail business, retailers are facing numerouschallenges.Projectsformba.blogspot.com
Projectsformba.blogspot.comThe Indian retail market is literally on the go. The share of retail trade in the countrysgross domestic product was between 8–10 per cent in 2007. It is currently around 12 percent, and is likely to reach 22 per cent by 2010.The Indian retail market, which is the fifth largest retail destination globally, was ranked2nd after Vietnam as the most attractive emerging market destination for investment inthe retail sector, by AT Kearneys seventh annual Global Retail Development Index(GRDI), in 2008.Continuing the robust growth of the organized retail in India, according to the CreditRating and Information Services of India, the industry raked in US$ 25.44 billionturnover in 2007–08, as against US$ 16.99 billion in 2006–07— a whopping growth rateof 49.73 per cent.India has one of the largest numbers of retail outlets in the world. Of the 12 million retailoutlets present in the country, nearly five million sell food and related products. Thoughtthe market has been dominated by unorganized players, the entry of domestic andinternational organized players is set to change the scenario. Fig: 1.4 Source-KSA techno pak (www.imagesretail.com)1.4.1 Rural retailProjectsformba.blogspot.com
Projectsformba.blogspot.comLed by the rising purchasing power, changing consumption patterns, increased access toinformation and communication technology and improving infrastructure, rural retailmarket is estimated to cross US$ 45.32 billion mark by 2010 and US$ 60.43 billion by2015, according to a study by Confederation of Indian Industry (CII) and YES Bank.The rural retail market in 2008 has grown at 25 per cent compared to the 7–10 per centgrowth rate of the urban consumer retail market. With 87 per cent of rural markets nothaving access to any sort of organised marketing and distribution, this segment hastremendous potential for growth. Fig: 1.4.1 Source- KSA techno pak (www.imagesretail.com)1.4.2 Luxury retailBy the next four to five years, India is expected to become a manufacturing hub forglobal luxury brands, according to a FICCI-Yes Bank report on luxury brands. The reportstates that India has the most rapidly growing High-Networth Individuals (HNI)population in the world, and the income level of consumers is expected to grow threetimes by 2025. The active age group (25–45 years) is likely to rise to a third of thepopulation.1.4.3 E-tailingProjectsformba.blogspot.com
Projectsformba.blogspot.comThe increase in the personal computers (PC) and Internet penetration along with thegrowing preference of Indian consumers to shop online has given a tremendous boost toe-tailing the online version of retail shopping. An estimated 10 per cent of the total e-commerce market is accounted by e-tailing. Several online retailers are reporting goodbusiness in categories like travel, art, books and music. E-tailing in lingerie and freshfruit businesses is also doing well.1.4.4 Retail FranchisingAlong with e-tailing another perceptible trend in the growth of organized retail markethas been the concept of retail franchising. According to industry estimates, retailfranchising has been growing at the rate of 60 per cent in the last three years and is set togrow two-fold in the next five years. And with immense potential seen in this segment,the US$ 4 billion-franchising industry is likely to see almost two-fold rise in the numberof franchisees (from 0.2 million) by 2010.1.4.5 Innovative retail conceptsWith the entry of new players and the market becoming increasingly competitive, retailplayers are using innovative retail concepts to attract consumers. With the US$ 6.31billion pharma retailing becoming progressively more organized, players are now lookingat newer formats to attract more people to their stores. Pharmacy chains like Med Plusand Good life have started providing health check-ups, diagnostic services, dental careand medical counseling to its patients, besides selling pharma and wellness products.1.4.6 Government initiativesThe Government allows 100 per cent foreign direct investment (FDI) in cash and carrythrough the automatic route and 51 per cent in single brand. Besides, the franchise routeis available for big operators. To further attract global retailers, the economic survey2007–08 has suggested a share for foreign equity in all retail trade and 100 per cent inrespect of luxury brands and other specialized retail chains. However, the Indian tariffstructure has to be streamlined as India levies one of the highest duties and taxes onProjectsformba.blogspot.com
Projectsformba.blogspot.comimported luxury goods. This fuels the growth of the grey market and duty-free purchases,even as the stringent regulatory environment encumbers investment by foreign brands. CHAPTER 2 RETAIL INDUSTRY STRUCTUREWorld over, the retail segment has performed exceptionally since its inception in the 20thcentury. It is currently the biggest industry in the world with sales of $7.2 trillion, every10th billionaire in the world today is a retailer and 25 of the top 50 Fortune 500companies are in retail.The Indian retail story couldnt have been more different. India has approx 15 millionretail stores, more than rest of the world put together. But the per capita square feet areaunder retail is just 2 sq.ft or 0.2 sq. meters with fragmented kirana stores being thepredominant players. Retailing in India had remained in the unorganized sector andlargely untouched by corporates till very recently. However, times are changing.. Withthe GDP at an all time high and income levels shooting through the roof, the averageIndian consumer has never had it so good. Credit cards are flashed with disdain andshopping baskets are getting bigger all the time. Following are some factors that indicatethe potential of retail in India: At 271 million, India has one of the largest consumer base in the world, forming 27% of the total population A high spending community below 45 years comprises 81 percent of the population A young population with 54% population below 25 years Increased literacy from 44% in 1965 to 70% in 2003 Increase in workingwomen from 1.3 million in 1961 to 4.8 million in 1998 Increase in media penetration to 38-million cable household and 80-million TV household in 2001Projectsformba.blogspot.com
Projectsformba.blogspot.com India Retail Structure Retail Formats 2002 2003 Total Grocery Outlets 5,170,709 6,037,738 Traditional grocery outlets 4,525,264 5,273,310 Supermarkets 175 2,314 Other grocery outlets 645,270 762,114 Total Drugstores 352,786 405,743 Traditional medical/drugstores 247,582 276,058 Cosmetic stores 105,204 129,685 Table- 2.0 Source: Business world Marketing White book 2005The overall size of the retail market in India is estimated at Rs 9300 billion (2003-04) andis expected to have grown at 5% p.a. making organized retailing a Rs 350 billion marketin 2005 according to INDIA RETAIL REPORT 2005. Currently, the sector is highlyfragmented and dominated by small individually owned businesses. In a developingcountry like India, bulk of consumer expenditure is on basic necessities, especially foodrelated items. Hence, it is not surprising that food, beverages and tobacco accounted foras much as 71per cent of retail sales in 2002. The remaining 29 per cent of retail sales arenon-food items. The share of food related items has declined from 73 per cent in 1999, aswith income growth, Indians, like consumers elsewhere, spent more on non-food itemscompared with food products.In the years to come the top 6 cities are expected to account for 66% of the organizedretail market While in the department stores, the share of the fashion wares will be over95%, in hypermarkets like Big Bazaar the share could go as high as 70%. It will befashion again that will see maximum growth in terms of organized retail expansion withover 1000 branded exclusive showrooms and over 20 large department stores opening inthe next two years. In a survey carried out in February 2002 on the % share of differentProjectsformba.blogspot.com
Projectsformba.blogspot.comproducts in the total sales of top department stores, apparel forms 73%, Jewellery, wristwear & fashion accessories 10%, home furnishings 7%, cosmetic and fragrance as 5%and footwear 1%. Sector wise organized retailing in India SEGMENT MARKET SIZE (US$ Million) Textiles and clothing 900 Jewellery 555 Consumer Durables 335 Footwear 335 Food and Personal care 225 Non-store retail 200 Luggage, watches and tyre 115 Books and Music 90 Table 2.1 Source: Business world Marketing White book 2005Franchising has emerged as a popular mode of retailing, thanks to economicliberalization, competition and foreign investment since the 1990s, which led to aproliferation of brands with both foreign and Indian companies acquiring strong brandequity for their products. Sales of franchises grew at a rapid pace of 14per cent perannum since 1999. In 2002, there were over 5,000 franchised outletsThe other major retailing organization format is multiples, better known as "chain stores"in India. In 2002, there were about 1,800 chain stores. Among the various organizationalformats, sales of chain stores grew at the fastest pace, with sales growth during1999-2002 averaging 24 per cent per year.An Images Retail Study on Shopping Habits & Lifestyle of consumers in India indicatesthat that the shopping frequency is highest in Mumbai.Stocks in the retail sector are also becoming increasingly attractive from an investor’spoint of view. Successful development of value based concepts as well as development ofretail space in smaller cities and towns are beginning to drive organized retail into theProjectsformba.blogspot.com
Projectsformba.blogspot.comnext levels of cities. Retailers have responded to this phenomenon by introducingcontemporary retail formats such as hypermarkets and supermarkets in the new pocketsof growth. Prominent ‘tier-II’ cities and towns which are witnessing a pick-up in activityinclude Surat, Lucknow, Dehradun, Vijaywada, Bhopal, Indore, Vadodara, Coimbatore,Nasik, Bhubaneswar, Varanasi and Ludhiana among others. With consumption in metrosalready being exploited, manufacturers and retailers of products such as personalcomputers, mobile phones, automobiles, consumer durables, financial services etc areincreasingly targeting consumers in tier II cities and towns.In addition, petro-retailing efforts of petroleum giants scattered throughout the country’slandscape have also ensured that smaller towns get exposed to modern retailing formats.On the supply side, mall development activity in the small towns is also picking up at arapid pace, thereby, creating quality space for retailers to fulfill their aggressiveexpansion plans. Thus, the ‘retail boom’, 85% of which has so far been concentrated inthe metros is beginning to percolate down to smaller cities and towns. The contribution ofthese tier-II cities to total organized retailing sales is expected to grow to 20-25%.2.1 The emerging sectorsRetailing, one of the largest sectors in the global economy, is going through a transitionphase not only in India but the world over. For a long time, the corner grocery store wasthe only choice available to the consumer, especially in the urban areas. This is slowlygiving way to international formats of retailing. The traditional food and grocery segmenthas seen the emergence of supermarkets/grocery chains (Food World, Nilgiris, ApnaBazaar), convenience stores (Convenience, HP Speedmart) and fast-food chains(McDonalds, Dominos).It is the non-food segment; however that foray has been made into a variety of newsectors. These include lifestyle/fashion segments (Shoppers Stop, Globus, LifeStyle,Westside), apparel/accessories (Pantaloon, Levis, Reebok), books/music/gifts (Archies,Music World, Crosswords, Landmark), appliances and consumer durables (Viveks,Jainsons, Vasant & Co.), drugs and pharmacy (Health and Glow, Apollo).Projectsformba.blogspot.com
Projectsformba.blogspot.comThe emergence of new sectors has been accompanied by changes in existing formats aswell as the beginning of new formats: • Hypermarts: • Large supermarkets, typically 3,500-5,000 sq. ft. • Mini supermarkets, typically 1,000-2,000 sq. ft. • Convenience stores, typically 750-1,000sq. ft. • Discount/shopping list grocerThe traditional grocers, by introducing self-service formats as well as value addedservices such as credit and home delivery, have tried to redefine themselves. However,the boom in retailing has been confined primarily to the urban markets in the country.Even there, large chunks are yet to feel the impact of organised retailing. There are twoprimary reasons for this. First, the modern retailer is yet to feel the saturation effect inthe urban market and has, therefore, probably not looked at the other markets asseriously. Second, the modern retailing trend, despite its cost-effectiveness, has come tobe identified with lifestyles.In order to appeal to all classes of the society, retail stores would have to identify withdifferent lifestyles. In a sense, this trend is already visible with the emergence of storeswith an essentially `value for money image. The attractiveness of the other storesactually appeals to the existing affluent class as well as those who aspire for to be part ofthis class. Hence, one can assume that the retailing revolution is emerging along the linesof the economic evolution of society2.2 SHARE OF ORGANISED RETAILProjectsformba.blogspot.com
Projectsformba.blogspot.comFig- 2.2 source: KPMG analysis and retailers of India(www.in.kpmg.com/TL_Files/Pictures/Indian_Retail_Mar09)Organised retailing is spreading and making its presence felt in different parts of thecountry. The trend in grocery retailing, however, has been slightly different with a growthconcentration in the South.However, the Mecca of retailing is undoubtedly Chennai. What was considered a`traditional, conservative and `cost-conscious market, proved to be the home ground formost of the successful retail names – Food World, Music World, Health and Glow, Vitan,Subhiksha and Viveks -to name a few.The choice of Chennai as the `retail capital has surprised many, but a variety of factorsacted in its favour. Chennai, in spite of being a rapidly growing metropolis offersProjectsformba.blogspot.com
Projectsformba.blogspot.comreasonable real estate prices, one of the most critical elements for the industry. Chennaihas been witnessing a high industrial growth and increasing presence of the MNCs, bothin the IT sector as well as outside it. The industrial boom has led to the emergence of newresidential areas with aggregation of professionals as well as a rapid increase in thenumber of `double-income households and growth of the nouveau riche/upper middleclass with increased purchasing power. These have been combined with the increasingneed for touch and feel shopping (especially for the large migrant population). All thefactors have acted favourably in nurturing the industry.2.3 SOURCING HUB FOR GIANT FOREIGN RETAILERSFavorable demographic and psychographic changes relating to India’s consumer class,international exposure, availability of increasing quality retail space, wider availability ofproducts and brand communication are some of the factors that are driving the retail inIndia. Simultaneously as many international retailers have entered the Indian market onthe strength of raising affluence levels of the young Indian population along with theheightened awareness of global brands and international shopping experiences and theincreased availability of retail real estate space some giant retailers have contributed tothe development of India as a sourcing hub. Retailers like Wal-Mart, GAP, Tesco, JCPenney, H&M, Karstadt-Quelle etc stepping up their sourcing requirements from Indiaand moving from third-party buying offices to establishing their own whollyowned/wholly managed sourcing & buying offices, which shall further make India anattractive retail opportunity for the global players. . Buying volumes for many of theseplayers are already in the range of INR 10-20 billion per year, with reported plans to stepup to INR 100-150 billion within the next 3-4 years.2005 saw goods worth $3 billionbeing sourced from India, of which $1billion was bought by Wal-Mart alone.2.4 OPPORTUNITIESProjectsformba.blogspot.com
Projectsformba.blogspot.comWholesale trading is an area, which has potential for rapid growth. German giant MetroAG and South African Shoprite Holdings have already made headway in this segment bysetting up stores selling merchandise on a wholesale basis in Bangalore and Mumbairespectively. These new-format cash-and-carry stores attract large volumes from asizeable number of retailers who do not have to maintain relationships with multiplesuppliers for all their needs.Rural RetailingOf late, Indias largely rural population has also caught the eye of retailers looking fornew areas of growth. ITC launched the countrys first rural mall ‘ Chaupal Sagar ,offering a diverse product range from FMCG to electronics appliance to automobiles,attempting to provide farmers a one-stop destination for all of their needs. There has beenyet another initiative by the DCM Sriram Group called the ‘ Hariyali Bazaar , that hasinitially started off by providing farm related inputs and services but plans to introducethe complete shopping basket in due course. Other corporate bodies include Escorts, andTata Chemicals (with Tata Kisan Sansar) setting up agri-stores to provideproducts/services targeted at the farmer in order to tap the vast rural market.Commenting on the Rural Retailing chapter in INDIA RETAIL REPORT 2005, Mr. AdiB. Godrej, Chairman, The Godrej Group (Indias one of the leading corporate majors)said that his group had also launched the concept of agri-stores named Adhaar, whichserved as one-stop shops for farmers selling agricultural products such as fertilisers &animal feed and also providing farmers knowledge on how to effectively utilise theseproducts. "There are 8 stores already operating in Maharashtra and Gujarat and furtherexpansion is very much on the cards. he added.FDI could indeed do a lot in this sector as entry of international retailers would bring inthe required expertise to set the supply chain in place which would result in eliminationof wastage, better prices and quality for consumers and higher income for farmers besidesof course farm produce retailing getting a facelift, said Mr. Godrej. Tapping the freshProjectsformba.blogspot.com
Projectsformba.blogspot.comfarm produce sector, the group plans to take its recently launched retail concept –Natures Basket - to newer cities steadily. Godrej Groups Agro and Food division, GodrejAgrovet Ltd. (GAVL) operates the format, selling a variety of vegetables, fruits and herbs- both local and exotic thereby introducing the concept of farm-to-plate to urbanites.Godrej plans to open four more Natures Basket stores in Mumbai before taking themnational. Setting up cost of a store is about INR 5-10 million and per stores sales areexpected in the range of INR 30- Rs 50 million a year.Interestingly, the worlds largest corporation, Wall-mart, also had its roots in ruralAmerica. Unlike many other retailers who started from urban centers and then trickleddown to rural areas, Wall-mart had started from rural areas and then came closer to citiesover a period of time. Many more such concepts are likely to be tested in the future asmarketers and retailers begin to acknowledge that the rural consumer is more than a ‘poorcousin of the urban counterpart. The IMAGES KSA Report avers that these concepts arelikely to go a long way in bringing a huge untapped population within the purview oforganized retailing, thereby, increasing the size of the total market.2.5 PREVAILING ORGANIZED RETAIL FORMATSEach of the retail stars that we know of has identified and settled into a feasible andsustainable business model of its own. • Shoppers Stop, Lifestyle - department store format • Westside - emulated the Marks & Spencer model of 100 per cent private label, very good value for money merchandise for the entire family • Giant and Big Bazaar - hypermarket/cash & carry store • Food World and Nilgiris, Nature’s Basket – supermarket format • Pantaloons and The Home Store - specialty retailing • Tanishq has very successfully pioneered a very high quality organized retail business in fine jewellery.Projectsformba.blogspot.com
Projectsformba.blogspot.com Fig: 2.5 Source- KSA analyses (www.k-space.com)A new entrant in the retail environment is the discounter format. It is also is known ascash and- carry or hypermarket. These formats usually work on bulk buying and bulkselling. Shopping experience in terms of ambience or the service is not the mainstay here.RPG group had set up the first discounter in Hyderabad called the Giant. Now Pantaloonis following suit with Big BazaarTwo categories of customers visit these retail outlets. 1. The small retailer. For example, a customer of Giant could be a dhabawala who needs to buy edible oil in bulk. 2. The regular consumer who spends on big volumes (large pack sizes) because of a price advantage per unit.Projectsformba.blogspot.com
Projectsformba.blogspot.com2.6 KEY CHALLENGES1) Location"Right Place, Right choice"Location is the most important ingredient for any business that relies on customers, and istypically the prime consideration in a customers store choice. Locations decisions areharder to change because retailers have to either make sustainable investments to buy anddevelop real estate or commit to long term lease with developers. When formulatingdecision about where to locate, the retailer must refer to the strategic plan: • Investigate alternative trading areas. • Determine the type of desirable store location • Evaluate alternative specific store sites2) MerchandiseThe primary goal of the most retailers is to sell the right kind of merchandise and nothingis more central to the strategic thrust of the retailing firm. Merchandising consists ofactivities involved in acquiring particular goods and services and making them availableat a place, time and quantity that enable the retailer to reach its goals. Merchandising isperhaps, the most important function for any retail organization, as it decides what finallygoes on shelf of the store.3) PricingPricing is a crucial strategic variable due to its direct relationship with a firms goal andits interaction with other retailing elements. The importance of pricing decisions isgrowing because todays customers are looking for good value when they buymerchandise and services. Price is the easiest and quickest variable to change.Projectsformba.blogspot.com
Projectsformba.blogspot.com4) Target Audience"Consumer the prime mover""Consumer Pull", however, seems to be the most important driving factor behind thesustenance of the industry. The purchasing power of the customers has increased to agreat extent, with the influencing the retail industry to a great extent, a variety of otherfactors also seem to fuel the retailing boom.5) Scale of OperationsScale of operations includes all the supply chain activities, which are carried out in thebusiness. It is one of the challenges that the Indian retailers are facing. The cost ofbusiness operations is very high in India.2.7 PRESENT INDIAN SCENARIO • 720 million Indians to join consuming age by 2010 • 55% of the Indian population will be under 20 years of age by 2015 • 32% rise in urbanization by 2008 • 10% annual growth in Retail market since 2000 • 7% of the population is engaged in retailing • A booming US$ 300 billion retail market in India • 5.5 retail outlets per 1000 population, highest in the world • 25-30% annual growth in retail loans and credit cards • The organized retail sector currently accounts for around 5 per cent of the Indian retail market.Projectsformba.blogspot.com
Projectsformba.blogspot.com • Organized Retail is predicted to capture 15 – 20% market share by 2010. • Over 100 malls of over 30 million sq feet of new shopping centre space are projected to open in India between 2009 and end-2010.2.8 Major Industry PlayersNanz in North India, Nilgiris in the South, Pantaloon in the East and Crossroad in theWest were the pioneers of the retail revolution in India. Nanz faced several obstacles (SeeCase Study) in their business and had to finally down their shutters. Nilgiris, due to somestrange reason, did not see any logic to expand beyond the southern frontiers. Pantaloonwent to scale up and become bigger and bigger to form the Future Group, that is nowomnipresent in almost all formats right from small groceries to e-tailing. Crossroads inMumbai imparted some valuable lessons to their parent, the Piramyd Group, who hassince then gone on an expansion drive with other formats of retailing in different cities.The big players in Indian retail landscape now are the Future Group, Shoppers Stop,Westside, Subiksha and RPG Spencer. The newcomers who are knocking at the gates areReliance Retail, Bharti Walmart and Aditya Birla Trinethra. Here, we intend to do a briefprofiling of the major players in order to understand the retail business in a better manner.The Future GroupThe Future Group, which was earlier known as PRIL (Pantaloon Retail India Limited)began as a trouser manufacturer in the mid 1980s. The Future Group is divided into sixverticals – Future Retail, Future Capital, Future Brands, Future Space, Future Media andFuture Logistics. The Future Group started operations in the mid 1987s by incorporatingthe company as Manz Wear Private Limited. The company went on to manufacturereadymade trousers under the “Pantaloons” brand name. It came out with a public issuein 1991 and later changed their name to Pantaloon Fashions (India) Limited (PFIL).Projectsformba.blogspot.com
Projectsformba.blogspot.comThe first exclusive men’s store called Pantaloon Shoppe was inaugurated in 1992.Pantaloons went for a franchisee route to expand the number of retail outlets and by1995, it had reached to a crucial number of 70. The first departmental store calledPantaloons was opened in Kolkata in 1997 with an investment of Rs 0.7 million. Thestore was a success and recorded revenues of Rs 100 million within the first year ofoperations. In 1999, the company’s name was changed to Pantaloon Retail (India)Limited (PRIL).The success of Pantaloons departmental stores encouraged PRIL to come up with otherretailing formats such as “Big Bazaar” to retail low cost general merchandising, and“Food Bazaar” to retail food products. As of 2005, the Future Group has 3.5 million sq ftof retail space and over 100 stores across 25 cities in India. It employs more than 12,000people and has a customer base of more than 120 million.Kishore Biyani, the promoter of the group who likes to address himself as “ChiefKnowledge Officer” has plans to launch 18 formats and over 3,340 stores, therebyturning the Future Group into a US$7 billion company with over US$1 billion in profitsby the year 2010. Fig-2.8.1Shoppers StopProjectsformba.blogspot.com
Projectsformba.blogspot.comShoppers’ Stop, promoted by the real estate group K Raheja, was one of the first moversto have set up a large retail outlet in New Delhi with international ambience. Shopper’sStop Ltd now has a considerable presence all over the country with 36api 7 lakh squarefeet of retail space and stocks over 200 brands of garments and accessories. The storesare spread all over India with presence in Mumbai, Delhi, Bangalore, Hyderabad, Jaipur,Pune , Kolkata, Gurgaon, Chennai & Ghaziabad.Shoppers’ Stop is also very well known for having pioneered several quality retailingconcepts in India like CROSSWORD, HyperCITY and Mothercare. They are the onlyretailer from India to become a member of the prestigious Intercontinental Group ofDepartmental Stores (IGDS).Shoppers’ Stop is positioned as a family store delivering a complete shopping experience.With its wide range of merchandise, exclusive shop-in-shop counters of internationalbrands and world-class customer service, Shoppers’ Stop brought international standardsof shopping to the Indian consumer providing them with a world class shoppingexperience. Shoppers’ Stop’s core customers represent a strong SEC A skew. They fallbetween the age group of 16 years to 35 years, the majority of them being families andyoung couples with a monthly household income above Rs. 20,000/- and an annual spendof Rs.1,50,000/-. A large number of Non – Resident Indians visit the shop for ethnicclothes in the international environment they are accustomed to.The stores offer a complete range of apparel and lifestyle accessories for the entirefamily. From apparel brands like Provogue, Color Plus, Arrow, Levi’s, Scullers, Zodiacto cosmetic brands like Lakme, Chambor, Le Teint Ricci etc., Shoppers’ Stop caters toalmost every lifestyle need.Projectsformba.blogspot.com
Projectsformba.blogspot.com Fig-2.8.2Shoppers’ Stop also retails its own line of clothing namely Stop, Life , Kashish, VettorioFratini and DIY. The merchandise at Shoppers’ Stop is sold at a quality and priceassurance backed by its guarantee stamp on every bill.Shoppers’ Stop’s customer loyalty program is called “The First Citizen”. The programoffers its members an opportunity to collect points and avail of innumerable specialbenefits. Currently, Shoppers’ Stop has a database of over 2.5 lakh members whocontribute to nearly 50% of the total sales of Shoppers’ Stop.The Organization, in 2000, along with ICICI ventures also acquired the reputedbookstore, “Crossword”, which offers the widest range of books along with CD-ROM,music, stationery and toys. Services like Dial-a-book, Fax-a-book and Email-a-bookenable customers to shop from their homes. Crossword currently has 18 Stores.Realizing the role of IT way back in 1991, Shoppers’ Stop was among the first fewretailers to use scanners and barcodes and completely capitalize its operations. Today it isone of the few stores in India to have retail ERP in place, which is now being integratedwith Oracle Financials and the Arthur Planning System, the best retail planning system inthe world. With the help of the ERP, they are able to replicate stores, open new storesfaster and get information about merchandise and customers online, which reduces theturnaround time in taking quick decision.Projectsformba.blogspot.com
Projectsformba.blogspot.comShoppers Stop has been very keen to understand the importance of distribution andlogistics in ensuring that merchandise is available on the shop floors. This has led theretail chain o streamline its supply chain. The company has developed process manualsfor each part of the logistics chain. These modules include vendor management, purchaseorder management, stock receiving systems, purchase verification and inventory buildup,generation and fixing of price and store tags, dispatch of stocks to the retail floor andforwarding of bills for payment.Shoppers’ Stop has a grand ambition to position itself as a global retailer. The companyintends to bring the world’s best retail technology, retail practices and sales to India.Currently, they are adding 4 to 5 new stores every year.Trent – WestsideEstablished in 1998, Trent operates some of the nation’s largest and fastest growing retailstore chains. A beginning was made in 1998 with Westside, a lifestyle retail chain, whichwas followed up in 2004 with Star India Bazaar, a hypermarket with a large assortment ofproducts at the lowest prices. In 2005, it acquired Landmark, India’s largest book andmusic retailer.In a recently signed deal, Trent has agreed to anchor 12 malls set up by DLF UniversalLtd across the country, at its Westside, Landmark and Star India Bazaar outlets. Thisamounts to about 27 locations, totaling to about a million square feet of space.Trent retails garments and household accessories for men, women and children,cosmetics and perfumes at Westside, food, beverages, health and beauty products,vegetables, fruits, dairy products, consumer electronics and household items at Star IndiaBazaar and books, music and stationery at Landmark.Westside has 25 outlets across 17 cities in India offering a variety of designs and styles ingarments, footwear and accessories, as table linens, artifacts, home accessories andProjectsformba.blogspot.com
Projectsformba.blogspot.comfurnishings. Well-designed interiors, sprawling space, prime locations and coffee shopsenhance the customers’ shopping experience.Trent also runs another chain of retail stores called Star India Bazaar. Launched in 2004,Star India Bazaar provides a large assortment of high quality products made available atthe lowest prices coupled with a unique shopping experience. Star India Bazaar is locatedin Ahmedabad and offers a wide choice of staple food, beverages, health and beautyproducts, vegetables, fruits, dairy products, consumer electronics and household items atthe most affordable prices.Trent has also recently acquired a 76 per cent stake in Landmark, one of the largest booksand music retail chains in India. Landmark commenced its operations in 1987 with itsfirst store in Chennai, and now has nine stores in the major metros of the country. EarlierLandmark was focused on books, stationery and greeting cards. In 1996 it added music toits product portfolio and also started the trend of stocking curios, toys, music, CDs andother gift items. Fig-2.8.3Projectsformba.blogspot.com
Projectsformba.blogspot.comPiramydPiramyd Retail is part of the Piramal Group, which has presence in diverse sectorsspanning Pharmaceuticals, Textiles, Real Estate, Engineering, Family Entertainment andRetail with manufacturing operations in 19 locations across five states and employingover 18,000 people.The promoters launched the apparel business in 1999 under Piramyd Retail andMerchandising Pvt. Ltd. (PRMPL) while its food; home & personal care businesses(FHPC) were housed under Crossroads Shoppertainment Pvt. Ltd. (CSPL). As theapparel and food businesses individually reached a critical mass the management mergedthe two companies into Piramyd Retail Ltd. Due to distant synergies in two businesses inMarch 2005. Pyramid also has a smaller format of stores called TruMart that caters toFood and Personal Care products.Piramyd Retail currently has 5 Mega stores and 8 Tru Mart stores mainly in Maharashtra.The company plans to increase these numbers to 17 Mega stores and 69 Tru Marts by2008. The floor space is expected to be 5 times on successful expansion.The FHPC (Food & Personal Care) business is volume driven while the Lifestyle store isa margin driven business. Piramyd Retail plans to increase the contribution of privatelabels from existing 7% to 18-20% of the revenues by 2010. Gross margins from privatelabels are over 40% and hence the company is planning to increase this business. Mostof the stores are on the lease format and the company is prone to higher lease rentals dueto the overall increase in real estate prices. This may bring the profit levels downsubstantially.Piramyd Retail did have a first mover advantage in many locations but it has actuallyfailed to 40apitalize over this advantage. Its competitors like Pantaloon, Shoppers Stopand Trent gained larger benefits of their far more aggressive business & marketingstrategy in the retail space.Projectsformba.blogspot.com
Projectsformba.blogspot.com Fig-2.8.4SubikshaThe Chennai based Subiksha grocery chain runs around 200 outlets all over the countryand it’s current turnover stands at Rs 224 crores. Their target customer is the middleincome value conscious buyers. The main aim of Subiksha is to offer a functional andtransactional shopping experience. This retail chain has no qualms and spends almost nomoney on creating a pleasant shopping experience, and all stores are non-air conditioned.There is no false roofing or sparkling vitrified tiles on the floor.A few years ago, Subiksha did not even offer shoppers self service. The customer had toplace an order at a computerized teller and the goods were billed and delivered after cashis collected. Customers had to bring their own carry bags or pay to buy them from thestore. Subiksha even attempted to charge the customers for home delivery.However, now Subiksha has slightly tweaked their business model in order to create abetter appeal to customers who were defecting to the competitors. The store formats arestill small and non-air conditioned. But customers have the option to pick from shelfProjectsformba.blogspot.com
Projectsformba.blogspot.comspaces. They also get shopping bags and free home delivery. But the selling USP (uniqueselling proposition) remains the same --- Subiksha tries to be as close to the customer aspossible and offers the lowest price and huge savings in comparison to competitors. It’sslogan happens to be --- bachat mera adhikar hain (saving is my fundamental right).RPG SpencerRPG’s Spencer presently has 125 stores across 25 cities covering a retail trading area ofhalf a million square feet and with a clientele of 3 million customers a month. Spencer’shas a national footprint with seven hypermarkets, three supermarkets and 70 daily useoutlets, called Dailies.All the newly opened Spencer’s stores stock every conceivable product that is requiredby a household on a daily basis. At Spencer’s Daily shoppers can get fresh fruits,vegetables, fast-moving consumer goods, household items, groceries, with regular offersand discounts.Spencer’s outlets are divided in to three retail formats. These are, Spencer’s Hyper, theover 25,000-sq ft hypermarkets stocking over 25,000 items. The 8,000sq ft to 15,000-sqft mini hyper stores, branded as Spencer’s Super and the daily purchase 4,000-sq ft to7,000-sq ft Spencer’s Daily for groceries, fresh food, chilled and frozen products, bakeryand weekly top up shopping.Reliance RetailWith a vision to generate inclusive growth and prosperity for farmers, vendor partners,small shopkeepers and consumers, Reliance Retail Limited (RRL), a subsidiary of RIL,was set up to lead Reliance Group’s foray into organized retail.The first store christened “Reliance Fresh” opened in November 2006 at Hyderabad.Within a few months they have now opened stores in Mumbai, Pune and Ahmedabad andplans foray into other cities on a rapid scale.Projectsformba.blogspot.com
Projectsformba.blogspot.com Fig-2.8.5On June 26, 2006, Mukesh Ambani, Chairman and Managing Director, RelianceIndustries Limited, announced a Rs 25,000-crore investment in the retail sector.Reliance Retail started its retail operation with “Reliance Fresh”, a grocery store that sellsvegetables, fruits, personal care items and other food products. Soon, these retail outletswill also be selling apparel and footwear, lifestyle and home improvement products,electronic goods and farm implements and inputs. They will also offer products andservices in energy, travel, health and entertainment. In addition to this, partnershipswould be developed to bring the best of global luxury brands to India as well.Reliance Retail plans to extend its footprint to cover 1,500 Indian cities and towns withoutlets of a varied format, a mix of neighborhood convenience stores, supermarkets,specialty stores and hypermarkets. Reliance also plans to open restaurant outlets,financial services marts and tourism counters within its stores.Mukesh Ambani’s ultimate ambition seems to be to create the Indian equivalent of Wal-Mart by scaling up the business to unprecedented heights to reach every nook and cornerof the country. With its retailing venture, Reliance expected a revenue target of US $20billion through its retail operations by 2010. Over a span of five years, RRL expects a20% return-on-investment.Projectsformba.blogspot.com
Projectsformba.blogspot.comBharti Wal-Mart Fig-2.8.6Bharti Retail (Pvt.) Ltd. Unveiled the roadmap for its retail venture on 19th February,2007 envisaging an investment of $2.5 billion with expectation of revenue of $4.5 billion(about Rs. 20,000 crore) from this business by 2015. The first retail outlet is expected toopen somewhere in the month of August.Bharti’s plan is to invest $2.5 billion by 2015 and open stores across all major cities. Thisinvestment would be only for setting up front-end stores. The modalities for its back-endlinkage, including its joint venture with the world’s largest retailer Wal-Mart, are in theprocess of being worked out.A high-level team from Wal-Mart was visited India in the later part of February to workout the details of the back-end chain. While Bharti would manage front-end of the retailventure, Wal-Mart would be involved in the back-end, including logistics, supply chainand cash-and-carry, he added.The JV was presently scouting for 10 million sq. ft. of retail space, which would includehypermarkets, supermarkets and convenience stores and would provide employment toProjectsformba.blogspot.com
Projectsformba.blogspot.comabout 60,000 people. The company would open multi-format retail outlets in all citieswith a population of about one million. Bharti is now conducting a massive consumersurvey to take a final decision on branding and promotional campaign.However, Bharti and Wal-Mart have been facing stiff opposition from the left parties andother political outfits who fear that the entry of the Bentonville giant will make lifedifficult for the small grocers and create massive unemployment. They also expect Wal-Mart to take a tough stance on lowering prices and force farmers to sell their produce atlower rates. A lurking fear of monopolistic regime in the retail sector is also enhancingtheir fears. Both Bharti and Walmart are presently having a tough time in convincing theministers, politicians, agriculturists, the NGOs and other pressure groups that theirbusiness model would serve to work in the best interests of all the stakeholders.Aditya Birla – MORE Fig-2.8.7The Aditya Birla Group is India’s first truly multinational corporation. Global in vision,rooted in values, the Group is driven by a performance ethic pegged on value creation forits multiple stakeholders. A US$ 24 billion conglomerate, with a market capitalization ofUS$ 23 billion and in the League of Fortune 500, it is anchored by an extraordinary forceProjectsformba.blogspot.com
Projectsformba.blogspot.comof 100,000 employees belonging to over 25 different nationalities. Over 50 per cent of itsrevenues flow from its operations across the world.” Our mission is to change the waypeople shop. We will give them more.” Says Mr. Kumar Mangalam Birla, Chairman,Aditya Birla Group. The more For you advantage: more Promises a world-classpleasurable shopping experience to Indian consumers in their very own neighborhood.more. Quality, more Variety, more Convenience and more Value are the four deliverycornerstones of the more Chain of supermarket stores.MORE. Value MORE. Promises best in market pricing. Linking up directly with farmersto source fresh fruits, vegetables and staples ensure great quality as well as great price.Add to this, the membership program Club more. Which provide convenience,customized shopping solutions and savings, and the more. Value promise becomes all themore evident.More Is an inspirational brand for an inspirational country. We have a bright andcommitted, enthusiastic team that represents the best experience from India and globally.MORE Also has a range of products from its own stable available across value, premiumand select ranges. The products have been quality-checked and are available in attractivepackaging at competitive prices. To avail additional benefits, at no extra charge,customers can also enroll for the membership program Club more.VISHAL RETAIL:Vishal is one of fastest growing retailing groups in India. Its outlets cater to almost allprice ranges. The showrooms have over 70, 00, 00 products range which fulfills all yourhousehold needs, and can be catered to under one roof. It is covering about 1282000 sq.ft. in 18 states across India. Each store gives you international quality goods and priceshard to match. The cost benefit that is derived from the large central purchase of goodsand services is passed on to the consumer. What started as a humble one store enterprisein 1986 in Kolkata (erstwhile, Calcutta) is today a conglomerate encompassing 51showrooms in 39 cities. India’s first hyper-market has also been opened for the IndianProjectsformba.blogspot.com
Projectsformba.blogspot.comconsumer by Vishal. Situated in the national capital Delhi this store boasts of the singelargest collection of goods and commodities sold under one roof in India. The group’sprime focus is on retailing. Fig-2.8.8 The Vishal stores offer affordable family fashion at prices to suit every pocket. Thegroup’s philosophy is integration and towards this end has initiated backward integrationin the field of high fashion by setting up a state of the art manufacturing facility tosupport its retail endeavors. Company has already tied up for 5-lakh sq ft space and islooking for more. Company will come up with 32 new stores this year. Company isdoing research on more formats. Company is looking for opportunities of expansion inthe South. Contribution of apparels business at 53% may slightly come down to 50%.India is a big country and there is huge space for four-five big retail players. Vishal canalways sustain growth in this big market. Company can sustain margins as it is going forbackward integration. Currently manufacturing contributes 10% of the business, which inthe next two to three years, will go up to 25%. Company is increasing its focus on thenon-apparel and FMCG segment. The current share of FMCG at 15% could go up to20-25%. Apparel sales currently at 63% in the next 2-3 years should come down to 50%as the company is now also focusing on different segments. With growth in volumes, thecost of sourcing will come down in the near future. Company will venture wherever itgets real estate space. Currently, it has very little space in the south India. Eventually, itwill have a pan-India set up.Projectsformba.blogspot.com
Projectsformba.blogspot.comMETRO – CASH & CARRY INDIAMETRO Group today, is the third largest trading and retailing group in the world. Thecompany employs over 2,50,000 staff in 30 countries. In the year 2005 METRO Grouphad generated sales of over €55.7 billion; 53% of total sales came from outside Germany.METRO Cash & Carry started operations in India in 2003 with two Distribution Centresin Bangalore. With this METRO introduced the concept of Cash & Carry to India. TheseCentres offer the benefit of quality products at the best wholesale price to over 150,000businesses in Bangalore. METRO offers assortment of over 18000 articles across foodand non food at the best wholesale prices to business customers such as Hotels,Restaurants, Caterers, Food and Non-food Traders, Institutional buyers and professionals.METRO’s Cash & Carry business model is based on a Business to Business (B2B)concept and focuses on meeting all the needs and requirements of business customers. Itis a modern format of wholesale trading, catering only to business customers. Fig-2.8.9Projectsformba.blogspot.com
Projectsformba.blogspot.comViveks- The Unlimited Shop Fig-2.8.10Vivek Limited is a professionally managed public limited company carrying three retailbrands – Viveks, Jainsons, Premier and continuously adding to the formidable strength of1000 employees. Vivek Ltd is the largest consumer electronics & home appliances retailchain in India. Viveks popularized several brands by creating visibility and have thedistinction of being market leaders and trendsetters with continuous support from theprincipal companies.Viveks evolved its strategies to suit the larger scene where there was a stigma attached toborrowing. Very few hire purchase options were available and hence Viveks startedVivek Hire Purchase and Leasing Ltd to finance consumer durables, which enhanced thecore retailing business also. Viveks grew from 3 stores to more than 52 stores andturnover increased to over Rs. 350 crores (USD 80 million) and also become a publiclimited company from a family run enterprise. In this process, 14 store Jainsons wasbought over in 1999, 2 store Premier in 2001 and Spencers in 2002 and have recentlyabsorbed Spencers into the Premier brand. With the liberalization of economy and otherchanges in the global scene, Viveks streamlined the marketing and advertising activitiesand shopping ambience was improved.Projectsformba.blogspot.com
Projectsformba.blogspot.comTable-3 Source- Price water house2.9 Retailing formats in IndiaMalls The largest form of organized retailing today is located mainly in metro cities, inproximity to urban outskirts. Ranges from 60,000 sq ft to 7,00,000 sq ft and above. Theylend an ideal shopping experience with an amalgamation of product, service andentertainment, all under a common roof. Examples include Shoppers Stop, Pyramid andPantaloon.Projectsformba.blogspot.com
Projectsformba.blogspot.comSpecialty StoresChains such as the Bangalore based Kids Kemp, the Mumbai books retailer Crossword,RPGs Music World and the Times Groups music chain Planet M, are focusing onspecific market segments and have established themselves strongly in their sectors.Discount StoresAs the name suggests, discount stores or factory outlets, offer discounts on the MRPthrough selling in bulk reaching economies of scale or excess stock left over at theseason. The product category can range from a variety of perishable/ non perishablegoods.Department StoresLarge stores ranging from 20000-50000 sq. ft, catering to a variety of consumer needs.Further classified into localized departments such as clothing, toys, home, groceries, etcDepartmental StoresDepartmental Stores are expected to take over the apparel business from exclusive brandshowrooms. Among these, the biggest success is K Rahejas Shoppers Stop, which startedin Mumbai and now has more than seven large stores (over 30,000 sq. ft) across India andeven has its own in store brand for clothes called Stop!.Hypermarts/SupermarketsLarge self service outlets, catering to varied shopper needs are termed as Supermarkets.These are located in or near residential high streets. These stores today contribute to 30%of all food & grocery organized retail sales. Super Markets can further be classified in tomini supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets rangingProjectsformba.blogspot.com
Projectsformba.blogspot.comfrom of 3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personalsales.Convenience StoresThese are relatively small stores 400-2,000 sq. feet located near residential areas. Theystock a limited range of high-turnover convenience products and are usually open forextended periods during the day, seven days a week. Prices are slightly higher due to theconvenience premium.MBO’sMulti Brand outlets, also known as Category Killers, offer several brands across a singleproduct category. These usually do well in busy market places and Metros.SPECIALITY STORESFood retailFood dominates the shopping basket in India. The US$ 6.1 billion Indian foods industry,which forms 44 per cent of the entire FMCG sales, is growing at 9 per cent and has setthe growth agenda for modern trade formats. Since nearly 60 per cent of the averageIndian grocery basket comprises non-branded items, the branded food industry is homingin on converting Indian consumers to branded food.The mobile revolutionThe retail market for mobile phones -- handset, airtime and accessories -- is already aUS$ 16.7 billion business, growing at over 20 per cent per year. In comparison, theProjectsformba.blogspot.com
Projectsformba.blogspot.comconsumer electronics and appliance market is worth US$ 5.6 billion, with a growth ratethat is half of the mobile market.Kid’s retailWhen it comes to Indian children, retailers are busy bonding--and branding: • Monalisa, the Versace of kids is coming to India. • Global lifestyle brand Nautica is bringing Nautica Kids. • International brand Zapp tied up with Raymond to foray into kids apparel. • Disney launched exclusive chains which stock character-based stationery. • Pantaloons joint venture with Gini & Jony will set up a retail chain to market kids apparel. • Swiss kids wear brand Milou is collaborating with Tirupura-based Sreeja Hosieries. • Turner International India Pvt. Ltd. will launch Cartoon Network Townsville and Planet POGO--two theme parks designed around its channels--in the National Capital Region. • Sahara One Television has also signed a Memorandum of Understanding to source content from Space toon Media Group, Middle Easts largest kids entertainment brand for animation and live action content.Leading the kids retail revolution is the apparel business, which accounts for almost 80per cent of the revenue, with kids clothing in India following international fashion trends.According to research firm KSA Techno pak, the branded segment comprises US$ 701.7million of the total kids apparel market-size of over US$ 3 billion.Industry experts say kids retailing will touch annual growth of 30-35 per cent. Toys,stationary, sportswear, outerwear, tailored clothing, eyewear, watches, fragrance,footwear, theme parks, TV channels… the segment is growing rapidly at 10 per cent perannum. Margins are in the range of 20-25 per cent (for dealers and distributors), whilecompanies enjoy an average gross margin of about 10 per cent.Projectsformba.blogspot.com
Projectsformba.blogspot.comAgricultural retailAgriculture across India is heralding the countrys second Green Revolution. 14 states,including Maharashtra, Punjab, Andhra Pradesh and Rajasthan amended the AgriculturalProduce Marketing Committee (APMC) act this year, along the lines of the ModelAPMC Act, 02, which allows farmers to sell their produce directly to buyers offeringthem the best price.Agricultural sectors such as horticulture, floriculture, development of seeds, animalhusbandry, pisciculture, aqua culture, cultivation of vegetables, mushroom undercultivated conditions and services related to agro and allied sectors are open to 100 percent FDI through the automatic route.For its e-Choupal scheme, ITC built internet kiosks in rural villages so farmers can accesslatest information on weather, current market prices, foods-in-demand, etc.With a US$ 5.6 billion, multi-year investment in agriculture and retail, Reliance Retailwill establish links with farms on several thousand acres in Punjab, West Bengal andMaharashtra. Field Fresh, planning to become Indias first large-scale exporter ofproduce, will annually pay farmers over US$ 30,000 to lease land for vegetables, to hiretractors and to pay their workers.Besides a five-year program with the Punjab government to provide several hundredfarmers with four million sweet-orange trees for its Tropicana juices by 2008, PepsiCo--with agriculture exports worth US$ 40 million--also introduced farmers to high-yieldingbasmati rice, mangoes, potatoes, chilies, peanuts, and barley for its Frito-Lay snacks.Export potential and a rapidly growing domestic demand for reliable produce from newsupermarket chains is driving change. With 77 per cent of Indias population relying onagriculture for a living, improved efficiency and new markets can benefit a large numberof people.Projectsformba.blogspot.com
Projectsformba.blogspot.comInternational retailersThe Australian governments National Food Industry Strategy and Austrade initiated atest marketing food retail in India wherein 12 major Australian food producers have tiedup with India-based distributor AB Mauri to sell their products directly at retail outlets.The largest-ever 150-member British business delegation in India committed investmentsin the areas of food processing, agri retail and manufacturing. It is also likely to press forthe liberalization of sectors like financial & legal services and retail.US-based home delivery and logistics company, Specialized Transportation Inc, willenter the Indian market through a strategic alliance with Patel Retail, a subsidiary of PatelIntegrated Logistics.Among other big international players, Wal-Mart has announced its plans for India inpartnership with Bharti, Tesco is sure to try again, and Carrefour too might finally findthe right partner.SupermarketsLarge self service outlets, catering to varied shopper needs are termed as Supermarkets.These are located in or near residential high streets. These stores today contribute to 30%of all food & grocery organized retail sales. Super Markets can further be classified in tomini supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets rangingfrom of 3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personalsales.Supermarkets are relatively new entrants in the market. They are so called pioneers inorganized food retailing and go by the western model in look and feel and format. This iswhat everybody means when they say organized food retailing.Projectsformba.blogspot.com
Projectsformba.blogspot.comFig: 2.9 source- www.retail-vision.co.ukFranchise outletsLike Tommy Hilfiger and Wal-Mart, other US retailers are firming up their India entrystrategies and if they are already in, they are undergoing rapid expansion. Fashion brandsDKNY is also al set to foray into the Indian fashion Industry through a franchiseeagreement with Indian company, S. Kumar Starbucks recently expressed their interest inentering Indian companyLike Tommy Hilfiger and Wal-Mart, other US retailers are firming up their India entrystrategies and if they are already in, they are undergoing rapid expansion. Fashion brandDKNY is also all set to foray into the Indian fashion Industry through a franchiseeagreement with Indian company, S Kumar’s. Starbucks recently expressed their interestin entering India through the franchise route, like their American F&B counterparts PizzaHut, Subway, and the very successful McDonald’s. McDonald’s has major expansionplans lined up; in the next 3 years, it plans to open another 100 outletsin cities across India.Projectsformba.blogspot.com
Projectsformba.blogspot.comHypermarketThe Large commercial establishment that is a combination of departmental store and asupermarket. The specific features of a hypermarket are the wide range of goods offered,quality service, quality display of goods on the shelves and complex systems providingfor customers loyalty.Hypermarket is known for a wide range of goods offered. It consists of dozens ofthousands of items, while similar goods can be offered in several forms. In order to workwith such an assortment it is necessary to group it into categories and sub categories thatwould unite goods according to this or that criteria.Shopping MallsThe new shopping malls that have been expanding their footprint across Indian cities arewell designed, built on international formats of retailing and integrated withentertainment and restaurants to provide a complete family experience. Over 300 mallsare expected to be built over the next two years and most Indian cities with over a millionpopulations will be exposed to this modern method of retailing.Shopping malls have existed in India since several decades but were designed and built tohouse several shops in a single facility. These malls also known as Shopping Arcadesoffered only rows of shops, most of which were small stores that promised bargains fortheir various wares. These Shopping Arcades tried to maximize on their store space anddid not offer any areas for recreation and entertainment.The present day malls are a creation of the past few years post 2000. They are designedprofessionally using a lot of international experience and combine shopping with a lot ofbrand building, recreation, food and entertainment. Malls also have a large format storethat serves as their anchor for shopping and a prominent restaurant that anchors the foodProjectsformba.blogspot.com
Projectsformba.blogspot.comneeds of visitors. Most malls also feature a multiplex cinema that offers entertainment tothe visitors of the mall. Finally the mall has large atria and open spaces to allow visitorsand families to hang-out.Emerging trendsThe single most important evolution that took place along with the retailing revolutionwas the rise and fall of the dotcom companies. A sudden concept of `non-store shoppingemerged, which threatened to take away the potential of the store. More importantly, thevery nature of the customer segment being addressed was almost the same. Thecomputer-savvy individual was also a sub-segment of the `store frequenting traffic.Internationally, the concept of net shopping is yet to be proven. And the poor financialperformance of most of the companies offering virtual shopping has resulted in store-based retailing regaining the upper hand. Other forms of non-store shopping includingvarious formats such as catalogue/mail order shopping, direct selling, and so on aregrowing rapidly. However, the size of the direct market industry is too limited to deterthe retailers. For all the convenience that it offers, electronic retailing does not suitproducts where `look and see attributes are of importance, as in apparel, or where thevalue is very high, such as jewellery, or where the performance has to be tested, as ofconsumer durables. The most critical issue in electronic retailing, especially in a countrysuch as ours, relates to payments and the various security issues involved.Projectsformba.blogspot.com
Projectsformba.blogspot.com CHAPTER 3 RELATED REVIEW OF LITERATUREMishra (2007) stated that the Kirana Store seems to be no longer an attractive option tobuy grocery, as organized retailing is picking up in the country offering ‘experience’ inaddition to quality products at affordable prices under hygienic conditions.The organized grocery retailer is the preferred kind of store by consumers, even thoughthe consumers buy in several establishments and exclusively in the hypermarket, whichindicates that there is no “single loyalty!”. While in organized retail outlet, the consumersbuy essentially convenience goods with low level of risk; in traditional retail, they buyessentially products of more involvement, which requires a more complex buyingbehavior. The results also show that consumers evoke price and convenience for notbuying certain goods in traditional retail, which reveals an attempt to optimize their timeand money.Sunitha Ravi of beri institute of technology analyzed that the retail sector hasundergone significant changes and is fast emerging. Inviting foreign investments to enterinto retail trade in India is a progressive measure. India is currently the ninth largest retailmarket in he world. This sector witnessed transformation of unorganized family-ownedretail formats to organized retailing. The retail revolution will restructure the Indianeconomy and would be beneficial to the consumers, customers, small and medium-scalebusinesses and farmers. The emergence of organized retailing will help accelerateproductivity growth, improve competitiveness, provide better job opportunities, offermore product variety and develop the agriculture and processed food industries.Projectsformba.blogspot.com
Projectsformba.blogspot.comAccording to reports released by the global real estate consulting group Knight Frank,the real estate segment of India was growing at 30 per cent per annum overall. In theretail space, Knight Frank ranked India fifth in the list of 30 emerging retail markets andpredicted 20 per cent growth rate for the organized retail segment by financial year 2012(FY10).It indicated that the retail industry will witness investment over Rs 100 billion uptoFY10. Presently available mall space of about 30 million square feet (mn sqft) in Indiawas expected to increase to 100 mn sqft by FY10. Out of this total mall space to bedeveloped, around 75 per cent will be developed in cities like Mumbai, Pune, Bangalore,Hyderabad and NCR cities. The rest will be in tier-2 and tier-3 cities like Nagpur,Ahmedabad, Chandigarh and Ludhiana. The number of malls to be developed in the country over next three years will be above300. According to a report on real estate trends by Merrill Lynch, the number of malls inthe five cities Mumbai, Bangalore, New Delhi, Hyderabad and Pune itself was expectedto reach to about 250 by FY10.Recently, Reliance Industries has announced its retail venture with pan-India footprintcovering 1500 cities and towns involving investment outlay of Rs 25,000 crore.Sharma of sardar patel university declared in 2007 that for a start, the retailers need toinvest much more in capturing more specific market. Intelligence as well as almost real-time customer purchase behavior information. The retailers also need to make substantialinvestment in understanding/acquiring some advanced expertise in developing moreaccurate and scientific demand forecasting models. Re-engineering of product sourcingphilosophies-aligned more towards collaborative planning and replenishment should thenbe next on their agenda. The message, therefore for the existing small and mediumindependent retailers is to closely examine what changes are taking place in theirimmediate vicinity, and analyze Whether their current market offers a potentialredevelopment of the area into a more modern multi-option destination. If it does, andProjectsformba.blogspot.com
Projectsformba.blogspot.commost commercial areas in India do have this potential, it would be very useful to form aconsortium of other such small retailers in that vicinity and take a pro-active approach topool in resources and improve the overall infrastructure. The next effort should be toencourage retailers to make some investments in improving the interiors of theirrespective establishments to make shopping an enjoyable experience for the customer.As the retail marketplace changes shape and competition increases, the potential forimproving retail productivity and cutting costs is likely to decrease. Therefore, it willbecome important for retailers to secure a distinctive position in the marketplace based onvalue, relationships or experience.Finally, it is important to note that these strategies are not strictly independent of eachother; value is function of not just price, quality and service but can also be enhanced byPersonalization and offering a memorable experience. In fact, building relationships withcustomers can by itself increase the quality of overall customer experience and thus theperceived value. But most importantly for winning in this intensely competitivemarketplace, it is critical to understand the target customers definition of value and makean offer, which not only delights the customers but also is also difficult for competitors toreplicate.The Hindu Business Line (2007) As Indias retail sector opens up on a huge scale,domestic logistics companies are planning significant investments to expand theirportfolio of services. It is expected that in the next two years, the logistics sector willhave undergone major changes, offering a wide spectrum of services. Consider this:Global retail giant Wal Mart announces its entry into India through a joint venture withBharti. Reliance puts on its drawing board a mega plan of Rs 25,000-crore to create 100million sq ft of retail space. The Aditya Birla group makes a retail foray with plans toinvest Rs 15,000 crore. The Tatas plan to participate in the retail race with renewed vigor.Pantaloon plans to create a retail space of 30 million sq ft by 2009-10. Shoppers Stopmay have 6 million sq ft of retail space by the same time. Global retailers from the US,European Union and Australia are all eyeing the retail revolution in India.Projectsformba.blogspot.com
Projectsformba.blogspot.comAccording to Research and Consultancy Outsourcing Services (2005) this year’sGlobal Retail Development Index India is positioned as the leading destination for retailinvestment. This followed from the saturation in western retail markets and we find bigwestern retailers like Wal-Mart and Tesco entering into Indian market. India’s retailindustry accounts for 10 percent of its GDP and 8 percent of the employment to reach$17 billion by 2010. There are about 300 new malls, 1,500 supermarkets and 325departmental stores being built in the cities very soon.A shopping revolution is ushering in India where, a large population between 20-34 agegroups in the urban regions is boosting demand by 11.1 percent in 2004-05 to an Rs23,308 purchasing power. This has resulted in huge international retail investment and amore liberal FDI.This market research report “The Indian Retail Sector – An Outlook (2005-2010)”analyzes the greatly divided Indian retail market and the trends in its business. Issuessuch as foreign investment restrictions, modern merchandizing in India, logistics andpayment terms for distribution, role of channel members and growth trends in differentregions are discussed. The market research report further analyzes the sustainability ofthe Indian retail sector and on the basis of 25 domestic and international companies thereport has given a suitable business model.3.1 REPORT HIGHLIGHTS- AN OUTLOOK (2005-2010)-Competitive analysis of Indian retail sector vis-à-vis global retail industry.-Supportive policies and regulations of government for the retail sector.- Issues and implications related to the current foreign direct investment in the retailsector.Projectsformba.blogspot.com
Projectsformba.blogspot.com- Market size and growth of Indian retail sector segmented by sectors, retail formats, andregional segmentations.- Increasing employment opportunities with stepping up of international retail brands inIndia.- Opportunities for big western retailers like Wall-mart and Tesco.- Market forecast till 2010.- Behavioral pattern, preferences and expenditure capacity of Indian consumers.- Increasing acceptance of e-retailing among Indian consumers.- Evolution of franchise businesses in Indian retail sector.- IT trends in Indian retail industry and technological expansion leading to the stores’Security.- Company profiles of 25 key players, which include 6 international retail brands.[Source- www.reportlinker.com]Roger Colwill of lead consumer partner in 2005 affirmed that the retail success willnot come from merely transplanting a tried-and-tested formula. Retailers will have toadapt to the needs of the customer. The world is changing and retailers must respond ifthey are to prosper. On the international front, India and China present significantopportunities. China has transformed retail supply chains in the past ten years, but bothcountries are evolving into vast consumer markets in their own right. This will offer hugegrowth potential to both domestic and international retailers, but a simple transfer of atried-and-trusted retail formula from elsewhere in the world is doomed to failure.Projectsformba.blogspot.com
Projectsformba.blogspot.comPankaj Gupta of Tata strategic management group working as a practice head ofconsumer and retail in 2006 stated that the Organized retail players who can aggressivelyscale-up their operations could target Rs 40,000-crore in organized retail business inIndia by 2015, says Pankaj Gupta, practice head — consumer and retail, Tata StrategicManagement Group.Organised trade in India is very underdeveloped when compared with other emergingmarkets in Asia, Latin America and Eastern Europe. According the research, India hasonly 4 % share in Organized Retail as compared to China which has 17% in 2003.3.2 Organized retail: India vs. ChinaThe Indian and Chinese markets are comparable in many aspects:Both countries are not homogeneous. They comprise many markets within a singlecountry, with significantly varying cultures and customer preferences across regions.There is a significant rural population in both countries, which has much lowerpurchasing power compared to the urban population. Both countries are geographicallyvery large and unevenly developed, adding a significant distribution and logisticsdimension to the retail trade. Consumers in both countries are highly value conscious.Between 1996 and 2003, the organized retail market in China more than doubled. Weestimate that the Indian retail market is today at the same inflection point as China was inthe mid-1990s. Consequently, considering a similar per capita GDP and roughly similarrates of economic growth, the Indian organized retail market has the potential forexponential growth over the next decade.[Source- www.tsmg.com]Projectsformba.blogspot.com
Projectsformba.blogspot.com3.3 Growth in organized segment- Images (F&R research)Footwear retail, the overall market as well as its organized segment, has grown fasteryear after year but growth in 2007 was especially remarkable: the overall market grew 12per cent in 2007 as against a 9.2 per cent growth in 2006 while the organized segmentgrew 42.3 per cent and 36.4 per cent respectively for the two years. The global brandshave actually turned the heat on, and the domestic brands too appear to have accepted thechallenge in the true spirit.Growth in the health and beauty care category has been remarkable in 2007, though theorganized segment growth in 2007 (57.5%) was slightly lower as compared to 2006(59.1%). The demand is stupendous but organized players have hardly much to boast ofin terms of innovative concepts and global standards when it comes to providing thecustomers with an experience that is superior and radically different from what theunorganized segment offers. This category needs to be positioned as a “wellness”category that provides individualized services to customers with synergies of health &beauty care, pharmaceuticals and specialized clinical services – all at one place.Another category that merits special mention is Furnishings and Furniture retail, wherethe overall market grew at seven per cent in 2007 as compared to just 3.2 per cent in 2006– thanks to the housing sector boom. The organized segment also grew faster at 29.7 percent in 2007 as compared to 23.1 per cent the previous year, but this Rs.45, 500 crorecategory calls for better attention from organized players. Is India ready for ready-toassembles furniture? May be not but surely the market will change in next couple ofyears. Global players need to understand that Indian homes are different and so are theIndian environments, maintenance standards. At present most large players entering thissegment are busy experimenting and in the process have lost monies too.Consumer durables and the mobile phone & accessories categories have both grownfaster in 2007 as compared to 2006. At constant prices, the overall food & grocery retailmarket grew slightly higher at 2.3 per cent in 2007 as compared to a 2.2 per cent annualProjectsformba.blogspot.com
Projectsformba.blogspot.comgrowth in the previous two years. But the organized retail segment in this category issimmering in the true sense – a 50 per cent growth in 2007 as compared to 42.9 per centin 2006, and lot more fireworks can be expected this year and the years ahead. Valued atRs.9,000 crore, this organized market constitutes barely 1.1 per cent of the total food &grocery retail market. Time wear (48.9%) and Footwear (48.4%) are the most organizedof all retail categories. Clothing & fashion accessories retail comes next with theorganized segment controlling 22.7 per cent of the market.SINHA (2002) stated that a shop is a world of its own, with its own ‘language’, patternsof behavior and code of conduct. With no two shops being similar, customersunconsciously adapt their behavior to suit the environment of the shop they are in.The basis of the idea propounded in this article is that we change our behavior when weshop in different retail outlets, even when the product or the brand bought is the same.The fact that when we buy something from a small store, we use our mother tongue, butwhen we buy from a large format, well-laid out store, we start speaking English is aperfect example of this phenomenon. In the former case we are pretty casual, while in thelatter we are formal. In stores we frequent, we are demanding and ‘brave’, in newerstores, we are timid and patient. All this because human, as beings we are subject to‘operant conditioning’, a phrase coined by B. F. Skinner. This article attempts tounderstand how the shop influences us so much that we change our behavior once weenter it. • With the retail trade accounting for over 10 per cent of GDP and employing approximately 8 per cent of the workforce, that is about 25 million people, this sector cannot be short-changed. And though organized retail accounts for a miniscule 2 per cent of the total retail market in the country, projections hold wholesale promise For instance, the organized retail players now account for around Rs 5,500 crore of the total retail market, but consultancy KSA Techno pak in its Retail Vision 2005 forecasts that this segment alone will, by 2005 account for Rs 29,842 crore.Projectsformba.blogspot.com
Projectsformba.blogspot.com • Analysts also expect the organized players to generate a couple of million jobs every year. And for a country such as India, with large-scale unemployment, these are surely heartening projections. In fact, even the Government seems to be waking up to the potential of the retail sector. Therefore, its intention to open the retail sector to foreign direct investment (FDI). With the Group of Ministers reassessing the policy, closed doors may open for foreign investment in retail, eventually. This, say the proponents of organized retail, will give Indian retailing the much-needed funds to offer even better and cheaper products and services. Not to forget the hundreds of jobs. Skeptics point to the lackluster performance of several of the country’s leading organized, modern format retailers, Including pioneers such as Shoppers’ Stop, and the collapse of another of the pioneers – the Delhi-based Nanz chain of department stores. Organized retail, they argue, is just another bubble. • With the entry players such as Food World, the demise of the kirana was foretold! But this has not happened. The kirana stores struck back, offering personalized service, credit facility and even stocking up on products they wouldn’t have earlier. And all this at the customer’s doorstep. Indeed, competition is a wonderful thing! Many neighborhood stores have reinvented themselves. In New Delhi, for instance, several small retailers have set up common sourcing systems to get the advantages of scale; others are working at leveraging their long-standing relationships with customers and still others, at offering all that modern retailers offer. The beneficiary of all this is, of course, the consumer.Surely there will be a shakeout, with the not-so-serious players falling by the wayside.Food and grocery retailing, for instance, has huge potential given that over 40 per cent ofthe spending by the Indian consumer is on this. So those who offer value in this segmentare likely to have greater success. The other stamp of a successful organized retailer isscalability. Pundits are almost unanimous that retailers who hit upon the right format andwho can customize its size to suit the requirements of different geographic locations willProjectsformba.blogspot.com
Projectsformba.blogspot.combe around. Above all, successful retailing is about getting right the nitty-gritty of retailing– merchandising, forecasting, the supply chain, training and recruitment, branding,category management and so on Or simply about getting the detail.3.4 UNORGANISED RETAIL---THE BIG BRATAC Nielsen Shopper & Consumer Trends 2004 in its analysis of key retail markets inthe Asia-Pacific region clearly states that India is the only market surveyed wheretraditional grocery stores are the key outlets where shoppers spend most money. Radicalchanges have taken place over the last 7 years yet the market share of retail chainsremains low. Traditional shopping facilities still dominate though the environment isfertile for the development of shopping centers.This growth was strongest for a number of non-essential impulse categories, such as beer,whisky, energy drinks and snacks, all of which grew by over 15%. These impulsecategories are all strength areas for both traditional stores and modern convenience storesand both trade channels benefited greatly from this growth. • From a size of only Rs.20, 000 crore, the ORGANISED retail industry will grow to Rs. 160,000 crore by 2005. 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 • An FDI Confidence Index survey revealed that, retail industry is one of the most attractive sectors for FDI (foreign direct investment) in India and foreign retail chains would make an impact circa 2003.Projectsformba.blogspot.com
Projectsformba.blogspot.comTotal grocery market in IndiaCOUNTRY 2002 2003Australia 21,093 20,226New Zealand 4,434 4,405Japan 149,345 144,423Hong Kong 4,271 3,963Korea 112,135 106,563Taiwan 28,052 28,879China 4,665,238 4,668,377Indonesia 1,903,628 1,760,692Malaysia 29,656 28,763Philippines 490,207 555,286Singapore 3,345 3,275Thailand 287,181 277,804Vietnam 29,036 29,132India 6,037,738Sri Lanka NA NASource: AC NIELSEN (Table 3.4)Note: India posted 5,170,709 total grocery outlets in 2000 andSri Lanka 85,574 in the same yearProjectsformba.blogspot.com
Projectsformba.blogspot.com3.5 The “Urban Youth”This is a revolution led by the young. They are pouring out of Indias fine higher educationalsystem at a rate of 2 million a year.The younger generation built Indias world-class computer software industry, followed nowby the globalization of the service industry. Hundreds of thousands of kids join its ranksevery year now -- and with their pockets full of money, they are sparking a consumermovement. Sociologists and media pundits have homed in on the fact: 54% of India isestimated to be under the age of 25. However, the consuming class that is the target of mostyouth lifestyle brands numbers approximately 16 million. (The number of consumers aged12-30 in SEC A and B in the top 35 cities, according to NRS 2003 data) The IMAGES-KSAprojections indicate that by 2015, India will have over 550 million people under the age of 20– reflecting the gargantuan opportunities possible in the kids and teens retailing segment. Fig-3.5 Source- KSA Techno pak Consumer Outlook 2004The traditionally defined youth demographic is ages 15-24. But is this a homogeneous mass?The youth at 15 and at 24 are two very different species.The first is characterized by a focus on career and consumption; limited by what the familycan afford or thinks is reasonable (less than 1.5 million youth aged 12-21 are from socio-economic class A1+, where money is not an issue).But its the second thats actually come into its own with BPO and other entry level jobsbooming. The indie, or financially independent young person, is a growing breed that retailboom is riding on. This consumer of today is definitely the growth engine of tomorrow.
Projectsformba.blogspot.com CHAPTER 4 OBJECTIVE AND RESEARCH METHODOLOGY4.1 PRIMARY OBJECTIVE To study the current scenario of the Indian retail industry and the various changes and developments it is going through. To ascertain the Customer’s perception towards Organized Retail To find out the impact of Organized Retail on Unorganized Retail To ascertain the factors that influences people to purchase goods from Organized Retail Store. To know expectations of the people from Organized Retail Stores. To suggest policy.SUB- OBJECTIVETo analyze and study the retailing models which would suit and prove to be successful for theneeds and requirements of the retail industry.4.2 SCOPE OF THE PROJECTThe study will provide some basic ideas of the current scenario in the Indian retail industry asresearch was done on their NCR region so we will be able to know more about that regionand will get a hint about the other region too.
Projectsformba.blogspot.com4.3 RESEARCH METHODOLOGY4.3.1 EXPLORATORY RESEARCH:Exploratory research is conducted when one is seeking insights into the general nature of asituation, the possible decision alternatives, and the relevant variables that need to beconsidered. This approach is tentative and acts as an input for further research. Whileconducting my study I used exploratory research, which was flexible and was aimed atidentifying all the attributes and parameters of the franchise models of different companies.4.3.2 RESEARCH DESIGN:The research design which was used for this research was secondary research. The datarequired for the analysis of the project was taken from secondary sources of data such asinternet, magazines, newspapers and journals. The data obtained from such sources wasorganized and analyzed to study the required objective of the project. The primary data willbe also collected with the help of questionnaire.4.4 DATA COLLECTION:METHOD: The data is collected through both primary and secondary sources. The datarequired for the analysis of the project was taken from secondary sources of data such asinternet, magazines, newspapers, journals etc and primary sources through questionnaire. Thedata obtained from such sources was organized and analyzed to study the required objectiveof the project.SAMPLE SIZE: 200 Nos.SAMPLE UNIT: Noida and NCR regionSAMPLE SELECTION: Random
Projectsformba.blogspot.com Chapter 5 DATA ANALYSIS AND INTERPRETATIONWe formulated the following hypotheses during the course of the study. These were testedusing Chi Square test. Chi square test was used to find out the dependency between variousvariables highlighted in the questionnaire. During the analysis phase SPSS software was usedextensively.Hypothesis 5.1.1: Association between the Monthly budget of consumer and the frequencyof shopping is independent of each other.Hypothesis 5.1.2: Association between the price range available and the product range in thestore is independent of each other.Hypothesis 5.1.3: Association between the price range available and paying extra for thewell known brands is independent of each other.Hypothesis 5.1.4: Association between the product range available in the store and thereference of the friends from where he buys is independent of each other.Hypothesis 5.1.5: Association between parking facility available in the retail store and thelocation of the outlet is independent of each other.Hypothesis 5.1.6: Association between Delivery facilities available for the consumer and thelocation of the outlet is independent of each other.Hypothesis 5.1.7: Association between helpful sales staff and the remember me on next visitis independent of each otherHypothesis 5.1.8: Association Between age of the respondent & frequency of shopping isindependent of each other.Hypothesis 5.1.9: Association Between age of the respondent and the paying extra for thewell known brands is independent of each other..
Projectsformba.blogspot.comHypothesis 5.1.1:Association between the monthly budget of consumer and the frequency of shopping isindependent to each other.Null Hypothesis (H o) = There is no Association between the monthly budget of consumerand the frequency of shopping is independent to each other.Alternate Hypothesis (H 1) = There is Association between the monthly budget of consumerand the frequency of shopping is independent to each other. Chi-Square Tests Value df Asymp. Sig. (2-sided) Pearson Chi-Square 28.278a 15 .020 Likelihood Ratio 22.519 15 .095 Linear-by-Linear 1.349 1 .245 Association N of Valid Cases 200 a. 10 cells (41.7%) have expected count less than 5. The minimum expected count is .23.Table 5.1.1 Monthly budget of consumer and the frequency of shoppingInterpretation:The closer examination of above test revealed that the Asymp. Significance level is 0.20,which is less than 0.05. So, the null Hypothesis was rejected and so we inferred that there wasstrong relationship between the Monthly budget of consumer and the frequency of shoppingof the respondent.The above test interpret that the monthly budget of consumer and frequency of shopping areinterrelated the consumer who spend more on shopping goes to shop more times while withless shopping expenditure usually not goes to shop that frequently. So the marketer shouldfocus on both the segment of the customer but more focused should be with the consumerwith huge amount of spending on the shopping.
Projectsformba.blogspot.comHypothesis 5.1.2: Association between the price range available and the product range in the store isindependent of each otherNull Hypothesis (H o) = There is no Association between the price range available and theproduct range in the store is independent to each other.Alternate Hypothesis (H 1) = There is Association between the price range available and theproduct range in the store is independent to each other. Chi-Square Tests Value df Asymp. Sig. (2-sided) Pearson Chi-Square 17.826a 16 .334 Likelihood Ratio 18.089 16 .319 Linear-by-Linear .431 1 .512 Association N of Valid Cases 200 a. 6 cells (24.0%) have expected count less than 5. The minimum expected count is 1.90. Table 5.1.2 Price range available and the product range available in the store Interpretation: From the above table 5.1.4 it can be seen that the Asymp. Significance level is 0.334, which is greater than 0.05. So, the null Hypothesis was accepted and hence we inferred that there was no relation between the price range available and the product range in the retail store. This test indicates that the people don’t consider price range and the product range in the retail store; Most of the people in Indian market go for those products which are cheaper and the other segments goes for that product which suits them the most and these type of customer require the product range available so they can choose amongst many option, and can select the desired one.
Projectsformba.blogspot.comHypothesis 5.1.3:Association between the price range available and paying extra for the well known brands isindependent of each other.Null Hypothesis (H o) = There is no Association between the price range available and thepaying extra for the well known brands is independent to each other.Alternate Hypothesis (H 1) = There is Association between the price range available and thepaying extra for the well known brands is independent to each other. Chi-Square Tests Value df Asymp. Sig. (2-sided) Pearson Chi-Square 12.520a 16 .707 Likelihood Ratio 14.239 16 .581 Linear-by-Linear .520 1 .471 Association N of Valid Cases 200 a. 6 cells (24.0%) have expected count less than 5. The minimum expected count is 2.10. Table 5.1.3 Price range available and the paying extra for the well known brands. Interpretation: From the above table 5.1.3 it can be seen that the Asymp. Significance level is 0.707, which is greater than 0.05. So, the null Hypothesis was accepted and hence we inferred that there was no relation between the Price range available in the store and the paying extra for the well known brands.. This test suggests that the most of the people in Indian market are price conscious and they are not willing to pay extra for the well known brands. So they want to have the price range available in the store as Indian market is so fragmented and different consumer has different liking and preferences.
Projectsformba.blogspot.comHypothesis 5.1.4:Association between the product range available in the store and the reference of the friendsfrom where he buys is independent of each other.Null Hypothesis (H o) = There is no Association between the product range available in thestore and the reference of the friends from where he buys is independent to each other.Alternate Hypothesis (H 1) = There is Association between the product range available in thestore and the reference of the friends from where he buys is independent to each other. Chi-Square Tests Value df Asymp. Sig. (2-sided) Pearson Chi-Square 14.019a 16 .597 Likelihood Ratio 14.542 16 .558 Linear-by-Linear 5.257 1 .022 Association N of Valid Cases 200 a. 10 cells (40.0%) have expected count less than 5. The minimum expected count is 1.14. Table 5.1.4 Product range available in the store and the reference of the friends from where he buysInterpretation:From the above table 5.1.4 it can be seen that the Asymp. Significance level is 0.597, whichis greater than 0.05. So, the null Hypothesis was accepted and hence we inferred that therewas no relation between the product range available in the store and the reference of thefriends from where he buysThis test indicates that the people don’t consider the friends reference from where they buy,they only consider product range available in the store which is relevant for them whileshopping the products.
Projectsformba.blogspot.comHypothesis 5.1.5:Association between parking facility available in the retail store and the location of the outletis independent of each other.Null Hypothesis (H o) = There is no Association between the parking facility available in theretail store and the location of the outlet is independent to each other.Alternate Hypothesis (H 1) = There is Association between the parking facility available inthe store and the location of the outlet is independent to each other. Chi-Square Tests Value df Asymp. Sig. (2-sided) Pearson Chi-Square 29.355a 16 .022 Likelihood Ratio 27.951 16 .032Linear-by-Linear Association 4.270 1 .039 N of Valid Cases 200 a. 14 cells (56.0%) have expected count less than 5. The minimum expected count is .30.Table 5.1.5 parking facility available in the store and the location of the outletInterpretation:From the above table 5.1.5 it can be seen that the Asymp. Significance level is 0.022, whichis less than 0.05. So, the null Hypothesis was not accepted and hence we inferred that therewas relation between the parking facilities and location of the outlet.This test suggests that the most of the people in Indian market consider the parking facility asthe main components of the retail store. Either the retail store will be in the nearby locality sothey don’t have to take their vehicle or either the good space for parking should be there inthe retail store so they can shop without worrying for their vehicle.
Projectsformba.blogspot.comHypothesis 5.1.6: Association between Delivery facilities available for the consumer and the location of theoutlet is independent of each otherNull Hypothesis (H o) = There is no Association between the delivery facility available forthe consumer and the location of the outlet is independent to each other.Alternate Hypothesis (H 1) = There is Association between the delivery facility available forthe consumer and the location of the outlet is independent to each other Chi-Square Tests Value df Asymp. Sig. (2-sided) Pearson Chi-Square 37.491a 16 .002 Likelihood Ratio 42.294 16 .000 Linear-by-Linear .048 1 .827 Association N of Valid Cases 200 a. 8 cells (32.0%) have expected count less than 5. The minimum expected count is .48.Table 5.1.6 Delivery facilities available for the consumer and the location of the outletInterpretation:From the above table 5.1.6 it can be seen that the Asymp. Significance level is 0.002, whichis less than 0.05. So, the null Hypothesis was not accepted and hence we inferred that therewas strong relation between the parking facilities and location of the outlet.Hence from this test it can be interpreted that the location of the outlet and the deliveryfacility provided by the retailers has the strong relationship. As the retail store is far frommany consumers adobe so they have to go to the shopping mall to purchase the products andit require time and money too. Hence the consumer required delivery at their home or theretail store within the reach of them, so retailers are providing delivery system as it require lotof money to open the new store.
Projectsformba.blogspot.comHypothesis 5.1.7: Association between helpful sales staff and the remember me on next visit is independent ofeach otherNull Hypothesis (H o) = There is no Association between the helpful sales staff and theremember me on next visit is independent of each otherAlternate Hypothesis (H 1) = There is Association between helpful sales staff and theremember me on next visit is independent of each other Chi-Square Tests Value df Asymp. Sig. (2-sided) Pearson Chi-Square 13.596a 12 .327 Likelihood Ratio 14.057 12 .297 Linear-by-Linear 4.834 1 .028 Association N of Valid Cases 200 a. 2 cells (10.0%) have expected count less than 5. The minimum expected count is 3.99.Table 5.1.7 Helpful sales staff and the remember me on next visitInterpretation:From the above table 5.1.7 it can be seen that the Asymp. Significance level is 0.327,which is not less than 0.05. So, the null Hypothesis was accepted and hence weinferred that there was no relation between the helpful sales staff and the rememberme on next visitThis test suggests that the most of the people want to have preference given to them bythe sales personnel. Hence from this test we can inferred that the consumer does notinfluenced by the helpful sales staff as they are not able to remember the customer intheir second visit or soon.
Projectsformba.blogspot.comHypothesis 5.1.8:Association Between age of the respondent & frequency of shopping is independent of eachother.Null Hypothesis (H o) = There is no Association between age of the respondent & frequencyof shopping is independent of each otherAlternate Hypothesis (H 1) = There is Association between age of the respondent &frequency of shopping is independent of each other Chi-Square Tests Value df Asymp. Sig. (2-sided) Pearson Chi-Square 19.876a 12 .069 Likelihood Ratio 14.489 12 .271 Linear-by-Linear 2.393 1 .122 Association N of Valid Cases 200 a. 7 cells (35.0%) have expected count less than 5. The minimum expected count is .81.Table 5.1.8 Age of the respondent & frequency of shoppingInterpretation:From the above table 5.1.8 it can be seen that the Asymp. Significance level is 0.069, whichis slightly greater than 0.05. Hence here we can interpret that the null Hypothesis could beaccepted or rejected and hence we inferred that the age of the respondent & frequency ofshopping is interdependent to each other.This test indicates that age of the respondent plays an important role in deciding that whichage limit the marketer should focus more and it is usually focussed by the companies todecide that what target market they should have according to the needs and wants of theconsumer.
Projectsformba.blogspot.comHypothesis 5.1.9:Association Between age of the respondent and the paying extra for the well known brands isindependent of each other.Null Hypothesis (H o) = There is no Association between age of the respondent and thepaying extra for the well known brands is independent of each otherAlternate Hypothesis (H 1) = There is Association between age of the respondent and thepaying extra for the well known brands is independent of each other Chi-Square Tests Value df Asymp. Sig. (2-sided) a Pearson Chi-Square 26.214 16 .051 Likelihood Ratio 28.337 16 .029 Linear-by-Linear .005 1 .943 Association N of Valid Cases 200 a. 10 cells (40.0%) have expected count less than 5. The minimum expected count is .74.Table 5.1.9 Age of the respondent and paying extra for the well known brands.Interpretation:From the above table 5.1.9 it can be seen that the Asymp. Significance level is 0.051, whichis almost equals to 0.05. Hence here we can interpret that the null Hypothesis could beaccepted and hence we inferred that the age of the respondent & paying extra for the wellknown brands is interdependent to each other.This test indicates that age of the respondent has an effect on paying extra for the well knownbrands as the young youth wants to use the branded products as it is the style status for them.So they are ready to pay extra for that products and these are only the young youth.
Projectsformba.blogspot.com5.2 Frequencies & Descriptive5.2.1 Average Monthly Shopping Budget of Consumers:The below given was the interpretation of the average monthly shopping budget for thesample size in the project survey. In the sample size most of the people (i.e. 38%) were ableto do shopping between Rs. 2000-5000.Interpretation: India mainly consist of middle income group people who are just earning theirlivelihood and struggling hard to splurge in costly affairs, they pursue for more income andthat’s why they have a habit of saving money and buying that much stuff that can fulfil theirrequirement. Due to this habit they buy the products in fragmented way or on the requirementbasis, as a result of this unorganized sector has a huge market share in Indian retailing. Tointimidate them the company should come up with a free home delivery and the person cancall you about their requirement and the retailer will deliver at your foot step and that alsofree of cost
Projectsformba.blogspot.com5.2.2 Awareness about different brands of Retail Sector:The store location, its customer services, discount schemes and offers, its quality are theimportant factors for the awareness of the any retailing company or brand but apart from allthese the most important thing which influence the awareness of any particular brand is itsadvertising and other promotional activities. Big Bazaar of future group in Ghaziabad is verywell known brand among the people of sample because of its pricing, attractive offers anddiscounts and its very good promotional and marketing activities. The Vishal Mega Mart isalso famous because of its reach in the various areas of the city.Interpretation: The big bazaar is the most aware retail store; it is the venture of future bazaarstarted in 2001. Shop till you drop! Big Bazaar has democratized shopping in India & is somuch more than a hypermarket. There are over 170,000 products under 1 roof that caters toevery need of a family, making Big Bazaar India’s favourite shopping destination.
Projectsformba.blogspot.com5.2.3 Retail chain Customers like to visit often:.Interpretation: Because of its attractive pricing and good schemes and offers people like tovisit Big Bazaar most often. Vishal Mega Mart is also giving attractive discount on formalwear so it is also known for good footfall. Shoppers stop do not have discount offers andschemes but it still likes by some of people in sample size because of its ambience, shoppingcomfort and good customer services.
Projectsformba.blogspot.com5.2.4 Customer Preferences for shopping from Retail chains:Interpretation: The consumers of sample size were visiting the big retail outlets mostbecause of their good pricing and for their attractive schemes and discounts offers. After thatthey also are going for the quality experience. The location of the store is also a big concernfor the consumers. Thereafter they are also looking for good customer services. They want toget well treated by the sales persons of the stores. Ambience came in last for all of them.
Projectsformba.blogspot.com5.2.5 How often you go for shopping?11% respondents go shopping twice a month, while 29% go shopping only twice a week.Most of the respondents i.e. 39% people go shopping once a week. With the increase inspending budget of the consumer, the frequency of shopping has increased.Interpretation: The Indian customers still buy the product according to their needs andthat’s where unorganized sector come into the place, as customer buys the products on dailyor weekly basis according to the requirement. So they prefer to buy from the nearby store asthat is easily assessable to them, the retailer should choose a good location according to thetarget customer of the products they want to sell.
Projectsformba.blogspot.com5.2.6 I would not mind paying extra for a well known brand.In this question 102 respondents said that they disagree with paying extra for a brand, out ofwhich 46 completely disagree with this.35 respondents were neutral on this and 63respondents were those who agree with this, out of which 22 were those who completelyagree with this as these were those who were brand loyal.Interpretation- one can understand and value a brand as the amount they pay extra for thatproduct. That pays extra for that product because that gives them the brand image, qualityand inquisitiveness of the west. By paying extra the consumer can be satisfied and ensured ofgetting good quality of the product. But by this survey we are able to know that consumerused to buy the product which is of good quality and they are not willing to pay extra for thebrands. Some products are there where customer pays extra for the brands but products usedin culinary doesn’t require branding and customer are not willing to pay extra for that
Projectsformba.blogspot.com5.2.7 I buy only from where my friends buyIn this 12 respondents said they only buy from a place from where their friends buy as theyare very much influenced by their friends, 28 respondents said they tend to agree with thequestion, 37 respondents were neutral on the question, 123 respondents said they tend todisagree with this, out of which 52 end to completely disagree with the question.Interpretation- The consumer buys the product from that place which is close to theirresidence. As it is easily accessible to them and they can have better relation with thatretailer, customer would never go to the retailer which is suggested by their friends or farfrom their home.
Projectsformba.blogspot.com5.2.8 There should be a children play area.This question was basically for the parents as they need some entertainment for their childrenwhenever they are shopping. So in these 32 respondents said it is very important for them tohave a children play area, 48 were neutral on that and 120 respondents said it is not importantfor them whether there is a children play area or not inside any mall.Interpretation- From the above question we are able to know that the Indian consumers stillnot shop for the entertainment or for recreational purposes. They go to this type ofdepartmental store or mall to buy the cheapest product and if they will not find any play areafor their children, it hardly matters to them.
Projectsformba.blogspot.com CHAPTER 6 CONCLUSION, SUGGESTION AND LIMITATIONS6.1 CONCLUSIONThe retail sector is undoubtedly growing and is attracting large-scale investments, but someretailers are closing down ventures to rework either the value proposition or the retail format.While some are moving away from malls to start their own exclusive stores, others are insearch of niche businesses that will be commercially viable. This was quite expected forbefore any sunrise sector finds its feet, there is the proverbial churning, failure before itstands up strong.The Indian market– is really a jigsaw of different markets – in markets as fragmented andvaried as this, it seems that the age-old marketing strategies may fail to deliver sustainedbrand success for retailers. What is required is an Unconventional marketing mix .This Indianretailers have realized.CULTURE is one of the major factors affecting consumer behavior and some of itsdimensions can be clearly observed with regard to the attitudes and values of consumers.Culture is a combination of learned beliefs, values and customs that can direct the behavior ofconsumers in a specific society. Customs on the other hand are overt modes of behavior thatare acceptable in a specific cultural context .From the marketing viewpoint, not just products& brands but successful business models would have to take into consideration the customsexisting in a specific market situation. With changes in the environment, though, customschange and marketers will be successful if they adapt their business models & time theirproducts/brands and position them in an appropriate manner. Thus undoubtedly the Indianshopper especially the urban ones(which definitely does not mean just the metro cities) iswanting a shopping experience akin to the kind he is exposed to, through the western media,but is yet not completely ready to overhaul his lifestyle preferences overnight. As the ACNielsen study clearly depicts that though retail potential is tremendous in the emergingeconomies the Asian shopper especially the Indian shopper still patronizes the local grocer
Projectsformba.blogspot.comfor his everyday purchases. Not just the consumer but the FMCG marketer too has extendedhis support to the traditional channel retailers, the higher end corner shops (read unorganizedretailer), in a phenomenon being termed “Mom & Pop-ping Back” by the Brand Equity,Economic Times, 15th March 2006.Also to be noted is that malls may be mushrooming all over India but studies have shown thatwhile traffic is high actual purchases do not match up. Retailers will have to take intocognizance the fact that sheer novelty factor or the ambience would not drive sales. Thoughthese are early days vital lessons are to be learnt from the experience of pioneers likeShopper’s Stop (which took 8 years to break even). The modern Indian shopper in spite of hisnew orientation continues to be price sensitive (the success of Westside is a prime example)yet demands a world class experience. Thus, success of the malls in the days to come "willdepend on the content they carry".Some well-known retailers have also learnt the hard way. For example, Shoppers Stopdecided to curtail the area of each of its stores after it worked out the optimal store sizeneeded for a break-even. And food chains such as McDonalds, Café Coffee Day and Baristahave, on several occasions, opted out of malls, in favor of stand-alone stores since businessinside malls was dull. Experts point out that retail is a long-term game, requiring carefulinvestment planning and economies of scale, but many retailers still feel that the number offootfalls is directly proportional to the business being generated. Footfalls do notautomatically mean business. Each retail concept has to be nurtured with adequateinvestments, right location and a five-six year gestation period. Retail consultancy KSATechnopaks Mr. Arvind Singhal is quick to point out that the closure of retail stores, "showsthat the retail business, much like any other, needs to have a clear value proposition. Theretail market in India is still at its nascent stage, where the trial and error method will be usedfor more time."Building and maintaining strong brands were the hallmarks of all successful companies.Building the right relationship between the brand and its consumers creates successfulbrands. Brands with the greatest equity are the most profitable because their customers aregenerally more loyal and willing to pay higher prices for the product, and have a closerrelationship with the brand.
Projectsformba.blogspot.comThus, for retailers, building store equity is increasingly becoming more important asconsolidation and the expansion of the modern trade increases, retailers would have to buildstore equity to develop chain level brand awareness & consumer loyalty; and induce theirwillingness to pay a premium to shop there.The consumer’s preferences are changing rapidity and becoming highly diversified. It isdifficult for the retail stores to satisfy all the needs of the customers. The most of theconsumer’s want to get some attractive prices, good schemes and offers on every purchasesand a shopping comfort as well. Those who are able to purchase their needs and want for amonth in a bulk prefers to go to the retail chains. Because of competitions in the market thebranded formals are also became cheaper so the younger generation prefers to purchase fromthe retail outlets of the brand the city. Only the big retail chains are able to satisfy all theseneeds of the new age consumers whereas there is still some consumers mostly of the old ageare willing to purchase from the local kirana store. Some of them have perception that thesebig stores are too costly to afford and some of them are not able to make purchases in a bulkso they do not want to waste their time to go especially to the big store for 2-3 itemspurchase. In the case of other items like wristwatches, branded jewellry, mobiles, gift itemsand other, they prefer to take it from where they are getting cheap prices, good after salesservices and the goodwill of the store.After studying the customer survey questionnaire statistically and theoretically as well andafter observing the consumer’s mood and their preferences I can say that Big Retail is here tostay. Assuming that improvements in infrastructure and lower real estate costs become areality, Big Retail still has a long way to go before satisfying the highly diverse needs of theIndian population. As a result, there will be a steady state where Big Retail will co-exist withSmall Retail.
Projectsformba.blogspot.com6.2 suggestions • The location of the outlet plays a pivotal role in emerging as a lucrative store, as the person likes to visit those stores only which are close to their home and they don’t have to travel a lot. So location planning should be done before opening a store as that will decide the future of the store and the target market should also be considered and the location should be chosen keeping the target market in the mind. • The merchandise in the store should be according to the positioning of the store. Proper product range as well as price range should be available, as consumer has different criteria of choosing the items for them. Retailers should try to cater the entire consumer as that will increase the revenue of the store. • The retailers should also provide the delivery system for the consumer as this will turn into customer loyalty and they will purchase from your store repeatedly, and if the retailers will remember the preference and liking of the consumer on their second purchase then the customer will be delighted and they will have like to purchase from your store only as that will save their time. • Retail Boom now Spreading to Tier- II and Tier-III Cities: As the current economic boom in India is spreading to Tier-II and Tier-III cities and towns, approaching potential consumers in these cities is among the high priority list for most of the retail companies. Cities like Noida, Gurgaon are emerging as the lucrative retail destinations due to their huge growth potential. So the Retailer should try to focus more on these cities as opening store in this store can give them the whopping sales. • Retailers Focusing on Private Labels: Retailers are nowadays feeling the rising pressure on their margins and are hence looking at sales through private labels to improve their bottom lines. Most of the retailers are expecting 20%-40% growth in their private label segment within the next three years. The margins offered by the private labels are as high as 35%-40%. The rising margins in the private label are inducing the retailers to put the private label and this can provide them good profit
Projectsformba.blogspot.com margins and help in long run of the retail store. Because consumers are not willing to pay extra for the well known brands they just want quality product which can be afforded by them. • Organized Retail growing: Currently, the share occupied by organized retailing within the total retail market is around 5% and is likely to increase further due to large number of malls and organized retail stores coming up in India or under the planning phase. The revival in organized retail sales gives an indication towards growing spending by the urban consumers, which is likely to boost the overall business environment.6.3 LimitationsFor every research there are restrictions and limitations. Without them the world does notexist. Similarly there are some restrictions in my research work, which could not becontrolled. The following were some limitations, which I faced in the making of thisresearch. • The study was restricted to selected Malls and Stores in NCR • Time was the biggest constraint. It was difficult and time consuming to get the questionnaires filled personally from the respondents thus the sample size was restricted to 20 Retailers and 120 Customers. Nevertheless all efforts were made to get relevant information for the successful completion of the research. • There may be some discrepancies in views as some people might give false information in the Questionnaire, as they might not be interested in filling the form. • The respondents may be biased in their opinions.
Projectsformba.blogspot.com Bibliography BOOKS • Willard N. Ander and Neil Z. Stern- Winning at Retail: Developing a Sustained Model for Retail Success • Michael levy, Barton a Wietz and Ajay Pandit- Retailing management, Tata Mac Graw-Hill, 6th edition • Naresh K Malhotra, Marketing Research- An applied orientation, 4th edition, Pearson education pvt. Ltd. • Kotler, Phillip, Kevin Keller– 13E Marketing Management • What retailers do- David Jenkins. REFERENCES • KSA Techno pak Consumer outlook 2004 • INDIAN RETAIL INDUSTRY - insights • Retail sector bows to Queen consumer, Times of India Feb 18, 2004 • Price Waterhouse Coopers, India Country Report ,Retail & Consumer Growth Dynamics From New Delhi to New Zealand 2003/2004 • The Asia Pacific Retail and Shopper Trends 2004, (AC NIELSEN) • www.iimcal.ac.in/community/consclub • www.ibef.org/industry/retail.aspx • www.indianrealtynews.com/category/retail-market • www.thehindubusinessline.com/nic/137/index.htm • indiafdiwatch.org/fileadmin/India_site/10-FDI-Retail-more-bad.pdf • www.rncos.com/Blog/retail.html • www.rediff.com/money/2008/sep/30bcrisis3.htm • www.indianground.com/retail/retail-sector-in-india.aspx • www.equitymaster.com/detail.asp • www.indiaedu.com/career-avenues/career-in-retail-sector.html • www.hindu.com/2008/04/30/stories/2008043061221200.htm • www.indianrealtynews.com/retail-market/india-witnesses-massive-growth-in-retail- sector.html - • www.legalserviceindia.com/article/l112-Retail-Sector-&-FDI.html
Projectsformba.blogspot.com Annexure CONSUMER SURVEY QUESTIONNAIRE RETAIL CHAINSThe objective of this survey is to collect tangible information about shoppingin Retail Chains. This questionnaire is being administered to people like youwho have visited and bought products in Retail Chains. Please let us knowyour spontaneous response to the questions that pertain to your shoppingexperience in Retail Chains. All information provided by you shall be keptconfidential and we shall only be publishing the outcomes. Please provide usyour unbiased and frank opinions.1. Name: ______________________________________________________2. Age: 15-20 20-30 30-40 40-50 50 & above3. Occupation: Student Govt. Employee Private Employee Businessman Any other (Pls specify) _______________4. Income group: 5k-10k 10k-20k 20k-30k 30k-40k 40k-50k 50k & above5. Education: Student Graduate Post-Graduate MBA Any other (Pls specify) ___________________6. Number of Family Dependants: Nil One Two Five Any other (Pls. specify)7. Telephone Number / E-mail:___________________________________________ 1. What is your monthly shopping budget? 0-2K 2-5K 5-10K 10-20K 20-50K >50K 2. Which retail chains do you visit often? Big Bazaar Shoppers Stop Westside Pantaloons Piramyd Vishal Megamart Any other (Please specify) ________________________________ 3. Why did you like that particular retail chain?
Projectsformba.blogspot.com Ambience Attractive Prices Wide range of choices Discount Schemes Free Offers Customer Service Any Other (Please Specify) ___________________________________ 4. How often you go for shopping? Once a week Twice a week More than twice a week Twice a month 5. I would not mind paying extra for a well known brand Strongly Agree Agree neither Agree nor Disagree Disagree Strongly Disagree 6. I buy from where my friend buys. Strongly Agree Agree neither Agree nor Disagree Disagree Strongly Disagree 7. I do not go to buy brand names and will buy unbranded products also if I am convinced of better quality Very important Important Neutral Not important Not at all important 8. We would like to prefer to go those malls which have the parking facilities. Very important Important Neutral Not important Not at all important 9. The location should be easily assessable. Very important Important Neutral Not important Not At all important 10. The environment of the retail outlet should be appealing. Very important Important Neutral Not important Not at all important 11. The malls should have the children playing area and a garden Very important Important Neutral Not important Not at all important 12. Which products do you normally buy from retail chains? ___________________________________________________________________
Projectsformba.blogspot.com _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ 13. Which products do you normally buy from your local grocery store? _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ ____________________________________________________________________