Dept of Commerce and Management studies Andhra University UGC Seminar On“ new trends in business education” 4th Dec, 2012
Session on Experience sharing with retailFocus Under the Esteemed Guidance of Prof. B. Mohan Venkat Ram By: Sobha Rani Peddini
Retail BasicsDefinition: A business or person that sellsgoods to the consumer, as opposed to awholesaler or supplier, who normally sell theirgoods to another business.Retail consists of the sale of goods ormerchandise for final consumption by the userand not for further sale or processing.
Organized Retailing – trading activitiesundertaken by licensed retailers those who areregistered for sales tax, income tax, etc., theseinclude the corporate-backed hypermarkets and retailchains, and also the privately owned large retailbusinesses.Unorganised retailing – traditional formats of low-cost retailing, for example, the local kiranashops, owner manned general stores, etc
Major global Retailers Retailer Home CountryWal-Mart Stores USACarrefour Group FranceThe Home Depot, Inc USAThe Kroger Co. USARoyal Ahold NetherlandsMetro AG GermanyTarget Corporation USAAlbertson’s,Inc. USASears, Roebuck and Co. USAKmart Corporation USA
Major Domestic PlayersRetail Group StoreFuture Group PantaloonK.Raheja group Shopper’s stopTata group West sideRPG SpencersLandmark Group LifestyleBharati-walmart WalmartReliance group Reliance retailA V Birla Group Louis Phillipe, Van HeusenMetro Metro cash and carryViveks Ltd Viveks
Other classification of retail formatsMom-and-pop Stores – Family owned businessesDepartment stores – KarachiwalaCategory Killers – best buy, sports authorityMalls – Forum mall, Spencer PlazaDiscount Stores – Brand factorySupermarkets – TrinethraHypermarkets -- Big bazaar
Indian Retail Scenario At A Glance• The contribution of retail industry to India’s GDP is more than 13%.• Spreads over more than 6 million outlets (2.4 million urban and 3.6 million in rural).• There is no supply chain management perspective.• Over 8 per cent of India’s population is engaged in retail
Indian Retail Scenario At A Glance• India’s per capita retailing space is the lowest in the world. (2 square feet).• In India still, more than 60% sales in retail comes from food items only• No role model for Indian suppliers and retails to adapt or expand in the Indian context. Hence Indian retailers have to find a suitable model and adopt it to the Indian context.
Indian Retail Scenario At A Glance• India’s first true shopping mall was inaugurated in 1999 in Mumbai. (This mall is called “Crossroads”).• An FDI Confidence Index survey showed that the retail industry is one of the most attractive sectors for FDI (foreign direct investment) in India.
Issues in International Retailing • Legislation and Regulation -- FDI • Taxation and Cross Border Shopping • Variations in Retailing Practice and Customs
Introduction to fdiFDI refers to the capital inflows from abroad that is invested inor to enhance the production capacity of the economyMethods:The foreign direct investor may acquire voting power of anenterprise in an economy through any of the following methods: •by incorporating •by acquiring shares •through a merger or an acquisition of an unrelated enterprise •joint venture with another investor or enterprise
FDI in IndiaName of the sector Increase in FDiInsurance 49%Broadcast sector 74%Retail and consumer 51%products(Multi brand)Retail and consumer 100%products (single brand)Aviation 49%
Scope of FDI in retail sectorAfter agriculture, retail sector is thehighest employer, employing 7% of the totalwork force in the country.Retailing in India accounts for more than13% of its GDP
Scope of FDI in retail sectorBetter cold storages prevent loss of fruitsand vegetables Opening up of large retail houses willupgrade systems, supply chain, upgradepeople and their abilities and skills. Consumers will be benefited first
FDI in RetailOn September 14th 2012, Government of India allowedFDI in Multi-brand retail up to 51% and in single brandretail up to 100%The choice of allowing FDI has been left to stategovernments.The Chief Ministers ofDelhi, Assam, Maharashtra, AndhraPradesh, Rajasthan, Uttarakhand, Haryana andGovernments of the State of Manipur and the UnionTerritory of Daman & Diu and Dadra and Nagar
Some Regulations of FDIThe establishment of the retail sales outlets will bein compliance of applicable State laws/regulations, such as the Shops and EstablishmentsAct etc.Retail sales outlets may be set up only in cities witha population of more than 10 lakh as per 2011 CensusIn States/ Union Territories not having cities withpopulation of more than 10 lakh as per 2011Census, retail sales outlets may be set up in the cities
FDI proposed conditions1} Minimum investment of US $100 million2} At least 50% of total FDI brought in shallbe invested in backend infrastructure •within three years of the induction of FDI •back-end infrastructure will include investment made towards processing, manufacturing, distribution, desi gn improvement, quality control, packaging, logistics, storage, ware- house, agriculture market produce
FDI proposed conditions3} Expenditure on land cost and rentals, if any, willnot be counted for purposes of backendinfrastructure4} There is a conditionality requiring at least 30%procurement from Indian small industries5} State Governments are also responsible foraspects ancillary to MBRT, such as zoningregulations, warehousingrequirements, access, traffic, parking and other
Safeguards A three year timeframe has been fixed for settingup the back-end infrastructure This condition will bind the foreign investors toinvest in critical back-end infrastructure, which is afelt need across the country It would also make the foreign investorsaccountable for proper implementation of thecondition. Farmers stand to benefit from the significantreduction in post-harvest losses
There is a conditionality requiring at least 30%procurement from Indian small industries This would enable them to get integrated withglobal retail chains. This, in turn, will enhance theircapacity to export products from IndiaThe final decision will be taken by the stategovernments This gives a control on approvals fornumber, size, format and type of retailer, based onthe favorable conditions of that concerned state
BenefitsGlobal experience indicates that organized andunorganized retail co-exists and growConsumers stand to gain the most.. •firstly, from the lowering of prices that would result from supply chain efficiencies •secondly, through improvement in product quality
BenefitsThe young people joining the workforce willbenefit from the creation of employmentopportunitiesThe policy will facilitate greater FDI inflows,additional and quality employment, global bestpractices and benefit consumers and farmers inthe long run
Age of the individuals Sample distribution 51 & above 2% 41-50 Upto 20 Male 8% 8% 44% 31-40 22% Female 56% 21-30 60% Occupation of individuals 43.5% 37% 6% 9% 4.5%business employes Student H.W Others
Growth of Shopping malls in recent years is beneficiary to the customers40 37.5% 37%3530 21.5% 21.7% Female25 22% Male20 12%1510 16% 15.3% 3.5%5 10% 0.5% 3%0 Strongly agree Agree Disagree Strongly disagree
Central Government’s recent decision on FDI helps for the growth of retailing in India50 45.5%454035 30%30 28.3%25 21% Female 14.7%20 Male15 13%10 17.2% 15.3%5 8% 3.5%0 Strongly agree Agree Disagree Strongly Disagree
Where do you prefer to shop?60 52% 48%5040 30% 25.7%30 Female Male2010 22.3% 22%0 Kirana Shops Shopping mall
Do you think foreign retailers intervention will effect small scale retailers business90 82%807060 49%50 Female40 Male30 18%20 33% 6.6%10 11.4%0 Yes No
Do you think foreign retailers offer products at cheaper rates80 68%706050 38.4%40 32% Female Male30 17.7%20 29.6%10 14.3%0 Yes No
ConclusionEntry of foreign investors into the country willimprove the GDP of the nation. It creates efficientstorage facilities, infrastructures, improve supplychain matrix, upgrades the existing technology, creates millions of jobs and consumers arebenefited more The studies shows that FDI approvalis more beneficial to the nation in the long run, butwith some conditions in order to safeguard theinterests of small and middle intermediaries.
ConclusionThe small scale intermediaries are however given priorityby the foreign players as they need local networking fortheir business activities. But still few will be endangeredbecause of their low supply capabilities.Majority of Vizagites opined that they will get qualityproducts at a cheaper rates. They also opined that thesmall scale retailers will be effected by the intervention ofbig players. Majority of the sample agreed with theCentral Government’s recent decision.
Thank YouUnder the Esteemed Guidance ofProf. B.Mohan Venkat Ram