Report - Retail Sector

A report on “Retail

Sector in India”

Submitted to:
Dr. R. L. Dhar

Submitted By:
Saurabh Paul
Saurav kumar
Shailendra Shankar Gautam
Sharad Srivastava
Department of Management Studies
Indian Institute of Technology Roorkee

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TABLE OF CONTENTS
1INTRODUCTION TO RETAIL SECTOR...............................................................................4
2EVOLUTION OF RETAIL SECTOR IN INDIA......................................................................5
3ANALYSIS OF RETAIL SECTOR........................................................................................6
3.1 Unorganized Retail Sector............................................................................................................. 6
3.1 Unorganized Retail Sector............................................................................................................. 6
3.2 Organized Retail Sector................................................................................................................. 7
3.2 Organized Retail Sector................................................................................................................. 7
3.3 Growth of Organized Retailing in India......................................................................................... 7
3.3 Growth of Organized Retailing in India......................................................................................... 7
3.4 Retail Formats in India................................................................................................................... 8
3.4 Retail Formats in India................................................................................................................... 8
3.5 Trends in the Retail Sector............................................................................................................ 9
3.5 Trends in the Retail Sector............................................................................................................ 9
3.6 Verticals in the Organized Retail Sector.......................................................................................9
3.6 Verticals in the Organized Retail Sector.......................................................................................9
3.7 Rural Retailing in India................................................................................................................. 10
3.7 Rural Retailing in India................................................................................................................. 10

4SITUATION ANALYSIS OF RETAIL SECTOR..................................................................10
4.1 Strengths (S)................................................................................................................................. 10
4.1 Strengths (S)................................................................................................................................. 10
4.2 Weaknesses (W)........................................................................................................................... 11
4.2 Weaknesses (W)........................................................................................................................... 11
4.3 Opportunities (O).......................................................................................................................... 11
4.3 Opportunities (O).......................................................................................................................... 11
4.4 Threats (T)..................................................................................................................................... 11
4.4 Threats (T)..................................................................................................................................... 11

5CHALLENGES FACED BY INDIAN RETAIL SECTOR.....................................................11
6FDI REFORMS IN RETAIL.................................................................................................12
6.1 FDI Policy in Retail....................................................................................................................... 12
6.1 FDI Policy in Retail....................................................................................................................... 12
6.2 Advantages of FDI Policy in Retail.............................................................................................. 13
6.2 Advantages of FDI Policy in Retail.............................................................................................. 13
6.3 Resistance to FDI in Retail........................................................................................................... 14
6.3 Resistance to FDI in Retail........................................................................................................... 14
6.4 Expectations of FDI in Retail....................................................................................................... 15
6.4 Expectations of FDI in Retail....................................................................................................... 15

2

7BIG RETAIL PLAYERS......................................................................................................15
7.1 Top Retailers in India................................................................................................................... 15
7.1 Top Retailers in India................................................................................................................... 15
7.2 Top Retailers in the World........................................................................................................... 15
7.2 Top Retailers in the World........................................................................................................... 15

8FUTURE OUTLOOK...........................................................................................................16
9RECOMMENDATIONS.......................................................................................................16
10CONCLUSION...................................................................................................................17
11REFERENCES..................................................................................................................18
11.1 Reports........................................................................................................................................ 18
11.1 Reports........................................................................................................................................ 18
11.2 Journals and Research Papers.................................................................................................18
11.2 Journals and Research Papers.................................................................................................18
11.3 Online Resources ...................................................................................................................... 18
11.3 Online Resources ...................................................................................................................... 18

3

1

INTRODUCTION TO RETAIL SECTOR

The Indian retail sector is one of the booming industries in India. It contributes to around
14%-15% of GDP and has experienced a growth rate of 10.6% between 2010 and 2012. The
Indian retail sector also employs around 40 million people (roughly 3.3% of the population)
and is one of top 5 retail markets around the world.
Traditionally retaining in India is done through weekly markets or village fairs. It used to be a
time taking exercise where customers used to reach at a certain place and at a certain
time/day. Then the emergence of local Kirana shops found resonance with the customers.
This form of local retailing reduced the time and spatial requirement. The government has
also promoted retailing through retail societies with prime focus on cost saving. After the
liberalization of the economy in 1991, there has been a phenomenal growth in Indian middle
class (now around one third of the entire population) and a new wave of shopping malls and
supermarkets came into existence. This has led to modern retaining and some of the big
brands such as Shopper’s Stop and Globus made their presence felt in Indian retail market.
The Indian retail sector is mostly unorganized with only 8% share is held by organized
retailing. Apparel industry, Fashion & Lifestyle, Food and Beverages and Mobile & Telecom
are some of the emerging areas in the retail sector. After the introduction of 100% FDI in
retail, the sectoral imbalance is expected to be reduced through the expansion of organized
sector. The recent growth of the Indian retail sector is driven by the increased spending of
Indian household and the rise of the middle class. This middle class segment looks not only
for price but also the other attributes such as brand name, quality etc.
The Indian retail sector proved to be robust enough to sustain itself. The sector maintained its
growth even during the 2008 recession. One of the prime reasons was a huge internal demand
which acted as a cushion and has been a driving force for retail boom. Easy availability of the
factors of production is another reason.
The Indian retail industry is having its challenges as well. Some of them are absence of
standardization, inefficient supply chain, lack of infrastructure and poor customer insight.
The majority of these issues can be handled in organized retailing. With the advancements in
technology as well as the increasing number of the big business organizations, these
problems will go away. In 2012, the government brought retailing reforms by allowing 100%
FDI in single brand stores and 51% in multi brand stores. The move would trigger an influx
of big global brands to come to Indian retail market. Though there is resistance from
conventional storeowners however the move will not only increase efficiency but also be a
potential tool for employment generation.
The prospect for the Indian retail sector looks promising. After FDI many big retail chains
are planning to invest in the Indian retail space. The need of the hour is to focus on customer
needs, technological innovations, quality and diversity of products.

4

2

EVOLUTION OF RETAIL SECTOR IN INDIA

The origin of the Indian retail sector could be traced to local Kirana shops. Before that India
has a crude system of retailing in forms of fairs, weekly hats etc. These local Kirana stores
were the first step towards convenience shopping. Later government also promoted the rural
retailing and several franchise stores came up such as Khadi and Village Industries
commission. After economic reforms, a new era of retailing came into existence with malls
and supermarkets. Broadly the evolution can be categorized into four phases:
Weekly markets, Village fairs, Mela: They were the primitive form of retailing.
These forms were having the rural reach and they also provided a medium of
entertainment apart from retailing function.
B. Convenience stores: They are in the form of local Kirana and mom-and-pop stores.
Their area of operation is centered to local region and they provided convenience to
the customer.
C. Khadi and Village stores societies: they are government supported form of retailing.
Their main value proposition was low cost and availability.
D. Malls, Supermarkets, Hypermarkets: They came up after the 1991 reforms. They
largely cater to the middle class and provide shopping efficiency.
A.

In terms of time, it can be categorized into three phases:
Post independence and Pre-reforms: There were some efforts initiated by the government
in the mid-1980 to open up the economy. However it did not give desired result and disturbed
the balance of payment. The fallouts were far reaching. For the first time in India negative
growth has been recorded in production in India. Even export rate had been negative. The
situation further deteriorated and by 1990-1991 India had a 3.1% fiscal deficit and 12%
inflation rate. This grim scenario forced the government to implement reforms and remove
excessive government control. Till this time India mostly had a traditional retail system with
no malls or big sized market.
Post-reforms: The economic reforms paved the way for competition, entrepreneurship and
better infrastructure from which retail sector has also benefited. The Indian economy has
been doing well since then. The GDP has grown at an exceptional rate. The reforms also
brought the era of service industry and a burgeoning middle class. This has translated to
shopping malls, and big sized stores. The increased ratio of organized sector and entrance of
big players are highlights of this phase.
FDI in retail: In 2012 Indian government allowed 100% foreign investment in single brand
retail stores. Though the consequences are yet to be seen however experts are excited about
it. The move will trigger the gateway for big global players like Tesco and Walmart and raise
the organized retailing. It would also result in improved supply chain, better technology and
greater supply of money in Indian market.
The growth story can be depicted by below graph:
5

Figure 1: Evolution of retail companies in India

Source: Dun and Bradsheet India
To sum it up, below table depicts the formats for retail business in India for different time
frames.
Table 1: Evolution of Modern Retailing in India
Time/Phase Description
Before
Peddlers, vegetables, vendors, neighborhood kirana store, sole clotting on
1980s
consumer durables
1980-1991
Few organized retail players particularly from the textile industry such as
Raymond or Grasim
Post 1991
Turning Point with economic reforms, i.e. dilution of strict laws, NAZ, entry
of international players enter into the retail Market

3

ANALYSIS OF RETAIL SECTOR

The Indian retail sector can be classified into two broad heading: Unorganized retail and
Organized retail. The Indian retail sector is largely unorganized with more than 90% share.
This presents a contrasting scenario as compared to developed countries where organized
sector’s contribution is 75-80 percent.

3.1

Unorganized Retail Sector

It consists mainly of small shops, mom-and pop stores and owned general stores. As per
FICCI, it is estimated to grow at a 5% rate and expected to reach at 650 billion USD by
2020 (76% of total retail). Some of the basic characteristics are mentioned below:
• This sector is highly competitive with a large number of suppliers.
• It involves a number of intermediaries which provide a net negative effect on the
overall economy.
6

•
•
•

3.2

Unorganized sector is one of the main sources of employment generator.
It suffers from lack of standardization.
Productivity is very low (only 4% compared to USA).

Organized Retail Sector

This is the modern format of retailing and involved big corporate players. According to
FICCI, this sector is anticipated to grow at a 25% rate and reach at 200 billion USD
(around 24% of total retail business). Some of the basic characteristics are mentioned below:
• It involves big corporate players and operates in form of supermarkets and malls.
• It is a standardized form of retail business.
• Its growth is associated with a rising middle class and economic progress.
• It is a technological intensive format with improved supply chain.
• It offers a variety of products at single place and having less operating cost.
The growth of Indian retail market is given below:
Table 2: Shape of Indian Retail Market
2010
2012
(In
Rs. (In
Rs.
Crore)
Crore)
Total Retail
21,19,634
28,50,055
Modern Retail
1,38,961
2,23,572
Share
%
of 6.6
7.8
modern retail
Source: Indian Retail Report 2013

3.3

Growth
%
16.0
26.8

Est. 2015
(In
Rs,
Crore)
47,80,318
4,87,423
10.2

Est. Growth
%
18.8
29.7

Growth of Organized Retailing in India

Ernst & Young (2007) have said that “prevalence of traditional retailing is highly
pronounced in small towns and cities with primary presence of neighborhood ‘kirana’ stores,
push-cart vendors, ‘melas’ and ‘mandis’. Organized formats are only in initial stages of
adoption in these regions. Leading retail players in the industry are beginning to explore
these markets and the rural consumers are slowly beginning to embrace the newer organized
retail format.” However the situation is not the same now. In the last five years organized
retailing has gained wide acceptance among the masses. In 1999 there were only 3 shopping
malls in India. The number has grown to 190 by 2010. The number is getting higher and
organized sector is destined to take the front seat. A brief growth of organized retail is given
below:
Figure 2: Growth of Organized retail in India

7

Source: Technopak Estimate, GoI

3.4

Retail Formats in India

As of now, a variety of formats are existing in India related to both organized as well as
unorganized sector. Some of the prominent formats are listed below:
1.

Mom-and-Pop Stores: These are family owned small sized stores which products
from diverse category. They maintain a personal bonding with the customers.

2.

General Merchandise Retailer: They offer a diverse range of products to the
customer with substantial depth. This format is again broken into several sub formats
as listed below:
A. Super Market: It is large sized self service stores offering a wide range of
products at one place such as food items, household items, cosmetics etc. they
focus on a low profit margin and high amount of sales. This format is usually by
big corporate houses such as Big Bazaar.
B. Discount Stores: These are self serving low cost stores offering known brands.
They focus on a less profit margin and high sales. Factory outlets come under this
category.
C. Department Stores: These are general stores offering quality products and
services. Some of them sell only a particular brand. Examples include Lifestyle
and Pantaloon.

3.

Specialty Stores: They offer a narrow product line with greater depth. These stores
usually offer lifestyle products such as jewelry. Tanishq is an example of such stores.

4.

Shopping Malls: They are the most popular form of organized retailing. They offer
the widest range of products under one roof. They occupy very large space and try to
present everything one wants to buy.

5.

Vending machines: This is relatively new format. This is self serving unmanned
vending machines which offer a limited or a single variety of product.
8

6.

3.5

E-Retailing: This format came into existence as a result of technological
improvement. It provides online purchase of products and services. Flipkart is an
example of this retail format.

Trends in the Retail Sector

The retail sector involves high interaction with the customers. Therefore any change in the
social, economic or other attribute makes a direct impact on retail business. In addition to
that there are other factors which affect retailing business. Some of them are discussed
below.
Growth of double income households: In modern times, the nuclear families are on the rise
with both partners earning. This has led to greater purchase power and increased spending.
This is one of the most factors for flourishing retail business in India.
The rise of organized retailing: Though Indian retailing is still dominated by an
unorganized form however recently big corporations have entered into retail business. This
has led to enhanced popularity of shopping malls. With retail FDI reforms organized sector
is expected to rise.
Acceptance of online retailing: The online shopping is yet to achieve its full potential. But it
is slowly and steadily gaining acceptance. According to Assocham, online retailing is
growing at a 35% rate.
Increased brand consciousness: The last 20 years (after economic reforms) have made a
significant impact on purchase decisions. Earlier value of a product was recognized by its
price tag. However people are now more sensitive to brands. Youth in particular are very
brand savvy.
Growing use of plastic money: With the credit card revolution, purchasing power has been
increased significantly. This has led to the growth of retail business in India.

3.6

Verticals in the Organized Retail Sector

The retail sector is divided into many verticals each experiencing a different growth. These
different verticals occupy different shares of modern retailing business. Below table shows
different verticals along with their share. The data shows that clothing and apparel section is
the backbone of modern retailing. Other major contributors are mobile & telecom, consumer
electronics and food & grocery. On the other hand, fashion, fitness and eyewear make a very
less contribution in overall retaining business.

Table 3: Share of different verticals in modern retail
Vertical
Share in Modern Retail
Pharmacy
2%
9

Mobile & Telecom
11%
Consumer Electronics
8%
Entertainment
& 3%
Gaming
Leisure
2%
Home & Interiors
5%
Food Service
7%
Food & Grocery
11%
Timewear
2%
Eyewear
1%
Jewelry
6%
Footwear
4%
Fashion Accessories
1%
Clothing & Apparel
33%
Fitness
1%
Beauty & Personal Care 3%
Total
100%
Source: India Retail Report 2013

3.7

Rural Retailing in India

Rural population constitutes more than 70% in total Indian population. This huge market has
relied on unorganized sector such as convenience stores, melas etc. Though the urban areas
offer greater prospect to organized retailing however urban areas are believed to face the
saturation. Many companies now are eyeing this large untapped market. ITC has started a
“Chaupal Sagar” scheme for rural marketing. DCM Shriram has also initiated a “Hariyali
Kisaan Bazaar” scheme which is very effective for farming. Another reason for rural retail is
that this sector is less affected by the financial crisis. The purchase pattern is very different in
rural retail from urban retailing. The rural market is mostly based on FMCG and consumer
durable goods. Therefore retailing business is changing with the environment. The area of
operation is larger for a retail store and people have specific needs. Companies have started to
invest heavily on rural markets. The growth is highlighted by the statement of Ramesh
Srinivas, Industry Director (Consumer Markets), KPMG, “Overall there is a huge market
which is waiting to be served, ready to splurge, willing to explore new products and services,
and retailers can tap on their wallets.”

4

SITUATION ANALYSIS OF RETAIL SECTOR

4.1

Strengths (S)
•
•
•

Availability of low cost skilled labor
Large and diversified segments with wide variety of products
Changing buying behavior and purchase preference

10

4.2

Weaknesses (W)
•
•
•

4.3

Opportunities (O)
•
•
•

4.4

Greater investment and FDI opportunities
Bright prospects in rural retailing
A huge domestic market which is growing

Threats (T)
•
•
•

5

Highly fragmented industry (inequilibrium in organized v's unorganized)
Underdeveloped supply chain mechanism
Lack of technology development

Political, economic and social issues
High government regulation and bureaucratic structures
Price competition among retails puts a downward pressure

CHALLENGES FACED BY INDIAN RETAIL SECTOR

Retail business in India is still in nascent stage and plagued by several deficiencies. These
weaknesses not only pose a question mark on overall efficiency but also take a toll on future
growth prospects. Some of the major challenges faced by the Indian retail sector are
described below:
Inadequate infrastructure: It is one of the key issues for retail industry. While India is the
second largest producer of fruits and vegetables with total production of around 221 million
tons in 2010-11, India has a cold storage capacity of approx. 25 million tones. This has
resulted in wastage of food products. According to Central Institute for Post Harvest
Engineering & Technology, a total of 18% of fruits and vegetables (worth Rs. 44000 crore)
were wasted sue to this shortage. Other factors such as deficit of power supply, poor roads
and transportation. These factors are affecting the supply chain of the retail business.
Large number of Intermediaries: In Indian retail business, there are a large number of
middle layers involved. These intermediate levels consume most of the profit and increase the
cost. Therefore neither the producer not the customer is in an advantageous position. As per
Press Information Bureau, GoI farmers in India get only one third of the market price as
against two third in developed nations. Additionally, these middlemen act as a union and
cause market equilibrium to be disturbed.

11

Productivity Issues: Retail productivity in India is very low compared to other countries. A
McKinsey report suggested in 2010 that Indian retail productivity in just 6% of the USA.
This less productivity is the bottleneck for its growth.
Yet to be recognized as an industry: Despite being the second largest employment
generator (after agriculture), the retail sector is still not recognized as an industry. This
absence of established credit facilities and standards has played a negative role in its growth.
Much of this could be attributed to the domination of unorganized retailing.
High cost of Retail Space: High (and even rising) prices of the real state sector also poses a
challenge for retail business. The high rates of stamp duty, strict Urban Land Ceiling Act and
time consuming legal process substantially eat away the profit margin. This has even
triggered the migration of business from Tier 1 cities to Tier 2 or 3 cities.
Poor customer Insight: This is an important concern for Indian retail. Currently the
information and research on customer needs and demands are in bad shape. Shopping mall in
particular from a very low customer conversion rate.
Unfriendly Regulatory Framework: Indian retail sector growth is also restricted by
stringent tax and legal laws. According to World Bank and IFC, India is ranked 132 out of
185 countries in 2012. These legal restrictions have created roadblocks for retailing. In
addition to it, tax rules also pose a problem. With different sales tax structures and slabs
applied in different states, it is really tough to maintain uniformity. These problems end up
with higher prices for the products.
Sustainability: It is the new focus area for retail business. Due to the increased
environmental sensitivity among consumers as well as producers, people are moving towards
eco-friendly products. Another major area is waste management and recycling. Recently
government banned usage of plastic bags in India. This is one example of such example of
green business.

6

FDI REFORMS IN RETAIL

Government of India allowed foreign direct investment in Indian retail sector in 2012. The
move opened the gate for foreign players and also expected to remove some of the
deficiencies.

6.1

FDI Policy in Retail

According to Ministry of Commerce and Industry, the FDI policy can be stated as:
1. FDI up to 51% is allowed in multibrand retail stores.
12

2. Single brand retailers like Apple can have 100% ownership of their Indian stores,
from the previous limit of 51%.
3. Both single as well as multi brand retail stores have to source a minimum of 30% of
their goods from small and medium sized suppliers.
4. Retail stores can open their operations in cities with pollution 1 million and above. A
total of 55 cities in India qualify this criterion.
5. Multibrand retailer should be investing a minimum of 100 million USD. Half of the
investment must be devoted to the back end infrastructure like transportation to
decrease after-harvest losses and to provide remunerative price to producers.
6. The opening of a retail store shall come under the ambit of state laws.

6.2

Advantages of FDI Policy in Retail

Consumers: With the introduction of FDI, the middle layers would be removed or
diminished to a considerable extent. This allows a significant cost saving and hence the prices
for end users will also come down. The big multinationals usually work on low profit margin
and high sales approach. Hence in economic terms, this will contain the inflation. These big
brands would also provide more options to consumers. Additionally the quality of the product
will rise due to standardization in organization retail growth.
Producers: The multinational would directly interact with the producers (farmers) rather
than going through intermediaries. Since the middle level cost will be lessened the
multinationals would be in a better position to pay more to the producers. On the other hand,
the relative bargaining power of producers will rise thus ensuring a better price for them.
Government Exchequer: Since FDI will encourage the organized retailing with involvement
of corporate houses, the tax contribution of government revenue would increase. The
unorganized retailing is highly unregulated and its tax generation is also very low. Many of
them are even not registered and it is not possible to monitor them all, considering their huge
number. Organized retail, on the contrary, is bog registered businesses which are easily
regulated, pay taxes and become a source of income for the government.
Local kirana stores: FDI will invite big players such as Walmart or Carrefour. These
companies use to open very big sized stores at the outskirt of the cities. This way the local
kirana stores will not be threatened and can coexist with an organized form of business.
Investment: The FDI of any kind is always good for a developing economy like India. It
provides the much needed money necessary for growth. As per a report by Assocham and
Yes Bank in 2012, India would have approx. 44000 crore rupees in multibrand retail. This
huge amount will translate into crores of tax revenue for government.
Employment Generation: With the involvement of foreign players, millions of jobs will be
created in retail business. Going by Indian Staffing Federation, FDI in retail will generate 4
million direct jobs and around 5 to 6 million indirect jobs in India in 10 years. These jobs
would again create lots of revenue for the economy as well as taxable income for
government.

13

Supply Chain: The foreign players would set up their own warehouses, bring technology and
processes and improve logistics and transportation. Walmart for example will set up cold
storages to stocking. This will ease some pressure on the government. These big players also
help in improving the waste management and recycling in India.

6.3

Resistance to FDI in Retail

Employment Killing: The theory of employment generation is questioned. As of now,
around 40 million people are employed by unorganized sector. With FDI, the unorganized
retail will shrink and hence tens of millions of people will be jobless. It is not possible to
create this many jobs. This could also result in the class war type of situation or other
socioeconomic problems.
Monopoly: The Indian unorganized retail sector is highly competitive. With the replacement
of many small retails by one big business house, the market will be less equilibrium and
overall it will shift towards a monopoly situation. The big retailers adopt predatory pricing
and eventually flush out local stores. In Thailand, only three big retailers increased their share
by 38% in 13 years. They also drove away 67% of local retail stores. Over the time it will
create a high entry barrier for the retail sector. This situation is definitely not suitable from
the economic point of view.
No long term benefits to producers and customers: Initially producers and farmers would
reap some benefits because of the removal of middlemen. However in the long run, their
profit will erode. Once the big retailers will capture the market, they would be in a position to
dictate the prices to both producers as well as customers. Because of their huge bargaining
power and less number of alternatives, other parties will have no other way but to follow the
prices. It is also feared that these big houses could collude with each other and eventually set
the national prices. This will be a detrimental situation for government as their control will
reduce. The dairy industry can be taken as an example. According to International Farm
comparison Network, milk producer in the USA and UK get only 38% and 36% share of
profit share respectively. While in India the milk producers get 70% of the share and those
who are associated with co-operatives get more that 80%. The situation will change with FDI.
Socioeconomic Issues: Since the new effect of FDI in retail will be job losses, this would
create large scale unemployment. This could lead to increased crimes, migration or other
socioeconomic problems.
Corruption: FDI in retail is also related to corrupt practices. According to a report, Walmart
spent around 25 million USD in four years for lobbying purposes. This huge amount is
believed to be used for bribery. This also indicates malafide intentions of the retail giant.
Most such cases are anticipated with these retail giants.

14

6.4

Expectations of FDI in Retail

While FDI might have some deficiencies however the benefits outweigh the losses. Further a
strong regulatory and control mechanism would curb most of the issues. Government on its
part can make laws which could prohibit the big retailers from disturbing the market. USA
model could be taken as an example in this regard. In a country like India where the need for
better infrastructure and improved productivity is much required, the FDI is indeed a viable
option. The issues raised are much for the part of the socialist legacy India had. When
liberalization was implemented in India similar kinds of questions were raised. However
those reforms are now paying rich dividends. Many experts have opined that FDI is a good
option for India. The decision to allow FDI in retail has also attained wide encouragement
from industry leaders and academia. In short, a cautious approach in FDI will prove to be a
boon for our nation.

7

BIG RETAIL PLAYERS

7.1

Top Retailers in India

The retail sector is a big industry in India with second highest contribution in the GDP. As
India is a developing country large part of retail business is owned by food, grocery, cloths
etc. Below are some of the top retailers in India.
Table 4: Largest Retailers in India
Brand
Stores
Pantaloon
Big Bazaar, Food Bazaar, Pantaloons, Fashion Station, Depot, E-Zone,
Retail
Brand Factory, aLL
K
Raheja Shopper’s Stop, Crossword, Mothercare
Group
Reliance
Reliance Hyper-mart
Landmark
Max Retail, Lifestyle, Landmark International, Funcity, Home Centre
Tata Group
Croma, Titan, Tanishq, Westside, Star India Bazaar
RPG Group
Foodworld, Music World, Spencer’s
Piramal Group Pyramid Megastore, TruMart
Source: KPMG

7.2

Top Retailers in the World

Table 5: Worldwide top retailers
Company Country
Dominant Segments
of Origin
Walmart
USA
Apparel/Footwear Specialty, Cash & Carry/Warehouse Club,
Discount
Department
Store,
Discount
Store,
Hypermarket/Supercenter/Superstore, Supermarket
Carrefour France
Cash & Carry/Warehouse Club, Convenience/Forecourt Store,
Discount Store, Hypermarket/Supercenter/Superstore, Supermarket
15

Tesco

Cash & Carry/Warehouse Club, Convenience/Forecourt Store,
Department Store, Discount Department Store, Discount Store,
Hypermarket/Supercenter/Superstore,
Other
Specialty,
Supermarket
Metro AG Germany
Cash & Carry/Warehouse Club, Department Store, Electronics
Specialty, Hypermarket/Supercenter/Superstore, Other Specialty
Kroger
USA
Convenience/Forecourt
Store,
Hypermarket/Supercenter/Superstore,
Other
Specialty,
Supermarket
Source: DTTL-Stores Report

8

UK

FUTURE OUTLOOK

The current economic crisis is expected to continue for some more time. Hence the share of
lifestyle good will remain to be thin for some time. In light of this situation, the market is
expected to shift in the second tier and third tier cities where demand for necessary goods
such as food or grocery is prevalent. Rural retailing is another area which has huge potential
for the future. Retailers may also go for eliminating unprofitable stores in order to reduce the
cost. It is expected that companies will invest considerable amount in their supply chain
improvement.
Online retailing is another major area which is steadily getting acceptance in the masses.
Because of the reduced cost of operations, it is more convenient to the retailer. Several
retailers such as Flipkart have made their presence felt in this domain. This format also
carries technological improvements and goes better day by day. Its share is low but it is
growing particularly among young populations. In developed countries online retail is widely
used format. In India too where service sector is developing and people have lesser time, this
format is destined to rise.

9

RECOMMENDATIONS

The Indian retail market is led by unorganized sector. As of now the Indian retail sector is
going through a transition from unorganized to organized. Hence there is a need to modify
the existing regulations which were primarily targeted to unorganized retailing. Germany and
South East Asian countries can provide better understanding of such regulations. India could
work on several options as mentioned below:
Regulate organized sector: New laws should be enacted to control the organized sector.
This is needed to save indigenous industries. Several countries such as China have put rules
in place to check big retail stores.
Improve unorganized sector: Government could invest in strengthening the unorganized
sector by providing better infrastructure. Research and development as well as technological
innovation are the areas which require special attention. New methods of farming, better
transportation, roads etc. would boost the retailing sector.

16

Urban Planning: As of now there is no ceiling for retail stores in an area either for size or
for numbers. Apart from exceptions such as forest, coastal or military areas, government has
no control over the retail stores. There is an urgent need for a comprehensive policy for such
issues. Local housing societies and municipals can be roped for this purpose.
Check unfair trade practices: A strong monitoring and control is needed for controlling
illegal business practices. Hoarding, misleading advertisements are some of the examples.
Recently a legal battle was fought between Subhiksha and Big Bazaar. Subiksha claimed that
its prices were lowest compared to the competitors. Big Bazaar filed a case for misleading
statement. This kind of business activities should be prohibited.

10

CONCLUSION

The retail is one of the main industries, a major source of employment and a key income
resource for government. Therefore government should give greater focus on this sector. By
introducing FDI government has taken a positive step. However it is equally important to
track the situation on a constant basis and plug the loopholes. In the short run there won’t be
many changes in the scenario as foreign retail giants are evaluating the situation. Additionally
a big bang type of influx is not expected in the retail sector. The shift will only take place in
phased manner. It is also expected that relatively industrialized states such as Gujrat or
Maharashtra will be the first to witness these foreign players. The stage has been set for the
foreign players. Need of the hour to adopt a cautious approach and sustain the momentum.

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11

REFERENCES

11.1

Reports

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11.2
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11.3
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A Brief Report on retail Sector in India; ASA & Associates; 2012
Indian Retail: Time to change Lanes; KPMG; 2009
Winning in India’s retail sector: Factors for success; PwC; 2011
Indian Retail Market Embracing a New Trajectory; Deloitte; 2011
Journals and Research Papers
Gopal V V, Suryanarayana A; Growth Drivers and Challenges for Organized
Retailing in India; International Conference of Business and Economic Research;
2011
Handa Vidushi, Grover Navneet; Retail Sector in India: Issues & Challenges;
International Journal of Multidisciplinary Research; 2012
Sikri Sunita, Wadhwa Dipti; Growth and challenges of Retail Industry in India: An
Analysis; Asia Pacific Journal of Marketing and Management Review; 2012
Manocha Sanjay, Pandey Anoop; Organized Retailing in India: Challenges and
Opportunities; VSRD International Journal of Business & Management Research;
2012
Joseph Mathew, Soundararajan Nirupama, Gupta Manisha, Sahu Sanghamitra; Impact
of Organized Retailing on Unorganized Sector; Indian Council for Research on
International Economic Relations; 2008
Online Resources
http://articles.economictimes.indiatimes.com/2012-11-18/news/35185252_1_backend-infrastructure-retail-industry-fdi
http://info.shine.com/Industry-Information/Retail/139.aspx
http://en.wikipedia.org/wiki/Retailing_in_India
http://www.slideshare.net/ramashankar1985/situation-analysis-of-retail-industry-inindia
http://zeenews.india.com/business/Special/Organised_or_Unorganised_Retail_Final.p
df
http://articles.economictimes.indiatimes.com/2012-11-18/news/35185252_1_backend-infrastructure-retail-industry-fdi
http://www.atimes.com/atimes/Global_Economy/FA31Dj03.html
http://www.indiaretailing.com/irr_2013.asp
http://dipp.nic.in/English/Policies/Policy.aspx

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Report - Retail Sector

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