Introduction

Retailing involves all activities incidental to selling to ultimate consumer for their personnel family and household use. It does this by organizing their availability on a relatively large scale and supplying them to a customers on arelatively smallscale. Retailer is any person/organization instrumental in reaching the goods or merchandise oer services to the end users.Retailer is a must and cannot be eliminated.

The Indian retailing industry is becoming intensely competitive, as more and more payers are Vying for the same set of customers. The major retail players are Pantaloon Retail, Shoppers Stop, Reliance,etc..,

Retailing is one of the biggest sectors and it is witnessing revolution in India. The new entrant in retailing in India signifies the beginning of retail revolution. India’s retail market is expected to grow tremendously in next few years. According to AT Kearney, The Windows of Opportunity shows that Retailing in India was at opening stage in 1995 and now it is in peaking stage in 2006. India’s retail market is expected to grow tremendously in next few years. India shows US$330 billion retail market that is expected to grow 10% a year, with modern retailing just beginning. India ranks first in 2005. In fact, in 2005 and 2006, India is the most compelling opportunity for retailers, because now India is in peaking stage.

This window of opportunity is useful for executives who plan their market-specific strategies; the four stages or the lifecycle of this industry is as as follows:

Introduction:

An introduction is the opening phase of a market and is one that is just entering the GRDI, Global Retail Development Index This index is based on more than 25 macro-economic and retail –specific variables.for instance ,the country risk includes parameters like political risk,economic performance,debt indicators,credit ratings,access bank finance and business risk.The market attractiveness covers reail sales per capita ,urban population ,laws and regulations and business efficiency.

Iin this stage all, which are outside the top 30 markets, falls in this stage. At this stage, retailers should monitor and performing high-level assessments, they should plan for their entry strategies. India in the late 1990’s is a good example in the opening stage, while in 2006, Kazakhstan is the country in introduction stage.

Stategy suggested:A rapid penetration strategy is suggested at this stage i>e low price and high promotion.

Growth:

In growth stage, the market is developing quickly and also ready for modern retailing. Countries, which are in Peaking stage, are India, Ukraine and Vietnam. Retailers entering this stage have the best chance for long-term success. Retailers at this stage should enter through local representations, sourcing offices and new stores. Wal-Mart success in china in the late 1990’s and early 2000’s gives us the importance of committing to a promising high-growth market at right time.

Strategy suggested: The strategy of adopting quality and styled products with new models and shift of advertising from product awareness to product preference Eg the big bazaar advt says surf exel is cheaper than the market price.The idea behind adopting strategy is to strengthen against competitors.

Maturity:

In this stage the market is still big and growing, but the space for new entrants will become tighter and retailers should act quickly at this stage because retailers at this stage have limited time to explore, and also their margin for error is thin. In general , they should act according to the established rules and should be open to face the competition from international retailers. This stage generally lasts longer than the previous two stages.

Strategy suggested: Enter new market segments that is either enter new geographic areas eg vishal megha mart has opened stores in smaller cities tier II and III cities

Decline:

The window of opportunity is closing fast and modern retail share is reaching 40 to 60 percent. Though the opportunity is closing the existing retailers can enter with new formats such as discount models or non-food formats such as consumer electronics and apparel.

Window of opportunity ends for about 5 to 10years before a market enters the closing phase and reaches saturation level. India for example, was in the opening stage in 1995 and entered peaking stage in the year 2003 and reached number 1 rank in2005.

Strategy suggested: Identifying weak segments, maintaining investment level selectively.

Unorganized retailing in India

In India, the most of the retail sector is unorganized. In India, the retail business contributes around 11 percent of GDP. Of this, the organized retail sector accounts only for about 3 percent share, and the remaining share is contributed by the unorganized sector. The main challenge facing the organized sector is the competition from unorganized sector. Unorganized retailing has been there in India for centuries, theses are named as mom-pop stores. The main advantage in unorganized retailing is consumer familiarity that runs from generation to generation. It is a low cost structure, they are mostly operated by owners, has very low real estate and labor costs and has low taxes to pay.

Organized retailing in India

In late 1990’s the retail sector has witnessed a level of transformation. Retailing is being perceived as a beginner and as an attractive commercial business for organized business i.e. the pure retailer is starting to emerge now. Organized retail business in India is very small but has tremendous scope. The total in 2005 stood at $225 billion, accounting for about 11% of GDP. In this total market, the organized retail accounts for only $8 billion of total revenue. According to A T Kearney, the organized retailing is expected to be more than $23 billion revenue by 2010.

In organized retailing will grow faster than unorganized sector and the growth speed will be responsible for its high market share, which is expected to be $ 17 billion by 2010-11.

Retailing will show good prospects in cities like Mumbai, Delhi, Chennai, kolkata, Banglore and Kanpur. After Dubai, Singapore and Hong Kong, In India Delhi will be the next big retail destination, According to Confederation of Indian Industries whose findings have shown that Delhi has the good resources and good conditions for the retail sector. Out of the total earnings of the Government of Delhi Rs 11,000 crore, Rs 6,500 crore is achieved from the retail sector.

- Share of Organised Retail

1999 2002 2005

Total Retail (in billion INR) 7000 8250 10000

Organized Retail (in billion INR) 50 150 350

% Share of Organized Retail 0.70% 1.80% 3.5%

The organized sector is expected to grow faster than GDP growth in next few years driven by favorable demographic patterns, changing lifestyles, and strong income growth. This organized retail sector mix includes supermarkets, hypermarkets discounted stores and specialty stores, departmental stores. For example, Spencer network has 69 stores, which includes seven Spencer hypermarkets, three Spencer super markets and 49 Spencer Dailys. Now the company is planning to open 20 stores in 10 cities in six months. The top 10 retailers account only for 2% of total market, today modern retailing is expected to enter a boom phase, which has major players and these players might capture 10% of total market, within next five years. The retail sales in India for future are shown below (data from 2005-2008 is based on estimates):

PRESENT INDIAN SCENARIO

* Unorganized market: Rs. 583,000 crores

* Organized market: Rs.5, 000 crores

* 5X growth in organized retailing between 2000-2005

* Over 4,000 new modern Outlets in the last 3 years

* Over 5,000,000 sq. ft. of mall space under development

* The top 3 modern retailers control over 750,000 sq. ft. of retail space

* Over 400,000 shoppers walk through their doors every week

Growth drivers in India for retail sector

• Rising incomes and improvements in infrastructure are enlarging consumer markets and accelerating the convergence of consumer tastes.

• Liberalization of the Indian economy

• Increase in spending Percapita Income.

• Advent of dual income families also helps in the growth of retail sector.

• Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc.

• Consumer preference for shopping in new environs

• The Internet revolution is making the Indian consumer more accessible to the growing influences of domestic and foreign retail chains. Reach of satellite T.V. channels is helping in creating awareness about global products for local markets.

• About 47% of India’s population is under the age of 20; and this will increase to 55% by 2015. This young population, which is technology-savvy, watch more than 50 TV satellite channels, and display the highest propensity to spend, will immensely contribute to the growth of the retail sector in the country.

• Availability of quality real estate and mall management practices

• Foreign companies’ attraction to India is the billion-plus population.

Employment opportunities in retail sector in India

India’s retail industry is the second largest sector, after agriculture, which provides employment. According to Associated Chambers of Commerce and Industry of India (ASSOCHAM), the retail sector will create 50,000 jobs in next few years.

Retail companies are starting retail manamgent courses in partnership with management institutes, roping in talent from other sectors and developing comprehensive career growth and loyalty plans for existing employees.

Top players like Pantaloon Retail India Limited, Trent, Shopper’s Stop, RPG Group and ebony are virtually on their toes.

Consider the plans of largest player, The Pantaloon Retail India Ltd, the company has developed a comprehensive strategy, where in it expects that in 2years, it will not recruit any new managers from outside.

“The estimated need is 1 lakh of employees till 2011″, said Mr. Sanjoy Jog, HR Head at Pantaloon Retail India Ltd. Pantaloon has the concept of partnership with educational Institute to run retail courses across the entire chain. The company has tied up with 11-B schools including K J Somaiya , Welinkars, Narsee Monjre and IISWBM. “The students joins the course and they are given an appointment letter by Pantaloon to become employees” said Mr. Jog, Pantaloon. Pantaloon is also planning to tie up with Ahmedabad-based National Institute of Design to start a course in visual merchandising. “The apex body of Indian organized retailers, Retailers Association of India( RAI) is also lending help hand to tide over the shortage of employees in organized retail sector.

Trent has also started in-house learning programmes and now goes to under graduate colleges to recruit students.

Since, the job market is hugely receptive to this with more and more business schools focusing on the sector and large retailers setting up retail academics.

Challenges of Retailing in India

In India the Retailing industry has a long way to go,and to become a truly flourishing industry, retailing needs to cross the following hurdles:

* The first challenge facing the organized retail sector is the competition from unorganized sector.

* In retail sector, Automatic approval is not allowed for foreign investment.

* Taxation, which favors small retail businesses.

* Developed supply chain and integrated IT management is absent in retail sector.

* Lack of trained work force.

* Low skill level for retailing management.

* Intrinsic complexity of retailing- rapid price changes, threat of product obsolescence and low margins.

* Organized retail sector has to pay huge taxes, which is negligible for small retail business.

*Cost of business operations is very high in India.

Conclusion

Many agencies have estimated differently about the size of organized retail market in 2010. The one thing that is common amongst these estimates is that Indian organized retail market will be very big in 2010. The status of the retail industry will depend mostly on external factors like Government regulations and policies and real estate prices, besides the activities of retailers and demands of the customers also show impact on retail industry.

As the retail market place changes shape and competition increases, the potential for improving retail productivity and cutting costs is likely to decrease. Therefore it is important for retailers to secure a distinctive position in the market place based on values relationships or experience.

Finally it is important to note that these strategies are not strictly independent of each other; value is function of not just price quality and service but can also be enhanced by personalization and offering a memorable experience

Question about retail

NEW ERA IN RETAIL-THE ROAD & CHALLENGES AHEAD

   ABSTRACT: 

In India, the most of the retail sector is unorganized. In India, the retail business contributes around 11 percent of GDP. Of this, the organized retail sector accounts only for about 3 percent share, and the remaining share is contributed by the unorganized sector. The main challenge facing the organized sector is the competition from unorganized sector. Unorganized retailing has been there in India for centuries, theses are named as mom-pop stores. The main advantage in unorganized retailing is consumer familiarity that runs from generation to generation. It is a low cost structure; they are mostly operated by owners, has very low real estate and labor costs and has low taxes to pay.

In organized retailing will grow faster than unorganized sector and the growth speed will be responsible for its high market share, which is expected to be $ 17 billion by 2010-11.
Retailing will show good prospects in cities like Mumbai, Delhi, Chennai, kolkata, Bangalore and Kanpur. After Dubai, Singapore and Hong Kong, In India Delhi will be the next big retail destination, According to Confederation of Indian industries whose findings have shown that Delhi has the good resources and good conditions for the retail sector. Out of the total earnings of the Government of Delhi Rs 11,000 crore, Rs 6,500 crore is achieved from the retail sector.
- Share of Organized Retail

1999 2002 2005
Total Retail (in billion INR) 7000 8250 10000
Organized Retail (in billion INR) 50 150 350
% Share of Organized Retail 0.70% 1.80% 3.5%

The organized sector is expected to grow faster than GDP growth in next few years driven by favorable demographic patterns, changing lifestyles, and strong income growth. This organized retail sector mix includes supermarkets,

hypermarkets discounted stores and specialty stores, departmental stores. For example, Spencer network has 69 stores, which includes seven Spencer hypermarkets, three Spencer super markets and 49 Spencer Dailys. Now the company is planning to open 20 stores in 10 cities in six months. The top 10 retailers account only for 2% of total market, today modern retailing is expected to enter a boom phase, which has major players and these players might capture 10% of total market, within next five years

But In India the Retailing industry has a long way to go,and to become a truly flourishing industry, retailing needs to cross the following hurdles:

* The first challenge facing the organized retail sector is the competition from unorganized sector.
* In retail sector, Automatic approval is not allowed for foreign investment.
* Taxation, which favors small retail businesses.
* Developed supply chain and integrated IT management is absent in retail sector.
* Lack of trained work force.
* Low skill level for retailing management.
* Intrinsic complexity of retailing- rapid price changes, threat of product obsolescence and low margins.
* Organized retail sector has to pay huge taxes, which is negligible for small retail business.

NEW ERA IN RETAIL-THE ROAD & CHALLENGES AHEAD

Retailing involves all activities incidental to selling to ultimate consumer for their personnel family and household use. It does this by organizing their availability on a relatively large scale and supplying them to customers on a relatively small scale. Retailer is any person/organization instrumental in reaching the goods or merchandise ore services to the end users. Retailer is a must and cannot be eliminated.

The Indian retailing industry is becoming intensely competitive, as more and more payers are Vying for the same set of customers. The major retail players are Pantaloon Retail, Shoppers Stop, Reliance, etc..,

Retailing is one of the biggest sectors and it is witnessing revolution in India. The new entrant in retailing in India signifies the beginning of retail revolution. India’s retail market is expected to grow tremendously in next few years. According to AT Kearney, The Windows of Opportunity shows that Retailing in India was at opening stage in 1995 and now it is in peaking stage in 2006. India’s retail market is expected to grow tremendously in next few years. India shows US$330 billion retail market that is expected to grow 10% a year, with modern retailing just beginning. India ranks first in 2005. In fact, in 2005 and 2006, India is the most compelling opportunity for retailers, because now India is in peaking stage.

Challenges in the Retail Industry:

“Retail today is all about being better, faster, and leaner. Columbus IT helps you overcome the challenges of the retail industry and write your ticket to success.” — Dmitry Davydov, Key Retail Acount Manager, Columbus IT Russia.

The retail industry faces challenges similar to those in other industries. What’s different is that they combine together to put a great deal of pressure on retailers in today’s modern economy. With a fast-paced society and faster-paced

Technological changes, customers want new, different, and customized goods now, and they’re not willing to wait.

 At the same time, pressures on the backend are mounting, too. Larger retailers, with their efficiencies of scale and international scope, are pushing prices down and slashing margins.

To compete, you have to think like a Wal-Mart, even if you are a medium-sized retailer. Technology offers your company a way to apply modern ERP and CRM techniques on a global scale, whether through bricks-and-mortar stores, or over the Internet.

 Face and overcome these retail challenges with Columbus IT Retail solutions.

 Decentralized Operations

As a manager, ideally you’d like to be able to walk down the hall from your office and into any one of your stores or warehouses. In reality, that’s not possible. You have to hire the right people, staff your other locations, and rely on them to do the job right.

Technology has the advantage of being able to bring you and your employees together – whether they’re located in Minsk or Montana. Columbus IT retail solutions provide you with a centralized solution for your decentralized business.

Data flows from your stores and warehouses to your head office every night, so you have up-to-date sales and inventory information. You can make pricing changes across the board, or implement a new sales campaign to reflect the success or failure of one of your major products at one store – or all of them.

 Staff Turnover

There’s a higher rate of staff turnover in the retail industry, compared to other industries. This varies by country. European countries, for example, tend to retain store-level personnel more successfully. North America has a turnover rate of 200-300% of front-end employees in certain segments.

What does this mean for your business? While you can implement and pursue staff retention programs – and it makes good sense to do so – you’re going to have new employees coming through your doors on a regular basis. Getting them trained on your systems rapidly and cost-effectively is critical so that they can become productive members of your team as soon as possible.

 Columbus IT has you covered. First, our retail systems, led by our flagship product Retail  Chain manager, are easy to learn, easy to use, and easy to train others on.

Second, we train as we go. While we’re developing and implementing your retail solution, we’ll be training your staff at the same. As soon as your retail solution is finished, they’re ready to use it – no downtime.

 Third, we can integrate with your existing third-party systems – such as a POS system. Existing employees don’t have to retrain on a new system, and since we can retain your best-of-breed components, new employees are more likely to have experience with them. 

The bottom line: It’s simply a fact of life that your staff turnover is going to be higher than in other industries. The good news is that Columbus IT Retail solutions help you manage that turnover sensibly, with training and easy-to-use systems, from the start.

Shrinkage

Consider these sobering statistics on shrinkage (also known as inventory shrink):

• For every dollar lost to shrinkage, you can lose $11 to $15 in profits. (UK statistic)
• You’ll only detect 3% of the shrinkage when it happens – the other 97% you’ll discover later. (UK statistic)
• For every theft you detect, 46 others will go undetected. (UK statistic)
• In 2005, total inventory shrinkage cost U.S. retailers $37.3-billion US.
• Administrative error is responsible for 14.6% of shrinkage, and employee theft is responsible for 47.9% of shrinkage (National Retail Security Survey, 2001).

Loss prevention strategies and programs can be an important part of reducing shrinkage before it becomes a real problem. But did you know that your IT solution can also help minimize shrinkage?

Columbus IT Retail solutions help you control shrinkage from the ground up in five ways:

1. Studies show that increased employee satisfaction reduces employee theft. With a retail solution from Columbus IT, you get easy-to-use applications that your employees are trained on from the early stages of implementation.
2. Studies also show that higher customer service results in less shoplifting. Columbus IT Retail solutions improves customer service and customer satisfaction by managing the supply chain so that your stores carry the goods customers want, at attractive prices. CRM capabilities also ensure
3. that customers are treated on a one-to-one basis, whether in marketing to them or responding to them if they contact you.
4. Columbus IT retail solutions enable you to accurately track and manage inventory and sales using technologies such as POS solutions, bar-coding, scanning, and RFID tracking.
5. We will provide you with a retail solution that minimizes the chances of administrative errors. By only requiring employees to enter data once, and providing management with full reporting capabilities, data accuracy and integrity are increased across your retail enterprise.
6. Lastly, you can reduce shrinkage by being on top of what’s going on in your business, and having access to key indicators that can show if shrinkage is becoming a problem. As you’ll see in the next section,
7.  

Lack of Information

The amount of information available to you as a retailer can be overwhelming. Each one of your stores’ profits are influenced by daily sales, overhead, employees, shipping, campaigns, and traffic that change on a daily basis. At your head office, you worry about inventory levels, warehouse efficiency, key financial indicators, administration, and human resources information.

Your retail business generates an enormous amount of information that would be very valuable to you if you could:

• Collect it quickly, reliably, and efficiently.
• Analyze it to make sense of the past and plan future decisions.
• Distribute it to the right people in your organization so they can act on it.

If you don’t have a system in place to track this information, you’re losing out on a powerful tool that other retailers use every day — the power of knowledge.

Whether you want to know if your latest marketing campaign was a success, or if your warehouse space is being used in an optimum way, Retail Chain Manager has the answers. And they’re answers that are error-free, rapid, and available to all the decision-makers in your company.

Future Uncertainty

The customer is fickle. Global market situations can also change the demand for your products. And unexpected problems at your warehouse or stores can also affect what you need to supply – and who may be buying it.

Retail is built on uncertainty – but victory goes to the business who knows how to manage that uncertainty and make allowances for it.

You need to be able to learn from the past so that you can plan for the future. Columbus IT Retail solutions provides you with sophisticated reporting and data mining about every aspect of your retail operation so you can make sensible choices about where your customers, suppliers, and your business are going.

Retail Chain Manager enables you to gather and analyze your past sales information so you can make the right decisions about what products to carry, where to sell them, and what price they should be.  

Columbus IT Retail solutions give you that power. By integrating your retail processes and systems into one comprehensive solution, we make sure that all of the information about your business is captured, measured, and available for you in flexible, powerful, yet easy-to-use reporting features.

Complex Pricing

It’s no longer enough to be able to stamp a product’s price and forget about it. Modern retailers are changing prices on goods daily, if not hourly. The benefit of flexible pricing is to be able to respond to changes in the market as they happen. Want to set a higher price for rush-hour customers and a lower price for off-hour ones? Or maybe you’d like to be able to run a test on a new campaign for one day and see how it compares to the sales results from the previous day. Columbus IT Retail solutions make it happen.

Whether you want to set prices for one shop or all of your retail outlets, you can do so quickly and consistently. It’s all handled automatically, from the central office.

Socio-Eco Impact of Large Scale Retailing in India:

There is no doubt that large scale Retailing has impact on socially and economically. In Social life the standard of living is raised because by these retailing a person can buy their daily needs from one place whereas this thing is also raising their extra expenses because human being has unlimited needs and when he see the different things at one time he is unable to stop him to buy them.

At economic level it is also effecting because at one place it is increasing consumerism where at another part it is damaging the earning or returns of the small salers who have not so much money and it is also effecting the small brands also because there is no place for these brands in malls.

Foreign Direct Investment in Retailing Sector:

‘No FDI in retail sector’

NEW DELHI: Food, agriculture and consumer affairs minister Sharad Pawar on( 15 Mar 2008, 0017 hrs IST,TNN  )said that the government was not considering any proposal to allow foreign direct investment in the retail sector.

Replying to supplementaries during question hour in Rajya Sabha, he said the International Council for Research on International Economic Relations (ICRIER) was examining the impact of domestic organised (corporate) retail sector on unorganised retail sector. Only after the report comes in would the government be in a position to take a clear decision. But he said that the government was not allowing FDI in retail as it wanted to protect this sector. “There is no proposal to allow FDI in retail (and) government is not thinking of it because it wants to protect the interest of retailers,” he said.

Challenges Before Organized Retailing in India:

• ·        Difficult shopping experience for Customer : before the organized retailing in India costumers had to go different places to buy different things.
• ·         Less Return on space for the retailers :  vendors had limited items or some special items due to that they couldn’t get more return on space.
• ·         Tough reach of product for customer : same thing that costumers had to go different places for different things it was so tough and time consuming also.
• ·        More & More time for customer at the check out: it was more & more time consuming for the costumers to go for shopping for their daily needs.

Emerging Trends in Indian Consumer Market:

The annual market for consumer durables in India (excluding computers and communication products) is currently of the order of Rs. 25,000 cr. In recent years, intense competition has led to a decline in prices. Consequently, market growth has mainly been in terms of quantity, rather than value. Further, the increase in quantity is propped up by consumer financing, promotions and discounts. Distribution is fragmented, and there are 40,000 consumer durable dealers in India.

Organized retailing is catching on, but has overheads due to expensive real estate, air conditioning and higher manpower costs. One tries to offset this by negotiating lower prices with durable manufacturers. The Indian consumer is brand-conscious, but not necessarily brand-loyal, and might even pick up a reliable private label if it offers good price and quality values. Retailers such as Reliance, Future Group, Hyper City and E-Mart, therefore, plan to launch low-priced private labels by importing in large quantities from China and Thailand. Domestic durable manufacturers are responding by expanding their product range to ensure higher bargaining and shelf power with the trade. They are also exploring the possibility of cross-category tie-ups with non-competing partners from other industries to tap each others’ points of influence, particularly in smaller/rural markets. Consumer durable penetration is one of the lowest in India and the untapped potential is evidently enormous. However, as Indian consumers continue to attach a high degree of importance to value for money, both manufacturers and traders would be compelled to explore every conceivable method to improve operational efficiencies, in order to achieve substantial and profitable business growth.

Conclusion:

In India, the most of the retail sector is unorganized. In India, the retail business contributes around 11 percent of GDP. Of this, the organized retail sector accounts only for about 3 percent share, and the remaining share is contributed by the unorganized sector. The main challenge facing the organized sector is the competition from unorganized sector. Unorganized retailing has been there in India for centuries, theses are named as mom-pop stores. The main advantage in unorganized retailing is consumer familiarity that runs from generation to generation. It is a low cost structure, they are mostly operated by owners, has very low real estate and labor costs and has low taxes to pay. The retail sales in India for future are shown below (data from 2005-2008 is based on estimates):

PRESENT INDIAN SCENARIO

* Unorganized market: Rs. 583,000 crores
* Organized market: Rs.5, 000 crores
* 5X growth in organized retailing between 2000-2005
* Over 4,000 new modern Outlets in the last 3 years

* Over 5,000,000 sq. ft. of mall space under development
* The top 3 modern retailers control over 750,000 sq. ft. of retail space
* Over 400,000 shoppers walk through their doors every week.

Many agencies have estimated differently about the size of organized retail market in 2010. The one thing that is common amongst these estimates is that Indian organized retail market will be very big in 2010. The status of the retail industry will depend mostly on external factors like Government regulations and policies and real estate prices, besides the activities of retailers and demands of the customers also show impact on retail industry.
As the retail market place changes shape and competition increases, the potential for improving retail productivity and cutting costs is likely to decrease. Therefore it is important for retailers to secure a distinctive position in the market place based on values relationships or experience.
Finally it is important to note that these strategies are not strictly independent of each other; value is function of not just price quality and service but can also be enhanced by personalization and offering a memorable experience

References:

• 15 Mar 2008, 0017 hrs IST,TNN  

·       

  FDI and Retail Sectors in India: D Kumar (page 124)

·       

  Changing retail scene in India : R.K.Srivastava (Journal 2008 Page: 714 – 721)

• Google.com

Question about retail

THE EXUBERANT AGE OF RETAIL IN INDIA

*Rizwana Atiq – Lecturer,Department of Business Administration, Integral University, Lucknow

Abstract

India has stepped in the exuberant age of retail. It ranks second after Russia as the most alluring destination for retailers among 30 emerging markets, according to the Global Retail Development Index developed by AT Kearney, a consultancy. The 10-12% increase in the economy’s disposable income can be seen clearly by the way goods and services are being brought and sold. Retail Trade contributes 10-11% of India’s GDP and currently employs over 4 crore people.

THE DRIVE FOR RETAIL :

The reason for the boom in retail is the gradual increase in disposable incomes of the middle and upper class household. Countries like US, Japan, U.K. have started out sourcing business activities and are willing to pay a handsome package to those who deserve. The out sourcing will create 10-24 million jobs by 2020. The Indian youth is zealous, Intelligence and has the will to work hard. This is attracted foreign business organizations in the country where by increasing the income levels and the purchasing power of consumers. The Indian consumer has a great amount of disposable income which has increased demand level of the country. This demand is accompanied by the desire to get the best quality. In India over 65% of the population is below 35 years of age and 54% are below 25 years. They have enough to pay for all their dream desires. Moreover there is a switch from joint family to nuclear family and DINK segment is making its presents felt. Driven by changing lifestyles, strong income growth and favourable demographic patterns, Indian retail is expanding at a rapid pace.

Mall space, from a meager one million square feet in 2002, is expected to touch an estimated 60 million square feet by end-2008, says Jones Lang LaSalle’s third annual Retailer Sentiment Survey-Asia.

The Indian consumer wants the best . This has increased demand for exclusive brands . Now Nike has over 100 outlets and Reebok has over 400 outlets. Thus the increase consumption pattern is having a direct bearing on the growth of retail sector. The consumption in 2005-06 was Rs. 2124000 Crore (Approximately 480 billion.)

THE INDIAN RETAILERS:

1. RPG:-It was the first to get into retail Business in India.Foodworld began as adivision of Spencer& Co., a part of RPG Group in May 1996,with supermarket in Chennai.Today Foood world is a separate company: a joint venture between Spencer & Co. and Dairy Farm international.

2. The TATA Group It has signed a joint venture for a new subsidiary, Infiniti retail, a large format multi brand chain for consumer durables. For lifestyle and the food and grocery segment, it operates through its retail arm Trent. Trent forayed into the hypermarket business with Star India Bazar.

3. Pantaloons Retail: The Company’s value retailing includes includes Big Bazar which is a hypermarket, Food Bazar which is a supermarket and Fashion Station, popular fashion stores. Pantaloon Retail (India) Limited is part of the future Group. The Future Group operates through many verticals viz Future retail, Future Capital, Future Space, Future Logistics and Future Group.

4. Vishal Retail Group: The store has spread over 25000 Sqft. It offers fashion accessories, grocery product, apparel & Electrical gadgets. The Group entered the hypermarket segment with its first such store in Udaipur.

5. Reliance Retail: It has set a revenue target by 2010-11 which is about double of the present revenues of all organized retail business in India. Reliance operates Qwik Mart, quick transaction stores offering the convenience of buying household food and non-food merchandise, music, take-away café and convenience-oriented ancillary services without a price penalty.

6. Subhiksha: The stores are small sized and functional with average size of 1500-2000sqft.

7. Nilgiri’s: The Company’s strategy is backward integration with an increase focus on fresh fruit and vegetables.

8. Trinethra:- It is a South based grocery chain. The stores in Kerala to have a bakery attached for which the Company has tied up with Ann’s Bakery.

A LOOK AT THE RETAIL FORMATS

1.Department Store : This represents retail outlets that stocks a wide range of merchandise. Stores often provide customers with exclusive membership cards on purchases up to a certain value. The major players are Ebony, Globus, Life Style, Shoper’s Stop and Westside.

2.Super market : They are self service stores which concentrate on the prize aspect to attract customers like Food Bazaar, Subhiksha and Fab-mall. Supermarket is a self-service store offering a range of food and household articles.

3.Hyper market : It is a department store combined with super market although in India the hyper markets are not well developed still we have a few player like Reliance retail, Big Bazaar and a few more. The latest to make a big splash in the retail scene is the Aditya Birla Retail (ABRL), the retail arm of the $24-billion Aditya Birla Group, which plans to invest between Rs 250 and Rs300 crore for setting up a dozen hypermarkets under the brand name ‘More Megastore’ in the country. The hypermarkets will offer 60,000 products sourced through over 500 suppliers say company officials. The group also plans to open ‘Family Stores’ stocking apparel from Madura Garments, the owner Louis Philippe, Van Heusen, Allen Solly and Peter England brands and also distributes the international brand Esprit in India.

4. Discount Store : It is a department store except that it sells products at a lower prize for example The Loot and My Dollar Store.

5. Specialty Store : They offer a large range of selections within a single merchandise category for example The Gold Souk in Gurgaon and the Music World and Planet M.

6. Conveyance Store : The stock most essential and FMGC products like food items and several products of daily use. The major players are Red Shop and My Mart. Although world wide they are open through out the day and night but this is not so all the palyers within this format in India.

7.Kiosk : they are small retails outletswhich are open on all sides and sell consumer goods like edibles and snacks, newspapers and so on. emphasis is on designing the kiosk façade-thet sport attractrive colour schemes. Some of the players are Mr. Orange , Cookie Man, Corn Man ,Kidz on Wheelz and so on.

TIE-UPS IN RETAIL

Indian retailers are trying to tie-up with global brands through franchise and licensing agreement because they benefits both the partners. The global companies have funds expertise and goodwill while the Indian companies have the right feel of the domestic market.

? India has global retail giants like Bharti-Wal-Mart. Wal-Mart’s (the world’s biggest retailer) tie up with Bharti Enterprises for cash & carry operations, seems to have encouraged French retailer Carrefour, to enter the Indian market through the wholesale route.

? Mukesh Ambani-controlled Reliance Retail is entering into talks with UK fashion retailer Marks & Spencer (M&S) to float an equal joint venture for apparel, gourmet food and cafes. The gourmet food format may be integrated with Reliance Fresh wherever possible. This would help M&S attain immediate scale in food business as Reliance Fresh has 491 stores selling foods, fruits and vegetables, and may be scaled up to 1,400 stores by the end of next fiscal. Marks & Spencer is present in India through a franchisee arrangement with Planet Retail since 2001 and operates more than 20 stores in India out of its 760-strong global network. Within four months of rolling out its first store in November 2007, Reliance Retail opened 500 stores in various formats, spanning 3-million square ft of occupied space in various cities.

? Home Solutions Retail India (HSRIL), a part of the Kishore Biyani-owned Future Group, will soon start retailing lightings and electrical products under the Bijli Ghar brand. This is the first time a major corporate retailer has unveiled plans to enter the unorganised Rs80,000 crore lighting market dominated by small and medium city and region-specific players across the country. The company already has a joint venture with Asian Electronics and Idiom Design & Consulting to launch the products. The lighting stores will open in 80 Big Bazaar outlets across the country and, in the next six to nine months, the company is planning of opening standalone stores, targeting revenues of Rs100 crore in the first year of operations.

FUTURE AHEAD IN RETAIL

Merrill Lynch which is a an advisory firm, expects the Indian Retail industry to grow to US$300 billion by 2010.

• Spencer’s is planning to set up 500 more stores by June 2008 with an investment of nearly US$ 125.89 million.

• Hypercity is planning to set up 250 Expresscity stores in the convenience store format across the country in the next five years.

• DLF plans to invest US$ 4.02 billion over four years to develop about 20 large shopping malls across the country.

• Israeli mall developer Plaza Center NV plans to invest US$ 1.25 billion over the next five-seven years to set up 50 malls in India.

The domestic retail sector is picking up pace with more and more Indian companies entering the sector either on their own or in alliance with foreign retailers to set up premium or niche outlets.

While Indian companies such as Bharti, Reliance Retail, Essar, Future Group, Shoppers Stop and the Aditya Birla Group are still trying to consolidate their markets, others such as Mahindra & Mahindra, realty groups like Parsvnath and DLF, two-wheeler maker Hero Honda, chemicals and foods firm Jubilant group and brokerage and realty firm Indiabulls have announced plans to enter the retail sector.

Tobacco major ITC is planning to set up more of its Wills Lifestyle, John Players and Miss Players stores across the country. The company plans to increase the number of Wills Lifestyle stores from 250 to 400 by the end of 2008-09. These stores will come up on the lines of the concept store, designed keeping cultural context and customer profile in mind.

Kishore Biyani–owned Future Group, India’s largest Retailer has planned to investRs. 3,600 crore in 100 stores in 30 cities.

ORGANISED RETAILING

According to industry estimates, the overall size of the retail sector in India is expected to touch $427 billion by 2010 and $637 billion by 2015 with the organised segment expected to account for 22 per cent by 2010. An additional 700 million Sqft of quality retail space over and above what is currently available will be required by 2011. Consulting firm Ernst & Young predicts that the organised retail market in India will touch approximately $30 billion by 2010.

Presently the share of organized retailing in India is abysmally low .The bulk of retailing is carried out by 12 m kirana which are mostly family owned. According to McKinsey, a consultancy about 96% of these kirana have 500 sq ft or less space

The advent of foreign rivals is viewed with some trepidation by India Retailers

The small retailers fear being wiped out while the large ones feel their shared eroded. It is definitely true that Foreign retailers can help improve efficiency among local organized retailers. The entry of foreign competition can lower prices. We cannot, in fact should not hurt the interest of the local retailers We need to size up the retail market into segments and then decide as to which segment can be organized and which one need to be left unorganized for the time being.

FDI in Retail will destroy employment in the kirana stores and create retail monopolies.

India has the highest shop density in the world with 11 shops per 1000 persons, much higher than European and other Asian countries.

We need to think of these small retailers before trying to enforce organized retailing in the country. The giant organized retailers may start using their monopoly and stampede the unorganized small retailers. Acceleration in organized retailing would make business unviable for the several such retailers. As there is great unemployment in the country and the small scale retailing provides livelihood security to about 20 million urban workers and 12 million rural workers, we cannot afford to put an end to it. The introduction of organized retailing would snatch the bread and butter and jeopardize the livelihoods of the millions in our country. We cannot encourage the entry of large retailers unless we have planned a livelihood for the vast majority.

KEEP THE RETAIL GOING

There is great competition in the retails sector. Thus arises the need of competent work force accompanied by Technology. Employees in the Retail Sector should be given proper training to deal with the customers. Those working in the retail sector should have a cheerful disposition because they may have to encounter short tempered customers.

• Store Employees should be empowered so that they are under no pressure to deal with the customers.

• All retailers should have consumer advisory boards.

• There should be customer research . Those employees who provide good service should be rewarded .

• Indian retails should follow the example of JC Penny whose sales associates give questionnaires to shoppers which are later analyzed to improve service.

• Retailers should always be ready to devise innovative ways to over come the problems of customize.

• Retails brands get built by developing personal relationship with consumer the important and frequent customers should be recognized and should be given free gifts and guaranties.

• The retailer should be able to display their product very beautifully in order to attract the side of the customer.

The Indian retails sector is in a state of evolution. The Indian retailers should understand that retailing has to be taken as a brand in a self. More than 99% of the Indian retailers function in less than 500 Sqft of shopping space. It is a challenge for the Indian Retails Industry to create a scenario making job exciting to the younger generation so as the attract them. It is difficult but not impossible to satisfy the culturally diverse consumers of the country.

CONCLUSION:-

India is an enormous market, of which we are seeing only the tip of the iceberg. If the changes which are taking place in the metros retail start to percolate in the all the urban settlements then there will be a real revolution in the Indian Retail. Indian Retail market is worth a mammoth 350 billion dollars. Such is the underlying potential for Retail trading in the country.

A single large retailer should not be allowed to capture the large market share. The Indian Government should not make haste in inviting the foreign retailers instead it should wait to see the great power of the Indian retailers. Indian retailers have to learn both the art and science of retailing by looking at the way the giant retailers are organizing and managing their activities . Indian retailer needs to be innovative and needs to understand the regional variations in consumer tastes

We Indians can celebrate our spending power and also channelise our spending towards healthy consumption for overall development of the country.

REFEENCES:-

Books:-

• Retailing Management,5th Edition, Michael Levy and Barton A Weitz, Tata McGraw-Hill Publishing Company

• Retail Management – A Strategic Approach ,9th Edition, Berry Berman and Joel R. Evans, Prentice Hall

Links:-

• www.imagesretail.com

• www.indiaretailforum.in

• www.retailindia.typepad

• www.ibef.org

Question about retail