Project Report

OF

Communication skill
ON RETAIL SECTOR OF INDIA

Submitted by:

NAME As!is! "an#an &eena me!"a

DIVISION E$M E$M

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Submitted to: '"o( Meena )a"e*an

Retailing in India

Retail Marketing Retailing is the interface between the producer and the individual consumer buying for personal consumption. This excludes direct interface between the manufacturer and institutional buyers such as the government and other bulk customers. A retailer is one who stocks the producer s goods and is involved in the act of selling it to the individual consumer! at a margin of profit. As such! retailing is the last link that connects the individual consumer with the manufacturing and distribution chain. The retail industry is divided into organised and unorgani"ed sectors. #rganised retailing refers to trading activities undertaken by licensed retailers! that is! those who are registered for sales tax! income tax! etc. These include the corporate$backed hypermarkets and retail chains! and also the privately owned large retail businesses. %norganised retailing! on the other hand! refers to the traditional formats of low$cost retailing! for example! the local kirana shops! owner manned general stores! paan&beedi shops! convenience stores! hand cart and pavement vendors! etc. The Indian Scenario: Trade or retailing is the single largest component of the services sector in terms of contribution to '(P. Its massive share of )*+ is double the figure of the next largest broad economic activity in the sector. India is the ,second most attractive retail destination globally from among thirty emergent markets. It has made India the cause of a good deal of excitement and the cynosure of many foreign eyes. -ith a contribution of )*+ to the national '(P and employing .+ of the total workforce /only agriculture employs more0 in the country! the retail industry is definitely one of the pillars of the Indian economy). 'rowing in tandem with the economy is the Indian retail sector. The sector is on a high growth trajectory and is expected to grow by more than 1. per cent over the next 2 to 3 years. Retail is one of India s largest industries! contributing to about )4 per cent of the '(P and providing employment to 5 per cent of the nation s workforce. Indian retail business promises to be one of the core sectors of the Indian economy! with organised retail sector estimated to grow by *44 per cent of its current si"e by 144.$45. Income! technology and life styles of consumers are changing! even from whom they buy are changing. The location or the place where they buy is changing6 the shops are opened closed according to the convenience of the buyers. The buying process has changed due to Internet buying! which brings new and better deals and also saves time. Population growth rate! increasing literacy rate and increasing family income has an effect on consumer spending. 7hanging social attitudes towards work! home and leisure affect the retail strategies. Political decisions relating to the environment! shopping locations and fair trade affect! where and how retailers can trade. 7hanges in technology bring new attitudes to buying products and services and to better organi"ation of the supply chain.

India has the highest shop density in the world and the present retail market in India. -e are ranked second in the global retail development index out of 84 by AT 9earney. This figure shows

the comparative penetration of organi"ed retail in India.

Com parit ive penit rat ion of organized ret ail )14+ )44+ 54+ 34+ *4+ 14+ 4+ %: Taiwan ;alaysia Thailand Indonesia 7hina India

Tradit ional #rgani"ed

Evolution of Retail Market in India. In the beginning there were only kirana stores called ;om and Pop :tores! the friendly neighborhood stores selling every day needs. In the )<54s manufacturer s retail chains like (7;! 'walior :uitings! =ombay (ying! 7alico! Titan etc started making its appearance in ;etros and small towns. ;ulti brand retailers came into the picture in the )<<4s. In the food and >;7' sectors retailers like >ood world! :ubhiksha! ?ilgris are some of the examples. In music :egment Planet ;! ;usic world and in books 7rossword and >ountainhead are some others. :hopping 7entres began to be established from )<<2 onwards. A uni@ue example was the Astablishment of margin free markets in 9erala. The millennium year saw the emeregence of super markets and hypermarkets. ?ow big players like Reliance! =harti! Tatas! BCC! IT7 are entering into the organi"ed retail segment. The big international retail bigwigs are waiting in the wings! as the present >(I guidelines do not allow them to own retail outlets in the country. -almart is testing the waters by agreeing to provide back end and logistic support to =harti for establishment of retail chains with a view to study the market for future entry when the >(I guidelines change and to establish a backbone supply chain. Table ) shows the different phases in the growth of organi"ed retailing in India. Table: 1. ourne! of "rganized Retail in India &unction Antry! 'rowth! Axpansion! Top line focus Range! Portfolio! >ormer options And to end supply chain management! =ackend operation! Technology! Process ;DA! :hakeout! 7onsolidation! Bigh investment

#ear '((( '(() '((* '(11 Source:

$ro%th >irst Phase :econd Phase Third Phase >ourth Phase Ern+t , #oung

$lobal Scenario Retail stores constitute 14+ of %: '(P D are the 8 rd largest employer segment in %:A. 7hina on the other hand has attracted several global retailers in recent times. Retail sector employs .+ of the population in 7hina. ;ajor retailers like -al$;art D 7arrefour have already entered the 7hinese market. In the year 1448! -al$;art D 7arrefour had sales of %: E .4.* 7rore D %: E )34 7rore respectively. The global retail industry has traveled a long way from a small beginning to an industry where the world wide retail sales is valued at E . x )4F 7rore. The top 144 retailers alone accounts for 84 + of the worldwide demand. Retail turnover in the A% is approximately Auros 1!44!444 7rore and the sector average growth is showing an upward pattern. The Asian economies /excluding Gapan0 are expected to grow at 3+ consistently till 1442$43.#n the global Retail stage! little has remained same over the last decade. #ne of the few similarities with today

is that -al$;art was ranked the top retailer in the world then D it still holds that distinction. #ther than -al$;artHs dominance! thereHs a little about todayHs environment that looks like the mid$ )<<4s. The global economy has changed! consumer demand has shifted D retailersH operating systems today are infused with far more technology than was the case six years ago. The Top &ive Compan! Inve+tment -al$;art $ =harti Iet to announce Reliance E 2.2 billion Aditya =irla 'roup E 8.8 billion Pantaloon E ) billion Tatas E 5< million :ourceJ The Aconomic Times -RESE.T I./I0. SCE.0RI" India s retail market that is seen as the '#C(;I?A by global players has grabbed attention of the most developed nations. This is no wonder to the one who knows that the total Indian retail market is %: E824bn. /)3! 44!444 crore I?R approx.0 of which organi"ed retailing is only around 8 percent i.e. %: E5bn /83!444 crore I?R approx0. ;odern retail has entered India as seen in sprawling shopping centers! multi$storeyed malls and huge complexes offer shopping! entertainment and food all under one roof. The future of Indian retailing may even witness the concept of 1* hour retailing. The urban retail market has been embracing various new formats and the malls turned out to be the trendsetters by promising the concept of shoppertainment. The trends in the rural market also have been changing from the old Baats and ;elas to the rural malls like ,7haupal :agar launched by IT7! (7; :hriram 'roups one$stop shopping destination called ,Bariyali =a"aar ! 'odrej groups agri store ,Adhar etc.

#rgani"ed retailing is spreading and making its presence felt in different parts of the country. The trend in grocery retailing! however! has been slightly different with a growth concentration in the :outh. Though there were traditional family owned retail chains in :outh India such as ?ilgiri s as early as )<4*! the retail revolution happened with various major business houses foraying into the starting of chains of food retail outlets in :outh India with focus on 7hennai! Byderabad and =angalore markets! preliminarily. In the Indian context! a countrywide chain in food retailing is yet

to be established as lots of :upply 7hain issues need to be answered due to the vast expanse of the country and also diverse cultures that are present. %norgani"ed marketJ Rs. 258!444 croresK #rgani"ed marketJ Rs.2! 444 croresK 2L growth in organi"ed retailing between 1444$ 1442 K #ver *!444 new modern #utlets in the last 8 yearsK #ver 2!444!444 s@. ft. of mall space under development >ood and grocery$ >ood world$ :hoppersH :top$ :ubhiksha$ -orking at certain places -estside M Planet ;$ ?ilgris M Cifestyle$ ;usic -orld$ ?irma$Radhey 'lobus$ Reliance >resh RP' s :pencers

Ma1or pla!er+ . . . . . . . . . . . . .

Indian consumers are rapidly evolving and accepting modern formats overwhelmingly. Retail :pace is no more a constraint for growth. &e% of India2+ top retailer+ are: ). =ig =a"aar$PantaloonsJ =ig =a"aar! a division of Pantaloon Retail /India0 Ctd is already IndiaHs biggest retailer. In the year 1448$4*! it had revenue of Rs 325.8) crores D by 14)46 it is targeting revenue of Rs 5!544 7rore. 1. >ood -orldJ >ood -orld in India is an alliance between the RP' group in India with (airy >arm International of the Gardine ;atheson 'roup. 8. TrinethraJ It is a supermarket chain that has predominant presence in the southern state of Andhra Pradesh. Their turnover was Rs .5.5 7rore for the year 1441$48. *. Apna =a"aarJ It is a Rs )*4$crore consumer co$operative society with a customer base of over )1 lakh! plans to cater to an upwardly mobile urban population. 2. ;argin >reeJ It is a 9erala based discount store! which is uniformly spread across 1*4 ;argin >ree franchisees in 9erala! Tamil ?adu and 9arnataka. -holesale trading is another area! which has potential for rapid growth. 'erman giant ;etro A' and :outh African :hoprite Boldings have already made headway in this segment by setting up stores selling merchandise on a wholesale basis in =angalore and ;umbai respectively. These new$format cash$and$carry stores attract large volumes from a si"eable number of retailers who do not have to maintain relationships with multiple suppliers for all their needs.

3hat i+ retailing4

The word HretailH is derived from the >rench word HretailerH meaning Hto cut a piece offH or Hto break bulkH. In simple terms it involves activities whereby product or services are sold to final consumers in small @uantities. Although retailing in its various formats has been around our country for many decades! it has been confined for along time to family owned corner shops. Anglishmen are great soccer enthusiasts! and they strongly think that one should never give Indians a corner. It stems from the belief that! if you give an Indian a corner he would end up setting a shop. That is how great Indians retail management skill is considered. This emergence of organi"ed retailing has been due to the demographic and psychographics changes taking place in the life of urban consumers. 'rowing number of nuclear families! working women! greater work pressure! changing values and Cifestyles! increased commuting time! influence of western way of life etc. have meant that the needs and wants of consumers have shifted from just being 7ost and Relationship drive to =rand and Axperience driven! while the Nalue element still dominating the buying decisions. A retail revolution is happening at newer markets! India presents exciting opportunities on account of its vast middle$class and a virtually untapped retail industry. O The network of retailers reaches every nook and corner of the country. :o any product produced anywhere in the country can be easily accessed by the buyers from any location. Thus the spatial convenience of Indian retailers is varying high. According to #R'$;AR'1 the total number of all kinds of retail outlets in India was 2)!84!444 during )<<3$<.. This means one retail outlet exists against an average of almost )<4 persons. O :econdly! in India the retailing industry is an unorgani"ed lot consisting of! in most of the cases! small entrepreneurs. And the virtual omnipresence of the Indian retailer can be attributed to these small entrepreneurs only. The second attribute gives rise to the following characteristics M O The manufacturers cannot directly reach all retailers in a particular geographical area. Therefore! the manufacturers cannot maintain the desired relationship with the retailers! which in turn! makes management of the channel complicated. This also makes the possibility of a direct feedback loop from the retailers almost remote.

O Therefore! the member operating between the manufacturers and retailers become more powerful as they can block the channel of communication between the two. :o the dependence of retailers on other channel members increases to a high extent. Thus the participation of retailers in the flows of marketing mix becomes lower than desired. O The financial strength of the Indian retailers! in general! is very low and hence the investment capabilities. This makes the retailers more dependent on the other channel members. Bowever! these characteristics are peculiar to the small retail outlets and may not be present at every kind of retail level. According to the #R'$;AR' study referred to above! the number of smaller retailers /having turnover less than Rs. 14!444 pa0 is estimated to be 1.!.)!144 and the number of retail outlets with turnover more than Rs. )!14!444 per annum is only 8!2<!)44. In recent times! however! more and more big retail outlets are coming up in the metros and cities of the country. ;any business houses now are thinking of opening up a retail chain of their own. :pencer and 7o. Cimited /retailing arm of the RP' group0! Nitan Industries Cimited! Pantaloon! :hoppers :top! to name a few! have already in the business with a big bang. All of them have got very ambitious plans to get into the new millennium. Pantaloon! for example! has got *4 strong chain of franchisee and )1 stores owned directly by them. RP' 'roup plans to increase their outlets to 24 >ood-orld! )5 Bealth D 'low! 5 ;usic-orld from present 1. >ood-orld and 1 ;usic-orld outlets by the end of the year )<<<. Cikewise! Archies has got a good presence in the market through a very successful and efficient franchisee network. In India! the logistics market is mainly thought to mean transportation. =ut the major elements of logistics cost for industries include transportation! warehousing! inventory management! courier and other valued$added services such as packaging. The logistics costs account for )8 per cent of '(P. The industry is currently on an upswing and is poised for a growth of 14 per cent in the coming years. -ith the expansion of retail! supply chain will take on an increasingly important role. -ith the end consumer becoming more demanding and time conscious! the need for just$in$time services is increasing. In retail! where competition is intense and stakes are high! customer satisfaction is paramount. Retailers reali"e that knowing what is selling and what is not can improve the inventory processes. Inventory is the biggest cost factor! and if not managed well! it can also be the biggest drain. ThatHs why retailers and their trading partners today set store by the inventory process and its impact. Affective :7; enablesJ 0verting problem+J :tores easily identify potential stock$outs and re@uest replenishment before the inventory drops to "ero. (eciding to de$list or replace a product is easier. &acilitating re+ource planning and allocationJ Product forecasts and supply schedules are easily converted to perform space planning! establish staffing needs and organise inbound&outbound shipments. >inancial experts can plan cash flow and analyse margins into the future. The key players in the logistics industry are gearing up to meet the challenges by initiating both organic and inorganic growth to leverage the retail opportunity. Cogistics firms have also started focusing on related services such as 7ustoms clearing and forwarding! inbound warehousing! labeling and packaging! fleet management! order picking and inventory management. Retail logi+tic+

Retailing is the most active and attractive sector of last decade. -hile the retailing industry itself has been present since ages in our country! it is only the recent past that it has witnessed so much dynamism. The emergence of retailing in India has more to do with the increased purchasing power of buyers! especially post$liberali"ation! increase in product variety! and increase in economies of scale! with the aid of modern supply and distributions solution and new technologies are improving retail productivity! though there are many opportunities to start a new retail business! retailers are facing numerous challenges. It is often taken for granted that products will be available to buy in the shops. The cornucopia of goods that is available in a hypermarket or a department store sometimes means that we forget how the products were supplied. -e expect our lettuces to be fresh! the new Playstation to be available on launch day and our clothes to be in good condition and ready to wear. -ith the introduction of e$commerce we have come to demand complete availability and home delivery at times of our choosing. 7onsumer beliefs and needs have altered. #ur willingness to wait to be satisfied or served has reduced and we expect instant product availability and gratification. It should be obvious from this that the supply or logistics system that gets products from production through retailing to consumption has also needed to be transformed. Physical distribution and materials management have been replaced by logistics management and a subse@uent concern for the whole supply chain />igure ).)0. This logistics transformation derives from cost and service re@uirements as well as consumer and retailer change /see >ernie! )<<46 >ernie and :parks! )<<50. Alements of logistics are remarkably expensive! if not controlled effectively. Bolding stock or inventory in warehouses just in case it is needed is a highly costly activity. The stock itself is expensive and might not sell or could become obsolete. -arehouses and distribution centres generally are expensive to build! operate and maintain. Nehicles to transport goods between warehouses and shops are expensive! in terms of both capital and running costs.

;aterials ;anagement # Raw ;aterials Parts Packaging ;aterials >inished Product

Physical distribution management 7 Inventory :torage >acilities %tili"ation Transportation 7ommunication R : Cogistics management ? : % ; A

There is thus a cost imperative to of both capital and running costs. There is thus a cost imperative to making sure that logistics is carried out effectively and efficiently! through the most appropriate allocation of resources along the supply chain. At the same time! there can be service benefits. =y appropriate integration of demand and supply! mainly through the widespread use of information technology and systems! retailers can provide a better service to consumers by! for example! having fresher! higher @uality produce arriving to meet consumer demand for such products. -ith the appropriate logistics! products should be of a better presentational @uality! could possibly be cheaper! have a longer shelf life and there should be far fewer instances of stock outs. Reaction time to spurts in demand can be radically improved through the use of information transmission and dissemination technologies. If operating properly! a good logistics system can therefore both reduce costs and improve service! providing a competitive advantage for the retailer. Retailing and logistics are concerned with product availability. ;any have described this as ,getting the right products to the right place at the right time . %nfortunately however that description does not do justice to the amount of effort that has to go into a logistics supply system and the multitude of ways that supply systems can go wrong. The very simplicity of the statement suggests logistics is an easy process. As the boxed example shows! problems and mistakes can be all too apparent. The real management ,trick is in making logistics looks easy! day in and day out! whilst reacting to @uite volatile consumer demand >or example! if the temperature rises and the sun comes out in an atypical :cottish summer! then demand for ice cream! soft drinks and even salad items rises dramatically. Bow does a retailer make sure they remain in stock and satisfy this transient demandP #r we might think about Nalentine s (ay! when demand for certain products in the days before increases exponentially. If a retailer stocks Nalentine s cards and demand does not materiali"e! then the retailer has stock that will not sell. There is little demand for Nalentine s cards on )2 >ebruary. -hile over$stocks in this case will not perish! the cost of their storage and handling for the intervening year can be considerable. The examples above demonstrate that retailers must be concerned with the flows of product and information both within the business and in the wider supply chain. In order to make products available retailers have to manage their logistics in terms of product movement and demand management. They need to know what is selling in the stores and both anticipate and react @uickly to changes in this demand. At the same time they need to be able to move less demand$ volatile products in an efficient and cost$effective manner. The logistics management task is therefore initially concerned with managing the components of the ,logistics mix . -e can identify five componentsJ

O Storage facilitie+: these might be warehouses or distribution centres or simply the stock rooms of retail stores. Retailers manage these facilities to enable them to keep stock in anticipation of or to react to! demand for products. O Inventor!: all retailers hold stock to some extent. The @uestion for retailers is the amount of stock or inventory /finished products and&or component parts0 that has to be held for each product! and the location of this stock to meet demand changes. O Tran+portation: most products have to be transported in some way at some stage of their journey from production to consumption. Retailers therefore have to manage a transport operation that might involve different forms of transport! different si"es of containers and vehicles and the scheduling and availability of drivers and vehicles. O 5nitization and packaging: consumers generally buy products in small @uantities. They sometimes make purchase decisions based on product presentation and packaging. Retailers are concerned to develop products that are easy to handle in logistics terms! do not cost too much to package or handle! yet retain their selling ability on the shelves. O Communication+: to get products to where retailers need them! it is necessary to have information! not only about demand and supply! but also about volumes! stock! prices and movements. Retailers have thus become increasingly concerned with being able to capture data at appropriate points in the system and to use that information to have a more efficient and effective logistics operation. It should be clear that all of these elements are interlinked. In the past they were often managed as functional areas or ,silos ! and while potentially optimal within each function! the business as a whole was sub$optimal in logistics terms. ;ore recently the management approach has been to integrate these logistics tasks and reduce the functional barriers. :o! if a retailer gets good sales data from the checkout system! this can be used in scheduling transport and deciding levels and locations of stock holding. If the level of inventory can be reduced! perhaps fewer warehouses are needed. If communications and transport can be linked effectively! a retailer can move from keeping stock in a warehouse to running a distribution centre which sorts products for immediate store deliveryJ that is! approaching a ,Gust$In$Time system. Internal integration has therefore been a major concern. It should also be clear! however! that retailers are but one part of the supply system. Retailers are involved in the selling of goods and services to the consumer. >or this they draw upon manufacturers to provide the necessary products. They may outsource certain functions such as transport and warehousing to specialist logistics services providers. Retailers therefore have a direct interest in the logistics systems of their suppliers and other intermediaries. If a retailer is effective! but its suppliers are not! errors and delays in supply from the manufacturer or logistics services provider will impact the retailer and the retailer s consumers! in terms of either higher prices or stock$outs /no products available on the store shelves0. If a retailer can integrate effectively its logistics system with that of its suppliers! such problems may be minimi"ed. ;uch more importantly! however! the entire supply chain can then be optimi"ed and managed as a single entity. This brings potential advantages of cost reduction and service enhancement! not only for the retailer! but also for the supplier. It should also mean that products reach the stores more rapidly! thus better meeting sometimes$transient customer demand. In some instances it may mean the production of products in merchandisable ready units! which flow through the distribution systems from production to the shop floor without the need for assembly or disassembly. :uch developments clearly re@uire supply chain co$operation and coordination. -e may be describing highly complex and advanced operations here. Retail suppliers are increasingly spread across the world. A retailer may have thousands of stores in a number of

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countries! with tens of thousands of individual product lines. They may make millions of individual sales per day. %tili"ing data to ensure effective operation amongst retailers! manufacturers! suppliers! logistics services providers! head office! shops and distribution centers is not straightforward. There is thus always a tension between overall complexity and the desire for the simplest possible process. :ummari"ing the discussion above! the logistics task therefore can be described asJ The process of strategically managing the procurement! movement and storage of materials! parts and finished inventory /and the related information flows0 through the organi"ation and its marketing channels in such a way that current and future profitability are maximi"ed through the cost effective fulfillment of orders. /7hristopher! )<<5J *0 ;anaging the logistics mix in an integrated retail supply chain! while aiming to balance cost and service re@uirements! is the essential element of logistics management. As retailers have begun to embrace this logistics approach and examine their wider supply chains! many have reali"ed that to carry out logistics properly! there has to be a transformation of approach and operations /:parks! )<<50. 6E# C7088E.$ES: )0 C#7ATI#?J 9Right -lace: Right choice9 >ollow the >our QRsH of :7; R Right time! Right place! Right price! Right @uantity R to reap the advantages ofJ Su+tained inventor! reduction by as much as 34 per cent for both the buyer and seller. Improved forecast accuracy by as much as 84 per cent. Anhanced store shelf stock rates by as much as 5 per cent. Increased sales by as much as 14 per cent. Reduced logistics costs by as much as * per cent.

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Cocation is the most important ingredient for any business that relies on customers! and is typically the prime consideration in a customer s store choice. Cocations decisions are harder to change because retailers have to either make sustainable investments to buy and develop real estate or commit to long$term lease with developers. -hen formulating decision about where to locate! the retailer must refer to the strategic planJ Investigate alternative trading areas. (etermine the type of desirable store location Avaluate alternative specific store sites

10 ;AR7BA?(I:A! /trade! commodities offered for sale0J The primary goal of the most retailers is to sell the right kind of merchandise and nothing is more central to the strategic thrust of the retailing firm. ;erchandising consists of activities involved in ac@uiring particular goods and services and making them available at a place! time and @uantity that enable the retailer to reach its goals. ;erchandising is perhaps! the most important function for any retail organi"ation! as it decides what finally goes on shelf of the store. 80 PRI7I?'J Pricing is a crucial strategic variable due to its direct relationship with a firmHs goal and its interaction with other retailing elements. The importance of pricing decisions is growing because todayHs customers are looking for good value when they buy merchandise and services. Price is the easiest and @uickest variable to change.

*0 TAR'AT A%(IA?7AJ

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S7onsumer the prime moverF T7onsumer PullS! however! seems to be the most important driving factor behind the sustenance of the industry. The purchasing power of the customers has increased to a great extent! with the influencing the retail industry to a great extent! a variety of other factors also seem to fuel the retailing boom. 20 :7ACA #> #PARATI#?:J :cale of operations includes all the supply chain activities! which are carried out in the business. It is one of the challenges that the Indian retailers are facing. The cost of business operations is very high in India. RET0I8I.$ &"RM0TSJ a; 7!permarket J It is the largest format in Indian retail so far is a one$stop shop for the modern Indian shopper. K;erchandiseJ food grocery to clothing to spots goods to books to stationery. K:pace occupiedJ 24444 :@. ft. and above. K:9%sJ 14444$84444. KAxampleJ Pantaloon retail s =ig =a"aar! RP' s :pencers /'iant0. b; Supermarket J A subdued version of a hypermarket. K;erchandiseJ Almost similar to that of a hypermarket but in relatively smaller proposition. K:pace occupiedJ 2444 :@. ft. or more. K:9%sJ Around )4444. KAxampleJ ?ilgiris! Apna =a"aar! Trinethra. C; Convenience +tore J A subdued version of a supermarket. K;erchandiseJ 'roceries are predominantly sold. K:pace occupiedJ Around 244 :@. ft. to 8444 :@. ft. KAxampleJ stores located at the corners of the streets! Reliance Retail s >resh and :elect. /; /epartment +tore J A retail establishment which speciali"es in selling a wide range of products without a single prominent merchandise line and is usually a part of a retail chain. K;erchandiseJ Apparel! household accessories! cosmetics! gifts etc. K:pace occupiedJ Around )4444 :@. ft. M 84444 :@. ft. KAxampleJ Candmark 'roup s Cife:tyle! Trent India Ctd. s -estside. E; /i+count +tore J :tandard merchandise sold at lower prices with lower margins and higher volumes. K;erchandiseJ A variety of perishable& non$perishable goods. KAxampleJ Niswapriya 'roup s :ubiksha! Piramal s Tru;art. &; Specialt! +tore J It consists of a narrow product line with deep assortment. K;erchandiseJ (epends on the stores KAxampleJ =ata store deals only with footwear! RP' s ;usic -orld! 7rossword.

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$; M<"=+ J ;ulti =rand outlets! also known as 7ategory 9illers. These usually do well in busy market places and ;etros. K;erchandiseJ #ffers several brands across a single product category. 7; 6irana +tore+: The smallest retail formats! which are the highest in number /)2 million approx.0 in India. :pace occupiedJ 24 s@ ft and even smaller ones exist. K;allsJ The largest form of organi"ed retailing today. Cocated mainly in metro cities! in proximity to urban outskirts. K;erchandiseJ They lend an ideal shopping experience with an amalgamation of product! service and entertainment! all under a common roof. K:pace occupiedJ Ranges from 34!444 s@ ft to .! 44!444 s@ ft. KAxampleJ Pantaloon Retail s 7entral! ;umbai s I? orbit. Supplier Retailer Relation+hip+ Traditionally the supplier$retailer relation in India comprised several layers such as the national distributor! the regional wholesaler and the end retailer. Bowever this scenario is fast changing with the organi"ed retail increasing its presence in the country where the relationship is directly with the manufacturer. Bowever this new model has been affecting the relationships that the manufacturer enjoys with the traditional system that is still the most dominant in the entire retail sector. The issue of differential pricing is being taken up at several forums and the growing dissatisfaction among the traditional retailers is being addressed by the manufacturers. Bowever we see that in the long term! the role of a national distributor would slowly fade away or get restricted to the rural& upcountry regions. The supplier$retailer relationship would come under severe pressure! as each party would try to s@uee"e maximum margins out of the other. Innovation+ in Tran+portation 8ogi+tic+ The logistics service providers have been innovating several interesting formats and models for the retail sector. As of now! organi"ed retail chains in India do not! by far! outsource logistical re@uirements6 they develop their own network. This was basically due to the fact that the supply$ chain was still in its infancy stage! which has begun to mature and the systems are being well defined. As retail chains begin to focus more and more on the retail end! the logistics support would begin to get outsourced. The logistics service providers have begun to come out with innovative customi"ed solutions for the retail chains such as 'ATI s model for distribution of Alphonso mangoes throughout the country with the Information Technology support. -e see that the logistics service providers would continue to innovate and develop effective distribution systems for the retail sector.

&ormat+ 7urrently the retail sector in India is populated with the traditional mom$and$pop stores and some )444 odd supermarkets under organi"ed retail chains. A daring few ventured into the Bypermarket segment with successful results and this format is being fast replicated by other players. This experience indicates that the Indian consumer has matured to the next level of shopping experience. 'iven the Indian conditions and the vast diversity a single format may not be possible for the national presence! but region specific formats may evolve. An interesting

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observation is that of lack of presence of organi"ed retail chains in the rural&semi$urban centers as over 34+ of Indian population is still in these parts. An ideal Tno frillsF model to start with! would be ideal for the rural markets! this would help to take them to the next level of supermarket experience. Enumerating +ome of the likel! po+itive outcome+. #rgani"ed retail market boom is expected to create the much$needed mass employment. It will upgrade India s layer second and third tier cities to international standard. -hile this boom addresses India s basic infrastructure challenges it promises to create demand for the product of rural India and a more efficient agricultural sector. The organi"ed retail market boom is expected to bring positive outcomes in many of sectors like economic growth! exports! education! IT industry! food processing! infrastructure and traffic! banking! tourism! agribusiness management along with the greater customer satisfaction. :ome of these positive outcomes O (evelopment of world class retail shops is likely to gives direct employment to many professionals like real estate dealers! builders! architects! display designers! retail shop managers and workers like sales persons! security etc. >igure 1 shows the manpower gap by 14)4.According to 7II the retail sector can absorb <.4 lakh people over the next five years. :ome of the activities like packing is likely to be outsourced from in and around the vicinity of the establishment. #ne million people will be employed by this retail sector and 8.1 million will be re@uired by 1445$4<. The local community is likely to benefit from employment opportunity so generated. The employees have the opportunity of getting pension! other employee benefits and union membership under this organi"ed sector. O :mall business can spring up around such mega retail outlets giving service to a large number of shoppers visiting the malls. O The organi"ed retail market boom is expected to become one of the pillars to Indian economy as are oil and gold for ;iddle Aast. Indian exports will get a boost when the big showrooms source Indian goods from small businesses for their international outlets and it will help us to find the market for the products form rural India. O Think of the increase in transport re@uired for providing goods and services for the retail outlets. This boom will eliminate the absence of cold$storage infrastructure problem of our farmers and help them to get the product to marketplace in time. The supply chain can again provide opportunities for a host of manufacturing! trading! and services. Air! road and rail transport is going to benefit from this. ?umbers of domestic airlines is now increasing their cargo services considerably to meet the re@uirements of this sector O The big book stalls in these hypermarkets become a blessing to voracious readers and researchers. It offers considerable discount and variety of books to all age of people! that now small maga"ine hats fail to offer. O ;anaging inventorie+ is one of the important asset of the big retailers. The best practices available in the world in this field would come into the country with the coming of players like -al$;art in the logistics of retail marketing. India is the fastest growing mobile market in the world. These showrooms will become major hubs for this electronic industry. #rgani"ed retail showrooms give the consumers wide range of electronics goods ranging from robots to imported toys. O The air conditioning and refrigeration industry is likely to get a big boost. 7ommercial air$ conditioning is likely to overtake the domestic market with the coming of this boom. The refrigerated containers re@uired to transport perishables to various retail outlets would be enormous. The production of consumer durable goods is expected to increase by this organi"ed retail sector.

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7onsumers would be the group! which benefits the most. They would get wider choices of products and cheaper prices. This will increase consumption rate and will indirectly generate more employment and wealth. The local retailers will start offering better discounts that other foreign retail giants could not cope. Time saving online shopping! home delivery through web portal and ability for better comparison of products will increase customer satisfaction. O Aducation is considered as the most happening sector in India. -hile retail giants entering in to the fray there are many opportunities opening up in the educational sector. Retailers like Reliance itself no% hire around >(?@( percent of it+ front?end +taff from government school pass outs. Pantaloon hires 844 school passed out from both government and private. Retail career area includes store operation! supply chain management! human resource management! entrepreneurship! IT! sales etc. The management schools like ?;I;:! II;s start offering courses with speciali"ation in this field. ?umber of e$learning portals start provides online courses for retail in India. >oreign Institutional Investors and corporate like Cifestyle tie up with Indian institutes like ?ational Institute of >ashion Technology /?I>T0 to start both short and long tem course for fashion retail management and retail supply chain management. This tie up will slowly shift in to other education fields also offering high @uality foreign education in Indian soil. The great demand for those @ualified students surely attract more and more youngsters and managers to this attractive courses and more and more public and private institutions start offering variety of courses in this field. The non$organi"ed market sectors hiring these @ualified professionals will also have change in their methodology for @uality of services! supply chain management! store organi"ation! financial management and product appreciation. O 'rowing organi"ed food retailing in India will bring significant change in the agribusiness management. The supermarket and fresh food outlet showrooms will directly procure product from the farmers. The organi"ed retail marketing will channelise large$scale private investments into irrigation! agriculture marketing! agriculture extension services and infrastructure such as roads! cold storage and grain banks. O >armers are likely to get better prices for their products as these mega retailers are likely to procure their farm products directly from the farmers. ;any of the middlemen would be eliminated. They start contracts based farming and get assured buyer with stable price. The food procurement business helps the farmers when government controversial decisions to import food items or when state procurement agencies stay away

O People becoming fashion conscious. The retail markets bring the latest in fashion accessories and kids wear for customers of all age groups. Indian customers will accept the international fashion brands like Parfois! Nincci! #akidi and #baibi with open arms and there will be drastic changes in the dress code. The traditional saree! 9adhi and silks dress will be shifted to occasional one. =aby care products like bed linen! rolling products! handbags! jewelry! watches! sunglasses! hats! belts and hair accessories and Nincci range of footwear of foreign brands will take place in the daily use of Indian customers. >igure 8 shows the retail segments ratio in Indian

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&a+t e+t gro%ing ret ail +egment in India -atch and Gewelry )5+ (urables )5+ Pharmacy 1.+ >urniture and >ixtures 1.+ >ood and 'rocery <)+

7lothing 22+

O The IT sector offers fairly high income in Indian youngsters. The greater purchasing opportunity makes them to work hard for the luxuries in their life. The world$class restaurants occupied in these retail showrooms will become a best place for get together and facilitate better family relation ship. These retail showrooms will be a great relief for old age people since they need not to %alk an!%here. Those who come back to India from foreign nation would be able to keep using their favorite brand+! as they are easily available through these retail shops. O The celebrations will become more enjoyable with costly gifts. The contest and offers during the festival season by theses big giants varies like air tickets! gadgets! jewelry! and chocolates. The offers from air services like :ingapore airlines and number of tourism development agencies like from other countries give a new face to the festival season in India. O The cigarette manufactures will face strict completion from foreign brands. The places near the theses showrooms will become turn to posh areas. The street corner shops selling cheap product like Pan! =eedi etc in these places will disappear and significant reduce in the smoking at public place

O The retail boom will bring a rush in property development and significant improvements in real estate and construction work at every small town in the country. Table * shows the drastic changes in the Indian cities. Table: A. Change+ in India. 5rban Share -opulation. 0verage Return on Inve+tment in Retail Real #ear $ro%th Rate E+tate. )<<) 13+Tier ) 7ities <$)4+ 144) 15+Tier 1 7ities 5$<+ 14)) *)+Tier 8 7ities )4$))+ :ourceJ Arnst D Ioung

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O Infrastructure and traffic facilities will improve significantly. ;ost of these stores are located away from the town areas they will encourage to facilitate the road and transport facilities to remote areas in the country. The gridlock of cars and other vehicles in the town areas will be reduced since the shopping centers find difficult to find parking areas and often the customers vehicle bring lot of traffic jam in peak hours .The shoppers will be spending money to develop these area. O =etter weather forecasting will be take place as -al$;art like big giants start depending on local whether data for replenishment purpose. 7onsumers will be benefited by the call center agents to en@uire on particular product. >or better store connectivity they will facilitate the real time status monitoring application! transformational technology like R>I(! service based infrastructure and Nirtual Private ?etworks. The IT professionals start developing retail technology products like Personal :hopping Assistant /P:A0! ARP and 7R; applications which will look in to inventory turn and stock availability by communicating in real time. IT industry will bring web portals to avoid go to market mechanism and innovative technologies like #ntological applications for treat each customer as uni@ue. ?umber of strategic ac@uisitions like #racle ac@uisition of Retek! 8347ommerece! ProfitCogic etc in the IT industries will take place to meet the retail specific functionality. Astablishment of new centers like T7: retail innovation lab! B7C! #racle Retail 7entre for the re@uirement engineering and related process will take place across the country. O Retail showrooms will start offering multi channel online retailing facility. The Indian society shift to purchase product and services online in a large amount. The online shopping destinations like e=ay! Ama"one comparison shopping portals like google and shopping.com will be more popular in Indian community. ?ew domestic e$commerce retailers are being born. There will be increase in the banks offerings and online facilities. The society will start using these online banking facilities! credit cards etc more and more in their daily life. The customer will be saving lot of time and have a better comparison of product in the neighborhood retail showrooms. The competition become more as adjacent district showrooms will deliver better product with in few hours. ;any other related industry start advertising their product in these local web portals. This will be benefit to the small$scale industry units. The flip +ide of thi+ revolution The flip side is e@ually prominent! large section of India s people are still deprived of the fruits of development. 13 percent of India lives below poverty line their life will become more pathetic and result in increased social tensions. Table 2 shows the urban and rural area poverty rate in India.

#ear )<<8$<* )<<<$44 144.

Table ): "ver all povert! in India over variou+ !ear+ -overt! Ratio -ercent .umber "f -oor BMillion+; Rural 5rban Combined Rural 5rban Combined 8..8 81.* 83.4 1**.4 .3.8 814.8 1..) 18.3 13.) )<8.1 3..) 134.8 1).) )2.) )<.8 ).4.2 *<.3 114.) :ourceJ Aconomy watch! ;arch 4.

Around *4 million people in India depend on the unorgani"ed retail sector6 the trade unions and traders fear these peopleHs livelihoods will be ruined if retail giants are permitted to enter IndiaHs retail market! some of the negative outcomes

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O It is observed that the presence of big retailers like -al$;art depresses the wages of the employees at the bottom of the pyramid in the community. :ome of the retail market giants who going to print their foot in India are notorious for driving out competition and slashing labour costs in other countries. ;ost of the employment opportunities that promise to create are for the semi skilled and unskilled labors this is not useful for majority of highly educated Indian youth. Reliance already started using two of the special economic "one as warehouse for their retail outlets. >armers lost their lively hood as most of the area that ac@uired for the purpose are farmland. The promised compensation packages are often inade@uate. (ue to delay in processing and corrupted middle players of government employees! it is not reaching to the real farmers. ;ost of the place senior citi"ens protesting against for their farmland ac@uisition are arrested and imprisoned for several months. The great apprehensions about these retail giants styles of operation will bring law and order problems in the country. O The coming of the big players in the retail market would be last nail in the coffin for the friendly neighborhood kirana stores. The personal touch one used to get from the service of kirana stores would be a thing of the past. O The life style of the community would change. In food consumption! heat and eat culture would replace the conventional cooking habits of the populace. >ast foods and junk foods would replace the more nutritional conventional foods O Retail giants with strong presence in other countries get the products cheapest rates possible from around the globe like oranges from 7alifornia! pineapples from Bawaii and apples from -ashington. The existing apple industry in 9ashmir and Bimachal will be badly affected. The presence of seasonal fruits from foreign country will surely decrease the market for Indian fruit. India s estimated 1+ food processing will struggle with the imported apple juice and processed food items. The domestic food product wastage that is *4+ now will increase. The Indian tea market may vanish by the cheaper tea from Nietnamese. This global supply chain will become outlets for cheep 7hinese made goods stores in India. O The decreasing sales of fruit juice! sauce and bread items in small shops will stop the supply&movement of these ready to eat products to the owner manned general stores! which will affect the lively hood of 8.<2 crores of unorgani"ed retail trade employees. .eed of Regulation+ 7hange is inevitable. (ifferent retailers serve for different needs of Indian society trying to protect any group of retailers through special laws hurt the customers. The foreign retailers failed in countries like Gapan. If the retailer s growth is prevented in India the expected economic growth will be badly affected. =ut law enforcement and rules like ;icro! :mall and ;edium Anterprises act 1443! Agricultural Produce ;arketing 7ommittee /AP;70 act etc should be effectively implemented to make sure that small and local business are not adversely affected. (epartment of industrial policy and promotion Polices /(IPP0 and local governing bodies should make polices to integrate small trading class as partners in the large retail chains so that they too can benefit from new technologies and new management practices. K:tate government must have control over these retailers and they should bring conditionality for the functioning of foreign retailers from place to place. They should closely monitor their functioning and introduce new internal self$regulations. K=anking finance for the welfare of unorgani"ed sector for improving their efficiency should be enhanced. K:trict labor laws and limited opening hours must be there for theses shops.

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KThe >(I policies should be reformed from time to time and foreigners entering strategies like franchise agreement! cash and carry whole sale trading! strategic licensing agreement make foolproof for avoiding global retailers to engage in full retailing. Cike ;exico! =ra"il! Argentina! %ruguay! 7hile and 7osta Rica got together to bring new legislation to prevent -al$;art from opening too many stores in their countries. KIndia should not allow the retail giants from monopoli"ing market above some percent in any sector. The price of commodities should be agreed by the state government. ;utual agreement with local government for the promotion of local commodities and employment should be signed by the foreign vendors. The food processing and allied services should bring under reserved items. The procurement must be through government agencies like supply co. KThe ministry should make sure that for all foreign retailers wishing to enter India! they should give an undertaking that whatever volume of business they generate in India for the first )4 years! they must export an e@uivalent amount /or more0 from India for these )4 years This will facilitate Indian manufacturing sector to get a boost. All foreign retailers must undertake to buy at least 24+ of their merchandise /by retail value0 from within India. This will prevent any dumping in India. All large retailers /of say total retail space U 124 s@uare feet0 must have a * percent turnover cess that should be used by the 'overnment to provide technology! training! and marketing support /through local small retailer associations0 to kirana & other neighborhood stores. 'overnment should make sure that the farmers are getting real profit of their product! which were bulkily procured and stored in the cold storage of these retailers! during off$season as well. Conclu+ion The paper paints a verbal picture of the impending retail boom likely to happen sooner than later. The signs are all over the place. >or few years foreign retailers will have the role of facilitator for to standardi"e the agribusiness and to unify customer s preference across the country. The competition will help to increase the @uality of service of the existing local retailers and greater customer satisfaction in Indian society. 7oncept of self$employment will vanish and sustainable small industries will be roped with the big chains. Paper gives a glimpse of the slow evolution of retail market over the years. A concise description of the drivers of this phenomenon was discussed. The likely positive and negative impact of this revolution is enumerated.

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