IntroductionThe Asia Pacific Rim region offers bright prospects for retailers and manufacturers. The large population, sound economic growth, investment in infrastructure and rising incomes all contribute to a positive and improving trading environment. Even in China, where the accessibility of markets was traditionally limited by the political regime, the move towards a socialist market economy is under way. This has led to a host of new retailing opportunities. However, while the prospects for companies seeking to expand their horizons are encouraging, those seeking to capitalize on these Pacific Rim opportunities must respect the inherent diversity of the region.Economically powerful Japan with the region's highest gross domestic product (GDP) is, to the outside observer, an obvious contrast to China's relatively backward but fast-growing economy. The distinctions between the newly industrialized economies of Hong Kong, Singapore, South Korea and Taiwan which have established a powerful trading presence within the region may appear to be less extreme, but are nonetheless also important. The newly industrialized economies themselves contrast with Malaysia, Thailand, Indonesia and the Philippines, where investment in infrastructure and a move to the cities is fundamentally altering lifestyles. The particular characteristics, both large and small, of all these countries affect trading conditions and must be taken into consideration by businesses and retailers wishing to operate in the region.While the Pacific Rim is characterized by such contrasts, there are also some important trends which apply more generally to the region. The first of these trends is a gradual improvement in the standard of living, with consumers having more purchasing power than before. As incomes rise, so do expectations, leading to increasing demand for a wide range of consumer items. The second trend relates to a change in family structure, with more women working, marrying later and having fewer children. Extended families, which previously may have shared a home, are increasingly splitting into more than one unit. The third trend is a move towards urbanization, accompanied by a change in the types of jobs which people do. Put together, these changes are resulting in massive infrastructure development. With this development come new jobs, better incomes and greater demands for housing, cars, consumer products, food and clothing. As families gear up for their new urban lifestyles, even the types of products that they need and want are changing.Political changes are also altering the characteristics of the marketplace. For example, the return of Hong Kong to China in 1997 and China's transition to a socialist market economy are likely to have far-reaching effects for retailers of all kinds. In order to take advantage of the region's emerging opportunities, local retailers and manufacturers must keep a close view on the rapidly changing economic, political and social patterns in the region. This paper reviews the impact of these aspects of the wider marketing environment on retailing in the Asia Pacific Rim and uses a series of short case studies to illustrate the impact of the key economic, demographic, political and sociocultural factors. Material for the case studies is sourced from a range of academic, business and statistical publications. (For the purposes of this paper, the Asia Pacific Rim region includes China, the newly industrialized economies (NIEs) of Singapore, Hong Kong, South Korea, Taiwan, Japan and the developing countries Indonesia, Malaysia, the Philippines and Thailand.)The marketing environmentThe marketing environment is a set of forces which either directly or indirectly influences a business' acquisitions of inputs or generation of outputs. Kotler[1] defines the marketing environment as "...the actors and forces that affect the company's ability to develop and maintain successful transactions and relationships with its target customers. It comprises 'non-controllable' actors and forces that impact on the company's market and marketing practice." When the marketing environment changes, companies face uncertainty, threats and opportunities. Retailers wishing to capitalize on such opportunities must be ready to predict likely outcomes and act quickly. According to Dibb et al.[2], "Marketing managers who fail to recognize changes in environmental forces leave their firms unprepared to capitalize on marketing opportunities or to cope with threats created by changes in the environment". Retailers involved with consumer goods need to be particularly vigilant as these products are particularly sensitive to environmental factors[3].

The marketing environment is sometimes broken down into two components: the micro- and macro-environment. The micro-environment concerns aspects which are close to the individual business and over which the business has some control. This paper is concerned with the macro-environment, sometimes also called the wider marketing environment, consisting of those elements which are external to the business and have a broader effect on it. These include economic, demographic, political, legal, technological, social and cultural factors.Economic factorsEconomic conditions in the Asia Pacific region are affected by a range of economic factors which have an impact on spending power and behaviour. In recent times the region has enjoyed considerable growth and has remained relatively unaffected by the 1990s global recession. The figures for 1993 indicate a total GDP of almost US$5.8 trillion, with a further 40 per cent growth expected by the end of the century. The full extent of this growth will be subject to factors such as the effects of Japanese recession (which is likely to have less of an impact in Asia than in the USA or Europe), the significant increase in China's economy and a slight slowing of the economies in Hong Kong, Singapore and Taiwan.As shown in Table I, not all countries are likely to contribute equally to this growth. Of the countries reviewed in this paper, the highest growth is expected from Thailand and Malaysia. This is due to an influx of direct foreign investment as labour-intensive businesses migrate from Japan and the NIEs to [TABULAR DATA FOR TABLE I OMITTED] cheaper areas. For such businesses the attractions of Thailand and Malaysia are obvious: both countries enjoy relatively low levels of inflation, cheap labour, and Malaysia is particularly rich in natural energy resources.As reforms take shape, China is also experiencing a rapid increase in its economy, with predictions suggesting that double figure growth rates will continue. In the run-up to the hand-over of power in Hong Kong, a three-way economic relationship between China, Hong Kong and Taiwan has been emerging. The size of the combined populations of these countries means that this relationship is bound to impact significantly on other trading conditions in the region. These trends are illustrated by the GDP figures and trends shown in Table I.Meanwhile, the Japanese economy has suffered as a result of world recession. Since 1991, Japan has seen a decline in private investment accompanied by a fall in consumption and profits. However, despite these setbacks, Japan remains the second biggest global economy, with a GDP per capita of US$33,821 in 1993[4]. Here again, the diversity of economic outlook is starkly illustrated. Table II gives further details by summarizing some key economic factors currently affecting …

The Indian retail industry is the fifth largest in the world. Comprising of organized and unorganized sectors, India retail industry is one of the fastest growing industries in India, especially over the last few years. Though initially, the retail industry in India was mostly unorganized, however with the change of tastes and preferences of the consumers, the industry is getting more popular these days and getting organized as well. With growing market demand, the industry is expected to grow at a pace of 25-30% annually. The India retail industry is expected to grow from Rs. 35,000 crore in 2004-05 to Rs. 109,000 crore by the year 2010.

Growth of Indian Retail

According to the 8th Annual Global Retail Development Index (GRDI) of AT Kearney, India retail industry is the most promising emerging market for investment. In 2007, the retail trade in India had a share of 8-10% in the GDP (Gross Domestic Product) of the country. In 2009, it rose to 12%. It is also expected to reach 22% by 2010.

According to a report by Northbride Capita, the India retail industry is expected to grow to US$ 700 billion by 2010. By the same time, the organized sector will be 20% of the total market share. It can be mentioned here

that, the share of organized sector in 2007 was 7.5% of the total retail market.

Major Retailers in India 

Pantaloon:

Pantaloon is one of the biggest retailers in India with more than 450 stores across the country. Headquartered in Mumbai, it has more than 5 million sq. ft retail space located across the country. It's growing at an enviable pace and is expected to reach 30 million sq. ft by the year 2010. In 2001, Pantaloon launched country's first hypermarket ‘Big Bazaar’. It has the following retail segments:

Food & Grocery: Big Bazaar, Food Bazaar Home Solutions: Hometown, Furniture Bazaar, Collection-i Consumer Electronics: e-zone Shoes: Shoe Factory Books, Music & Gifts: Depot Health & Beauty Care: Star, Sitara E-tailing: Futurebazaar.com Entertainment: Bowling Co.

Tata Group

Tata group is another major player in Indian retail industry with its subsidiary Trent, which operates Westside and Star India Bazaar. Established in 1998, it also acquired the largest book and music retailer in India ‘Landmark’ in 2005. Trent owns over 4 lakh sq. ft retail space across the country.

RPG Group

RPG Group is one of the earlier entrants in the Indian retail market, when it came into food & grocery retailing in 1996 with its retail Foodworld stores. Later it also opened the pharmacy and beauty care outlets ‘Health & Glow’.

Reliance

Reliance is one of the biggest players in Indian retail industry. More than 300 Reliance Fresh stores and Reliance Mart are quite popular in the Indian retail market. It's expecting its sales to reach Rs. 90,000 crores by 2010.

AV Birla Group

AV Birla Group has a strong presence in Indian apparel retailing. The brands like Louis Phillipe, Allen Solly, Van Heusen, Peter England are quite popular. It's also investing in other segments of retail. It will invest Rs. 8000-9000 crores by 2010.

Retail formats in India

Hypermarts/supermarkets: large self-servicing outlets offering products from a variety of categories. 

Mom-and-pop stores: they are family owned business catering to small sections; they are individually handled retail outlets and have a personal touch.

Departmental stores: are general retail merchandisers offering quality products and services. Convenience stores: are located in residential areas with slightly higher prices goods due to the

convenience offered. Shopping malls: the biggest form of retail in India, malls offers customers a mix of all types of products

and services including entertainment and food under a single roof. E-trailers: are retailers providing online buying and selling of products and services. Discount stores: these are factory outlets that give discount on the MRP. Vending: it is a relatively new entry, in the retail sector. Here beverages, snacks and other small items

can be bought via vending machine. Category killers: small specialty stores that offer a variety of categories. They are known as category

killers as they focus on specific categories, such as electronics and sporting goods. This is also known as Multi Brand Outlets or MBO's.

Specialty stores: are retail chains dealing in specific categories and provide deep assortment. Mumbai's Crossword Book Store and RPG's Music World are a couple of examples.

Challenges facing Indian retail industry

The tax structure in India favors small retail business Lack of adequate infrastructure facilities High cost of real estate Dissimilarity in consumer groups Restrictions in Foreign Direct Investment Shortage of retail study options Shortage of trained manpower Low retail management skill

The Future

The retail industry in India is currently growing at a great pace and is expected to go up to US$ 833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018 at a CAGR of 10%. As the country has got a high growth rates, the consumer spending has also gone up and is also expected to go up further in the future. In the last four year, the consumer spending in India climbed up to 75%. As a result, the India retail industry is expected to grow further in the future days. By the year 2013, the organized sector is also expected to grow at a CAGR of 40%.

India Organised Retail Market 2010A report by Knight Frank India.

By Retailer | May 26, 2010

 

Retail-Business-Practice

Knight Frank India, the country’s leading independent global property consultants, announced the

release of their in-depth research study on the Indian retail market entitled “India Organized Retail

Market 2010.” The study provides a unique and insightful documentation towards providing a concrete

understanding of the current market trends, evolution of the organized retail space and real estate

retail supply. However, the key highlight of the report is the observation and analysis that provides a

view on the demand-supply situation and prevailing rentals in each of the 7 major metros in the

country.  In relation, it provides a micro view of the Mumbai retail market as well as details the factors

influencing its growth. 

 

HighlightsORS 95 million sq ft by 2012 from 41 million sq ft currentlyEstimated 21 million sq ft oversupply in 7 cities by 2012

 

 

Organised retail space in Mumbai is expected to grow by around 130 per cent, from 8.72 million sq ft

at present to 20 million sq ft by 2012, according to Knight Frank India report. The report, India

Organised Retail Market 2010, forecasts that during 2010-12, around 55 million sq ft of retail space

will be ready in Mumbai, NCR, Bangalore, Kolkata, Chennai, Hyderabad and Pune. Besides, between

2010 and 2012, the organized retail real estate stock will grow from the existing 41 million sq ft to 95

million sq ft.

The report reveals an in-depth analysis of the dynamics of Organized Retail Market and the Real

Estate Retail Potential (RERP) to identify the oversupply or undersupply situation in the retail space. 

Knight Frank further estimates that by 2012, higher pace of real estate developments in comparison to

the pace of organized retail market growth will create an oversupply situation of 21 million sq ft in 7

cities. Its examination of the state of affairs of the retail market implies that the frenetic rental hikes

witnessed during the boom will not haunt retailers until 2012.

Dr Samantak Das, National Head—Research Knight Frank India said: Our research has undertaken

an extensive survey of all major operational and upcoming malls and 2 prominent high streets in each

of these 7 cities. The report determines the performance of the operational malls in terms of

occupancy, rentals; retail formats and also foresees the demand-supply dynamics till 2012.”

Knight Frank India estimates Mumbai’s Organized Retail Stock (ORS) to touch  20 million sq .ft. by 2012 while

country’s ORS estimated to reach 95 million sq ft

6.4 million sq ft retail space to be available in Mumbai by end of 2010

4.7 million sq ft to be completed over the next two years

1.76 million sq ft of retail space currently vacant in the city.

 

Mumbai currently has 8.72 mn sq ft organized retail stock which will estimated to reach 20.00 mn.sq ft

by 2012. Besides, presently the city has faced a situation of oversupply since there is 20% vacancy of

retail space in the market.

The demand-supply forecast model indicate that the Organized Retail Market (ORM) to grow from Rs

74 billion in 2009 to Rs 203 billion in 2012, whereas, the Real Estate Retail Potential (RERP) will

increase from Rs.79 billion to Rs.216 billion. The model also predicts that in 2012, Mumbai will

continue to face the situation of oversupply by 1.31 million sq. ft. which accounts to 6 per cent of the

total retail stock. But, the Western Suburbs and Island city both will have undersupply of retail space.

However, Navi Mumbai and Central Suburbs will have oversupply.

 

Area Current Distribution of Retail Stock

Current Mall Vacancy

Upcoming Mall Supply till 2012

Island City 15% 4% 6%Western Suburbs 43% 21% 20%Central Suburbs 27% 29% 62%Navi Mumbai 15% 19% 13%

 

 

 

 

 

 

 

In Mumbai, 6.4 million sq ft of retail space will be available by the end of 2010 and about 4.7 million sq

ft will be completed over the next two years. For Chennai market, approximately 7.49 million sq ft of

organized retail space is expected to come up during the next three years,” said Das.

Retail Industry

By

Tamoghna DasSharmaStudent

Globsyn Business School 

Executive Summary

Retailing is emerging as a sunrise industry in India and is presently the largest employer after agriculture. In the year 2004, the size of Indian organized retail industry was Rs 28,000 Crore, which was only 3% of the total retailing market. Retailing in its present form started in the latter half of 20thCentury in USA and Europe and today constitutes 20% of US GDP. It is the 3rd largest employer

segment in USA. Organized retailing in India is projected to grow at the rate of 25%-30% p.a. and is estimated to reach an astounding Rs 1,00,000 Crore by 2010. The contribution of organized retail is expected to rise from 3% to 9% by the end of the decade. The projection for the current year ie 2005 is Rs 35,000 Crore. In India it has been found out that the top 6 cities contribute for 66% of total organized retailing. With the metros already been exploited, the focus has now been shifted towards the tier-II cities**. The 'retail boom', 85% of which has so far been concentrated in the metros is beginning to percolate down to these smaller cities and towns. The contribution of these tier-II cities to total organized retailing sales is expected to grow to 20-25%. In the year 2004, Rs 28,000 Crore organized retail industry had Clothing, Textiles & fashion accessories as the highest contributor (39%), where as health & beauty had a contribution of 2%. Food & Grocery contributed to 18% whereas Pharma had a contribution of 2%. 

** Tier-II cities: Surat, Lucknow, Dehradun, Vijaywada, Bhopal, Indore, Bhubasehwar, Varanasi to name a few.

Introduction

Retailing includes all activities involved in selling goods or services directly to final consumers for personal, non-business use. A retailer or retail store is any business enterprise whose sales volume comes primarily from retailing.

Any organization selling to final consumers – whether a manufacturer, wholesaler or retailer- is doing retailing. It does not matter how the goods or services are sold (by person, mail, telephone, vending machine or internet) or where they are sold (in store, on the street, or in consumer's home).

There are 3 types of retailers:

1. Store retailer2. Non Store retailer3. Retail Organization

From the assortment point of view, Store retailers* are of 5 types:

1. Specialty Store2. Departmental Store3. Super market4. Convenience Store5. Discount Store

* = Definition of the store retailer types is provided in the glossary.

From customers service point of view:

1. Self-service retailing: Many customers are willing to carry out their own locate-compare-select process to save money.

2. Self-selection retailing : Customers find their own goods, although they can ask for assistance.

3. Limited service retailing: These retailers carry more shopping goods, and customers need more information and assistance. The stores also offers services such as credit & merchandise-return privileges.

4. Full service retailing: Salespeople are ready to assist in every phase of the locate-compare-select process.

Although majority of goods & services is sold through stores, non-store retailing has been growing

much faster than store retailing.

Major non-store retailer types:

1. Direct Selling: It deals with door-to-door or at home sale parties i.e. it involves one-to-one or one-to-many selling.Example > Eureka Forbes, Amway, Mary Kay Cosmetics.

2. Automatic Vending: Example > ATM

3. Buying services: Is a store less retailer serving a specific clientele-usually employees of large organizations-who are entitled to buy from a list of retailers who have agreed to give them discounts in return for membership. Example > Amazon.com

4. Direct marketing: It involves direct response marketing. The different forms of direct marketing are: Direct mail, catalog marketing, telemarketing, television direct response marketing and electronic shopping.Example: Dell Computers

Retail Organization mainly falls into 4 major categories:

1. Corporate chains: Example > Pantaloons, Westside2. Retail Co-operative: Example > Amul, Samavaika, Khadi Gram Yudog3. Consumer Co-operative: Example > Apna Bazar 4. Franchise Organization: Example > Monginis, Café Coffee day.

Global Scenario

Retail stores constitute 20% of US GDP & is the 3 rd largest employer segment in USA. China on the other hand has attracted several global retailers in recent times. Retail sector employs 7% of the population in China. Major retailers like Wal-Mart & Carrefour have already entered the Chinese market. In the year 2003, Wal-Mart & Carrefour had sales of US $ 70.4 Crore & US $ 160 Crore 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 $ 7 x 10 5 Crore. The top 200 retailers alone accounts for 30 % of the worldwide demand. Retail turnover in the EU is approximately Euros 2,00,000 Crore and the sector average growth is showing an upward pattern. The Asian economies (excluding Japan) are expected to grow at 6% consistently till 2005-06.

On the global Retail stage, little has remained same over the last decade. One of the few similarities with today is that Wal-Mart was ranked the top retailer in the world then & it still holds that distinction. Other than Wal-Mart's dominance, there's a little about today's environment that looks like the mid-1990s. The global economy has changed, consumer demand has shifted & retailers' operating systems today are infused with far more technology than was the case six years ago. 

Given below a list of World's top 15 retailers:

DT Rank 04

Country of Origin

Company name Formats 2003 retail sales            (US $

Crore)

1 US Wal-Mart Discount, Hypermarket, Supermarket, Superstore, Warehouse

25,632.9

2 France Carrefour Discount, Hypermarket, Supermarket, Specialty, Convenience, Cash & Carry

7,979.6

3 US Home Depot DIY 6,481.6

4 Germany Metro Hypermarket, Superstore, Specialty, Convenience, Cash & Carry, Departmental, DIY, Food Service

6,050.3

5 US Kroger Discount, Convenience, Supermarket, Super center, Warehouse, Specialty

5,379.1

6 UK Tesco Department, Hypermarket, Supermarket, Superstore, Convenience

5,153.5

7 US Target Department, Discount, Super center

4,678.1

8 Netherlands Ahold Discount, Hypermarket, Supermarket, Specialty, Convenience, Cash & Carry, Drug

4,458.4

9 US Costco Warehouse 4,169.310 Germany Aldi Einkauf Discount, Supermarket 4,006.0 e11 Germany Rewe Hypermarket,

Superstore, Super market, Specialty, Convenience, Cash & Carry, Departmental, DIY, Food Service, Discount, Drug

3,893.1e

12 France Intermarche Superstore, Super market, Specialty, Convenience, Cash & Carry, DIY, Food Service, Discount

3,747.2e

13 US Sears Department, mail order, Specialty

3,637.2

14 US Safeway, Inc. Supermarket 3,555.315 US Albertsons Convenience, Drug,

Supermarket3,543.6

                                                                                                       e= estimate.

Indian Scenario

Retailing in India is the largest employer after agriculture. It employs almost 7% of the total work force in India and has a contribution of 14% to the national GDP. In the year 2004 , the size of Indian organized retail industry was Rs 28000 Crore, which was only 3% of the total retailing market. Organized retailing is projected to grow at the rate of 25%-30% p.a. and is estimated to reach an astounding Rs 1,00,000 Crore by 2010. The contribution of organized retail is expected to rise from 3% to 9% by the end of the decade. The projection for the year 2005 is Rs 35000 Crore.

Though with a population of a billion and a middle class of 300 million (upper middle class= 40, Middle class =150 & lower middle class = 110), organized retailing is still at its infancy in India. The great Indian middle class is estimated to grow to over 60 Crore by 2010 making India one of the largest consumer markets of the world. It is projected that by the year 2010, 65% of the Indian population will be in the age group of 10-49 years, which makes the scenario even more attractive. India has the largest retail network with 1.2 Crore outlets but only 4% of them are larger than 500 sq. feet in size. USA on the other hand has 9 Lakh outlets catering to more than 13 times the total retail market size of India. Thus India has the highest number of outlets per capita in the world with a widely spread retail network but with the lowest per capita retail space (@ 2 sq.ft. per person). AT Kearney has ranked India as the 2nd most attractive retail market after Russia, in its Global Retail Development Index 2004 report.

Retailing, one of the largest sectors in the global economy, is going through a transition phase in India. For a long time, the corner grocery store was the only choice available to the consumer, especially in the urban areas. This is slowly giving way to international formats of retailing.

Let us look at the evolution process:

Detailing reasons why Indian organized retail is at the brink of revolution, the IMAGES-KSA report says that the last few years have seen rapid transformation in many areas and the setting of scalable and profitable retail models across categories. Indian consumers are rapidly evolving and accepting modern formats overwhelmingly. Retail Space is no more a constraint for growth. India is on the radar of Global Retailers and suppliers / brands worldwide are willing to partner with retailers here. Further, large Indian corporate groups like Tata, Reliance, Raheja, ITC, Bombay Dyeing, Murugappa & Piramal Groups etc and also foreign investors and private equity players are firming up plans to identify investment opportunities in the Indian retail sector. The quantum of investments is likely to skyrocket as the inherent attractiveness of the segment lures more and more investors to earn large profits. Investments into the sector are estimated at    INR 2000 - 2500 Crore in the next 2-3 years, and over INR 20,000 Crore by end of 2010.

Few of India's top retailers are:

1. Big Bazaar-Pantaloons: Big Bazaar, a division of Pantaloon Retail (India) Ltd is already India's biggest retailer. In the year 2003-04, it had revenue of Rs 658.31 crores & by 2010; it is targeting revenue of Rs 8,800 Crore.

2. Food World : Food World in India is an alliance between the RPG group in India with Dairy Farm International of the Jardine Matheson Group.

3. Trinethra : It is a supermarket chain that has predominant presence in the southern state of Andhra Pradesh. Their turnover was Rs 78.8 Crore for the year 2002-03.

4. Apna Bazaar : It is a Rs 140-crore consumer co-operative society with a customer base of over 12 lakh, plans to cater to an upwardly mobile urban population.

5. Margin Free : It is a Kerala based discount store, which is uniformly spread across 240 Margin Free franchisees in Kerala, Tamil Nadu and Karnataka.

Wholesale trading is another area, which has potential for rapid growth. German giant Metro AG and South African Shoprite Holdings have already made headway in this segment by setting up stores selling merchandise on a wholesale basis in Bangalore and Mumbai respectively. These new-format cash-and-carry stores attract large volumes from a sizeable number of retailers who do not have to maintain relationships with multiple suppliers for all their needs.

SWOT Analysis

A SWOT analysis of the Indian organized retail industry is presented below:

Strength:

1. Retailing is a " technology-intensive" industry. It is technology that will help the organized retailers to score over the unorganized retailers. Successful organized retailers today work closely with their vendors to predict consumer demand, shorten lead times, reduce inventory holding and ultimately save cost. Example: Wal-Mart pioneered the concept of building competitive advantage through distribution & information systems in the retailing industry. They introduced two innovative logistics techniques – cross-docking and EDI (electronic data interchange).

2. On an average a super market stocks up to 5000 SKU's against a few hundreds stocked with an average unorganized retailer.

Weakness

1. Less Conversion level : Despite high footfalls, the conversion ratio has been very low in the retail outlets in a mall as compared to the standalone counter parts. It is seen that actual conversions of footfall into sales for a mall outlet is approximately 20-25%. On the other hand, a high street store of retail chain has an average conversion of about 50-60%. As a result, a stand-alone store has a ROI (return on investment) of 25-30%; in contrast the retail majors are experiencing a ROI of 8-10%.

2. Customer Loyalty: Retail chains are yet to settle down with the proper merchandise mix for the mall outlets. Since the stand-alone outlets were established long time back, so they have stabilized in terms of footfalls & merchandise mix and thus have a higher customer loyalty base.

Opportunity

1. The Indian middle class is already 30 Crore & is projected to grow to over          60 Crore by 2010 making India one of the largest consumer markets of the world. The IMAGES-KSA projections indicate that by 2015, India will have over 55 Crore people under the age of 20 - reflecting the enormous opportunities possible in the kids and teens retailing segment.

2. Organized retail is only 3% of the total retailing market in India. It is estimated to grow at the rate of 25-30% p.a. and reach INR 1,00,000 Crore by 2010.

3. Percolating down : In India it has been found out that the top 6 cities contribute for 66% of total organized retailing. While the metros have already been exploited, the focus has now been shifted towards the tier-II cities. The 'retail boom', 85% of which has so far been concentrated in the metros is beginning to percolate down to these smaller cities and towns. The contribution of these tier-II cities to total organized retailing sales is expected to grow to 20-25%.

4. Rural Retailing: India's huge rural population has caught the eye of the retailers looking for new areas of growth. ITC launched India's first rural mall "Chaupal Saga" offering a diverse range of products from FMCG to electronic goods to automobiles, attempting to provide farmers a one-stop destination for all their needs." Hariyali Bazar" is started by DCM Sriram group which provides farm related inputs & services. The Godrej group has launched the concept of 'agri-stores' named "Adhaar" which offers agricultural products such as fertilizers & animal feed along with the required knowledge for effective use of the same to the farmers. Pepsi on the other hand is experimenting with the farmers of Punjab for growing the right quality of tomato for its tomato purees & pastes.

Threat

1. If the unorganized retailers are put together, they are parallel to a large supermarket with no or little overheads, high degree of flexibility in merchandise, display, prices and turnover.

2. Shopping Culture: Shopping culture has not developed in India as yet. Even now malls are just a place to hang around with family and friends and largely confined to window-shopping.

Conclusion

To conclude, it can be said that though the global retail industry has reached its maturity, the Indian retail industry is still at its infancy. But with the huge potentiality existing in the Indian market, it is expected to grow in leaps and bounds in the near future.

Instead of comparing the total global retail industry with the Indian retail industry, lets compare Wal-Mart alone with the Indian retail industry & put forward few interesting facts:

1. Retail Sales of Wal-Mart for the year 2003 was US $ 25,632.9 Crore; higher than the size of Indian retail industry.

2. The size of any Wal-Mart store is much higher than the size of any existing shopping mall in India.

3. Wal-Mart has over 4,800 stores, which is unparallel to any of the India's large format store. 

4. New stores opened annually by Wal-Mart are about 420, much higher than all organized Indian retailers put together.

5. The sales per hour of $2.2 Crore are incomparable to any retailer in the world. 

6. Wal-Mart has around 30,000 suppliers throughout the world and more than 600,000 SKU's on its web site, a number that cannot be compared.

7. Daily customers are about 1.57 Crore (almost equivalent to Mumbai's entire population).

8. Time between each Barbie Sale at Wal-Mart is just two seconds (same rate at which babies are produced in India!)

Overall, it can be said that " Retail Industry" in India will emerge as one of the best 5 Business sectors in this decade.

Glossary

Specialty Store: Narrow product line with deep assortment, viz apparel stores, book stores etc. A clothing store would be a single line store, men's clothing store would be limited line store & men's custom-shirt store would be a super specialty store.Example: The limited, The Body Shop.

Departmental Store: Several product lines-typically clothing, household goods, home furnishings- with each line operated as a separate department managed by specialist buyers or merchandisers.Example: Sears, Bloomingdale's.

Supermarkets: Relatively large, low-cost, low-margin, high volume, self-service operation designed to serve total needs for food, laundry & household maintenance products. Example: Kroger, Safeway.

Convenience Stores: Relatively small store located near residential area, open long hours, seven days a week and carrying a limited line of high-turnover convenience products at slightly higher prices.Example: 7-Eleven, Circle K.

Discount Store: Standard merchandise sold at lower prices with lower margins and higher volumes. True discount stores regularly sell merchandise at lower prices and offer mostly national brands.Example: Wal-Mart, Kmart.

Off-price retailer: Merchandise bought at less than regular wholesale prices & sold at less than retail; often-leftover goods, overruns and irregulars obtained at reduced prices from manufacturers or other retailers.

Factory outlets are owned and operated by manufacturers and normally carry the manufacturer's surplus, discontinued or irregular goods.Example: Mikasa(dinnerware), Dexter (shoes)

Independent off-price retailers are owned & run by entrepreneurs or by divisions of larger retail corporations.Example: T.J.Maxx, Filene's Basement.

Warehouse clubs (or wholesale clubs) sell a limited selection of brand name grocery items, appliances, clothing and other goods sold at deep discounts to members who pay an annual membership fees. Warehouse clubs serve small businesses & group members from government agencies, nonprofit organizations and some large corporations. They operate in huge, low-overhead, warehouse like facilities & offer few frills.They offer rock bottom prices- typically 20% to 40% below super market and discount stores prices but make no home deliveries and accept no credit cards.Example: Sam's Clubs, Max Clubs.

Superstore: Averages 35,000 square feet of selling space traditionally aimed at meeting consumers' total needs for routinely purchased food and non food items. Usually offer services such as laundry, dry cleaning, shoe repair, check cashing & bill paying.

A new group called "category killers" carries a deep assortment in a particular category & a knowledgeable staff.Example: Borders books & Music, IKEA.

Combination stores are a diversification of the supermarket store into the growing drug-and-prescription field. Combination food & drug stores average 55,000 square feet of selling space.Example: Jewel & Osco stores.

Hypermarkets range between 80,000 and 220,000 square feet and combine supermarket, discount & warehouse retailing principles. Product assortment goes beyond routinely purchased goods & includes furniture, large & small appliances, clothing items and many other items. Bulk display & minimum handling by store personnel with discounts offered to customers who are willing to carry heavy appliances and furniture out of the store. Hypermarkets originated in France.Example: Carrefour and Casino (France), Pyrca, Continente and Alcampo (Spain), Meijer's (Netherlands). 

Tamoghna DasSharmaStudent

Globsyn Business School 

Source : E-mail October 10, 2006 

       

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Overview of Indian Retail Sector

Retail Sector is the most booming sector in the Indian economy. Some of the biggest players of the world are going to enter the industry soon. It is on the threshold of bringing the next big revolution after the IT sector. Although organized retail market is not so strong as of now, it is expected to grow manifolds by the year 2010. The sector contributes 10% of the GDP, and is estimated to show 20% annual growth rate by the end of the decade as against the current growth rate of 8.5%. A CRISIL report says that the Indian retail market is the most fragmented in the world and that only 2% of the entire retailing business is in the organized sector. This suggests that the potential for growth is immense. There are about 300 new malls, 1500 supermarkets and 325 departmental stores currently being built in the cities across India.

Estimates and predictions for retail sector:

At present, the industry is estimated to be at more than US$ 400 billion by a study of McKinsey.The Economist Intelligence Unit (EIU) estimates the retail market in India will increase to US$608.9 billion in 2009 from US$394 billion in 2005.KPMG Report says that the organized retail would grow at a higher rate than the GDP in the next five years.The retail sector would generate employment for more than 2.5 million people by the year 2010, predicts an analysis by Ma Foi Management Consultants Ltd.

Some of the players present in the industry: 

Archies, Bata India Ltd, Big Bazaar, Crossword, Ebony Retail Holdings Ltd., Fabmall, Food Bazaar, Globus Stores Pvt. Ltd., Health and Glow, Liberty Shoes Ltd., MTR Foods Ltd., Music World Entertainment Ltd., Pantaloon Retail India Ltd., Shoppers Stop, Style SPA Furniture Ltd, Subhiksha, Titan Industries, Lifestyle, etc.

New entrants entering the market soon will be Reliance Retail Ltd, Wal-Mart Stores, Carrefour, Tesco, Boots Group, etc. 

Evolution of the Sector 

Weekly Markets, Village and Rural Melas 

Source of entertainment Rural and historic reach

                   

Convenience stores, Mom-and-pop / Kirana shops 

Neighborhood stores/convenience Traditional and pervasive reach 

                   

PDS outlets, Khadi stores, Cooperatives 

Government supported Availability/low costs/distribution 

                   

Exclusive Brand outlets, Hypermarkets and Supermarkets, Department stores and Shopping malls. 

Shopping experience/ efficiency Modern formats/ international 

Modern Format retailers

Supermarkets Hypermarkets Department StoresSpecialty ChainsCompany Owned Company Operated 

Traditional Format Retailers

Kiranas: Traditional Mom and Pop StoresKiosksStreet MarketsExclusive /Multiple Brand Outlets 

Traditional vis a vis Modern Format Retailers 

The retail boom will face a strong competition from the 12 million mom-and-pop stores. These are easily accessible and provide services like free home delivery and goods at credit, which is not possible with hypermarkets and supermarkets. Buying from Malls, Supermarkets and Department stores like Subhiksha, Marks & Spencers, etc. provide a different environment where one can pick and choose from a variety of products. Owing to the entry of such big players, the small shopkeepers fear losing their business. Reliance Retail Ltd. has been inviting such people to join in its Dairy business as franchisees. 

ChallengesThe Indian Retail sector is constantly shakened with cut throat competition. It is also facing challenges in the form of shortages for management professionals, cash flow, supply chain management and frauds. 

International retailersThere has been greater influence of brands like Walmart, Tommy Hilfiger, Carrefour, Marks & Spencer,

Nike, etc in the big cities of India for long 

Booming Retail Sector in India

“Booming Retail Sector in India” helps the client to analyze the opportunities and factors that will make

the Indian retail industry a success.

New Delhi, New Delhi, October 31, 2009 /India PRwire/ -- India is one of the most attractive

destinations for retailers from all across the globe. Thanks to the entry of corporate, changing

consumer behavior & lifestyle, increasing influence of western culture and rising income, the Indian

retail industry has seen phenomenal growth in the last five years (2001-2006) and organized retailing

has finally emerged from the shadows of unorganized retailing and is contributing significantly to the

growth of the overall retail sector, according to "Booming Retail Sector in India”, a new market

research report by RNCOS. The research report helps the client to analyze the opportunities and

factors that will make the Indian retail industry a success.

Key Findings

- Organized retail market in India is expected to reach US$ 50 Billion mark by 2011.

- Number of shopping malls is expected to increase at a CAGR of more than 18.9% from 2007 to

2015.

- Rural market is projected to dominate the retail industry landscape in India by 2012 with total market

share of above 50%.

- Organized retailing of mobile handset and accessories is expected to reach close to Rs. 5000 Crore

by 2010.

- Driven by the expanding retail market, third party logistic market is forecasted to reach US$ 20

Billion by 2011.

- Apparel, along with food and grocery, will lead the organized retailing in India.

Key Issues Analyzed

- What is the market size and scope of the retail industry in India?

- What are the current market trends?

- What are the growth prospects and issues related to the industry?

- What is the segment-wise size of the organized market and what are the growth prospects of the

market?

- What are the opportunities and challenges faced by the industry?

- Who are the major players in the Indian retail industry and what are the latest developments?

Key Players Analyzed

This section covers the key players currently operating in the Indian retail industry, including

Subhiksha, Reliance Retail Ltd, Pantaloon Retail (India) Ltd., etc.

Research Methodology Used

Information Sources

Information has been sourced from books, newspapers, trade journals, and white papers, industry

portals, government agencies, trade associations, monitoring industry news and developments, and

through access to more than 3000 paid databases.

Analysis Method

The analysis methods include ratio analysis, historical trend analysis, linear regression analysis using

software tools, judgmental forecasting and cause and effect analysis.

For FREE SAMPLE of this report visit: http://www.rncos.com/Report/IM112.htm

Notes to Editor

About RNCOS:

RNCOS, incorporated in the year 2002, is an industry research firm. We are a team of industry

experts who analyze data collected from credible sources. We provide industry insights and analysis

that helps corporations to take timely and accurate business decision in today's globally competitive

environment.

Product Description

The India Business Forecast Report helps businesses with Indian market assessment, strategic planning and

decision making to promote growth and profitability in India and is an essential tool for CEOs, Chairmen, Finance

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An analysis of the Indian Retail sector

Tarannum M Sarwar

October 11, 2006

1. An Overview of the Retail sector:

The Indian retail sector is highly fragmented with 97% of its business being run by the unorganized retailers like the traditional family run stores and corner stores. The organized retail however is at a very nascent stage though attempts are being made to increase its proportion to 9-10% by the year 2010 bringing in a huge opportunity for prospective new players 1. The sector is the largest source of employment after agriculture, and has deep penetration into rural India generating more than 10% of India's GDP 2.

Source: Ernst &Young, The Great Indian Retail Story, 2006.

A look at the statistics shows that the retail sector in India is worth USD 394 billion and is growing at the rate of 30% annually. An ICRIER study has found that retailing ($180 billion) contributes to 10 per cent of GDP and employs 7 per cent (21 million) of the workforce 3. According to AT Kearney, India is given the top ranking as the next foreign investment destination, as markets like China become increasingly saturated 4. India is the 4th largest economy as regards GDP (in PPP

 

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terms) and is expected to rank 3rd by 2010 just behind US and China1. Over the past few years, the retail sales in India are hovering around 33-35% of GDP as compared to around 20% in the US. The table gives the picture of India's retail trade as compared to the US and China.

Source: Economist, Let gradualism guide FDI in retail, 2006.

The last few years witnessed immense growth by this sector, the key drivers being changing consumer profile and demographics, increase in the number of international brands available in the Indian market, economic implications of the government increasing urbanization, credit availability, improvement in the infrastructure, increasing investments in technology and real estate building a world class shopping environment for the consumers 4. In order to keep pace with the increasing demand, there has been a hectic activity in terms of entry of international labels, expansion plans, and focus on technology, operations and processes. This has lead to more complex relationships involving suppliers, third party distributors and retailers, which can be dealt with the help of an efficient supply chain. A proper supply chain will help meet the competition head-on, manage stock availability; supplier relations, new value-added services, cost cutting and most importantly reduce the wastage levels in fresh produce 5.

Large Indian players like Reliance, Ambanis, K Rahejas, Bharti AirTel, ITC and many others are making significant investments in this sector leading to emergence of big retailers who can bargain with suppliers to reap economies of scale. Hence, discounting is becoming an accepted practice. Proper infrastructure is a pre-requisite in retailing, which would help to modernize India and facilitate rapid economic growth. This would help in efficient delivery of goods and value-added services to the consumer making a higher contribution to the GDP.

International retailers see India as the last retailing frontier left as the China's retail sector is becoming saturated. However, the Indian Government restrictions on the FDI are creating ripples among the international players like Walmart, Tesco and many other retail giants struggling to enter Indian markets. As of now the government has allowed only 51% FDI in the sector to `one-brand' shops like Nike, Reebok etc. However, other international players are taking alternative routes to enter the Indian retail market indirectly via strategic licensing agreement, franchisee agreement and cash and carry wholesale trading (since 100% FDI is allowed in wholesale trading).

2. How has the Indian consumer changed over the years?

In the past few years the whole concept of shopping has been altered in terms of format and consumer buying behavior. With the increasing urbanization, the Indian consumer is emerging as more trend-conscious. There has also been a shift from price considerations to designs and quality as there is a greater focus on looking and feeling good (apparel as well as fitness). At the same time, the Indian consumer is not beguiled by retail products which are high on price but commensurately low on value or functionality. However, it can be said that the Indian consumer is a paradox, where the discount shopper loyalty takes a backseat over price discounts 6.

Indians have grown richer and thus spending more on vehicles, phones and eating out in restaurants. The spending is focused more outside the homes, unlike in other Asian countries where consumers have tended to spend more on personal items as they grow richer7. Spending on luxury goods have increased twice as fast with 2/3 of India's population is under 35, consumer demand is clearly growing. The mall mania has bought in a whole new breed of modern retail

formats across the country catering to every need of the value-seeking Indian consumer. An average Indian would see a mall as a perfect weekend getaway with family offering them entertainment, leisure, food, shopping all under one roof.

Source: Ernst & Young, The Great Indian Retail Story, 2006.

Indian consumer is also witnessing some changes in its demographics with a large working population being under the age group of 24-35, there has been an increasing number of nuclear families, increase in working women population and emerging opportunities in the service sector during the past few years which has been the key growth driver of the organized retail sector in India. The emergence of a larger middle and upper middle classes and the substantial increase in their disposable income has changed the nature of shopping in India from need based to lifestyle dictated. The self-employed segment has replaced the employed salaried segment as the mainstream market, thus resulting in an increasing consumption of productivity goods, especially mobile phones and 2 - 4 wheeler vehicles. There is also an easier acceptance of luxury and an increased willingness to experiment with the mainstream fashion, reuslting in an increased willingness towards disposability and casting out from apparels to cars to mobile phones to consumer durables. Indians spend over USD 30,000 a year (in PPP terms) on conspicuous consumption that represents 2.8% of the entire population (which is approx 30 million people) making it the 4th largest economy in PPP terms next only to USA, Japan and China 1.

With reference to the map of India's income class, it can be noticed that the real driver of the Indian retail sector is the bottom 80% of the first layer and the upper half of the second layer of the income map. This segment of about 40 million households earns USD 4,000-10,000 per household and comprises salaried employees and self-employed professionals and is expected to grow to 65 million households by 2010 1. In addition to this, facilities like credit friendliness, availability of cheap finance and a drop in interest rates have changed consumer markets. Capital expenditure (jewelry, homes, and cars) has shifted to becoming redefined as consumer revenue expenditure, in addition to consumer durables and loan credit purchases.

3. FDI in retail:

Global retailers have already been sourcing from India; the opening up of the retail sector to the FDI has been fraught with political challenges. With politicians arguing that the global retailers will put thousands of small local players and fledging domestic chains out of business.

The only opening in the retail sector so far has been to allow 51% foreign stakes in single brand consumer stores, private labels, high tech items/ items requiring specialized after sales service, medical and diagnostic items and items sourced from Indian small sector (manufactured with technology provided by the foreign collaborations). Parties supporting the FDI suggest that the FDI in retail should be opened in a gradual/ phased manner, such that it can promote competition and contribute to the growth of the Indian economy. The impact of the FDI would benefit the end user of the consumer to a great extent and will help to generate a decent amount of employment as more and more entrepreneurs would be coming forward to invest and taste the new generation in retail marketing. The opening of FDI should be designed in such a way that many sectors - including agriculture, food processing, manufacturing, packaging and logistics would reap benefits. The table below lists the pros and cons of allowing FDI into retail.

Benefits of FDI in retail

Drawbacks of FDI in retail

Inflow of investment and funds.

Improvement in the quality of employment.

Generating more employment.

Increased local sourcing.

Provide better value to end consumers.

Investments and improvement in the supply chains and warehousing.

Franchising opportunities for local entrepreneurs.

Growth of infrastructure.

Increased efficiency.

Cost reduction.

Implementation of IT in retail.

Stimulate infant industries and other supporting industries.

Would give rise to cut-throat competition rather than promoting incremental business.

Promoting cartels and creating monopoly.

Increase in the real estate prices.

Marginalize domestic entrepreneurs.

The financial strength of foreign players would displace the unorganized players.

Absence of proper regulatory guidelines would induce unfair trade practices like Predatory pricing.

Thus it can be said that this investment boom could change the face of Indian retail by offering quality goods at lower prices to the consumers. In addition to this, the presence of global retailers will further enhance exports from India as they would also source Indian goods for their international outlets in a big way leading to a remarkable increase in Indian exports.

4. Segment analysis:

The structure of Indian retail is developing rapidly with shopping malls becoming increasingly common in the large cities and development plans being projected at 150 new shopping malls by 2008. However, the traditional formats like hawkers, grocers and tobacconist shops continue to co-exist with the modern formats of retailing. Modern retailing has helped the companies to increase the consumption of their products for example: Indian consumers would normally

consume the rice sold at the nearby kiranas viz. Kolam for daily use. With the introduction of organized retail, it has been noticed that the sale of Basmati rice has gone up by four times than it was a few years back; as a superior quality rice (Basmati) is now available at almost the same price as the normal rice at a local kirana. Thus, the way a product is displayed and promoted influences its sales. If the consumption continues to grow this way it can be said that the local market would go through a metamorphoses of a change and the local stores would soon become the things of the past or restricted to last minute unplanned buying.

4.1 Food and grocery retail:

The food business in India is largely unorganized adding up to barely Rs. 40,000 crore, with other large players adding another 50% to that. The All India food consumption is close to Rs. 900,000 crore, with the total urban consumption being around Rs.330,000 crore. This means that aggregate revenues of large food players is currently only 5% of the total Indian market, and around 15-20% of total urban food consumption. Most food is sold in the local `wet' market, vendors, roadside push cart sellers or tiny kirana stores. According to McKinsey report, the share of an Indian household's spending on food is one of the highest in the world, with 48% of income being spent on food and beverages.

4.2 Apparel retail:

The ready-mades and western outfits are growing at 40-45% annually, as the market teems up with international brands and new entrants entering this segment creating an Rs.500 crore market for the premium grooming segment. The past few years has seen the sector aligning itself with global trends with retailing companies like Shoppers' stop and Crossroads entering the fray to entice the middle class. However, it is estimated that this segment would grow to Rs. 300 crore in the next three years.

4.3 Gems and Jewellery retail:

The gems and jewellery market is the key emerging area, accounting for a high proportion of retail spends. India is the largest consumer of gold in the world with an estimated annual consumption of 1000 tonnes, considering actual imports and recycled gold. The market for jewellery is estimated as upwards of Rs. 65,000 crores 9.

4.4 Pharma retail:

The pharma retailing is estimated at about Rs. 30,000 crore, with 15% of the 51 lakh retail stores in India being chemists. According to Vikas Bali, Principal, A.T. Kearney (India) Ltd, "Pharma retailing will follow the trend of becoming more organised and corporatised as is seen in other retailing formats (food, apparel etc)". A few corporates who have already forayed into this segment include Dr Morepen (with Lifespring and soon to be launched Tango), Medicine Shoppe, Apollo pharmacies, 98.4 from Global Healthline Pvt Ltd, and the recently launched CRS Health from SAK Industries. In the south, RPG group's Health & Glow is already in this category, though it is not a pure play pharma retailer but more in the health and beauty care business 10.

4.5 Music Retail:

The size of the Indian music industry, as per this Images-KSA Study, is estimated at Rs.1100 crore of which about 36 percent is consumed by the pirated market and organized music retailing constitutes about 14 percent, equivalent to Rs.150 crore 11.

4.6 Book retail:

The book industry is estimated at over Rs. 3,000 crore out of which organized retail accounts for only 7% (at Rs.210 crore). This segment is seen to be emerging with text and curriculum books accounting to about 50% of the total sales. The gifting habit in India is catching on fast with books enjoying a significant share, thus expecting this sector to grow by 15% annually 11.

4.7 Consumer durables retail:

The consumer durables market can be stratified into consumer electronics comprising of TV sets, audio systems, VCD players and others; and appliances like washing machines, microwave ovens, air conditioners (A/Cs). The existing size of this sector stands at an estimated USD 4.5 Billion with organized retailing being at 5% 12.

Source: E&Y, The Great Indian Retail Story, 2006.

As noticed in the figure above, the organized retail penetration (ORP) is the highest in footwear with 22% followed by clothing. Though food and grocery account for largest share of retail spend by the consumer at about 76%, only 1% of this market is in the organized sector. However, it has been estimated that this segment would multiply five times taking the share of the organized market to 30 percent in the coming years 1.

5. Industry analysis of the Indian retail sector:

Modern retailing has entered India in form of sprawling malls and huge complexes offering shopping, entertainment, leisure to the consumer as the retailers experiment with a variety of formats, from discount stores to supermarkets to hypermarkets to specialty chains. However, kiranas still continue to score over modern formats primarily due to the convenience factor.

Source: IT Retailing: Are You In The Loop?, July 16, 2006.

The organized segment typically comprises of a large number of retailers, greater enforcement of taxation mechanisms and better labour law monitoring system. It's no longer about just stocking and selling but about efficient supply chain management, developing vendor relationship quality customer service, efficient merchandising and timely promotional campaigns. The modern retail formats are encouraging development of well-established and efficient supply chains in each segment ensuring efficient movement of goods from farms to kitchens, which will result in huge savings for the farmers as well as for the nation. The government also stands to gain through more efficient collection of tax revenues. Along with the modern retail formats, the non-store retailing channels are also witnessing action with HLL initiating Sangam Direct, a direct to home service. Network marketing has been growing quite fast and has a few large players today. Gas stations are seeing action in the form of convenience stores, ATMs, food courts and pharmacies appearing in many outlets.

In the coming years it can be said that the hypermarket route will emerge as the most preferred format for international retailers stepping into the country. At present, there are 50 hypermarkets operated by four to five large retailers spread across 67 cities catering to a population of half-a-million or more. Estimates indicate that this sector will have the potential to absorb many more hypermarkets in the next four to five years 1.

List of retailers that have come with new formats:

Retailer

Current Format New Formats. Experimenting With

Shoppers' Stop Department Store Quasi-mall

Ebony Department Store Quasi-mall, smaller outlets, adding food retail

Crossword Large bookstore Corner shops

Piramyd Department Store Quasi-mall, food retail

Pantaloon Own brand store Hypermarket

Subhiksha Supermarket Considering moving to self service

Vitan Supermarket Suburban discount store

Foodworld Food supermarket Hypermarket, Foodworld express

Globus Department Store Small fashion stores

Bombay Bazaar   Aggregation of Kiranas

Efoodmart   Aggregation of Kiranas

Metro   Cash and carry

S Kumar's   Discount store

Traditionally, the small store (kirana) retailing has been one of the easiest ways to generate self-employment, as it requires minimum investments in terms of land, labour and capital. These stores are not affected by the modern retailing as it is still considered very convenient to shop. In order to keep pace with the modern formats, kiranas have now started providing more value-added services like stocking ready to cook vegetables and other fresh produce. They also provide services like credit, phone service, home delivery etc.

The organized retailing has helped in promoting several niche categories such as packaged fruit juices, hair creams, fabric bleaches, shower gels, depilatory products and convenience and health foods, which are generally not found in the local kirana stores. Looking at the vast opportunity in this sector, big players like Reliance and K Rahejas has announced its plans to become the country's largest modern retainers by establishing a chain of stores across all major cities.

Apart from metro cities, several small towns like Nagpur, Nasik, Ahmedabad, Aurangabad, Sholapur, Kolhapur and Amravati as witnessing the expansion of modern retails. Small towns in Maharashtra are emerging as retail hubs for large chain stores like Pantaloon Retail because many small cities like Nagpur have a student population, lower real estate costs, fewer power cuts and lower levels of attrition. However, retailers need to adjust their product mix for smaller cities, as they tend to be more conservative than the metros.

In order for the market to grow in modern retail, it is necessary that steps are taken for rewriting laws, restructuring the tax regime, accessing and developing new skills and investing significantly in India.

6. Business analysis of the Indian retail sector:

The size of modern retail is about US$ 8 Billion and has grown by 35% CAGR in last five years. 14 (KSA Technopak, June 2006). In modern retailing, a key strategic choice is the format; retailers are coming up with various innovative formats to provide an edge to retailers.

Most attractive developing markets for retail by region according to AT Kearney Study:

Percentage of markets that are `on the radar' and `to consider':

Source: AT Kearney, GRDI 2006.

A look at the graph above shows that the Asian markets are considered attractive for retail as per the AT Kearney's report; India is being placed on the radar by the USA and UK. Global giants like Tesco and Walmart are experimenting with various options to enter India. One possibility for Walmart would be to open Sam's club wholesale business through a joint venture and sell strictly to other retailers. This strategy skirts the issue of not being able to sell directly to customers and establish a strong presence in the local market. On the other hand, Tesco is planning to get into a partnership with Home Care Retail Mart Pvt. Ltd expecting to open 50 stores by 2010 4. The government is taking gradual steps in allowing the FDI into Indian retail, when it takes the final steps the peak time will quickly pass giving the existing players a distinct edge.

6.1 Merger and acquisition activity:

India witnessed a record number of M&A deals in the first half of 2006, which were collectively worth USD 25.6 billion. A significant number of deals have being carried out in the Indian retail sector in the past few months in order to acquire a larger share in the growing domestic market and to compete against the prospective global and domestic players.13 The table below shows some recent deals that have taken place in the Indian retail sector:

Year

Acquired/ JV Company/ Target Acquirer Nature of Business Stake

Consideration

(US$ million)

2005 Liberty Shoes Future group Retail (Footwear) 51% 3

2005 Indus - League Clothing Future group Retail clothing 68% 5

2005 Odyssey India Deccan Chronicle Holdings

Leisure retail chain (books, music, toys) 100% 14

2005 Landmark Tata Trent Books, music, accessories 74% 24

2006 Bistro HospitalityTGI Friday's (a subsidiary of Carlson Restaurant World-wide)

Restaurant (Food retail) 25% N/A

2006

Indus League clothing

(Future group company)

Etam group, France Lingerie and women's wear retailing

50%

(JV)

8

Source: PricewaterhouseCoppers, Asia-Pacific M&A bulletin, Mid year 2006.

6.2 Business models for entry in Indian markets:

Due to the FDI restrictions the international players are looking for alternative avenues to enter the Indian markets. The chart below shows the current formats permitted by the Government of India for the international players.

Source: Ernst & Young, The great Indian Retail Story, 2006.

7. Employment opportunities in this sector:

The Indian retail sector offers an economic opportunity on a massive scale both as a global base and a domestic market. This sector yields many positive results like generating more jobs and bringing numerous goods to the consumers at reasonable prices. According to Ernst &Young's report `The Great Indian Retail Story' this sector is expected to create 2 million jobs by 2010.

About 4 crore people are employed in retail trade, assuming each person supports a family of 5, this, implies that about 20 crore people are dependent on this sector. For a vast majority of the households, retailing is a euphemism for a marginal existence. Modern retail formats have generated huge employment for the young and even senior citizens and women wanting to work part-time (even in small towns). People have greater exposure to the technical aspects, training and also earn higher salaries along with bonuses and incentives. With foreign companies opening

expanding in India, employees are being re-trained according to international standards and practices that are being bought in. There is also an increase in the number of retail management programmes and institutes. This will bridge the gap in availability of talented professionals at the middle and lower levels. Successful Indian retailers are creating a robust second and third level of management by hiring aggressively for these key roles. Talented professionals will put increased pressure on wage costs. Therefore operating margins, especially for mid-sized retailers, are becoming a poaching ground for international retailers once they enter India.

With private companies getting into retail, there are people employed from diverse cultures (no room for reservations unlike government owned stores) where there is a sense of unity in diversity. The companies are also employing people who are physically handicapped. The next few years are expected will see the sector offering new jobs to 50,000 young graduates and diploma holders.

8. What makes foreign firms come to India?

A host of traditional `brick and mortar' companies such a Tatas have entered the retail business. With demographic changes like rising disposable incomes and rapidly expanding middle class, the Indian retail sector is at an inflexion point where the growth in consumption and growth of organized retailing are taking it towards higher growth. Market liberalization and an increasingly assertive consumer population have attracted bigger Indian and multinational operations to make investments, but are yet to achieve success or reach break even.

The Indian consumption pattern and preference have undergone vast changes over the years allowing the foreign retailers to play with the psyche of the brand conscious modern Indian, who has no qualms spending a fortune on overhauling his wardrobe. This led to the entry of up-market brands like Nautica and New Balance into the country to cash in on this opportunity.

India has the youngest population in the world, with large population between 20-34 age groups in the urban regions boosting the demand. All these factors have tempted the foreign firms such as Walmart, Tesco and Carrefour to enter India. India is now firmly placed on the US and UK radars as US retailers are gradually realizing the potential of the retail and consumer goods sector. The timing is the most important source of competitive advantage for global and regional retailers in the globalization race. Knowing when to enter emerging retail markets is the key to success.

AT Kearney's study on global retailing trends found that India is the least competitive as well as least saturated of all major global markets. This implies that there are significantly low entry barriers for players trying to setup base here, in terms of the competitive landscape. The report further stated that global retailers such as Walmart, Carrefour, Tesco and Casino would take advantage of the more favourable FDI rules that are likely in India and enter the country through partnerships with local retailers. Other retailers such as Marks & Spencer and the Benetton Group, who operate through a franchisee model, would most likely switch to a hybrid ownership structure.

However, in order to achieve breakthrough growth the global retailers might have to face some glitches in India. High taxes, poor infrastructure, bureaucratic hurdles and high cost of real estate are some of the challenges that overseas retailers may have to tackle in the country.

9. IT and latest development:

Technology has played a key role in retailers' efforts to compete in this volatile market. With e-tailing channels making its presence felt in India companies are using either their own web portal or are tying up with horizontal players like Rediff.com and Indiatimes.com to offer their products on the web 15 (www.alexa.com). IT has been used by retailers ranging from Amazon.com to eBay, in order to radically change the buying behavior across the globe 16.

Retailers worldwide are looking forward to increase their IT spending by almost 15% in 2006, allocating almost half of this increase to application software with a particular focus on tools that facilitate multi-channel customer relationships, point of sale systems, strategic merchandising and supply chain management 17. The last 2-3 years have seen several retailers ranging from F&B operations to discount clothing implementing supply chain management (SCM) solutions to improve core business processes such as global sourcing, distribution, logistics, innovations, transparency and visibility in financials and inventory, compliance and management of point of sale (POS) data. However, organized retailers have not taken well to the concept of 3PL (third party logistics) due to their apprehensions of losing control over the supply chain. Currently, the transportation is carried out partly by organized service providers and partly by truckers and local transporters.

In conclusion, it can be said that in order to deliver the levels of quality and service that consumers are demanding; the organized retailers are in a pressing need for a single enterprise wide IT platform to manage operations, which will become increasingly complex once the market expands.

10. A look at the rural retailing:

More than half of retail market in India is in the rural areas (55%); although share of urban market is increasing by almost 5% every 8-10 years 14. Accommodating almost two-third of the country's consumers and generating almost half of the national income, the rural India offers tremendous opportunities for organized retailers which many companies have failed to access. According to the study conducted by NCEAR, the number of `lower middle income' group in rural areas is almost double as compared to the urban areas, having a large consuming class with 41% of the Indian middle class and 58% of the total disposable income.

Source: Census; National Council of Applied Economic Research (NCAER).

A look at the demographics reveals that the highest income levels households in the rural areas are 1.6 million as compared to 2.3 million in urban areas. It has also been forecasted that the middle and the higher income households are expected to grow to 111 million by 2007 from the current levels of 80 million. Thus, it can be said that with 128 million households, the rural population is nearly three times the urban. This vast demand base and size offers a huge opportunity that MNCs cannot afford to ignore.

In order to meet with this rapid growth in demand the government has shown its concern by providing an induction of Rs.140 billion and Rs. 300 billion in the rural sector through its development schemes in the Seventh and the Eight plan respectively. The large players like ITC, HLL, BPCL are realizing the potential of this sector and are seen experimenting with new ways to tap this segment.

ITC spent 3 years and Rs. 80 crore on r&d to come up with the concept of E-choupal and Choupal Sagar-rural hypermarkets 18. Through this, the farmers can access latest local and global information on weather and market prices, scientific farming techniques at the village itself through a web-portal - all in Hindi. E-Choupal also facilitates supply of high quality inputs as well as purchase of commodities at their doorstep. The hypermarket (Choupal Sagar) provides them with another platform to sell their produce and purchase necessary farm and household goods under one roof.

Next in line, HLL came up with Project Shakti in late 2000 to sell its products through women self-help groups who operate like a direct-to-home team of sales women in inaccessible areas where HLL's conventional sales system does not reach. Another step to tap the rural market was `Operation Bharat' wherein low-priced sample packets of toothpastes, fairness creams, Clinic Plus shampoos and Ponds face creams to 20mn households.

As a part of their rural strategy, BPCL introduced Rural Marketing Vehicles (RMVs) that move from village and village and filling cylinders on the spot for rural consumers keeping in mind the low-income of the rural population. The Company also introduced a smaller size cylinder to reduce both the initial deposit cost as well as the recurring refill cost.

Future outlook:

Investments in the range of US$ 20+ Billion are expected in the next 5 years in Retail & its Supply Chain alone.

Size of modern retail likely to touch US$ 60+ Billion by 2011:

At least 2.5 Million additional direct jobs likely to be created in the next 5 years.

Hyper-competition is expected to set in by 2008-9 as the footprint of the top-5 players starts significant overlapping in top 20 - 30 towns.

Significant impact on other retailers and branded good players - creating new opportunities and threats:

According to Assocham, the overall retail market would grow by 36 per cent with the organised

sector expected to register three-fold growth to Rs 15,000 crore by 2008. The total size of the market is also expected to increase to Rs 14,79,000 crore from the current level of Rs 5,88,000 crore.

Challenges faced by this sector:

The industry is facing a severe shortage of talented professionals, especially at the middle-management level.

Most Indian retail players are under serious pressure to make their supply chains more efficient in order to deliver the levels of quality and service that consumers are demanding. Long intermediation chains would increase the costs by 15%.

Lack of adequate infrastructure with respect to roads, electricity, cold chains and ports has further led to the impediment of a pan-India network of suppliers. Due to these constraints, retail chains have to resort to multiple vendors for their requirements, thereby, raising costs and prices.

The available talent pool does not back retail sector as the sector has only recently emerged from its nascent phase. Further, retailing is yet to become a preferred career option for most of India's educated class that has chosen sectors like IT, BPO and financial services.

Even though the government is attempting to implement a uniform value-added tax across states, the system is currently plagued with differential tax rates for various states leading to increased costs and complexities in establishing an effective distribution network.

Stringent labor laws govern the number of hours worked and minimum wages to be paid leading to limited flexibility of operations and employment of part-time employees. Further, multiple clearances are required by the same company for opening new outlets adding to the costs incurred and time taken to expand presence in the country.

The retail sector does not have 'industry' status yet making it difficult for retailers to raise finance from banks to fund their expansion plans.

Government restrictions on the FDI are leading to an absence of foreign players resulting into limited exposure to best practices.

Non- availability of government land and zonal restrictions has made it difficult to find a good real estate in terms of location and size. Also lack of clear ownership titles and high stamp duty has resulted in disorganized nature of transactions.

13. Performance of the players in the retail industry:

  Revenues Growth% Growth% Net Profit

Growth% Growth% OPM% OPM% EPS CMP

  (Rs mn) QoQ

(compared to corresponding quarter)

YoY (Rs mn) QoQ

(compared to corresponding quarter)

YoY Q1FY06 Q1FY05 Q1FY06  

Trent 3464.41 15.94 47.75 243.78 (1.35) 27.91 6.25 7.07 4.55 875.00

Shoppers' Stop 6455.74 4.75 57.07 271.05 (4.94) 42.43 4.38 3.00 2.03 604.60

Pantaloon (Retail) India Limited

18677.71 26.28 72.30 641.58 (2.50) 66.42

7.00

(Q3FY06)

6.82

(Q3FY06)

5.89

(Q3FY06)

1844.85

Pyramid Retail Limited

991.99 (9.67) 0.00 (74.76) 3.20 0.00 (16.62) 0.00 (3.53) 114.85

Note: Market Price as at 11/10/2006.

Source: bseindia.com, economictimes.com, myiris.com,

List of resources:

1. Ernst & Young, The Great Indian Retail Story, 2006.

2. FICCI - ICICI Property Services Study.

3. Let gradualism guide FDI in retail, Economist, 2006.

4. AT Kearney, GRDI 2006.

5. Retail scenario most developed in Bangalore, DH News service, According to Bijou Kurien, 6. President & Chief Executive - Life Style, Reliance Retail.

7. CII, Logistics and Freight News, March 2006.

8. KPMG analysis, Consumer markets in India - the next big thing, September 2005.

9. India's changing household, Deutche Bank, November 2004.

10. CII, Manufacturing Bulletin, June 2006.

11. Pharma's retail push, Business Line, 2006.

12. Northbridge Journal, Industry Outlook - Retail, 2006.

13. Express Press release, Consumer durables sector sees pick-up sales in India, 2006.

14. Price Water Coppers, Asia-Pacific M&A bulletin, Mid year 2006.

15. KSA Technopak, June 2006.

www.alexa.com.

Hoilday shopping defined by outlet malls of Amazon, eBay, CNet News, 9th December 2002.

According to Frost & Sullivan Research analysts.

www.itcportal.com.

CII, Retail scenario in India: Unlimited Opportunity.

Disclaimer:

This document has been based on the information obtained from secondary sources believed to be reliable and which are not independently verified. The author makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. The recipients of this report should be aware that the past performance is not necessarily a guide to future performance and value of investments can go down as well.

The document should not be reproduced, wholly or in part in any material form (including photocopying or storing it in any

medium by electronic means and whether or not transiently or incidentally to some other use of this publication), modified or in any manner communicated to any third party except with the written approval of the author.

This publication is for information purposes only. While due care has been taken during the compilation of this publication to ensure that the information is accurate to the best knowledge and belief, the content should not be taken as a substitute for professional advice. Expressions of opinion are those of the research department only and are subject to change without notice.

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FUTURE TRENDS OF RETAIL IN INDIA

ABSTRACT

Retail is India's largest industry, accounting for over 10 per cent of the country's GDP and around

eight per cent of the employment. Retail industry in India is at the crossroads. It has emerged as

one of the most dynamic and fast paced industries with several players entering the market. But

because of the heavy initial investments required, break even is difficult to achieve and many of

these players have not tasted success so far. However, the future is promising; the market is

growing, government policies are becoming more favorable and emerging technologies are

facilitating operations. 

    

 FUTURE TRENDS OF RETAIL IN INDIA

R.Yuvarani*

INTRODUCTION

Indian retail sector is highly fragmented as compared to the developed as well as the other

developing countries. This shows a great potential for the organized retail industry to prosper in

India, as the market for the final consumption in India is very large. Retail trade is largely in the

hands of private independent owners and distributor’s structure for fast moving consumer goods

consisting of multiple layers such as carrying and forwarding agents, distributors, stockiest,

wholesalers and retailers. Thus, the growth potential for the organized retailer is enormous. In the

next 2-3 years, India will finally see operations of a number of very serious international players-

net withstanding the current restrictions on FDI in retail.

The Indian retail sector is ready to take on challenges from global retail players such as Wal-mart

and Carrefour because unlike them, they have a better understanding of the Indian consumer’s

psyche. Ultimately, a successful retailer is one who understands his customer. The Indian customer

is looking for an emotional connection, a sense of belonging. Hence, to be successful any retail

outlet has to be localized. The customer should feel that it is a part of his culture, his perceived

values, and does not try to impose alien values or concepts on him. Indian customer is not keen to

buy something just because it is sold by an international   company .

 

 

PRESENT SCENARIO

Retailing in India is witness to the boom in terms of modern retailing formats, shopping malls etc.

the future of retailing for any product across the country will definitely be in malls where the

consumer can get variety, quality and ambience.

However, in spite of this continuous debate to be or not to be, recently Government has allowed up

to 51 percent FDI in single brand retailing by foreign companies like Reebok and Louis Vuiton. As of

now, single brand retailers operate through the franchisee route and there is a strong view that FDI

in this segment would not displace jobs or impact the local industry but help create employment.

Even today the government is undecided about the level FDI in retail, but a number of foreign

players, including the Wal-mart stores, Inc., have announced their intention to enter India in a big

way. At present Wal-mart is operating through its subsidiary in Bangalore, which was functioning

as a liaison office till last year. Now it is in the process of setting up offices in New Delhi and

Mumbai.

RETAILING IN THE 21ST CENTURY

Retailing in the new millennium stands as an exciting, complex and critical sector of business in

most developed as well as emerging economies. Today, the retailing industry is being buffeted by

a number of forces simultaneously, e.g., increasing competition within and across retailing formats,

the growth of online retailing, the advent of “Radio Frequency Identification (RFID) technology, the

explosion in customer-level data availability, the global expansion of major retail chains like WAL-

MART and METRO Group and so on. Making sense of it all is not easy but of vital importance to

retailing practitioners, analysis and policymakers.

RETAIL IN INDIA - THE FUTURE

According to a study the size of the Indian Retail market is currently estimated at    Rs.704 crores,

which accounts for a meager 3% of the total retail market. As the market becomes more and more

organized the Indian retail industry will gain greater worth. The Retail sector in the small towns and

cities will increase by 50% to 60% pertaining to easy and inexpensive availability of land and

demand among consumers.

Growth in India Real estate sector is also complementing the Retail sector and thus it becomes a

strong feature for the future trend. Over a period of next 4 years there will be a retail space

demand of 40 million sq. ft. However with growing real estate sector space constraint will not be

there to meet this demand. The growth in the retail sector is also caused by the development of

retail specific properties like malls and multiplexes.

According to a report, from the year 2003 to 2008 the retail sales are growing at a rate of 8.3% per

annum. With this the organized retail which currently has only 3% of the total market share will

acquire 15%-20% of the market share by the year 2010.

Factors that are playing a role in fuelling the bright future of the Indian Retail are as follows:

The income of an average Indian is increasing and thus there is a proportional increase in the

purchasing power.

The infrastructure is improving greatly in all regions is benefiting the market.

Indian economy and its policies are also becoming more and more liberal making way for a wide

range of companies to enter Indian market.

Indian population has learnt to become a good consumer and all national and international brands

are benefiting with this new awareness.

Another great factor is the internet revolution, which is allowing foreign brands to understand

Indian consumers and influence them before entering the market. Due to the reach of media in the

remotest of the markets, consumers are now aware of the global products and it helps brands to

build themselves faster in a new region

However despite these factors contributing to the growth of Indian retail Industry, there are a few

challenges that the industry faces which need to be dealt with in order to realize the complete

scope of growth in Indian market.

Foreign direct investment is not allowed in retail sector, which can be a concern for many brands.

But Franchise agreements circumvent this problem. Along with this regulation, local laws, and real

estate purchase restrictions bring up challenges. Other than this lack of integrated supply chain,

management, and lack of trained workforce and flux of the market in terms of price and product

choice also need to be eliminated.

The Indian Retail Street is set to glow brighter with India recapturing its position as the most

attractive destination for global retailers, despite the global slump. According to the Global Retail

Development Index (GRDI) released by US-based global management consulting firm, A T Kearney,

India has emerged as best country amongst 30 emerging markets. This reinforces the fact

that trade with India is a golden opportunity to be capitalized upon. Interestingly, Russia clinched

the second position, while China settled for the third spot. The report also stated that India has

become the most attractive destination for retail investment for the fourth time in five years.

Currently India has one of the largest numbers of retail outlets in the world. According to a report

by images Retail estimates the number of operational malls will grow more than two-fold, i.e., it

will cross 412, with 205 million square feet getting covered by 2010. Nearly 715 malls will be

added by 2015, with major retail developments in tier-II and tier-III cities fuelling further growth. 

Many global retailers have given thumps up to trade with India.

The future ahead Industry experts see the rise of the rural sector in the coming years. Currently,

rural market comprises nearly half of the domestic retail market of India, i.e., US$ 300 billion. The

per capital income of the rural India has reportedly grown by 50 percent over the last 10 years,

mainly because of the rising commodity prices and better productivity. According to E&Y India,

basic infrastructure, generation of employment guarantee schemes, better information services

and access to funding are ushering in good times for the rural households.

• As per the new market research report by RNCOS, organized retail market is expected to reach

US$ 50 billion by 2011

• The boom in the retail market will fuel the growth of the logistic market. It is estimated the

market will reach around US$20 billion by 2011.

• Retailing of mobile handset and accessories is estimated to reach close to US$990 million by

2010.

• Rural market is estimated to lead the Indian retail industry landscape in the future.

• Shopping malls are expected to increase at a CAGR of more than 18.9 per cent from 2007 to

2015.

INDIAN RETAIL LANDSCAPE

Raising income and increase consumerism are fueling retail growth.

Year

$ billion retail growth

1998

201

2000

204

2002

238

2004

278

2006*

321

2008*

368

2010*

421

*Estimates

Sources: Retail in India-A CII-AT Kearney report

According to NCEAR forecasts, the number of ‘rich’ households (the target market for modern retail

stores) is expected to more than double from 57 million in 2002 to 107 million by 2010. The

proportion of India’s population, that is less than 25 years of age stands at more than 50 percent

currently while more than 80 percent of the population is below the age of 45 years. This ‘young

population’ segment is driving the changes in consumption habits and spending patterns. An

increasing proportion of the young population is joining the work force, and adding to overall

spending, which should bode well for the growth of modern retail formats in India. Growing

urbanization (malls are likely to be concentrated in urban areas) is also fuelling modern retail

format growth. It is expected that India’s urban population will grow from 21 percent of the overall

population in 2000 to 32 percent by 2010.

CHANGE ACCELERATORS

The following factors will be significant in driving growth in the retail sector:

Consumer factors

 

Supply side factors

 

Consumer factors

¨      Increase in income

¨      Working women

¨      Changes in lifestyle demand for ‘global’ trend

Supply side factors

¨      Growing importance of retailing in political and economic agenda.

¨      Real estate reforms to be undertaken in the next 24 months.

¨      Major restructuring of the manufacturing sector easing product supply constraints for efficient

retailing.

¨      Reduction in import duties- offering more global sourcing options.

COMPETITION FOR FUTURE MARKET LEADER

India’s organized retail, although less than Rs 45,000 crore in size, already boasts of several

players different formats and categories. The big players are Future Group (Big Bazzar and

Pantaloon) of Kishore Biyani, Tata Group (it runs departmental stores under Westsite, a books and

music chain called Landmark, hypermarket star India bazaar, and a customer durables Chain

christened Crima, in a tie up with UK’s Woolworths),Sanjiv Goneka,s RPG Group (Food World and

Spencer’s), and Dubai-based Micky Jagtiani’s Land mark group (life style). That apart, there are

several smaller players, including Subhiksha, Trinetra, and Nilgiri’s. Most recently, the Kumar

Mangalam Birla-led AV Birla Group has announced plans of entering retail.

 CONCLUSION 

The retail sector has played a phenomenal role throughout the world in increasing productivity of

consumer goods and services. It is also the second largest industry in US in terms of numbers of

employees and establishments. There is no denying the fact that most of the developed economies

are very much relying on their retail sector as a locomotive of growth. The Retail Industry in India

has come forth as one of the most dynamic and fast paced industries with several players entering

the market. But all of them have not yet tasted success because of the heavy initial investments

that are required to break even with other companies and compete with them. The India Retail

Industry is gradually inching its way towards becoming the next boom industry. Favorable

government policies and continued growth will mean that the future belongs to the most

aggressive players. The future is now.

 

 

(ArticlesBase SC #1315969)

R.Yuvarani - About the Author:

R.Yuvarani, M.Phil Scholar , Department of Commerce, Periyar University, Salem-11.

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