A Dissertation Report On

INDIAN RETAIL INDUSTRY TRENDS

Submitted For the Partial Fulfillment of Two Year Full Time Post Graduate Diploma in Management

2010

JAIPURIA INSTITUTE OF MANAGEMENT NOIDA

DECLARATION I declare that dissertation entitled Indian retail industry trends is my own work conducted under the supervision of Dr. Vikas Nath. I further declare that to the best of my knowledge the dissertation does not contain any part of my work, which has been submitted for the award of any diploma either in this institute or any other institute without proper citation

Signature of supervisor

Signature of candidate

ACKNOWLEDGEMENTS I am deeply indebted to all who have inspired, guided and helped me in the successful completion of the project. I owe debt of gratitude to them, who were so generous with their valuable time and expertise. I wish to express my deep sense of gratitude to my Internal Guide, DR. Vikas Nath, for his able guidance and useful suggestions, which helped me in completing the project work, in time. Needless to mention that Mr. B.D Nathani, who had been a source of inspiration and for his timely guidance in the conduct of my project work. I would also like to thank Prof. S. Goswami for his efforts in completing my project. Finally, yet importantly, I would like to express my heartfelt thanks to my beloved parents for their blessings, my friends/classmates for their help and wishes for the successful completion of this project.

Sheetal

EXECUTIVE SUMMARY
India is undergoing a retail revolution from the unorganized to the organized sector. There are now more modern retail formats such as hypermarkets, supermarkets and malls. Several international companies such as Wal-Mart, Carrefour, and Tesco are planning their entry and establishment into the Indian market while several domestic companies are setting up their retail setups, exclusive showrooms and large format stores such as Reliance, Tata and the whole concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. These trends indicate that retailing, as an industry, has come into its own. According to a study by the Confederation of Indian Industry organized retail sales in India were a mere Rs. 135 billion in 2000 but today with over 15 million outlets, that provide employment to over 74 million people (7% of the population), the size of the retail industry stands at USD 350 billion and it is expected to grow at a compounded 30% over the next 5 years. Retailing is an important infrastructure perquisite for modernizing India and can facilitate rapid economic growth. Modernization of all retail services would enable efficient delivery of goods and value-added services to the consumer, making a higher contribution to the Gross Domestic Product. This project focuses on taking an in-depth analysis of retail scenario & consumer trends as they are emerging and identify the various retailing models that would work, in the Indian retail market. The analysis is done by looking at Global retail trends vis--vis the ones in India, the current state of the Indian retail industry, industry characteristics and Economic drivers of change, to understand the consumer buying behavior and what it foretells about the nature of the Industry. To predict the kind of retail models that would work in India, besides analyzing the existing ones, the attempt has been to predict potentially promising formats.

TABLE OF CONTENTS

S.NO.

PARTICULARS Certificate from the mentor Acknowledgement Executive summary List of Tables List of Figures

P. NO. I III IV VII VIII

1.
INTRODUCTION
Retailing 1.1.1 Origin of retail sector 1.1.2 How retail developed 1.1.3 Family business to formal structure 1.2 Top ten retailers 1.3 Traditional retail scene in India 1.4 Scenario of retail in India 1.4.1 Rural retail 1.4.2 Luxury retail 1.4.3 E-tailing 1.4.4 Retail franchising 1.4.5 Innovative retail concept 1.4.6 Government initiative 1-13 2 3 4 6 7 8 9 11 12 12 13 13 13 14-49 17 19 20 21 22 24 25 26 42 50-58 54 56 57 60 62 63-64 63 63 64 64 64 64

2.

RETAIL INDUSTRY STRUCTURE

2.1 The emerging section 2.2 Share of organized retailing 2.3 Sourcing hub for giant foreign retailing 2.4 Opportunities 2.5 Prevailing organized retail format 2.6 key challenges 2.7 Present Indian scenario 2.8 Major industry players 2.9 Retailing formats in India

3.

REVIEW OF LITERATURE
3.1 Report highlight 3.2 Organized retail: India vs. china 3.3 Growth in organized retailing 3.4 Unorganized Retail- The big brat 3.5 The Urban youth

4.

OBJECTIVE AND RESEARCH METHODOLOGY

4.1 Objectives and Sub-objectives of the study 4.2 Scope of the project 4.3 Research methodology 4.3.1 Exploratory Research 4.3.2 Research Design

List of Tables
Table 2.0: Table 2.1: Table 2.8: Table 3.4: Table 5.1.1: Table 5.1.2: Table 5.1.3: Table 5.1.4: Table 5.1.5: Table 5.1.6: Table 5.1.7: Table 5.1.8: Table 5.1.9: Table 5.2.1: Table 5.2.2: Table 5.2.3: Table 5.2.4: Table 5.2.5: Table 5.2.6: Table 5.2.7: Indian Retail structure Sector wise organized retailing in India Formats of Major Retail Industry Players Total Grocery Market in India Monthly budget of consumer and the frequency of shopping Price range available and the product range available in the store Price range available and the paying extra for the well known brand Product range available in the store and the reference of the friends from where he buys Parking facility available in the store and the location of the outlet Delivery facilities available for the consumer and the location of the Outlet Helpful sales staff and the remember me on next visit Age of the respondent & frequency of shopping Age of the respondent & paying extra for well known brands Average monthly shopping budget of consumer Awareness of different retail sector Retail chain customer like to visit often Customer preference from shopping from Retail chain Frequency of shopping Paying extra for well known brand Buys from where my friend buys 15 16 49 61 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81

Figure 1.1.3: Figure 1.4: Figure 1.4: Figure 2.2: Figure 2.5: Figure 2.8.1: Figure 2.8.2: Figure 2.8.3: Figure 2.8.4: Figure 2.8.5: Figure 2.8.6: Figure 2.8.7: Figure 2.8.8: Figure 2.8.9: Figure 2.8.10: Figure 2.9: Figure 3.5:

Family business to formal structure Percentage Share of retail segments in total retail sector Rural-Urban Share in Retail Market Share of Organized Retail Different Formats at Different Stages Pantaloons Shoppers stop Westside Piramyd Reliance fresh Bharti Wal-mart More Vishal retail Metro cash & carry Viveks Retail formats available in India Largest young Population

7 11 12 19 23 27 29 31 33 35 36 37 39 40 41 47 62

List of figures

CHAPTER 1 INTRODUCTION
In 2004 a study conducted by McKinsey titled Indias Retailing Comes of Age had predicted a definite retail revolution in India. This is turning out to be very true. India is the last among the large Asian economies to liberalize its retail sector. The licensing raj is long over. A number of Indian and international retailers are entering this nascent, though dynamic market. Market liberalization and increasingly assertive consumers are sowing the seeds of a retail transformation that will bring bigger Indian and multinational players on to the scene. The market is huge at US $350 billion overall. The entry of multinational companies (MNC) has certainly transformed this sector. The supply chain, and consumer interest and awareness in branded products have been built from scratch. Presently, global players are entering India, indirectly, via the licensee/franchisee route, and more recently through joint ventures with Indian companies as partners. But as the Chinese experience clearly indicates allowing FDI (with restriction) would add buoyancy to the retail sector All the major Indian cities have major commercial projects under construction for retail purposes. In fact, the retail sector has provided the primary boost, to the commercial property market all over India. Presently, there are over 55 large shopping malls under development all over India. The retail sector is also getting acceptance in the job market with more and more business schools focusing on the sector and large retailers setting up retail academies. This sector is estimated to create 50,000 jobs per year in the next five years. The Indian consumers are divided into two categories, viz., high-income urban consumers and low-income urban and rural consumers. The high-income urban consumers are willing to pay a higher price for having the choice of quality products and the complete shopping experience in the large retail stores. But, the low-income urban and rural consumers will go for the price sensitive products which are easily available in

the smaller stores located nearby. The markets in both categories are very large and hence, there is little direct competition between the two retail sectors. As the awareness and disposable incomes increase in India, the two categories will merge slowly, before the competition actually begins. But till then along with modern retail formats the traditional network especially the kirana stores would coexist. In fact unlike any other mature retail market what will develop in India would be its own homegrown unconventional marketing mix. Since the consumer market is diverse & traditional retail has deep socio-cultural roots it would be imprudent to emulate blindly the retail growth path of any other country. India remains one of the last frontiers of modern retailing. The complexities of the vast and varied market will be a challenge. But the retailer who can shape the nascent retail market as well as adapt to Indias unique characteristics will reap larger rewards over the long term. Industry experts say there is no magic formula that can make an average retailer's business boom. The key to generating growth lies in the willingness to invest money for some years and experiment with different retail formats. Pantaloon's Managing Director Kishore Biyani is a case in point. From departmental store Pantaloon and the hypermarket discount store Big Bazaar, he has diversified into other concepts, including a seamless mall called Central and the food and grocery home delivery vehicle called Food Bazaar on Call. And he says more retail concepts are welcome. So, it appears that like in any other business, he who takes the risk and innovates is most likely to succeed in retail as well!

1.1Retailing
The word "Retail" originates from a French-Italian word. Retailer someone who cuts off or sheds a small piece from something. Retailing is the set of activities that markets products or services to final consumers for their own personal or household use. It does this by organizing their availability on a relatively large scale and supplying them to customers on a relatively small scale. Retailer is a Person or Agent or Agency or

Company or Organization who is instrumental in reaching the Goods or Merchandise or Services to the End User or Ultimate Consumer. Retailing is the final step in the distribution of merchandise - the last link in the Supply Chain - connection the bulk producers of commodities to the final consumers. Retailing covers diverse products such as apparels, consumer goods, financial services and leisure. A retailer, typically, is someone who does not affect any significant change in the product execs breaking the bulk. He/ She is also the final stock point who makes products or services available to the consumer whenever require. Hence, the value proposition a retailer offers to a consumer is easy availabilities of the desired product in the desired sizes at the desired times. In the developed countries, the retail industry has developed into a full-fledged industry where more than three-fourths of the total retail trade is done by the organized sector. Huge retail chains like Wall-Mart, Carr four Group, Sears, K-Mart, McDonalds, etc have now replaced the individual small stores. Large retail formats, with high quality ambiance and courteous, and well-trained sales states are regular features of these retailer.

1.1.1 Origin of Retail Sector: Early Trade:

When man started to cultivate and harvest the land, he would occasionally find himself with a surplus of goods. Once the needs of his family and local community were met, he would attempt to trade his goods for different goods produced elsewhere. Thus markets were formed. These early efforts to swap goods developed into more formal gatherings. When a producer who had a surplus could not find another producer with suitable products to swap, he may have allowed others to owe him goods. Thus early credit terms would have been developed. This would have led to symbolic representations of such debts in the form of valuable items (such as gemstones or beads), and eventually money.

1.1.2 HOW RETAIL DEVELOPED: Peddlers and Producers:

The Retail Trade is rooted in two groups, the peddlers and producers. Peddlers tended to be opportunistic in their choice of stock and customer. They would purchase any goods that they thought they could sell for a profit. Producers were interested in selling goods that they had produced.

General Store:
This division continues to this day with some shops specializing in specific areas, reflecting their origins as outlets for producers (such as Pacific Concord of Hong Kong), and others providing a broad mix, known as General Store (such as Casey's in the Midwest of the U.S.A.). Although specialist shops are still with us, over time, the general store has increasingly taken on specialist products. Customers have found this to be more convenient than having to visit many shops - thus the term "Convenience Store" has also been applied to these shops. As the popularity of general stores has grown, so has their size. This combined with the advent of Self-Service has lead to the Supermarket, or Superstore.

Early Markets:
Over time, producers would have seen value in deliberately over-producing in order to profit from selling these goods. Merchants would also have begun to appear. They would travel from village to village, purchasing these goods and selling them for a profit. Over time, both producers and merchants would regularly take their goods to one selling place in the centre of the community. Thus, regular markets appeared. The First Shop: Eventually, markets would become permanent fixtures i.e. shops. These shops along with the logistics required to get the goods to them were, the start of the Retail Trade.

The Birth of Distance Retailing:

Defined as sales of goods between two distant parties where the deliverer has no direct interest in the transaction, the earliest instances of distance retailing probably coincided with the first regular delivery or postal services. Such services would have started in earnest once man had learned how to ride a camel, horse etc. When individuals or groups left their community and settled elsewhere, some missed foodstuffs and other goods that were only available in their birthplace. They arranged for some of these goods to be sent to them. Others in their newly adopted community enjoyed these goods and demand grew. Similarly, new settlers discovered goods in their new surroundings that they dispatched back to their birthplace, and once again, demand grew. This soon turned into a regular trade. Although such trading routes expanded mainly through the growth of traveling salesmen and then wholesalers, there were still instances where individuals purchased goods at long distance for their own use. A second reason that distant selling increased was through war. As armies marched through territories, they laid down communication lines stretching from their home base to the front. As well as garnering goods from whichever locality they found themselves in, they would have also taken advantage of the lines of communication to order goods from home.

Origins of Retail
It is likely that, as markets became more permanent fixtures they evolved into shops. Although advantageous in many respects, this removed the mobility that a peddler or traveling merchant may still have enjoyed. For some shopkeepers, it made sense to obtain extra stock and open up another shop, most probably operated by another family member. This would recover business from peddlers and create new business and the greater volume would allow the shopkeeper to strike a better deal with suppliers. Thus the retail chain would have started. Its thought that this process would have started in china over 2200 years ago with a chain of shops owned by a trader called Lo Kass.

The First Self-Service Store:

This all changed in 1915 when Albert Gerrard opened the Groceteria in Los Angeles, the first documented self-service store. This was soon followed a year later by the Piggly Wiggly self-service store, founded by Clarence Saunders in Tennessee in the U.S.

Growth:
This new type of shopping was more efficient and many customers preferred it. Although personal service stores remain to this day, this new concept started a rapid growth of selfservice stores in the United States. Other countries were slow to take up the idea, but there has been a steady rise in the global amount of self-service stores ever since.

Efficiency
These entrepreneurs noticed that their staff had to spend a great deal of time taking grocery orders from customers. The groceries were stacked on shelves allowing customers to walk around and browse, collecting their shopping in a basket that was supplied. The shopkeeper would only need to tot up the final bill at the end of the process and transfer the goods from the basket to the customer and receive payment.

1.1.3 Family Business to Formal Structure:

Although retail chains would have been mostly run by families, as some chains grew, they would have needed to employ people from outside of their family. This was a limiting factor as there would have been a limit to the amount of trusted non family members available to help run the chain. Another, even more definite limiting factor was the distance the furthest shop would have been from the original shop. The greater the distance, the more time and effort would have been needed to effectively manage outpost shops and to service them with goods. There was, therefore, a natural barrier to expansion. That was the case until transport and communications became faster and more reliable. When this happened towards the end of the 19th century, chains became much

bigger and more widespread. Many of these businesses became more structured and formalized, leading to the retail chain that we see today.

Fig: 1.1.3 Source-Indian retail report-2004 (www.imagesretail.com)

1.2 Top Ten Retailers Worldwide

Rank Retailer No of stores owned Sales in FY-00 US$ Millions 1 Wall-Mart Stores Inc. (USA) 4178 $180,787 2 Carrefour Group (France) 8130 $61,047 3 The Kroger Co. (USA) 3445 $49,000 4 The Home Depot, Inc. (USA) 1134 $45,738 5 Royal Ahold (Netherlands) 7150 $45,729 6 Metro AG (Germany) 2169 $44,189 7 Kmart Corporation (USA) 2105 $37,028 8 Sears, Roebuck and Co. (USA) 2231 $36,823 9 Albertson's, Inc. (USA) 2512 $36,726

10 Target Corporation (USA) 1307 $36,362 Source: (www.india-reports.com/retail-reports.aspx) Broadly the organized retail sector can be divided into two segments, In-Store Retailers, Who operate fixed point-of-sale locations, located and designed to attract a high volume of walk-in customers, and the Non-Store Retailers, who reach out to the customers at their homes or offices. Apart from using the internet for communication (commonly called e-tailing), Non-Store retailers did business by broadcasting of infomercials, broadcasting and publishing of direct-response advertising publishing of traditional and electronic catalogues, door-todoor solicitation, a temporary displaying of merchandise (stalls).

1.3 TRADITIONAL RETAIL SCENE IN INDIA

India is the country having the most unorganized retail market. Traditionally the retail business is run by Mom & Pop having Shop in the front & house at the back. More than 99% retailers function in less than 500Sq.Ft of area. All the merchandise was purchased as per the test & vim and fancies of the proprietor also the pricing was done on ad hock basis or by seeing at the face of customer. Generally the accounts of trading & home are not maintained separately. Profits were accumulated in slow moving & non-moving stocks which were to become redundant or consumed in-house. Thus profits were vanished without their knowledge. The Manufactures were to distribute goods through C & F agents to Distributors & Wholesalers. Retailers happen to source the merchandise from Wholesalers & reach to end-users. The merchandise price used to get inflated to a great extent till it reaches from Manufacturer to End-user. Selling prices were largely not controlled by Manufacturers. Branding was not an issue for majority of customers. More than 99% customers are price sensitive & not quality or Brand Sensitive at the same time they are Brand conscious also. Weekly Bazaar in many small tows was held & almost all the commodities were on the scene including livestock. Bargaining was the unwritten law of market. Educational qualification level of these retailers was always low. Hence market was controlled by handful of distributors &/or Wholesalers. Virtually there was

only one format of retailing & that was mass retail. Retailer to consumer ratio was very low, for all the categories without exception. Varity in terms of quality, Styles were on regional basis, community based & truly very low range was available at any given single place. Almost all the purchases / (buying) by mass population was need oriented & next turn may be on festivals, Marriages, Birthdays & some specific occasions. Impulsive buying or consumption is restricted to food or vegetables etc. Having extra pair of trousers or Shirts or Casuals & Formals & leisure wear & sports wear & different pair of shoes for occasions is till date is a luxury for majority population except for those living in Metros. Purchasing power of Indian urban consumer is very low and that of Branded merchandise in categories like Apparels, Cosmetics, Shoes, Watches, Beverages, Food, Jewellery, are slowly seeping into the lifeline of Indian City folks. However electronic & electrical home appliances do hold appropriate image into the minds of consumers. Brand name does matter in these white goods categories. In the coming times also majority of organized retailers will find it difficult to keep balance with rest of the unbranded retail market which is very huge.

1.4 SCENARIO OF RETAILING IN INDIA

Retailing is the most active and attractive sector of last decade. While the retailing industry itself has been present since ages in our country, it is only the recent past that it has witnessed so much dynamism. The emergence of retailing in India has more to do with the increased purchasing power of buyers, especially post-liberalization, increase in product variety, and increase in economies of scale, with the aid of modern supply and distributions solution. Emerging markets such as India and China are the final frontier for retail taking the focus away from saturated Western markets. Since 2001, 49 global retailers entered 90 new markets, but at the same time, 17 retailers left markets in 2005.

The Indian retail industry in valued at about $300 billion and is expected to grow to $427 billion in 2010 and $637 billion in 2015. Only three percent of Indian retail is organized. Retailers of multiple brands can operate through a franchise or a cash-and-carry wholesale model. Retail is Indias largest industry, accounting for over 10 percent of the countrys GDP and around eight percent of employment. Retail 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. That said, the heavy initial investments required make break even hard to achieve and many players have not tasted success to date. However, the future is promising; the market is growing, government policies are becoming more favorable and emerging technologies are facilitating operations. Retailing in India is gradually inching its way to becoming the next boom industry. The whole concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping. Modern retail has entered India as seen in sprawling shopping centers, multi-storied malls and huge complexes offer shopping, entertainment and food all under one roof. The Indian retailing sector is at an inflexion point where the growth of organized retail and growth in the consumption by Indians is going to adopt a higher growth trajectory. The Indian population is witnessing a significant change in its demographics. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing working-women population and emerging opportunities in the services sector are going to be the key growth drivers of the organized retail sector. Indian retailing today is at an interesting crossroads. The retail sales are at the highest point in history and new technologies are improving retail productivity. Though there are many opportunities to start a new retail business, retailers are facing numerous challenges.

The Indian retail market is literally on the go. The share of retail trade in the country's gross domestic product was between 810 per cent in 2007. It is currently around 12 per cent, and is likely to reach 22 per cent by 2010. The Indian retail market, which is the fifth largest retail destination globally, was ranked 2nd after Vietnam as the most attractive emerging market destination for investment in the retail sector, by AT Kearney's seventh annual Global Retail Development Index (GRDI), in 2008. Continuing the robust growth of the organized retail in India, according to the Credit Rating and Information Services of India, the industry raked in US$ 25.44 billion turnover in 200708, as against US$ 16.99 billion in 200607 a whopping growth rate of 49.73 per cent. India has one of the largest numbers of retail outlets in the world. Of the 12 million retail outlets present in the country, nearly five million sell food and related products. Thought the market has been dominated by unorganized players, the entry of domestic and international organized players is set to change the scenario.

Fig: 1.4 Source-KSA techno pak (www.imagesretail.com)

1.4.1 Rural retail

Led by the rising purchasing power, changing consumption patterns, increased access to information and communication technology and improving infrastructure, rural retail market is estimated to cross US$ 45.32 billion mark by 2010 and US$ 60.43 billion by 2015, according to a study by Confederation of Indian Industry (CII) and YES Bank. The rural retail market in 2008 has grown at 25 per cent compared to the 710 per cent growth rate of the urban consumer retail market. With 87 per cent of rural markets not having access to any sort of organised marketing and distribution, this segment has tremendous potential for growth.

Fig: 1.4.1 Source- KSA techno pak (www.imagesretail.com)

1.4.2 Luxury retail

By the next four to five years, India is expected to become a manufacturing hub for global luxury brands, according to a FICCI-Yes Bank report on luxury brands. The report states that India has the most rapidly growing High-Networth Individuals (HNI) population in the world, and the income level of consumers is expected to grow three times by 2025. The active age group (2545 years) is likely to rise to a third of the population.

1.4.3 E-tailing

The increase in the personal computers (PC) and Internet penetration along with the growing preference of Indian consumers to shop online has given a tremendous boost to e-tailing the online version of retail shopping. An estimated 10 per cent of the total ecommerce market is accounted by e-tailing. Several online retailers are reporting good business in categories like travel, art, books and music. E-tailing in lingerie and fresh fruit businesses is also doing well.

1.4.4 Retail Franchising

Along with e-tailing another perceptible trend in the growth of organized retail market has been the concept of retail franchising. According to industry estimates, retail franchising has been growing at the rate of 60 per cent in the last three years and is set to grow two-fold in the next five years. And with immense potential seen in this segment, the US$ 4 billion-franchising industry is likely to see almost two-fold rise in the number of franchisees (from 0.2 million) by 2010.

1.4.5 Innovative retail concepts

With the entry of new players and the market becoming increasingly competitive, retail players are using innovative retail concepts to attract consumers. With the US$ 6.31 billion pharma retailing becoming progressively more organized, players are now looking at newer formats to attract more people to their stores. Pharmacy chains like Med Plus and Good life have started providing health check-ups, diagnostic services, dental care and medical counseling to its patients, besides selling pharma and wellness products.

1.4.6 Government initiatives

The Government allows 100 per cent foreign direct investment (FDI) in cash and carry through the automatic route and 51 per cent in single brand. Besides, the franchise route is available for big operators. To further attract global retailers, the economic survey 200708 has suggested a share for foreign equity in all retail trade and 100 per cent in respect of luxury brands and other specialized retail chains. However, the Indian tariff structure has to be streamlined as India levies one of the highest duties and taxes on

imported luxury goods. This fuels the growth of the grey market and duty-free purchases, even as the stringent regulatory environment encumbers investment by foreign brands.

CHAPTER 2 RETAIL INDUSTRY STRUCTURE

World over, the retail segment has performed exceptionally since its inception in the 20th century. It is currently the biggest industry in the world with sales of $7.2 trillion, every 10th billionaire in the world today is a retailer and 25 of the top 50 Fortune 500 companies are in retail. The Indian retail story couldn't have been more different. India has approx 15 million retail stores, more than rest of the world put together. But the per capita square feet area under retail is just 2 sq.ft or 0.2 sq. meters with fragmented kirana stores being the predominant players. Retailing in India had remained in the unorganized sector and largely untouched by corporates till very recently. However, times are changing.. With the GDP at an all time high and income levels shooting through the roof, the average Indian consumer has never had it so good. Credit cards are flashed with disdain and shopping baskets are getting bigger all the time. Following are some factors that indicate the potential of retail in India: At 271 million, India has one of the largest consumer base in the world, forming 27% of the total population A high spending community below 45 years comprises 81 percent of the population A young population with 54% population below 25 years Increased literacy from 44% in 1965 to 70% in 2003 Increase in workingwomen from 1.3 million in 1961 to 4.8 million in 1998 Increase in media penetration to 38-million cable household and 80-million TV household in 2001

India Retail Structure Retail Formats 2002 2003 Total Grocery Outlets 5,170,709 6,037,738 Traditional grocery outlets 4,525,264 5,273,310 Supermarkets 175 2,314 Other grocery outlets 645,270 762,114 Total Drugstores 352,786 405,743 Traditional medical/drugstores 247,582 276,058 Cosmetic stores 105,204 129,685 Table- 2.0 Source: Business world Marketing White book 2005 The overall size of the retail market in India is estimated at Rs 9300 billion (2003-04) and is expected to have grown at 5% p.a. making organized retailing a Rs 350 billion market in 2005 according to INDIA RETAIL REPORT 2005. Currently, the sector is highly fragmented and dominated by small individually owned businesses. In a developing country like India, bulk of consumer expenditure is on basic necessities, especially food related items. Hence, it is not surprising that food, beverages and tobacco accounted for as much as 71per cent of retail sales in 2002. The remaining 29 per cent of retail sales are non-food items. The share of food related items has declined from 73 per cent in 1999, as with income growth, Indians, like consumers elsewhere, spent more on non-food items compared with food products. In the years to come the top 6 cities are expected to account for 66% of the organized retail market While in the department stores, the share of the fashion wares will be over 95%, in hypermarkets like Big Bazaar the share could go as high as 70%. It will be fashion again that will see maximum growth in terms of organized retail expansion with over 1000 branded exclusive showrooms and over 20 large department stores opening in the next two years. In a survey carried out in February 2002 on the % share of different

products in the total sales of top department stores, apparel forms 73%, Jewellery, wrist wear & fashion accessories 10%, home furnishings 7%, cosmetic and fragrance as 5% and footwear 1%.

Sector wise organized retailing in India SEGMENT MARKET SIZE (US$ Million) Textiles and clothing Jewellery Consumer Durables Footwear Food and Personal care Non-store retail Luggage, watches and tyre 900 555 335 335 225 200 115

Books and Music 90 Table 2.1 Source: Business world Marketing White book 2005 Franchising has emerged as a popular mode of retailing, thanks to economic liberalization, competition and foreign investment since the 1990s, which led to a proliferation of brands with both foreign and Indian companies acquiring strong brand equity for their products. Sales of franchises grew at a rapid pace of 14per cent per annum since 1999. In 2002, there were over 5,000 franchised outlets The other major retailing organization format is multiples, better known as "chain stores" in India. In 2002, there were about 1,800 chain stores. Among the various organizational formats, sales of chain stores grew at the fastest pace, with sales growth during 19992002 averaging 24 per cent per year. An Images Retail Study on Shopping Habits & Lifestyle of consumers in India indicates that that the shopping frequency is highest in Mumbai. Stocks in the retail sector are also becoming increasingly attractive from an investors point of view. Successful development of value based concepts as well as development of retail space in smaller cities and towns are beginning to drive organized retail into the

next levels of cities. Retailers have responded to this phenomenon by introducing contemporary retail formats such as hypermarkets and supermarkets in the new pockets of growth. Prominent tier-II cities and towns which are witnessing a pick-up in activity include Surat, Lucknow, Dehradun, Vijaywada, Bhopal, Indore, Vadodara, Coimbatore, Nasik, Bhubaneswar, Varanasi and Ludhiana among others. With consumption in metros already being exploited, manufacturers and retailers of products such as personal computers, mobile phones, automobiles, consumer durables, financial services etc are increasingly targeting consumers in tier II cities and towns. In addition, petro-retailing efforts of petroleum giants scattered throughout the countrys landscape have also ensured that smaller towns get exposed to modern retailing formats. On the supply side, mall development activity in the small towns is also picking up at a rapid pace, thereby, creating quality space for retailers to fulfill their aggressive expansion plans. Thus, the retail boom, 85% of which has so far been concentrated in the metros is beginning to percolate down to smaller cities and towns. The contribution of these tier-II cities to total organized retailing sales is expected to grow to 20-25%.

2.1 The emerging sectors

Retailing, one of the largest sectors in the global economy, is going through a transition phase not only in India but the world over. 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. The traditional food and grocery segment has seen the emergence of supermarkets/grocery chains (Food World, Nilgiris, Apna Bazaar), convenience stores (Convenience, HP Speedmart) and fast-food chains (McDonalds, Dominos). It is the non-food segment; however that foray has been made into a variety of new sectors. These include lifestyle/fashion segments (Shoppers' Stop, Globus, LifeStyle, Westside), apparel/accessories (Pantaloon, Levis, Reebok), books/music/gifts (Archies, Music World, Crosswords, Landmark), appliances and consumer durables (Viveks, Jainsons, Vasant & Co.), drugs and pharmacy (Health and Glow, Apollo).

The emergence of new sectors has been accompanied by changes in existing formats as well as the beginning of new formats: Hypermarts: Large supermarkets, typically 3,500-5,000 sq. ft. Mini supermarkets, typically 1,000-2,000 sq. ft. Convenience stores, typically 750-1,000sq. ft. Discount/shopping list grocer

The traditional grocers, by introducing self-service formats as well as value added services such as credit and home delivery, have tried to redefine themselves. However, the boom in retailing has been confined primarily to the urban markets in the country. Even there, large chunks are yet to feel the impact of organised retailing. There are two primary reasons for this. First, the modern retailer is yet to feel the saturation' effect in the urban market and has, therefore, probably not looked at the other markets as seriously. Second, the modern retailing trend, despite its cost-effectiveness, has come to be identified with lifestyles. In order to appeal to all classes of the society, retail stores would have to identify with different lifestyles. In a sense, this trend is already visible with the emergence of stores with an essentially `value for money' image. The attractiveness of the other stores actually appeals to the existing affluent class as well as those who aspire for to be part of this class. Hence, one can assume that the retailing revolution is emerging along the lines of the economic evolution of society

2.2 SHARE OF ORGANISED RETAIL

Fig- 2.2 source: KPMG analysis and retailers of India (www.in.kpmg.com/TL_Files/Pictures/Indian_Retail_Mar09) Organised retailing is spreading and making its presence felt in different parts of the country. The trend in grocery retailing, however, has been slightly different with a growth concentration in the South. However, the Mecca of retailing is undoubtedly Chennai. What was considered a `traditional', conservative' and `cost-conscious' market, proved to be the home ground for most of the successful retail names Food World, Music World, Health and Glow, Vitan, Subhiksha and Viveks -to name a few.

The choice of Chennai as the `retail capital' has surprised many, but a variety of factors acted in its favour. Chennai, in spite of being a rapidly growing metropolis offers reasonable real estate prices, one of the most critical elements for the industry. Chennai has been witnessing a high industrial growth and increasing presence of the MNCs, both in the IT sector as well as outside it. The industrial boom has led to the emergence of new residential areas with aggregation of professionals as well as a rapid increase in the number of `double-income' households and growth of the nouveau riche/upper middle class with increased purchasing power. These have been combined with the increasing need for touch and feel shopping (especially for the large migrant population). All the factors have acted favourably in nurturing the industry.

2.3 SOURCING HUB FOR GIANT FOREIGN RETAILERS

Favorable demographic and psychographic changes relating to Indias consumer class, international exposure, availability of increasing quality retail space, wider availability of products and brand communication are some of the factors that are driving the retail in India. Simultaneously as many international retailers have entered the Indian market on the strength of raising affluence levels of the young Indian population along with the heightened awareness of global brands and international shopping experiences and the increased availability of retail real estate space some giant retailers have contributed to the development of India as a sourcing hub. Retailers like Wal-Mart, GAP, Tesco, JC Penney, H&M, Karstadt-Quelle etc stepping up their sourcing requirements from India and moving from third-party buying offices to establishing their own wholly owned/wholly managed sourcing & buying offices, which shall further make India an attractive retail opportunity for the global players. . Buying volumes for many of these players are already in the range of INR 10-20 billion per year, with reported plans to step up to INR 100-150 billion within the next 3-4 years.2005 saw goods worth $3 billion being sourced from India, of which $1billion was bought by Wal-Mart alone.

2.4 OPPORTUNITIES

Wholesale trading is an 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.

Rural Retailing
Of late, India's largely rural population has also caught the eye of retailers looking for new areas of growth. ITC launched the country's first rural mall Chaupal Sagar' , offering a diverse product range from FMCG to electronics appliance to automobiles, attempting to provide farmers a one-stop destination for all of their needs. There has been yet another initiative by the DCM Sriram Group called the Hariyali Bazaar' , that has initially started off by providing farm related inputs and services but plans to introduce the complete shopping basket in due course. Other corporate bodies include Escorts, and Tata Chemicals (with Tata Kisan Sansar) setting up agri-stores to provide products/services targeted at the farmer in order to tap the vast rural market. Commenting on the Rural Retailing chapter in INDIA RETAIL REPORT 2005, Mr. Adi B. Godrej, Chairman, The Godrej Group (India's one of the leading corporate majors) said that his group had also launched the concept of agri-stores named 'Adhaar', which served as one-stop shops for farmers selling agricultural products such as fertilisers & animal feed and also providing farmers knowledge on how to effectively utilise these products. "There are 8 stores already operating in Maharashtra and Gujarat and further expansion is very much on the cards. he added. FDI could indeed do a lot in this sector as entry of international retailers would bring in the required expertise to set the supply chain in place which would result in elimination of wastage, better prices and quality for consumers and higher income for farmers besides

of course farm produce retailing getting a facelift, said Mr. Godrej. Tapping the fresh farm produce sector, the group plans to take its recently launched retail concept Nature's Basket - to newer cities steadily. Godrej Group's Agro and Food division, Godrej Agrovet Ltd. (GAVL) operates the format, selling a variety of vegetables, fruits and herbs - both local and exotic thereby introducing the concept of 'farm-to-plate' to urbanites. Godrej plans to open four more Nature's Basket stores in Mumbai before taking them national. Setting up cost of a store is about INR 5-10 million and per stores sales are expected in the range of INR 30- Rs 50 million a year. Interestingly, the world's largest corporation, Wall-mart, also had its roots in rural America. Unlike many other retailers who started from urban centers and then trickled down to rural areas, Wall-mart had started from rural areas and then came closer to cities over a period of time. Many more such concepts are likely to be tested in the future as marketers and retailers begin to acknowledge that the rural consumer is more than a poor cousin' of the urban counterpart. The IMAGES KSA Report avers that these concepts are likely to go a long way in bringing a huge untapped population within the purview of organized retailing, thereby, increasing the size of the total market.

2.5 PREVAILING ORGANIZED RETAIL FORMATS

Each of the retail stars that we know of has identified and settled into a feasible and sustainable business model of its own. Shoppers' Stop, Lifestyle - department store format Westside - emulated the Marks & Spencer model of 100 per cent private label, very good value for money merchandise for the entire family Giant and Big Bazaar - hypermarket/cash & carry store Food World and Nilgiris, Natures Basket supermarket format Pantaloons and The Home Store - specialty retailing Tanishq has very successfully pioneered a very high quality organized retail business in fine jewellery.

Fig: 2.5 Source- KSA analyses (www.k-space.com)

A new entrant in the retail environment is the 'discounter' format. It is also is known as cash and- carry or hypermarket. These formats usually work on bulk buying and bulk selling. Shopping experience in terms of ambience or the service is not the mainstay here. RPG group had set up the first 'discounter' in Hyderabad called the Giant. Now Pantaloon is following suit with Big Bazaar Two categories of customers visit these retail outlets.
1.

The small retailer. For example, a customer of Giant could be a dhabawala who needs to buy edible oil in bulk.

2.

The regular consumer who spends on big volumes (large pack sizes) of a price advantage per unit.

because

2.6 KEY CHALLENGES 1) Location

"Right Place, Right choice" Location is the most important ingredient for any business that relies on customers, and is typically the prime consideration in a customers store choice. Locations decisions are harder to change because retailers have to either make sustainable investments to buy and develop real estate or commit to long term lease with developers. When formulating decision about where to locate, the retailer must refer to the strategic plan: Investigate alternative trading areas. Determine the type of desirable store location Evaluate alternative specific store sites

2) Merchandise
The primary goal of the most retailers is to sell the right kind of merchandise and nothing is more central to the strategic thrust of the retailing firm. Merchandising consists of activities involved in acquiring particular goods and services and making them available at a place, time and quantity that enable the retailer to reach its goals. Merchandising is perhaps, the most important function for any retail organization, as it decides what finally goes on shelf of the store.

3) Pricing
Pricing is a crucial strategic variable due to its direct relationship with a firm's goal and its interaction with other retailing elements. The importance of pricing decisions is growing because today's customers are looking for good value when they buy merchandise and services. Price is the easiest and quickest variable to change.

4) Target Audience
"Consumer the prime mover" "Consumer Pull", however, seems to be the most important driving factor behind the sustenance of the industry. The purchasing power of the customers has increased to a great extent, with the influencing the retail industry to a great extent, a variety of other factors also seem to fuel the retailing boom.

5) Scale of Operations
Scale of operations includes all the supply chain activities, which are carried out in the business. It is one of the challenges that the Indian retailers are facing. The cost of business operations is very high in India.

2.7 PRESENT INDIAN SCENARIO

720 million Indians to join consuming age by 2010 55% of the Indian population will be under 20 years of age by 2015 32% rise in urbanization by 2008 10% annual growth in Retail market since 2000 7% of the population is engaged in retailing A booming US$ 300 billion retail market in India 5.5 retail outlets per 1000 population, highest in the world 25-30% annual growth in retail loans and credit cards The organized retail sector currently accounts for around 5 per cent of the Indian retail market.

Organized Retail is predicted to capture 15 20% market share by 2010. Over 100 malls of over 30 million sq feet of new shopping centre space are projected to open in India between 2009 and end-2010.

2.8 Major Industry Players

Nanz in North India, Nilgiris in the South, Pantaloon in the East and Crossroad in the West were the pioneers of the retail revolution in India. Nanz faced several obstacles (See Case Study) in their business and had to finally down their shutters. Nilgiris, due to some strange reason, did not see any logic to expand beyond the southern frontiers. Pantaloon went to scale up and become bigger and bigger to form the Future Group, that is now omnipresent in almost all formats right from small groceries to e-tailing. Crossroads in Mumbai imparted some valuable lessons to their parent, the Piramyd Group, who has since then gone on an expansion drive with other formats of retailing in different cities. The big players in Indian retail landscape now are the Future Group, Shoppers Stop, Westside, Subiksha and RPG Spencer. The newcomers who are knocking at the gates are Reliance Retail, Bharti Walmart and Aditya Birla Trinethra. Here, we intend to do a brief profiling of the major players in order to understand the retail business in a better manner.

The Future Group

The Future Group, which was earlier known as PRIL (Pantaloon Retail India Limited) began as a trouser manufacturer in the mid 1980s. The Future Group is divided into six verticals Future Retail, Future Capital, Future Brands, Future Space, Future Media and Future Logistics. The Future Group started operations in the mid 1987s by incorporating the company as Manz Wear Private Limited. The company went on to manufacture readymade trousers under the Pantaloons brand name. It came out with a public issue in 1991 and later changed their name to Pantaloon Fashions (India) Limited (PFIL).

The first exclusive mens store called Pantaloon Shoppe was inaugurated in 1992. Pantaloons went for a franchisee route to expand the number of retail outlets and by 1995, it had reached to a crucial number of 70. The first departmental store called Pantaloons was opened in Kolkata in 1997 with an investment of Rs 0.7 million. The store was a success and recorded revenues of Rs 100 million within the first year of operations. In 1999, the companys name was changed to Pantaloon Retail (India) Limited (PRIL). The success of Pantaloons departmental stores encouraged PRIL to come up with other retailing formats such as Big Bazaar to retail low cost general merchandising, and Food Bazaar to retail food products. As of 2005, the Future Group has 3.5 million sq ft of retail space and over 100 stores across 25 cities in India. It employs more than 12,000 people and has a customer base of more than 120 million. Kishore Biyani, the promoter of the group who likes to address himself as Chief Knowledge Officer has plans to launch 18 formats and over 3,340 stores, thereby turning the Future Group into a US$7 billion company with over US$1 billion in profits by the year 2010.

Fig-2.8.1

Shoppers Stop

Shoppers Stop, promoted by the real estate group K Raheja, was one of the first movers to have set up a large retail outlet in New Delhi with international ambience. Shoppers Stop Ltd now has a considerable presence all over the country with 36api 7 lakh square feet of retail space and stocks over 200 brands of garments and accessories. The stores are spread all over India with presence in Mumbai, Delhi, Bangalore, Hyderabad, Jaipur, Pune , Kolkata, Gurgaon, Chennai & Ghaziabad. Shoppers Stop is also very well known for having pioneered several quality retailing concepts in India like CROSSWORD, HyperCITY and Mothercare. They are the only retailer from India to become a member of the prestigious Intercontinental Group of Departmental Stores (IGDS). Shoppers Stop is positioned as a family store delivering a complete shopping experience. With its wide range of merchandise, exclusive shop-in-shop counters of international brands and world-class customer service, Shoppers Stop brought international standards of shopping to the Indian consumer providing them with a world class shopping experience. Shoppers Stops core customers represent a strong SEC A skew. They fall between the age group of 16 years to 35 years, the majority of them being families and young couples with a monthly household income above Rs. 20,000/- and an annual spend of Rs.1,50,000/-. A large number of Non Resident Indians visit the shop for ethnic clothes in the international environment they are accustomed to. The stores offer a complete range of apparel and lifestyle accessories for the entire family. From apparel brands like Provogue, Color Plus, Arrow, Levis, Scullers, Zodiac to cosmetic brands like Lakme, Chambor, Le Teint Ricci etc., Shoppers Stop caters to almost every lifestyle need.

Fig-2.8.2

Shoppers Stop also retails its own line of clothing namely Stop, Life , Kashish, Vettorio Fratini and DIY. The merchandise at Shoppers Stop is sold at a quality and price assurance backed by its guarantee stamp on every bill. Shoppers Stops customer loyalty program is called The First Citizen. The program offers its members an opportunity to collect points and avail of innumerable special benefits. Currently, Shoppers Stop has a database of over 2.5 lakh members who contribute to nearly 50% of the total sales of Shoppers Stop. The Organization, in 2000, along with ICICI ventures also acquired the reputed bookstore, Crossword, which offers the widest range of books along with CD-ROM, music, stationery and toys. Services like Dial-a-book, Fax-a-book and Email-a-book enable customers to shop from their homes. Crossword currently has 18 Stores. Realizing the role of IT way back in 1991, Shoppers Stop was among the first few retailers to use scanners and barcodes and completely capitalize its operations. Today it is one of the few stores in India to have retail ERP in place, which is now being integrated with Oracle Financials and the Arthur Planning System, the best retail planning system in the world. With the help of the ERP, they are able to replicate stores, open new stores faster and get information about merchandise and customers online, which reduces the turnaround time in taking quick decision.

Shoppers Stop has been very keen to understand the importance of distribution and logistics in ensuring that merchandise is available on the shop floors. This has led the retail chain o streamline its supply chain. The company has developed process manuals for each part of the logistics chain. These modules include vendor management, purchase order management, stock receiving systems, purchase verification and inventory buildup, generation and fixing of price and store tags, dispatch of stocks to the retail floor and forwarding of bills for payment. Shoppers Stop has a grand ambition to position itself as a global retailer. The company intends to bring the worlds best retail technology, retail practices and sales to India. Currently, they are adding 4 to 5 new stores every year.

Trent Westside
Established in 1998, Trent operates some of the nations largest and fastest growing retail store chains. A beginning was made in 1998 with Westside, a lifestyle retail chain, which was followed up in 2004 with Star India Bazaar, a hypermarket with a large assortment of products at the lowest prices. In 2005, it acquired Landmark, Indias largest book and music retailer. In a recently signed deal, Trent has agreed to anchor 12 malls set up by DLF Universal Ltd across the country, at its Westside, Landmark and Star India Bazaar outlets. This amounts to about 27 locations, totaling to about a million square feet of space. Trent retails garments and household accessories for men, women and children, cosmetics and perfumes at Westside, food, beverages, health and beauty products, vegetables, fruits, dairy products, consumer electronics and household items at Star India Bazaar and books, music and stationery at Landmark. Westside has 25 outlets across 17 cities in India offering a variety of designs and styles in garments, footwear and accessories, as table linens, artifacts, home accessories and

furnishings. Well-designed interiors, sprawling space, prime locations and coffee shops enhance the customers shopping experience. Trent also runs another chain of retail stores called Star India Bazaar. Launched in 2004, Star India Bazaar provides a large assortment of high quality products made available at the lowest prices coupled with a unique shopping experience. Star India Bazaar is located in Ahmedabad and offers a wide choice of staple food, beverages, health and beauty products, vegetables, fruits, dairy products, consumer electronics and household items at the most affordable prices. Trent has also recently acquired a 76 per cent stake in Landmark, one of the largest books and music retail chains in India. Landmark commenced its operations in 1987 with its first store in Chennai, and now has nine stores in the major metros of the country. Earlier Landmark was focused on books, stationery and greeting cards. In 1996 it added music to its product portfolio and also started the trend of stocking curios, toys, music, CDs and other gift items.

Fig-2.8.3

Piramyd
Piramyd Retail is part of the Piramal Group, which has presence in diverse sectors spanning Pharmaceuticals, Textiles, Real Estate, Engineering, Family Entertainment and Retail with manufacturing operations in 19 locations across five states and employing over 18,000 people. The promoters launched the apparel business in 1999 under Piramyd Retail and Merchandising Pvt. Ltd. (PRMPL) while its food; home & personal care businesses (FHPC) were housed under Crossroads Shoppertainment Pvt. Ltd. (CSPL). As the apparel and food businesses individually reached a critical mass the management merged the two companies into Piramyd Retail Ltd. Due to distant synergies in two businesses in March 2005. Pyramid also has a smaller format of stores called TruMart that caters to Food and Personal Care products. Piramyd Retail currently has 5 Mega stores and 8 Tru Mart stores mainly in Maharashtra. The company plans to increase these numbers to 17 Mega stores and 69 Tru Marts by 2008. The floor space is expected to be 5 times on successful expansion. The FHPC (Food & Personal Care) business is volume driven while the Lifestyle store is a margin driven business. Piramyd Retail plans to increase the contribution of private labels from existing 7% to 18-20% of the revenues by 2010. Gross margins from private labels are over 40% and hence the company is planning to increase this business. Most of the stores are on the lease format and the company is prone to higher lease rentals due to the overall increase in real estate prices. This may bring the profit levels down substantially. Piramyd Retail did have a first mover advantage in many locations but it has actually failed to 40apitalize over this advantage. Its competitors like Pantaloon, Shoppers Stop and Trent gained larger benefits of their far more aggressive business & marketing strategy in the retail space.

Fig-2.8.4

Subiksha
The Chennai based Subiksha grocery chain runs around 200 outlets all over the country and its current turnover stands at Rs 224 crores. Their target customer is the middle income value conscious buyers. The main aim of Subiksha is to offer a functional and transactional shopping experience. This retail chain has no qualms and spends almost no money on creating a pleasant shopping experience, and all stores are non-air conditioned. There is no false roofing or sparkling vitrified tiles on the floor. A few years ago, Subiksha did not even offer shoppers self service. The customer had to place an order at a computerized teller and the goods were billed and delivered after cash is collected. Customers had to bring their own carry bags or pay to buy them from the store. Subiksha even attempted to charge the customers for home delivery. However, now Subiksha has slightly tweaked their business model in order to create a better appeal to customers who were defecting to the competitors. The store formats are still small and non-air conditioned. But customers have the option to pick from shelf

spaces. They also get shopping bags and free home delivery. But the selling USP (unique selling proposition) remains the same --- Subiksha tries to be as close to the customer as possible and offers the lowest price and huge savings in comparison to competitors. Its slogan happens to be --- bachat mera adhikar hain (saving is my fundamental right).

RPG Spencer
RPGs Spencer presently has 125 stores across 25 cities covering a retail trading area of half a million square feet and with a clientele of 3 million customers a month. Spencers has a national footprint with seven hypermarkets, three supermarkets and 70 daily use outlets, called Dailies. All the newly opened Spencers stores stock every conceivable product that is required by a household on a daily basis. At Spencers Daily shoppers can get fresh fruits, vegetables, fast-moving consumer goods, household items, groceries, with regular offers and discounts. Spencers outlets are divided in to three retail formats. These are, Spencers Hyper, the over 25,000-sq ft hypermarkets stocking over 25,000 items. The 8,000sq ft to 15,000-sq ft mini hyper stores, branded as Spencers Super and the daily purchase 4,000-sq ft to 7,000-sq ft Spencers Daily for groceries, fresh food, chilled and frozen products, bakery and weekly top up shopping.

Reliance Retail
With a vision to generate inclusive growth and prosperity for farmers, vendor partners, small shopkeepers and consumers, Reliance Retail Limited (RRL), a subsidiary of RIL, was set up to lead Reliance Groups foray into organized retail. The first store christened Reliance Fresh opened in November 2006 at Hyderabad. Within a few months they have now opened stores in Mumbai, Pune and Ahmedabad and plans foray into other cities on a rapid scale.

Fig-2.8.5

On June 26, 2006, Mukesh Ambani, Chairman and Managing Director, Reliance Industries Limited, announced a Rs 25,000-crore investment in the retail sector. Reliance Retail started its retail operation with Reliance Fresh, a grocery store that sells vegetables, fruits, personal care items and other food products. Soon, these retail outlets will also be selling apparel and footwear, lifestyle and home improvement products, electronic goods and farm implements and inputs. They will also offer products and services in energy, travel, health and entertainment. In addition to this, partnerships would be developed to bring the best of global luxury brands to India as well. Reliance Retail plans to extend its footprint to cover 1,500 Indian cities and towns with outlets of a varied format, a mix of neighborhood convenience stores, supermarkets, specialty stores and hypermarkets. Reliance also plans to open restaurant outlets, financial services marts and tourism counters within its stores. Mukesh Ambanis ultimate ambition seems to be to create the Indian equivalent of WalMart by scaling up the business to unprecedented heights to reach every nook and corner of the country. With its retailing venture, Reliance expected a revenue target of US $20 billion through its retail operations by 2010. Over a span of five years, RRL expects a 20% return-on-investment.

Bharti Wal-Mart

Fig-2.8.6

Bharti Retail (Pvt.) Ltd. Unveiled the roadmap for its retail venture on 19th February, 2007 envisaging an investment of $2.5 billion with expectation of revenue of $4.5 billion (about Rs. 20,000 crore) from this business by 2015. The first retail outlet is expected to open somewhere in the month of August. Bhartis plan is to invest $2.5 billion by 2015 and open stores across all major cities. This investment would be only for setting up front-end stores. The modalities for its back-end linkage, including its joint venture with the worlds largest retailer Wal-Mart, are in the process of being worked out. A high-level team from Wal-Mart was visited India in the later part of February to work out the details of the back-end chain. While Bharti would manage front-end of the retail venture, Wal-Mart would be involved in the back-end, including logistics, supply chain and cash-and-carry, he added. The JV was presently scouting for 10 million sq. ft. of retail space, which would include hypermarkets, supermarkets and convenience stores and would provide employment to

about 60,000 people. The company would open multi-format retail outlets in all survey to take a final decision on branding and promotional campaign.

cities

with a population of about one million. Bharti is now conducting a massive consumer

However, Bharti and Wal-Mart have been facing stiff opposition from the left parties and other political outfits who fear that the entry of the Bentonville giant will make life difficult for the small grocers and create massive unemployment. They also expect WalMart to take a tough stance on lowering prices and force farmers to sell their produce at lower rates. A lurking fear of monopolistic regime in the retail sector is also enhancing their fears. Both Bharti and Walmart are presently having a tough time in convincing the ministers, politicians, agriculturists, the NGOs and other pressure groups that their business model would serve to work in the best interests of all the stakeholders.

Aditya Birla MORE

Fig-2.8.7

The Aditya Birla Group is Indias first truly multinational corporation. Global in vision, rooted in values, the Group is driven by a performance ethic pegged on value creation for its multiple stakeholders. A US$ 24 billion conglomerate, with a market capitalization of US$ 23 billion and in the League of Fortune 500, it is anchored by an extraordinary force

of 100,000 employees belonging to over 25 different nationalities. Over 50 per cent of its revenues flow from its operations across the world. Our mission is to change the way people shop. We will give them more. Says Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group. The more For you advantage: more Promises a world-class pleasurable shopping experience to Indian consumers in their very own neighborhood. more. Quality, more Variety, more Convenience and more Value are the four delivery cornerstones of the more Chain of supermarket stores. MORE. Value MORE. Promises best in market pricing. Linking up directly with farmers to source fresh fruits, vegetables and staples ensure great quality as well as great price. Add to this, the membership program Club more. Which provide convenience, customized shopping solutions and savings, and the more. Value promise becomes all the more evident. More Is an inspirational brand for an inspirational country. We have a bright and committed, enthusiastic team that represents the best experience from India and globally. MORE Also has a range of products from its own stable available across value, premium and select ranges. The products have been quality-checked and are available in attractive packaging at competitive prices. To avail additional benefits, at no extra charge, customers can also enroll for the membership program Club more.

VISHAL RETAIL:
Vishal is one of fastest growing retailing groups in India. Its outlets cater to almost all price ranges. The showrooms have over 70, 00, 00 products range which fulfills all your household needs, and can be catered to under one roof. It is covering about 1282000 sq. ft. in 18 states across India. Each store gives you international quality goods and prices hard to match. The cost benefit that is derived from the large central purchase of goods and services is passed on to the consumer. What started as a humble one store enterprise in 1986 in Kolkata (erstwhile, Calcutta) is today a conglomerate encompassing 51 showrooms in 39 cities. Indias first hyper-market has also been opened for the Indian

consumer by Vishal. Situated in the national capital Delhi this store boasts of the singe largest collection of goods and commodities sold under one roof in India. The groups prime focus is on retailing.

Fig-2.8.8

The Vishal stores offer affordable family fashion at prices to suit every pocket. The groups philosophy is integration and towards this end has initiated backward integration in the field of high fashion by setting up a state of the art manufacturing facility to support its retail endeavors. Company has already tied up for 5-lakh sq ft space and is looking for more. Company will come up with 32 new stores this year. Company is doing research on more formats. Company is looking for opportunities of expansion in the South. Contribution of apparels business at 53% may slightly come down to 50%. India is a big country and there is huge space for four-five big retail players. Vishal can always sustain growth in this big market. Company can sustain margins as it is going for backward integration. Currently manufacturing contributes 10% of the business, which in the next two to three years, will go up to 25%. Company is increasing its focus on the non-apparel and FMCG segment. The current share of FMCG at 15% could go up to 2025%. Apparel sales currently at 63% in the next 2-3 years should come down to 50% as the company is now also focusing on different segments. With growth in volumes, the cost of sourcing will come down in the near future. Company will venture wherever it gets real estate space. Currently, it has very little space in the south India. Eventually, it will have a pan-India set up.

METRO CASH & CARRY INDIA

METRO Group today, is the third largest trading and retailing group in the world. The company employs over 2,50,000 staff in 30 countries. In the year 2005 METRO Group had generated sales of over 55.7 billion; 53% of total sales came from outside Germany. METRO Cash & Carry started operations in India in 2003 with two Distribution Centres in Bangalore. With this METRO introduced the concept of Cash & Carry to India. These Centres offer the benefit of quality products at the best wholesale price to over 150,000 businesses in Bangalore. METRO offers assortment of over 18000 articles across food and non food at the best wholesale prices to business customers such as Hotels, Restaurants, Caterers, Food and Non-food Traders, Institutional buyers and professionals. METROs Cash & Carry business model is based on a Business to Business (B2B) concept and focuses on meeting all the needs and requirements of business customers. It is a modern format of wholesale trading, catering only to business customers.

Fig-2.8.9

Viveks- The Unlimited Shop

Fig-2.8.10

Vivek Limited is a professionally managed public limited company carrying three retail brands Viveks, Jainsons, Premier and continuously adding to the formidable strength of 1000 employees. Vivek Ltd is the largest consumer electronics & home appliances retail chain in India. Viveks popularized several brands by creating visibility and have the distinction of being market leaders and trendsetters with continuous support from the principal companies. Viveks evolved its strategies to suit the larger scene where there was a stigma attached to borrowing. Very few hire purchase options were available and hence Viveks started Vivek Hire Purchase and Leasing Ltd to finance consumer durables, which enhanced the core retailing business also. Viveks grew from 3 stores to more than 52 stores and turnover increased to over Rs. 350 crores (USD 80 million) and also become a public limited company from a family run enterprise. In this process, 14 store Jainsons was bought over in 1999, 2 store Premier in 2001 and Spencers in 2002 and have recently absorbed Spencers into the Premier brand. With the liberalization of economy and other changes in the global scene, Viveks streamlined the marketing and advertising activities and shopping ambience was improved.

Table-3 Source- Price water house

2.9 Retailing formats in India

Malls The largest form of organized retailing today is located mainly in metro cities, in proximity to urban outskirts. Ranges from 60,000 sq ft to 7,00,000 sq ft and above. They lend an ideal shopping experience with an amalgamation of product, service and entertainment, all under a common roof. Examples include Shoppers Stop, Pyramid and Pantaloon.

Specialty Stores
Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer Crossword, RPG's Music World and the Times Group's music chain Planet M, are focusing on specific market segments and have established themselves strongly in their sectors.

Discount Stores
As the name suggests, discount stores or factory outlets, offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left over at the season. The product category can range from a variety of perishable/ non perishable goods.

Department Stores
Large stores ranging from 20000-50000 sq. ft, catering to a variety of consumer needs. Further classified into localized departments such as clothing, toys, home, groceries, etc

Departmental Stores
Departmental Stores are expected to take over the apparel business from exclusive brand showrooms. Among these, the biggest success is K Raheja's Shoppers Stop, which started in Mumbai and now has more than seven large stores (over 30,000 sq. ft) across India and even has its own in store brand for clothes called Stop!.

Hypermarts/Supermarkets
Large self service outlets, catering to varied shopper needs are termed as Supermarkets. These are located in or near residential high streets. These stores today contribute to 30% of all food & grocery organized retail sales. Super Markets can further be classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets ranging

from of 3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personal sales.

Convenience Stores
These are relatively small stores 400-2,000 sq. feet located near residential areas. They stock a limited range of high-turnover convenience products and are usually open for extended periods during the day, seven days a week. Prices are slightly higher due to the convenience premium.

MBOs
Multi Brand outlets, also known as Category Killers, offer several brands across a single product category. These usually do well in busy market places and Metros.

SPECIALITY STORES Food retail

Food dominates the shopping basket in India. The US$ 6.1 billion Indian foods industry, which forms 44 per cent of the entire FMCG sales, is growing at 9 per cent and has set the growth agenda for modern trade formats. Since nearly 60 per cent of the average Indian grocery basket comprises non-branded items, the branded food industry is homing in on converting Indian consumers to branded food.

The mobile revolution

The retail market for mobile phones -- handset, airtime and accessories -- is already a US$ 16.7 billion business, growing at over 20 per cent per year. In comparison, the

consumer electronics and appliance market is worth US$ 5.6 billion, with a growth rate that is half of the mobile market.

Kids retail
When it comes to Indian children, retailers are busy bonding--and branding: Monalisa, the Versace of kids is coming to India. Global lifestyle brand Nautica is bringing Nautica Kids. International brand Zapp tied up with Raymond to foray into kids' apparel. Disney launched exclusive chains which stock character-based stationery. Pantaloon's joint venture with Gini & Jony will set up a retail chain to market kids' apparel. Swiss kids wear brand Milou is collaborating with Tirupura-based Sreeja Hosieries. Turner International India Pvt. Ltd. will launch Cartoon Network Townsville and Planet POGO--two theme parks designed around its channels--in the National Capital Region. Sahara One Television has also signed a Memorandum of Understanding to source content from Space toon Media Group, Middle East's largest kids' entertainment brand for animation and live action content.

Leading the kids' retail revolution is the apparel business, which accounts for almost 80 per cent of the revenue, with kids' clothing in India following international fashion trends. According to research firm KSA Techno pak, the branded segment comprises US$ 701.7 million of the total kids' apparel market-size of over US$ 3 billion. Industry experts say kids' retailing will touch annual growth of 30-35 per cent. Toys, stationary, sportswear, outerwear, tailored clothing, eyewear, watches, fragrance, footwear, theme parks, TV channels the segment is growing rapidly at 10 per cent per

annum. Margins are in the range of 20-25 per cent (for dealers and distributors), while companies enjoy an average gross margin of about 10 per cent.

Agricultural retail
Agriculture across India is heralding the country's second Green Revolution. 14 states, including Maharashtra, Punjab, Andhra Pradesh and Rajasthan amended the Agricultural Produce Marketing Committee (APMC) act this year, along the lines of the Model APMC Act, '02, which allows farmers to sell their produce directly to buyers offering them the best price. Agricultural sectors such as horticulture, floriculture, development of seeds, animal husbandry, pisciculture, aqua culture, cultivation of vegetables, mushroom under cultivated conditions and services related to agro and allied sectors are open to 100 per cent FDI through the automatic route. For its e-Choupal scheme, ITC built internet kiosks in rural villages so farmers can access latest information on weather, current market prices, foods-in-demand, etc. With a US$ 5.6 billion, multi-year investment in agriculture and retail, Reliance Retail will establish links with farms on several thousand acres in Punjab, West Bengal and Maharashtra. Field Fresh, planning to become India's first large-scale exporter of produce, will annually pay farmers over US$ 30,000 to lease land for vegetables, to hire tractors and to pay their workers. Besides a five-year program with the Punjab government to provide several hundred farmers with four million sweet-orange trees for its Tropicana juices by 2008, PepsiCo-with agriculture exports worth US$ 40 million--also introduced farmers to high-yielding basmati rice, mangoes, potatoes, chilies, peanuts, and barley for its Frito-Lay snacks. Export potential and a rapidly growing domestic demand for reliable produce from new supermarket chains is driving change. With 77 per cent of India's population relying on

agriculture for a living, improved efficiency and new markets can benefit a large number of people.

International retailers
The Australian government's National Food Industry Strategy and Austrade initiated a test marketing food retail in India wherein 12 major Australian food producers have tied up with India-based distributor AB Mauri to sell their products directly at retail outlets. The largest-ever 150-member British business delegation in India committed investments in the areas of food processing, agri retail and manufacturing. It is also likely to press for the liberalization of sectors like financial & legal services and retail. US-based home delivery and logistics company, Specialized Transportation Inc, will enter the Indian market through a strategic alliance with Patel Retail, a subsidiary of Patel Integrated Logistics. Among other big international players, Wal-Mart has announced its plans for India in partnership with Bharti, Tesco is sure to try again, and Carrefour too might finally find the right partner.

Supermarkets
Large self service outlets, catering to varied shopper needs are termed as Supermarkets. These are located in or near residential high streets. These stores today contribute to 30% of all food & grocery organized retail sales. Super Markets can further be classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets ranging from of 3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personal sales.

Supermarkets are relatively new entrants in the market. They are so called pioneers in organized food retailing and go by the western model in look and feel and format. This is what everybody means when they say organized food retailing.

Fig: 2.9 source- www.retail-vision.co.uk

Franchise outlets
Like Tommy Hilfiger and Wal-Mart, other US retailers are firming up their India entry strategies and if they are already in, they are undergoing rapid expansion. Fashion brands DKNY is also al set to foray into the Indian fashion Industry through a franchisee agreement with Indian company, S. Kumar Starbucks recently expressed their interest in entering Indian company Like Tommy Hilfiger and Wal-Mart, other US retailers are firming up their India entry strategies and if they are already in, they are undergoing rapid expansion. Fashion brand DKNY is also all set to foray into the Indian fashion Industry through a franchisee

agreement with Indian company, S Kumars. Starbucks recently expressed their interest in entering India through the franchise route, like their American F&B counterparts Pizza Hut, Subway, and the very successful McDonalds. McDonalds has major expansion plans lined up; in the next 3 years, it plans to open another 100 outlets in cities across India.

Hypermarket
The Large commercial establishment that is a combination of departmental store and a supermarket. The specific features of a hypermarket are the wide range of goods offered, quality service, quality display of goods on the shelves and complex systems providing for customers loyalty. Hypermarket is known for a wide range of goods offered. It consists of dozens of thousands of items, while similar goods can be offered in several forms. In order to work with such an assortment it is necessary to group it into categories and sub categories that would unite goods according to this or that criteria. Shopping Malls The new shopping malls that have been expanding their footprint across Indian cities are well designed, built on international formats of retailing and integrated with entertainment and restaurants to provide a complete family experience. Over 300 malls are expected to be built over the next two years and most Indian cities with over a million populations will be exposed to this modern method of retailing. Shopping malls have existed in India since several decades but were designed and built to house several shops in a single facility. These malls also known as Shopping Arcades offered only rows of shops, most of which were small stores that promised bargains for their various wares. These Shopping Arcades tried to maximize on their store space and did not offer any areas for recreation and entertainment.

The present day malls are a creation of the past few years post 2000. They are designed professionally using a lot of international experience and combine shopping with a lot of brand building, recreation, food and entertainment. Malls also have a large format store that serves as their anchor for shopping and a prominent restaurant that anchors the food needs of visitors. Most malls also feature a multiplex cinema that offers entertainment to the visitors of the mall. Finally the mall has large atria and open spaces to allow visitors and families to hang-out.

Emerging trends
The single most important evolution that took place along with the retailing revolution was the rise and fall of the dotcom companies. A sudden concept of `non-store' shopping emerged, which threatened to take away the potential of the store. More importantly, the very nature of the customer segment being addressed was almost the same. The computer-savvy individual was also a sub-segment of the `store' frequenting traffic. Internationally, the concept of net shopping is yet to be proven. And the poor financial performance of most of the companies offering virtual shopping has resulted in storebased retailing regaining the upper hand. Other forms of non-store shopping including various formats such as catalogue/mail order shopping, direct selling, and so on are growing rapidly. However, the size of the direct market industry is too limited to deter the retailers. For all the convenience that it offers, electronic retailing does not suit products where `look and see' attributes are of importance, as in apparel, or where the value is very high, such as jewellery, or where the performance has to be tested, as of consumer durables. The most critical issue in electronic retailing, especially in a country such as ours, relates to payments and the various security issues involved.

CHAPTER 3 RELATED REVIEW OF LITERATURE

Mishra (2007) stated that the Kirana Store seems to be no longer an attractive option to buy grocery, as organized retailing is picking up in the country offering experience in addition to quality products at affordable prices under hygienic conditions. The organized grocery retailer is the preferred kind of store by consumers, even though the consumers buy in several establishments and exclusively in the hypermarket, which indicates that there is no single loyalty!. While in organized retail outlet, the consumers buy essentially convenience goods with low level of risk; in traditional retail, they buy essentially products of more involvement, which requires a more complex buying behavior. The results also show that consumers evoke price and convenience for not buying certain goods in traditional retail, which reveals an attempt to optimize their time and money.

Sunitha Ravi of beri institute of technology analyzed that the retail sector has undergone significant changes and is fast emerging. Inviting foreign investments to enter into retail trade in India is a progressive measure. India is currently the ninth largest retail market in he world. This sector witnessed transformation of unorganized family-owned retail formats to organized retailing. The retail revolution will restructure the Indian economy and would be beneficial to the consumers, customers, small and medium-scale businesses and farmers. The emergence of organized retailing will help accelerate

productivity growth, improve competitiveness, provide better job opportunities, offer more product variety and develop the agriculture and processed food industries.

According to reports released by the global real estate consulting group Knight Frank, the real estate segment of India was growing at 30 per cent per annum overall. In the retail space, Knight Frank ranked India fifth in the list of 30 emerging retail markets and predicted 20 per cent growth rate for the organized retail segment by financial year 2012 (FY10). It indicated that the retail industry will witness investment over Rs 100 billion upto FY10. Presently available mall space of about 30 million square feet (mn sqft) in India was expected to increase to 100 mn sqft by FY10. Out of this total mall space to be developed, around 75 per cent will be developed in cities like Mumbai, Pune, Bangalore, Hyderabad and NCR cities. The rest will be in tier-2 and tier-3 cities like Nagpur, Ahmedabad, Chandigarh and Ludhiana. The number of malls to be developed in the country over next three years will be above 300. According to a report on real estate trends by Merrill Lynch, the number of malls in the five cities Mumbai, Bangalore, New Delhi, Hyderabad and Pune itself was expected to reach to about 250 by FY10. Recently, Reliance Industries has announced its retail venture with pan-India footprint covering 1500 cities and towns involving investment outlay of Rs 25,000 crore.

Sharma of sardar patel university declared in 2007 that for a start, the retailers need to invest much more in capturing more specific market. Intelligence as well as almost realtime customer purchase behavior information. The retailers also need to make substantial investment in understanding/acquiring some advanced expertise in developing more accurate and scientific demand forecasting models. Re-engineering of product sourcing

philosophies-aligned more towards collaborative planning and replenishment should then be next on their agenda. The message, therefore for the existing small and medium independent retailers is to closely examine what changes are taking place in their immediate vicinity, and analyze Whether their current market offers a potential redevelopment of the area into a more modern multi-option destination. If it does, and most commercial areas in India do have this potential, it would be very useful to form a consortium of other such small retailers in that vicinity and take a pro-active approach to pool in resources and improve the overall infrastructure. The next effort should be to encourage retailers to make some investments in improving the interiors of their respective establishments to make shopping an enjoyable experience for the customer. As the retail marketplace changes shape and competition increases, the potential for improving retail productivity and cutting costs is likely to decrease. Therefore, it will become important for retailers to secure a distinctive position in the marketplace based on value, relationships or experience. Finally, it is important to note that these strategies are not strictly independent of each other; value is function of not just price, quality and service but can also be enhanced by Personalization and offering a memorable experience. In fact, building relationships with customers can by itself increase the quality of overall customer experience and thus the perceived value. But most importantly for winning in this intensely competitive marketplace, it is critical to understand the target customer's definition of value and make an offer, which not only delights the customers but also is also difficult for competitors to replicate.

The Hindu Business Line (2007) As India's retail sector opens up on a huge scale, domestic logistics companies are planning significant investments to expand their portfolio of services. It is expected that in the next two years, the logistics sector will have undergone major changes, offering a wide spectrum of services. Consider this: Global retail giant Wal Mart announces its entry into India through a joint venture with Bharti. Reliance puts on its drawing board a mega plan of Rs 25,000-crore to create 100

million sq ft of retail space. The Aditya Birla group makes a retail foray with plans to invest Rs 15,000 crore. The Tatas plan to participate in the retail race with renewed vigor. Pantaloon plans to create a retail space of 30 million sq ft by 2009-10. Shoppers Stop may have 6 million sq ft of retail space by the same time. Global retailers from the US, European Union and Australia are all eyeing the retail revolution in India. According to Research and Consultancy Outsourcing Services (2005) this years Global Retail Development Index India is positioned as the leading destination for retail investment. This followed from the saturation in western retail markets and we find big western retailers like Wal-Mart and Tesco entering into Indian market. Indias retail industry accounts for 10 percent of its GDP and 8 percent of the employment to reach $17 billion by 2010. There are about 300 new malls, 1,500 supermarkets and 325 departmental stores being built in the cities very soon.

A shopping revolution is ushering in India where, a large population between 20-34 age groups in the urban regions is boosting demand by 11.1 percent in 2004-05 to an Rs 23,308 purchasing power. This has resulted in huge international retail investment and a more liberal FDI.

This market research report The Indian Retail Sector An Outlook (2005-2010) analyzes the greatly divided Indian retail market and the trends in its business. Issues such as foreign investment restrictions, modern merchandizing in India, logistics and payment terms for distribution, role of channel members and growth trends in different regions are discussed. The market research report further analyzes the sustainability of the Indian retail sector and on the basis of 25 domestic and international companies the report has given a suitable business model.

3.1 REPORT HIGHLIGHTS- AN OUTLOOK (2005-2010)

-Competitive analysis of Indian retail sector vis--vis global retail industry.

-Supportive policies and regulations of government for the retail sector. - Issues and implications related to the current foreign direct investment in the retail sector. - Market size and growth of Indian retail sector segmented by sectors, retail formats, and regional segmentations. - Increasing employment opportunities with stepping up of international retail brands in India. - Opportunities for big western retailers like Wall-mart and Tesco. - Market forecast till 2010. - Behavioral pattern, preferences and expenditure capacity of Indian consumers. - Increasing acceptance of e-retailing among Indian consumers. - Evolution of franchise businesses in Indian retail sector. - IT trends in Indian retail industry and technological expansion leading to the stores Security. - Company profiles of 25 key players, which include 6 international retail brands. [Source- www.reportlinker.com]

Roger Colwill of lead consumer partner in 2005 affirmed that the retail success will not come from merely transplanting a tried-and-tested formula. Retailers will have to adapt to the needs of the customer. The world is changing and retailers must respond if

they are to prosper. On the international front, India and China present significant opportunities. China has transformed retail supply chains in the past ten years, but both countries are evolving into vast consumer markets in their own right. This will offer huge growth potential to both domestic and international retailers, but a simple transfer of a tried-and-trusted retail formula from elsewhere in the world is doomed to failure. Pankaj Gupta of Tata strategic management group working as a practice head of consumer and retail in 2006 stated that the Organized retail players who can aggressively scale-up their operations could target Rs 40,000-crore in organized retail business in India by 2015, says Pankaj Gupta, practice head consumer and retail, Tata Strategic Management Group. Organised trade in India is very underdeveloped when compared with other emerging markets in Asia, Latin America and Eastern Europe. According the research, India has only 4 % share in Organized Retail as compared to China which has 17% in 2003.

3.2 Organized retail: India vs. China

The Indian and Chinese markets are comparable in many aspects: Both countries are not homogeneous. They comprise many markets within a single country, with significantly varying cultures and customer preferences across regions. There is a significant rural population in both countries, which has much lower purchasing power compared to the urban population. Both countries are geographically very large and unevenly developed, adding a significant distribution and logistics dimension to the retail trade. Consumers in both countries are highly value conscious. Between 1996 and 2003, the organized retail market in China more than doubled. We estimate that the Indian retail market is today at the same inflection point as China was in the mid-1990s. Consequently, considering a similar per capita GDP and roughly similar

rates of economic growth, the Indian organized retail market has the potential for exponential growth over the next decade. [Source- www.tsmg.com]

3.3 Growth in organized segment- Images (F&R research)

Footwear retail, the overall market as well as its organized segment, has grown faster year after year but growth in 2007 was especially remarkable: the overall market grew 12 per cent in 2007 as against a 9.2 per cent growth in 2006 while the organized segment grew 42.3 per cent and 36.4 per cent respectively for the two years. The global brands have actually turned the heat on, and the domestic brands too appear to have accepted the challenge in the true spirit. Growth in the health and beauty care category has been remarkable in 2007, though the organized segment growth in 2007 (57.5%) was slightly lower as compared to 2006 (59.1%). The demand is stupendous but organized players have hardly much to boast of in terms of innovative concepts and global standards when it comes to providing the customers with an experience that is superior and radically different from what the unorganized segment offers. This category needs to be positioned as a wellness category that provides individualized services to customers with synergies of health & beauty care, pharmaceuticals and specialized clinical services all at one place. Another category that merits special mention is Furnishings and Furniture retail, where the overall market grew at seven per cent in 2007 as compared to just 3.2 per cent in 2006 thanks to the housing sector boom. The organized segment also grew faster at 29.7 per cent in 2007 as compared to 23.1 per cent the previous year, but this Rs.45, 500 crore category calls for better attention from organized players. Is India ready for ready-to assembles furniture? May be not but surely the market will change in next couple of years. Global players need to understand that Indian homes are different and so are the

Indian environments, maintenance standards. At present most large players entering this segment are busy experimenting and in the process have lost monies too. Consumer durables and the mobile phone & accessories categories have both grown faster in 2007 as compared to 2006. At constant prices, the overall food & grocery retail market grew slightly higher at 2.3 per cent in 2007 as compared to a 2.2 per cent annual growth in the previous two years. But the organized retail segment in this category is simmering in the true sense a 50 per cent growth in 2007 as compared to 42.9 per cent in 2006, and lot more fireworks can be expected this year and the years ahead. Valued at Rs.9,000 crore, this organized market constitutes barely 1.1 per cent of the total food & grocery retail market. Time wear (48.9%) and Footwear (48.4%) are the most organized of all retail categories. Clothing & fashion accessories retail comes next with the organized segment controlling 22.7 per cent of the market. SINHA (2002) stated that a shop is a world of its own, with its own language, patterns of behavior and code of conduct. With no two shops being similar, customers unconsciously adapt their behavior to suit the environment of the shop they are in. The basis of the idea propounded in this article is that we change our behavior when we shop in different retail outlets, even when the product or the brand bought is the same. The fact that when we buy something from a small store, we use our mother tongue, but when we buy from a large format, well-laid out store, we start speaking English is a perfect example of this phenomenon. In the former case we are pretty casual, while in the latter we are formal. In stores we frequent, we are demanding and brave, in newer stores, we are timid and patient. All this because human, as beings we are subject to operant conditioning, a phrase coined by B. F. Skinner. This article attempts to understand how the shop influences us so much that we change our behavior once we enter it. With the retail trade accounting for over 10 per cent of GDP and employing approximately 8 per cent of the workforce, that is about 25 million people, this

sector cannot be short-changed. And though organized retail accounts for a miniscule 2 per cent of the total retail market in the country, projections hold wholesale promise For instance, the organized retail players now account for around Rs 5,500 crore of the total retail market, but consultancy KSA Techno pak in its Retail Vision 2005 forecasts that this segment alone will, by 2005 account for Rs 29,842 crore. Analysts also expect the organized players to generate a couple of million jobs every year. And for a country such as India, with large-scale unemployment, these are surely heartening projections. In fact, even the Government seems to be waking up to the potential of the retail sector. Therefore, its intention to open the retail sector to foreign direct investment (FDI). With the Group of Ministers reassessing the policy, closed doors may open for foreign investment in retail, eventually. This, say the proponents of organized retail, will give Indian retailing the much-needed funds to offer even better and cheaper products and services. Not to forget the hundreds of jobs. Skeptics point to the lackluster performance of several of the countrys leading organized, modern format retailers, Including pioneers such as Shoppers Stop, and the collapse of another of the pioneers the Delhi-based Nanz chain of department stores. Organized retail, they argue, is just another bubble. With the entry players such as Food World, the demise of the kirana was foretold! But this has not happened. The kirana stores struck back, offering personalized service, credit facility and even stocking up on products they wouldnt have earlier. And all this at the customers doorstep. Indeed, competition is a wonderful thing! Many neighborhood stores have reinvented themselves. In New Delhi, for instance, several small retailers have set up common sourcing systems to get the advantages of scale; others are working at leveraging their long-standing relationships with customers and still others, at offering all that modern retailers offer. The beneficiary of all this is, of course, the consumer.

Surely there will be a shakeout, with the not-so-serious players falling by the wayside. Food and grocery retailing, for instance, has huge potential given that over 40 per cent of the spending by the Indian consumer is on this. So those who offer value in this segment are likely to have greater success. The other stamp of a successful organized retailer is scalability. Pundits are almost unanimous that retailers who hit upon the right format and who can customize its size to suit the requirements of different geographic locations will be around. Above all, successful retailing is about getting right the nitty-gritty of retailing merchandising, forecasting, the supply chain, training and recruitment, branding, category management and so on Or simply about getting the detail.

3.4 UNORGANISED RETAIL---THE BIG BRAT

AC Nielsen Shopper & Consumer Trends 2004 in its analysis of key retail markets in the Asia-Pacific region clearly states that India is the only market surveyed where traditional grocery stores are the key outlets where shoppers spend most money. Radical changes have taken place over the last 7 years yet the market share of retail chains remains low. Traditional shopping facilities still dominate though the environment is fertile for the development of shopping centers. This growth was strongest for a number of non-essential impulse categories, such as beer, whisky, energy drinks and snacks, all of which grew by over 15%. These impulse categories are all strength areas for both traditional stores and modern convenience stores and both trade channels benefited greatly from this growth. From a size of only Rs.20, 000 crore, the ORGANISED retail industry will grow to Rs. 160,000 crore by 2005. The TOTAL retail market, however, as indicated above will grow 20 per cent annually from Rs. 400,000 crore in 2000 to Rs. 800,000 crore by 2005

An FDI Confidence Index survey revealed that, retail industry is one of the most attractive sectors for FDI (foreign direct investment) in India and foreign retail chains would make an impact circa 2003.

Total grocery market in India

COUNTRY Australia New Zealand Japan Hong Kong Korea Taiwan China Indonesia Malaysia Philippines Singapore Thailand Vietnam India Sri Lanka NA 2002 21,093 4,434 149,345 4,271 112,135 28,052 4,665,238 1,903,628 29,656 490,207 3,345 287,181 29,036 2003 20,226 4,405 144,423 3,963 106,563 28,879 4,668,377 1,760,692 28,763 555,286 3,275 277,804 29,132 6,037,738 NA

Source: AC NIELSEN (Table 3.4)

Note: India posted 5,170,709 total grocery outlets in 2000 and Sri Lanka 85,574 in the same year

3.5 The Urban Youth

This is a revolution led by the young. They are pouring out of India's fine higher educational system at a rate of 2 million a year. The younger generation built India's world-class computer software industry, followed now by the globalization of the service industry. Hundreds of thousands of kids join its ranks every year now -- and with their pockets full of money, they are sparking a consumer movement. Sociologists and media pundits have homed in on the fact: 54% of India is estimated to be under the age of 25. However, the consuming class that is the target of most youth lifestyle brands numbers approximately 16 million. (The number of consumers aged 12-30 in SEC A and B in the top 35 cities, according to NRS 2003 data) The IMAGES-KSA projections indicate that by 2015, India will have over 550 million people under the age of 20 reflecting the gargantuan opportunities possible in the kids and teens retailing segment.

Fig-3.5 Source- KSA Techno pak Consumer Outlook 2004 The traditionally defined youth demographic is ages 15-24. But is this a homogeneous mass? The youth at 15 and at 24 are two very different species. The first is characterized by a focus on career and consumption; limited by what the family can afford or thinks is 'reasonable' (less than 1.5 million youth aged 12-21 are from socioeconomic class A1+, where money is not an issue). But it's the second that's actually come into its own with BPO and other entry level jobs booming. The 'indie', or financially independent young person, is a growing breed that retail boom is riding on. This consumer of today is definitely the growth engine of tomorrow.

CHAPTER 4 OBJECTIVE AND RESEARCH METHODOLOGY 4.1 PRIMARY OBJECTIVE

To study the current scenario of the Indian retail industry and the various changes and developments it is going through. To ascertain the Customers perception towards Organized Retail To find out the impact of Organized Retail on Unorganized Retail To ascertain the factors that influences people to purchase goods from Organized Retail Store. To know expectations of the people from Organized Retail Stores. To suggest policy.

SUB- OBJECTIVE
To analyze and study the retailing models which would suit and prove to be successful for the needs and requirements of the retail industry.

4.2 SCOPE OF THE PROJECT

The study will provide some basic ideas of the current scenario in the Indian retail industry as research was done on their NCR region so we will be able to know more about that region and will get a hint about the other region too.

4.3 RESEARCH METHODOLOGY

4.3.1 EXPLORATORY RESEARCH: Exploratory research is conducted when one is seeking insights into the general nature of a situation, the possible decision alternatives, and the relevant variables that need to be considered. This approach is tentative and acts as an input for further research. While conducting my study I used exploratory research, which was flexible and was aimed at identifying all the attributes and parameters of the franchise models of different companies.

4.3.2 RESEARCH DESIGN:

The research design which was used for this research was secondary research. The data required for the analysis of the project was taken from secondary sources of data such as internet, magazines, newspapers and journals. The data obtained from such sources was organized and analyzed to study the required objective of the project. The primary data will be also collected with the help of questionnaire.

4.4 DATA COLLECTION:

METHOD: The data is collected through both primary and secondary sources. The data required for the analysis of the project was taken from secondary sources of data such as internet, magazines, newspapers, journals etc and primary sources through questionnaire. The data obtained from such sources was organized and analyzed to study the required objective of the project.

SAMPLE SIZE: 200 Nos. SAMPLE UNIT: Noida and NCR region SAMPLE SELECTION: Random

Chapter 5 DATA ANALYSIS AND INTERPRETATION

We formulated the following hypotheses during the course of the study. These were tested using Chi Square test. Chi square test was used to find out the dependency between various variables highlighted in the questionnaire. During the analysis phase SPSS software was used extensively. Hypothesis 5.1.1: Association between the Monthly budget of consumer and the frequency of shopping is independent of each other. Hypothesis 5.1.2: Association between the price range available and the product range in the store is independent of each other. Hypothesis 5.1.3: Association between the price range available and paying extra for the well known brands is independent of each other. Hypothesis 5.1.4: Association between the product range available in the store and the reference of the friends from where he buys is independent of each other. Hypothesis 5.1.5: Association between parking facility available in the retail store and the location of the outlet is independent of each other. Hypothesis 5.1.6: Association between Delivery facilities available for the consumer and the location of the outlet is independent of each other. Hypothesis 5.1.7: Association between helpful sales staff and the remember me on next visit is independent of each other Hypothesis 5.1.8: Association Between age of the respondent & frequency of shopping is independent of each other. Hypothesis 5.1.9: Association Between age of the respondent and the paying extra for the well known brands is independent of each other. .

Hypothesis 5.1.1: Association between the monthly budget of consumer and the frequency of shopping is independent to each other. Null Hypothesis (H o) = There is no Association between the monthly budget of consumer and the frequency of shopping is independent to each other. Alternate Hypothesis (H 1) = There is Association between the monthly budget of consumer and the frequency of shopping is independent to each other.

Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases
a.

df 15 15 1

Asymp. Sig. (2-sided) .020 .095 .245

28.278a 22.519 1.349 200

10 cells (41.7%) have expected count less than 5. The minimum expected count is .23.

Table 5.1.1 Monthly budget of consumer and the frequency of shopping Interpretation: The closer examination of above test revealed that the Asymp. Significance level is 0.20, which is less than 0.05. So, the null Hypothesis was rejected and so we inferred that there was strong relationship between the Monthly budget of consumer and the frequency of shopping of the respondent. The above test interpret that the monthly budget of consumer and frequency of shopping are interrelated the consumer who spend more on shopping goes to shop more times while with less shopping expenditure usually not goes to shop that frequently. So the marketer should focus on both the segment of the customer but more focused should be with the consumer with huge amount of spending on the shopping.

Hypothesis 5.1.2: Association between the price range available and the product range in the store is independent of each other Null Hypothesis (H o) = There is no Association between the price range available and the product range in the store is independent to each other. Alternate Hypothesis (H 1) = There is Association between the price range available and the product range in the store is independent to each other. Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases
a.

df 16 16 1

Asymp. Sig. (2-sided) .334 .319 .512

17.826a 18.089 .431 200

6 cells (24.0%) have expected count less than 5. The minimum expected count is 1.90.

Table 5.1.2 Price range available and the product range available in the store Interpretation: From the above table 5.1.4 it can be seen that the Asymp. Significance level is 0.334, which is greater than 0.05. So, the null Hypothesis was accepted and hence we inferred that there was no relation between the price range available and the product range in the retail store. This test indicates that the people dont consider price range and the product range in the retail store; Most of the people in Indian market go for those products which are cheaper and the other segments goes for that product which suits them the most and these type of customer require the product range available so they can choose amongst many option, and can select the desired one.

Hypothesis 5.1.3: Association between the price range available and paying extra for the well known brands is independent of each other. Null Hypothesis (H o) = There is no Association between the price range available and the paying extra for the well known brands is independent to each other. Alternate Hypothesis (H 1) = There is Association between the price range available and the paying extra for the well known brands is independent to each other.

Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases
a.

df 16 16 1

Asymp. Sig. (2-sided) .707 .581 .471

12.520a 14.239 .520 200

6 cells (24.0%) have expected count less than 5. The minimum expected count is 2.10.

Table 5.1.3 Price range available and the paying extra for the well known brands. Interpretation: From the above table 5.1.3 it can be seen that the Asymp. Significance level is 0.707, which is greater than 0.05. So, the null Hypothesis was accepted and hence we inferred that there was no relation between the Price range available in the store and the paying extra for the well known brands.. This test suggests that the most of the people in Indian market are price conscious and they are not willing to pay extra for the well known brands. So they want to have the price range available in the store as Indian market is so fragmented and different consumer has different liking and preferences.

Hypothesis 5.1.4: Association between the product range available in the store and the reference of the friends from where he buys is independent of each other. Null Hypothesis (H o) = There is no Association between the product range available in the store and the reference of the friends from where he buys is independent to each other. Alternate Hypothesis (H 1) = There is Association between the product range available in the store and the reference of the friends from where he buys is independent to each other.

Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases
a.

df 16 16 1

Asymp. Sig. (2-sided) .597 .558 .022

14.019a 14.542 5.257 200

10 cells (40.0%) have expected count less than 5. The minimum expected count is 1.14.

Table 5.1.4 Product range available in the store and the reference of the friends from where he buys Interpretation: From the above table 5.1.4 it can be seen that the Asymp. Significance level is 0.597, which is greater than 0.05. So, the null Hypothesis was accepted and hence we inferred that there was no relation between the product range available in the store and the reference of the friends from where he buys This test indicates that the people dont consider the friends reference from where they buy, they only consider product range available in the store which is relevant for them while shopping the products.

Hypothesis 5.1.5: Association between parking facility available in the retail store and the location of the outlet is independent of each other. Null Hypothesis (H o) = There is no Association between the parking facility available in the retail store and the location of the outlet is independent to each other. Alternate Hypothesis (H 1) = There is Association between the parking facility available in the store and the location of the outlet is independent to each other. Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 29.355a 27.951 4.270 200 df 16 16 1 Asymp. Sig. (2-sided) .022 .032 .039

a. 14 cells (56.0%) have expected count less than 5. The minimum expected count is .30. Table 5.1.5 parking facility available in the store and the location of the outlet Interpretation: From the above table 5.1.5 it can be seen that the Asymp. Significance level is 0.022, which is less than 0.05. So, the null Hypothesis was not accepted and hence we inferred that there was relation between the parking facilities and location of the outlet. This test suggests that the most of the people in Indian market consider the parking facility as the main components of the retail store. Either the retail store will be in the nearby locality so they dont have to take their vehicle or either the good space for parking should be there in the retail store so they can shop without worrying for their vehicle.

Hypothesis 5.1.6: Association between Delivery facilities available for the consumer and the location of the outlet is independent of each other Null Hypothesis (H o) = There is no Association between the delivery facility available for the consumer and the location of the outlet is independent to each other. Alternate Hypothesis (H 1) = There is Association between the delivery facility available for the consumer and the location of the outlet is independent to each other

Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 37.491a 42.294 .048 200 df 16 16 1 Asymp. Sig. (2-sided) .002 .000 .827

a. 8 cells (32.0%) have expected count less than 5. The minimum expected count is .48. Table 5.1.6 Delivery facilities available for the consumer and the location of the outlet Interpretation: From the above table 5.1.6 it can be seen that the Asymp. Significance level is 0.002, which is less than 0.05. So, the null Hypothesis was not accepted and hence we inferred that there was strong relation between the parking facilities and location of the outlet. Hence from this test it can be interpreted that the location of the outlet and the delivery facility provided by the retailers has the strong relationship. As the retail store is far from many consumers adobe so they have to go to the shopping mall to purchase the products and it require time and money too. Hence the consumer required delivery at their home or the retail store within the reach of them, so retailers are providing delivery system as it require lot of money to open the new store.

Hypothesis 5.1.7: Association between helpful sales staff and the remember me on next visit is independent of each other Null Hypothesis (H o) = There is no Association between the helpful sales staff and the remember me on next visit is independent of each other Alternate Hypothesis (H 1) = There is Association between helpful sales staff and the remember me on next visit is independent of each other

Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases
a.

df 12 12 1

Asymp. Sig. (2-sided) .327 .297 .028

13.596a 14.057 4.834 200

2 cells (10.0%) have expected count less than 5. The minimum expected count is 3.99.

Table 5.1.7 Helpful sales staff and the remember me on next visit Interpretation: From the above table 5.1.7 it can be seen that the Asymp. Significance level is 0.327, which is not less than 0.05. So, the null Hypothesis was accepted and hence we inferred that there was no relation between the helpful sales staff and the remember me on next visit This test suggests that the most of the people want to have preference given to them by the sales personnel. Hence from this test we can inferred that the consumer does not influenced by the helpful sales staff as they are not able to remember the customer in their second visit or soon.

Hypothesis 5.1.8: Association Between age of the respondent & frequency of shopping is independent of each other. Null Hypothesis (H o) = There is no Association between age of the respondent & frequency of shopping is independent of each other Alternate Hypothesis (H 1) = There is Association between age of the respondent & frequency of shopping is independent of each other Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 19.876a 14.489 2.393 200 df 12 12 1 Asymp. Sig. (2-sided) .069 .271 .122

a. 7 cells (35.0%) have expected count less than 5. The minimum expected count is .81. Table 5.1.8 Age of the respondent & frequency of shopping

Interpretation: From the above table 5.1.8 it can be seen that the Asymp. Significance level is 0.069, which is slightly greater than 0.05. Hence here we can interpret that the null Hypothesis could be accepted or rejected and hence we inferred that the age of the respondent & frequency of shopping is interdependent to each other. This test indicates that age of the respondent plays an important role in deciding that which age limit the marketer should focus more and it is usually focussed by the companies to decide that what target market they should have according to the needs and wants of the consumer.

Hypothesis 5.1.9: Association Between age of the respondent and the paying extra for the well known brands is independent of each other. Null Hypothesis (H o) = There is no Association between age of the respondent and the paying extra for the well known brands is independent of each other Alternate Hypothesis (H 1) = There is Association between age of the respondent and the paying extra for the well known brands is independent of each other Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 26.214
a

df 16 16 1

Asymp. Sig. (2-sided) .051 .029 .943

28.337 .005 200

a. 10 cells (40.0%) have expected count less than 5. The minimum expected count is .74.

Table 5.1.9 Age of the respondent and paying extra for the well known brands.

Interpretation: From the above table 5.1.9 it can be seen that the Asymp. Significance level is 0.051, which is almost equals to 0.05. Hence here we can interpret that the null Hypothesis could be accepted and hence we inferred that the age of the respondent & paying extra for the well known brands is interdependent to each other. This test indicates that age of the respondent has an effect on paying extra for the well known brands as the young youth wants to use the branded products as it is the style status for them. So they are ready to pay extra for that products and these are only the young youth.

5.2 Frequencies & Descriptive

5.2.1 Average Monthly Shopping Budget of Consumers:
The below given was the interpretation of the average monthly shopping budget for the sample size in the project survey. In the sample size most of the people (i.e. 38%) were able to do shopping between Rs. 2000-5000.

Interpretation: India mainly consist of middle income group people who are just earning their livelihood and struggling hard to splurge in costly affairs, they pursue for more income and thats why they have a habit of saving money and buying that much stuff that can fulfil their requirement. Due to this habit they buy the products in fragmented way or on the requirement basis, as a result of this unorganized sector has a huge market share in Indian retailing. To intimidate them the company should come up with a free home delivery and the person can call you about their requirement and the retailer will deliver at your foot step and that also free of cost

5.2.2 Awareness about different brands of Retail Sector:

The store location, its customer services, discount schemes and offers, its quality are the important factors for the awareness of the any retailing company or brand but apart from all these the most important thing which influence the awareness of any particular brand is its advertising and other promotional activities. Big Bazaar of future group in Ghaziabad is very well known brand among the people of sample because of its pricing, attractive offers and discounts and its very good promotional and marketing activities. The Vishal Mega Mart is also famous because of its reach in the various areas of the city.

Interpretation: The big bazaar is the most aware retail store; it is the venture of future bazaar started in 2001. Shop till you drop! Big Bazaar has democratized shopping in India & is so much more than a hypermarket. There are over 170,000 products under 1 roof that caters to every need of a family, making Big Bazaar Indias favourite shopping destination.

5.2.3 Retail chain Customers like to visit often:

.

Interpretation: Because of its attractive pricing and good schemes and offers people like to visit Big Bazaar most often. Vishal Mega Mart is also giving attractive discount on formal wear so it is also known for good footfall. Shoppers stop do not have discount offers and schemes but it still likes by some of people in sample size because of its ambience, shopping comfort and good customer services.

5.2.4 Customer Preferences for shopping from Retail chains:

Interpretation: The consumers of sample size were visiting the big retail outlets most because of their good pricing and for their attractive schemes and discounts offers. After that they also are going for the quality experience. The location of the store is also a big concern for the consumers. Thereafter they are also looking for good customer services. They want to get well treated by the sales persons of the stores. Ambience came in last for all of them.

5.2.5 How often you go for shopping?

11% respondents go shopping twice a month, while 29% go shopping only twice a week. Most of the respondents i.e. 39% people go shopping once a week. With the increase in spending budget of the consumer, the frequency of shopping has increased. Interpretation: The Indian customers still buy the product according to their needs and thats where unorganized sector come into the place, as customer buys the products on daily or weekly basis according to the requirement. So they prefer to buy from the nearby store as that is easily assessable to them, the retailer should choose a good location according to the target customer of the products they want to sell.

5.2.6 I would not mind paying extra for a well known brand.

In this question 102 respondents said that they disagree with paying extra for a brand, out of which 46 completely disagree with this.35 respondents were neutral on this and 63 respondents were those who agree with this, out of which 22 were those who completely agree with this as these were those who were brand loyal.

Interpretation- one can understand and value a brand as the amount they pay extra for that product. That pays extra for that product because that gives them the brand image, quality and inquisitiveness of the west. By paying extra the consumer can be satisfied and ensured of getting good quality of the product. But by this survey we are able to know that consumer used to buy the product which is of good quality and they are not willing to pay extra for the brands. Some products are there where customer pays extra for the brands but products used in culinary doesnt require branding and customer are not willing to pay extra for that

5.2.7 I buy only from where my friends buy

In this 12 respondents said they only buy from a place from where their friends buy as they are very much influenced by their friends, 28 respondents said they tend to agree with the question, 37 respondents were neutral on the question, 123 respondents said they tend to disagree with this, out of which 52 end to completely disagree with the question.

Interpretation- The consumer buys the product from that place which is close to their residence. As it is easily accessible to them and they can have better relation with that retailer, customer would never go to the retailer which is suggested by their friends or far from their home.

5.2.8 There should be a children play area.

This question was basically for the parents as they need some entertainment for their children whenever they are shopping. So in these 32 respondents said it is very important for them to have a children play area, 48 were neutral on that and 120 respondents said it is not important for them whether there is a children play area or not inside any mall.

Interpretation- From the above question we are able to know that the Indian consumers still not shop for the entertainment or for recreational purposes. They go to this type of departmental store or mall to buy the cheapest product and if they will not find any play area for their children, it hardly matters to them.

CHAPTER 6 CONCLUSION, SUGGESTION AND LIMITATIONS 6.1 CONCLUSION

The retail sector is undoubtedly growing and is attracting large-scale investments, but some retailers are closing down ventures to rework either the value proposition or the retail format. While some are moving away from malls to start their own exclusive stores, others are in search of niche businesses that will be commercially viable. This was quite expected for before any sunrise sector finds its feet, there is the proverbial churning, failure before it stands up strong. The Indian market is really a jigsaw of different markets in markets as fragmented and varied as this, it seems that the age-old marketing strategies may fail to deliver sustained brand success for retailers. What is required is an Unconventional marketing mix .This Indian retailers have realized. CULTURE is one of the major factors affecting consumer behavior and some of its dimensions can be clearly observed with regard to the attitudes and values of consumers. Culture is a combination of learned beliefs, values and customs that can direct the behavior of consumers in a specific society. Customs on the other hand are overt modes of behavior that are acceptable in a specific cultural context .From the marketing viewpoint, not just products & brands but successful business models would have to take into consideration the customs existing in a specific market situation. With changes in the environment, though, customs change and marketers will be successful if they adapt their business models & time their products/brands and position them in an appropriate manner. Thus undoubtedly the Indian shopper especially the urban ones(which definitely does not mean just the metro cities) is wanting a shopping experience akin to the kind he is exposed to, through the western media, but is yet not completely ready to overhaul his lifestyle preferences overnight. As the AC Nielsen study clearly depicts that though retail potential is tremendous in the emerging economies the Asian shopper especially the Indian shopper still patronizes the local grocer

for his everyday purchases. Not just the consumer but the FMCG marketer too has extended his support to the traditional channel retailers, the higher end corner shops (read unorganized retailer), in a phenomenon being termed Mom & Pop-ping Back by the Brand Equity, Economic Times, 15th March 2006. Also to be noted is that malls may be mushrooming all over India but studies have shown that while traffic is high actual purchases do not match up. Retailers will have to take into cognizance the fact that sheer novelty factor or the ambience would not drive sales. Though these are early days vital lessons are to be learnt from the experience of pioneers like Shoppers Stop (which took 8 years to break even). The modern Indian shopper in spite of his new orientation continues to be price sensitive (the success of Westside is a prime example) yet demands a world class experience. Thus, success of the malls in the days to come "will depend on the content they carry". Some well-known retailers have also learnt the hard way. For example, Shoppers' Stop decided to curtail the area of each of its stores after it worked out the optimal store size needed for a break-even. And food chains such as McDonald's, Caf Coffee Day and Barista have, on several occasions, opted out of malls, in favor of stand-alone stores since business inside malls was dull. Experts point out that retail is a long-term game, requiring careful investment planning and economies of scale, but many retailers still feel that the number of footfalls is directly proportional to the business being generated. Footfalls do not automatically mean business. Each retail concept has to be nurtured with adequate investments, right location and a five-six year gestation period. Retail consultancy KSA Technopak's Mr. Arvind Singhal is quick to point out that the closure of retail stores, "shows that the retail business, much like any other, needs to have a clear value proposition. The retail market in India is still at its nascent stage, where the trial and error method will be used for more time." Building and maintaining strong brands were the hallmarks of all successful companies. Building the right relationship between the brand and its consumers creates successful brands. Brands with the greatest equity are the most profitable because their customers are generally more loyal and willing to pay higher prices for the product, and have a closer relationship with the brand.

Thus, for retailers, building store equity is increasingly becoming more important as consolidation and the expansion of the modern trade increases, retailers would have to build store equity to develop chain level brand awareness & consumer loyalty; and induce their willingness to pay a premium to shop there. The consumers preferences are changing rapidity and becoming highly diversified. It is difficult for the retail stores to satisfy all the needs of the customers. The most of the consumers want to get some attractive prices, good schemes and offers on every purchases and a shopping comfort as well. Those who are able to purchase their needs and want for a month in a bulk prefers to go to the retail chains. Because of competitions in the market the branded formals are also became cheaper so the younger generation prefers to purchase from the retail outlets of the brand the city. Only the big retail chains are able to satisfy all these needs of the new age consumers whereas there is still some consumers mostly of the old age are willing to purchase from the local kirana store. Some of them have perception that these big stores are too costly to afford and some of them are not able to make purchases in a bulk so they do not want to waste their time to go especially to the big store for 2-3 items purchase. In the case of other items like wristwatches, branded jewellry, mobiles, gift items and other, they prefer to take it from where they are getting cheap prices, good after sales services and the goodwill of the store. After studying the customer survey questionnaire statistically and theoretically as well and after observing the consumers mood and their preferences I can say that Big Retail is here to stay. Assuming that improvements in infrastructure and lower real estate costs become a reality, Big Retail still has a long way to go before satisfying the highly diverse needs of the Indian population. As a result, there will be a steady state where Big Retail will co-exist with Small Retail.

6.2 suggestions
The location of the outlet plays a pivotal role in emerging as a lucrative store, as the person likes to visit those stores only which are close to their home and they dont have to travel a lot. So location planning should be done before opening a store as that will decide the future of the store and the target market should also be considered and the location should be chosen keeping the target market in the mind. The merchandise in the store should be according to the positioning of the store. Proper product range as well as price range should be available, as consumer has different criteria of choosing the items for them. Retailers should try to cater the entire consumer as that will increase the revenue of the store. The retailers should also provide the delivery system for the consumer as this will turn into customer loyalty and they will purchase from your store repeatedly, and if the retailers will remember the preference and liking of the consumer on their second purchase then the customer will be delighted and they will have like to purchase from your store only as that will save their time. Retail Boom now Spreading to Tier- II and Tier-III Cities: As the current economic boom in India is spreading to Tier-II and Tier-III cities and towns, approaching potential consumers in these cities is among the high priority list for most of the retail companies. Cities like Noida, Gurgaon are emerging as the lucrative retail destinations due to their huge growth potential. So the Retailer should try to focus more on these cities as opening store in this store can give them the whopping sales. Retailers Focusing on Private Labels: Retailers are nowadays feeling the rising pressure on their margins and are hence looking at sales through private labels to improve their bottom lines. Most of the retailers are expecting 20%-40% growth in their private label segment within the next three years. The margins offered by the private labels are as high as 35%-40%. The rising margins in the private label are inducing the retailers to put the private label and this can provide them good profit

margins and help in long run of the retail store. Because consumers are not willing to pay extra for the well known brands they just want quality product which can be afforded by them.

Organized Retail growing: Currently, the share occupied by organized retailing within the total retail market is around 5% and is likely to increase further due to large number of malls and organized retail stores coming up in India or under the planning phase. The revival in organized retail sales gives an indication towards growing spending by the urban consumers, which is likely to boost the overall business environment.

6.3 Limitations
For every research there are restrictions and limitations. Without them the world does not exist. Similarly there are some restrictions in my research work, which could not be controlled. The following were some limitations, which I faced in the making of this research. The study was restricted to selected Malls and Stores in NCR Time was the biggest constraint. It was difficult and time consuming to get the questionnaires filled personally from the respondents thus the sample size was restricted to 20 Retailers and 120 Customers. Nevertheless all efforts were made to get relevant information for the successful completion of the research. There may be some discrepancies in views as some people might give false information in the Questionnaire, as they might not be interested in filling the form. The respondents may be biased in their opinions.

Bibliography
BOOKS

Neil Z. Stern- Winning at Retail: Developing a Sustained Model for Retail Success Michael levy, Barton a Wietz and Ajay Pandit- Retailing management, Tata Mac Graw-Hill, 6th edition Naresh K Malhotra, Marketing Research- An applied orientation, 4th edition, Pearson education pvt. Ltd. Kotler, Phillip, Kevin Keller 13E Marketing Management What retailers do- David Jenkins.
Willard N. Ander and

REFERENCES
KSA Techno pak Consumer outlook 2004 INDIAN RETAIL INDUSTRY - insights Retail sector bows to 'Queen' consumer, Times of India Feb 18, 2004 Price Waterhouse Coopers, India Country Report ,Retail & Consumer Growth Dynamics From New Delhi to New Zealand 2003/2004 The Asia Pacific Retail and Shopper Trends 2004, (AC NIELSEN) www.iimcal.ac.in/community/consclub www.ibef.org/industry/retail.aspx www.indianrealtynews.com/category/retail-market www.thehindubusinessline.com/nic/137/index.htm indiafdiwatch.org/fileadmin/India_site/10-FDI-Retail-more-bad.pdf www.rncos.com/Blog/retail.html www.rediff.com/money/2008/sep/30bcrisis3.htm www.indianground.com/retail/retail-sector-in-india.aspx www.equitymaster.com/detail.asp www.indiaedu.com/career-avenues/career-in-retail-sector.html www.hindu.com/2008/04/30/stories/2008043061221200.htm www.indianrealtynews.com/retail-market/india-witnesses-massive-growth-in-retailsector.html www.legalserviceindia.com/article/l112-Retail-Sector-&-FDI.html

www.financialexpress.com/news/baring-seeks-to-invest-in-indian-retailsector/343399/ www.cxotoday.com/India/News/Indian_Retail_Fixated_on_Customers/551-82394911.html www.indiantelevision.com/tamadex/y2k8/nov/tam47.php blog.monsterindia.com/my/nikhilsh2/retail-sector-17951.html www.dnaindia.com/report.asp?newsid=

Websites
www.asiatimesonline.com www.icfdc.com www.indiainfoline.com www.acnielsen.com www.ibef.org www.retailwire.com www.icfai.com

Annexure
CONSUMER SURVEY QUESTIONNAIRE RETAIL CHAINS The objective of this survey is to collect tangible information about shopping in Retail Chains. This questionnaire is being administered to people like you who have visited and bought products in Retail Chains. Please let us know your spontaneous response to the questions that pertain to your shopping experience in Retail Chains. All information provided by you shall be kept confidential and we shall only be publishing the outcomes. Please provide us your unbiased and frank opinions. 1. Name: 2. Age: 3. Occupation: 4. Income group: 5. Education: ______________________________________________________ 15-20 40-50 Student Businessman 5k-10k 40k-50k Student MBA 20-30 30-40 50 & above Govt. Employee Private Employee Any other (Pls specify) _______________ 10k-20k 50k & above 20k-30k 30k-40k

Graduate Post-Graduate Any other (Pls specify) ___________________ Nil One Any other (Pls. specify) Two Five

6. Number of Family Dependants:

7. Telephone Number / E-mail:___________________________________________ 1. What is your monthly shopping budget? 0-2K 2-5K 5-10K 10-20K 20-50K >50K

2. Which retail chains do you visit often? Big Bazaar Shoppers Stop Westside Pantaloons Piramyd Vishal Megamart Any other (Please specify) ________________________________ 3. Why did you like that particular retail chain?

Ambience Attractive Prices Wide range of choices Discount Schemes Free Offers Customer Service Any Other (Please Specify) ___________________________________ 4. How often you go for shopping? Once a week Twice a month Twice a week More than twice a week

5. I would not mind paying extra for a well known brand

Strongly Agree Agree neither Agree nor Disagree Disagree Strongly Disagree

6. I buy from where my friend buys.

Strongly Agree Agree neither Agree nor Disagree Disagree Strongly Disagree

7. I do not go to buy brand names and will buy unbranded products also if I am convinced of better quality

Very important

Important

Neutral

Not important

Not at all important

8. We would like to prefer to go those malls which have the parking facilities.
Very important Important Neutral Not important Not at all important

9. The location should be easily assessable.

Very important Important Neutral Not important Not At all important

10. The environment of the retail outlet should be appealing.

Very important Important Neutral Not important Not at all important

11. The malls should have the children playing area and a garden
Very important Important Neutral Not important Not at all important

12. Which products do you normally buy from retail chains? ___________________________________________________________________

_____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ 13. Which products do you normally buy from your local grocery store? _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ ____________________________________________________________________