EVOLUTION OF INDIAN RETAILING

Retailing in India has a long history. Early retailing in India can be traced back to the weekly
haats where vendors used to put their offerings on sale. Kirana stores have traditionally
dominated the Indian retail market for a long time. Most of the retail stores in India are small
family run businesses utilizing predominantly household labor. Organized retail began to make
its mark in India in the 1970s when shops like Raymonds, Nallis and Bata were in the market
through their exclusive stores or franchisees. Till the early 1980s Indian people did not visit
large retail stores to buy ready- to- wear clothing. During the 1990s , the wave of liberalization,
privatization and globalization ushered in new retailing formats , modern techniques and
exclusive retail outlets like Shoppers Stop(1991), Pantaloon (1997) and others. Further
transformation was witnessed during the early years of 21st century, with the opening of the
numerous supermarkets, departmental stores, chain stores and malls across the country, and
emergence of hypermarkets and big discount stores.

PRESENT SENERIO
The Indian retail industry is now beginning to evolve in the line with the transformation that
has swept other large economies. It witnesses tremendous growth with the changing
demographics and an improvement in the quality of life of urban people. The growing affluence
of Indias consuming class, the emergence of the new breed of entrepreneurs and a flood of
imported products in the food and grocery space, has driven the current retail boom in the
domestic market.
Retail in India changed radically to become one of the sunrise sectors in the economy. It gained
importance in terms of employment generation and business opportunity. The waves of
globalization, liberalization and privatization have been responsible for this change. But the
retail industry has been hard-hit by the economic downturn, with many retailers putting a
brake on their expansion plans. In this scenario, the kirana stores are flourishing again. India is
the fifth largest retail destination globally from among thirty emergent markets, with a size of
US$500bn., and is expected to grow at 7% over the next 10 years, reaching a size of US$ 850
billion by 2020. Traditional retail is expected to grow at 5% and reach a size of US$ 650 billion
(76%), while organized retail is expected to grow at 25% and reach a size of US$ 200 billion by
2020. Retailing in India is one of the pillars of its economy and accounts for 20 percent of its
GDP.


RETAILING FORMATS IN INDIA
Modern retailing has entered India in form of sprawling malls and huge complexes offering
shopping, entertainment, leisure to the consumer as the retailers experiment with a variety of
formats, from discount stores to supermarkets to hypermarkets to specialty chains. However,
kiranas still continue to score over modern formats. The organized segment typically comprises
of a large number of retailers, greater enforcement of taxation mechanisms and better labour
law monitoring system. It's no longer about just stocking and selling but about efficient supply
chain management, developing vendor relationship quality customer service, efficient
merchandising and timely promotional campaigns.






OPERATING ENVIRONMENT-RETAILING FORMATS IN INDIA
Retail formats prevailing in India are in various forms like Hypermarts / supermarkets: large
self- servicing outlets offering products from a variety of categories. Some of them are
followings:
MOM-AND-POP STORES: these are family owned business catering to small sections;
these are individually handled retail stores and have a personal touch of the owner.
DEPARTMENTAL STORES: these are general retail traders offering quality products and
services to cater to the need of the customers. Further classified into localized
departments such as clothing, toys, home, groceries, etc.
CONVENIENCE STORES: these are relatively small stores 400-2000 sq. feet located in
residential areas with a little higher price goods due to the convenience offered to the
residents.
SHOPPING MALLS: these are the biggest structure of retail in India, malls offers
customers a mix of all types of products and services including entertainment and food
under a single roof.
E-TRAILERS: these are retailers providing online buying and selling of products and
services.
DISCOUNT STORES: these are factory outlets that give discount on the MRP to the
customers.
VENDING: vending is a relatively new entry, in the retail sector. Here beverages, snacks
and other small items can be bought via vending machine.
CATEGORY KILLERS: these are small specialty stores that offer a variety of categories.
They are known as category killers as they focus on specific categories, such as
electronics and sporting goods. This is also known as Multi Brand Outlets or MBO's.
SPECIALTY STORES: these are retail chains dealing in specific categories and provide
deep collection. Bangalore based Kids Kemp, Mumbai's Crossword Book Store and RPG's
Music World and the Times Groups music chain Planet M are focusing on specific
market segment and have established themselves strongly in their sectors.






OPPORTUNITIES AND THREATS TO INDIAN RETAIL INDUSTRY
The huge population, increasing per-capita income and changing consumer habits - all these
developments have culminated in the booming of the retail sector in India. Like many others
industries, the Indian retail sector is also dominated by the unorganized sector. Almost every
road and street, there is a general store or a kirana shop after every hundred steps. And it is in
these huge numbers that the Indian unorganized retail industry finds its protection. The
government view is that the entry of the organized retail, especially the FDI led variety, will
threatens these numbers. The powerful trade unions across the country have also been
persistent against the entry of organized retailers and FDI in this sector. The organized sector,
identified as malls/multiplexes/supermarkets is still at a nascent stage, and is unlikely to prove
a threat to the unorganized sector for many, many years to come. The retail sector itself is
growing so fast that it will absorb any fresh additions to the supermarkets very easily and the
unorganized sector will still continue to grow.
India is one of the youngest and largest consumer markets in the world with a median age of
around 25 years, which is the lowest as compared with other countries. According to estimates,
Indias median age would be 28 by 2020. It is expected that over 53% of the population will be
under the age of 30 by 2020, which means that the potential for the Indian retail segment will
be enormous. This generation will be more dynamic than the previous generations because
their consumption is driven by wants rather than needs. Thus, the organised retailing, which
thrives on lifestyle products, is expected to receive a boost because of the young population by
2020.
By 2015, the middle class is expected to constitute around 25% of total households and account
for 44% of the total disposable income, and by 2025, the respective figures are likely to go up to
46% and 58%. The Indian middle-class population and their growing disposable income levels
will drive the future growth of organised retail in India.
There has been a substantial increase in the number of Indians who use the Internet and a
concomitant increase in the number of online purchases. Indians have started using the
Internet not only for increasing awareness but also to shop online, which has opened a whole
new channel of retailing in the Indian retail scenario.





CHALLENGES FACING INDIAN RETAIL INDUSTRY
The biggest challenge facing the Indian organized retail sector is the lack of retail space. With
real estate prices escalating due to increase in demand from the Indian organized retail sector,
it is posing a challenge to its growth. With Indian retailers having to shell out more for retail
space it is effecting there overall profitability in retail. Trained manpower shortage is a
challenge facing the organized retail sector in India. The Indian retailers have difficultly in
finding trained person and also have to pay more in order to retain them. This again brings
down the Indian retailers profit levels.
The Indian government has allowed 51% foreign direct investment (FDI) in the India retail
sector to one brand shops only. This has made the entry of global retail giants to organized
retail sector in India difficult. This is a challenge being faced by the Indian organized retail
sector. But the global retail giants like Tesco, Wal-Mart, and Metro AG are entering the
organized retail sector in India indirectly through franchisee agreement and cash and carry
wholesale trading. Many Indian companies are also entering the Indian organized retail sector
like Reliance Industries Limited, Pantaloons, and Bharti Telecoms. But they are facing stiff
competition from these global retail giants. As a result discounting is becoming an accepted
practice. These too bring down the profit of the Indian retailers. All these are posing as
challenges facing the Indian organized retail sector.
The challenges facing the Indian organized retail sector are there but it will have to be dealt
with and only then this sector can prosper.