MID TERM PROGRAM 2010

A
REPORT ON
“RETAIL (AN INTRODUCTION )”

BY
NEELAM AGARWAL
(PGFR)
 PEARL ACADEMY OF FASHION
(CHENNAI)

A
REPORT ON
“RETAIL (AN INTRODUCTION )”

(Submitted in the partial fulfillment of the requirement of P.G. Diploma program of

Pearl Academy of Fashion)
Submitted
To
Simi Madam
By
NEELAM AGARWAL
PGFR
15th Sep, 2010
 DECLARATION

I hereby declare that this report on ― Retail (an introduction) has been
written and prepared by me during the academic year 2010-2012. This
project was done under the guidance and supervision of my faculty guide
Prof. Simi (Faculty, Pearl Academy of fashion Chennai)) in partial
fulfillment of the requirement for the post Graduate course of Pearl
Academy of Fashion.

I also declare that this project is the result of my own efforts All the details
and analysis provided in the report hold true to the best of my knowledge.

Place: Chennai Neelam Agarwal

Date: 15.09.2010 12004
 ACKNOWLEDGEMENT

This report is the result accomplished out of hard labor and meticulous
guidance. Any work of this magnitude required inputs, efforts and
encouragement of people from all sides.

A practical stint and a professional course is the key to its successful

completion. 6 weeks of constant learning and gaining valuable knowledge in
Pearl Academy of fashion would not have been possible without the
guidance and support of certain key people, who directly or indirectly helped
in the completion of this study.

With humility and gratitude, I Acknowledge my indebtedness to my faculty

guide, Prof. Simi, for her invaluable guidance, supervision, keen interest and
untiring help, without which this Project would not have been accomplished.

Finally I thank all the teaching staff and all my colleagues who has helped us
for accomplishing our project.
TABLE OF CONTENTS

• Introduction

• Meaning of Retail

• Meaning of Organized Retail

• Organized Retail Country Wise share

• Indian Retail Scenario

 Top Retailers in India

• Global Retail Scenario

 Top Retailers Globally

• Evolution of Retail in India

• Formats of Retail

 Store Retail

 Non-Store Retail
 INTRODUCTION

Retailing consists of the sale of goods or merchandise

from a fixed location, such as a department store, boutique or
kiosk, or by mail, in small or individual lots for direct
consumption by the purchaser. Purchasers may be individuals
or businesses. In commerce, a "retailer" buys goods or products
in large quantities from manufacturers or importers, either
directly or through a wholesaler, and then sells smaller
quantities to the end-user. Retail establishments are often
called shops or stores. Retailers are at the end of the supply
chain. Manufacturing marketers see the process of retailing as
a necessary part of their overall distribution strategy.

Shops may be on residential streets, shopping streets

with few or no houses or in a shopping mall. Online retailing, a
type of electronic commerce used for business-to-consumer
(B2C) transactions and mail order, are forms of non-shop
retailing. Shopping generally refers to the act of buying
products. Sometimes this is done to obtain necessities such as
food and clothing; sometime sit is done as a recreational
activity.

A marketplace is a location where goods and services are

exchanged. The traditional market square is a city square
where traders set up stalls and buyers browse the merchandise.
This kind of market is very old, and countless such markets are
still in operation around the whole world.
In some parts of the world, the retail business is still dominated
by small family-run stores,but this market is increasingly being
taken over by large retail chains.

Retail is usually classified by type of products as follows:

 Food products

 Soft goods - clothing, apparel, and other fabrics.

 Hard goods ("hard line retailers") - appliances, electronics,

furniture, sporting goods, etc.

WHAT IS RETAILING?

Historically retailing has been viewed as the sale of goods to the consumer
through retail shops. However, retailing today should be viewed as being
rather broader.

Retailing is the sale of goods and services to the ultimate consumer for
personal family or household use. It is the sale of goods to end users, not
for resale, but for use and consumption by the purchaser. The retail
transaction is at the end of the supply chain. Manufacturers sell large
quantities of products to retailers, and retailers sell small quantities of
those products to consumers.
What is Organized Retail ?
Any retail outlet chain (and not a one shop outlet) which is professionally
managed, (even if it is family run) has accounting transparency(with proper
usage of MIS and accounting standards) and organized supply chain
management with centralized quality control and sourcing can be termed
as an organized retailer. In India most of the giant corporate companies are
entering this field like
Wills lifestyle
Shoppers Stop
HPCL
RPL
Globus chain
RPG
Food World
Spencers
Music world
Health & Glow

Organized Retailing country wise share

Retail in India

Retailing is one of the pillars of the economy in India and accounts

for 35% of GDP. The retail industry is divided into organized and
unorganized sectors. Over 12 million outlets operate in the country and only
4% of them being larger than 500 sq ft (46 m2) in size. Organized retailing
refers to trading activities undertaken by licensed retailers, that is, those
who are registered for sales tax, income tax, etc. These include the
corporate-backed hypermarkets and retail chains, and also the privately
owned large retail businesses. Unorganized retailing, on the other hand,
refers to the traditional formats of low-cost retailing, for example, the local
kirana shops, owner manned general stores, paan/beedi shops, convenience
stores, hand cart and pavement vendors, etc.

Most Indian shopping takes place in open markets and millions of

independent grocery shops called kirana. Organized retail such
supermarkets accounts for just 4% of the market as of2008. Regulations
prevent most foreign investment in retailing. Moreover, over thirty
regulations such as "signboard licences" and "anti-hoarding measures" may
have to be complied before a store can open doors. There are taxes for
moving goods to states, from states, and even within states.

An increasing number of people in India are turning to the services

sector for employment due to the relative low compensation offered by the
traditional agriculture and manufacturing sectors. The organized retail
market is growing at 35 percent annually while growth of unorganized retail
sector is pegged at 6 percent.

The Retail Business in India is currently at the point of inflection.

Rapid change with investments to the tune of US $ 25 billion is being
planned by several Indian and multinational companies in the next 5 years.
Organized retail is expected to garner about 16-18 percent of the total retail
market (US $ 65-75 billion) in the next 5 years. The enormous growth of the
retail industry has created a huge demand for real estate. Property
developers are creating retail real estate at an aggressive pace and by 2010,
300 malls are estimated to be operational in the country.
With over 1,000 hypermarkets and 3,000 supermarkets projected to come up
by 2011, India will need additional retail space of 700,000,000 sq ft
(65,000,000 m2) as compared to today. Current projections on construction
point to a supply of just 200,000,000 sq ft (19,000,000 m2), leaving a gap of
500,000,000 sq ft (46,000,000 m2) that needs to be filled, at a cost of
US$1518 billion.
TOP RETAILERS IN INDIA

Pantaloon Retail:

It is headquartered in Mumbai with 450 stores across the country

employing more than 18,000 people. It can boast of launching the first
hypermarket Big Bazaar in India in 2001. An all-India retail space of 5
million sq. ft. which is expected to reach 30 mn by 2010. It is not only the
largest retailer in India with a turnover of over Rs. 20 billion but is present
across most retail segments - Food & grocery (Big bazaar, Food bazaar),
Home solutions (Hometown, furniture bazaar, collection-i), consumer
electronics (e-zone), shoes (shoe factory), Books: music & gifts (Depot),
Health & Beauty care services (Star, Sitara and Health village in the
pipeline), e-tailing (Futurbazaar.com), entertainment (Bowling co.)

One of their recent innovations include e-commerce’ hybrid format of

’small’ shops , the area for these stores will be 150 sq. ft. fitted with 40
digital screens. Customers will be encouraged to browse through the entire
range of products on digital screen. They will be able to place the order, the
delivery of which will be arranged by the shop to their homes within a few
hours

K Raheja Group

They forayed into retail with Shopper’s Stop, India’s first departmental
store in 2001. It is the only retailer from India to become a member of the
prestigious Intercontinental Group of Departmental Stores (IGDS). They
have signed a 50:50 joint venture with the Nuance Group for Airport
Retailing. Shoppers Stop has 7, 52, 00 sq ft of retail space with a turnover
of Rs 6.75 billion.

The first Hyper city opened in Mumbai in 2006 with an area of 1, 20,000 sq.
ft. clocking gross sales of Rs. 1 bn in its first year.

Crossword brand of book stores, Homes stop a store for home solutions,
Mother care a concept stocking merchandise related to childcare are also
owned by them. Recently, Raheja’s have signed an MoU with the Home
Retail Group of UK to enter into a franchise arrangement for the Argos
formats of catalogue & internet retailing.

The group has announced plans to establish a network of 55 hypermarkets

across India with sales expected to cross the US$100 million mark by 2010.

Tata group:

Established in 1998, Trent - one of the subsidiaries of Tata Group -

operates Westside, a lifestyle retail chain and Star India Bazaar - a
hypermarket with a large assortment of products at the lowest prices. In
2005, it acquired Landmark, India's largest book and music retailer. Trent
has more than 4 lakh sq. ft. space across the country. Westside registered
a turnover of Rs 3.58 mn in 2006.

Tata’s has also formed a subsidiary named Infiniti retail which consists of
Croma, a consumer electronics chain. It is a 15000-17000 sq. ft. format with
8 stores as of September 2007.

Another subsidiary, Titan Industries, owns brands like “Titan”, the watch of
India has 200 exclusive outlets the country and Tanishq, the jewellery
brand, has 87 exclusive outlets. Their combined turnover is Rs 6.55 billion.

Trent plans to open 27 more stores across its retail formats adding 1.5 mn
sq ft of space in the next 12 DLF malls.
RPG group:

One of the first entrants into organised food & grocery retail with
Foodworld stores in 1996 and then formed an alliance with Dairy farm
International and launched health & glow (pharmacy & beauty care) outlets.
Now the alliance has dissolved and RPG has Spencer’s Hyper, Super, Daily
and Express formats and Music World stores across the country.

RPG has 6 lakh sq. ft. of retail space and has registered a turnover of Rs
4.5 billion in 2006.

It is planning to venture into books retail, with the launch of its own
bookstores “Books and Beyond” by the end of 2007. An IPO is also in the
offering, with expansion to 450+ MusicWorld, 50+ Spencer's hyper outlets
covering 4 million sq. ft. by 2010.

Landmark group:

were launched in 1998 in India. Lifestyle is spread across six cities,

covering 4.6 lakh sq. ft. with a turnover of Rs 3.5 billion in 2005. A new
division named Lifestyle International has emerged for their international
brands business comprising Bossino, Kappa and Springfield in their
portfolio.

Their retail mix includes Home solutions (Home centre), fashion (lifestyle,
landmark International), value retailing (max retail), hypermarkets &
supermarkets (Max), kids entertainment (Funcity).

They plan to invest Rs. 300 crores in the next two years to expand on Max
chain, and Rs 100 crores on Citymax 3 star hotel chain. They have already
instituted a separate company christened Citymax Hotels (India).

Piramal Group
In September 1999, Piramal Enterprises announced their arrival into retail
with the launch of three retail concepts: India's first true shopping mall of
international standards, called Crossroads; a lifestyle department store
named Piramyd Megastore; and a family entertainment centre known as
Jammin. Piramyd Megastore and Jammin were anchor tenants for
Crossroads (recently sold to Pantaloon for Rs 4 billion). In 2001, the group
entered the business of food & grocery retail with the launch of TruMart
supermarkets in Pune.

They have around 18 TruMart stores covering 1.90 lakh sq. ft. registering a
turnover of Rs 37.6 mn in 2005. Piraymd Megatsore’s contributes more than
70 % to their retail mix with a turnover of Rs 112.8 mn. They plan to open
150 stores covering 75 mn sq ft of retail space in the next 5 years.

Subhiksha

Subhiksha is a Chennai-based, decade old, no frills, food, grocery, pharma

and telecom, discount retail chain. ICICI Venture Capital holds 24% in the
equity capital of Subhiksha. It has more than 500 stores across the country
covering a retail space of more than 1 million sq ft with a registered
turnover of Rs 3.34 bn in 2006. It has a planned investment of Rs.300 crores
to ramp up its operations to 1200 stores by 2008.

New but potential BIG players

Bharti-Walmart

Their plans include US$ 7 bn investment in creating retail network in the

country including 100 hypermarkets and several hundred small stores.
They have signed a 50:50 percent joint venture agreement with Walmart.
Wal-Mart will do the cash & carry while Bharti will do the front-end.

Reliance
India’s most ambitious retail plans are by reliance, with investments to the
tune of Rs. 30,000 cr ($ 6.67 bn) to set up multiple formats with expected
sales of Rs 90,000 crores ($20 bn) by 2009-10.

There are already more than 300 Reliance Fresh stores and the first
Reliance Mart Hypermart has opened in Ahmedabad. The next ones are
slated to open at Jamnagar, followed by marts in Delhi / NCR, Hyderabad,
Vijaywada, Pune and Ludhiana.

10. AV Birla Group

They have a strong presence in apparel retailing through Madura garments

which is subsidiary of Aditya Birla Nuvo Ltd. They own brands like Louis
Phillipe, Van Heusen, Allen Solly, Peter England, Trouser town.

In other segments of retail, AV Birla Group has announced investment

plans of Rs 8000 - 9000 crores in the first 3 years till 2010.

THE GLOBAL RETAIL SCENERIO : An Overview

Retail has played a major role world over in increasing productivity across
a wide range of consumer goods and services .The impact can be best
seen in countries like U.S.A., U.K., Mexico, Thailand and more recently
China. Economies of countries like Singapore, Malaysia, Hong Kong, Sri
Lanka and Dubai are also heavily assisted by the retail sector.
Retail is the second-largest industry in the United States both in number of
establishments and number of employees. It is also one of the largest
world wide. The retail industry employs more than 22 million Americans
and generates more than $3 trillion in retail sale annually. Retailing is a U.S.
$7 trillion sector.
Wal-Mart is the world’s largest retailer. Already the world’s largest
employer with over 1million associates, Wal-Mart displaced oil giant Exxon
Mobil as the world’s largest company when it posted $219 billion in sales
for fiscal 2001. Wal-Mart has become the most successful retail brand in
the world due its ability to leverage size, market clout, and efficiency to
create market dominance. Wal-Mart heads Fortune magazine list of top 500
companies in the world. Forbes Annual List of Billionaires has the largest
number (45/497) from the retail business.

TOP WORLD RETAILERS

Wal-Mart: With 6,000 outlets and more than $250bn in sales, Wal-Mart
towers above its competitors. But its critics complain of poor wages and
environmental practices while it faces a class-action suit alleging
discrimination against female staff in terms of pay and promotion.

Carrefour: Europe's largest retailer, Carrefour is Wal-Mart's nearest

challenger. It overhauled its management last year to try and improve
sluggish growth in France and the changes seem to have worked. It is
China's biggest foreign retailer, with nearly 80 stores.

Home Depot: Home Depot, the world's largest home improvement chain
and the third largest retailer, opened its first store in Atlanta in 1979. More
than 20,000 people visit its 2,000 stores across the US, Canada and Mexico
every week. They sell more than 40,000 items.
Metro: German giant Metro, led by Hans-Joachim Koerber, was formed in
1996 by the merger of three firms. The world's fourth largest retailer is best
known for its cash and carry business, in 30 countries including Vietnam
and Moldova. It also owns a department store chain.

Tesco: Tesco is pre-eminent in the UK, where it accounts for £1 in every

£8 spent. The world's fifth largest retailer is expanding rapidly abroad,
becoming a major player across Asia. But it is accused of being over-
dominant at home and squeezing out small stores.

Evolution of Retail in India

The origins of retailing in India can be traced back to the emergence of

Kirana stores and mom-and-pop stores. These stores used to cater to the
local people. Eventually the government supported the rural retail and
many indigenous franchise stores came up with the help of Khadi & Village
Industries Commission. The economy began to open up in the 1980s
resulting in the change of retailing. The first few companies to come up
with retail chains were in textile sector, for example, Bombay Dyeing, S
Kumar's, Raymonds, etc. Later Titan launched retail showrooms in the
organized retail sector. With the passage of time new entrants moved on
from manufacturing to pure retailing.
Retail outlets such as Foodworld in FMCG, Planet M and Musicworld in
Music, Crossword in books entered the market before 1995. Shopping
malls emerged in the urban areas giving a world-class experience to the
customers. Eventually hypermarkets and supermarkets emerged. The
evolution of the sector includes the continuous improvement in the supply
chain management, distribution channels, technology, back-end
operations, etc. this would finally lead to more of consolidation, mergers
and acquisitions and huge investments.
Traditionally retailing in India can be traced to the emergence of the
neighborhood Kirana stores catering to the convenience of the
consumers.

Era of government support for rural retail:

Indigenous franchise model of store chains run by Khadi & Village
Industries Commission.

1980s experienced slow change as India began to open up economy.

Textiles sector with companies like Bombay Dyeing, Raymond's, S
Kumar's and Grasim first saw the emergence of retail chains Later
Titan successfully created an organized retailing concept and
established a series of showrooms for its premium watches.

The latter half of the 1990s saw a fresh wave of entrants with a shift from
Manufactures to Pure Retailers.

F or e.g. F ood World, Subhiksha and Nilgiris in food andF MCG; Planet
M and Music World in music; Crossword and Fountainhead in books.

Post 1995 onwards saw an emergence of shopping centers, mainly in

urban areas, with facilities like car parking targeted to provide a
complete destination experience for all segments of society.

Emergence of hyper and super markets trying to provide customer with

3 V’s - Value, Variety andm Volume.

Expanding target consumer segment:

At year end of 2009 the size of the Indian organized retail industry is
estimated at US $408bn.
RETAIL FORMATS;

• Store Retailing
• Non-Store Retailing

Classification of store retail formats

• Based on location
Chain store
High street stores
Destination stores
Convenience stores

• Based on Ownership
Franchisee
Independent

• Based on Merchandise
Family store
Specialty stores
Department store
Supermarkets

• Based on Size
Shopping stores
Shopping mall
Shopping centre/Plaza
Hypermarket
 • Based on Prize
Discount store
Category Killer
Factory outlet
Single price denomination

Discount stores
Discount stores are the General merchandisers that offer brand name
Products at lower prices to the consumers. Most discount department
stores offer a wide assortment of goods; others specialize in such
merchandise as jewelry, electronic equipment, or electrical appliances.
These retailers are ready to accept lower prices in exchange for high sales
Volume. They offer a variety of perishable/ non perishable goods. Example
of Discount stores is subiksha, Piramal¶s TruMart, Wal-Mart the largest
retailer in the world.

Factory outlets
Factory outlet is a retail store in which manufacturers sell their stock
directly to the public through their own branded stores. Factory outlets are
the manufacturer owned outlets that sell off Goods that cannot be sold
through Traditional retailers. Factory outlets are based on the concept of
value positioning. These retailers Offer medium-high quality goods at deep
Discounts to the consumers.

Supermarkets
A supermarket, also called a grocery store, is a self-service store offering a
wide variety of food and household merchandise, organized into
departments. It is larger in size and has a wider selection than a traditional
grocery store and it is smaller than a hypermarket or superstore.
Supermarkets are based on the concept of scrambled merchandising, in
which goods & services that are unrelated to one Another are sold
together. Example of supermarkets Nilgiris, Apna Bazaar.

Hypermarkets
Hypermarket is a superstore which combines a supermarket and a
department store. It caters to specific target market. A hyper market
generally has an ambience which attracts the family as whole.
Hypermarkets allow customers to satisfy all their routine weekly shopping
needs in one trip. Typically they have business models focusing on high-
volume, low-margin sales. This type of retailing is growing very fast.
Example of hypermarket is Pantaloon retail¶s Big Bazaar. operating costs,
lower rents, smaller sales staff and absence of shop lifting. This type of
retailing saves consumer time.

Warehouse Stores
This is a form of mass discounter that often provides even lower prices
than traditional mass discounters. In addition, they often require buyers to
make purchases in quantities that are greater than what can be purchased
at mass discount stores. These retail outlets provide few services and
product selection can be limited. 60 ± 70 percent of sales in these stores
are wholesale Purchases by hotels, restaurants, small retailers & Service
firms. Membership cards are required
to gain entry into warehouse stores.

Kirana stores
Kirana stores are owned and operated on a small scale, usually in a space
of 500sq.ft. Or less. The smallest retail formats which are the highest in
number in India. It mostly deals with food and glossaries item.Kirana stores
are operated by the owners themselves and thus provide the benefit of low
operational costs. Kirana stores are likely to be in the immediate locality
and thus have a better understanding of customer preferences.

Variety stores
A variety store or price-point retailer is a retail store that sells inexpensive
items, usually with a single price point for all items in the store. Typical
merchandise includes cleaning supplies, toys, and confectionery. It offer
limited customer service and employ few number of people. Because of its
limited growth it is moving towards specialty stores.

Shopping Malls
These are the largest form of retail formats. They provide an ideal shopping
experience by providing a mix of all kinds of products and services, food
and entertainment under one roof. Examples are Sahara Mall, TDI Mall in
Delhi. They lend an ideal shopping experience with an amalgamation of
product, service and entertainment, all under one common roof

Direct response retailers

These types of retailers Advertise products on radio/TV & take mail or
Telephone orders and Take credit cards & operate 24 hrs. Example of direct
response retailers are Television shopping programs, home Shopping.

Automatic vendors
Automatic vending enhance customer Service inside traditional retail
stores & Provide convenient service where stores do not exist. Examples

of automatic vendors are ATMs & Airline ticket machine.

Non Store Retailing

The selling of goods and services without establishing a physical store is
known as Non-Store Retailing. The fastest growing method used by
retailers to sell product is through methods that do not have Customers
physically visiting a retail outlet. A large majority about 80% of retail
transaction are made in store however a growing volume of sales is taking
place away from stores. It is estimated that non-store sales account for
almost 20% of total retail trade.

Types of Non-Store Retail Format

Direct selling
It is also defined as a personal contact between a sales person and a
consumer away from the retail store. This type of retailing has also been
called in home selling. It is particularly widespread in japan , which
accounts for about 35% of the worldwide volume of direct selling. The U.S
represents almost 30% of the total and all other countries the rest.
The two types of direct selling are
Door-to door
Party plan

Telemarketing
Sometimes called telephone selling, telemarketing refers to a sales person
initiating contact with a shopper and closing a sale over the telephone.
Many product that can be bought without being seen are sold over the
telephone. Examples are pest control devices, magazine subscription,
credit cards and club membership.

Online Retailing
When a firm uses its website to offer product for sale and than individuals
or organizations use theie computers to make purchases from this
company, the parties have engaged in electronic transactions (also called
online selling or internet marketing).

Automatic Vending
The sale of product with a machine with no personal contact between
buyer and seller is called automatic vending. The appeal of automatic
vending is convenient purchase. Examples cold drink, coffee etc.

Direct Marketing
There are no consumers on the exact nature of direct marketing. In effect, it
comprises all types of non store retailing other than direct selling,
telemarketing, automatic vending and online retailing. In the context of
retailing, it has been defined as direct marketing as using print or broad
caste advertising to contact consumers who in turn, buy product without
visiting a retail store.
Direct marketing contact consumer through one or more of the following
media
Radio
Television
Newspaper
Magazine
Catalogs
Direct mail.
Electronic Retailing
E-retailing, most commonly known as e-tailing is nothing but shopping
through the Internet and other media forms. There are many things that are
common between direct retail stores and online retail stores. Both have the
process of billing of the customers and have to maintain a relationship with
the suppliers.

Bibliography

http/:www.economictimes.com/
http/:www.slideshare.com/
http://www.naukrihub.com/india/retail/overview/evolution/