PROJECT REPORT ON Retail Marketing in India (A study at _______________)

Submitted by:

Under the Supervision of

Submitted to:

ACKNOWLEDGEMENT

It is indeed a pleasure doing a project on Retail Marketing in India. I am grateful to ________________, for providing me this opportunity. I owe my indebtedness to My Project Guide ______________, for his keen interest, encouragement and constructive support and under whose able guidance I have completed out my project. He not only helped me in my project but also gave me an overall exposure to other issues related to retailing and answered all my queries calmly and patiently. The realization of this project marks the beginning of an ever growing and valuable learning experience in my life. Throughout the period of this project every day was a new turning point in my career. It would be worthwhile here to mention the contributions made by people around me, which lead to the successful completion of this project. I express my gratitude for all that I have learnt so far and continue learning with each passing day. I take the pleasure to express thanks to all my colleagues for many useful discussions and cooperation during the course of the project work.

TABLE OF CONTENTS
EXECUTIVE SUMMARY CHAPTER 1: RETAILING - THE SUNRISE INDUSTRY 1.1 Introduction 1.2 Overview of Global Retail Industry CHAPTER 2: RETAIL MARKETING REVOLUTION 2.1 Retail Marketing 2.2 Types of Retail Marketing 2.3 Major Formats of Retailing 2.4 Organized Retailing 2.5 Trends ion Retailing CHAPTER 3: RETAIL MARKETING IN INDIA 3.1 Retailing in 1990s 3.2 Present Retail Scenario in India CHAPTER 4: INFORMATION TECHNOLOGY IN RETAIL CHAPTER 5: FOREIGN TOUCH IN INDIAN RETAIL. CHAPTER 6: FACTORS THAT WOULD MAKE OR BREAK THE INDUSTRY 6.1 Issues and Challenges Facing Retailing 6.2 Road Blocks in Retail Development 6.3 Factors that would lead to Growth 6.4 Visions 2010 CHAPTER 7: RETAIL MARKETING SURVEY 7.1 Research Design 7.2 Research Methodology 7.3 Data Analysis 7.3.1 Shoppers Stop 7.3.2 Pantaloon (retail) India Ltd. 7.3.3 Ebony 7.3.4 Big Jos 7.4 Findings and Suggestions CHAPTER 8: RECOMMENDATIONS 8.1 Recipe for Success - for Retailers 8.2 Recipe for Success - for Government CONCLUSION BIBILOGRAPHY APPENDIX

EXECUTIVE SUMMARY

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. The concept retail which includes the shopkeeper to customer

interaction, has taken many forms and dimensions, from the traditional retail outlet and street local market shops to upscale multi brand outlets, especially stores or departmental stores. Though at this moment, it is still premature to say that the Indian retail market will replicate the success stories of names such as Wal-Mart stores, Sainsbury and Tesco but at least the winds are blowing in the direction of growth. Hence, focusing on two aspects of retail marketing i.e. Store Retailing and Non-store Retailing. Store Retailing as the departmental store, which is a store or multi brand outlet, offering an array of products in various categories under one roof, trying to cater to not one or two but many segments of the society and Nonstore Retailing as the direct selling, direct marketing, automatic vending. Therefore, this concept of retail marketing through departmental stores, which is coming up in a big way in India was decided to be studied in detail, through an exploratory and conclusive research.

The objective being to assess the various parameters that influences a buyer to visit or shop at departmental store thereby contributing to its turnover (in terms of sales and profits) hence leading to its overall success. The extensive research brought me to conclude that departmental stores are soon emerging on the top priority lists, amongst the shopping spree in Delhi, as they seem to derive immense pleasure of convenience and exposure to variety under one roof, in their extremely busy lives, when they dont have time for things. Though some of the customers perceive departmental stores to be expensive and only high income categorys cup of tea, the stores make constant efforts to induce them to at least visit the store at once during the sale period, or discount offers. Most of these stores believe in creating not just a marketing activity with its customers, but rather favor relationship building with him so as to convert first time customers into a client. Hence this document entails me through these aspects in great detail, helping me to understand the concept of retail marketing through departmental stores in Delhi.

Chapter 1

RETAILING THE SUNRISE INDUSTRY

1.1 Introduction
The word retail means to sell or be sold directly to individuals. Retail is Indias largest industry, and arguably the one with the most impact on the population. It is the countrys largest source of employment after agriculture, has the deepest penetration to rural India, and generates more than 10percent of Indias GDP. However, retailing in India has so far, been mostly in the hand of small disorganized entrepreneurs. It is also Indias least evolved industries. In fact, it is not even considered a real industry. The industry suffers from lack of management talent, poor access to capital, unfavorable regulation and denial of access to best practices. The Indian retail industry is only now beginning to evolve in line with the transformation that has swept other large economies. Fifty years of restricting the consumer goods industry, a national mindset which favored denial over indulgence, and a fractured supply chain for agricultural products have all contributed to prevent the development of modern tenants based on scale advancements and consumer

preferences. India has some 12 million retail outlets, but many of these act merely as subsistence providers for their owners and survive on a cost structure where labor and land is assumed to be free and taxes nil. Compare this with the global retail industry, which is one of the worlds largest organized employers, is at the cutting edge of technology, and which leverages scale and scope to offer value-added services to its customers. However, only recently has there been an awakening in this sector, with more organized retailers starting to make an impact. The liberalization of

the consumer goods industry, initiated in the mid-80s and accelerated through the 90s has begun to impact the structure and conduct of the retail industry. Backed by changing consumer trends and metrics, liberalization in mindsets driven by media, new opportunities and increasing wealth, retailing in India, presents a vast opportunity for a variety of businesses - real estate, store design & operations, visual merchandising logistics and communications, B2C service providers, and FMCG companies who can add to their offers by partnering this revolution. The Indian Retailing Industry stands poised to take off into the 21st century. It is one of the fastest growing sectors in the nation that caters to the world's second largest consumer market. Retail boom is unabating. India has five million retailers with a business volume of $180 million growing at 5 to 7 per cent a year. The middle class drives retailing anywhere in the world and this segment should have reasonable income. The next driver is availability of variety of goods, products and brands. The third one is sense of awareness. In other developing economies, this transformation has already begun. In many of these countries, organized retail already has a 40 percent share of the market, compared to Indias current levels of 2 percent. As India goes through this transformation, new businesses with sales of 1billion 2 billion US $ will be created in grocery and of 250million 500million US $ in apparel. Smaller but still interesting opportunities will be created in other sectors like books, electronics, and music. This transformation will also impact the supply chain in agriculture, the tax collections from trade and the way people shop.

In the last 10 years, all Southeast Asian countries like Indonesia, Malaysia, Taiwan and Korea have gone through similar phases. China, with a per capita income of $650-700 per annum, is going through the same phase what India is also facing now. Europe went through this phase of retail revolution about 40-50 years ago. It is believed that when a countrys per capita income reaches the level of $1,200 per annum, organized retailing begins to takeover. Though India has a per capital income of $ 400, on the basis of purchasing power parity (PPP) it has already hit the $1200 level. This does strengthen the belief that probably, the right time for organized retailing to click in India has come. This report aims at providing an insight into the emerging trends in the industry and the barriers to change and a perspective on what this industry could become, using the global industry as the backdrop.

1.2 Overview of the Global Retail Industry Retail: world largest industry
Retail, with total sales of $ 6.6 trillion, is the worlds largest private industry ahead of financial industries $ 5.1 trillion. It is also home to a number of the worlds largest enterprises. Over 50 of the Fortune 500 companies, and around 25 of the Asian top 500 companies, are retailers. The industry accounts for over 8 percent of the GDP in western economies. Figure 1 Retail: Largest private industry in the world economy

Pharma Telecom Autom otive electronics energy chemicals packaged goods Construction Financial services Retail 0 1 2 3 4 5 6 7

Source: Euro monitor

A Study by Mc Kinsey states that organized retail accounts for just around 2 percent (out of which modern retail formats account for 7 percent of trade) presently is set to grow at exponential exceeding 35

percent. Fitch estimates the current share of organized retail to grow from 2 percent presently to around 15 to 20 percent by 2010. Table 1: Retail areas Food Retailing 130 Consumption US $ billion Existing Companies in the

organized sector Food Bazaar (Pantaloon) Food

World Subhishka. Clothing & Apparel 12 Pantaloon Stop Jewelry, Watches 7 Tanishq, (Pantaloon) Home Furnishing Foot wear Beauty Care 5 1.7 3.6 Home Store, Arcus (Pantaloon) Bata, Woodland VLCC, Health & Glow Titan, Gold Bazaar Westside, Shoppers

Source: economic times industry report

Traditionally, most retailers have had very localized operations. This localized nature of the industry is changing as retailers face low rates of growth and threatened profitability at home. New geographies will help them sustain top-line growth as well as permit global sourcing. Profits in retail have steadily been rising and have generated 18 percent shareholder returns between 1994 and 1999. Significantly, retail is also one of the worlds largest employers, accounting for instance 16 percent of the US workforce, Poland 12 percent, China 8percent, India 10 percent and Brazil 6percent. Factors such as scale in sourcing, merchandising, operational effectiveness and ambience have driven the spread of organized retail.

Figure 2:

share of retail in employment

20 15 10 5 0
USA Brazil Poland China India

Grocery, electronics are examples of categories that compete on the strength of better pricing, which in turn is driven by superior sourcing and merchandising and cost-efficient operations. Wal-Mart, Home Depot and Kingfisher are benchmark retailers in these fields. In apparel, home furnishings and furniture, the advantage is driven by the marketers ability to provide better products in a comfortable ambience at affordable prices. In these cases sourcing capability has to be backed by strong design capability and store management. IKEA and GAP are good examples of this model of retailing. Over the last few decades, retail formats have changed radically. The basic department stores and co-operatives of the early 20 th Century have given way to mass merchandisers, hypermarkets, warehouse clubs, category killers, discounters and convenience stores. Each of these formats has been driven by marketers need to offer relevant, distinctive and economic propositions to an evolving consumer base. Global retailers have also reached a position of strength that enables their brand to be leveraged across a wide range of services. Many of

them have expanded their offering, over the years to include fuel retail, car retail, convenience services and personal financial services. This has put them in a position where they are not only beginning to capture growth from geographical expansion, but are also entering large new areas of business. The recent evolution of the Internet has helped further broaden the scope of operations of large retailers. Further, a large number of retailers are pursuing innovative aggregation and supply chain-streamlining initiatives using B2B technology.

Chapter 2

THE RETAIL MARKETING REVOLUTION

By 2010, the list of India's top 10 retailers will have at least 5 Indian corporate. Retail Marketing will go through a tremendous change in India this millennium. It will change India's cities, its people, and its households. The Indian consumer is reportedly the largest spender in Singapore and London. It is, therefore, strange that there have, so far, been few efforts to present the product in the right kind of environment in India. Indeed, the right shopping experience does induce Indian consumers to spend more. This is evident from the experiences of retailoutlets like Shoppers' Stop, Music World, Food World, Crosswords, The Home Store, Ebony, Bigjos, Saboos, Standard, Vijay Store and Janaki Das & Sons, Westside etc. However, the development of organized retail is dependent on the efforts of several agencies and institutions. The first among these is the government. In a country as big as India and with as many states as ours, it is imperative that the Central government and all state governments bring in Value Added Taxation or a unified taxation system to ensure that the tax-regimes are the same across the country. The laws governing retail real estate should also be looked into, so that it is possible to develop retail-estate beyond the city-limits. Apart from providing entertainment and retail opportunities, this will also decongest the city center and facilitate the development of suburbs. The relevant rules should also be amended to allow retail-stores to operate 7 days a week, 12 hours a day. Given the hours most urban consumers

keep at work, and keeping in mind the increase in the number of nuclear families, this may, indeed, make sense. This will also help people enjoy their evenings, out at malls. The second group, whose participation is essential in making retail a boom-sector in this millennium, comprises developers. Most properties are developed without considering the end user; thus, we sometimes find high-ceilinged offices and low-ceilinged retail stores. Often, the shopper's convenience is not taken into consideration while the property is constructed. Another area of concern is the way in which developers sell their space. The only consideration is the price, not the usage pattern or the nature of the product that is to be sold. In contrast, internationally, mallmanagement is treated as a specialized discipline of retail management. This is what we have to focus on in this millennium. The third constituency that has a role to play in the fortunes of organized retail this century is the education-sector. Retail is a peopleintensive business, and there is a huge opportunity for retail institutes in India. For manufacturers, retailing will present an attractive opportunity. Organized retail allows them to expose their products to a large volume of customers in an environment conducive to buying. Already, several transnational retail giants have established their presence in India; others, notably Chinese retailers, have visited India and studied the Indian market. There's a lot at stake here: even so early in the 21st Century, India is too large a market to be ignored by transnational retail giants.

From the manufacturing company's perspective, the focus should be on producing good products, and forging relationships with organized retail. Manufacturers need to draw a plan of producing quality products and tie in with retailers. Indeed, the birth of organized retail will also engender the creation of private labels and store-brands. Thus, if a manufacturing company lacks the resources to build a brand, it can supply to a retailchain that has the resources to create a brand of its own. A glimpse of the last 2 decades of the previous century proves illuminating. Large-format retailing started with outlets like Vivek's and Nalli's in Chennai and Kidskemp in Bangalore, and, at another level, with manufacturer-retail brands like Bata, Bombay Dyeing, and Titan. The last decade of the millennium witnessed the emergence of lifestyle brands and the plastic culture. Liberalization and increasing awareness of the world around us created the Indian yuppie, who aspired to own everything we saw on TV, or in shops during jaunts abroad. New lifestyle brands offered traditional retail-outlets an opportunity to convert themselves into exclusive stores, franchised or otherwise. And even as these developments were taking place, the Indian consumer became more mature. Customer-expectations zoomed Thus, at the beginning of the New Millennium, retailers have to deal with a customer who is extremely demanding. Not just in terms of the product-quality, but also in terms of service, and the entire shopping experience. Today, the typical customer who shops in a retail outlet compares the time spent at the check-out counter with that at an efficient petrol station, and the smile of the counter-person to that decorating the face of a Jet Airways' crew member. To cope with the new customer, manufacturers have to focus on product quality and brand

building. And retailers, in turn, have to focus on the quality of the shopping experience. Internationally, retailing is a large business; you find at least one retailer amongst the top 10 companies in every country. In the US, it is WalMart with a turnover in excess of $ 120 billion. In the UK, it is Marks and Spencer's with close to 10 billion; and, in Germany, it is Karstadt with a turnover in excess of dm 10 billion. Table 2: Top 10 Retailers Worldwide
Rank Retailer No of stores owned 4178 8130 3445 1134 7150 2169 2105 Co. 2231 Sales in US$ Millions $180,787 $61,047 $49,000 $45,738 $45,729 $44,189 $37,028 $36,823

1 2 3 4 5 6 7 8

Wall-Mart Stores Inc. (USA) Carrefour Group (France) The Kroger Co. (USA) The Home Depot, Inc. (USA) Royal Ahold (Netherlands) Metro AG (Germany) Kmart Corporation (USA) Sears, (USA) Roebuck and

9 10

Albertson's, Inc. (USA) Target Corporation (USA)

2512 1307

$36,726 $36,362

Source: economic times industry report

Studies by consulting firms like A.T. Kearney, KSA Technopak, and McKinsey & Co. in India have indicated a huge potential for retailing in

the country. Drawn by the magic number of Rs 1, 60, 000 crore that is expected to be the size of the retail industry by the end of the first decade of this millennium, several companies from the organized sector have also jumped into the fray. In this millennium, like in the last, customers will want to spend time with their family and friends. They may like to visit malls on weekends where everything will be available under one roof. India will benefit from these developments because of increased consumption through retailing and the corresponding increase in employment created by retailing.

Retail Marketing
Retail Marketing includes all the activities involved in selling goods or services directly to final consumes for personal, non-business use. Any organization selling to final consumers -whether a

manufacturer, wholesaler, or retailer is doing retailing. It does not matter how the goods or services are sold (by Person, Mail, Telephone, Vending Machine, or Internet) or where they are sold (in a store, on the street, or in the consumers home). There are many approaches to understanding and defining retail marketing; most emphasize retail marketing as the business activity of selling goods or services to the final consumer, but what we emphasized upon is defined as follows: Any business that directs its marketing efforts towards satisfying the final consumer based upon the organization of selling goods and services as a means of distribution The concept assumed within this definition is quite important. The final consumer within the distribution chain is a key concept here as retailers

are at the end of the chain and are involved in a direct interface with the consumer. A retailer or retail store is any business enterprise, whose sales volume comes primarily from retailing. Retail organizations exhibit great variety and new forms keep emerging. There are store retailers, non-store retailers, and retail organizations. Consumers today can shop for goods and services in a wide variety of stores. The best-known type of retailer is the department store. Japanese department stores such as

Takashimaya and Mitsukoshi attract millions of shoppers each year. These stores feature art galleries, cooking classes, and childrens playgrounds. A retailer is at the end of the distributive channel. He provides goods and service to the ultimate consumers. This he does through his small organization, with the help of a few personnel. In an individual retail store there is not much scope for organization except in the sense that the shopkeeper has to organize and apportion his time and resources. The need for organization becomes essential as soon as he hires people and enters into partnership or takes the help of members of his family in running his store. A retailer deals in an assortment of goods to cater to the needs of consumers. His objective is to make maximum profit out of his enterprise. With that end in view he has to pursue a policy to achieve his objective. This policy is called retailing mix. A retailing mix is the package of goods and services that store offers to the customers for sale. It is the combination of all efforts planned by the retailer and embodies the adjustment of the retail store to the market environment. Retailing mix, a communication mix and a distribution mix. The maximum satisfaction to the customers is achieved by a proper blend of all three.

The success of the retail stores, therefore, depends on customers reaction to the retailing mix which influences the profits of the store, its volume of turnover, its share of the market, its image and status and finally its survival. There are three main phases in the life of a retailing institution. These are: Innovation (Entry) Trading Up Vulnerability. In the entry stage, a new retailer enters with new price appeal, limiting product offerings, Sparton Stores & Limited services. Its monopoly power over the others is its price advantage, which means that it offers products at low prices so as to get a competitive edge over its competitors. In the trading up stage, the retailer starts expanding. It expands in terms of product offering, better services, and improved interiors. With all these, it starts charging a bit higher prices. In the vulnerability stage, there is a gap in the market leaving some space for the new players to come in. this is due to increase in the prices by the retailer. I have already explained the three stages in life of a retail institution. Normally these stages are there in the life of a retail institution. But all these may not be necessarily there in every retail institution. For instance, any retail institution targeting the upper class may start itself with a large variety & high price.

This brings to broadly identify and categorize the types of retail marketing, which are defined as follows: 1. Store Retailing 2. Non store Retailing 2.2 Types OF Retail Marketing Store Retailing Store retailing provides consumers to shop for goods and services in a wide variety of stores and it also help the Consumers to get all the needed goods and services from one shop only. The different types of store retailing are given below: Specialty Stores These stores focus on leisure tastes of different individuals. They have a narrow product line with deep assortment such as apparel stores, sporting goods stores, furniture stores, florists and bookstores. These stores are usually expensive and satisfy the needs of selected consumers who have liking or preference for exclusive things. Departmental Store These stores are usually built in large area and keep variety of goods under one shed. It is usually divided into different sections like clothing, kids section, home furnishings, electronic appliances and other

household goods. In a departmental store a consumer can buy variety of goods under one shed.

Supermarket These stores are relatively large, low cost, low margin, high volume, self service operations designed to serve total needs for food, laundry and household maintenance products. Supermarkets earn an operating profit of only 1 percent on sales and 10percent on net worth. Convenience Stores These are relatively small stores located near residential area, open for long hours seven days a week, and carrying a limited line of high turnover convenience products at slightly higher prices than

departmental stores. Many such stores also have added takeout sandwiches, coffee and pastries. Off - Price Retailer These stores sell goods at low price with lower margins & higher volumes. These stores sell goods with deteriorated quality. The defects are normally minor. This target at the persons belonging to the lower income group, though some have a collection of imported goods aimed to target the younger generation. The company owned showroom selling the seconds products is a typical example of off - price retailer. Discount Store These stores sell standard merchandise at lower prices by accepting lower margins and selling higher volumes. The use of occasional discounts or specials does not make a discount store. A true discount store regularly sells its merchandise at lower prices, offering mostly national brands, not inferior goods.

In recent years, many discount retailers have traded up. They have improved decor, added new lines and services, and opened suburban branchesall of which has led to higher costs and prices and as some department stores have cut their prices to compete with discounters. Not only that, discount stores have moved beyond general merchandise into specialty merchandise stores, such as discount sporting goods stores, electronics stores, and bookstores. Catalog Showroom Catalog showrooms generally sell a broad selection of high-markup, fastmoving, brand-name goods at discount prices. These include jewelry, power tools, cameras, luggage small appliances, toys, and sporting goods. Catalog showrooms make their money by cutting costs and margins to provide low prices that will attract a higher volume of sales. Catalog showrooms have been struggling in recent years to hold their share of the retail market.

RETAIL SCENE IN INDIA

India has some sometimes been called a nation of shopkeepers. This epithet has its roots in the huge number of retail enterprises in the country totaling 12 million, about 78 percent of these are small family owned businesses utilizing only household labour. even among retail enterprises that hire workers the bulk of them hire less than 3 workers .Indias retail sector appears backwards not only by standards of industrialized countries but also in comparison to several other emerging markets in Asia and elsewhere. There are only 14 companies that run departmental stores and mere two with hypermarket operations. While the number of businesses operating supermarkets is higher (725 in 2007) most of these had only 1 outlet, the number of companies with supermarket chains was less than 10.

2.3 Major Formats of Retailing Major formats of In-Store Retailing have been listed in Table given below: Table 3: Format Branded Stores Description The Value Proposition range for a given

Exclusive showrooms either Complete owned or franchised out by a available manufacturer.

brand, Certified product quality.

Specialty Stores

Focus on a specific consumer Greater choice to the need; carry most of the consumer, comparison

brands available. Department Stores

between brands possible

Large stores having a wide One stop shop catering variety organized departments, clothing, of into products, to varied consumer

different needs. such as wares, toys,

house

furniture, appliances, etc. Supermarkets

Extremely large self-services One stop shop catering retail outlets. to varied consumer

needs. Discount Stores Stores offering discounts on Low prices. the retail high the price through and of

selling reaping

volumes economies

scale. Hyper-mart Larger than a Supermarket, Low prices, vast choice sometimes with a warehouse available appearance, including

generally services as cafeterias.

located in quieter parts of the city Convenience Stores Small located areas. Shopping Malls self-service in crowded formats Convenient location and urban extended hours. of shops operating

An enclosure having different Variety

formats of in-store retailers, available close to each all under one roof.
Source: India info line

other.

Non-store Retailing
It is another type of retail marketing. Different types of non-store retailing are given below: Direct Selling Direct selling which started centuries ago with itinerant peddlers has burgeoned into a $9 billion industry, with over 600 companies selling door to door, office to office, or at home sales parties. A variant of direct selling is called multilevel marketing, whereby companies such as Amway recruit independent businesspeople who act as distributors for their products, who in turn recruit and sell to sub distributors, who

eventually recruit others to sell their products, usually in customer homes. Direct Marketing Direct marketing has its roots in mail-order marketing but today includes reaching people in other ways than visiting their homes or offices, including telemarketing, television direct response marketing, and electronic shopping. Automatic Vending Automatic vending has been applied to a considerable variety of merchandise, including impulse goods with high convenience value (cigarettes, soft drinks, candy, newspaper, hot beverages) and other products (hosiery, cosmetics, food snacks, hot soups and food,

paperbacks, record albums, film, T-shirts, insurance policies, and even fishing worms).

2.4 Organized Retail Formats in India

Each of the retail stars has identified and settled into a feasible and sustainable business model of its own.

Shoppers' Stop - 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 Supermarket format Pantaloons and The Home Store - Specialty retailing Tanishq has very successfully pioneered a very high quality organized retail business in fine jewellery.

Figure 3:

Source: ksa technopak

Structure of the retailing industry according to ownership patterns:

An unaffiliated or independent retailer A chain retailer or corporate retail chain A franchise system A Leased Department (LD) Vertical Marketing System (VMS) Consumer Co-operatives

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 has set up the first 'discounter' in Hyderabad called the Giant. Now Pantaloon is following suit. 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) because of a price advantage per unit. Retailing in India is still evolving and the sector is witnessing a series of experiments across the country with new formats being tested out; the old ones tweaked around or just discarded. Some of these are listed in Table below. Table 4:

Retailer Shoppers' Stop Ebony

Current Format Department Store Department Store

New Formats Quasi-mall Quasi-mall, smaller outlets,

adding food retail Crossword Pyramid Pantaloon Subhishka Large bookstore Department Store Own brand store Supermarket Corner shops Quasi-mall, food retail Hypermarket Considering service Vitan Foodworld Supermarket Food supermarket Suburban discount store Hypermarket, express Glob us Bombay Bazaar Efoodmart Metro S Kumar's Department Store Super market Food super market Departmental store Departmental store Small fashion stores Aggregation of Kiranas Aggregation of Kiranas Cash and carry Discount store Foodworld moving to self

Source: India info line

Retailers are also trying out smaller versions of their stores in an attempt to reach a maximum number of consumers. Crossword bookstores are experimenting with Crossword Corner, to increase reach and business from their stores. FoodWorld is experimenting with a format of onefourth the normal size called FoodWorld Express. 2.5 Trends in Retail Marketing

At this point, I can summarize the main development retailers and manufacturers need to take into account as they plan their competitive strategies. In India the trends are mainly in three sectors. These sectors are: Trends in retail marketing

Urban

Suburban

Rural

1. New retail forms and combinations continually emerge. Bank branches and ATM counters have opened in supermarkets. Gas stations include food stores that make more profit than the gas operation. Bookstores feature coffee shops. Even old retail forms are reappearing: In 1992 Shawna and Randy Heniger introduced peddlers carts in the Mall of America. Today threefourths of the nations major malls have carts selling everything from casual wear to condoms. Successful carts average $ 30,000 to $ 40,000 a month in sales and can easily top $ 70,000 in December. With an average start-up cost test of only $3,000, push retailing dreams carts a help budding cash

entrepreneurs

their

without

major

investment. They provide a way for malls to bring in more mom-and-pop retailers, showcase seasonal merchandise, and prospect for permanent tenants.

2. New retail forms are facing a shorter life span. They are rapidly copied and quickly lose their novelty. 3. The electronic age has significantly increased the growth of non store retailing, consumers receive sales offers in the mail and over television, computers, and telephones, to which they can immediately respond by calling a toll-free number or via computer. 4. Competition today is increasingly intertype, or between different types of store outlets. Discount stores, catalog showrooms, and department stores all compete for the same consumers. The competition between chain superstores and smaller independently owned stores has become particularly heated. Because of their bulk buying power, chains get more favorable terms than independents, and the chains large square footage allows them to put in cafes and bathrooms. In many locations, the arrival of a superstore has forced nearby independents out of business. In the book selling business, the arrival of a Barnes & Noble superstore or Borders Books and Music usually puts smaller bookstores out of business. Yet the news is not all bad for smaller companies. Many small independent retailers thrive by knowing their customers better and providing them with more personal service. 5. Todays retailers are moving toward one of two poles, operating either as mass merchandisers or as specialty retailers. Superpower retailers are emerging. Through their superior information systems and buying power, these giant retailers are able to offer strong price savings. These retailers are using sophisticated marketing information and logistical systems to deliver good service and immense volumes of product at appealing prices to masses of consumers. In the process, they are crowding out smaller manufacturers, who become dependent on one large retailer and are therefore extremely vulnerable, and smaller

retailers, who simply do not have the budget of the buying power to compete. Many retailers are even telling the most powerful

manufacturers what to make; how to price and promote; when and how to ship; and even how to reorganize and improve production and management. Manufacturers have little choice: They stand to lose 10 to 30 percent of the market if they refuse. 6. Marketing channels are increasingly becoming professionally managed and programmed. retail organizations are increasingly designing and launching new store formats targeted to different lifestyle groups. They are not sticking to one format, such as department stores, but are moving into a mix of retail formats. 7. Technology is becoming critical as a competitive tool. Retailers are using computers to produce better forecasts, control inventory costs, order electronically from suppliers, send e-mail between stores, and even sell to customers within stores. They are adopting checkout scanning systems, electronic funds transfer, and improved merchandisehandling systems. 8. Retailers with unique formats and strong brand positioning are increasingly moving into other countries. McDonalds, The Limited, Gap, and Toys R Us have become globally prominent as a result of their great marketing prowess. Many more Indian retailers are actively pursuing overseas markets to boost profits. 9. There has been a marked rise in establishments that provide a place for people to congregate, such as coffeehouses, tea shops, juice bars, bookshops, and brew pubs. Denvers two Tattered Covered bookstores host more than 250 events annually, from folk dancing to womens meetings. Brew pubs such as New Yorks Zip City Brewing and Seattles

Trolley man Pub offer tasting and a place to pass the time. The Discovery Zone, a chain of childrens play spaces, offers indoor spaces where kids can go wild without breaking anything and stressed-out parents can exchange stories. There are also the now-ubiquitous coffeehouses and espresso bars, such as Starbucks, whose numbers have grown from 2,500 in 1989 to a forecasted 13,000 by 2001. And Barnes & Noble turned a once-staid bookstore industry into a fun-filled village green.

Chapter 3

RETAIL MARKETING IN INDIA

Retail marketing is the most important part of the entire logistics chain in a business especially in consumer related products. Without proper retailing the companies can't do their business. Retailing is the process of selling goods in small quantities to the public and is not meant for resale. Retail is derived from the French word retailer, meaning to cut a piece off or to break bulk. There are various ways of making goods available to consumers like: consumer Company to salesperson to consumer Company to consumers (online/ phone/ catalog ordering) Company to distributor to wholesaler to retailer to

These three are among the most common ways of making the goods available to consumers. But in India the three layered system of distributor, wholesaler and retailer, forms the backbone of the front-end logistics of most of the consumer-good companies. In this system the company operating on all India basis appoints hundreds of distributors across the country that supplies to various retailers and wholesalers. Wholesalers in turn can either directly sell in the market or can supply to retailers. The current retailing system prevalent across the country is highly fragmented and unorganized. Anyone with some money and some real estate can open a small shop

and become a retailer catering to the locality in which he opens the shop. There are a number of reasons behind this fragmented retail market. Some of the major reasons being: Poverty and lower literacy levels. Low per capita income. Savings focused and less indulgence mindset. Poor infrastructure facilities like roads etc. Restrictions on intra-state good movement. High taxes. No exposure to media. High import duties on imported goods. FDI in retailing is not allowed. Retailing is not considered as a business or industry by the government. Hitherto none of the business schools in India were offering specialized courses on retailing. Expensive supply chain. Besides this there is other reasons too, which led to stifling of growth of organized segment of retailing sector and which instead led to highly fragmented market.

Today in India we have more than 12 million retail outlets and most of then are family run and locally owned. There are very few nationally present retail stores. In India the process of buying and selling at these unorganized retail outlets, is highly characterized by bargaining and negotiations. But slowly with increasing influence of media and

urbanization the market is shifting towards organized segment. Seeing the huge market size of retail business in the country and the current level of organized segment, many players have jumped into the fray and many are waiting for the right opportunity to enter it. 3.1 Retailing in 1990s On account of the liberalization drive in the 1990s, several structural and demographic changes that are taking place are helping the industry to grow. The GDP has grown by 6.6percent in the last decade resulting in increased income levels and higher purchasing power for the population. Increasing literacy levels, increasing number of working women,

increasing urbanization, higher international travel by Indian population and increasing media penetration has raised aspiration levels of the population, resulting in demand for better shopping experience and larger variety of goods. India has close to 54percent of population below the age of 25, which translates into higher prospects for increased consumption levels in the future. Finally, interest rates have also declined in the past few years further propelling the consumption demand. These factors were the key drivers for the retail wave in the country. Notable among the early entrants were players like Shoppers Stop, Pantaloon, Ebony, Foodworld, Subhiksha, etc. Initially, the growth in organized retail was very slow and concentrated mainly in metros, with south India holding its ground as the pioneer in organized retail growth,

on account of the low cost of real estate. Due to the high investments required in the early stages and the fact that real estate was the key deciding factor for success of stores, real estate developers have been the major players in the industry (see Table). Table 5: Sponsors Group Rajan Raheja Real Retail Business Estate Globus Chain of departmental stores Shoppers Stop Chain of

Developer K, Raheja - Real Estate Developer

departmental stores Hiranandani Developer Tata Diversified Business House Real Estate Haiko supermarket, Loft shoe

stores and Hakone mall. Westside chain of department stores

DS Group - Real Estate Developer RPG Diversified Business House

Ebony - chain of department stores Foodworld supermarkets, Health & Giant Glow

hypermarkets,

beauty and health stores. DLF Real Estate Developer ITC - Diversified Business House DLF malls Wills Sport Chain of apparel stored.
Source: Fitch

In the early 1990s, as the players were lower down on the learning curve many faltered in their models, and growth of the industry remained slow. The second half of 1990s saw several players making losses and exiting

from the business. The worst years for the industry were 2000 and 2001, as the stock market downturn, which reduced customer confidence and spending, had a direct impact on the performance of the industry. The industry recovered starting 2002. It now appears the efforts and learnings of the players in the last decade are beginning to pay off; the organized retail industry has established firm roots and is beginning to grow. 3.2 Present Retail Scenario In India Retail experts find Indian industry promising Retail sales touch Rs. 30,000 crore in 2005 Mall Mania: The developing mall culture in India Emergence of region-specific formats Emergence of discount formats Entry of international players Retail experts find Indian industry promising The retail movement in India has acquired the critical mass that is required for rapid acceleration in terms of industry growth as well as geographical spread. The Indian retail industry can no longer be called nascent. The spread of super stores to the northern cities such as Delhi, Chandigarh, Jaipur and Kolkata is evidence of the fact that organized retailing in India has emerged from its southern bastion.

The retailing boom is being driven by increased expectations as well as changing shopping behavior of the urban Indian consumer. With the increasing number of nuclear families, working women, greater work pressure and increased commuting time, consumers are looking for convenience. And, convenience is defined as having everything under one roof, longer hours and multiplicity of choice. On the supply side, the current inefficient supply chain in India, particularly for food items has led a few players to consolidate their operations to take advantage of economies of scale and match consumer expectations in terms of delivery as well as space. So, we have a situation where both demand and supply side dynamics are fuelling the growth of organized retailing in India, although improvements in the supply chain are yet to fully match with consumer expectations. The future growth need not necessarily come only from the big metros, where there already exists a good retail network. The fact that big Indian retail chains are moving into places like Indore or Chandigarh is an important indicator of future growth. For the Rs. 5000-crore organized retail industry it is, perhaps, time to tap the relatively smaller cities. Retail Sales to touch Rs. 30,000 Cr. by 2005 Retail is exciting, and action in the sector promises to hot up. KSA a leading international consultancy believes the organized sector will grow six folds to almost Rs 30,000 crore by 2005. The share of organized sector in total retail sales will grow from one per cent now to six per cent by 2005.While projections can be slippery, hard facts point to exciting growth ahead for this sector.

According to KSA, organized retailing is focusing on only SEC-A cities, Indias 23 largest cities. That is where a large portion of the country's urban population exists. Today 82 per cent of organized retailing comes from the top six cities and 12 per cent from the next four. KSA says the top 10 cities provide 94 per cent of organized retail sales in India. By 2005, KSA projects the top six cities will account for 66 per cent of total organized retailing and the next four for 20 per cent. The top 10 cities will account for 86 per cent of organized retail sales. There could be variations in growth patterns in different segments. The second half of the top 10 cities will provide large growth for food and groceries, while the top six would still be the growth centers for consumer durables, believes KSA. The spread of organized retailing is unlikely to be a national phenomenon yet. This appears to be the case so far. South India, particularly Chennai, Hyderabad and Bangalore, have seen the emergence of chain stores or large format stores. While garment stores have been around for

sometime, other segments like food and groceries, consumer durables and even books and music have witnessed the emergence of organized players in large cities in South India. The lack of trained manpower or alternatively the tremendous scope the sector has to provide

employment is another issue. Mall Mania: The Developing Mall Culture in India Modern malls made their entry into India in the late 1990s, with the establishment of Crossroads in Mumbai and Ansals Plaza in Delhi. By early 2001, several mall projects were announced. According to market estimates, close to 12 million sq. ft. of mall space is being developed across several cities in the country, of which 10 million sq. ft. is expected

to be operational by end of 2003 (see Table below). With this, rentals for retail properties have shown a marked decline, which has brought down the break-even levels of the retail projects. Moreover, retailers would now have access to retail-specific properties, which will increase their efficiencies. Table 6: Mall Development in India

Mall

Location

Rate / Sq. ft.

Crossroads Ansals Nirmal Lifestyle Runweals Mall Karnavat Mall Raheja Mind space Jogs Mall Cable Corporation Ansals Sahara MGF Malls Metroplitian & Plaza DLF Shipra Forum

Tardeo, Mumbai South Ex, Delhi Mulund, Mumbai Mulund, Mumbai Thane, Mumbai Malad, Mumbai Andheri, Mumbai Borevali, Mumbai East Delhi Gurgaon Gurgaon

225-250 175-200 75-90 75-90 65-85 60-80 55-75 55-75 75 50-70 65-85*

Gurgaon Noida KolKotta

65-85 80-180 100

City Center Rave 3 Inox Forum

KolKotta Kanpur Baroda Bangalore

55 45-55 75 70-90 70

Spencers Plaza Phase Chennai III Indore, Nasik and Jaipur Malls Hyatt, Mumbai & Leela, Phoenix Malls Lower Parel, Mumbai

45-55

175-300

100-125

*average for the metropolitian is Rs. 60 per sq. ft..

source: Chesterten Meghraj. Industry Reports

Till some time back, there were only few international style shopping malls in India --Spencer in Chennai, Crossroads in Mumbai, Ansals Plaza in New Delhi and Srirams Arcade in Kolkata. By the end of 2004, that number jumped to many. It looks like a virtual stampede, major players with a cumulative investment of Rs 375 crore are set to change cityscapes across India. In the next one year, close to 40 lakh square feet of retail space will be developed. In three years, this will rise to 70-lakh sq ft. As the retail industry evolves, consumers want more variety before making their purchase decision. A study on consumer outlook suggests that over 80 percent of consumers want a wide range of products at hand while shopping. This signifies that people are finally ready for multi-option complexes.

Many old-time corporates are seriously considering using their idle assets. It makes sense for landowners to develop it and keep the returns rather than sell it outright or even lease it, especially when there is opportunity here. It is perhaps the best way to use an idle real estate asset. The limited kitty of brands has yet another significant knock on effect on the typical size of Indian malls. In the US and South-East Asia, malls are as large as 50 lakh sq ft. Spencer is by far the largest mall in India - it occupies 7 lakh sq ft and even that is dwarfed by Asia's largest mall, the 4-million sq ft mega mall in Malaysia. Even the 26 malls that are being planned are likely to measure between 50,000 sq ft and 2 lakh sq ft. The Indian mall cannot offer too many choices in terms of brands. So, developing a very large mall can never be sustainable. There's a flip side though -malls even as small as 80,000 sq ft, like Shopper's City in Kolkata or the Esplanade Mall at Kochi, can be sustained. Emergence of Region-Specific Formats For the first time in 10 years, the industry is witnessing the development of region-specific formats. With organized retail penetrating into B class towns, retailers have started differentiating in the sizes and formats of stores. For example, in departmental store format, while most A class cities and metros have larger stores of 50,000 plus sq. ft. sizes, stores in B class towns have stabilized in the 25,000-35,000 sq. ft. range. Most players have started operating these two formats across various cities, which has helped them to standardize the merchandise offering across the chain.

Emergence of Discount Formats Larger discount formats, popularly known as hypermarkets, are now emerging as major competitors to both unorganized and organized retailers. Penetration of organized retail into the lower strata of income groups and consumer demand for increased value-for-money has improved the prospects of these formats. These formats span across the entire range of merchandise categories. Big Bazaar, promoted by Pantaloon and Giant, promoted by the RPG Group, are examples of this format. Entry of International Players A large number of international retailers have evinced interest in India, despite the absence of favorable government policy for foreign players (see Table below). A number of the major brands have entered the country through licensing agreements with Indian players to capitalize on the opportunities available in the sector. Table 7: International players International Players Retail Ventures In India

Landmarc Group, Dubai Metro, Germany Shoprite, South Africa Nanz, Germany Marks & Spencer, UK Mango, Spain

Lifestyle Chain of Departmental Stores Hypermarket Supermarket, Hypermarket Supermarket Apparel Retailer Apparel Retailer

McDonalds, USA Dominos USA Tricon Restaurant, USA

Source: Industry Reports

Food Retailer Food Retailer Food Retailer

Chapter 4

INFORMATION TECHNOLOGY IN RETAIL

Over the years as the consumer demand increased and the retailers geared up to meet this increase, technology evolved rapidly to support this growth. The hardware and software tools that have now become almost essential for retailing can be divided into 3 broad categories: Customer interfacing systems

Bar coding and scanners Point of sale systems use scanners and bar coding to identify an item, use pre-stored data to calculate the cost and generate the total bill for a client. Tunnel Scanning is a new concept where the consumer pushes the full shopping cart through an electronic gate to the point of sale. In a matter of seconds, the items in the cart are hit with laser beams and scanned. All that the consumer has to do is to pay for the goods.
Payment

Payment through credit cards has become quite widespread and this enables a fast and easy payment process. Electronic cheque conversion, a recent development in this area, processes a cheque electronically by transmitting transaction information to the retailer and consumer's bank. Rather than manually process a cheque, the retailer voids it and hands it back to the consumer along with a receipt, having digitally captured and stored and image of the cheque, which makes the process very fast.

Internet

Internet is also rapidly evolving as a customer interface, removing the need of a consumer physically visiting the store. Operation support systems

ERP System

Various ERP vendors have developed retail-specific systems which help in integrating all the functions from warehousing to distribution, front and back office store systems and merchandising. An integrated supply chain helps the retailer in maintaining his stocks, getting his supplies on time, preventing stock-outs and thus reducing his costs, while servicing the customer better.

CRM Systems

The rise of loyalty programs, mail order and the Internet has provided retailers with real access to consumer data. Data warehousing & mining technologies offers retailers the tools they need to make sense of their consumer data and apply it to business. This, along with the various available CRM (Customer Relationship Management) Systems, allows the retailers to study the purchase behavior of consumers in detail and grow the value of individual consumers to their businesses.

Advanced Planning and Scheduling Systems

APS systems can provide improved control across the supply chain, all the way from raw material suppliers right through to the retail shelf. These APS packages complement existing (but often limited) ERP packages. They enable consolidation of activities such as long term budgeting, monthly forecasting, weekly factory scheduling and daily

distribution scheduling into one overall planning process using a single set of data. Leading manufactures, distributors and retailers and considering APS packages such as those from i2, Manugistics, Bann, Mercial incs and Sterling-Douglas. Strategic decision support systems

Store Site Location

Demographics and buying patterns of residents of an area can be used to compare various possible sites for opening new stores. Today, software packages are helping retailers not only in their locational decisions but in decisions regarding store sizing and floor-spaces as well.

Visual Merchandising

The decision on how to place & stack items in a store is no more taken on the gut feel of the store manager. A larger number of visual merchandising tools are available to him to evaluate the impact of his stacking options. The SPACEMAN Store Suit from AC Nielsen and Modacad are example of products helping in modeling a retail store design.

Chapter 5

FOREIGN TOUCH IN INDIAN RETAIL

The chief of Marks & Spencer has been making trips to India over the past year. Global investment bank Warburg Pincus is awaiting the Indian government's clearance to pick up a 25.1 per cent stake, worth $13 million, in Shoppers Stop. Dairy Farm International and Jardine Matheson are present here, through tie-ups with the RPG Group. Fast food major McDonalds have already made a dent in the marketplace and in Indian palates. The Dubai-based Landmark group is making its presence felt in Chennai through its Lifestyle mega store of over 30,000 sq ft. Landmark is owned by Mukesh Jagtiani, a non-resident Indian. Lifestyle International Private Limited, formed in India recently, is a wholly-owned subsidiary of the Mauritius-based Lifestyle International which, in turn, is wholly-owned by the Landmark group. In India, according to Lifestyle International's marketing manager, Roshan Mathew, the target is to "have 12 to 16 stores by 2005." These stores will sell all lifestyle products, barring furniture, under one roof. Immediate plans include opening a 46,000 sq ft store in Hyderabad, which Mathew terms "The Millennium Store". The Hyderabad store will have additional sections for books and music, unlike the Chennai store. Besides, as soon as Lifestyle gets a keenly awaited Foreign Investment Promotion Board clearance for a Rs 100 crore investment, it will create outlets in Bangalore, Pune, Mumbai, Delhi and Ahmedabad.

The Hong Kong-based Dairy Farm International, a 125 year old retail major with around 1,300 outlets across nine countries, recently converted its technical tie-up (since 1996) with the RPG group's Spencer & Company for Foodworld into a 49:51 joint venture. The new venture is called Foodworld Supermarkets Limited. DFI also has a 50:50 joint venture with the Indian group in RPG Guardian. DFI is the retail arm of Jardine Matheson. In Western markets, a familiar sight is the McDonalds golden arch. In India too McDonalds has maintained its unique selling proposition -providing the same quality of food and the same ambience as anywhere in the world. Its raw material requirements are totally out-sourced. But what it has taken care of is world class quality in all its raw material sourcing, with specifications ensured strictly. The chain has been smart enough to tailor its products to the Indian environment, adding fare for the large number of vegetarians who love fast food, and avoiding certain beef and pork in deference to social sensitivities. In a market place where Kentucky Fried Chicken failed to make an impact, McDonalds seems to be finding its place slowly but surely.

Chapter 6

FACTORS THAT WOULD MAKE OR BREAK THE INDUSTRY

6.1 Issues and Challenges Facing Retailing Despite the size and the phenomenal potential that exists, retailing is among the lesser-evolved sectors of the Indian Industry. Retailing as an industry is yet to be recognised in India. The policy environment is currently seen to be unfavorable to organized retailing. Given the huge investments that need to be made, a look on the Foreign Direct Investment Policy in the sector might be needed. Complex sales tax rates, octroi and excise structures are major deterrents. Other impediments to growth of retail include the bureaucracy, inflexible labour laws and multiple licensing requirements. Real estate in India is also not geared to facilitate organized retailing. The various crumbling issues affecting retail trade are discussed in detail as under: Restrictions on Foreign Direct Investment There really is no point in playing a cat and mouse game here. It is not helping anybodys case and that includes domestic industry and consumers too. The Indian economy is highly regulated and the most significant regulation is the restriction of foreign ownership. Globally FDI is a popular source of funding for any business activity but prevailing laws of land do allow FDI in retailing. A strong FDI presence in retail sector is expected to not only boost the retail scenario, but also act as a driving force in attracting FDI in

upstream activities as well. This will be more prominent in food processing and packaging industries because many large retail chains also promote their own brands by way of backward integration/contract manufacturing. The status of organized retailing in some South East Asian countries that allowed FDI in retailing has been given in Table below: Table 8: Country Organized Retailing Malaysia Thailand Philippines Indonesia South Korea China India 50 percent 50 percent 35 percent 25 percent 15 percent 10 percent 2 percent Traditional Retailing 50 percent 50 percent 65 percent 75 percent 85 percent 90 percent 98 percent

Source: economic times There are indications that finally that dismantling of barrier is around the corner because worlds largest retailer wants to enter India as they consider India, Russia, and China to be the big bets. Wal-Mart people want to increase its buying from India to US$ 5 billion in fact recently it signed a deal with liberty footwears of India to source and stock its range in their stores and talks with dairy major AMUL are also in advanced stages. Also Britains largest retailer Tesco also wants to enter India and has already established an IT-BPO centre in Bangalore its 1st outside UK.

So, the pressure is building up and in view of the demands made by industry and the need to boost the retail trade, the government is actively considering removing the restrictions. A recent note circulated by the Ministry of Commerce has proposed permission for FDI up to 100 per cent in retail trade subject to government approval on a case-to-case basis. However, this permission, if it is given, will be with lots of strings attached. Besides following rules on minimum capitalization, the foreign entrants will be expected to neutralize the outflow of foreign exchange (repatriation of dividends) by way of export earnings on a year-to-year basis. The erstwhile NDA government announced in April 2004 that it will be allowing 25 percent FDI in select retail sectors. The final permission was awaited but with the change of government at centre and communist parties having a decisive role in new electorate, all aspects will be appraised afresh and the wait might prolong but sooner or later it has to come. The biggest opposition to allowing 100 percent FDI is the feared exit of the small retailers. Currently, moves are on to counter these

apprehensions and the players are keenly awaiting the final decision from the Government. Land and property Laws There is a shortage of good quality retail space and rents are high for what is available. Compounding these shortages are the following problems.

One of the drivers of property prices is the high demand for space in the cities. This demand is exasperated by the flow of black money (undeclared for tax purpose) that is generally invested in the property sector.

Only Indians can own property in India, which complimenting the restrictions placed on FDI, restrict the entry of foreign players.

Stamp duties on property deals are significant (12.5percent in Gujarat and 8percent in Delhi). The lease alone can cost up to 610 per cent of sales while it's just 3-5 per cent globally.

The initial urban planning of cities was done with smaller plots in mind which along with rigid building and zoning laws make it difficult for procurement of retail space.

The urban land ceiling act and rent control acts have distorted property markets in cities, leading to exceptionally high property prices.

The presence of strong pro-tenancy laws make it difficult to evict tenants and make people reluctant to give real estate on rent. The problem is compounded by problems of clear titles to own

Labour laws The labour laws instituted to protect store workers are not flexible enough to support the modern formats of retailing. These rigidities in the law constrain the operations of modern- retail outlets.

Working hours are restricted, with shops required to close one day of the week and the hiring of part-time employees is difficult, however in Bangalore, the State Government has permitted flexibility in the use of labour without doing away with the associated benefits accruing to it. Taxes

Corporation tax is 38percent and this would be even higher at 45percent for a foreign business.

Even essential basic foodstuffs are taxed (8percent on milk). The varying sales tax rate across states make supply chain management an even more difficult task for retailers.

With the expected introduction of Value Added Tax (VAT) in April 2003, some of the sales tax anomalies in the supply chain could get correct over a period of time. However, retailers might also be additionally burdened as given below:Changing tax structure: Retailer margins to come under VAT net In the tax regime contemplated from April 1 2005, VAT will be imposed at every stage between the manufacturer and the final consumer. Thus, margin payable to the distributor and the retailer will also be taxed. As retailers and wholesalers would be taxed under VAT, their margins will decline. Companies, in turn, will come under pressure to increase trade and distributors margins to the extent of the tax being paid by them, thus pushing up the cost of the product. The MRP could therefore increase in order to neutralize the impact of VAT on margins. Goods with a long distribution chain between the manufacturer and final consumer, such as FMCG items and consumer durable, would be the worst affected.

Table 9: Roadblocks in Retail Development

Factors Barriers to FDI Description FDI not permitted in pure retailing Franchisee arrangement allowed Lack of Industry Status Structural Impediments Lack of urbanization Poor transportation infrastructure Consumer habit of buying fresh foods Administered pricing Restricted retail growth Growth of small, one-store formats, with unmatchable cost structure Wastage of almost 20%-25% of farm High Cost of Real Estate Pro-tenant rent laws Non-availability of government land, zoning restrictions Lack of clear ownership titles, high stamp duty Disorganized nature of High land cost owing to constrained supply produce Government does not recognize the Industry Restricted availability of finance Restricts growth and scaling up Lack of awareness of Indian consumers Limited exposure to best practices Implications Absence of global players

Difficult to find good real estate in terms of location and size

(10%)

transactions

Supply Chain Bottlenecks

Several segments like food and apparel reserved for SSIs.

Limited product range Makes scaling up difficult High cost and complexity of sourcing & planning

Distribution, logistics constraints restrictions of purchase and movement of food grains, absence of cold chain infrastructure

Lack of value addition and increase in costs by almost 15%

Complex Taxation System

Long intermediation chain Differential sales tax rates across states Multi-point octroi Sales tax avoidance by smaller stores Added cost and complexity of distribution Cost advantage for smaller stores through tax evasion

Multiple Legislations

Stringent labor laws governing hours of work, minimum wage payments

Limits flexibility in operations Irritant value in establishing chain operations; adds to

Multiple licenses / clearances required

overall costs

Customer Preferences

Local consumption habits Need for variety Cultural issues

Leads to product proliferation Need to stock larger number of SKUs at store level

Increases complexity in

sourcing & planning Increases the cost of store management

Availability of Talent

Highly educated class does not consider retailing a profession of choice

Lack of trained personnel Higher trial and error in managing retail operations

Lack of proper training Increase in personnel costs

Manufacturer s Backlash

No increase in margins

Manufacturers refuse to

dis-intermediate and pass on intermediary margins to retailers

Source: Market Participants, Fitch

6.3 Factors that would lead to growth

Increasing growth in disposable income. Increasing demand of products by consumers. Changing life styles. Better consumers. Relaxation of a number of regulations by government. Rethinking on existing Real estate laws (like governmental plans for ULCA). Restructuring in Tax regime (like uniform sales tax for all states). Increased Government. Future of retailing Through this project various topics have been presented which reflect the current state of the Art and Science of retailing. To look beyond the present to what it will be like in ten, fifteen or more years is a difficult endeavor at best. It is important, however, for retailers to look to the future since the store which plans for the future increases its chances of being in business at that time. In examining the future, a care full study of trends can be quite helpful. Trends in population, store development, merchandising, personnel, promotion, customer service, and retail control are examined. It should investment and focus on infrastructure by product and shopping options available with

be

noted that retailing is dynamic. Predicting its future is no easy

assignment. Trends in population: Retailing needs people to sell to. Where will these people be 20 years from now ? Will they have the ability to buy ? At the 1977 National Retail merchants Association Annual Convention, William M. Salzer, a retail consultant, examined these and other economic and demographic questions which should affect retailers in the years to come. Among the ideas presented were. The population of U.S. In 1980 is projected to be 222.8 million and 234.1 million in 1985, or an average increase of 2.1 million per year. The age mix of the population is expected to increase most in the 20-34 age groups during the period 1975-1980. Teenager and middle age markets are expected to experience decreases during the same period. Family size is on the decline. In 1976, the average household consisted of 2.89 persons, down from 3.14 persons in 1970 and it is still declining. Demographic characteristics such as these illustrate the growth

potential. The trend here is clear. customers of the future will be mobile, will be adequate financial resources, and will be many in number. Trends in store development: Where will the store of the future be located? What type store will they be?

One trend which is taking place is a move back to the central business district. In many larger cities, and increasing interest is being seen in the downtown areas. Such areas are receiving more interest as good retail locations in the suburbs become harder to find. Store development will also be influenced in the future by developments in the energy area. The regional shopping center must draw people from a large geographic area. If the gasoline supply does decrease, such centers will suffer as shopper will be force to buy closer to home. The large center serving 100 square mile trade area could become a thing of the past if the means to transport customers to the center becomes too expensive or nonexistent. The interior of the store should become more flexible in the years to come. Modern building will find all interior walls to be free standing and quite mobile. New materials will open up new avenues for the retailers to pursue in terms of wall, floor, and ceiling treatments. As for layout, more use of free-flow patterns should result as retailers continued the present trend to personalize their store and the departments within them. Trends in promotion: Advertising, sales promotion and retail display are areas where much improvement is possible for many stores. For the major chain and large independents, more use of television including cable will be seen. Catalogues sales will also become more popular as store seeks to serve fringe areas in a more efficient manner. Displays will continue the trend already set where they reflect the thinking if the target market, whether that thinking be traditional or unconventional.

For the smaller store the greatest change will be found in taking promotion more seriously. The smaller store due to necessity, will begin to budget its promotional effort, will become more aware of the need for continuity in promotion, and will begin to view promotion as are necessary part of its total marketing program- things which are already done by the larger stores. The future will also find EFTS (Electronic Funds Transfer Systems) in use in stores as customers learn to accept the idea. Such a service will reduce bad-check losses for retailers while providing the equivalent of branch within the store for the customer. More leisure time services such as classes and schools to teach everything from charm to cooking will be offered as a means of building traffic. Trends in retail control: In the future, more and more emphasis will be placed on retail control as a means of improving the profitability of the store. The problem of bad checks and bad credit cards may be overcome thanks to EFTS. As for the customer and employee theft, techniques will be borrowed from space age technology to use in this area. Operations control may be the area which holds the most promise for the future of retailing. There is a growing realization among all types of retailer that sales gains can be generated internally through increase productivity that this may be a important-as well as profitable-means of growth than expansion though physical growth. The store of the future will be more cost conscious. Consumerism, competition, and regulation have joined forces to make the retailer more receptive to the needs of the market place. Greater use of retail auditing procedure will be seen in the years to come as retailers strive to make their operation serves the needs of the consumer of the

more efficient way possible a store which meets this objective should be around which the future becomes the present. 6.4 Vision 2010 The past 2-3 years have seen a number of developments in the retailing business in India. The entry of corporate houses like RPG, Tatas and Piramals has increased the capital availability in the market. Bigger players like Shoppers Stop are in a position to take advantage of their sizes in dealing with the manufacturers. Despite a slowdown in the economy, customer queues at the stores are not decreasing. Retail sector is bound to grow in the coming years. But how much and in what direction are the questions that need to be evaluated. Various agencies have made different estimates of the size of organized market in 2010. The one thing in common amongst these estimates is that the Indian organized retailing industry will be very big in 2010. The status of the industry will depend a lot on external factors like Government regulations and real estate prices, besides activities of the retailers and demands of the customers. Based on the analysis of present trends, and development of retailing, perspectives and

snapshots of organized retailing, as it would exist in 2010 are: Investment will increase Retail sector will see huge investments in the next 4-5 years. Newer chains will come in and the present players will increase their penetration. By 2005, the established players would have reached saturation levels in metropolitans and will shift the focus of their investments to other Class 1 cities. By 2010, there will be little difference

between the metros and the next 20 cities (the present million plus cities). However, the investments would largely be private investments, or at best secondary markets. This will happen because expansion will happen through investments by business houses that will not sell their stakes. If any purely retailing company exists, it will be an exception. However, if the ban on foreign players holding a controlling stake is lifted, the sector could see drastic movements. The entry of foreign players will undoubtedly result in buying and selling and some businesses might withdraw their money in anticipation. The entry of foreign players, if allowed, will not only affect ownership, but also change the basics of business. Huge investments in stores and their supply chains can transform the entire scenario. But the lifting of ban is a policy issue that cannot be predicted, and can only be decided by the government. Demographics In the next 10 years, India population is expected to grow by about 14 per cent. But this increase will not be even. Important trends that will affect retailers are listed below. The number of children (0-15 years) will remain stable at 30 million: This will mean a lesser growth for toys, games and some apparel segments. But given the current nascent stage of the growth, these sectors will still offer high growth rates. The number of people in 40-60 years of age will go up by 30 percent: Sales of cosmetics, skin care, hair dyes, and other youth inducing products will rise. More consumer resources would be spent on

retirement planning and saving for retirement. Home improvement and financial services firms would benefit from this trend. .The number of households will increase by 25percent: This would lead to a higher growth in the household-decor items vis--vis personal items as apparel and fashion accessories. Regional differences will stay

Although a few players will be able to form pan-Indian retail supply chains; the retail market is unlikely to be a single entity. For example, food retailing in Chennai, Kolkata and Chandigarh is vastly different in terms of shopping habits and consumer tastes. Many such differences will remain. Though a few national retail chains will develop, they would have to coexist with strong regional players, who would excel in their

understanding of the customers and strong brand names. The national players would primarily be is sectors like Apparel, Fashion, Food and Music. Importance of local supplies for grocery sector would ensure the regional chains would reign supreme in these sectors. The key to success for national players will to maintain the efficiencies that come from their large-scale operations while retaining the ability and the flexibility to satisfy different needs of different consumers. However, organized retailing, in some cases, will change and harmonize consumer habits, purchasing patterns and consumer behavior.

McDonalds and Barista have already been successful in doing this Retailers would adapt more than one format.

Today, internationally all top-retailers (except Kmart and Aldi) operate 34different formats, with companies like Metro AG operating 13 formats. This diversity of formats allows the company to utilize its brand value across different segments and categories of customers. Signs of such a development are visible in India as well. A movement towards Class-I cities necessitates modification of operating format5s to suit different needs. By 2010, top retailers would be operating at least 34 formats. The biggest challenge that the retailers will have to face would be of maintaining different brand images, and though clashing images would be formed, a few retailers would be able to use Brand Extensions to establish different images in different cities. Dual focus on costs and time With more dual income families consumer ability to spend will increase, but the time available for shopping will go down. Customers will become more demanding in terms of rapid and friendly service. Retailers would develop shopping as an entertaining experience, but the more successful ones will be the ones who provide faster service. On the other hand, increasing competition would push the prices down. Efficiencies in supply chain and economies of scale would allow retailers to reduce their prices without compromising either on the shopping experience or on their own profitability. 24 hours retailing Time stressed consumers will also ask for round the clock retailing. As these consumers will be ready to pay a premium for service at odd

hours, the timings of shopping will have to adapt to needs of these consumers. A number of 24 hours retail stores would emerge to cater to this need. The assumption here is that the current administrative restrictions on running shops at nights will be lifted. It is expected that in the face of increasing demand from both the consumers and the industry foray, regulations regarding retailing will be eased. Small retailer will coexist Within a decade; large organized retailers would be controlling a substantial portion of the retail trade. Yet, it is not to say that small, independent and unorganized retailers will disappear in large numbers. They will survive on their core strengths of personal relations with customers and closeness to residences. The experiences of South East Asian countries has been that even after 10 to 15 years of allowing FDI in retailing, unorganized retailers still control a sizeable chunk of the retailing market. The Indian experience in retailing is expected to be no different. However, to compete with the big retailers on price, small retailers will form cooperatives for purchasing, just as the once in France, Spain and Italy have already done. This trend has also started in Delhi, and is only expected to increase.

The balance of power between retailers and manufacturers will shift towards the retailers. The bigger retailers would be able to seek the lowest prices, require their suppliers to assume greater business risks, and collaborate with suppliers to achieve overall cost reduction in their operations. Scale economics would help in operating optimized supply chains and logistics network with investments in information technology enabling process efficiencies and effectiveness. Increased volumes would

enable investments in specialized equipment for transportation of goods. Retailers with large chains would negotiate and get central procurement but local dispatches from their supplier

RETAIL MARKETING SURVEY

There are many factors that affect the flow of visitors to organized retailing outlets and to attract a consistent volume of traffic it is imperative that the retailers consider them and to ensure that it works. In order to understand what consumers feel about the same a study was conducted among different age groups, sex and income. This gave an insight into the mind of the shoppers. The data revealed that a holistic approach that gives due importance to each of these factors would be helpful in making these ventures successful Research Design To know the factors that attract walk ins to organized retail outlets and to make the best use of that to increase the flow of walk-ins it was necessary to get the feedback from shoppers too. For this it was decided that the right mode of approach could be a combination of surveys which is a mix of exploratory and descriptive research. Construction of questionnaire Questionnaire with closed ended questions was used as the respondents had to give a specific answer to the questions. This also made it easier for the respondents to give their opinion without too much time.

Sampling procedure The questionnaire was distributed among fifty respondents who were from different age groups and income brackets. The procedure for sampling involved convenience and judgment. The former when the researcher selects the most accessible population for e.g. here it could be the college going youths and the latter means member who are good prospects for accurate information which for this study could be visitors at a store.

Research Methodology
Objective of the study 1. To understand the factors that influence shoppers to visit organized retail outlets. 2. To find out ways to leverage these factors so that there is an increased flow of walk-ins into these organized retail outlets. Pilot study Pilot study is the preliminary study which is a prelude to the main work undertaken to have an understanding of the overall business scenario. This is done by studying the available literature related to retailing in India. List of the information and secondary data used Various articles on retailing in India published in magazines, newspaper supplements and editorials were used to provide a basis for this study. Scope of the study This study depended on the authenticity of the secondary data available and that of the respondents. There has been an apparent bias towards the age group of that can affect the finding. Retail Stores Surveyed: Ebony Being a complete and grand departmental store Ebony appears to be one amongst the top priorities when thought of departmental stores.

The store offers a huge range of products, in order to meet the needs of most of the segments of the society, including all high-class brands and fabricated products, most of which are high priced too, and become affordable by the middle income group only in the season of discounts and offers, thereby giving an opportunity to the store to tap more segments into its customer category. This also brings me to conclude that ebony targets mostly the elite top class of the society, who are fairly well educated, and have a taste and preference for good quality stuff, and who belongs to the upper or upper-middle classes of the society. Some of the exclusive brands for different categories of apparels available in the store are Zodiac, Park Avenue, Rock Port, Indigo Nation etc. for shirts, TNG, Parx, Lee Cooper etc. for jeans, Nike, Adidas, Bentley, Liberty, Revlon. Shehnaz, LOreal, Swatch, etc. Visiting one of the Ebony outlets in Delhi, i.e. at South-Extension, I could identify one thing which is not common among any other departmental store is the existence of an exclusive section for books and CDs both of educative and leisure interests. As per the manager, Mr. Sanjeev Sood (branch manager), and also through my observation I could conclude the Ebony indulges in largescale advertising in order to tap its (target) customers. It also announces discount sales and other promotional offers at least twice to thrice in a

year, in order to induce the non-regular buyers to come to the store, having an implicit motive of stock clearance too.

Besides this, the store also takes care of it loyal customer base, by sending them greeting on important days of their own lives, as that of their B Days, Anniversaries, etc. which acts as a EVP (Extra Value Proposition), to the store. The sales staff is trained in such a manner so as to assist and help the customers while buying, and not interfere or disturb them when they are in the process of making a purchase. Shoppers Stop Pioneers in organized retailing in India, Shoppers' Stop Ltd., was started by the Rahejas, with the very first outlet being in Mumbai (a retail area of 4500 sq. ft.) in 1991. It now holds around 1, 95,000 sq. ft. of retail space from Shoppers' Stop alone. It also has chain of stores in other formats, with Cross words and Shoppersstop.Com under its wings Shoppers' Stop, is a specialty chain of garment and accessory retail stores with outlets in Mumbai, Bangalore, Hyderabad, Jaipur, and New Delhi. Crosswords is a specialty chain of books, music and gifts retail stores with outlets in Mumbai, Bangalore, Ahmedabad, Delhi, Pune, Nasik, Goa and Vadodara. Shoppersstop.Com (India) Pvt. Ltd, is 100percent subsidiary of Shoppers' Stop Ltd. It has been floated with the intention of breaking down location barriers and helping customers from around the world to "Feel the Shoppers' Stop shopping experience", online. And as of now the management says they plan to have 30 stores in India by 2005, and increase their private label contribution from todays 12 percent to 20 percent by 2001 end. The store sells a total of 300 brands (including fragrances

and cosmetics) and 52 product categories, employing 935 people across India. The annual turnover for the year ending March 2000 was around 151 crores. They offer their customers a range of the finest national and international brands, and a quality and price assurance that is backed by their guarantee, stamped on every bill: "We are responsible for the goods we sell." Ask the staff what their USP is, and the reply comes lightening quick : Quality merchandise, supported by clean and ambient surroundings, and warm and welltrained customer care associates. Well-trained is right. In house training is a must for every Shoppers Stop employee, and senior executives have to attend retail management lectures at Narsee Monjee Institute. As per the Asst. Marketing Manager Mr. Pransanjeet Dutt Barua, at Shoppers Stop (Ansal Plaza), what makes Shoppers Stop different from other stores is the entire experience of shopping, that a customer goes through while shopping at Shoppers Stop. To ensure its reach to its target audience Shoppers Stop engages in advertising on the net, through news papers, TV, radio, banners, hoardings, outdoor displays etc.

BigJos One of the top stores on the priority list of a Delhi based shopping spree seems to have top of the mind awareness, due to successful advertising and cashing on the credit earned over the years, in terms of good quality merchandise available in large variety.

Bigjos started under the aegis of JAINSONS outfit is today a standard, that the connoisseurs of fine taste swear by from mens, womens, kids fashion wear to every conceivable fashion accessories to the most wanted home accessories. It has that entire customer needs in our everyday life. Existing on 2 prime shopping locations - South Extension and C.P. adds to its advantages to capture its target customers, who, belong to the relatively high-income category. The store deals mostly in fabricated products, and sells mostly its own branded products. Like others store, Big Jos too cares for its loyal customers base through loyalty programs using loyalty cards and special occasion greetings. It also announces discount sales and other promotional offers at least twice to thrice in a year, in order to induce the non-regular buyers to come to the store, having an implicit motive of stock clearance too Pantaloon Retail ( India ) Limited Pantaloon is among the leading players in the Indian retail market place. The Company has three formats departmental stores, hypermarkets and supermarkets. The departmental stores are christened Pantaloon Stores, while hypermarkets are called Big Bazaar and supermarkets are called Food Bazaar. The Company currently has 14 departmental stores, five Big Bazaars and one Food Bazaar, which are operational, with close to 204,000 sq. ft. of total area. The Company has embarked on an aggressive expansion plan of adding close to 150,000 sq. ft. of retail space annually. The plans for the next two years involve the opening of five Big Bazaars, a chain of 10 Food Bazaars and four departmental stores. The Company expects a turnover of Rs10bn by 2005.The Biyani family controls the management of Pantaloon and is involved in the day-to-day operations of the business. The family entered the business of textile manufacturing in the second half of 1980s. The Group

has a weaving plant for producing trouser lengths, which are sold under the brand name Pantaloon. The Company entered retailing in the late 1980s with the introduction of Pantaloon shops across the country, using franchisee formats. In the late 1990s, the Company forayed into the departmental store format. Pantaloon Departmental Stores were amongst the first stores, which capitalized on the private label advantages. Almost 75 percent of the merchandise sold in the stores is private label, which gives higher profitability. The Company entered into the hypermarket format in 2001, which it believes is the next phase of retail development for a priceconscious consuming nation like India and is, therefore, going to concentrate on this format for future growth.

Data Analysis
1. Age Group ( in years ) 15-25 25-35 35-45 35/50 13/50 02/50 70% 26% 4%

35 30 25 20 15 10 5 0 15-25 25-35 35-45

2. Gender Ratio Male Female 31/50 19/50 62% 38%

35 30 25 20 15 10 5 0 Male Female

3. Family income (per month in rupees) : Upto 15000 15000-30000 30000-50000 50000 and above 17/50 13/50 12/50 8/50 34% 26% 24% 16%

18 16 14 12 10 8 6 4 2 0 Upto15000 15000-30000 30000-50000 50000 and above

4.

Awareness of shopping malls in Delhi

Shoppers stop Pantaloon Ebony Big Jos

35/50 28/50 15/50 15/50

35 30 25 20 15 10 5 0

35 28

15

15

Shoppers stop

Pantaloon

Ebony

Big Job's

5. How frequently do you visit a shopping mall?

Once in two month Once a month Twice in a month Once a week or more On patterns of visit

11/50 22/50 15/50 09/50 12/50

Own patterns of visit

12

Once a week or more

Twice in a month

15

once a month

22

Once in 2 months

11

10

15

20

25

6. Which day in a week normally do you prefer going to a mall?

Sunday

28/50

56%

Monday Tuesday Wednesday Thursday Friday Saturday No specific day

05/50 02/50 0 0 0 09/50 06/50

10% 4%

18% 12%

30 25 20 15 10 5 0 Sunday Tuesday Thursday Saturday

7. With whom you visit to the mall? Alone With family With friends 02/50 18/50 30/50 4% 36% 60%

30 25 20 15 10 5 0 Alone With fam ily With friends

8. What are the timings during which you usually make these visits? Between 10am - 12pm 12 am - 3pm 3pm - 10pm
45 40 35 30 25 20 15 10 5 0
Between 10 am - 12 am 12 am - 3 pm 3 pm - 10 pm

02/50 06/50 42/50

4% 12% 84%

6. What do you make generally purchase from malls?

Apparel Accessories Utility Other

30/50 5/50 5/50 10/50

60% 10% 10% 20%

35

30

25

20

15

10

0 Apparel Accessories Utility Other

Please rate the factors given below that influence you visit to a shopping mall (out of 50). Not at all important 1 2 3 Discount Display Location 5 6 10 Some what important 10 11 15 20 13 5 Important Extremely important 15 20 20

4 5 6 7 8 9 10

Packing space Food joints Ambience Service Personnel Referrals Playing arena for kids

10 12 18 15 10

20 18 12 15 17 20 25

12 15 5 15 13 13 10

8 5 15 20 20 2 5

11

Membership privilege

10

30

Findings
Retailers must consider these factors in order to enhance that they come out with program marketing innovations that pull the customers to their malls. Factors that influence visit to a shopping mall Discount Not at all important Discount 5 Some what important 10 20 Important Extremely important 15

Majority of the respondents felt that discounts offered by the retailers are an important factor that attracts them to the stores. This makes it imperative for the retailers to come out with attractive discount schemes to lure the visitors to their stores. Display Not at all important Display 6 Some what important 11 13 Important Extremely important 20

The display and layout of store is an important factor that pulls the consumers towards shopping malls. Good interior which facilitates display of items in an attractive way is necessary to elicit response from the target consumers. Location

Not at all important Location 10

Some what important 15

Important

Extremely important

20

Respondents have felt that location is an important factor that influences them to visit a shopping mall. This is especially important in large cities where shoppers would like to have them located in areas that would be near to their residence. Time is a perishable commodity and shoppers have the least tone to go shopping at a far away location. Parking space Not at all important Packing space 10 Some what important 20 12 Important Extremely important 8

Parking space is an extremely important factor for the respondents that make them choose the right shopping mall. This could be understood as we see that most of the shoppers like to visit with their family or friends for which they require four wheelers. There is a genuine lack of parking space across the cities making the task of parking an arduous one. If this space is not there, then it can act as an impediment against the shoppers from visiting malls. Figures prove that the preferred way of visiting malls is with friends, followed by family and lonely visit being the least preferred. Schemes that encourage people to come with their preferred groups such as friends or family can be used to achieve report visits from them. Food-joints

Not at all important Food joints 12

Some what important 18

Important

Extremely important

15

A food joint is an important factor that influences the consumers to visit shopping malls. Eating out is slowly turning out to be a favorite past time for the urban middle class consumers. When they come for shopping they look forward to munching something different from what they get home. So shopping malls with eating joints attract consumers better than the ones without. Ambience Not at all important Ambience 18 Some what important 12 5 Important Extremely important 15

Ambience attracts people. This goes along with shopping malls too. Aesthetically designed interiors attract shoppers as this has an affect on their mind. It lifts their self-esteem to a higher level. Satisfaction of aspirations of the consumers also happens when consumers visit shopping malls that matches what they think where they should be visiting for shopping. Hence this rated as important by the respondents. Service Not at all important Service Some what important 15 15 Important Extremely important 20

Service has become extremely important these days especially for any service unit in which human touch is of crucial importance. Respondents have pointed out that quality of service is an extremely important factor that influences their decision to visit a shopping mall or not. Consumers always like to be pampered and it is here the kind of service provided by the personnel come into picture. If they are able to give personalized service to the customers then retailers are going to succeed in gaining and retaining clientele. Personnel Not at all important Personnel Some what important 17 13 Important Extremely important 20

Quality of personnel that provide service is also an important factor that has a high effect on the shoppers attitude towards a retailing mall. Their grooming and appearance along with their ability to provide individual attention to the customers is considered by the shoppers while performing a mall over the other. Face to face with celebrities Not at all important Face to face with celebrities 15 Some what important 20 13 Important Extremely important 2

Celebrities are always wanted by the public.

When it comes to shopping the

respondents have given it as the least important factor that influences them. This proves that they dont like to get distracted while shopping nor are they interested in wasting time meeting celebrities. Referrals Not at all important Referrals 15 Some what important 20 13 Important Extremely important 2

Best form of getting increase in business is making use of the existing customer base to promote the brand. Word of mouth communication between the shoppers and prospective shoppers is the cheapest way to increase the footfall in a shopping mall. This is considered to be an important factor by the respondents. Live entertainment shows Shoppers are least attracted by live entertainment shows conducted in the malls such as magic shows, live band, discotheques with VJs etc. We can find from this result that the shoppers generally dont like to be distracted by any such events and for them finding the right choice for consumption is more significant than being entertained by the hosts. Playing area for kids Not at all important Playing arena 10 Some what important 25 10 Important Extremely important 5

for kids

Shopping accompanied by family is an important factor in influencing the visit by consumers. Family invariably include kids who are prone to getting bored with this practice and can try out all tricks in their bag to disturb their parents. Shopping malls have come out with solution such as playing arena for kids so that their parents can be free to shop. From the survey we can deduce that it pays them in investing playing arena. Though major respondents didnt turned up in favor then also this factor plays an important role.

Membership privilege

Not at all important Membership privilege 10

Some what important 30

Important

Extremely important

Respondents consider membership privilege somewhat important in their choice of going to shopping malls. Gaining self importance through membership cards is an attractive option for the shoppers. This makes them feel extra special and hence this trend has just started. Timing of the visit It is evident from the figures that most shoppers prefer to visit in the evening between 3 pm and 10 pm. Retailers should be with equipped to deal with this rush hour period and at the same time desire strategies to improve the frequency of visits in the afternoon too. Product categories preferred Shopping for apparels is the highest on the list of items bought from shopping malls. Footwear also finds a place at the top. Apart from accessories and utility items bought from malls, books are being taken as another source of attractions by the shoppers. Awareness of shopping malls in New Delhi The data analyzed clearly shows that shoppers stop scores over all other retailers when it comes to general awareness among the public about shopping malls. Pantaloon is a close second while Ebony and Big Jos are left far behind. Shoppers

stop reputation being pioneer in the field of large scale retailing has helped it to achieve good brand recall among the public. Frequency of visit to a shopping mall From the data analysis it is evident that visit to shopping malls is not apart of a routine unlike what we find in the west where consumers ship more often. This could be attributed to the lack of spending power among the consumers and also a lack of awareness among them about the efficacies of a big shopping mall. There are very few who visit once in a week or more. Many of them dont have a specific pattern of visit making it occasional. Preference of a weekly day for a visit to the shopping mall Data shows that consumers prefer going to the malls during the weekends with Sunday being the most popular choice followed by Saturday. During the middle of the week we find that very few visit the malls. This clearly throws light upon the significance of sales promotion schemes during the middle of the week to attract consumers even during these days too.

SUGGESTION AND CONCLUTION

Suggestions: Recipe for success ( for retailers )

Focus on the consumer: It is clear that consumers have changed and they are looking for something different. Understanding their evolving needs, aspirations and lifestyles is the underlying key to success for any retailer. The primary emphasis should be on access, experience and service and the secondary emphasis on product and price. There should be an effort to improve service by having better trained sales staff, better availability of products, and minor but important conveniences, e.g. delivery of goods either to the car or even home. Collaborative advertising and promotion can then round off this effort

Brand the store: Branding the store will increase volume and enhance customer loyalty. Branding is critical to maintaining competitive differentiation in an increasingly challenging retail environment. However, the brand needs to be clearly communicated to the customer.

Develop private label brand: Private labels act as margin generators, increasing sales volume by positioning the label as providing higher perceived value to consumers. In the long run, they also increase the retailers bargaining power with national brand suppliers.

Private labels generate customer loyalty by providing exclusive products, which works towards differentiation strategy, much sought after by the retailers. In terms of geography Some entrepreneurs should put efforts in creating custom-developed solutions for tapping the rural and semi-urban spending potential. Even in non-metro urban centers, there are very good opportunities in looking at starting or expanding operations. Some cities that should see greater organized retail action in the future would be Ludhiana, Chandigarh, Lucknow, Nagpur, Ahmedabad, Surat, Pune, Kochi, Thiruvananthapuram, Guwahati and Bhubaneshwar. In terms of format Malls have a sustainable competitive advantage over other formats. Consumer preferences are shifting towards malls from traditional markets. As a result of consumer shifts, retailers also prefer to be located in malls in anticipation of higher footfall. KSA Consumer Outlook 2000 shows that increasingly consumers prefer "All under One Roof destination for shopping as well as eating out and entertainment. These findings together indicate an excellent potential for a mall with the following features:
1. 2. 3. 4. 5.

A superior well-managed leisure experience Targeted at all members of the household comprising of shopping, dining and entertainment, all under one roof A wide range of products and services Proximity to homes

Recipe for success ( for government )

Permit FDI in retail: FDI has played a key role in rapid development of high quality retail in development of several other developing countries. Allowing retail global retailers to invest in this sector would attract the best practices as several retailers (such as Tesco, ToysR, Wal-Mart etc) have already evinced interest in building business here. Though a strong united lobby is against introduction of FDI in retail but if broad based reforms are executed we are likely to see both employment and growth in retail

Remove bottlenecks in the supply chain: To adequately develop the upstream, policy makers need to do away with the constraints on processing, manufacturing and distribution. Especially distribution part has to be focused more as every year according to some industry estimates an whopping amount of Rs 50000 crores is in transferring, storage and distribution.

Also government should stress on building better infrastructure such as of roads, rail and ports etc so that delivery time could be reduced and spoilage, breakage could be reduced to minimum. Organized market for real estate: The objective here is to ensure a regular supply of real estate by ensuring transparency in dealings. It can be done by ensuring proper rent laws by linking rents to market value, making zoning laws more flexible and ensuring that usage norms take into account both demand and supply without affecting balance both in rural and urban areas and finally ensuring strict and fair enforcement of all the laws. Simplify the tax structure:

Government should ensure adoption of a uniform sales tax rate across country and introduce VAT, also wherever Octroi is levied that should also be withdrawn. Flexibility of labour laws: Permitting flexibility in the use of labour without doing away with the benefits accruing to them will permit retailers to better organize operations and improve capacity utilization, it will include permitting retail businesses to stay open all days of week, encouraging use of part time labour etc.

Ensure single window clearance for retail chains: State Governments should make all licenses and permits available through a single agency at least at the city level. Providing one time licenses for multiple stores in a chain will ease the bureaucratic hurdle experienced by modern retailers.

Conclution: India has the scale and the potential to transform itself into a retail powerhouse. It has been rated as the fifth most powerful and most attractive emerging market for retail globally. Over the next five years the market is certain to evolve significantly and we shall see growth of a few retailers beyond the Rs 1000 crore turnover (USD 230 million), with significant expansion in network size. Here I would like to say that every retail outlet in Delhi is trying to be the best in t this present hyper competitive business scenario. It is also very clear from earlier pages that there is no remarkable difference between the USP of the retail stores in Delhi. Though, in spite of not having any difference they are still competing with each other. Even Ebony is trying to follow the chain system and very soon they are planning to open their outlet in Gujarat. Though retailing in India is still largely traditional but the advent of modern trade has started to worry them and people are talking about the end of show for them but they have to understand the fact that they have certain unique advantages over modern formats like an unmatchable retail network across the country, proximity to customer, a very low almost zero cost structure and service levels which modern formats cannot match in even a longer span of time. Similarly modern trade has some advantages over traditional unorganized trade like ability to offer better prices and service due to their strong bargaining power with manufacturers which comes due to the scales at which they operate wider and deeper merchandise and assortment, better efficient operations etc. Both the traditional and modern trade can co-exist and flourish together, all they have to do is to identify their USPs, niches etc and build up on them, after all it is the survival of fittest, those who will adapt according to changing times will stand in the competition in the long run.

For the retail sector to achieve further growth, the spread of organized retailing has to become a national phenomenon. According to KSA Technopak, a leading consulting firm, the organized sector will grow to almost Rs.30, 000 crores by 2005, representing 6 percent of the total retail market. The top 6 cities will account for 66 percent of total organized retailing. Although many international retailers and brands still regard India as too difficult, they would welcome the opportunity to create an appropriate joint venture, if they felt India was changing. The growth of the organized retail industry in the country will mean thousands of new jobs, increasing income levels and living standards, better products, and services, a better shopping experience, and more social activities.

APPENDIX

BIBILOGRAPHY
Reference Books: Kotler Philip, Marketing Management-Principles in Marketing. Burns & Bush, Marketing Research Dubey V K, Retail Management Vedamani Gibson, Retail Management: Functional principles & practices. Malik Shilpa, 2003, Retail real state malls in India

Websites: www.infoshop.com, January 2005,"Indian Retail Industry: Strategies, Trends and Opportunities" www.equitymaster.com, September 2004, "A tale of retailing www.fastmoving.co.za, March 2005, "Retail in India" . www.tdctrade.com, November 2003, "Shopping centers the future scene of Indian retail boom" www.rediff.com, march 2005,"Great homes, great malls coming!" www.Ksa-techopak.com www.domain-b.com www.timesb2b.com

www.indiainfoline.com/bisc/mmrm, services to retail customers " www.etretail/biz.com/jan 2003/ www.ibef.org

Magazines, reports and news: Economic Times, ET knowledge series, Changing gears - Retailing in India. Business Today, Pantaloon - Rajah of retail, march 13 -15 USP age Magazine Reports by Euro monitor international agency Industry reports on retailing sector by CII, FICCI Marketing White book (2003-04) Business World.

QUESTIONNAIRE

Dear respondent, I am a final year student of ------- undertaking a detailed study on the factors considered by the shoppers while making a visit to a shopping mall or a department store. Kindly respond to the questions given below: Walk-in could be defined as anyone entering a shopping mall alone or with others, for purchase or for personal experience. 1. From which age group do you belong? 15-25 25-35 35-45

2. Are you male or female? Male Female

3. Your family income stands in group upto 15000 15000-30000 30000-50000

50000 and above 50000 4. Which shopping malls in New Delhi are you aware of? ___________________________________ ___________________________________ ___________________________________

5. How frequently do you visit a shopping mall? once in two months once a week or more once a month twice a month

your own pattern of visits ________

6. Which days in a week normally do you prefer going to a mall? Sunday Thursday Monday Friday Tuesday Saturday Wednesday No specific day

7. When you visit a mall, you go Alone with family with friends

8. What are the timings during which you usually make these visits? Between 10am - 12 pm 9pm - 10pm 9. What do you generally purchase from malls? Apparel Other 10. What else would you like to buy from a shopping mall? __________________________________________ __________________________________________ Accessories Utility Shoes 12pm - 3pm 3pm - 6pm

11. Please rate the factors given below on the scale of 0-4, that influence your visit to a shopping mall, Not at all important, Some what important, important, extremely important. most preferred been rated higher. Not at all important Discount Display Location Parking space Food joints Ambience Service Personnel Referrals Live entertainment shows Face to face with celebrities Playing arena for kids Membership privilege Somewhat important Important Extremely important

12. Given below are the names of well known shopping malls in New Delhi. Rate them in a scale of 1-4 according to the factors that influence your visit there. 1 - Unsatisfactory, 2-Satisfactory, 3-Good, 4-Very good

Ebony Discounts Display Location Parking space Food joints Ambience Service Personnel Referrals Age (in years) 15-25 Sex: M/F Family Income (per month in rupees) upto 15000

Shoppers Stop

Pantaloon

Big Jos

25-35

35-45

45 and above

15000-30000 30000-500000 50000 and above