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PROJECT ON OPERATION MANAGEMENT IN RETAIL SECTOR PROJECT SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE POST GRADUAT

E DIPLOMA IN MANAGEMENT SUBMITTED TO Mrs. SHALINI SRIVASTAV FACULTY GUIDE 1 Reliance Super SUBMITTED BY AJAY KUMAR PGDM/08-10/03

ACKNOWLEDGEMENT I take this opportunity to express my deep sense of gratitude to all those who h ave contributed significantly by sharing their knowledge and experience in the c ompletion of this project work. I am greatly obliged to my Parents for providing me the right kind of opportunit y and facilities to complete this venture. My first word of gratitude is due to Mr. Akshay Gaur, Operation Manager, Relainc e super, Greater Noida, my corporate guide, for his kind help and support and fo r his valuable guidance throughout the project. I am thankful to him for providi ng me with necessary insights and helping me out at every single step. My heartfelt thanks to my respected Faculty Guide namely Mrs. Shalini Srivastav, Without her continuous help the project would not have been materialized in the present form. Her valuable suggestions helped me at every step. Finally, I would also like to thank all my dear friends for their kind cooperati on, advice and encouragement during the long and arduous task of preparing this report and carrying out the project. At last but not the least, who are always at the top of my heart, my dear family members whose blessings, inspiration and encouragement have resulted in the suc cessful completion of this project. Ajay Kumar 2 Reliance Super

DECLARATION I hereby declare that the project report titled OPERATION MANAGEMENT IN RETAIL SE CTOR at RELIANCE SUPER, GREATER NOIDA (UP) is my own work and has been carried ou t under the guidance of Mr. Akshay Gaur, Operation Manager, Reliance super, Grea ter Noida, and Mrs. Shalini Srivastav, Faculty Guide, IILM-CMS, GREATER NOIDA. A ll care has been taken to keep this report error free and I sincerely regret for any unintended discrepancies that might have crept into this report. I shall be highly obliged if errors (if any) be brought to my attention. Thank You. AJAY KUMAR 3 Reliance Super

INDEX Topic Introduction Types of retail sector Retailing format in India Retail secto r growth in India Contribution of Indian retain industry FDI in Indian retail in dustry Government intervention in retail IT trends in retail sector in India Opp ortunities of western retailers in India E- Retailing in India Top companies in retail Retail: Worldwide scenario Reliance Industries ltd. Reliance super SWOT a nalysis Retail triangle Learning from summer internship SAP commands Research wo rk Major findings Conclusion Page No. 05 07 07 08 10 13 15 16 18 21 22 29 31 32 33 35 38 41 43 45 46 Reliance Super 4

INTRODUCTION WHAT IS RETAIL? The word retail is, in fact, derived from the Frenc h word retailer, which means to cut off a piece or to break bulk.A retailer may be defined as a dealer or trader who repeatedly sells goods in small quantities. T he sale of goods or commodities in small quantities directly to consumers of, or engaged in the sale of goods or commodities at retail. It also means to sell in small quantities directly to consumers. RETAIL The sale of goods individually i n small quantities to the public or to sell. Retailing consists of the sale of g oods or merchandise from a fixed location, such as a department store or kiosk, or by post, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. The sale of good s directly to the consumer; to sell at retail, or in small quantities directly t o customers; to repeat or circulate (news or rumors) to others; Of, or relating to the sale of good directly to the customer; In retail quantities, or at retail prices To sell directly to the consumer, usually in small quantities in compari son with the total level of sale. Any product for sale in a store or directly to a consumer. Trade in which a client buys or sells an over-the-counter stock thro ugh a broker dealer. Merchants selling tangible goods in a face-to-face environm ent who normally use conventional terminals and swipe transactions. TYPES OF RET AIL SECTOR Retailing is one of the pillars of the economy in India and accounts for 35% of GDP. The retail industry is divided into organized and unorganized se ctors. Over 12 million outlets operate in the country and only 4% of them being larger than 500 sq ft (46 m2) in size. Organized Retail Unorganized Retail 5 Reliance Super

ORGANIZED RETAIL Organized retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporate backed hypermarkets and retail chains, and als o the privately owned large retail businesses. Organized retail segment has been growing at a blistering pace, exceeding all previous estimates. According to a study by Deloitte Haskins and Sells, organized retail has increased its share fr om 5 per cent of total retail sales in 2006 to 8 per cent in 2007. The fastest g rowing segments have been the wholesale cash and carry stores (150 per cent) fol lowed by supermarkets (100 per cent) and hypermarkets (75-80 per cent). Further, it estimates the organized segment to account for 25 per cent of the total sale s by 2011. UNORGANIZED RETAIL Unorganized retailing, on the other hand, refers t o the traditional formats of low-cost retailing, for example, the local kirana s hops, owner manned general stores, paan/beedi shops, convenience stores, hand ca rt and pavement vendors, etc. Unorganized retailing is defined as an outlet run l ocally by the owner or caretaker of a shop that lacks technical and accounting s tandardization. The supply chain and sourcing are also done locally to meet loca l needs. Its organized counterpart may not obtain its supplies from local source s. Difference between organized and unorganized retailing The major differences between organized and unorganized retailing lies in its number (chain) of store operations. An unorganized outlet may be just stand alone or can have maximum of 2-3 outlets in a city, where as the organized outlets are "any retail chain (mo re than two outlets)which is professionally managed (even if its family run), ha s a accounting transparency (with proper usage of MIS and accounting standards) and organized SCM with centralized quality control and sourcing (certain parts c an be locally made) can be termed as an "organized retailing" in India. Retailin g in India is predominantly unorganized. According to a survey by AT Kearney, an overwhelming proportion of the Rs. 400,000 crore retail market is UNORGANISED. In fact, only a Rs. 20,000 crore segment of the market is organized. We are know n as a nation of shopkeepers with over 12 million, the highest outlet density in the world in the world with an estimated turnover of $ 200 billion. However a d isturbing point here is that as much as 96 per cent of them are smaller than 500 square feet in area. This means that India per capita retailing space is about 2 square feet (compared to 16 square feet in the United States). India's per cap ita retailing space is thus the lowest in the world. Another point to note is th at only 8 % of our population is engaged in Retail whereas the global average is around 10-12%. 6 Reliance Super

INSTORE RETAILERS This type of retail format is also known as the brick and mort ar format. These retail stores are in the form of fixed point sale outlets. They are specially designed to lure the customers. There are different types of stor es through which the instore retailers operate. Branded Stores appear in the for m of exquisite showrooms. Here the total range of a particular brand is availabl e and the quality of the product is certified by the government. There are also multi brand specialty stores that sell a series of brands so that the consumer c an choose from the wide array of brands. Department stores have a large number o f brands and products catering to all basic needs to luxurious items as well. Su permarkets are basically self service retail stores. Discount Stores offer commo dities at reduced prices. In Hyper Marts customers have wide variety of products to choose from and they are also available at discounted rates. Convenient stor es are located in prominent places within the reach of majority of the customers and do not operate in stringent work hours. Shopping Malls are a storehouse of a large variety of retail shops situated close to each other. RETAILING FORMATS IN INDIA MALLS: The largest form of organized retailing today. Located mainly in metro cities,in proximity to urban outskirts. Ranges from 60,000 sq ft to 7,00, 000 sq ft and above. They lend an ideal shopping experience with an amalgamation of product, service and entertainment; all under a common roof. Examples includ e Shoppers Stop, Piramyd, and Pantaloon. SPECIALTY STORES: Chains such as the Ba ngalore based Kids Kemp, the Mumbai books retailer Crossword, RPG's Music World and the Times Group's music chain Planet M, are focusing on specific market segm ents and have established themselves strongly in their sector. DISCOUNT STORES: As the name suggests, discount stores or factory outlets, offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left ov er at the season. The product category can range from a variety of perishable/ n on perishable goods. DEPARTMENT STORES: Large stores ranging from 20000-50000 sq . ft, catering to a variety of consumer needs. Further it is classified into loc alized departments such as clothing, toys, home, groceries, etc. Departmental St ores are expected to take over the apparel business from exclusive brand showroo ms. Among these, the biggest success is K Raheja's Shoppers Stop, which started in Mumbai and now has more than seven large stores (over 30,000 sq. ft) across I ndia and even has its own in store brand for clothes called Stop. HYPER MARTS/SU PERMARKETS: Large self service outlets, catering to varied shopper needs are ter med as Supermarkets. These are located in or near residential high streets. Thes e stores 7 Reliance Super

today contribute to 30% of all food & grocery organized retail sales. Super Mark ets can further be classified in to mini supermarkets typically 1,000 sq ft to 2 ,000 sq ft and large supermarkets ranging from of 3,500 sq ft to 5,000 sq ft. ha ving a strong focus on food & grocery and personal sales. CONVENIENCE STORES: Th ese are relatively small stores 400-2,000 sq. feet located near residential area s. They stock a limited range of high-turnover convenience products and are usua lly open for extended periods during the day, seven days a week. Prices are slig htly higher due to the convenience premium. MBO's: Multi Brand outlets, also known as Category Killers, offer several brands across a single product category. The se usually do well in busy market places and Metros. The Indian Retail IndustrySk y is the limit In terms of the retail development index India ranks fifth. In As ia it occupies the second position, next to China. Among all the global markets, the Indian retail market is the most expanding. This is owing to absence in res triction at the entry level. So the large foreign companies can reap the benefit s of economies scale by entering the green retail fields of India. There are man y reasons why the retail industry in India can reach the zenith. Firstly the org anized retail sector in India has a very low contribution to the entire retail s ector in the country. Hence there is ample scope for the new players to achieve success in the backdrop of soaring disposable income of the upcoming generation. Secondly, not only have the incomes increased but there has been a sea change i n the preferences of the consumers. These factors have acted as a stimulus for t he ushering of foreign players retailing in apparels, accessories, electronic ap pliances etc. Large shopping malls have already mushroomed in the metropolitan c ities. There still lies untapped potential in the Indian Retail Market. Retail S ector Growth in India In this section we may deal with the growth of the organiz ed as well as the unorganized retail sector of India. Due to the untapped potent ial that exists in the Indian retailing market, it is a very fast growing sector . One reason that can be attributed to this rapid entry of the foreign retail gi ants ,is that the Western Countries have reached a point of saturation in their retail sector. Another reason as already mentioned earlier is the change in the tastes and preferences or the psychographic of the consumers that is bent in the ir favour. The retail sector in India contributes to about 10% in the GDP, it is the most underdeveloped sector in terms of investments that are made in this se ctor. The unorganized retail sector has recorded a growth of 5% per annum while the organized sector is growing at 25-30 % per annum. One should not be impresse d by the figures of the organized retail markets since developed market in US, T aiwan, Malaysia is still a dream to the Indian retail market. They have register ed a growth of 50% per annum. The retail stores have mushroomed in the Tier II a nd Tier III cities. The 8 Reliance Super

participants in the retail market hold the presence of market in the cities as a signal to their growth. It has been seen that the retail companies have investe d in the IT sector for their growth and development. The IT sector has contribut ed greatly to the growth of the retail sector in India. The retail firms have ma de lumpy investments in Enterprise Resource Planning System as a strategy for th eir growth and development. SAP has also assumed a significant role in the growt h and development of the organized retail industry. The sudden growth of the org anized retail sector can be attributed to the ushering of the domestic retail gi ants like Reliance, Pantaloons, ITC, RPG, Raheja's and the Bharti Group. The forei gn companies continue to wait in the sidelines. These prominent retail chains ha ve adversely affected the farmers in some states. Another viewpoint is that the farmers have rather benefited since they were eager on the market intervention o f the buig retailers for the purpose of marketing and processing of their output . Since the big retailers reap the benefits of buying directly from the farmers, the consumers can purchase the products at minimal price rates. In places like Uttarakhand, the big retail chains are welcomed for the same purpose by the farm ers. They have helped in putting finances in the right channels of processing an d packaging. Growth of the Retail Outlets In India Outlets 1996 1997 Food Retail ers 2769 2943.9 Non-Food 5773.6 6040 Retailers Total Retailers 8542.6 8983.6 1998 3123.4 6332.2 9455.6 1999 3300.2 6666.3 9966.5 2000 3480 7055.5 10534.4 2001 3682.9 7482.1 11165 From the above table it is quite evident that there is a rising trend in the tot al retail outlets in India. The non-food retail outlets contribute more to this rise. The trend in the retail sector as compared to other sectors may be represe nted in the following graph. We can see that as compared to the clothing and the food and beverages industry the retail industry has witnessed a sharp rise espe cially from 2002.Before that it was following a slow and steady pace. The growth of the different retail sectors can be discussed as under. Growth of FMCG The report produced by HSBC shows that the FMCG retail sector is expected to grow by 60 % by 2010. leaving aside the packaging sectors, the other sectors that have registered rapid growth are hair care, household care, confec tionery, chocolates etc. Growth of Consumer Durables The consumer growth industr y is estimated to grow by 40% in the coming season. The television, refrigerator and washing machines sector has also witnessed a rapid growth. The market for I ndian colour television is expected to reach the value of 10.5 9 Reliance Super

million units by the next fiscal year. The refrigerator market is estimated to r each 4.5 million. Hence in a nut shell the retail industry in India has witnesse d unprecedented growth in the past years. The organised sector is expected to ma ke Quantum jumps in the coming years in terms of its contribution to GDP. Contri bution of Indian Retail Industry Contribution of Retail: What, How and For Whom The presence of retail sector in India has been in limelight for the last few ye ars. Its significance has been undoubted. Policymakers are quite optimistic that the evolution and steady maturation of organized retailing will take the econom y to new highs. Besides, it will also help strengthen the linkages between the d ifferent sectors so as to break the vicious circle of poverty and ensure a brigh t future for the next generation. The benefit of retailing to general public inc ludes growing awareness and brand consciousness. Past Retail Industry in India B efore the decade of eighties, India with hundreds of towns and cities was a nati on striving for development. The evolution was being witnessed at various levels and the people of the nation were learning to play different roles as businessm en and consumers. The foundation for a strong economy were being laid, youth wer e beckoning new awareness in all spheres. And this brought in an opportunity for retail industry to flourish. First in the metros and major cities later to impa ct sub urban and rural market as well. Retailing in India at this stage was comp letely unorganized and it thrived as separate entities operated by small and med ium entrepreneurs in their own territories. There was lack of international expo sure and only a few Indian companies explored the retail platform on a larger sc ale. From overseas only companies like Levi's, Pepe, Marks and Spencer etc. had entered targeting upper middle and rich classes of Indians. However as more than 50 % population was formed by lower and lower middle class people, the market w as not completely captured. This was later realized by brands like Big Bazaar an d Pantaloons who made their products and services accessible to all classes of p eople and today the success of these brands proves the potential of Indian retai l market. A great shift that ushered in the Indian Retail Revolution was the eru ption of Malls across all regional markets. Now at its peak, the mall culture ac tually brought in the organized format for Retailing in India which was absent e arlier.To your surprise there was not a single mall in India a decade before and just a few years ago only a handful of them were striving, today there are more than 50 malls across different cities and 2 years from now around 500 malls are predicted to come up. 10 Reliance Super

Present Retail Industry in India At present the Retail industry in India is acce lerating. Though India is still not at an equal pace with other Asian counterpar ts, Indian is geared to become a major player in the Retail Market. The fact tha t most of the developed nations are saturated and the developing ones still not prepared, India secures a great position in the international market. Also with a highly diverse demography, India provides immense scope for companies brining in different products targeting different consumers. According to the Global Ret ail Development Index, India is positioned as the foremost destination for Retai l investment and business development. The factor that is presently playing a si gnificant role here is the fact that a large section of Indian population is in the age group of 20-34 with a considerably high purchasing power; this has cause d the increase in the demand in the urban market resulting in consistent growth in the Retail business. And though the metros and other tier 1 cities continue t o sustain Retail growth, the buzz has now shifted from these great cities to les ser known ones. As the spending power is no longer limited to metros, every tier 2 city in the country has good market for almost every product or service. Due to this, tier 2 cities like Chandigarh, Coimbatore, Pune, Kolkatta, Ahmedabad, B aroda, Hyderabad, Cochin, Nagpur, Indore, Trivandrum etc. provide a good platfor m for a brand to enter Indian market. However there are a few precautions for ev ery brand that explores Indian market. As Indian consumers are very curious and have a broad perspective, they respond well to a new product or concept and ther e are very fair chances of a brand surviving well, but every Indian consumer be it an urbanite or a small town dweller needs a feeling of value for money. Altho ugh labeled as tight fisted, Indian consumers are great spenders once they reali ze that they are getting value for their money. Also new product /service concep ts from the western world are better adopted first by the urban Indians, the sma ller markets respond well to the need based retailing rather than luxury concept s. As the Indian retailing is getting more and more organized various retail for mats are emerging to capture the potential of the market. * Mega Malls * Multipl exes * Large and small supermarkets * Hypermarkets * Departmental stores 11 Reliance Super

As the major cities have made the present retail scenario pleasant, the future o f the Indian Retailing industry lies in the rural regions. Catering to these con sumers will bring tremendous business to brands from every sector. However as th e market expands companies entering India will have to be more cautious with the ir strategic plans. Indian Retail: Past Vs Present It is widely accepted that th e retail industry has undergone a drastic change in last five years and there is yet more to come. Let us compare the image of Indian retailing in 2004-05 to th at of its status in 2007-08 in the following table: Magnification of the Indian Retail Industry Yardstick Situation in 04-05 Value of retail sales Rs. 10,20,000 crore Annual growth rate 5% Value of organized market Rs 35,000 crore Share of organized market in the 3.4% sector Forecasts (after 5 years) about size Over Rs . 1,00,000 crore of organized retail market Forecasts about growth rate of Aroun d 30% organized retail market Situation in 07-08 Rs 12,00,000 crore 5.7% Rs 55,0 00 crore 4.6% Rs. 2,00,000 crore Around 40% The above table clearly shows that the retail market as well as the mindset requ ired for it has experienced a thorough revisal in the last three years. This is just the beginning and Indians are sanguine that the sector will see rosy days i n the future. This confidence has helped India acquire the No.1 position among 3 0 most attractive retailing destinations in the world according to the Global Re tail Development Index of 2005 (by AT Kearney, India). Among emerging markets, I ndia holds the second position after China in the list of most favored retail de stinations. The retail industry employs a huge share of the total workforce in I ndia. It is the second largest employer after India. Presently 7 percent of the total labor force is employed in the retail sector. According to available data it is also the largest employer in the services sector and maximum growth in the non-agricultural sector has been witnessed by retail trade. According to market analysts 300 new malls, 1,500 supermarkets and 325 departmental stores are goin g to come up in India in the next few days. The shopping revolution that has led to this retail boom is going to continue and this is a good news for the govern ment as well as those who wish to work in the organized sector. 12 Reliance Super

Future Retail Industry in India According to a study the size of the Indian Reta il market is currently estimated at Rs. 704 crores which accounts for a meager 3 % of the total retail market. As the market becomes more and more organized the Indian retail industry will gain greater worth. The Retail sector in the small towns and cities will increase by 50 to 60 % pertaining to easy and inexpensive availability of land and demand among consumers. Growth in India Real estate sec tor is also complementing the Retail sector and thus it becomes a strong feature for the future trend. Over a period of next 4 years there will be a retail spac e demand of 40 million sq. ft. However with growing real estate sector space con straint will not be there to meet this demand. The growth in the retail sector i s also caused by the development of retail specific properties like malls and mu ltiplexes. According to a report, from the year 2003 to 2008 the retail sales ar e growing at a rate of 8.3% per annum. With this the organized retail which curr ently has only 3% of the total market share will acquire 15-20 % of the market s hare by the year 2010. Factors that are playing a role in fuelling the bright fu ture of the Indian Retail are as follows: The income of an average Indian is inc reasing and thus there is a proportional increase in the purchasing power. The i nfrastructure is improving greatly in all regions is benefiting the market. Indi an economy and its policies are also becoming more and more liberal making way f or a wide range of companies to enter Indian market. Indian population has learn t to become a good consumer and all national and international brands are benefi ting with this new awareness. Another great factor is the internet revolution, w hich is allowing foreign brands to understand Indian consumers and influence the m before entering the market. Due to the reach of media in the remotest of the m arkets, consumers are now aware of the global products and it helps brands to bu ild themselves faster in a new region However despite these factors contributing to the growth of Indian retail Industry, there are a few challenges that the in dustry faces which need to be dealt with in order to realize the complete scope of growth in Indian market. Foreign direct investment is not allowed in retail s ector, which can be a concern for many brands. But Franchise agreements circumve nt this problem. Along with this regulations and local laws and real estate purc hase restrictions bring up challenges. And with Good Planning, Timely Implementa tion and a media campaign that touches Indian consumers any brand can go far ahe ad in the Indian Retail Revolution. FDI In Indian Retail Industry The Government of India was initially very apprehensive of the introduction of the Foreign Dir ect Investment in the Retail Sector in India. The unorganized retail sector as h as been mentioned earlier occupies 98% of the retail sector and the rest 2% is c ontributed by the 13 Reliance Super

organized sector. Hence one reason why the government feared the surge of the Fo reign Direct Investments in India was the displacement of labor. The unorganized retail sector contributes about 14% to the GDP and absorbs about 7% of our labo r force. Hence the issue of displacement of labor consequent to FDI is of primal importance. There are different viewpoints on the impact of FDI in the retail s ector in India. According to one viewpoint, the US evidence is empirical proof t o the fact that FDI in the retail sector does not lead to any collapse in the ex isting employment opportunities. There are divergent views as well. According to the UK Competition Commission, there was mass scale job loss with the entry of the hypermarkets brought about by FDI in the UK retail market. According to anot her school of thought, there is undoubtedly labor displacement associated with F DI, but employment generation will occur in different dimensions. Varied skills would be specialized. Taking into consideration the pros and cons of introducing FDI in India, ICRIER has recommended 49% of FDI. The opening up of FDI in India is also expected to be gradual so that the domestic industries can tailor thems elves according to the changes. At the formative stage, the idea was to start wi th 26% of FDI in this sector. But soon the idea changed as China's FDI moved up from 49% to 100% in the retail sector. While the government is continuing its pl ans to liberalize FDI in the retail sector in India, foreign companies like WalMart are waiting on the threshold. They basically wish to enter into partnership with various multinational chains. FDI would bring about modern infrastructure that would help to boost the productivity of the organized retail sector in Indi a. Malls have mushroomed in various locations. They are the centre of entertainm ent for the new generation. FDI is not allowed in the retail sector and this is the reason why many prominent global players like Dominos, Levis, Lee, Nike, Adi das, TGIF, Benetton, Swarovski, Sony, Sharp, Kodak etc are entering the retail m arket via licensee or franchisee. The opening up of the economy to FDI in the re tail sector is also expected to generate employment. FDI can be a blessing inste ad of curse only if it produces backward linkages relating to production and man ufacturing. It may also, in the process help to push up domestic production as w ell as exports. In the present scenario, 51% Foreign Direct Investment is permit ted in India only through single brand retailing. The international retailers ar e entering the matket through licensees just as Wal-Mart has entered through the franchisee, Bharti Enterprises. Bottlenecks to FDI in Retail Industry According to the Land and Property laws only the Indians have the right to land and prope rty in India and this law has in a a way inhibited the entry of the foreign play ers in India. Again the labor laws are so designed that the store workers can be protected, quite contrary to the requirements of the modern formats. The tax st ructure of India is also unfavorable for the 14 Reliance Super

foreign players. The corporate tax rate for the domestic companies is 36.59% whe reas it is 41.82% for the foreign companies. The changing sales tax as well as t he Value Added Tax is also not favorable in the case of international companies. Government Intervention in Indian Retail India's government seems to be on a gra dual but definite path toward allowing foreign retailers into the country.... sug gests the A.T. Kearney's Retail Development Index 2006. It is a common knowledge that the Union government has to face a number of hurdles both from its opponen ts as well as its allies before it could announce the final verdict. There have been demands from all corners regarding framing of rules to safeguard interests of the so-called small traders. Simultaneously economists have the consensus tha t industrialization is imperative for the growth of the economy and foreign inve stment has to play an inevitable role in it. With Lok Sabha elections to come in 2009, the Union government too seems a bit confused regarding decision in who's favor can provide it a political edge. So in this study let us compare the view s for and against liberalization as is held by Indian Bureaucrats. Entry of larg e players: stiff opposition from Left Parties The recent outburst of fury among the Kerala's LDF(Left Democratic Front) Government has been noticeable. They hav e exacted for a three-pronged approach to prevent the retail giants from serving the Keralians. At the first stage, not only MNCs but also the local retail gian ts like Reliance will be shown the red signal. In fact a magnified CPI protest h as compelled a Reliance Fresh outlet in Kochi to take police protection. The dra ft of a bill has been finalized to amend the Kerala Essential Commodities Act so that the state government can intervene in the retail market. As a second step, local councils (70% of which is controlled by the Left) will deny licenses, tha t are mandatory to start a retail chain in the state. Kochi and Tiruvananthapura m corporations will be in fact commanded to reconsider the licenses of outlets t hat are already operating in the regions. This strategy grants more power to the state. However a ban on shopping in these outlets is still not clear. The third and the most revolutionary judgment is actually an outcome of the whole game. G overnment-controlled supermarkets and hypermarkets will be established in some o f the key cities in the state. This rigid legal wall not only in Kerala but acro ss the country has been born out of a traditional mindset. Kerala claims to have a literacy rate of 90.92% and a sex ratio of 1058 females per 1000 males. The d ata speaks for the government's prudent commitment in the case of Kerala. So it is high time that the government opens up avenues for its people to let them gro w and become self dependent. But the government is still holding good, the conve ntional 'infant industry' outlook. The main worry is the negative impact on the already gloomy condition of employment. Let's make an attempt to understand the vicious circle of unorganized retailing 15 Reliance Super

and present employment scenario. Unorganized retailing has a share of about 96% in the Indian retail sector. But why should people work in such miserable situat ions if the manufacturing and services sector are booming is the overwhelming qu estion. There has been a trend to migrate to cities in search of alluring bright city lights. But the consequences has been been even worse- earning lower than expected wages(Harris Todaro model of migration). The illiterate and unskilled p eople ultimately set up a grocery shop to earn a living. This gives birth to ano ther unorganized retail shop in India and thus enlarges its share. So the unorga nized retail market in India has born out of fate rather than selection. The Act ual Scene Those opposing the expansion of organized retail in India must underst and that the share of primary sector shrinks and that of the secondary and then the tertiary sector expands as an economy grows. This is the basic structural ad justment in case of any transforming economy. India is at a take off stage. A re tardation in the agricultural sector is not permissible but inhibiting the growt h of services on grounds of protection to agriculture is more irrational. A proo f of this has been seen in a small town of North Bengal. The opening of a Big Ba zaar (brand name for stores under Pantaloon) departmental store has seen a human deluge of about 7,000 people in the 35,000 sqft shopping mall by 3pm. This clea rly indicates that people (even in remote places) have become fed up of monotono us marketing practices and demand nowadays is purely governed by choice. The Rul ing UPA government's outlook The UPA government is rather clear in its aim of ta king India to new highs. The commerce minister has repeatedly asserted that FDI will kill two birds with the same stone. It will generate substantial direct as well as indirect employment and at the same time will not tamper with the presen t scope of the unorganized retail market. The indirect employment includes jobs in transport, packaging and other logistic services. It will enhance competition in the country thus giving a virtual chance to face global challenges while ope rating at home. Mr. Nath is clearly focused on the utilization of FDI in acquiri ng benefits. It is true that such investments will bring in huge imports but thi s may also help in the Indian products reaching the foreign consumers. Foreign m ajors such as Wal-Mart, Tesco and Carrefour are ready to enter India. The UPA go vernment has already permitted 51 percent FDI in Single-brand products without c onsulting its allies and it is expected that slowly but steadily the government will achieve its goal. IT Trends in the Retail Sector in India The Indian retail ing, which has topped the charts for being the most favored and attractive desti nation is yet in its nascent stage. Neither the FMCG retailers are in a position to maintain world class standard, nor one wishes to be an iconoclast. The digit ization of the Indian retail sector has captured the minds of retail magnets for quite some time now but has remained the grey area of the Indian story of retai l sector. The Indian IT sector is growing at a rate of 31 16 Reliance Super

percent and posted record revenue of $40 billion in 2006-07. This is indeed good news but the staggering domestic segment demanded services worth only $8.2 bill ion. In this study we focus on how e-retail can boost the plans of existing and forthcoming national retail players. We further try to put forth the challenges in computerization of the organized retail and make an attempt to suggest some p rospective solutions. Traditional retail sector: The organized retail sector of India will form about 10 percent of the total retailing business in India and is expected to worth US $70 billion by the end of 2010. in the mean time it will g row at a CAGR of around 49.53 percent. But certain speed breakers associated wit h the primitive form of retailing must be overcome to maintain its tempo. 1. Unorganized retailing in India is ubiquitous and so the communication between the manufacturer and retailer is heavily dependent on the wholesalers, dealers and traders. This is more so because the retailers can't afford costly investmen ts. So they ultimately have to suffer due to low participation market flow of co mmodities. Nowadays even the organized business houses are facing the problems r elated to SCM (Supply Chain Management). The SCM's huge emphasize on middlemen r ather than on the retailers has aggravated the problem. The introduction of EDI (Electronic Data Interface) can deliver QR (Quick Response) and ECR (Efficient C onsumer Response) systems to ameliorate the partnership channel and thus shorten the time between the placement of orders and delivery to occur. For e.g. the 17 outlets of Food World are linked online with its central manufacturing house at Chennai. 2. The scale and process complexity are also of paramount importance a s millions of customers deal with thousands of retail outlets. At the end of the day the total number of transactions is in the order of hundreds of millions. T his makes keeping track of the money movement an onerous job. The spread of the planning cycles and huge geographical dispersion makes the task more arduous. Re tail operation India has seen a retail boom in the last five years. This has hel ped the sector grow to a size of Rs. 8, 10,000 crores. IT can and has to play a substantial role in this flourishing industry to keep up the vigor as well as to make it globally competitive. It can happen in many ways: 1. retailing in a lar ge country like India is basically a multi-plant and multi-market activity. It i s almost if not actually impossible to handle the diversified operations. Introd uction of IT can make things easier and the node can be immensely useful in mana ging the complexities. 17 Reliance Super

2. Advanced planning and scheduling and inventory management are inevitable to a ny growing retail sector. Besides, merchandising and seasonality management syst ems can drastically change the fortune of retail sector in India. To improve pen etration and enhance quality of services, data mining and top-class forecasting has no substitutes. Understanding consumer needs and collaborating with supplier s are essential parts of merchandising activities. A logical interpretation of d ata is fundamentally important to make decision, especially when one is looking forward to establish a new retail chain. These help in modifying revenues and cu tting down costs, the two dimensions of an upward-moving profit curve. Data-clea nsing and re-architecture also help in making effective decisions. It is fully j ustified that all the retail institutions as well as the manufacturer and all di stribution centers be linked Online to ensure EDI of the server installed in the market with the EPOS (Electronic Point Of Sale). However the retailers should c arefully choose the IT service provider as global researches have shown that glo bal IT expenditure in the retail sector is growing at 13 percent whereas the rev enues has grown at a mere rate of 2 percent. The maintenance costs are also quit e high owing to the different technology platforms for fragmented point solution s. Opportunities of the Western Retailers in India The retail industry in the we stern countries has reached a point of saturation and there is no way of expandi ng. In this backdrop the retail giants are trying to make their mark in the reta il market of countries that still have untapped potential of expansion. India ha ppens to be one of them. AT Kearney has constructed the Global Retail Developmen t Index which has helped the western retailers to identify the countries in whic h investments could be made. Opportunities in India have attracted the western r etailers like Wal-Mart, Euro set, Supervalu who have plans to enter as single br anded retailers. In gauging whether to enter, the companies keep into account th e timing factor that is whether the consumers are ready to accept the products t hat are offered by them. It is highly possible that there are potentials in the market but the consumer preferences are skewed against the products that are off ered. Certain parameters have been included in the construction of the Global Re tail Development Index and given weightage which have been shown in the followin g figure. Table1: Parameters in the Construction of GRDI Parameters Country Risk Market Attractiveness Market Saturation Time Pressure Weightage 25% 25% 30% 20% 18 Reliance Super

Country Risk: Country risk arises from political risk, poor debt management, low credit ratings and access to bank finance. Country risk also has their origin f rom business risk arising from terrorism, corruption and violence. Attractivenes s of Market This is measured by retail sales per capita. If the score is zero in this parameter, then it clearly hints to a highly underdeveloped retail sector. On the other hand a cent percent score would indicate that the retail sector ha s reached the point of saturation. Weightage is also given to population, urban population and business efficiency. The more the population and urban population more will be the prospect for growth. By business efficiency we mean the qualit y of infrastructure. Higher the quality of infrastructure, higher will be the ea se of business operations. Market Saturation To understand the market saturation level, importance is to be given to the share of modern retailing, number of in ternational retailers, the sale of retail per urban inhabitant and the market sh are of the top retailers. Time Factor The time factor as measured by CAGR has a weightage of 20% in the construction of GRDI. Major Challenges 1. Amalgamation o r Confusion- According to Tata Strategic Management Group, India has a high dens ity retail structure of 1 retail outlet per 90 people and is the 9th largest ret ail market in the world. But the structure of the retail industry in India is in utter jumble. The parallel operation of convenience stores, supermarkets, hyper markets and specialty stores in the economy is bewildering. According to the 'Wh eel of Retailing Theory', certain loopholes in one of the forms of marketing can get communicated to other forms also. 2. What to sell- Another bemusement is th e category of items to be offered. According to researches, 41 percent of total consumption expenditure goes to the segment of food and groceries and it account s for 77 percent of total retail sales. So it is obvious that this is the most p referred section of retailers. But unfortunately the foible taste bias for 'wet market' (i.e. fresh food available through hawkers) has marred this prospect als o. Therefore supply chain 19 Reliance Super

management, storage of fresh perishable foods and persuading the customers that the food is inexpensive despite being fresh are genuine challenges to the newcom ers. Diversifying the product base to consumer products such as readymade garmen ts, furniture, mobiles and computers can mitigate the losses, if any from food m arketing and also broaden the reach to consumers. 3. Nostalgia- Indian shopping habits are no different. People tend to attach qualities like honesty, fair pric e, good behavior etc. to shopkeepers with whom they have been dealing right from childhood. They find no reason to go to a distant megastore without any genuine reason. This problem is difficult to deal with as it demands a change in long-f ormed mindset. Organized retail outlets can overcome this problem by employing e ligible local peoples who can interact in vernacular language and win the confid ence of people. 4. Information Technology- This is a major problem and India mus t act fast if it wishes to create a smooth field for organized retailing. Digiti zation of services will make transfer of goods easy and an improvement in supply chain management will definitely play a significant role in attracting more con sumers and less consumer grievances. Besides, it will generate easier payments o ption for customer and easier money movement for the CEOs of these highly divers ified malls. Minor Challenges 1. Human resource crunch- the concern for insuffic ient manpower in the industry has been in news for the last few months. This fea r is somehow unfounded. The retail industry according to recent reports is growi ng at a rate of 100 percent. Kishore Biyani's Future Group i.e. the Big Bazaar c hain of retail outlet alone provides employment to more than 18,000 people and i s planning to expand its employment base to 34,000 by June 2008. If we add to th is the foray by mega players like Reliance and Bharti-Walmart then the fear can surely turn into a misperception. Retailing mainly deals with hard-selling of sp ace, trade of stocks and building of relationships. Since most of the openings a re for front line shop people, a graduation will suffice. Nowadays many institut es also provide post-HSC and post-graduate retail-specific courses. 2. Hindrance s from government- Some political parties want the government to amend laws and improve curbs so that the mega players can't openly decimate the unorganized ret ail sector. This is a conclusion based on a myopic outlook and must be amended f or a long term strategy. The fear is baseless because of the reasons mentioned a bove. The megastores will no doubt provide employment to the less educated masse s. Also taking business away especially from small food vendors is more easily s aid than done. Instead the limiting move will send wrong signals to the investor s and will ward off investments when the states need it most. Allowing 51 percen t retail FDI in single brand retailing is a welcome move in this direction. It i s expected that the government will create further opportunities for the organiz ed retail to come 20 Reliance Super

up as home grown investment is always sweeter than foreign investment. The advent of organized retailing in an economy where spending power is growing fast and Tier II as well as Tier III town dwellers are becoming brand conscious is sure to bring a revolution in the retail sector. E-Retailing in India E-retai ling, most commonly known as e-tailing is nothing but shopping through the Inter net and other media forms. There are many things that are common between direct retail stores and online retail stores. Both have the process of billing of the customers and have to maintain a relationship with the suppliers. Bottlenecks Fa ced By E-Retailing in India Problems with the Payment System-People in India are not used to the online shopping system and moreover the online payment system t hrough the credit card is also totally alien to them. Most of them do not avail of the transaction facilities offered by the credit cards. They are also dubious regarding the online payment system through the credit cards. Hence different p ayment options should be made available to them like the credit card, cash on de livery and net banking to give them further assurance. Problems with Shipping Th e customers using the online shopping channel should be assured that the product s that they have ordered would reach them in due time. For this the retail compa nies have resorted to private guaranteed courier services as compared to postal services. Offline presence The customers should be assured that the online retai lers are not only available online but offline as well. This gives them the psyc hological comfort that these companies can be relied upon. Products offered at d iscounted rates The online retailers save on the cost of building and employee s alaries. Some part of this benefit should also be enjoyed by the online customer s by a reduction in the price of the product. The customers should be conveyed t his message that they are getting the products at a discounted price. Language P roblem Most internet retail shops use English as their mode of communication. En glish may not be comprehensible to the majority of the Indian population. To inc rease the customer base, content in the online retail shops should be provided i n local language. Another reason why the concept of e- retailing or online retai ling has not gained prominence in India is that the Indians prefer to touch the products physically before buying them. This facility is provided through the mu lti-brand outlets, not available online. Studies have revealed 21 Reliance Super

the preferences of the customers towards the traditional shopping methods. Hence the retailer online should first make it a point to spot the potential customer s and accordingly plan out the product. If the customers are more open to online shopping, then nothing can be more beneficial. They save the time and effort to visit, departmental stores, shopping malls, etc. products can be delivered by a click of the mouse. Another problem is that the retail industry is standing on its point of inflexion and considering its infant stage, it would take time for the new concept of e-retailing to take off. Some online retailing sites in India E Bay is heading the race of online retailers. In this race it has become very difficult to determine the online retail store that makes the products available at convenient and cheap rates. From this very difficulty has cropped up compari son sites. Comparison is done on the basis of an index which is constructed from the data available from different shopping sites. The bechna.com and the ultop. com are such sites though many more sites are entering this zone. The comparison sites not only help to choose the online sites that would be providing the best deal but also offline as well. Sites like Rediff.com and India.com have constru cted the data that is taken from the conventional local retailers. These sites h elp the customer in finding out the local retail store that will best suit his p urpose Future of E-retailing in India There are divergent views on the future of e-retailing in India. Some experts are of the opinion that the giant, big brand retailers would dominate the small ones due to their wider investment capacitie s. It would be next to impossible for the small retailers and the kiraynas to pr ove their existence in the battlefield of online retailing. Another viewpoint is that there would be an exponential growth in the online retailing business in I ndia. Top Companies: An analysis Big Bazaar is a chain of department stores in I ndia, currently with 75 outlets. It is owned by the Pantaloon Retail India Ltd, Future Group. It works on the same economy model as Wal-Mart and has considerabl e success in many Indian cities and small towns. The idea was pioneered by entre preneur Kishore Biyani, the CEO of Future Group. Currently Big Bazaar stores are located only in India. It is the biggest and the fastest growing chain of depar tment store and aims at being 350 stores by the end of year 2010. It offers all types of household items such as home furnishing, utensils, fashion products etc . It has a grocery department and vegetable section known as the Food Bazaar and its online 22 Reliance Super

shopping site is known as FutureBazaar.com. The real estate fund management comp any promoted by the Future Group expects to develop more than 50 projects across India covering a combined area of more than 16 million sq. ft. On April 1 2007, Big Bazaar had to shut its outlets in Mumbai as the 120 retrenched employees ca lled a strike with the support of Bhatia Kamgar Sena (the trade Union wing of Sh iv Sena). Later the management agreed to reinstate the sacked workers Pantaloon Retail India Ltd, is India's leading retail company with presence across food, fashion, home solutions and consumer electronics, books and music, health , wellness and beauty, general merchandise, communication products, E-tailing an d leisure and entertainment. Headquartered in Mumbai (Bombay), has over 450 stor es across 30 cities in India and employs over 18,000 people. Pantaloon founded b y Mr. Kishore Biyani. The company owns and manages multiple retail formats cater ing to a wide cross-section of the Indian society and its width and depth of mer chandise helps it capture almost the entire consumption basket of the Indian con sumer. Founded in 1987, as a garment manufacturing company, Pantaloon Retail for ayed into modern retail in 1997 with the opening up of a chain of department sto res, Pantaloons. In 2001, it launched Big Bazaar, a hypermarket chain, followed by Food Bazaar, a supermarket chain. It went on to launch Central, a first of it s kind, seamless mall located in the heart of major Indian cities. Some of its o ther formats include, Collection I (home improvement products), E-Zone (consumer electronics), Depot (books, music, gifts and stationeries), all (fashion appare l for plus-size individuals), Shoe Factory (footwear) and Blue Sky (fashion acce ssories). It has recently launched its retailing venture, futurebazaar.com. In I ndia's chaotic markets, Kishore Biyani is the unchallenged king of retail. He ha s the knack of catching rivals off-guard and striking where it hurts most. And n ow that he's set himself the task of retaining control of the largest retail spa ce in the country, he won't let anyone - suppliers or international promoters in cluded - catch him slacking. The latest to face the wrath of the 43year-old is S outh African hypermarket Shop rite, which opened shop in Mumbai last month throu gh a franchise agreement with local company Normal Lifestyle. The hypermarket be gan retailing products from big boys Nestle, Unilever and Procter & Gamble at co nsumer discounts of 20-30 per cent, lower than even Biyani's purchase prices in his Big Bazaar and Food Bazaar stores. Reliance Fresh is the retail chain divisi on of Reliance Industries of 23 Reliance Super

India which is headed by Mr.Mukesh Ambani. Reliance has entered into this segmen t by opening new retail stores into almost every metropolitan and regional area of India. Reliance plans to invest Rs 25000 cores in the next 4 years in their r etail division and plans to begin retail stores in 784 cities across the country . The Reliance Fresh supermarket chain is RIL's Rs 25,000 crore venture and it pla ns to add more stores across different g, and eventually have a panIndia footpri nt by year 2011. The super marts will sell fresh fruits and vegetables, staples, groceries, fresh juice bars and dairy products and also will sport a separate e nclosure and supply-chain for non-vegetarian products. Besides, the stores would provide direct employment to 5 lakh young Indians and indirect job opportunitie s to a million people, according to the company. The company also has plans to t rain students and housewives in customer care and quality services for part-time jobs. Reliance Fresh recently (24th Jan, 2007) opened several "Fresh" outlets i n Chennai, New Delhi, Hyderabad, Jaipur, Mumbai, Chandigarh, Ludhiana increasing its total store count to 40. Reliance is still testing its retail concepts by c ontrolled entry beginning in the southern state. DLF Retail Developers Ltd. is one of the troikas of the DLF Group. Besides being India's largest real estate developer, DLF is also of the leaders in innovating shopping malls in India. It caught public eye when it launched the 2, 50,000 sq ft. shopping mall in Gurgaon. It has brought a dramatic change in the lifestyle s and entertainment with its City Centers and DT Cinemas. DLF has plans to inves t Rs. 2000-3000 crore in all the emerging areas from metros to class cities in t he next two years. Till last year the company was involved in building 18 malls out of which 10 were in the NCR region. Future plans of DLF involve opening up o f 100 malls (specialty malls, big box retailing and integrated malls) across 60 cities in next 8-10 years. They are slowly transforming into 'lease' and 'revenu e share' models. Local players like ITC, the A.V. Birla Group and Tatas have giv en the hints to enter organized retail. France's Carrefour SA and Britain's Tesco to o were recently in news for their future plans to explore the Indian retail mark et Bharti Retail, a wholly owned subsidiary of Bharti Enterprises. Has announced tw o joint ventures (JV)with the international retailing behemoth, Wal-Mart. The fi rst JV ensures cash and carry business, in which 100 percent FDI is permitted an d it can sell only to retailers and distributors. The second JV concerns the fra nchise arrangement. Sunil Mittal, Chairman of the Bharti Group assured that the ventures will use low prices every day and best practices for the satisfaction of t he customer. Processed foods and vegetables will be delivered by Bharti Field Fre sh, Bharti's JV 24 Reliance Super

with Rothschild. Bharti Retail aims to foray every city with a population exceed ing 1 million. It has plans to come up with an investment of more than $2 billio n in convenience stores, supermarkets and hypermarkets spread over an aggregate 10 million sq. ft. The expansion drive looks ambitious but analysts are worried that Bharti may face stiff competition from Pantaloon and Reliance as they too h ave sanguine plans to flood the markets with thousands of retail outlets in the coming five years. Bharti Telecom also has plans to offer all its fixed and mobi le telecom products and services from a single window to the SMB (Small and Medi um Business) enterprises under the Bharti Infotel division. Lifestyle is part of the Landmark Group, a Dubai-based retail chain. With over 3 0 years' experience in retailing, the Group has become the foremost retailer in th e Gulf. Positioned as a trendy, youthful and vibrant brand that offers customers a wide variety of merchandise at exceptional value for money, Lifestyle began o perations in 1998 with its first store in Chennai in 1999 and now has 13 Lifesty le stores, 5 Home Centers and 1 Baby shop store across Chennai, Hyderabad, Banga lore, Gurgaon, Delhi, Mumbai and Ahmedabad. Business World-IMRB Most Respected C ompany Awards Survey has rated Lifestyle as the Most Respected Company in the Re tail Sector in 2003 and 2004. Lifestyle has also been awarded the ICICI-KSA Tech nopak Award for Retail Excellence in 2005, the Reid & Taylor Retailer of the Yea r Award for 2006 and more recently, the Lycra Images Fashion Award for the Most Admired Large Format Retailer of the Year in 2006 The foundation of Shopper's Stop was laid on October 27, 1991 by the K. Raheja C orp. group of companies Shoppers' Stop aims to position itself as a global retaile r. The company intends to bring the world's best retail technology, retail practic es and sales to India. Currently, they are adding 4 to 5 new stores every year w ith an immense amount of expertise and credibility, Shopper's Stop has become th e highest benchmark for the Indian retail industry Shopper's Stop in the only re tailer from India to become a member of the prestigious Intercontinental Group o f Departmental Stores (IGDS). With its wide range of merchandise, exclusive shop -in-shop counters of international brands and world-class customer service, Shop pers' Stop brought international standards of shopping to the Indian consumer prov iding them with a world class shopping experience. The stores offer a complete r ange of apparel and lifestyle accessories for the entire family. From apparel br ands like Provogue, Color Plus, Arrow, Levi's, Scullers, Zodiac to cosmetic brands like Lakme, Chambor, Le Teint Ricci etc., Shoppers' Stop caters to every lifestyl e need. Shoppers' Stop retails its own line of clothing namely Stop, Life, Kashi sh, Vettorio Fratini and DIY. The 25 Reliance Super

merchandise at Shoppers' Stop is sold at a quality and price assurance backed by i ts guarantee stamp on every bill. Their motto: We are responsible for the goods w e sell. Vishal Mega Mart is one of fastest growing retailing groups in India. Its outlet s cater to almost all price ranges. The showrooms have over 70,000 products rang e which fulfills all your household needs, and can be catered to less than one r oof. It is covering about 1996592 lac sq. ft. in 18 states across India. Each st ore gives you international quality goods and prices hard to match. The cost ben efits that is derived from the large central purchase of goods and services is p assed on to the consumer the group had a turnover of Rs. 1463.12 million for fis cal 2005, under the dynamic leadership of Mr. Ram Chandra Aggarwal. The group ha d of turnover Rs 2884.43 million for fiscal 2006 and Rs. 6026.53 million for fis cal 2007.the group's prime focus is on retailing. The Vishal stores offer affordab le family fashion at prices to suit every pocket. Trent is the retail arm of the TATA group. Started in 1998, Trent operates Wests ide, one of the many growing retail chains in India. The foresight of the TATA G roup, which invested in retail relatively early, is paying high dividends as ret ail is one of the booming sectors in India. The company has a turnover of Rs. 35 7.6 crores (FY 2005-2006) and currently operates 22 stores in the major metros a nd mini metros of India. An international shopping experience, a perception of v alues, and offering the latest styles, has created a loyal following for Westsid e's own brand of merchandise. Westside was named the 'Most Admired Large Format Retail Chain of the Year' by the Lycra Images Fashion Awards 2005.Westside opera tes stores in Mumbai, Ahmedabad, Bangalore, Delhi, Chennai, Kolkata, Hyderabad, Pune, Surat, Vadodara, Indore, Noida, Gurgaon, Ghaziabad, Mysore, Jaipur, Luckno w, Nagpur. Wal-Mart Stores, Inc. is an American public corporation that runs a c hain of large, discount department stores. It is the world's largest public corp oration by revenue, according to the 2007 Fortune Global 500. Founded by Sam Wal ton in 1962, it was incorporated on October 31, 1969. It opened its home office and first distribution center in Bentonville, Arkansas. It had 38 stores operati ng with 1,500 employees and sales of $44.2 million .Wal-Mart is the largest groc ery retailer in the United States, with an estimated 20% of the retail grocery a nd consumables business, as well as the largest toy seller in the U.S., with an estimated 22% share of the toy market. Wal-Mart is the largest private user of e lectricity in the US. Owns a subsidiary electric company in Texas, and will poss ibly move into the power business. It is also undertaking a number of environmen tally conscious initiatives to reduce energy usage and waste. Wal-Mart 26 Reliance Super

operates in Mexico as Walmex, in the UK as ASDA, and in Japan as Seiyu. It has w holly-owned operations in Argentina, Brazil, Canada, Puerto Rico, and the UK. Wa l-Mart's investments outside North America have had mixed results: its operation s in South America and China are highly successful, but it sold its retail opera tions in South Korea and Germany in 2006 after sustained losses. On September 12 , 2007, Wal-Mart introduced new advertising with the slogan, "Save Money Live Be tter," replacing the "Always Low Prices, Always" slogan, which it had used for t he previous 19 years. Global Insight, which conducted the research that supporte d the ads, found that Wal-Mart's price level reduction resulted in savings for c onsumers of $287 billion in 2006, which equated to $957 per person or $2,500 per household. 27 Reliance Super

Latest News of Retail Market in India Israeli Giants Enter Indian Retail Sector-- Israeli mall giants, owners of retai l-linked realty assets across the world, are buying into India's money minting ret ail sector. Tel Aviv-based mall giant Gazit Globe has tied up with one of the HD FC funds to pump in $150 million into developing assets, including supermarket a nchored retail play. Big Shopping Group, of Israel's biggies has teamed up with Le hman Brothers Real Estate Private equity to set up open malls' in tier I and tier I I cities. Israeli tycoons and families, which raked in money from core real esta te developments in the US, have turned their attention to retail assets from Sao Paulo to Macedonia, as mall ownership and management provides attractive 20% pl us annualized returns in developing markets. Billionair eChaim Katzman, at the h elm of Gazit Globe, is no exception as he went on acquiring shopping centers fro m market to market Us Retail Major Kroger Plans Entry into Indian Real Estate Th e $66-billion US based grocery giant, Kroger is all set to enter into Real Estat e India. According to reports, the company representatives have already met 3-4 prominent real estate companies of India for joint ventures. Some prominent sour ces said that Kroger is primarily interested in jointly developing new FDI-compl iant commercial projects or buying into existing ones. Interestingly, America No . 3 general retailer behind Wal-Mart and The Home Depot runs all its nearly 2,50 0 supermarket stores in the US Reliance Retail plans to turn Adani outlets into specialty Stores Reliance Retai l will be changing the format of its recently purchased Adani Retail stores into specialty stores for jewelry, medicines, eyeglasses, home furnishings, telecom and consumer electrical stores. The company has also taken in some of the execut ives onto its own team. According to a senior executive, the stores cannot be co nverted to Reliance Fresh stores as they are too small, ranging from 2,000-3,000 sq ft, while most Reliance Fresh stores are around 4,000 sq ft in size. Pantalo on Retail pulls out from Gini & Jony Pantaloon Retail India Ltd (PRIL) has offic ially pulled out of Gini & Jony, a children's wear brand and one of the first bran ds that Kishore Biyani, MD of Pantaloon had invested in. Sources report that whi le the financial arrangement with Gini & Jony will continue, it will break off a ll operational ties. Pantaloon had invested in the company with the thought that it would drive business on its own but unfortunately, it has not been able to wor k in a cohesive manner with Pantaloon and become dependent on it. Ultimately Pan taloon had to even depute top management, including the CFO to take care of its functioning. 28 Reliance Super

RETAIL : WORLDWIDE SCENARIO China- the total sales from retail market in China r eached US$755 billion in 2005. However organized retailing in China accounts for only 20% of it. Also the fragmentation of China's retail market is so high that top 100 retailers make up for only 10.5% of the total market. The registered sa les of department stores grew by 25.7% and that of convenience stores grew by 36 .5% in 2005. The Chinese retail market is expected to reach new highs as the pop ulation of strong middle class is expected to double by 2020 and mergers and acq uisitions among retailers are3 going in great guns. The WTO restrictions are als o expected to have a favorable impact on its retail sector. Key Players Analyzed This section covers the key facts about players currently operating in the Chin a retail industry including Shanghai Bailian Group, Beijing Gome Electric, Carre four, Wal-Mart Stores, Wuhan Zhongbai Group, and China Paradise Electronics Reta il. Japan- total annual sales for the Japanese retail industry for 2003 amounted to JPY 133,273 billion. Japan had 1.2 million retail establishments in June 200 4 and there were 42,738 specialty superstores. The year 2002 to 2004 the annual sales per store increased by 3.8%. The growth was mainly driven by the grocery s uperstores but the number of superstores specializing in clothes gradually came down. The organized retail sector in Japan couldn't perform at its full efficien cy because of collapse of the 'bubble economy' in the early 90s Spain- Spain Ene rgy Industry Spain energy consumption is estimated to have reached 165 Million T ons of Oil Equivalent in 2006. Fossil fuels are the major sources for energy in Spain especially Oil (49.5%) & Natural Gas (19.9%). With the Spanish objective o f energy security & diversity, and clean energy sources, renewable sources are e xpected to grow at rapid pace. Key Findings Spain is a net energy importer, with imports accounting for 99% of its total annual oil and natural gas consumption and 50% of its coal consumption key players in Spain energy such as Gas Natural Group, CEPS Group, Repsol YPF, Endesa S.A. and Gamesa. World Trade Organization United State - Retail is the second-largest industry in the U.S. by number of bu sinesses and number of employees. Retail sales in the U.S. (total retail sales i nclude the categories of gasoline, automobiles, and food service) were up about 3.8% in 2007, to $4.49 trillion (Plunkett Research estimate). The 2007 growth wa s driven partly by higher gasoline costs as well as by deep price discounting du ring the Christmas season by mass merchandisers and year-long discounting by aut omobile dealers. 29 Reliance Super

US Retailing Format Brazil- Emerging as one of the world's largest retail markets. The sales in the industry have been growing strongly since 2003 and are expected to continue at t his momentum only over the next few years as constantly declining inflation rate allows for continued expansion of real incomes (increasing demand for non durab le consumer goods) and credit conditions ease (sustaining demand for durable goo ds). A process of consolidation of the retail industry has been underway but ove rall, the market remains relatively fragmented, indicating substantial scope for the larger players to grow their market share in future. The top five supermark et chains account for approximately 40% of total sales. All the market values ha ve been converted to US$ at May 2007 exchange rate where, 1 Brazil Real (BRL) US $ 0.494 (Approx). Penetration of Retail 30 Reliance Super

RELIANCE RELIANCE GROUP The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), i s India's largest private sector enterprise, with businesses in the energy and m aterials value chain. Group's annual revenues are in excess of USD 27 billion. T he flagship company, Reliance Industries Limited, is a Fortune Global 500 compan y and is the largest private sector company in India. Backward vertical integrat ion has been the cornerstone of the evolution and growth of Reliance. Starting w ith textiles in the late seventies, Reliance pursued a strategy of backward vert ical integration - in polyester, fibre intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and production - to be fully inte grated along the materials and energy value chain. The Group's activities span e xploration and production of oil and gas, petroleum refining and marketing, petr ochemicals (polyester, fibre intermediates, plastics and chemicals), textiles an d retail. Reliance enjoys global leadership in its businesses, The Group exports products in excess of USD 15 billion to more than 100 countries in the world. T here are more than 25,000 employees on the rolls of Group Companies. Major Group Companies are Reliance Industries Limited (including main subsidiaries Reliance Petroleum Limited and Reliance Retail Limited) and Reliance Industrial Infrastr ucture Limited. 31 Reliance Super

Reliance super Growth through Value Creation With a vision to generate inclusive growth and pro sperity for farmers, vendor partners, small shopkeepers and consumers, Reliance Retail Limited (RRL), a subsidiary of RIL, was set up to lead Reliance Group's for ay into organized retail. With a 27% share of world GDP, retail is a significant contributor to overall economic activity across the world. Of this, organized r etailing contributes between 20% to 55% in various developing markets. The India n retail industry is pegged at $ 300 billion and growing at over 13% per year. O f this, presently, organized retailing is about 5%. This is expected to grow to 10% by 2011. RRL has embarked upon an implementation plan to build state-of-theart retail infrastructure in India, which includes a multi-format store strategy of opening neighbourhood convenience stores, hypermarkets, specialty and wholes ale stores across India. RRL launched its first store in November 2006 through i ts convenience store format Reliance Fresh'. Since then RRL has rapidly grown to op erate 590 stores across 13 states at the end of FY 2007-08. RRL launched its fir st Reliance Digital' store in April 2007 and its first and India's largest hypermarke t Reliance Mart' in Ahmedabad in August 2007. This year, RRL has also launched its first few specialty stores for apparel (Reliance Trends), footwear (Reliance Foo tprints), jewellery (Reliance Jewels), books, music and other lifestyle products (Reliance Timeout), auto accessories and service format (Reliance Autozone) and also an initiative in the health and wellness business through Reliance Wellness'. In each of these store formats, RRL is offering a unique set of products and se rvices at a value price point that has not been available so far to the Indian c onsumer. Overall, RRL is well positioned to rapidly expand its existing network of 590 stores which operate in 57 cities. During the year, RRL also focused on b uilding strong relationships in the agri-business value chain and has commenced marketing fruits, vegetables and staples that the company sources directly to wh olesalers and institutional customers. RRL provides its customers with high qual ity produce that has better shelf life and more consistent quality than was avai lable earlier. RRL 32 Reliance Super

has made significant progress in establishing state-of-the-art staples processin g centres and expects to make them operational by May 2008. Through the year, RR L also expanded its supply chain infrastructure. The Company is fully geared to meet the requirements of its rapidly growing store network in an efficient manne r. Recognizing that strategic alliances are going to be a key driver to its reta il business, in FY 200708, RRL established key joint ventures with international partners in apparel, optical and office products businesses. Further, RRL will continue to seek synergistic opportunities with other international players as w ell. This year, RRL will continue its focus on rapid expansion of the existing a nd other new formats across India. Mukesh Ambani-promoted Reliance Retail has la unched its first hypermarket Reliance hypermart - in Ahmedabad that will sell fa rm produce to general merchandise at budget friendly prices even as the company mulls setting up 500 such superstores across India by 2010. Reliance super in Gr eater noida was opened in year 2008 to sell merchandise products at lower prices in comparison to local market. It is on the top in terms of sell in complete NC R from the date of its opening. SWOT Analysis of Reliance Retail ltd. Strength:India's biggest conglomerate. First to start retail trend in India. Marke t value US$ 35 billion Turnover of US$ 27 billion in 2007. Investing US$ 5 billi on in pan-india retail including both small & super stores. Generating 1 million jobs Reaching annual sales of US$ 25 billion by 2011 Free membership card to it s customer. Firsthand knowledge of retail business. Small retailers are a powerf Latest software a ul lobby that Made RIL to take on international retail giants. nd technology used like, SAP, RETALIX(used by wall mat except reliance retail lt d.) 33 Reliance Super

Weakness: Lack of detailed region specific customer data. Less data on spending p attern. Lack of trained personnel at all level. Inefficient ERP, SCM. Insufficie nt stock. No proper system to solve customer complaints regarding products.

Oppourtunities: India ranks 1st for top international destination for reta stment. U.S $ 350 billion retail market. 96% market share is held by 12 million family run shops. 4th largest economy in purchasing parity terms after US, china & Japan. Retail sector will grow 35% in 2008. Virgin territory for organized re tail investment. 2-6% of total retail. Expected to increase to 15-18% by 2011. F ood retailing is expected to grow to US$ 1.6 billion. Apparel to increase by 9.5 % by 2010. Threats: Wall-Mart Vishal Mega Mart Future group- Big Bazaar, Food bazaar, pantal oons, brand factory, e-zone, central mall, furniture bazaar etc. Spencer Aditya Birla Group- petre england people store, more. TATA group- westside, tanishq sto re, titan store, star india bazaar, landmark, croma 34 Reliance Super

Retail triangle Manpower Customer Merchandise 1. Customer Marketing of goods and services Loyalty programmes Services Promotion and Scheme s 2. Merchandize Quality Quantity Range Product Price Placement Categories under Merchandize a. A pperals Men's Ladies Kids Men's Men's casual Men's formal Basics(UG) Sports 35 Reliance Super

Ladies Casual Formal Launchary (UG) Sports Kids Toddlers (Infants) Juniors Senio rs b. Food Staples Bakery Processed Staples Pulses Flours Oil & Ghee Rice Proces sed food (FMCG) RTE-ready of eat RTF-ready to fry Processed food Beverages Confe ctionary Bakery Bread Rush Butter Milk products Cheese Eggs Cakes c. Non- food F MCG Telecom Electronics IT Toys, stationary Books, magazine, music Auto accessor ies House ware 36 Reliance Super

FMCG Oral car Personal care Home care House ware Utensils Crokery Cleaning equip ments Glass ware Home decoration Home dining Pooja needs Disposal ware Bathroom accessories 3. Manpower (Team) SM ASM ADM SUPERVISOR CSA JCSA 4. HR Compensation Incentives Perks Facilities Motivation Recruitment Training Develop ment Career growth Task allocation Job time Area allocation. 37 Reliance Super

Learning from summer internship Inventory management Customer care services Product placement Billing ODP EOD PI SAP & RETALIX Inventory management It is concerned with managing inventory in b ack of house (BOH) and also on floor. Main inventory is received from distributi on channel (DC) of company and from vendors of company such as HUL, P&g etc. Whe n order or invoice is received it is first verified at BOH by matching HU number and then it is delivered at floor. After this the complete information is updat ed in SAP, which is a ERP software Main function of BOH is to receive, store and then deliver or issue. ______________ ______________ ______________ ___________ ___ At the time of receiving of invoice we have to take three copies of product list. These three lists are original list, duplicate list, and excise list. So, in retail inventory management is concern with receiving of products, updating i n SAP and then placing on floor for customer service. Customer care services-- I n retail sector there is CSD (customer service desk) to provide customer care se rvices. These services include providing information to customer about If we fin d such signal on any carton, then its means that we can put the Same product car ton on it but not more than four in numbers. 38 Reliance Super

Schemes & offers Scratch coupons Discount offers Apart from these in this sectio n we have to provide services to customers related to the Membership or loyalty cards Vouchers Credit notes Alteration services Return or exchange of product Pr oduct placement In this section we have carry products from BOH to the floor. We have to place the product in their respective positions in their respective sec tions. Product placement is done on the basis of the customer purchasing like an d dislike. It also depends upon the sale of the product or the offers available on the products. If a product which is most sold and possible to keep in front t hen it is placed in front depending upon the store architecture. There is a data script which has bar code, MRP, RRP, product name to inform customer about the product. This data script is also called price sel. Some time there are products which are same but have different bar code. Then we have to keep them separate. Top- Top is used to store excess quantity and end cap is used for promotion onl y. All the products are placed in a Gandola and it is also called POP (point of purchase). Product placement is mainly concern with the providing knowledge abou t product price and easy availability to customer in store. 39 Reliance Super

Billing process In reliance retail RETALIX is used for cash management. All kind of billing is done with the help of this software. All the billing process is c arried out at POS (point of sale). There are many different mode of payment such as By cash By Credit card By Debit card By loyalty card (voucher) By credit not e By scratch cards By Acor By Sodexo ODP (opening day process) On each morning w e have to first take the sale report of last day. After this denomination proces s is done to in the multiple of 10 for cash of each and every cashier which were working yon last day. After this process of cash transfer is done. In this proc ess whole cash is transferred to the bank account and other sources of payment a re transferred to the reliance head office account. Safe locking process is done to lock the complete information regarding the previous day sale. After doing t his process all the transaction are locked. On each morning we have to provide f loat to cashier who have to do billing on that particular day. EOD (end of day p rocess) As the name suggest, it is the process which has to be done before 12 AM in any condition. This process is possible only when all the billing has been d one on each day. So before doing this process we have to sign off each POS and t aking out X-Read report from each POS. after doing EOD process whole data relate d to transactions is transferred to head office. 40 Reliance Super

If this process is not done before 12 AM, then no transactions will be possible on next day. Both ODP and EOD process are done with the help of RETALIX- Storeli ne software. PI (physical inventory) Physical inventory is one of the most impor tant processes carried out in retail store. This process is carried out one time in a month to check the quantity of each product or the stock matching that has to be available according to the ERP software. In this process we have to take each and every product from each section then checking availability by manually counting those products by their bar code mentioned on each and every product. F or this we have to first generate report for a particular section like 18 for st aples and many more. There are 36 categories available in reliance super. This p rocess goes for 10 days in a month. After generating report for particular categ ory, we have to check quantity availability for each product by matching their b ar code. Initially manual report was generated for PI. But in that store manager takes only those products which are available in right amount. In manual report 1000 articles were generated in a single report. But in auto report only 300 ar ticles are generated in one document. The report consists of sr. no. , PI no. , EAN no. , article no., article name, quantity. After counting whole article the data is entered in SAP to check the variation in actual quantity available in st ore and quantity that SAP shows. In this case we have to match both quantity of to show minimum variation possible. So, this is whole process done in PI (physic al inventory) process. SAP COMMANDS TO VIEW NEGATIVE STOCK AMOUNT TO VIEW PENDIN G GRN TO VIEW DC WISE VSTO REPORT NO OF STO CREATED PURCHASING DOC NO IF YOU DON'T KNOW SERACH BY ARTICLE VENDOR S PO SEE SEARCH ARTICLE NO. AND P O GENERIC ORDER OF PO CHANGE STO TO PRINT STO MOVE MENT TYPE STOCK MOVEMENT MB52 ZGRSTAT ZMMSTO R ME2N ME2L ME2M ME2W ME22N YM70 MB51 41 Reliance Super

FOR MAIN SCREEN TO CHANGE STO PENDING PO REPORT TO CHECK PO HISTORY CREATE PURCH ASE ORDER TO SEE OUTBOUND DOCUMENT REVERVSE THE OUT BOUND DELIVERIES CHANGE OUTB OUND DELIVERY FOR CREATING PO TO SEE DISCREPANCY OF INDENT VS RECEIVED VENDOR CO DES AMUL KWALITY WALLS MOTHER DAIRY RANGER FARMS WET DC DRY DC PURCHASE ORDER- O THER PURCHASE ORDER- PUT PO ZSTORE ME22N Ympn me23n me21 n VL06F VL09 VL02N ME21N me80fn 10001034 10001039 10001036 9206 9007 9006 NO AND CHANGE DATE Pitfalls Bad behavior of employees Lot of customer complaints Employees not available for foreign customer dealings Schemes are not implemented quickly. Some important terms NOB:- NUMBER OF BILLIN A DAY FF:- WALK IN THE STORE ABV:- A vg. BILL VALUE= SALE/NOB CONVERSION:- VISITED PEOPLE CONVERTED IN CUSSTOMER= (NO B/TOTAL FOOTFALL)*100 42 Reliance Super

RESEARCH WORK Research objective:- To know the significant effect of footfall on sale. Data:- Secondary Samples:- Non- probability (convenience) Hypothesis:- H0 -there is a significant relationship exist between footfall and sale. Sample siz e:- 31 Result:Null hypothesis is correct because significance level is .904 R sq uare is .818 Per customer sale is Rs.362.52 Function for sale is Sale = 3622.514 (footfall)-15381.908. GRAPH REPRESENTATION FROM DATA WEEK 1 2 3 4 5 FOOTFALL 5827 4231 4238 5087 3066 % FF 25.95661 18.84716 18.87835 22.66025 13.65762 SALE 2059985 1536903 1471702 1409588 890881 %SALE 27.95452 20.85616 19.97137 19.12847 12.08948 43 Reliance Super

Monthly Footfall 7000 6000 5000 4000 3000 2000 1000 0 1 2 3 4 5 5827 5087 4231 4238 3066 WEEK FOO TFALL Monthly Footfall in % 30 25 20 15 10 5 0 1 2 3 4 5 18.85 18.88 13.66 WEEK % FF 25.96 22.66 44 Reliance Super

Monthly sale 2500000 2059985 2000000 1536903 1500000 1000000 500000 0 1 2 3 4 5 1471702 14095 88 890881 WEEK SALE Monthly Sale in % 30 25 20 15 12.08 10 5 0 1 2 3 4 5 27.95 20.86 19.97 19.13 %SALE WEEK MAJOR FINDINGS The Retail Sector in India can be split up into two, the organize d and the unorganized. The organized sector whose size is expected to triple by 2010 can be further split up into departmental stores, supermarkets, shopping ma lls. In terms of value the size of the retail sector in India is $300 billion. T he organized sector contributes about 4.6% to the total trade. The retail sector in India contributes 10% to the Gross Domestic Product and 8% to the employment of the country. In terms of growth the FMCG retail sector is the fastest growin g unit and the retail relating to household care, confectionery etc, have lagged behind. 45 Reliance Super

The foreign retail giants were initially restricted from making investments in I ndia. But now FDI of 51% is permitted in India only through single branded retai l outlets. Multi brand outlets are still beyond their reach. Again they can only enter the market through franchisees. This was how Wal-Mart had entered joining hands with Bharti Enterprises. On line retailing is still to leave a mark on th e customers due to lacunae that we have already mentioned. Cultural and regional differences in India are the biggest challenges in front of retailers. This Fac tor deters the retailers in India from adopting a single retail format. Hypermar ket is emerging as the most favorable format for the time being in India CONCLUS ION For a start, these retailers need to invest much more in capturing more spec ific market. Intelligence as well as almost real-time customer purchase behavior information. The retailers also need to make substantial investment in understa nding/acquiring some advanced expertise in developing more accurate and scientif ic demand forecasting models. Re-engineering of product sourcing philosophies-al igned more towards collaborative planning and replenishment should then be next on their agenda. The message, therefore for the existing small and medium indepe ndent retailers is to closely examine what changes are taking place in their imm ediate vicinity, and analyze Whether their current market offers a potential red evelopment of the area into a more modern multi-option destination. If it does, and most commercial areas in India do have this potential, it would be very usef ul to form a consortium of other such small retailers in that vicinity and take a pro-active approach to pool in resources and improve the overall infrastructur e. The next effort should be to encourage retailers to make some investments in improving the interiors of their respective establishments to make shopping an e njoyable experience for the customer. As the retail marketplace changes shape an d competition increases, the potential for improving retail productivity and cut ting costs is likely to decrease. Therefore, it will become important for retail ers to secure a distinctive position in the marketplace based on value, relation ships or experience. Finally, it is important to note that these strategies are not strictly independent of each other; value is function of not just price, qua lity and service but can also be enhanced by Personalization and offering a memo rable experience. In fact, building relationships with customers can by itself i ncrease the quality of overall customer experience and thus the perceived value. But most importantly for winning in this intensely competitive marketplace, it is critical to understand the target customer's definition of value and make an offer, which not only delights the customers but also is also difficult for comp etitors to replicateSS. 46 Reliance Super