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Project on Retail industry and its
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Future in Bikaner
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Submitted To:- Mr. P C Rao
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Submitted By:- JITENDRA
Date:- 12/21/2010
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ACKNOWLEDGEMENT
We both are highly grateful to Mr. P C Rao Sir for giving US this great
opportunity to work on this project and the process enrich us with
immense learning on all the aspects for the development of the project.
NITESH SADANI
JITENDRA KUMAR JAIN
INTRODUCTION
The India Retail Industry is the largest among all the industries, accounting
for over 10 per cent of the country’s GDP and around 8 per cent of the
employment. The Retail Industry in India has come forth as one of the most
dynamic and fast paced industries with several players entering the market.
But all of them have not yet tasted success because of the heavy initial
investments that are required to break even with other companies and
compete with them. The India Retail Industry is gradually inching its way
towards becoming the next boom industry.
The total concept and idea of shopping has undergone an attention
drawing change in terms of format and consumer buying behavior,
ushering in a revolution in shopping in India. Modern retailing has entered
into the Retail market in India as is observed in the form of bustling
shopping centers, multi-storied malls and the huge complexes that offer
shopping, entertainment and food all under one roof.
A large young working population with median age of 24 years, nuclear
families in urban areas, along with increasing workingwomen population
and emerging opportunities in the services sector are going to be the key
factors in the growth of the organized Retail sector in India. The growth
pattern in organized retailing and in the consumption made by the Indian
population will follow a rising graph helping the newer businessmen to
enter the India Retail Industry.
In India the vast middle class and its almost untapped retail industry are the
key attractive forces for global retail giants wanting to enter into newer
markets, which in turn will help the India Retail Industry to grow faster.
Indian retail is expected to grow 25 per cent annually. Modern retail in India
could be worth US$ 175-200 billion by 2016. The Food Retail Industry in
India dominates the shopping basket. The Mobile phone Retail Industry in
India is already a US$ 16.7 billion business, growing at over 20 per cent
per year. The future of the India Retail Industry looks promising with the
growing of the market, with the government policies becoming more
favorable and the emerging technologies facilitating operations.
THE INDIAN RETAIL SCENE
India is the country having the most unorganized retail market. Traditionally
it is a family�s livelihood, with their shop in the front and house at the
back, while they run the retail business. More than 99% retailer�s
function in less than 500 square feet of shopping space. Global retail
consultants KSA Technopak have estimated that organized retailing in
India is expected to touch Rs 35,000 crore in the year 2005-06. The Indian
retail sector is estimated at around Rs 900,000 crore, of which the
organized sector accounts for a mere 2 per cent indicating a huge potential
market opportunity that is lying in the waiting for the consumer-savvy
organized retailer.
Purchasing power of Indian urban consumer is growing and branded
merchandise in categories like Apparels, Cosmetics, Shoes, Watches,
Beverages, Food and even Jewellery, are slowly becoming lifestyle
products that are widely accepted by the urban Indian consumer. Indian
retailers need to advantage of this growth and aiming to grow, diversify and
introduce new formats have to pay more attention to the brand building
process. The emphasis here is on retail as a brand rather than retailers
selling brands. The focus should be on branding the retail business itself. In
their preparation to face fierce competitive pressure, Indian retailers must
come to recognize the value of building their own stores as brands to
reinforce their marketing positioning, to communicate quality as well as
value for money. Sustainable competitive advantage will be dependent on
translating core values combining products, image and reputation into a
coherent retail brand strategy.
There is no doubt that the Indian retail scene is booming. A number of large
corporate houses � Tata�s, Raheja�s, Piramals�s, Goenka�s
� have already made their foray into this arena, with beauty and health
stores, supermarkets, self-service music stores, newage book stores,
every-day-low-price stores, computers and peripherals stores, office
equipment stores and home/building construction stores. Today the
organized players have attacked every retail category. The Indian retail
scene has witnessed too many players in too short a time, crowding
several categories without looking at their core competencies, or having a
well thought out branding strategy.
STRATEGIES, TRENDS AND OPPORTUNITIES 2007
Retailing in India is gradually inching its way toward becoming the next
boom industry. The whole concept of shopping has altered in terms of
format and consumer buying behavior, ushering in a revolution in shopping
in India. Modern retail has entered India as seen in sprawling shopping
centres, multi-storied malls and huge complexes offer shopping,
entertainment and food all under one roof. The Indian retailing sector is at
an inflexion point where the growth of organized retailing and growth in the
consumption by the Indian population is going to take a higher growth
trajectory. The Indian population is witnessing a significant change in its
demographics. A large young working population with median age of 24
years, nuclear families in urban areas, along with increasing
workingwomen population and emerging opportunities in the services
sector are going to be the key growth drivers of the organized retail sector
in India.
GROWTH OF RETAIL SECTOR IN INDIA
Retail and real estate are the two booming sectors of India in the present
times. And if industry experts are to be believed, the prospects of both the
sectors are mutually dependent on each other. Retail, one of India�s
largest industries, has presently emerged as one of the most dynamic and
fast paced industries of our times with several players entering the market.
Accounting for over 10 per cent of the country�s GDP and around eight
per cent of the employment retailing in India is gradually inching its way
toward becoming the next boom industry.
As the contemporary retail sector in India is reflected in sprawling
shopping centers, multiplex- malls and huge complexes offer shopping,
entertainment and food all under one roof, the concept of shopping has
altered in terms of format and consumer buying behavior, ushering in a
revolution in shopping in India. This has also contributed to large-scale
investments in the real estate sector with major national and global
players investing in developing the infrastructure and construction of the
retailing business. The trends that are driving the growth of the retail
sector in India are
Low share of organized retailing
Falling real estate prices
Increase in disposable income and customer aspiration
Increase in expenditure for luxury items (CHART)
Another credible factor in the prospects of the retail sector in India is the
increase in the young working population. In India, hefty pay packets,
nuclear families in urban areas, along with increasing working-women
population and emerging opportunities in the services sector. These key
factors have been the growth drivers of the organized retail sector in
India which now boast of retailing almost all the preferences of life -
Apparel & Accessories, Appliances, Electronics, Cosmetics and
Toiletries, Home & Office Products, Travel and Leisure and many more.
With this the retail sector in India is witnessing rejuvenation as traditional
markets make way for new formats such as departmental stores,
hypermarkets, supermarkets and specialty stores.
The retailing configuration in India is fast developing as shopping malls
are increasingly becoming familiar in large cities. When it comes to
development of retail space specially the malls, the Tier II cities are no
longer behind in the race. If development plans till 2007 is studied it
shows the projection of 220 shopping malls, with 139 malls in metros and
the remaining 81 in the Tier II cities. The government of states like Delhi
and National Capital Region (NCR) are very upbeat about permitting the
use of land for commercial development thus increasing the availability
of land for retail space; thus making NCR render to 50% of the malls in
India.
India is being seen as a potential goldmine for retail investors from over
the world and latest research has rated India as the top destination for
retailers for an attractive emerging retail market. India�s vast middle
class and its almost untapped retail industry are key attractions for global
retail giants wanting to enter newer markets. Even though India has well
over 5 million retail outlets, the country sorely lacks anything that can
resemble a retailing industry in the modern sense of the term. This
presents international retailing specialists with a great opportunity. The
organized retail sector is expected to grow stronger than GDP growth in
the next five years driven by changing lifestyles, burgeoning income and
favorable demographic outline.
INDUSTRY EVOLUTION
Traditionally retailing in India can be traced to
The emergence of the neighborhood �Kirana� stores catering to
the convenience of the consumers
Era of government support for rural retail: Indigenous franchise model
of store chains run by Khadi & Village Industries Commission
1980s experienced slow change as India began to open up economy.
Textiles sector with companies like Bombay Dyeing, Raymond's, S
Kumar's and Grasim first saw the emergence of retail chains
Later Titan successfully created an organized retailing concept and
established a series of showrooms for its premium watches
The latter half of the 1990s saw a fresh wave of entrants with a shift
from Manufactures to Pure Retailers.
For e.g. Food World, Subhiksha and Nilgiris in food and FMCG;
Planet M and Music World in music; Crossword and Fountainhead in
books.
Post 1995 onwards saw an emergence of shopping centers
Mainly in urban areas, with facilities like car parking
Targeted to provide a complete destination experience for all
segments of society
Emergence of hyper and super markets trying to provide customer
with 3 V�s - Value, Variety and Volume
Expanding target consumer segment: The Sachet revolution -
example of reaching to the bottom of the pyramid.
At year end of 2000 the size of the Indian organized retail industry is
estimated at Rs. 13,000 crore
RETAILING FORMAT 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 include Shoppers Stop, Pyramid, and
Pantaloon.
Specialty Stores:
Chains such as the Bangalore based Kids Kemp, the Mumbai books
retailer Crossword, RPG's Music World and the Times Group's music
chain Planet M, are focusing on specific market segments and have
established themselves strongly in their sectors.
Discount Stores:
As the name suggests, discount stores or factory outlets, offer
discounts on the MRP through selling in bulk reaching economies of
scale or excess stock left over at the season. The product category
can range from a variety of perishable/ non-perishable goods.
Department Stores:
Large stores ranging from 20000-50000 sq. ft, catering to a variety of
consumer needs. Further classified into localized departments such as
clothing, toys, home, groceries, etc.
Departmental Stores are expected to take over the apparel business
from exclusive brand showrooms. Among these, the biggest success is K
Raheja's Shoppers Stop, which started in Mumbai and now has more
than seven large stores (over 30,000 sq. ft) across India and even has its
own in store brand for clothes called Stop.
Hyper marts/Supermarkets:
Large self-service outlets, catering to varied shopper needs are termed
as Supermarkets. These are located in or near residential high streets.
These stores today contribute to 30% of all food & grocery organized
retail sales. Super Markets can further be classified in to mini
supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets
ranging from of 3,500 sq ft to 5,000 sq ft. having a strong focus on food &
grocery and personal sales.
Convenience Stores:
These are relatively small stores 400-2,000 sq. feet located near
residential areas. They stock a limited range of high-turnover
convenience products and are usually open for extended periods during
the day, seven days a week. Prices are slightly higher due to the
convenience premium
MBO�s:
Multi Brand outlets, also known as Category Killers, offer several brands
across a single product category. These usually do well in busy market
places and Metros.
INDIA�S NUMBER OF DOMESTIC GROCERY CHAINS AND
EARLY FOREIGN ENTRANTS
RECENT TRENDS
Retailing in India is witnessing a huge revamping exercise as can be
seen in the graph
India is rated the fifth most attractive emerging retail market: a
potential goldmine.
Estimated to be US$ 200 billion, of which organized retailing (i.e.
modern trade) makes up 3 percent or US$ 6.4 billion
As per a report by KPMG the annual growth of department stores is
estimated at 24%
Ranked second in a Global Retail Development Index of 30
developing countries drawn up by AT Kearney.
Multiple drivers leading to a consumption boom:
o Favorable demographics
o Growth in income
o Increasing population of women
o Raising aspirations: Value added goods sales
Food and apparel retailing key drivers of growth
Organized retailing in India has been largely an urban
Phenomenon with affluent classes and growing number of double-
income households.
More successful in cities in the south and west of India. Reasons
range from differences in consumer buying behavior to cost of real
estate and taxation laws.
Rural markets emerging as a huge opportunity for retailers reflected
in the share of the rural market across most categories of
consumption
o ITC is experimenting with retailing through its e-Choupal and
Choupal Sagar � rural hypermarkets.
o HLL is using its Project Shakti initiative � leveraging women
self-help groups � to explore the rural market.
o Mahamaza is leveraging technology and network marketing
concepts to act as an aggregator and serve the rural markets.
IT is a tool that has been used by retailers ranging from Amazon.com
to eBay to radically change buying behavior across the globe.
�E-tailing� slowly making its presence felt.
RETAIL SALES IN INDIA
CHALLENGES & OPPORTUNITIES
Retailing has seen such a transformation over the past decade that its very
definition has undergone a sea change. No longer can a manufacturer rely
on sales to take place by ensuring mere availability of his product. Today,
retailing is about so much more than mere merchandising. It�s about
casting customers in a story, reflecting their desires and aspirations, and
forging long-lasting relationships. As the Indian consumer evolves they
expects more and more at each and every time when they steps into a
store. Retail today has changed from selling a product or a service to
selling a hope, an aspiration and above all an experience that a consumer
would like to repeat.
For manufacturers and service providers the emerging opportunities in
urban markets seem to lie in capturing and delivering better value to the
customers through retail. For instance, in Chennai CavinKare�s
LimeLite, Marico�s Kaya Skin Clinic and Apollo Hospital�s Apollo
Pharmacies are examples, to name a few, where manufacturers/service
providers combine their own manufactured products and services with
those of others to generate value hitherto unknown. The last mile connect
seems to be increasingly lively and experiential. Also, manufacturers and
service providers face an exploding rural market yet only marginally tapped
due to difficulties in rural retailing. Only innovative concepts and models
may survive the test of time and investments.
However, manufacturers and service providers will also increasingly face a
host of specialist retailers, who are characterized by use of modern
management techniques, backed with seemingly unlimited financial
resources. Organized retail appears inevitable.
Retailing in India is currently estimated to be a US$ 200 billion industry, of
which organized retailing makes up a paltry 3 percent or US$ 6.4 billion. By
2010, organized retail is projected to reach US$ 23 billion. For retail
industry in India, things have never looked better and brighter. Challenges
to the manufacturers and service providers would abound when market
power shifts to organized retail.
CONCLUSION
The retail sector has played a phenomenal role throughout the world in
increasing productivity of consumer goods and services. It is also the
second largest industry in US in terms of numbers of employees and
establishments. There is no denying the fact that most of the developed
economies are very much relying on their retail sector as a locomotive of
growth. The India Retail Industry is the largest among all the industries,
accounting for over 10 per cent of the country�s GDP and around 8 per
cent of the employment. The Retail Industry in India has come forth as one
of the most dynamic and fast paced industries with several players entering
the market. But all of them have not yet tasted success because of the
heavy initial investments that are required to break even with other
companies and compete with them. The India Retail Industry is gradually
inching its way towards becoming the next boom industry.
