INTRODUCTION

Industry analysis of the Indian retail sector:

Modern retailing has entered India in form of malls and huge complexes offering shopping,
entertainment, leisure to the consumer as the retailers experiment with a variety of formats,
from discount stores to supermarkets to hypermarkets to specialty chains. However, kiranas
still continue to score over modern formats mostly due to the convenience factor i.e. near to
their house.

This organized segment typically comprises of a large number of retailers, greater

enforcement of taxation mechanisms and better labour law monitoring system. It's no longer
about just stocking and selling but about efficient supply chain management, developing
vendor relationship quality customer service, efficient merchandising and even the labour
class is also in the working process timely promotional campaigns. The modern retail formats
are encouraging development of well-established and efficient supply chains in each segment
ensuring efficient movement of goods from farms to kitchens, which will result in huge
savings for the farmers as well as for the nation. The government also stands to gain through
more efficient collection of tax revenues. Network marketing has been growing quite fast and
has a few large players today. Gas stations are seeing action in the form of convenience
stores, ATMs, food courts and pharmacies appearing in many outlets.

In the coming years it can be said that the hypermarket route will emerge as the most
preferred format for international retailers stepping into the country. Estimates indicate that
this sector will have the potential to absorb many more hypermarkets in the next four to five
years.

List of retailers that have come with new formats:

Retailer Current Format New Formats

Shoppers’ Stop Department Store Quasi-mall

Crossword Large Bookstore Corner shop

Piramyd Departmental Store Quasi-mall, Food retail

Pantaloon Own brand store Hypermarket

Subhiksha Supermarket considering moving to self service

Globus Department Store Small fashion stores

Traditionally, the kirana retailing has been one of the easiest ways to generate self-employment,
as it required minimum investment in terms of land, labour and capital. These store are not
affected by the modern format of retailing. In order to keep pace with the modern formats,
kiranas have now started providing more value-added services like stocking ready to cook
vegetables and other fresh produce. They also provide services like credit, phone service, home
delivery etc.

The organized retailing has helped in promoting several niche categories such as packaged
fruit juices, hair creams, fabric bleaches, shower gels, depilatory products and convenience
and health foods, which are generally not found in the local kirana stores. Looking at the vast
opportunity in this sector, big players like Reliance has announced its plans to become the
country's largest modern retainers by establishing a chain of stores across all major cities.

Apart from metro cities, several small towns like Nagpur, Nasik, Ahmedabad, Aurangabad,
Sholapur, Kolhapur and Amravati has seen the expansion of modern retails. Small towns in
Maharashtra are emerging as retail hubs for large chain stores like Pantaloon Retail because
many small cities like Nagpur have a student population, lower real estate costs, fewer power
cuts and lower levels of attrition.

However, retailers need to adjust their product mix for smaller cities, as they tend to be more
conservative than the metros. In order for the market to grow in modern retail, it is necessary
that steps are taken for rewriting laws, restructuring the tax regime, accessing and developing
new skills and investing significantly in India.

India is rated as the most attractive retail markets

Country Market Market Time

Risk Rank
Attractiveness Saturation Pressure
Country 25% 25% 30% 20%

India 62 34 91 80 1st
Russia 52 58 71 92 2nd
China 68 40 53 90 4th
Turkey 51 56 66 65 9
Thailand 64 41 59 71 12
Malaysia 70 49 58 40 18
Egypt 51 35 85 30 25
Brazil 52 56 57 20 29
India’s
24th 14th 1st 7th 1st
Rank
 Socio demographic factors will lead to faster growth of Organized retail in India:

100% 9% 10% 11% 12%

9%
80% 19% 19% 20% 22% 23%

60% 25% 24% 24% 26% 27%

40%

20% 47% 47% 45% 42% 39%

0%
1991 1996 2001 2006 2010E

0-19 Yrs 20-34 Yrs 35-54 Yrs 55+ Yrs

Pharma
Entertainment Durable 2%
1% 10%
Home
3%
Clothing and
Textile
36%
Food & Grocery
14%

Health & Beauty

1%

Books, Music &

Gifts
3% Footwear
Watch & 13%
Jewellery
17%
 ORIGIN OF RETAIL SECTOR
Early Trade:

When man started to cultivate and harvest the land, he would occasionally find himself with a
surplus of goods. Once the needs of his family and local community were met, he would
attempt to trade his goods for different goods produced elsewhere. Thus markets were formed.
These early efforts to swap goods developed into more formal gatherings. When a producer
who had a surplus could not find another producer with suitable products to swap, he may have
allowed others to owe him goods. Thus early credit terms would have been developed. This
would have led to symbolic representations of such debts in the form of valuable items (such
as gemstones or beads), and eventually money.

HOW RETAIL DEVELOPED:

Peddlers and Producers:

The Retail Trade is rooted in two groups, the peddlers and producers. Peddlers tended to be
opportunistic in their choice of stock and customer. They would purchase any goods that they
thought they could sell for a profit. Producers were interested in selling goods that they had
produced.

General Store:

This division continues to this day with some shops specializing in specific areas, reflecting
their origins as outlets for producers (such as Pacific Concord of Hong Kong), and others
providing a broad mix, known as General Store (such as Casey's in the Midwest of the U.S.A.).
Although specialist shops are still with us, over time, the general store has increasingly taken
on specialist products. Customers have found this to be more convenient than having to visit
many shops - thus the term "Convenience Store" has also been applied to these shops. As the
popularity of general stores has grown, so has their size. This combined with the advent of
Self-Service has lead to the Supermarket, or Superstore.

Early Markets:

Over time, producers would have seen value in deliberately over-producing in order to profit
from selling these goods. Merchants would also have begun to appear. They would travel
from village to village, purchasing these goods and selling them for a profit. Over time, both
producers and merchants, would regularly take their goods to one selling place in the centre
of the community. Thus, regular markets appeared.The First Shop : Eventually, markets
would become permanent fixtures i.e. shops. These shops along with the logistics required to
get the goods to them were, the start of the Retail Trade.
The Birth of Distance Retailing:

Defined as sales of goods between two distant parties where the deliverer has no direct interest
in the transaction, the earliest instances of distance retailing probably coincided with the first
regular delivery or postal services. Such services would have started in earnest once man had
learned how to ride a camel, horse etc.

When individuals or groups left their community and settled elsewhere, some missed foodstuffs
and other goods that were only available in their birthplace. They arranged for some of these
goods to be sent to them. Others in their newly adopted community enjoyed these goods and
demand grew. Similarly, new settlers discovered goods in their new surroundings that they
dispatched back to their birthplace, and once again, demand grew. This soon turned into a
regular trade. Although such trading routes expanded mainly through the growth of traveling
salesmen and then wholesalers, there were still instances where individuals purchased goods
at long distance for their own use. A second reason that distance selling increased was through
war. As armies marched through territories, they laid down communication lines stretching
from their home base to the front. As well as garnering goods from whichever locality they
found themselves in, they would have also taken advantage of the lines of communication to
order goods from home.

Origins of Retail

It is likely that, as markets became more permanent fixtures they evolved into shops. Although
advantageous in many respects, this removed the mobility that a peddler or traveling merchant
may still have enjoyed. For some shopkeepers, it made sense to obtain extra stock and open up
another shop, most probably operated by another family member. This would recover business
from peddlers and create new business and the greater volume would allow the shopkeeper to
strike a better deal with suppliers. Thus the retail chain would have started. Its thought that this
process would have started in china over 2200 years ago with a chain of shops owned by a
trader called Lo Kass.

The First Self-Service Store:

This all changed in 1915 when Albert Gerrard opened the Groceteria in Los Angeles, the first
documented self-service store. This was soon followed a year later by the Piggly Wiggly® self-
service store, founded by Clarence Saunders in Tennessee in the U.S.

Growth:

This new type of shopping was more efficient and many customers preferred it. Although
personal service stores remain to this day, this new concept started a rapid growth of self-
service stores in the United States. Other countries were slow to take up the idea, but there has
been a steady rise in the global amount of self-service stores ever since.
Efficiency

These entrepreneurs noticed that their staff had to spend a great deal of time taking grocery
orders from customers. The groceries were stacked on shelves allowing customers to walk
around and browse, collecting their shopping in a basket that was supplied. The shopkeeper
would only need to tot up the final bill at the end of the process and transfer the goods from the
basket to the customer and receive payment.

From Family Business to Formal Structure:

Although retail chains would have been mostly run by families, as some chains grew, they
would have needed to employ people from outside of their family. This was a limiting factor
as there would have been a limit to the amount of trusted non family members available to
help run the chain. Another, even more definite limiting factor was the distance the furthest
shop would have been from the original shop. The greater the distance, the more time and
effort would have been needed to effectively manage outpost shops and to service them with
goods. There was, therefore, a natural barrier to expansion. That was the case until transport
and communications became faster and more reliable. When this happened towards the end
of the 19th century, chains became much bigger and more widespread. Many of these
businesses became more structured and formalized, leading to the retail chain that we see
today.
 INDIAN RETAIL INDUSTRY
UNORGANISED RETAIL SECTOR:

Today, retailing doesn’t involve just dealing or marketing from shops, it includes analyzing the
market in an effort to provide reasonable prices together with an array of options and
experience to customers. The sole purpose of all this is retaining the brand loyalty of customers.
Indian retail is currently a US$ 245 billion market and is anticipated to extend to almost US$
385 billion mark by the next five years. The Indian retail sector is currently sporting a brand
new look and together with a 46.64 per cent three-year Compounded Annual Growth Rate
(CAGR), Conventional marketplaces are paving way for new shopping malls, the likes of
superstores, shopping plazas, supermarkets and brand label stores. International style shopping
centers have started dotting the skyline of cities and smaller towns, acquainting the Indian
customer to a unique shopping experience. The retail industry in India is split up into the
unorganized and organized retail segments.

The unorganized retail sector includes the big, average and modest grocery stores and the
chemist shops. A changeover is taking place from the conventional retail sector to organized
retailing. But the unorganized segment still dominates and leads the industry. By 2010, the
Indian retailing sector is anticipated to become an Rs12.5 trillion market. The share of
organized retailing is supposed to jump to about 10 per cent from the existing three per cent.
The anticipated staggering growth in organized retailing provides an opportunity to expand the
market for both established and new players. According to the latest report India Retail Sector
Analysis (2006ñ07)I by RNCOS, the total retail market is primarily focused in rural regions,
which makes up 55 per cent or US$ 165 billion of the overall retail market as opposed to urban
segment, which represents 45 per cent or US$ 135 billion of the gross retail market. The rural
market is spread over 627,000 villages, even though its centre of attention is focused around a
core group of 100,000 villages that makes up 50 per cent of the rural population.

India represents the most compelling international investment opportunity for mass merchant
and food retailers looking to expand overseas, according to management consulting firm AT
Kearney's 2005 Global Retail Development Index (GRDI), an annual study of retail investment
attractiveness among 30 emerging markets. India is rated as the fifth largest emerging retail
market and is seen as a potential goldmine. Driving global brands into India is the greatly
improved investment climate due to the recent relaxation of direct ownership restrictions on
foreign retailers. The country's retail market totals $330 billion, is vastly underserved and has
grown by 10 per cent on an average over the past five years. The message for retailers on India
is clear – move now or forego prime locations and market positions that will soon become
saturated. Global retailers that missed opportunities to capture first-mover advantage in China
will make up for it in India.

Though India has more than five million retail outlets, they are greatly unorganized. There is
no supply chain management perspective. In fact, out of the entire retail sector in India, the
organized sector is only 25 per cent and the rest is unorganized. 96 per cent of the retail outlets
are smaller in area than the standard norms. The retail industry is divided into organized and
unorganized sectors. Organized retailing refers to trading activities undertaken by licensed
retailers who are registered for sales tax and income tax. These include corporate backed
hypermarket and retail chains and so on. Unorganized retailing is the traditional low-cost shops,
handcarts and pavements and is by far the prevalent form of trade in India. The efficiency of
organized sector in retailing is manifested in some of the newer supermarkets in
urban/metropolitan India – the produce is cleaner, fresher, well packed and often cheaper than
the local shopkeeper. This is possible because of the far more efficient distribution system,
which organized retail chains are employing, by cutting the layers of middlemen involved.
There are other benefits too, of transforming the unorganized retail sector into an organized
sector. Firstly, a number of new jobs will be created, far better paid than the underage labor
working in the local shops. Secondly, the benefits to the producer and consumer through better
prices and lesser wastage; throwing up exportable surpluses, which will also benefit the
economy as a whole. Thus one can see that allowing FDI in retailing is beneficial to all the
stakeholders involved.
The Big Bazaars and Spencer’s, the huge unorganized retail sector is finally beginning to see
the merit of logging on, even if at a model scale.

Taxation policies also push you to automate and the push is even harder for those looking to
expand beyond their single store existence.

Though it’s early days yet to measure it penetration in the unorganized retail industry, interest
levels are surely raising fast. “It’s good to at least answer their questions. Though the interest
is more with retailers who register good sales and volumes.

Software available to the retailers is ShawMan’s RetailMagiK, which takes care of the front-
end store needs, as well as the back-end warehouse requirements. “It would surely help the
unorganized sector to get into technologies like bar-coding, which will make their operations
more efficient. Some other features are a user-defined billing screen and discount with control
mechanism from the head-office, delivery order management, batch control and quick
information search, among others. The product is a simple to use. The screen design and the
functionality are designed in such a way that the user need not press too many keys to get things
done,” says Khushroo Bagwadia, business development manager, Shawman Software.

To begin with, most retailers look at decent entry-level solutions starting at Rs 25,000.
However, there are cheaper quick-fix solutions available too. One can even deploy a computer
and start with financial accounting programmers like Microsoft Excel, FoxPro and Tally.

Small retailers seem next in line and vendors are also warming up to the opportunity. At the
low-end however, smart inexpensive solutions are the need of the hour. And solutions providers
like Microsoft, Polaris and Shawman are now working on developing smart tools for the retail
enthusiasts. For small players with just one store, the investment on retail solutions go really
low, anywhere between Rs 10,000 to Rs 25,000. Most of the time these solutions are developed
by local firms, who at times compete with the big names in the industry.

According to Oberoi of Polaris, generally the mom-and-pop stores like to go for technology,
which will get their work done at a reasonable cost. They avoid the high-end technology, and
consider these as frills. “They are not even bothered about upgrading, so the cheap systems are
more than welcome. These solutions might not work for the mid-sized retailers with five stores,
as then one need to scale it up and take care of inventory and supply chain management,” he
says.

Comparing the case with China, Vedamani suggests India is on the right track. “In China, we
find the organized sector to be 20-23% of the total industry. Here, the technology has
advanced in phases, and so is the case in India.
 Format Description The Value Proposition

Complete range available for a

Exclusive showrooms either owned or franchised out
Branded Stores given brand, certified product
by a manufacturer.
quality

Greater choice to the consumer,

Specialty Focus on a specific consumer need, carry most of the
comparison between brands is
Stores brands available
possible

Large stores having a wide variety of products,

Department One stop shop catering to varied/
organized into different departments such as clothing,
Stores consumer needs.
house wares, furniture, appliances, toys, etc.

One stop shop catering to varied

Supermarkets Extremely large self-service retail outlets
consumer needs

Stores offering discounts on the retail price through

Discount Stores Low Prices
selling high volumes and reaping economies of scale

Larger than a supermarket, sometimes with a Low prices, vast choice available
Hyper- mart warehouse appearance, generally located in quieter including services such as
parts of the city cafeterias.

Convenience Small self-service formats located in crowded urban Convenient location and extended
stores areas. operating hours.

Enclosure having different formats of in-store retailers, Variety of shops available to each
Shopping Malls
all under one roof. 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 include Shoppers Stop, Pyramid, 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:

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!.

Hypermarts/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.
 SPECIALITY STORES

Food retail:
Food dominates the shopping basket in India. The US$ 6.1 billion Indian foods
industry, which forms 44 per cent of the entire FMCG sales, is growing at 9 per cent and has
set the growth agenda for modern trade formats. Since nearly 60 per cent of the average
Indian grocery basket comprises non-branded items, the branded food industry is homing in
on converting Indian consumers to branded food.

The mobile revolution:

The retail market for mobile phones -- handset, airtime and accessories -- is already a
US$ 16.7 billion business, growing at over 20 per cent per year. In comparison, the consumer
electronics and appliance market is worth US$ 5.6 billion, with a growth rate that is half of
the mobile market.

Kids retail:
When it comes to Indian children, retailers are busy bonding--and branding:
 Monalisa, the Versace of kids is coming to India.
 Global lifestyle brand Nautica is bringing Nautica Kids.
 International brand Zapp tied up with Raymond to foray into kids' apparel.
 Disney launched exclusive chains which stock character-based stationery.
 Pantaloon's joint venture with Gini & Jony will set up a retail chain to market kids'
apparel.
 Swiss kidswear brand Milou is collaborating with Tirupur-based Sreeja Hosieries.
 Turner International India Pvt Ltd. will launch Cartoon Network Townsville and
Planet POGO--two theme parks designed around its channels--in the National Capital
Region.
 Sahara One Television has also signed a Memorandum of Understanding to source
content from Spacetoon Media Group, Middle East's largest kids' entertainment brand
for animation and live action content.

Leading the kids' retail revolution is the apparel business, which accounts for almost 80 per
cent of the revenue, with kids' clothing in India following international fashion trends.
According to research firm KSA Technopak, the branded segment comprises US$ 701.7
million of the total kids' apparel market-size of over US$ 3 billion.

Industry experts say kids' retailing will touch annual growth of 30-35 per cent. Toys,
stationary, sportswear, outerwear, tailored clothing, eyewear, watches, fragrance, footwear,
theme parks, TV channels… the segment is growing rapidly at 10 per cent per annum.
Margins are in the range of 20-25 per cent (for dealers and distributors), while companies
enjoy an average gross margin of about 10 per cent.
Agricultural retail:
Agriculture across India is heralding the country's second Green Revolution. 14 states,
including Maharashtra, Punjab, Andhra Pradesh and Rajasthan amended the Agricultural
Produce Marketing Committee (APMC) act this year, along the lines of the Model APMC
Act, '02, which allows farmers to sell their produce directly to buyers offering them the best
price.
Agricultural sectors such as horticulture, floriculture, development of seeds, animal
husbandry, pisciculture, aqua culture, cultivation of vegetables, mushroom under cultivated
conditions and services related to agro and allied sectors are open to 100 per cent FDI
through the automatic route.
For its e-Choupal scheme, ITC built internet kiosks in rural villages so farmers can
access latest information on weather, current market prices, foods-in-demand, etc.
With a US$ 5.6 billion, multi-year investment in agriculture and retail, Reliance
Retail will establish links with farms on several thousand acres in Punjab, West Bengal and
Maharashtra. FieldFresh, planning to become India's first large-scale exporter of produce,
will annually pay farmers over US$ 30,000 to lease land for vegetables, to hire tractors and to
pay their workers.
Besides a five-year program with the Punjab government to provide several hundred
farmers with four million sweet-orange trees for its Tropicana juices by 2008, PepsiCo--with
agriculture exports worth US$ 40 million--also introduced farmers to high-yielding basmati
rice, mangoes, potatoes, chilies, peanuts, and barley for its Frito-Lay snacks.
Export potential and a rapidly growing domestic demand for reliable produce from
new supermarket chains is driving change. With 77 per cent of India's population relying on
agriculture for a living, improved efficiency and new markets can benefit a large number of
people.

International retailers:
The Australian government's National Food Industry Strategy and Austrade initiated a
test marketing food retail in India wherein 12 major Australian food producers have tied up
with India-based distributor AB Mauri to sell their products directly at retail outlets.
The largest-ever 150-member British business delegation in India committed
investments in the areas of food processing, agri retail and manufacturing. It is also likely to
press for the liberalisation of sectors like financial & legal services and retail.

US-based home delivery and logistics company, Specialised Transportation Inc, will
enter the Indian market through a strategic alliance with Patel Retail, a subsidiary of Patel
Integrated Logistics.
Among other big international players, Wal-Mart has announced its plans for India in
partnership with Bharti, Tesco is sure to try again, and Carrefour too might finally find the
right partner.
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.
Supermarkets are relatively new entrants in the market. They are so called pioneers in
organized food retailing and go by the western model in look and feel and format. This is
what everybody means when they say organized food retailing.

Franchise outlets:
Like Tommy Hilfiger and Wal Mart, other US retailers are firming up their India
entry strategies and if they are already in, they are undergoing rapid expansion. Fashion
brands DKNY is also al set to foray into the Indian fashion Industry through a franchisee
agreement with Indian company, S. Kumar Starbucks recently expressed their interest in
entering Indian company
Like Tommy Hilfiger and Wal-Mart, other US retailers are firming up their India
entry strategies and if they are already in, they are undergoing rapid expansion. Fashion brand
DKNY is also all set to foray into the Indian fashion Industry through a franchisee agreement
with Indian company, S Kumar’s.Starbucks recently expressed their interest in entering India
through the franchise route, like their AmericanF&B counterparts Pizza Hut, Subway, and the
very successful McDonald’s. McDonald’s has major expansion plans lined up; in the next 3
years, it plans to open another 100 outlets in cities across India.

Hypermarket:
A very large commercial establishment that is a combination of departmental store
and a supermarket.
The specific features of a hypermarket are the wide range of goods offered, quality
service, quality display of goods on the shelves and complex systems providing for customers
loyalty.
Hypermarket is known for a wide range of goods offered. It consist of dozens of
thousands of items, while similar goods can be offered in several forms. In order to work with
such an assortment it is necessary to group it into categories and sub categories that would
unite goods according to this or that criteria.
Shopping Malls:
The new shopping malls that have been expanding their footprint across Indian cities
are well designed, built on international formats of retailing and integrated with entertainment
and restaurants to provide a complete family experience. Over 300 malls are expected to be
built over the next two years and most Indian cities with over a million populations will be
exposed to this modern method of retailing.
Shopping malls have existed in India since several decades but were designed and
built to house several shops in a single facility. These malls also known as Shopping Arcades
offered only rows of shops, most of which were small stores that promised bargains for their
various wares. These Shopping Arcades tried to maximize on their store space and did not
offer any areas for recreation and entertainment.
The present day malls are a creation of the past few years post 2000. They are
designed professionally using a lot of international experience and combine shopping with a
lot of brand building, recreation, food and entertainment. Malls also have a large format store
that serves as their anchor for shopping and a prominent restaurant that anchors the food
needs of visitors. Most malls also feature a multiplex cinema that offers entertainment to the
visitors of the mall. Finally the mall has large atria and open spaces to allow visitors and
families to hang-out.
 MAJOR INDUSTRY PLAYERS
The Future Group:

The Future Group, which was earlier known as PRIL (Pantaloon Retail India Limited)
began as a trouser manufacturer in the mid 1980s. The Future Group is divided into six
verticals – Future Retail, Future Capital, Future Brands, Future Space, Future Media and
Future Logistics. The Future Group started operations in the mid 1987s by incorporating the
company as Manz Wear Private Limited. The company went on to manufacture ready made
trousers under the “Pantaloons” brand name. It came out with a public issue in 1991 and later
changed their name to Pantaloon Fashions (India) Limited (PFIL).

The first exclusive men’s store called Pantaloon Shoppe was inaugurated in 1992.
Pantaloons went for a franchisee route to expand the number of retail outlets and by 1995, it
had reached to a crucial number of 70. The first departmental store called Pantaloons was
opened in Kolkata in 1997 with an investment of Rs 0.7 million. The store was a success and
recorded revenues of Rs 100 million within the first year of operations. In 1999, the
company’s name was changed to Pantaloon Retail (India) Limited (PRIL).

The success of Pantaloons departmental stores encouraged PRIL to come up with

other retailing formats such as “Big Bazaar” to retail low cost general merchandising, and
“Food Bazaar” to retail food products. As of 2005, the Future Group has 3.5 million sq ft of
retail space and over 100 stores across 25 cities in India. It employs more than 12,000 people
and has a customer base of more than 120 million.

Kishore Biyani, the promoter of the group who likes to address himself as “Chief Knowledge
Officer” has plans to launch 18 formats and over 3,340 stores, thereby turning the Future
Group into a US$7 billion company with over US$1 billion in profits by the year 2010.
Shoppers Stop:

Shoppers’ Stop, promoted by the real estate group K Raheja, was one of the first
movers to have set up a large retail outlet in New Delhi with international ambience.
Shopper’s Stop Ltd now has a considerable presence all over the country with overr 7 lakh
square feet of retail space and stocks over 200 brands of garments and accessories. The stores
are spread all over India with presence in Mumbai, Delhi, Bangalore, Hyderabad, Jaipur,
Pune , Kolkata, Gurgaon, Chennai & Ghaziabad.

Shoppers’ Stop is also very well known for having pioneered several quality retailing
concepts in India like CROSSWORD, HyperCITY and Mothercare. They are the only
retailer from India to become a member of the prestigious Intercontinental Group of
Departmental Stores (IGDS).

Shoppers’ Stop is positioned as a family store delivering a complete shopping

experience. With its wide range of merchandise, exclusive shop-in-shop counters of
international brands and world-class customer service, Shoppers’ Stop brought international
standards of shopping to the Indian consumer providing them with a world class shopping
experience. Shoppers’ Stop’s core customers represent a strong SEC A skew. They fall
between the age group of 16 years to 35 years, the majority of them being families and young
couples with a monthly household income above Rs. 20,000/- and an annual spend of
Rs.1,50,000/-. A large number of Non - Resident Indians visit the shop for ethnic clothes in
the international environment they are accustomed to.

The stores offer a complete range of apparel and lifestyle accessories for the entire
family. From apparel brands like Provogue, Color Plus, Arrow, Levi’s, Scullers, Zodiac to
cosmetic brands like Lakme, Chambor, Le Teint Ricci etc., Shoppers’ Stop caters to almost
every lifestyle need.

Shoppers' Stop also retails its own line of clothing namely Stop, Life , Kashish,
Vettorio Fratini and DIY. The merchandise at Shoppers’ Stop is sold at a quality and price
assurance backed by its guarantee stamp on every bill.

Shoppers’ Stop’s customer loyalty program is called “The First Citizen”. The program
offers its members an opportunity to collect points and avail of innumerable special benefits.
Currently, Shoppers’ Stop has a database of over 2.5 lakh members who contribute to nearly
50% of the total sales of Shoppers’ Stop.
Trent – Westside:

Established in 1998, Trent operates some of the nation's largest and fastest growing
retail store chains. A beginning was made in 1998 with Westside, a lifestyle retail chain,
which was followed up in 2004 with Star India Bazaar, a hypermarket with a large assortment
of products at the lowest prices. In 2005, it acquired Landmark, India's largest book and
music retailer.

In a recently signed deal, Trent has agreed to anchor 12 malls set up by DLF
Universal Ltd across the country, at its Westside, Landmark and Star India Bazaar outlets.
This amounts to about 27 locations, totaling to about a million square feet of space.

Trent retails garments and household accessories for men, women and children,
cosmetics and perfumes at Westside, food, beverages, health and beauty products, vegetables,
fruits, dairy products, consumer electronics and household items at Star India Bazaar and
books, music and stationery at Landmark.

Westside has 25 outlets across 17 cities in India offering a variety of designs and
styles in garments, footwear and accessories, as table linens, artifacts, home accessories and
furnishings. Well-designed interiors, sprawling space, prime locations and coffee shops
enhance the customers' shopping experience.

Trent also runs another chain of retail stores called Star India Bazaar. Launched in
2004, Star India Bazaar provides a large assortment of high quality products made available
at the lowest prices coupled with a unique shopping experience. Star India Bazaar is located
in Ahmedabad and offers a wide choice of staple food, beverages, health and beauty
products, vegetables, fruits, dairy products, consumer electronics and household items at the
most affordable prices.

Trent has also recently acquired a 76 per cent stake in Landmark, one of the largest
books and music retail chains in India. Landmark commenced its operations in 1987 with its
first store in Chennai, and now has nine stores in the major metros of the country. Earlier
Landmark was focused on books, stationery and greeting cards. In 1996 it added music to its
product portfolio and also started the trend of stocking curios, toys, music, CDs and other gift
items.
Piramyd:

Piramyd Retail is part of the Piramal Group, which has presence in diverse sectors
spanning Pharmaceuticals, Textiles, Real Estate, Engineering, Family Entertainment and
Retail with manufacturing operations in 19 locations across five states and employing over
18,000 people.

The promoters launched the apparel business in 1999 under Piramyd Retail and
Merchandising Pvt. Ltd. (PRMPL) while its food; home & personal care businesses (FHPC)
were housed under Crossroads Shoppertainment Pvt. Ltd. (CSPL). As the apparel and food
businesses individually reached a critical mass the management merged the two companies
into Piramyd Retail Ltd. due to distant synergies in two businesses in March 2005. Pyramid
also has a smaller format of stores called TruMart that caters to Food and Personal Care
products.

Piramyd Retail currently has 5 Mega stores and 8 TruMart stores mainly in
Maharashtra . The company plans to increase these numbers to 17 Mega stores and 69
TruMarts by 2008. The floor space is expected to be 5 times on successful expansion.

The FHPC (Food & Personal Care) business is volume driven while the Lifestyle
store is a margin driven business. Piramyd Retail plans to increase the contribution of private
labels from existing 7% to 18-20% of the revenues by 2010. Gross margins from private
labels are over 40% and hence the company is planning to increase this business. Most of
the stores are on the lease format and the company is prone to higher lease rentals due to the
overall increase in real estate prices. This may bring the profit levels down substantially.

Piramyd Retail did have a first mover advantage in many locations but it has actually
failed to capitalise over this advantage. Its competitors like Pantaloon, Shoppers Stop and
Trent gained larger benefits of their far more aggressive business & marketing strategy in the
retail space.
Subiksha:

The Chennai based Subiksha grocery chain runs around 200 outlets all over the
country and it’s current turnover stands at Rs 224 crores. Their target customer is the middle
income value conscious buyers. The main aim of Subiksha is to offer a functional and
transactional shopping experience. This retail chain has no qualms and spends almost no
money on creating a pleasant shopping experience, and all stores are non-air conditioned.
There is no false roofing or sparkling vitrified tiles on the floor.

A few years ago, Subiksha did not even offer shoppers self service. The customer had
to place an order at a computerized teller and the goods were billed and delivered after cash is
collected. Customers had to bring their own carrybags or pay to buy them from the store.
Subiksha even attempted to charge the customers for home delivery.

However, now Subiksha has slightly tweaked their business model in order to create a
better appeal to customers who were defecting to the competitors. The store formats are still
small and non-airconditioned. But customers have the option to pick from shelf spaces. They
also get shopping bags and free home delivery. But the selling USP(unique selling
proposition) remains the same --- Subiksha tries to be as close to the customer as possible and
offers the lowest price and huge savings in comparison to competitors. It’s slogan happens to
be --- bachat mera adhikar hain (saving is my fundamental right).

RPG Spencer:

RPG’s Spencer presently has 125 stores across 25 cities covering a retail trading area
of half a million square feet and with a clientele of 3 million customers a month. Spencer's
has a national footprint with seven hypermarkets, three supermarkets and 70 daily use outlets,
called Dailies.

All the newly opened Spencer's stores stock every conceivable product that is
required by a household on a daily basis. At Spencer's Daily shoppers can get fresh fruits,
vegetables, fast-moving consumer goods, household items, groceries, with regular offers and
discounts.

Spencer's outlets are divided in to three retail formats. These are, Spencer's Hyper, the
over 25,000-sq ft hypermarkets stocking over 25,000 items. The 8,000sq ft to 15,000-sq ft
mini hyper stores, branded as Spencer's Super and the daily purchase 4,000-sq ft to 7,000-sq
ft Spencer's Daily for groceries, fresh food, chilled and frozen products, bakery and weekly
top up shopping.
Reliance Retail:

On June 26, 2006, Mukesh Ambani, Chairman and Managing Director, Reliance
Industries Limited, announced a Rs 25,000-crore investment in the retail sector.
Reliance Retail started it’s retail operation with “Reliance Fresh”, a grocery store that sells
vegetables, fruits, personal care items and other food products. Soon, these retail outlets will
also be selling apparel and footwear, lifestyle and home improvement products, electronic
goods and farm implements and inputs. They will also offer products and services in energy,
travel, health and entertainment. In addition to this, partnerships would be developed to bring
the best of global luxury brands to India as well.

Reliance Retail plans to extend it’s footprint to cover 1,500 Indian cities and towns
with outlets of a varied format, a mix of neighborhood convenience stores, supermarkets,
specialty stores and hypermarkets. Reliance also plans to open restaurant outlets, financial
services marts and tourism counters within it’s stores.

Mukesh Ambani’s ultimate ambition seems to be to create the Indian equivalent of

Wal-Mart by scaling up the business to unprecedented heights to reach every nook and corner
of the country. With it’s retailing venture, Reliance expected a revenue target of US $20
billion through it’s retail operations by 2010. Over a span of five years, RRL expects a 20%
return-on-investment.

The first store christened “Reliance Fresh” opened in November 2006 at Hyderabad. Within a
few months they have now opened stores in Mumbai, Pune and Ahmedabad and plans foray
into other cities on a rapid scale.
Bharti Wal-Mart:

Bharti Retail (Pvt.) Ltd. unveiled the roadmap for its retail venture on 19th February,
2007 envisaging an investment of $2.5 billion with expectation of revenue of $4.5 billion
(about Rs. 20,000 crore) from this business by 2015. The first retail outlet is expected to open
somewhere in the month of August .

Bharti’s plan is to invest $2.5 billion by 2015 and open stores across all major cities.
This investment would be only for setting up front-end stores. The modalities for its back-end
linkage, including its joint venture with the world's largest retailer Wal-Mart, are in the
process of being worked out.

A high-level team from Wal-Mart was visited India in the later part of February to
work out the details of the back-end chain. While Bharti would manage front-end of the retail
venture, Wal-Mart would be involved in the back-end, including logistics, supply chain and
cash-and-carry, he added.

The JV was presently scouting for 10 million sq. ft. of retail space, which would
include hypermarkets, supermarkets and convenience stores and would provide employment
to about 60,000 people. The company would open multi-format retail outlets in all cities
with a population of about one million. Bharti is now conducting a massive consumer survey
to take a final decision on branding and promotional campaign.
Aditya Birla - MORE:

The Aditya Birla Group is India's first truly multinational corporation. Global in
vision, rooted in values, the Group is driven by a performance ethic pegged on value creation
for its multiple stakeholders. A US$ 24 billion conglomerate, with a market capitalization of
US$ 23 billion and in the League of Fortune 500, it is anchored by an extraordinary force of
100,000 employees belonging to over 25 different nationalities. Over 50 per cent of its
revenues flow from its operations across the world.” Our mission is to change the way people
shop. We will give them more.” says Mr. Kumar Mangalam Birla, Chairman, Aditya Birla
Group. The more. for you advantage: more. promises a world-class pleasurable shopping
experience to Indian consumers in their very own neighborhood. more. Quality, more.
variety, more. convenience and more. value are the four delivery cornerstones of the more.
chain of supermarket stores. more.

MORE. Value MORE. promises best in market pricing. Linking up directly with
farmers to source fresh fruits, vegetables and staples ensure great quality as well as great
price. Add to this, the membership program Club more. which provides convenience,
customized shopping solutions and savings, and the more. value promise becomes all the
more evident.

More. Is an inspirational brand for an inspirational country. We have a bright and

committed, enthusiastic team that represents the best experience from India and globally.
MORE. also has a range of products from its own stable available across value, premium and
select ranges. The products have been quality-checked and are available in attractive
packaging at competitive prices. To avail additional benefits, at no extra charge, customers
can also enroll for the membership program Club more.
Vishal Retail:

Vishal is one of fastest growing retailing groups in India. Its outlets cater to almost all
price ranges. The showrooms have over 70,00 products range which fulfills all your
household needs, and can be catered to under one roof. It is covering about 1282000 sq. ft. in
18 state across India. Each store gives you international quality goods and prices hard to
match. The cost benefits that is derived from the large central purchase of goods and services
is passed on to the consumer. What started as a humble one store enterprise in 1986 in
Kolkata(erstwhile, Calcutta) is today a conglomerate encompassing 51 showrooms in 39
cities. India’s first hyper-market has also been opened for the Indian consumer by Vishal.
Situated in the national capital Delhi this store boasts of the singe largest collection of goods
and commodities sold under one roof in India. The group’s prime focus is on retailing.

The Vishal stores offer affordable family fashion at prices to suit every pocket. The
group’s philosophy is integration and towards this end has initiated backward integration in
the field of high fashion by setting up a state of the art manufacturing facility to support its
retail endeavors. Company has already tied up for 5-lakh sq ft space and is looking for more.
Company will come up with 32 new stores this year. Company is doing research on more
formats. Company is looking for opportunities of expansion in the South. Contribution of
apparels business at 53% may slightly come down to 50%. India is a big country and there is
huge space for four-five big retail players. Vishal can always sustain growth in this big
market. Company can sustain margins as it is going for backward integration. Currently
manufacturing contributes 10% of the business, which in the next two to three years, will go
up to 25%. Company is increasing its focus on the non-apparel and FMCG segment. The
current share of FMCG at 15% could go up to 20-25%. Apparel sales currently at 63% in the
next 2-3 years should come down to 50% as the company is now also focusing on different
segments. With growth in volumes, the cost of sourcing will come down in the near future.
Company will venture wherever it gets real estate space. Currently, it has very little space in
the south India. Eventually, it will have a pan-India set up.
METRO – CASH & CARRY INDIA:

METRO Group today, is the third largest trading and retailing group in the world. The
company employs over 2,50,000 staff in 30 countries. In the year 2005 METRO Group had
generated sales of over €55.7 billion; 53% of total sales came from outside Germany.
METRO Cash & Carry started operations in India in 2003 with two Distribution Centres in
Bangalore. With this METRO introduced the concept of Cash & Carry to India. These
Centres offer the benefit of quality products at the best wholesale price to over 150,000
businesses in Bangalore. METRO offers assortment of over 18000 articles across food and
non food at the best wholesale prices to business customers such as Hotels, Restaurants,
Caterers, Food and Non-food Traders, Institutional buyers and professionals. METRO's Cash
& Carry business model is based on a Business to Business (B2B) concept and focuses on
meeting all the needs and requirements of business customers. It is a modern format of
wholesale trading, catering only to business customers.
Viveks- The Unlimited Shop :

Vivek Limited is a professionally managed public limited company carrying three

retail brands - Viveks, Jainsons, Premier and continuously adding to the formidable strength
of 1000 employees. Vivek Ltd is the largest consumer electronics & home appliances retail
chain in India. Viveks popularized several brands by creating visibility and have the
distinction of being market leaders and trendsetters with continuous support from the
principal companies. Viveks evolved its strategies to suit the larger scene where there was a
stigma attached to borrowing. Very few hire purchase options were available and hence
Viveks started Vivek Hire Purchase and Leasing Ltd to finance consumer durables, which
enhanced the core retailing business also.Viveks grew from 3 stores to more than 52 stores
and turnover increased to over Rs. 350 crores (USD 80 million) and also become a public
limited company from a family run enterprise. In this process, 14 store Jainsons was bought
over in 1999, 2 store Premier in 2001 and Spencers in 2002 and have recently absorbed
Spencers into the Premier brand. With the liberalization of economy and other changes in the
global scene, Viveks streamlined the marketing and advertising activities and shopping
ambience was improved.
 SWOT OF THE MARKET
Strength:
1) Organized retailing at US$ 3.31 billion, growing at 8%.

2) 2nd largest contributor to GDP after agriculture at 20%.

3) Pattern of consumption changing along with shopping trends.

4) A Growing population will translate to move consumers.

5) Consumer spending increasing at 11% annually.

6) Almost 25 million sq. ft. retail space available.

7) Paradigm shift in shopping experience for consumers pulling in more people.

8) Most of the entrants to organized retail come from 3 main categories, and have ventured

into retail as their business extension.

Weaknesses:

1) Shortage of quality retail spaces at affordable rates.

2) Government regulations on development of real estate(Urban Land Ceiling Act)

3) Need to provide Value for Money-squeezing margins

4) Lack of industry status.

5) Retail revolution restricted to 250 million people due to monolithic urban-rural divide.

6) Footfalls not a clear indicator of sales as actual consumers lower in number.

7) Lack of huge investments for expansion

Opportunities:
1) Increasing urban population-more participants in retail revolution.

2) Increase in consuming middle class population.

3) Social factors like dual household income has enhanced spending power.

4) Spends moving towards lifestyle products and esteem enhancing products.

5) Availability of old industrial lands-prime real estate locked in sick industrial units.

6) Average grocery spends at 42% of monthly spends-presents a huge opportunity.

7) Increase in use of credit cards.

Threats:

1) Rising lease/rental costs affecting project viability.

2) FDI restrictions in the retail sector.

3) Poor monsoons and low GDP Growth could affect consumer spending drastically.

4) Archaic labor laws are a hindrance to providing 24/7 shopping experience.

5) Personalized service offered by Mom-&-Pop stores.

6) Unavailability of qualified personnel to support exponential growth in retail.

7) Differentiate taxation laws hindering expansion.

 RESEARCH METHODOLOGY

Objectives of study:

 The overall purpose of this endeavor is to investigate empirically customers’

preference towards exclusive and multi brand retail outlets and to determine the
factors that influence the satisfaction level of customers’ in retail sector especially in
Lucknow city.

 This study is also aimed at finding out the relation between major demographic
variables and satisfaction level of customers’ and preference of retail formats.

 To study the preference given by consumers in term of quality, ambience, service,

scheme and location for retail purchase.

 What are the factors affects for the purchase?

Research Design:

Descriptive research design will be used.

 Type: Descriptive Study

 Scope: combination of theoretical study as well as Statistical Study

 Environment: Field Research

Data Sources:

Primary Data: It will be collected with the help of Questionnaire Method and Survey
Research. As well as unstructured observation will also come in use at some part (topic) of
study.

Secondary Data: It will be collected with the help of Internet, books, journals, articles of
newspapers & magazines and research papers related to booming organized retail sector.
Data Analysis:

Data will be analyzed with the help of certain statistical tools.

1. Questionnaire method

2. Method of observation

Significance of the Study:

 To know the awareness of people about different brands of retail sector.

 Result will be the knowledge about customer’s preference towards exclusive and
multi-brand retail outlet that will be helpful to find out the factors that influence the
satisfaction level of customer.

 It will be helpful to know the connection between demographic factors of consumer

like age, income, education and choice of people for different types of product.

Limitations of the Study:

 The present study is limited to the growth of retail sector in india only.

 The bias of respondents while responding cannot be eliminated.

 The study was limited to only in Lucknow city.

 CONCLUSION

The consumer’s preferences are changing rapidity and becoming highly diversified. It
is difficult for the retail stores to satisfy all the needs of the customers. The most of the
consumer’s want to get some attractive prices, good schemes and offers on every purchases
and a shopping comfort as well. Those who are able to purchase their needs and want for a
month in a bulk prefers to go to the retail chains. Because of competitions in the market the
branded formals are also became cheaper so the younger generation prefers to purchase from
the retail outlets of the brand the city. Only the big retail chains are able to satisfy all these
needs of the new age consumers whereas there is still some consumers mostly of the old age
are willing to purchase from the local kirana store. Some of them have perception that these
big stores are too costly to afford and some of them are not able to make purchases in a bulk
so they do not want to waste their time to go especially to the big store for 2-3 items
purchase. In the case of other items like wristwatches, branded jewelry, mobiles, gift items
and other, they prefer to take it from where they are getting cheap prices, good after sales
services and the goodwill of the store.

After studying the customer survey questionnaire statistically and theoretically as well
and after observing the consumer’s mood and their preferences I can say that Big Retail is
here to stay. Assuming that improvements in infrastructure and lower real estate costs
become a reality, Big Retail still has a long way to go before satisfying the highly diverse
needs of the Indian population. As a result, there will be a steady state where Big Retail will
co-exist with Small Retail.
 BIBLIOGRAPHY
Web Sites and Search Engines:

 www.indiabiznews.com
 www.fashion2fibre.com
 www.indiainfoline.com
 www.equitymaster.com
 www.economywatch.com
 www.google.com
 www.rediff.com
 www.ibef.org

Newspapers:

 The Times Of India

 The Indian Express
 The Economic Times
 Financial Express
 Business Standard
 Business Line

Books and Magazines:

 Business World
 The Indian Dream
 Business & Economy