Académique Documents
Professionnel Documents
Culture Documents
2008-2010
Submitted By Submitted To
AMIT KAUSHIK R.P.Sharma
MBA 2 nd SEM
(ROLL NO- 03 )
CONTENTS
INDIA RETAILING INDUSTRY AN INTRODUCTION
RETAILING IN 1990S
MALL DEVELOPMENT:
RETAILING IN INDIA
INTRODUCTION
By the turn of the 20th century, the face of the Indian retailing industry had
changed significantly. The retailing industry, which, until the early 1990s,
was dominated by the unorganized sector, witnessed a rapid growth in the
organized sector with the entry of corporate groups such as Tata , RPG,
ITC and Bennett Coleman & Company into the retailing market.
With the liberalization and growth of the Indian economy since the early
1990s, the Indian customer witnessed an increasing exposure to new
domestic and foreign products through different media, such as television
and the Internet. Apart from this, social changes such as increase in the
number of nuclear families and the growing number of working couples
resulting in increased spending power also contributed to the increase in the
Indian consumers' personal consumption.
This is mainly on account of the reach and penetration of this business and its scientific
approach in dealing with customers and their needs. In spite of the positive prospects of
this industry, Indian retailing faces some major hurdles which have stymied its growth.
Early signs of organised retail were visible even in the 1970s when Nilgiris (food),
Viveks (consumer durables) and Nallis (sarees) started their operations. However, as a
result of the roadblocks, the industry remained in a rudimentary stage.
While these retailers gave the necessary ambience to customers, little effort was made to
introduce world-class customer care practices and improve operating efficiencies.
Moreover, most of these modern developments were restricted to south India, which is
still regarded as a “Mecca of Indian Retail”.
Retailing in 1990s
On account of the liberalization drive in the 1990s, several structural and demographic
changes that are taking place are helping the industry to grow. The GDP has grown by
6.6 per cent in the last decade resulting in increased income levels and higher purchasing
power for the population. Increasing literacy levels, increasing number of working
women, increasing urbanization, higher international travel by Indian population and
Increasing media penetration has raised aspiration levels of the population, resulting in
demand for better shopping experience and larger variety of goods.
India has close to 54 per cent of population below the age of 25, which translates into
higher prospects for increased consumption levels in the future. Finally, interest rates
have also declined in the past few years further propelling the consumption demand.
These factors were the key drivers for the retail wave in the country. Notable among the
early entrants were players like Shoppers Stop, Pantaloon, Ebony, Foodworld, Subhiksha,
etc.
Initially, the growth in organized retail was very slow and concentrated mainly in metros,
with south India holding its ground as the pioneer in organized retail growth, on account
of the low cost of real estate.
Due to the high investments required in the early stages and the fact that real estate was
the key deciding factor for success of stores, real estate developers have been the major
players in the industry.
In the early 1990s, as the players were lower down on the learning curve many faltered in
their models, and growth of the industry remained slow. The second half of 1990s saw
several players making losses and exiting from the business.
The worst for the industry were 2000 and 2001, as the stock market downturn, which
reduced customer confidence and spending, had a direct impact on the performance of the
industry. The industry recovered starting 2002.
It now appears the efforts and learning’s of the players in the last decade are beginning to
pay off; the organized retail industry has established firm roots and is beginning to grow.
The total private final consumption expenditure of India stood at Rs 15 lakh crore in
2001-02. Of this, close to 65 per cent is spent on goods and services bought off the shelf.
Currently, the Indian retail industry is estimated to be close to Rs 9 lakh crore and the
market estimates the size of the organised retail industry at close to Rs 17,500 crore
accounting for close to 2 per cent of the overall retail industry.
Larger discount formats, popularly known as hypermarkets, are now emerging as major
competitors to both unorganized and organized retailers. Penetration of organised retail
into the lower strata of income groups and consumer demand for increased value-for-
money has improved the prospects of these formats. These formats span across the entire
range of merchandise categories. Big Bazaar, promoted by Pantaloon and Giant,
promoted by the RPG Group, are examples of this format.
A large number of international retailers have evinced interest in India, despite the
absence of favorable government policy for foreign players.
A number of the major brands have entered the country through licensing agreements
with Indian players to capitalize on the opportunities available in the sector.
Mall development:
Modern malls made their entry into India in the late 1990s, with the establishment of
Crossroads in Mumbai and Ansals Plaza, DLF in gurgaon & Delhi. By early 2001,
several mall projects were announced.
According to market estimates, close to 10 million sq. ft. of mall space is being
developed across several cities in the country, of which 8 million sq. ft. is expected to be
operational by end of 2005.
With this, rentals for retail properties have shown a marked decline, which has brought
down the break-even levels of the retail projects. Moreover, retailers would now have
access to retail-specific properties, which will increase their efficiencies.
Besides the macro factors, which have aided in retail growth, the existing players have
also taken steps to improve the internal operations of their businesses. Most players have
implemented ERP and planning support systems.
The impact of these positive steps is already visible in the performance of the companies.
However, Fitch believes that players still lag behind in adopting efficient supply chain
practices. While a part of this has been on account of the lack of proper infrastructure, a
large part is also due to the basic inertia and haphazard initiatives taken by the
companies. Fitch believes that there is tremendous scope for cost savings and
improvements on the operational front, where retailers can reap huge benefits in the
future.
Since most of the retail operations are gaining momentum and the hurdles to growth are
increasingly being addressed, the industry has now entered the investment phase. Fitch
estimates that the industry as a whole will add close to one mn sq. ft. every year. At an
average investment of Rs 2,400 per sq. ft., this would mean an investment of Rs 240
crore investments per annum over the next few years.
In addition, basic infrastructure like parking, real estate, etc., would require over Rs 100
crore investments per annum. However, given the nascent stage of the industry, most of
these investments would be in the form of equity.
A few cues can be taken from other emerging markets, where retail industry has taken
shape in the last couple of decades. Fitch’s study of other emerging markets shows that it
takes 10-12 years for the organised industry to achieve 10 per cent to 12 per cent market
share.
Most of the emerging markets, like Thailand, Indonesia, China and Malaysia, which saw
an emergence of organised retail in the 1980s, have now achieved between 20 per cent to
40 per cent market shares. However, for India to achieve a similar level of penetration, it
would have to overcome key roadblocks like lack of FDI approval, complex taxation and
infrastructure bottlenecks.
While some of these hurdles are easy to remove, others are politically sensitive issues and
might take several years to get addressed. As a result, Fitch believes that the growth in
organised retailing in India might not be as rapid as it has been in other emerging
markets. This would mean that the industry would continue to remain in an investment
stage for longer time compared to other emerging markets.
Fitch believes that some of the key hurdles to growth, like lack of FDI approval and
multiplicity of taxes are expected to remain in the short to medium term. Other
constraints, like lack of infrastructure facilities, retail manpower and supply chain
bottlenecks would be solved over the next few years. These would propel growth rates
from the current levels.
Key conclusions:
Thus, the industry is poised for the next phase of rapid growth and improving
profitability, which will improve company valuations and reduce overall operational
risks.
Conclusion
Fitch believes that the retail industry is poised for growth over the next few decades. The
industry is in an investment mode and would require substantial funds for expansion and
growth. Lack of “industry status” and ban on FDI are major hurdles to growth.
On the operations front, the players are now starting to employ global retail practices.
However, it would take sometime before players are able to bring their supply chain
infrastructure in line with the world class standards, to maximize benefit. Besides, the
retailers would need to do substantial work on the front-end of their business models,
Fitch believes that many of the players, who have survived the tumultuous period of the
last two years, may be able to harness the benefits of scale and size in the years to come.
As these players grow into national chains, they will be able to take advantage of the
synergies in supply chain, which will help them reduce costs and offer higher value to the
customers.
This would help them achieve higher organic growth, with reduced reliance on external
funds. These players will, thus, emerge as strong credits, thus mitigating, to a substantial
degree, the format and operations risks associated with them in the initial stage of their
businesses. However, until these companies transform themselves — from being small
regional chains to large, geographically well-distributed national chains — the inherent
format and operations risks along with the financial risk would be key factors influencing
their credit ratings.
Retailing in India
Total Consumer Spend in the Year 03-04 – INR 9300 billion ( USD 375 billion) growing
over 5% annually
Retail sales – 55% at INR 280 billion (USD 205 billion)
Organised Retail – Only 3% but growing at 30%
Organised retail to cross INR 1000 billion mark by 2010
INR 200 billion investment in the pipeline
Top 6 cities account for 66% of total organized retailing.
Overwhelming acceptance of modern retail formats.
Scalable and Profitable Retail Models are well established for most of the
Categories.
Looking Ahead
Many strong regional and national players emerging across formats and product
categories Most of these players are now geared to expand far more rapidly than the
initial years of starting up Most have regained / improved profitability after going
through their respective learning curves
Malls in India
The hectic construction and renovation activity in Metros' bazaars is the precursor to the
emergence of India's one of the biggest industry:
Organized Retailing.
Historical reasons for the absence of retailing not withstanding, the industry (to borrow
from Andy Groove) is at an inflection point. Issues like Govt. policies, land market
distortions, 'cheap' being the key word and indigenous small stores, of-course needs to be
circumvented. Still there are lot of other things waiting to give a thrust to the industry on
a tangential zoom. In this report we try to argue in favor of the industry, factors which
will make it happen, players which are likely to succeed and the overall dynamics.
The opportunity
In the absence of structured data and the contradictory figures one should try to
understand the potential and the size of Organized retailing with right perspective. We are
using the top down approach starting with the GDP and market size vis a vis Global
Markets and the size of the various industries.
GDP
Growth
Changing
Demography
India:
A service Economy
Income:
Rs10,000+ per month
How
Low is Low per Capita Income
India is the fourth largest economy in World with 2000 GDP at USD1797bn (PPP wise).
In absolute terms though India stands at 17th position (USD360bn). But with the high
GDP growth rate (5% expected 2002) India will soon surpass countries like Netherlands,
Australia, South Korea and will rival Mexico. In the period from 1994-95 to 2002-03
India's GDP CAGR will be 6.6%, one of the highest in world. With the slowdown in
American and European economies the growth only becomes more pronounced.
`Reliance Fresh` retail stores in Jaipur from tomorrow, after opening its maiden store in Hyderabad last
month, report agency sources.
Jaipur has been chosen as the next destination for opening of these farm fresh stores after its launch in
Hyderabad, mainly because the infrastructure required to start the stores have been put in place quickly and
efficiently in Rajasthan.
Reliance will open five stores in Jaipur this week, which will stock 125 varieties of fruits and vegetables at a
time.
All seasonal fruits and vegetables will be available including puja flowers.
The company siad that 30% of fruits and vegetables for the stores in Rajasthan will be sourced from within
the state, especially from Alwar, while the rest would be obtained from all over the country.
President and chief executive (food business), Gunendar Kapur, said the retail scene in India is totally
fragmented and Reliance Retail is to be the most organised and admired retail company in India.
He said that the complete farm-to-fork project cycle initiated by the RIL is part of its agricultural initiative
and is unlikely to harm the small-time vegetable vendor.
RIL feels India`s retail growth, which is now worth USD 300 billion, could grow up to USD 427 billion in the
next four years.
RELIANCE RETAIL LAUNCHES JAIPURS FIRST SET OF FIVE PILOT RELIANCE FRESH
STORES
Reliance Retail Ltd today unveiled its first set of pilot stores in the Pink City - Jaipur. Reliance Fresh, the
first of the formats from Reliance Retail will be opened up for consumers from the morning of 15th of
December. The five pilot Reliance Fresh stores will be rolled out at Khatipura, Vijaypath — Mansarover,
Shastri Nagar, Ram Gunj Chopar and Jawahar Nagar and have an area of about 2000 to 3500 sq. ft. The
stores will have an average of about 20 trained sales associates attending to the customers in each store. The
Reliance Fresh stores will carry fresh fruits
Reliance Fresh Shopping Mall Khatipura near Jai Bhawani Colony is a location in Jaipur in India. If you
have seen Reliance Fresh Shopping Mall Khatipura near Jai Bhawani Colony , then write us a review
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Bhawani Colony in Jaipur below. Rajasthan is the first launch in North India. With this
launch, Reliance Retail has 22 stores in Hyderabad and Jaipur.
Piramyd will blend fashion with culture. The store will be spread over 50,000 square feet on three floors,”
Bipin Gurnani, chief executive officer, Piramyd, said.
The offering at the store will include branded-merchandise in the lifestyle and fashion segments in men's
wear, women's wear, kid’s wear, home fashion and lifestyle accessories,” he said, adding, “the store would
showcase over 300 brands, of which around 10 would be our labels.”
The retail scene, which evolved in metros some time ago, is now catching up in tier II towns and Jaipur
reflects this phenomenon,” Gurnani said.
Report says economic slowdown affecting organized retail in
India
The KPMG report also mentioned that about an unfavorable impact on Indian retailers in spheres such
as availability of working capital; cost of finance; advertising expenditure; and store and headcount
expansion. Nevertheless, the study also conceived the current scenario as an immense opportunity for
the retailers to become cost competitive, take the maximum-possible benefit from the availability of
real estate in bargain basement price; and spread out into tier II and III towns.
Acknowledging that the retail sector is suffering a blow from the liquidity crunch, KPMG national
industry director Ramesh Srinivas, said: "Slowing sales resulting in lower inventory turnover and
increasing working capital requirements to fuel growth have resulted in liquidity pressures for many
domestic retailers."
The country on the other hand stands as an emerging market at the 11th position thanks to
old socialist policies. The above model shows the country's standing on various
parameters.High growth rate combined with a population of 1bn+, second only to China,
makes India a hot destination for anybody interested in selling its products, poor
infrastructure and low per capita income notwithstanding. India is the second biggest
producer of Wheat, Rice, Sugar, Vegetables, has some of the biggest mines in world for
many minerals and to top it all has the people to consume all that. The population and
resources combined translates into a huge domestic market and phenomenal export
opportunities in the light of declining population growth rates (CAGR 1.44% 1999-
2010). The strengthening service economy (46.4% GDP share in FY00 compared to
43.6% in FY96) in the country and the expectation of additional 7mn job creation by
2008 in IT and IT enabled services makes it a market worth a look. India with its diverse
culture and varied economic classes has 75mn people earning above Rs10,000 per month
presenting a target market for anybody interested in selling branded shirts and packed
staple food. The 75mn figure is nearly equal to the population of Germany and higher
then U.K., France, Italy or South. Korea. Of course the high figure itself doesn’t make
India attractive since the variation in per capita disposable income is phenomenal, but the
sheer numbers with the capacity to buy a basket of goods 60-70% similar to the people in
other countries, though less pronounced in quality, does. India also rates favorably in
terms of population structure. Paul Krugman, one of the first to predict East Asian Crisis
identified the population structure as one of the key reasons for the high growth rates of
South East Asian Economies. India too is going through the sea change in terms of the
percentage of population entering the workforce (High growth of labor force at 2.48% vis
a vis population growth of 1.57%. With population growth rate declining and the life
expectancy increasing India's young population will be 63% of its population by the year
2012 as compared to 53% in Year 1997. Combined with increasing literacy, women
entering workforce and increasing employment vistas Economically Active Population
too will witness a huge growth from current 32-35%. The figure stands at 50% for U.S,
56% for China and 54% for Japan. The shift will give a great boost to disposable
incomes.
Lower per capita incomes are not 'The Hindrance' keeping the Indians chaste from the
invasions of Malls. China with above 20% organized retailing market share doesn't have
much higher retail sales then India. India's USD198/annum retail sales aren't far behind
China's USD272. Besides one school of economists has their reservation over the data
coming out of China.
India: What sells
High
Volumes
Low Value
Dispersed,
unstructured and fragmented
But is the war lost?
The market size for all the goods of consumer's basket is higher then most
of the economies in world at least in terms of volumes if not dollar value.
The total market in major categories is stated below.
OBJECTIVES
It is restricted to the jaipur City and it deals with only the “Changing Face of Retail
and Its Implication on Consumer Behaviour”
REVIEW OF LITERATURE
Jaipur, March 20
Consumers of today are more inclined towards specialised formats of retail outlets like
hypermarkets, super bazaars, shopping malls etc. where they get different variety of
products under one roof rather than typical Kiryana stores. It is quite imperative that in
such a fast paced shift, more and more companies are coming up with different formats of
their retail outlets, specially discount stores, department stores, hypermarkets etc. either
individually or in collaboration with foreign partners.
A recent research conducted by Sandhir Sharma and Gautam Bansal of the Punjab
College of Technical Education (PCTE) here reveals that Indian companies had already
started taking initiative in this line. Reliance is planning to go for expansion in the retail
sector in the coming years, Vishal mega Mart retail chain is planning to set up 80 more
stores at an investment of Rs 480 crore in the next financial year. On the same lines,
Birlas have decided to roll out its retail business with in the next seven to eight months
and is likely to develop the business of its own rather than in collaboration with any
foreign partners.
The researchers said in spite of the fact that the government was still not clear regarding
the decision of allowing foreign players in huge and potential Indian markets, the sector
was buzzing with both domestic and foreign players who were trying to make their
presence felt. Players like Wal-Mart had already tied up with the Bharti group to enter
into retail markets, though they were not coming at the front end operations but definitely
it would help Bharti in gaining the logistical, storage efficiencies, which were important
functional areas of retail operations for gaining competitive advantage.
Sharma and Bansal said the majority of retailers still felt that karyana and small stores
would not be suppressed at any cost as India had a huge market with people from
different segments, class, income groups of society so the need and importance for these
traditional stores would remain there. According to statistics available, 70 per cent of the
Indian consumers was from middle and lower income groups and they preferred to shop
from karyana stores rather than going into big shopping malls. It was only the upper
strata (20-25 per cent) of society which would be attracted towards these big formats of
retailing.
The experts in the field say that if the foreign players wanted to tap a major chunk of the
Indian consumer they had to come to the level of karyana stores as had been done by
various domestic players. But one thing was sure that what ever happens it would change
the shopping styles of Indian consumers. Indian consumer was definitely going to
respond well to these changes. Biggest challenge the retailers would face would be the
availability of space for opening their outlets.
However, 98 per cent of the retail is in the unorganised sector. But in recent years, RPG,
Pantaloon, ITC and Ebony have entered the retail sector in a big way. Walmart, world’s
largest retailing company, has also shown keen interest to invest in this sector, but the
government has only allowed it to set up its subsidiary for sourcing material for other
countries.
Dr Arpita Mukherjee, co-author of the report “Foreign Direct Investment in Retail Sector:
India” claimed that even though FDI was not allowed in retailing, foreign players had
entered the Indian market through various loopholes in the regulations.
She said the government should open the retail sector in a phased manner over three to
five years. “It should also ensure that existing franchisees are not affected and foreign
companies do not indulge in predatory pricing,” she said.
The report has recommended that any opening up of the FDI regime should be gradual to
give the domestic industry enough time to adjust to the changes. “The FDI should first be
allowed in relatively less sensitive sectors such as garments, lifestyle products, consumer
durable, houseware and entertainment (books and music). Once the market starts
adjusting then it could be allowed in certain sensitive sectors like food and grocery,” she
said.
- Organized retail market in India is expected to reach US$ 50 Billion mark by 2011.
- Number of shopping malls is expected to increase at a CAGR of more than 18.9% from
2007 to 2015.
- Rural market is projected to dominate the retail industry landscape in India by 2012
with total market
share of above 50%.
- Organized retailing of mobile handset and accessories is expected to reach close to Rs.
5000 Crore
by 2010.
- Driven by the expanding retail market, third party logistic market is forecasted to reach
US$ 20 Billion
by 2011.
- Apparel, along with food and grocery, will lead the organized retailing 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
Another cap to the retailing industry in India is allowing 51% FDI in single brand outlet. The
government is now set to initiate a second wave of reforms in the segment by liberalizing investment
norms further. This will not only favor the retail sector develop in terms of design concept,
construction quality and providing modern amenities but will also help in creating a consumer-
friendly environment. Retail industry in India is at the crossroads but the future of the consumer
markets is promising as the market is growing, government policies are becoming more favorable
and emerging technologies are facilitating operations in India. And this upsurge in the retail industry
has made India a promising destination for retail investors and at the same time has impelled
investments in the real estate sector. As foreign investors cautiously test the Indian Markets for
investments in the retail sector, local companies and joint ventures are expected to be more
advantageously positioned than the purely foreign ones in the evolving India's organized retailing
industry.
Strength:
1. Retailing is a " technology-intensive" industry. It is technology that will help the organized
retailers to score over the unorganized retailers. Successful organized retailers today work closely
with their vendors to predict consumer demand, shorten lead times, reduce inventory holding and
ultimately save cost. Example: Wal-Mart pioneered the concept of building competitive advantage
through distribution & information systems in the retailing industry. They introduced two innovative
logistics techniques ? cross-docking and EDI (electronic data interchange).
2. On an average a super market stocks up to 5000 SKU's against a few hundreds stocked with an
average unorganized retailer.
Weakness:
1. Less Conversion level : Despite high footfalls, the conversion ratio has been very low in the retail
outlets in a mall as compared to the standalone counter parts. It is seen that actual conversions of
footfall into sales for a mall outlet is approximately 20-25%. On the other hand, a high street store
of retail chain has an average conversion of about 50-60%. As a result, a stand-alone store has a
ROI (return on investment) of 25-30%; in contrast the retail majors are experiencing a ROI of 8-
10%.
2. Customer Loyalty: Retail chains are yet to settle down with the proper merchandise mix for the
mall outlets. Since the stand-alone outlets were established long time back, so they have stabilized
in terms of footfalls & merchandise mix and thus have a higher customer loyalty base.
Opportunity :
1. The Indian middle class is already 30 Crore & is projected to grow to over 60 Crore by 2010
making India one of the largest consumer markets of the world. The IMAGES-KSA projections
indicate that by 2015, India will have over 55 Crore people under the age of 20 - reflecting the
enormous opportunities possible in the kids and teens retailing segment.
2. Organized retail is only 3% of the total retailing market in India. It is estimated to grow at the
rate of 25-30% p.a. and reach INR 1,00,000 Crore by 2010.
3. Percolating down : In India it has been found out that the top 6 cities contribute for 66% of total
organized retailing. While the metros have already been exploited, the focus has now been shifted
towards the tier-II cities. The 'retail boom', 85% of which has so far been concentrated in the
metros is beginning to percolate down to these smaller cities and towns. The contribution of these
tier-II cities to total organized retailing sales is expected to grow to 20-25%.
4. Rural Retailing: India's huge rural population has caught the eye of the retailers looking for new
areas of growth. ITC launched India's first rural mall "Chaupal Saga" offering a diverse range of
products from FMCG to electronic goods to automobiles, attempting to provide farmers a one-stop
destination for all their needs." Hariyali Bazar" is started by DCM Sriram group which provides farm
related inputs & services. The Godrej group has launched the concept of 'agri-stores' named
"Adhaar" which offers agricultural products such as fertilizers & animal feed along with the required
knowledge for effective use of the same to the farmers. Pepsi on the other hand is experimenting
with the farmers of Punjab for growing the right quality of tomato for its tomato purees & pastes.
Threats :
1. If the unorganized retailers are put together, they are parallel to a large supermarket with no or
little overheads, high degree of flexibility in merchandise, display, prices and turnover.
2. Shopping Culture: Shopping culture has not developed in India as yet. Even now malls are just a
place to hang around with family and friends and largely confined to window-shopping.
India Retail Report 2005
The retail market in the country is expected to be worth over Rs 18,10,000 crore by
2010. And organised retail is likely to exceed Rs 2,30,000 crore (at constant prices),
at about 13% of the pie, according to India Retail Report (2009 edition).RS Roy,
editorial director, India Retail Report 2009 said, “Our research estimates the Indian
retail market in 2007 at Rs 13,30,000 crore, growing annually at 10.8%. The share
of organised Retail in 2007 was estimated to be only 5.9%, or Rs 78,300 crore.
Modern retail witnessed a growth rate of 42.4% in 2007 and we envisage it to
maintain a faster growth rate over the next three years. Increase in consumer
spending is and will push the economy into a growth-and-liberalisation mode.”In the
overall retail pie, food and grocery was the dominant category with 59.5% share,
valued at Rs 7,92,000 crore, followed by clothing and accessories with a 9.9% share
at Rs 1,31,300 crore. Interestingly, out-of-home food (catering) services (Rs 71,300
crore) has overtaken jewellery (Rs 69,400 crore) as the third-largest retail category,
with a 5.4% market share. Consumer durables (Rs 57,500 crore) is the fifth-largest
retail category, followed by health and pharmaceuticals (Rs 48,800 crore),
entertainment (Rs 45,600 crore), furniture, furnishings and kitchenware (Rs 45,500
crore), mobiles and accessories (Rs 27,200 crore), leisure retail (Rs 16,400 crore),
footwear (Rs 16,000 crore), health and beauty care services (Rs 4,600 crore) and
watches and eyewear (Rs 4,400 crore), in the order.In organised retailing, however,
clothing and fashion accessories is the largest category with a market share of
38.1%, at Rs 29,800 crore, followed by food and grocery with 11.5% (Rs 9,000
crore), footwear 9.9% (Rs 7,750 crore) and consumer durables 9.1% (Rs 7,100
crore). Timewear (48.9%) and Footwear (48.4%) are the most organised of all
retail categories, followed by clothing & fashion accessories (22.7%).At 25.6% year-
on-year, the fastest-growing segment in the overall pie in 2007 was mobile and
accessories followed by out-of-home food (catering) services (25.1%) and books,
music & gifts leisure category (23.3%). In organised retail, however, the fastest
growth was recorded in the tiny health and beauty care services category at Rs 660
crore, which grew 65%. The second-fastest-growing organised retail category was
entertainment (53.8%), followed by the mobile phones and accessories (55.2%)
and food and grocery retail (55.2%.At constant prices, growth in the fashion and
accessories retail category, both in the overall market and the organised retail
segment, have been consistently positive since 2004: while the overall market grew
12.8% in 2007, the organised segment grew 35.5%.In jewellery retail, the overall
market growth was higher in 2007 (9.6%) as compared with the previous year
(9.2%) but growth in organised retail was slightly lower (31%).The overall market
growth in the timewear category has declined from 10.7% in 2005 to 9.7% in 2006
and further to 8.9% in 2007. However, growth in organised retail was higher in 2007
(16.6%, as against 14.8% in 2006). Footwear retail, the overall market as well as
organised segment, grew faster year after year, but growth in 2007 has been
remarkable. The overall market grew 12% in 2007 as against 9.2% in 2006, while
the organised segment grew 42.3% and 36.4%, respectively. Growth in the health
and beauty care has been optimistic, though the organised segment growth of
57.5% in 2007 was slightly lower as compared with 59.1% in 2006. In the
furnishings and furniture retail category, the overall market grew at 7% in 2007 as
against 3.2% in 2006 - thanks to the housing sector boom. The organised segment
also grew faster at 29.7% in 2007 as against 23.1% the previous year. At constant
prices, the overall food and grocery retail market grew slightly higher at 2.3% in
2007 as compared with 2.2% in the two previous years. The report suggests that the
organised retail segment in this category is simmering in the true sense - a 50%
growth in 2007 as against 42.9% in 2006, and lot more fireworks can be expected
going ahead. Valued at Rs 9,000 crore, this organised market constitutes barely
1.1% of the total food and grocery retail market
Indian organised retail is on the brink of a revolution says the Images-KSA India
Retail Report 2005
“Supported with the findings of various research reports of IMAGES and KSA
Consumer Outlook study the India Retail Report 2005 presents size, strengths and
scope with performance of key players in each segment and explores new emerging
segments that have potential for new and existing players,” said Mr Roy.
Detailing reasons why Indian organized retail is at the brink of revolution the
IMAGES-KSA report says that the last few years have seen rapid transformation in
many areas and setting scalable and profitable retail models across categories.
Indian consumers are rapidly evolving and accepting modern formats
overwhelmingly. Retail space is no more a constraint for growth. India is on the
radar of global retailers and suppliers/brands worldwide are willing to partner with
retailers here.
Further, large Indian corporate groups like Tata, Reliance, Raheja, ITC, Bombay
Dyeing, Murugappa & Piramal groups etc and also foreign investors and private
equity players are firming up plans to identify investment opportunities in the Indian
retail sector. The quantum of investments is likely to sky-rocket as the inherent
attractiveness of the segment lures more and more investors to earn large profits.
Investments into the sector are estimated at Rs 20-25 billion in the next 2-3 years,
and over Rs 200 billion by end of 2010.
Stocks in the retail sector are also becoming increasingly attractive from an
investor’s point of view. Successful development of value based concepts as well as
development of retail space in smaller cities and towns shall drive the organized
retail into the next levels of cities. Retailers have responded to this phenomenon by
introducing contemporary retail formats such as hypermarkets and supermarkets in
the new pockets of growth. Prominent ‘tier-II’ cities and towns which are witnessing
a pick-up in activity include Surat, Lucknow, Dehradun, Vijaywada, Bhopal, Indore,
Vadodara, Coimbatore, Nasik, Bhubaneswar, Varanasi and Ludhiana among others.
With consumption in metros already being exploited, manufacturers and retailers of
products such as personal computers, mobile phones, automobiles, consumer
durables, financial services etc are increasingly targeting consumers in tier II cities
and towns. In addition, petro-retailing efforts of petroleum giants scattered through
out the country’s landscape have also ensured that smaller towns are also exposed
to modern retailing formats. On the supply side, mall development activity in the
small towns is also picking up at a rapid pace, thereby, creating quality space for
retailers to fulfill their aggressive expansion plans. Thus, the ‘retail boom’, 85% of
which has so far been concentrated in the metros is beginning to percolate down to
smaller cities and towns. The contribution of these tier-II cities to total organized
retailing sales is expected to grow to 20-25%.
Purushottam Kumar
The Indian organized retail industry is valued at about $300 billion and is expected to
grow to $427 billion in 2010 and $637 billion in 2015. Retail Market India today is the
second fastest growing economy of the world after China. Indian economy will grow
larger than Britain's by 2022, Japan by 2032 and by 2050 will become the second largest
economy of the world after China. Indian market has become the most lucrative market
for retail investment in the world. Some of the factors which have contributed to the
growth of organized retail in India are: increase in the purchasing power of Indians, rapid
urbanization, increase in the number of working women, large number of working young
population.
Today people look for better quality product at cheap rate, better service, better ambience
for shopping and better shopping experience. Organized retail promises to provide all
these. The Industry The various formats of organized retail are: Hypermarkets: They
store products of multiple brands comprising food items and non-food items.
Supermarkets: These are self service stores selling food and personal care products. E.g.:
Subhiksha. Departmental stores: Retails branded goods in non-food categories. E.g.:
Shoppers Stop. Specialty Chains : These stores focuses on a branded product or a product
category. E.g.: Bata Convenience stores: These are small self service outlet located in
crowded urban area. Malls: A huge enclosures which has different retail formats. e.g.:
Nucleus Key players in organised retail are: Pantaloon Retail: It was started by Kishore
Biyani- India's largest retailer. The various formats of pantaloon retail are: Pantaloons,
Big Bazaar, Food Bazaar, Central etc. RPG Retail: Its various formats are: Food World,
Music World, Health & Glow, Spencer's Tata Retail (known as TRENT): Its various
formats are: CromaWestsideStar India Bazaar K Raheja Corp. Group: Shoppers' Stop,
Hypercity, Crossword, InOrbit Mall Reliance Retail Job Opportunities: Retail accounts
for 8% employment in the country. In the next 2 years the sector is set to provide 2.5 lakh
job opportunities.
The types of jobs available in retail are: Retail sales, Store management, Stock
management, Supply chain management, warehousing and operations. In organised retail
the frontliners like shop floor executives, sales executives etc are in great demand. The
frontliners have to directly communicate with the customers. The other jobs are for store
managers, store planners, cashiers, stockists, logistics, operations, distribution, marketing,
finance, HR, IT etc. Good communication skill, high interpersonal skills, convincing
power, positive attitude and ability to handle stress is a prerequisite for these jobs. Fresh
graduates who want to make career in retail can easily fill these jobs. Stock planners,
Operations, logistics, cashiers have to deal with the numbers daily. Besides having good
communication skills they also require numerical and analytical ability.
Bharati retail is planning to invest $2.5bn by 2015 which will create employment
opportunity for 60,000 people. Bharti Resources, a learning and development solutions
subsidiary of Bharti Group, has tied-up with Global Retail School (GRS) to groom
graduates and undergraduates in retail management and other sectors. They will provide
3-month and 6-month certificate courses for Rs 30,000 and Rs 15,000 respectively in
Retail Sales and Marketing, Retail Visual Merchandising and Space Planning, Retail
Supply Chain Management, for creating frontend manpower professionals. Indeed it is a
fact that organised retail in India is all set to grow at an stupendous pace.
After a long spell of shortages, which shackled consumer buying for decades, retail is
becoming India's new mantra. The Sanskrit word "mantra" is not just "hymn" or
"slogan"; it embraces aspiration and encompasses new India's way of life. While the
retailing industry itself has been present through history in our country, it is only the
recent past that has witnessed so much dynamism.
We have entered the 21st century at a time when the demography of our population
is changing significantly to drive organized retail growth. India now has a large
young working population with a median age of 24. The number of nuclear families
in urban areas is growing fast. Then there is the increase in working women
population. Add to these the emerging opportunities in the service sector. Lifestyle
habits are shifting from austerity to complete self-indulgence and Indians are now
unapologetic about spending lavishly on non-essential goods such as luxury watches,
cars, and hi-tech products.
India can be said to have entered the second phase of retail growth when there is
high-speed growth.
There are retail chains like Tata's Westside, Pantaloon's Big Bazaar and
Rahejas' Shoppers' Stop, to name a few, along with global players such as
McDonald's and Benetton, trying to tap country's vast potential. Bringing all these
under one roof are mega malls such as Lifestyle, Fun Republic and Big Bazaar. Now,
top names in international malls such as Marks and Spencer and Mango are also
eying the Indian market. It is only later that the retailing scene will move to the
other phases when the fruits of rapid growth will result in economies of scale and
greater efficiency leading finally to consolidation through mergers and acquisitions.
Thus, retailing in India has a very long haul ahead.
RESEARCH METHODOLOGY
MEANING OF RESEARCH
SURVEY METHOD:
The Survey Method was selected to obtain the needed information by asking the
questions to the respondents through the Questionnaire developed, and passed by Prof
Incharge Aman preet Singh Brar. As per Prof Incharge this method was the suitable for
the Project. Surveys are generally conducted both in qualitative and quantitative
researches. After decision about the sampling, the questionnaire was designed and the
respondents were contacted to answer the questions. This process of getting answers is
known as interviewing.
Data or information is important tool for success of the study; moreover it reduces
uncertainty in decision-making process. In order to make meaningful research a suitable
methodology has been adopted. Both primary and secondary sources have been used in
order to collect vital information about the respective study.
PRIMARY SOURCE
Maximum data collected in this study is primary data, which is collected through survey
through Questionnaire.
SECONDARY SOURCE
In this study the secondary data is collected through Internet sites, Book, Journals,
Newspaper.
SAMPLING TECHNIQUE
A sample of 100 respondents was chosen based on Random Sampling Technique.
In this sampling technique each and every unit of the universe has the same chance of
being included in the sample. The selection of the units depends upon the element of
chance and it is not affected by the investigator's bias. A sample is considered a simple
random one of its members are drawn in such a way that each observation of the universe
has an equal chance of being included in the sample and every possible combination of
observations in the universe is the same chance of being included.
QUESTIONNAIRE
A questionnaire is a set of questions relating to the enquiry. I have used the structured
type of questionnaire in which I have used one type of questions:
In this type of questions there are limited choices to respondent. The respondents have to
Choose the answer from the choices given.
ANALYSIS OF DATA
The analysis of the data through light on the different aspects of the survey work. For the
analysis worktables are used to describe the response to the various questions asked to the
individuals during survey. The number of responses to a given question is shown in it.
Based on these tables, bar charts and graphs are made for the ease of understanding and
to make things more clear.
MARKETING RESEARCH
Marketing research is the systematic design, collection, analysis a reporting of data and
findings relevant to a specific marketing situation facing the company.
Make decisions
Family Income
15%
0.5 to1
42%
1 to 2
2 to 3
31% 3 and more
12%
Interpretation:-
In Ludhiana city majority of people who goes to retail outlets are belong to the
categories of Rs.3 lakhs and more. These people in percentage are 42%.
Second highest income group is comes under the category of Rs.1 to 2 lakhs.
Third highest income group is comes under the category of Rs. .5 to 1 lakhs.
Forth highest income group is comes under the category of Rs. 2 to 3 lakhs.
40 37
30 26
No. of
20 16
respondents
13
10 8
0
0
10% to 15% to 20% to 25% to 50% to 75%
no.of respondents 37 26 13 16 8 0
Percentage of income
Interpretation:-
In ludhiana city 37% people spend, 10% to 15% of their Income on retail outlets.
16% people spend, 25% to 50% of their income on retail outlets and so on…….
no
7%
yes
no
yes
93%
Interpretation:-
In the Ludhiana city the people who goes to retail outlets aware the concept about
the retail outlets.
80
63 77 67
37
24
Interpretation:-
According to the survey majority of people are aware about the concept of Retail
outlets.
Most of the people have visited in different Retail outlets people says they are
know about all the retail outlets like Vishal Mega Mart, Ebony, Ansal Plaza,
Elite’s Arcade, Subhiksha. But 80 people say they have visited the Vishal Mega
Mart, 63 people say they have visited to Ebony, 77 people says they have visited
Ansal Plaza and so on………….
5. Do you prefer to buy from Retail outlets?
Preference Of customer
21%
yes
no
79%
Interpretation:-
Different people have different perception about the retail but the people who go
to retail outlets in between 79% people are like prefer to purchase from the retail
outlets.
Remaining 21% people goes to retail outlets to see the new trends, for
entertainments.
6. How frequently you visit there?
7% 5%
19% Daily
23% Once a week
Twice a week
Once a month
15% Twice a month
More than that
31%
Interpretation:-
Most of people like to go for Retail outlets once in the month and these people
like to go on generally on Sunday or holidays. Percentages of these people are
31%.
Then the people like twice a month the Percentages of these people are 23%.
19% people goes to retail outlets once a week, 15% people goes to retail outlets
twice a week and so……..
Retail
Outlets 67
No of user
S1
Retail Company
Wholesaler Any others
outlets outlets
Series1 32 67 37 41
Interpretation:-
According to research study 67% people says they like to purchase from retail
outlets regularly and 37% people prefer to purchase from company outlets, 32%
from wholesaler and 41% people prefer to purchase from small retail shops.
Reduction of duplication
50 43
No.of respondents
40
30 26
20 15
11 Series1
10 5
0
Strongly Neither Strongly
Agree Disagree
Agree Agree Nor DisAgree
Series1 11 43 26 15 5
Factors
Interpretation:-
According to research, People rate factors on the matter of reduction in
Duplicacy, the factors which are strongly agree, agree, neither agree nor disagree,
disagree, strongly disagree in which 43% people are agree, 26% are neither agree
nor disagree, 15% people are disagree and 11% people are strongly agree.
9. What do you like the most about the Retail outlets?
(Please give the rank from 1 to 8)
Preference. Ist IInd IIIrd IVth Vth VIth VIIth VIIIth Total Mean Rank
Weitage 8 7 6 5 4 3 2 1
Factor’s
Latest Trend 28 16 16 8 16 8 8 0 576 5.76 IInd
Branded product 12 40 12 12 8 16 0 0 588 5.88 Ist
Quality Product 24 12 24 0 12 12 12 4 532 5.32 IIIrd
Infrastructure 20 4 4 24 16 16 12 4 472 4.72 IVth
Services 0 8 16 12 20 16 8 20 376 3.76 VIth
Window 8 4 16 8 4 4 16 40 328 3.28 VIIIth
Shopping
Family 4 0 4 16 20 12 36 8 332 3.32 VIIth
Shopping
Time Saving 4 16 8 20 4 16 8 24 396 3.96 Vth
Interpretation:-
According to survey about what people like most about the retail outlets. I have
asked the people to give the rank according to their liking about the Retail.
In statement I included Eight factors which are Latest trend, Branded product,
Quality product, Infrastructure, Services, Window shopping, Family shopping and
Time saving.
According to the survey the respondents given first preference to the Branded
product as compare to the Quality product, Infrastructure, Services, Window
shopping, Family shopping and Time saving and given second preference to the
Latest trend as compare to the Quality product, Infrastructure, Services, Window
shopping, Family shopping and Time saving. I have given the higher rating to the
first preference rating as 8 and second preference as 7 and third preference as 6
and so on…. Then I have multiplied these rating to their preference and got total
rating. Then I have divide the Total by the total number of respondents (100) and
I got the mean value and then given the rank. I gave the first rank to the Branded
product which is having highest mean value and second rank to the Latest Trend
and third rank to the Quality product and so on…………..
50
42
40
No.of respondents
30 26
17 Series1
20
10
10 5
0
Very poor Poor Average Good Very good
Series1 5 17 42 26 10
Factors
Interpretation:-
According to research, thinking of People about the pricing of retail outlets, the
factors very poor, poor, average, good, very good in which 42% people have
average, 26% have a good ,10% people have very good, 17% people have poor
and 5% people says very poor.
11. Are you satisfied with the services provided by them?
Satisfaction level
60 51
No. of respondents
50
40
Series1
30
19
20 16
11
10 3
0
Highly satisfied Neither Dissatisfie Highly
Series1 19 51 16 11 3
Factors
Interpretation:-
According to research, People rate their satisfaction level with the factors which
are Highly satisfied, Satisfied, Neither satisfied nor dissatisfied, Dissatisfied,
highly dissatisfied in which 51% people are Satisfied the service provided by the
retail outlets, 19% people are saying they are highly satisfied with the
service,16%people are neither satisfied nor dissatisfied, 11% people are
dissatisfied the service and 3% people are highly dissatisfied the service.
12. Which factor do you most consider while purchasing the domestic needs?
(Please give the rank from 1 to 7)
Preference. Ist IInd IIIrd IVth Vth VIth VIIth Total Mean Rank
Weitage 7 6 5 4 3 2 1
Factor’s
Convenience 8 20 24 32 8 4 4 468 4.68 Ist
Location 8 16 20 20 24 12 0 428 4.28 IVth
Discount And Sale 12 12 12 8 24 24 8 376 3.76 VIth
Credit Option 0 8 8 8 16 16 44 244 2.44 VIIth
Product 12 24 12 28 0 20 4 444 4.44 IIIrd
Availability
Branded Product 36 8 16 0 16 8 16 460 4.60 IInd
More reasonable 24 12 8 4 12 16 24 388 3.88 Vth
price
Interpretation:-
In the Question I have try to cover all the factors which generally people consider
while purchase the domestic needs.
According to the survey the respondents given first preference at the time of
purchasing domestic needs to the Convenience as compare to the Location,
Discount And Sale, Credit Option, Product Availability, Branded product and
More reasonable Price and given second preference to the Branded Product as
compare to the Location, Discount And Sale, Credit Option, Product Availability
and More reasonable Price..
60
50
40
30 Series1
20
10
0
Strongly Agree Neither Disagree Strongly
7 3
Series1 58 22 10
Factors
Interpretation:-
People of jaipur says the future of Retail outlets is bright in jaipur they excited to
know that their are other big industry house are entered in retail business very
shortly like reliance is coming in retail segment with the name of “Reliance
Fresh”, Tata, Bharti are yet to come. Bharti is coming in retail segment with the
tie up world largest Retail Company Wallmart, pantaloon,Bigbazaar.
According to research, the factors strongly agree, agree, neither agree nor
disagree, disagree, strongly disagree, in which 58% people are agree, 22% are
Strongly agree ,10% people are neither agree nor disagree, 7% people are disagree
and 3% people are strongly disagree regarding the future of retail outlets.
CONCLUSION
The name of the project “Changing face of retail and its implication on
consumer behaviour”. I did my research study in Ludhiana city and people who are
visit to Retail outlets and having the knowledge about retail outlets are included in
sample and the sample size is100 deliberately taken by me.
I selected the people randomly and its include all age group which goes to retail outlets in
this research study I included all the age group to reduce the biasness.
I conclude that people like to visit the retail outlets most probably at the end of weekend
and holidays. A person who regularly goes to retail outlets is generally purchase from
retail outlets and most of the people are agree that purchasing from retail outlets reduce
duplicacy.
According to the survey the response of the people regarding service that retail outlets
provide average quality services.
People like to purchase the branded product and these retail outlets provide the different
branded product according to the requirement of customers.
Most of the people like to purchase their domestic needs according to there convenience.
LIMITATION
Although I have made my best efforts to get as accurate data as possible but even then the
data used in this report is subjected to some limitations and these limitations.
INADEQUATE KNOWLEDGE:
Customers don’t have sufficient knowledge about the services provided by retail
outlets so that they may give wrong information also
TIME CONSTRAINT
Time has also affected the research due to less availability of number of days; sur
vey was conducted in few days.
ADDRESS ______________________________
______________________________
0.5 to 1 ( ) 1 to 2 ( )
2 to 3 ( ) 3 and more ( )
Yes ( ) No ( )
11. Are you satisfied with the services provided by Retail outlets?
12. Which factor do you most consider while purchasing the domestic needs?
(Please give the rank from 1 to 7)
BIBLIOGRAPHY
Institute of Productivity and Management. January- June 2005, Journal of IPM Meerut,
volume 5, number 1
David J. Luck, Ronald S. Rubin 2001, Marketing Research, new Delhi, Prentice Hall of
India Pvt. Ltd.