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An Article
Submitted to
By
Anupama Jangid
` Dhiraj Kumar Choudhary
Section B
on
20th of Jan 2007
1
GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
Abstract
The president of MTL had diversified it with the objective of future growth
potential and making it less vulnerable to any economic fluctuation. The earlier
president was handling all the businesses himself and so a second line of
leadership had not been groomed. The untimely death of the president led to a
situation of leadership vacuum throughout the businesses. The situation is further
complicated by the fact that most of the acquired businesses are actually not
doing much ‘business’ in terms of sales and profits. So it is advisable to divest
some of the businesses and to integrate and establish the proper top management
within the organization.
No of Words = 109
2
GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
Table of Contents:
Abstract....................................................................................................................2
No of Words = 109..............................................................................................2
Table of Contents:...................................................................................................3
GLOBALIZATION:
REVOLUTIONIZING RETAIL INDUSTRY IN
INDIA
Introduction:-
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GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
Exihibit:-2
4
GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
18
25000
16
14
20000
12
15000 10
8
10000
6
4
5000
2
0 0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
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GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
Developed
Awareness
consumers
Potential in
Premium
segments
conscious
of brands
market
market
media
Quality
Profit
best
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GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
A) FOOD RETAILERS
Food retail contributes 62.7% in the total retail sales. It has increased
substantially by 85% to Rs. 7,039 billion in current terms during last 5 years.13
Food sales accounted for about 63% of supermarket sales and 60% of
convenience stores. Traditional types of retailers, who operate small single-outlet
businesses mainly using family labor, dominate this sector. In comparison, super
markets account for a small proportion of food sales in India. However, now a
day’s super markets are becoming more attractive due to higher standards of
hygiene and attractive ambience.
Global-brands such as Marks & Spencer, Lacoste, and Benetton have established
their retail presence in the country through the franchising route. In fact, a large
number of Indian brands have also adopted the franchising route for expansion
due to the relatively lower level of investments involved.
C) DURABLE GOODS
The Indian durable goods sector has seen the entry of a large number of foreign
companies (LG, Hyundai, Samsung etc.) during the post liberalization period.
Intense competition among companies to sell their brands provided a strong
impetus to growth for retailers doing business in this sector.
D) CATERING
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GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
with two national brands Cafe Coffee Day & Barista already established. The
sector is expected to grow at about 12-15 percent in the near future.14
E) BOOK RETAILING
Global stores like Crossword, Oxford, Landmark etc. have been instrumental in
revolutionizing the book retailing in the country. These stores have positioned
themselves as “Experience or Destination Centers” by providing music,
stationery, toys and gifts along with books. Book Stores have mushroomed across
several cities and shown a healthy growth rate ranging between 20-70 percent
annually.15
F) MUSIC RETAILING
The Indian music industry is the fifth largest consumer of music units in the
world (181.1 million units). In spite of the decline in the domestic music industry,
Music World and Planet M have posted impressive growth in their topline (18
percent and 46 percent respectively).This growth is mainly attributed to the retail
expansion.16
G) JEWELLERY RETAILING
Malls in India:-
Over the last 2-3 years, the Indian consumer market has seen a
significant growth in the number of modern-day shopping centers, popularly
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GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
known as ‘malls’. There is an increased demand for quality retail space from a
varied segment of large-format retailers and brands, which include food and
apparel chains, consumer durables and multiplex operators. This has attracted
Global real-estate giants like DLF to establish malls and retail stores. As a result,
from just 3 malls in 2000, India is all set to have over 300 malls by 2007. 18
(Exihibit:-6)
Challenges:-
Exhibit:-84
FDI controls
Unorganised
urban retail
Partnership
competition
Storage of
Cost Of
space
sector
laws
9
GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
Exhibit:-94
60
50
40
30
20
10
0
geographical
Infrastructure
Distribution
Fragmented
distribution
distribution
networks
constraints
national
Lack of
Lack of
market
costs
hubs
Large
area
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GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
exit of domestic retailers, especially small family managed outlets. FDI would
only encourage imports without the benefit of local manufacturing, or the
backward linkages to the agricultural sector. There is also the fear that global
retail chains would use India as a dumping ground for sub-standard or outdated
products. (Exhibit:-10)
Recommendation:-
The retailers in India have to learn both the art and science of retailing by closely
following how retailers in other parts of the world are organizing, managing, and
coping up with new challenges in an ever-changing marketplace. According to
the 'Global Retail Development Index 2006, India has retained its topmost
position in the annual study of retail investment attractiveness among 30
emerging markets.22 To exploit this potential India should allow FDI in phased
manner. Currently it can be allowed to the extent of 26 percent. Subsequently the
small industry will learn the efficiency improving mechanism and technology to
avoid the global players to dominate the market. In the next phase the FDI limit
can be increased to 49% so that with controlling power in the hand of Indian
industry it can improve itself to compete with the global player. In the final phase
it can be increased to 100%. As the sector is highly profitable and has huge
potential so no incentives like tax breaks, import duty exemption and subsidies
are required. A comprehensive, rational retail support policy can go a long way in
making the sector act as an engine of growth for the state economy. Also if India
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GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
continues to get strongly integrated with the world economy riding the waves of
globalization, the retail sector is bound to take big leaps in the years to come.
.
Exhibits:-
Exhibit:-124
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GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
13
Exhibit:-323
Photography
Kodak Processing
890+ 5,00,000 Imaging chain 700 Plans 200 stores every year
Nationwide and
Peripherals
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GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
RPG Retail
Food
Investment so far Rs. 132 cr. Rs.
World,
Super Food, Music, 60 cr. Investment every year to
Music
market/specialt Health and add 30 outlets of Music World,
World, 110 4,93,000 460
y stores, Hyper Beauty, more Health and Glow outlets 25
Health &
market Groceries, etc food world stores and 4 grand
Glow,
hypermarkets
Super Store
& Grant
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GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
Groceries,
Nilgiris (12 dairy products
26 89,000 Super market 230 Investment so far Rs. 35 cr
Cities) and
confectioneries
Subhiksha Food,
Discount
112 1,25,000 provisions and 200 NA
supermarket
Tamil Nadu pharma
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GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
Pantaloon
Retail,
Pantaloon
Dept. Clothing,
stores,
13+34+3 3,38,000 stores/hyper utilities and 175 Investment so far Rs. 100 cr
franchisees
market groceries
, Big
Bazaar in 9
cities
Vivek Consumer
group, electronics and
36 2,00,000 Super markets 173 Investment up to Rs. 35 cr
Tamilnadu, home
Karnataka appliances
17
Exhibit:-513
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GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
Exihibit:-621
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GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
Kolkotta 741,660 3
Chennai 1,350,000 2
Bangalore 1,260,000 5
Pune 1,230,000 5
Hyderabad 695,000 5
Others 3,179,830 20
Total All India 21,564,864 96
Exhibit-724
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GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
Exhibit:-10
Sr.
No. Factors Description Implications
Barriers to FDI not permitted in Absence of global players
FDI pure retailing Limited exposure to best
1
Franchisee practices
arrangement allowed
Lack of Government does Restricted availability of
2 Industry not recognize the finance Restricts growth
Status industry and scaling up
Structural Lack of urbanization Lack of awareness of
Impediments Poor transportation Indian consumers
infrastructure Restricted retail growth
Consumer habit of Growth of small, one-store
3
buying fresh foods formats, with unmatchable
Administered cost structure Wastage of
pricing almost 20%-25% of farm
produce
4 High Cost of Pro-tenant rent laws Difficult to find good real
Real Estate Non-availability of estate in terms of location
government land, and size High land cost
zoning restrictions owing to constrained
Lack of clear supply Disorganized nature
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GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
References:-
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GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
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GLOBALIZATION: REVOLUTIONIZING RETAIL INDUSTRY IN INDIA
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