Questions for discussion:

1. What are the existing retail formats in India? Comment on the emergence of
organized retailing in the last few years. List out the factors that led to the
growth of retail industry in India?

As given in the case and also we have experienced in our day to day life, traditionally the
retail industry in India comprised of large,mediam and small grocery stores and drug
stores which could be categorized as unorganized retailing.

1) Kirana stores,
2) road side vendors
3) Weely markets,
4) haat,
5) mela etc…

The era of rural retail industry could be categorized into two formats: weekly markets and
village fairs. Primarily weekly formats catered to the daily necessities of villagers.
Village fairs were larger in size with a wide variety of goods sold from food, clothing,
cosmetics and small consumer durables. The traditional era saw the emergence of the
neighborhood 'Kirana' store to cater to convenience of the Indian consumers

The following kinds of retail formats are found in India:

• Mom-and-pop stores: These are generally family-owned businesses catering to small

sections of society. They are small, individually run and handled retail outlets.

• Category killers: Small specialty stores have expanded to offer a range of categories.
They have widened their vision in terms of the number of categories. They are called
category killers as they specialize in their fields, such as electronics (Best Buy) and sporting
goods (Sport Authority).

• Department stores: These are the general merchandise retailers offering various kinds
of quality products and services.

These do not offer full service category products and some carry a selective product line. K Raheja's
Shoppers Stop is a good example of department stores. Other examples are Lifestyle and Westside.
These stores have further categories, such as home and décor, clothing, groceries, toys, etc.

Malls: These are the largest form of retail formats. They provide an ideal shopping experience by
providing a mix of all kinds of products and services, food and entertainment under one roof.
Examples are Sahara Mall, TDI Mall in Delhi.
Specialty Stores: The retail chains, which deal in specific categories and provide deep assortment
in them are specialty stores. Examples are RPG's Music World, Mumbai's bookstore Crossword, etc.

Discount stores: These are the stores or factory outlets that provide discount on the MRP items.
They focus on mass selling and reaching economies of scale or selling the stock left after the season
is over

Hypermarkets/ Supermarkets: These are generally large self-service outlets, offering a variety
of categories with deep assortments. These stores contribute 30% of all food and grocery organized
retail sales. Example: Big Bazaar.

Convenience stores: They are comparatively smaller stores located near residential areas. They
are open for an extended period of the day and have a limited variety of stock and convenience
products. Prices are slightly higher due to the convenience given to the customers.

Exclusive Store: This format is owned/ managed by the Company or through its franchise. These
can offer single brand as well as multiple bands

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

Departmental Store: Large stores, catering to a variety of consumer needs. Further classified
into localized departments such as clothing, toys, home, groceries, etc

Super Markets: Large self service outlets, catering to varied shopper needs are termed as Super
markets. These are located in or near residential high streets.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 a
size of 3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personal sales.

Emergence of organized retail industry.

Organized retailers are evolved in resent years and we have seen some big names have
entered in to the retail business like TATA Group, Priamals, RPG, Rahejas . now these
business house has recognized the sector and investing heavily to capture the market
before the big foreign players enters in it.

Apparel retailing
- Westside,owned by Tata’s
- Trent & Shopper’s stop owned by Reheja group
Food Retailing
- Foodworld of RPG group
- Food Bazaar of PRIL
Health & Beauty products retailing
- All most all the groups retails beauty & health related products
Footwear Retailing
- Bata
- Loft
- Library
- Khadim
- Shree lather
Music & Entertainment

- Music world of RPG group

- Plant M of Times Group

Watches & Jewelry

- Tanishq & Titan from Tata

- Rajmal lakhi chand
- Alukkas
- Biman
- Punjab Jewelers
- Kimji
Book retailing
- Crossword
- Landmark
- Oxford

Also in petrol & desial, home furniture, luggages..etc are other sector are the emerging.

In 2005 PRIL had

- 16 Pantaloon departmental stores.
- 21 Big Bazaar
- 33 food Bazaar
- 3 Central Mall

PRIL's (Finacial Performance report)

Year Profit( in Rupess Million)
2000 49.2
2001 64
2002 70.3
2003 114.1
2004 197.8
2005 385.5

Trent Limited( Finacial Performance report)

Year Profit( in Rupess Million)

2001 99.8
2002 98.3
 2003 168.9
2004 172
2005 190.6

Factors that led to the growth of retail industry in India

Question 2:

Examine the reasons for the growing interest of multinational companies

in the Indian retail industry. What are the challenges that retailers like
Wal-Mart or Carrefour could face when they enter India? What should
the Indian retailers do to face competitions from such well-established
multinational retailers?

Growing interest of multinational companies in the Indian retail industry

1) India is the 4th largest economy in terms of Purchasing power parity after
USA, China & Japan
2) Is the 2nd fastest growing economy in the world
3) Among top 10 FDI destinations
4) Stable government
5) Growing corporate ethics( Labour laws, Child labour requlations,
Intellectual and property rights
6) Major Tax reforms including implementation of VAT
7) 2nd most attractive developing market, ahead of China
8) Has the largest Young population in the world
9) 300 million odd middle class – the real consumers
10) Tremendous scope for new Markets.

The Challenges that Wal-Mart or Carrefour could face when they enter India.

Despite the presence of the basic ingredients required for growth of the retail industry in
India, it still faces substantial hurdles that will retard and inhibit its growth in the future.
One of the key impediments is the lack of FDI. This has largely resulted in limited capital
investments in supply chain infrastructure, which is a key for development and growth of
retailing and has also constrained access to world-class retail practices. Lack of proper
infrastructure and relatively high cost of real estate are the other impediments to the
growth of retailing. While the industry and the government are trying to remove many of
these hurdles, some of the roadblocks will remain and will continue to affect the smooth
growth of this industry.

Also India is a price sensitive market and therefore WalMart has to devise its strategy
very carefully

Another tough cookie could be the rapid development of local retail brands, and their
innovative retailing models. Companies like Reliance, Pantaloons have almost made in-
roads to the varied markets which has different preferences all over. They say in India,
that the language is different every twelve miles you walk. Walmart has so far had most
of its experience in countries with minimal diversity. It remains to be seen how it deals
with the Indian mindset of the friendly neighborhood retailer who cares enough to
maintain a relationship at a personal level with all his customers!

Wal-Mart has serious competition from Reliance Group, Piramals, Pantaloon brigade of
Central Megamarts, Big Bazaar, Tru-Mart etc. It has to survive in a already buzzing and
extremly dynamic market, create its own TRUST factor and be able to focus on India's
rising middle-level population with huge disposable incomes.