PROJECT REPORT

ON

RETAILING IN INDIA
(Organized Retail Sector v/s Un-Organized Retail Sector)

SUBMITTED
BY
Shaikh Zubir

MMS 4th Semester

Roll No. 6844

PROJECT GUIDE: PROF. V. RAVI

UNIVERSITY OF MUMBAI

ORIENTAL INSTITUTE OF MANAGEMENT

SECTOR 12, VASHI
NAVI MUMBAI – 400 704

ACADEMIC YEAR 2007-2008

1
DECLARATION
I Shaikh Zubir OF ORIENTAL INSTITUTE OF MANAGEMENT – VASHI (NAVI
MUMBAI) OF M.M.S (SEMESTER FOURTH) HEREBY DECLARE THAT I HAVE
COMPLETED THIS PROJECT ON RETAILING IN INDIA (Organized Retail
Sector V/S Un-Organized Retail Sector) DURING THE ACADEMIC YEAR
2007-2008. THE INFORMATION SUBMITTED BY ME IS TRUE AND ORIGINAL
TO THE BEST OF MY KNOWLEDGE.

Date:

Place: - Navi Mumbai

Signature of student
Shaikh Zubir.

2
Certificate
I, Prof. V RAVI hereby certify that Shaikh Zubir (Roll no: MMS-6844) of
Oriental Institute of Management enrolled in the course of MMS-II Year have
completed the final year Project on “RETAILING IN INDIA (Organized Retail
Sector V/S Un-Organized Retail Sector) ” in academic Year 2007-08. The
information submitted is true and original to the best of my knowledge

Prof. Ravi
(Project Guide)

3
Acknowledgment
I take this opportunity to express my deep sense of gratitude to RAVI Sir for
his valuable guidance, encouragement and support extended to me during
the course of completion of this project report .It has been an honor to work
under his guidance throughout the project span.

We would like to express our gratitude to the library staff and

computer lab staff of our college for helping us to get the desired
information. Also to thank our well wishers & friends who have helped
us in various ways.

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 TABLE OF CONTENTS

Sr. No Title Page No.

1. Executive summary 6
Project Objective
2. Introduction to Retailing:
-Definition 7
-Growing Importance 9
-Major types of retailers 11

3. Overview of the Industry 15

4. Retailing in India:
-History 21
-Key Drivers 23
-Contribution to the economy 33
5. Evolution of Organized Retailing 35
6. Organized V/s Un-Organized Retail 38
Sector
7. Research:
-Hypotheses 40
-Methodology 41
-Data Analysis & Interpretation 42
-Questioner 46
8. Suggestions 50
9. Conclusion 51
10. Bibliography/ References 53

Executive Summary
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The project deals with the effect of Organized Retail sector on Un-
Organized sector in India. It shows the changes in the buying
behavior of consumers due to spreading mall culture. It
speaks about the kirana stores which are near the malls and
away from the malls. It shows that even though organized
retail is growing at a rapid speed, Kirana stores will not be
affected.

Project Objective

• To ascertain the effect of the organized retail sector on the

un-organized retail sector.

• To analyze the changes in the buying behavior of the

consumers because of the spreading mall culture.

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 INTRODUCTION TO RETAILING

Definition of Retailing:

Retailing is derived from the old French word ‘retaillier’,

meaning ‘to cut into small pieces’. Retailing is defined as the
business activity of selling goods and services to the final
consumer. In simple terms, it implies a first-hand transaction with
the customer.

Retailing involves:
- Interpreting needs of customers.
- Developing good assortment of merchandise.
- Presenting them in an effective manner so that consumers
find it easy, convenient and attractive to buy
According to Philip Kotler, Retailing includes all the activities
involved in selling goods and services directly to final consumer
for personal, non-business use. A ‘retailer’ or ‘retail store’ is any
business enterprise whose sales volume comes primarily from
retailing.

Retailing involves a direct interface with the customer and

the coordination of business activities from end to end-right from
7
the concept or design stage of a product or offering, to its delivery
and post-delivery service to the customer.

Long ago, the Father of the Nation, Mahatma Gandhi

realized the importance of customer in retailing. He said, “The
customer is the most important person on our premises. He is not
dependent on us. We are dependent on him. He is not an
interruption of our work; he is the purpose of it. He is not an
outsider on our business, he is part of it. We are not doing a favor
by serving him; He is doing us a favor by giving us the opportunity
to do so.” This proves the fact that retailing is incomplete without
customer. Retailing is directly dependent on customer.

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Growing importance of the retail sector:

Retailing is not only an integral part of our economic

structure but also shapes and is shaped by our way of life. While
trading of goods has always been a part of traditional societies, in
recent times the buying and selling of products has become a
much more formalized and brand dominated activity. Its impact on
society in general is readily acknowledged.
Factors illustrating the growing importance of the retail
sector:
• Large & increasing contribution to GDP.
• Economic importance more visible.
• Major employer.
• Shopping is consumer demand.
• Retailers as ‘gatekeepers’. Earlier retailers used to sell
those brands which the consumer demanded, but now
they can sell the brands they wish depending on their
overall retail strategy & supply relationship.
• Retailers diversifying their activities.
• Organization growing on an international scale.
• Size of operations allowing for supply chain control.
• Blurring of areas of retail to include wider areas of
business activity.

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• Retailing organization is growing & is now comparable
with and ever bigger than manufacturers.
• Development of new products of retailers’ i.e. own brand
lines takes large portion of the market.

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Major types of retailers:

1. Kirana Stores: The Kirana Stores are the original retail

formats in India. They are small, friendly neighborhood
stores, which have been offering customized services to
their customers.

2. Specialty Stores: Specialty stores are narrow product line

with a deep assortment, such as apparel store, sporting
goods store, furniture stores, bookstores and florist. A
clothing store would be a single line store, a men’s clothing
store would be a limited line store and a men’s custom shirt
store would be a super specialty store. 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 some of the examples of Specialty
store.

3. Department store: Departmental stores are such stores

which cater to all shopping needs of the consumer under
one roof under their luxurious settings. It consists of different
several product lines-clothing, home furnishings, household
goods. Departmental Stores are expected to take over the
apparel business from exclusive brand showrooms. Among
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 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!.

4. Supermarkets: Supermarkets are relatively large self-

services retail outlets, they are low cost, low margin, high
volume, designed to serve total needs for food, laundry, and
household maintenance products. They earn an operating
profit of only about 1% on sales and 10% on Net worth.

5. Discount Stores: Discount stores are the stores which offer

discounts on the retail price through selling high volumes
and reaping the economies of scale. True discount stores
regularly sell merchandise at lower prices and offer mostly
national brands. The main advantage of such stores is low
prices. ‘Big Bazaar’ is one of the very good examples of
discount stores.

6. Branded Stores: Branded Stores are exclusive stores either

owned or franchised out by a manufacturer consisting of a
complete range available for a given brand only. There are
various companies having their branded stores like TATA
owned Westside, Raymond, Adidas, Reebok, and

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 Pantaloons etc. This concept is now being used to introduce
organized retailing to the second rung towns.
7. Malls: Malls consist of an enclosure having different formats
of in-store retailers, all under one roof. They have variety of
shops available close to each other. Most malls give floor
space out to individual shops on lease, and these are
enticed by the economies resulting from the sharing of costs.
India's largest shopping arcade Spencer Plaza (600,000-sq-
ft) in Chennai is an example. In malls like these, the
combined brand pull of all outlets is used to create a pull for
the mall. Center One, R-Mall, Crossroads, Nirmal Lifestyles,
RNA Millennium, In Orbit malls in Mumbai, Sahara Mall,
MGF Metropolitan, DLF Mega mall in Delhi, are some of the
many examples of Malls in India.

8. Hypermarkets: Hypermarkets are larger than a Supermarket,

sometimes with a warehouse appearance, generally located
in quieter parts of the city and have low prices, vast choice
available including services as cafeterias. Big Bazaar, Giant
and Super Sabka Bazaar are the three major players in this
segment.

9. Hotel Shopping Plazas: This type has been largely unknown

because of its thin existence. Traditionally hotel retail was
restricted to jewellery and handicraft items but post 2003 this
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 is changing with various international retailers entering the
market preferring the hotel environment more suitable to get
a feel of the market. Assessing this demand, new upcoming
hotels are incorporating distinct retail areas in their plans on
the lines of Grand Hyatt in Mumbai and Leela Galleria in
Bangalore.

10. E- Tailing: The Internet has become a household name in

urban India and e-commerce transactions in India are
growing steadily. Many chains and large retail houses have
entered the virtual store business. They are mainly in non-
food retailing business, like clothes, music and business.

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 OVERVIEW OF THE INDUSTRY

The retail sector is India’s largest industry, which accounts

for over 10 percent of India’s Gross Domestic Product but is
fragmented and unorganized .It is also the highest employer by
contributing to over 8 percent of total employment. The Indian
Retail Industry has emerged as one of the most dynamic and fast
paced sectors on the lines of Information Technology. Since mid
1990’s, the scenario has undergone a drastic change, thanks
mainly to the changes in Government rules and regulations. Since
then, the concept of Multi-Outlet retail stores has gained
momentum and is all set to become the de-facto standard in the
years ahead. This Industry has been predicted to grow to a $200-
280 billion enterprise by 2010.

Organized retailing has finally got the push it needed and its
importance is increasing day by day. The consumer in India is
now being exposed to shopping as an experience and is charmed
with a host of international brands that too at competitive prices.
Today, the Indian consumer expects wide array of choices and
brand options. He has now started spending more and also
demanding more from the retailers.
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 According to a report prepared by Mc Kinsey and the
Confederation of Indian Industry (CII), India is set to witness retail
boom, with the potential to become a US $ 300 billion market per
year by 2010.

According to recent DSP Merrill Lynch report, the key factor

providing a thrust to this retail boom is the changing age profile of
spenders. A new set of young earners who are in their mid
twenties has emerged and over seven million people are entering
this category every year. The number of people who earn over
US$ 5000 plus per annum is growing at an intense pace and this
is primarily attributed to the rapid rise in young earners (those in
their mid twenties).

Modern retail has entered India as seen in sprawling

shopping centers, multi-storied malls and huge complexes offer
shopping, entertainment and food all under one roof. The retail
landscapes is dominated more and more by elaborate shopping
malls and super stores, which are springing up in both metro’s
and large non-metro’s. As a result of which nearly all domestic
retail majors have announced huge expansion plans for the next
12-18 month period with analysts predicting new investments in
the region of US$ 1.5-2 billion.

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 India retained its position as the world’s most attractive
market for mass merchant and food retailers according to
management consulting firm AT Kearney’s 2008 Global Retail
Development Index (GRDI). The Index, an annual study of retail
investment attractiveness among 30 emerging markets found
Asia had overtaken Europe as a dominant region for global retail
expansion, with a growth rate of over 40%. AT Kearney’s Global
Retail Development Index (GRDI), which ranks 30 emerging
countries based on a set of 25 variables including economic and
political risk, retail market attractiveness and retail saturation
levels, has retained India’s position at the top. The report said that
the Government of India has gradually started taking all
necessary steps. On the permission to allow FDI up to 51 per cent
in single-brand retail, the report said. “This has triggered market-
entry announcements from some retailers and has signaled to
international retailers that India is serious about opening up the
sector. India is at the peak of attractiveness for retailers right now,
with a $350-billion retail market expected to grow 13 per cent this
year.”

Retailing provides jobs to a large number of Indians and is

the largest contributor to India's GDP. But the flip side of the coin
is that the average size of each of the retail outlets in India is only
50 square feet and though a large employer, the industry is very
unorganized, fragmented and with a rural bias.

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The Indian retail industry is unorganized:

There are nearly twelve million retail outlets in India and the
number is growing. Two thirds of these stores are in rural location.
The vast majority of the twelve million stores are small "father and
son" outlets. According to the "Retailing in India" report published
by the PwC Global Retail Intelligence Program, share of the
unorganized sector is 98%.

The Indian retail industry is fragmented:

Retail stores in India are mostly small individually owned

businesses. The average size of an outlet is 50 s.q. ft. and though
India has the highest number of retail outlets per capita in the
world, the retail space per capita at 2 s.q. ft per person is amongst
the lowest in the world.

The Indian retail industry has rural bias:

Nearly two thirds of the stores are located in rural areas. The
retail industry in rural India has typically two forms: "Haats" and
"Melas". Haats are the weekly markets: they serve groups of 10-
50 villages and sell day-to-day necessities. They are frequently
used as replenishment point for the small village retailer. Melas
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are larger in size and more sophisticated in terms of the goods
sold. Mela merchandise would include more complex
manufactured products such as televisions.

Even in urban areas, organized retailing in India is restricted

to the top few cities of the country only.

Organized retail currently accounts for only three percent of

the $ 230 billion retail industry in India.

A report by property consultants Knight Frank says the retail

boom has spread to Tier II and Tier III cities, too. Of the 361 malls
under construction, 227 are in the top 7 cities, while the remaining
134 are coming up in the smaller cities.

Knight Frank estimates that besides the new malls, close to

35 hypermarkets, 325 large department stores and more than
10,000 new outlets are also under development.

Leading the retail boom is the National Capital Region and in

particular its satellite towns of Gurgaon, Noida and Ghaziabad.
With the mall culture gripping ht e ballooning upwardly mobile
population, this survey expects another 25.39 million sq ft of retail
space adding o the current stock of 10.6 million sq ft. of the 78
malls slated to come up in the NCR, 35 will be in Delhi alone.

Mumbai presents a different picture with the retail boom

taking the suburbs by storm but bypassing the island city. Here,
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poor infrastructures, lack of fresh space for new construction and
high real estate costs have stymied growth.

Retail is currently enjoying its sunrise status, but the market

dynamics are set to change drastically in the near future. As retail
formats mature across the country, it will be imperative for
retailers to brand themselves for competitive advantage and as
employers. Given below is the projected distribution of retail
space by the year 2010.

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 RETAIL IN INDIA

History:

Indian retailing for long has been only the mom-and-pop

stores or the local kirana stores, organized retailing rarely
existed and it was also very fragmented. The word ‘retailer’ was
associated with only such stores and a common man could not
imagine anything other than that. For him, a retailer was only a
person who sold goods to him after purchasing from wholesaler.

For Indian retailing, things started to change slowly in the

1980s, when the government recognized its potential and began
opening its economy. Textiles sector (which companies like
Bombay Dyeing, Raymond's, S Kumar's and Grasim) was the
first to see the emergence of retail chains. Later on, Titan, maker
of premium watches, successfully created an organized retailing
concept in India by establishing a series of elegant showrooms.

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 For long, these remained the only organized retailers, but
the latter half of the 1990s saw a fresh wave of entrants in the
retailing business. This time around it was not the manufacturer
looking for an alternative sales channel. These were pure
retailers with no serious plans of getting into manufacturing.
These entrants were in various fields, like - FoodWorld,
Subhiksha, More and Nilgiris in food and FMCG; Planet M and
Music World in music; Crossword and Fountainhead in books.

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 Key drivers of retailing in India:

1. Consumer Pull:

In the pre-liberalization market, the power rested clearly

with the manufacturers. In today’s demand-led market, it’s the
consumer who calls the shots. Over the last decade, there has
been a significant evolution in the Indian consumer, mainly due to
the liberalization of the consumer goods industry that was initiated
in themed-eighties and accelerated through the nineties,
combined with a growing consumerism driven by the media, new
opportunities and increasing wealth. A. F. Ferguson & Co. had
carried out a brief survey among consumers across income
segments to understand their spending pattern. An analysis of the
`monthly purchase basket of the consumers surveyed indicated
that the average monthly households spend on food and grocery
related items varied across income segments. For instance, in the
case of upper income households, the average spend was around
23
Rs 4,200 per month. As against this, the average spend in the
case of a middle income household was around Rs. 2,850 and
lower income households Rs. 1,250 per month.

2. Rising incomes:

Over the past decade, India’s middle and high income

population has grown at rapid pace of over 10 percent per annum.
Though this growth is most evident in urban areas, it has also
taken place in rural areas. Further the number of households
earning above Rs. 1, 50,000 per annum is about 50 million today
and is expected to grow to80 million by 2010. This growing high
income population is triggering the demand for consumer goods,
leading to proliferation of higher quality/ higher priced products.
With increase in double-income households and working women,
there is an increasing pressure on time with very little time being
available for leisure. These changes in consumer behavior also
augur well for the retailing industry.

3. Explosion of media:

There has been an explosion in media as well during the

last decade. Kick-started by the cable explosion during the Gulf
24
 War, television has accelerated to a point where there are more
cable connections than telephones in Indian homes (225 million
vs. 23 million), and about over 100 channels are being aired at all
times. This media bombardment has exposed the Indian
consumer to the lifestyles of more affluent countries and raised
their aspirations and expectations from the shopping experience-
they want more choice, value, service, experience and
convenience of more affluent countries and raised their
aspirations and expectations from the shopping experience- they
want more choice, value, service, experience and convenience.

4. Change in consumer behavior:

There has been a change in shopping behavior in present

urban India where consumers are looking for convenience. That
is, they want everything under one roof and a bigger choice of
products. With an increase in double-income households, people
do not have much leisure time and seek the convenience of one-
stop shopping in order to make the best use of their time. They
also look for speed and efficiency. Increased awareness has also
meant that consumers now seek more information, variety,
product availability, better quality and hygiene as well as
increased customer service. The concept f “Value for Money” is
picking up.

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 As malls and supermarkets offer the option of entertainment
along with shopping, younger couples prefer to shop there along
with their kids. Also driving the retail industry is impulse buying
spurred on by higher brand awareness.

Consumer niches have begun propelling the market and are

becoming more important, with positive and negative sub-
segments of consumers gaining significance. The growth
accelerator has definitely been the working woman, with the
money spent by her averaging 1.3 times that of a housewife.

5. Consumer cycle:

The consumer cycle starts with the industry dictating the

market. Eventually over time the distributor gains control over the
market; at this stage the distributor becomes an important link
between manufacturer and customer. When the market starts
developing its horizons, retailers turn into the vital link in this
supply chain. India is entering the third stage where retailers
control the market. Being closest to the link to the consumer in the
supply chain, retailers benefit accordingly. Manufacturers spend a
lot of money promoting a product, but if it’s not on the shop-shelf,
consumers won’t be able to buy it. Manufacturers have also
realized that retailer recommendations matter, particularly in

26
smaller towns where retailers are figures of authority or opinion
leaders.

With shopping attitudes changing, the Indian market today

desires value- added products and services with good ambience
and brands, which only a retailer can provide. Hence, good
relations are a must. Manufacturers are ready to pay listing fees
to get retailers to stock a product, or display charges to place it
prominently.

6. Emergence of rural market:

The rural market is beginning to emerge as an important

consumption area, accounting for over one-third of the demand
for most key consumer durables and non- durables, IN response,
manufacturers of consumer goods- both FMCG’s and durables –
have begun developing new products (LG television, shampoo
sachets, Ruf n Tuf jeans) and marketing strategies (using a
village ‘Haat” for brand promotions) with the rural consumers in
mind.

7. Establishment of Supply Chain:

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 Over the past few years, the consumer goods sector has
been transformed by increased liberalization, continuous
reduction in customs duty, a shift from quota to tariff-based
systems for imports and sophistication in manufacturing. Entry
restrictions for multinationals have been removed in nearly all
sectors. All these has enabled chain retailers to enjoy better
range depth and sourcing options as well as improved average
margins. There has been a proliferation in the range across all
categories, with a simultaneous increase in the supply of products
and quality retail space. According to a study, there are over
18,000 stock- keeping units (SKUs are products and their
variants, of type and size, counted individually), while most
retailers have the space for at most 5,000 – 7,000 units.

8. Emergence of Hubs as Retail Activity:

Chennai was considered a `traditional', conservative' and

`cost-conscious' market, but proved to be the home ground for
most of the successful retail names - Food World, Music World,
Health and Glow, Vitan, Subhiksha and Viveks -to name a few.
The choice of Chennai as the `retail capital' has surprised many,
but a variety of factors acted in its favor. Chennai, in spite of being
a rapidly growing metropolis offers reasonable real estate prices,
one of the most critical elements for the industry. Chennai has
been witnessing a high industrial growth and increasing presence
of the MNCs, both in the IT sector as well as outside it. The
28
industrial boom has led to the emergence of new residential areas
with aggregation of professionals as well as a rapid increase in
the number of `double-income' households and growth of the
nouveau riche/upper middle class with increased purchasing
power. These have been combined with the increasing need for
touch and feel shopping (especially for the large migrant
population). All the factors have acted favorably in nurturing the
industry.

9. Expansion of Family-Owned Businesses:

The most successful of these are the Rs.150- crore Viveks,

the forty year old Chennai consumer durables chain, the Rs 50-
crore Pantaloon apparel retail business, and Bangalore’s food
retailer Nilgiris. With the new-age demanding consumer preferring
to shop in these big retail chains, traditional ‘bania’ shops will face
a difficult time trying to meet consumer expectations. The process
is likely to be kick-started by grocery stores transforming into
supermarkets since the margins in the grocery trade are the
lowest in the business.

10. New Entrepreneurs:

The growing attractiveness of the retail trade has begun to

attract new entrepreneurs with ideas, and venture capitalists with
29
funds. Subhiksha, an innovative discount grocery chain started
from Chennai is one of the most successful retail start-ups of the
recent past. Venture capitalists like ICICI and IL&FS are also
increasingly willing to invest in retail business.

11. Building Chains around Brands:

Apparel, footwear and consumer durable brands have driven

the growth of specialty chains and upgraded existing multi-brand
outlets. Some like Reebok claim to have entered retailing
because of the paucity of suitable multi-brand retailing options.
However, many of these are emerging as large retailers (Titan,
Madura Garments, Raymond) today, and appear to be committed
to developing their retail businesses. Thus there is an extension
of consumer brand-seeking i.e. promise, trust, comfort, and
image; from products to stores.

12. Foreign Retailers Looking for Entry Options:

The increasing attractiveness of the sector has drawn the

interest of a number of global retailers. With the opening of the
economy, more and more MNC’s have entered the Indian
Business arena through joint ventures, franchisees or even self –
owned stores. The very first MNC to get into the business was
30
Spencer’s and the Diary Farm International, a $10 billion Hong-
Kong based company, and a part of the Jardine Matheson group.

While the foreign retailers cannot start operations on their

own mainly because of the FDI restrictions on the sector, a
number of companies, including Tesco, Carrefour and Ahold, are
exploding entry options. In apparel, Benetton, Lifestyle and Zegna
are already in business, Diary Farm has a number of retailing joint
ventures in India.

13. Technological Impact:

Technology is probably the most dynamic change agent in

the retailing industry. The computerization of the various
operations in the retail store – including inventory management,
billing and payments as well as database (of customers)
management – widespread use of bar coding, point-of-sale
terminals and Management Information Systems (MIS) has
changed the face3 of retailing drastically. Apart from providing the
retailers with better & timely information about their operations,
the technology also performs such tasks as preventing theft
(through the hi-tech Electronic Article Surveillance System),
promoting the store’s goods and creating a better shopping
atmosphere. This is done with the help of Closed-circuit
televisions, video walls, in-store video networks, and other forms
31
of interactive applications – ranging from CD-ROMs to virtual
reality – to let customers select and buy products.

They make the customers life a lot easier by facilitating the use of
credit cards, debit cards and smart cards. Toll-free numbers have
brought about a revolution in consumer ordering & feedback
mechanisms. These also pave the way for tele-shopping and net-
shopping. Emerging technologies also facilitate just-in-time
management of certain products within the store.

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Contribution of Retailing to Indian Economic Sector:

1. Real estate: The retail industry’s real-estate requirement will

be in millions of square feet. This will release for productive use
large tracts of land lying with various government agencies such
as the ports, the armed forces, railways, mill land and so on.

2. Tourism/Outbound shopping: One of the best features of any

city that attracts a large number of tourists every year—London,
Singapore, Dubai, New York and so on—is a well-developed
shopping environment. Organized retailing will help significantly
in developing our cities as tourist destinations. And, if well-
marketed and managed, it can significantly enhance government
revenues, apart from spreading the word about ethnic Indian
brands across the world.

3. Higher GDP: The value that retailing can add to the economy
should not be underestimated. Organized retailing has huge
33
potential, which could lead to higher GDP growth and also
generate employment. Organized retailing could also bring about
the transformation of the agricultural supply chain, remove
inefficiencies in the distribution of consumer goods and improve
productivity while providing consumers with a better range of
products at better prices in a better ambience at the same time.

4. Outsourcing opportunities: If organize retailing is a $200 billion

industry, how big can its outsourcing opportunities be? Pretty big,
including everything from supply chain management to pilferage
control to loyalty management. Checkpoint Systems has launch
its pilferage prevention system and Venture Infotek has come in
with traction management for loyalty programmes.

The benefits are difficult to quantify, but clearly they will be

huge. In countries where retailing and modernization has
progressed, it has favorably affected the value-capturing capacity
and modernization of the farming industry. It has also
restructured the supply chain for all FMCG products, driven end-
costumer prizes down on a sustain basis, created significant
employment opportunities, been a source of considerable
revenue for both State and Central Governments, and in general
been a catalyst for creating considerable national wealth.

34
 EVOLUTION OF ORGANIZED RETAILING

The much needed organized retailing in India is already taking

place. It originally began in the south. The availability of land at
prime locations coupled with lower real estate prices compared to
Delhi and Mumbai made multi-storied shopping complexes
possible. As a result of this, Chennai and to a lesser extent
Bangalore and Hyderabad- has emerged as a centre of organized
retailing. In fact, in Chennai, nearly 20 % of food sales is now
accounted for by supermarkets and an equal share of consumer
durables is sold through specialty chains such as Vivek’s.

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 Country Organized Retailing Traditional Retailing
Malaysia 50% 50%
Thailand 50% 50%
Philippines 35% 65%
Indonesia 25% 75%
South Korea 15% 85%
China 10% 90%
India 2% 98%

It took almost two years of recession for this concept of

shopping to take root in major cities like Mumbai and Delhi.
Recession brought down the prices of property in these cities, and
it was during this slump that big business houses took notice of
the potential in retailing.

India is now rapidly evolving into an exciting and competitive

market place with potential target consumers in both the niche
and middle class segments. Manufacturer-owned and retail chain
stores are springing up in urban areas to market consumer goods
36
in a style similar to that of malls in more affluent countries. Even
though big retail chains like Crossroads, Saga and Shopper’s
Stop are concerting on the upper segment and selling products at
higher prices, some like RPG’s Food World and Big Bazaar are
tapping the huge middle class population. During the past two
years, there has been tremendous amount of interest in the Indian
retail trade from major players as well. Over the years,
international brands like Mc Donald’s, Swarovski, Lacoste,
Domino’s, and Pepsi, Benetton among a host of others to come in
and thrive in India.

Organized retailing has a very long haul ahead. The process

of getting into newer forms of purchasing has been gradual
because of traditional buying habits and the manner in which
traditional retailers manage relationships. There is no specific
international format or an existing role model that can be easily
adapted and applied in the Indian context. India is going through
that phase which the US experienced in the eighties and nineties.
In order to develop the right proposition one needs to go through
the learning curve. The growth and development of organized
retailing I India will be driven by mainly two factors- low price and
benefits the consumer can’ resist. Economies of scale will drive
down the cost of the supply chain and increase the benefits
offered to the customer. From product-based shopping, the
emphasis will shift to experience-based shopping.
37
 All these factors signals the prosperity of organized retailing
in India. Organized retailing in India is now being catapulted
through the different stages of its growth to its culmination in
maturity. There is a growing consumerism that is paving the way
for greater consumer orientation and consumer enlightenment.
More emphasis is given on establishing a robust and cost-
effective supply chain backed by fast developing technology. Now
it has become of utmost importance of creating a liberalized
economic platform that will enable global retailers to set up shops
in India through various methods that are permitted now such as
joint ventures, licensing, franchising, etc.

One thing is very clear that the growth of retailing will

continue to be fuelled by the consumer, his expectations and
demands for more value. This has led retail organizations to scale
up operations rapidly to minimize costs and increase margins so
that they can sustain/ expand their business. This would help in
the consolidation of retail growth.

Organized V/s Un-Organized Retail Sector

According to Indian Retail report 2008, at present, India's retail

sector is largely unorganized, with about 15 million tiny outlets
38
catering to consumer needs across the country and employing
second-largest number of people after agriculture.
Organized retail is now focused primarily on the 300 million urban
"middle classes'' and an additional 200 million rural rich, who form
a consumer market worth more than US$100 billion.
So, there is enough ground for the modern and the traditional
formats to co-exist.
The small retail stores are an important source of jobs, providing
about 7 per cent of the total employment in India. Moreover, they
are providers of employment of the last resort.
Anyone without a job and proper education can set up a local
retail outlet.
However, India is not an integrated homogeneous market; it is a
hierarchy of markets catering to people of many different income
levels and tastes. For example, both Sony and a local brand can
coexist, catering to market segments.
Entry of sophisticated branded products affects the unbranded
mass market only marginally in a country such as India.
Moreover, in malls where the large retail chains set up their
stores, typically, there will also be many small shops which will
attract people.
Further, the street-corner shops will have some advantages over
big stores located many miles away in shopping plazas.
In India, transportation and parking are big problems for people
who want to visit shopping malls.
39
For them, it is more convenient and cost-effective to purchase
many of their daily requirements from the neighbourhood stores,
especially as these establishments stock goods that are in
particular demand in the locality.
Hence, the local kirana stores can very well survive.

RESEARCH:

Hypotheses :

40
 Null Hypotheses

 Ho1: “Un-organized retail sector is not getting affected by

the entry of the organized retail sector”.

 Ho2: “Buying behavior of consumers is not getting changed

because of the organized retailing”.

Alternative Hypotheses

 Ha1 = “Un-organized retail sector is getting affected by the

entry of the organized retail sector”.

 Ha2 = “Buying behavior of the consumers is getting

significantly changed because of the organized retailing”.

Research Methodology & Data Collection:

41
 The primary data collected as a result of survey was tabulated
and analyzed using the Chi Square test.

Two separate samples were selected for the purpose of data

collection.

For first, the sample size was of 50 kirana stores from various
locality of the Agra city. The localities selected were divided
into two categories, one which was near the organized retail
stores (25 samples) and second who were away from the
organized retail stores (25 samples).

For second the sample size was of 100 randomly selected

consumers visiting the various organized retail stores at the city
of Agra. Sampling method used was Judgment and
Convenience.

Data Analysis and Interpretation

42
Above table was used to analyze the hypothesis Ho1. Since
the calculated value of χ2 is much higher then the table

Opinion
Getting Not Getting
Total
Locality Affected Affected

Near the organized retail store

19 06 25

Away from the organized retail

12 13 25
store

Total 31 19 50

value of χ2 alternative hypothesis Ha1 stands validated.

Analysis of data from above table proved that the kirana stores
are getting affected because of the opening of the organized retail
stores. However one important point to be noted is that the affect
is more on the kirana stores which are in proximity to the retail
stores in comparison to those which are far off from the organized
retail stores.

Data Analysis and Interpretation

43
 Schemes
Better Availabili
Parameters Cost made Time
Display/ ty of
Age Group Saving available by Saving
Status Variety
the malls

18-29 22 09 17 22 03

30-39 24 29 23 19 29

40-49 25 30 23 16 30

>50 12 19 19 19 19

Representation of data from above table shows that the

respondents of the age group of 18-29 often visit the organized
retail store because of the better display of the products and the
status it gives to them if they buy. Whereas for rest of the
respondents, comparatively important parameters were the cost
saving, time saving and the better schemes made available by the
shopping malls.

Data Analysis and Interpretation

44
Q. Do you think the better availability of products / services,
various schemes at the malls prompt you to buy more from a
retail store in comparison to the traditional kirana store and has
changed your buying and consumption patterns.

Opinion
Yes No Total
Age Group

18-29 11 11 22

30-39 22 07 29

40-49 27 03 30

>50 18 01 19

Total 78 22 100

Above table was used to analyze the hypothesis Ho2. Since the
calculated value of χ2 is much higher then the table value of χ2
alternative hypothesis Ha2 stands validated.

Statistical analysis of the data with the help of above table proves
beyond doubts that there is a significant change in the buying
patterns of the consumer because of the organized retailing.

45
QUESTIONNAIRE

46
Name of the Respondent:
___________________________________________________

Gender: ________________ Marital Status: ______________________

Age range: 18-29Yr ( ) 29-39 Yr ( ) 39-49 Yr ( ) 50+ Yr ( )

Occupation: Student ( ) Service ( ) Self-employed ( )

Business ( ) Others ( )
Address:
_____________________________________________________________________
_
Pin code: ____________________
Telephone(R):_________________ Telephone (M):_______________
Email ID: ____________________

Interview Location
Place/Landmark: _______________Interviewers Signature: ______________
Area: ___________________________________

FOR CUSTOMETRS (sample size 100)

1. Where do you shop?

47
 Organized Stores Unorganized Stores

2. How frequently you shop?

Daily Weekly Monthly

3. Why do you shop in an organized retail store?

Better displays/Status Cost saving schemes

Variety Time saving

4. Do you think the better availability of products / services,

various schemes at the malls prompt you to buy more from a
retail store in comparison to the traditional kirana store and has
changed your buying and consumption patterns.

Yes No

5. (A) Do you use any tools while shopping?

Yes ( ) No ( )

6. (B) If YES; what tools do you use while shopping? (Mention if

the tool comes under ‘others’ category)

Coupons Loyalty cards store circulars

kiosks Other

7. Level of fulfillment with store shopping?

Satisfied Neutral Dissatisfied

FOR RETAILERS (sample size 50)

Type of Retailer:
48
Hwakers Pushcart Vendor
Small retailer (<Rs. 10,000)
Big retailer ( >= Rs. 10,000)

1) How long you have been in this business?

5-10 yrs 10+ yrs
0-2 yrs 2-5 yrs

2) Do you think big retail giants are taking away your business?
Yes No

3) What is the effect of opening up of big retail outlets on your

business?

Increase in sales Decrease in sales

No effect

4) As per question 3, what is the magnitude of change in percentage

sales (approx)?

1-10% 20-30%
40-50% 50<%

5) What is the effect on your profit margins?

49
Increase Decrease No change

6) Have you introduced any promotional techniques to

attract new customers and/or retain old ones?

Yes No

7) If yes, please mark the appropriate promotional policy

used-

Free home delivery

Credit policy
Personal suggestions
Good relationship
Discounts
Distribution of pamphlets/ hand fliers

8) Did the opening of big retail stores have led to any

changes in the work timings of your business?

Yes No

9) What do you think will be the impact of competition from

big retail stores in coming future?

Minor decline in sales

Major decline in sales
Closure of shop/business

10) Is there any change in customer demands &

expectations after the opening up of big retail outlets near
your area?

Yes No Can’t say

50
 Suggestions

There is an effect on the sales figure of the local kirana

stores but it is more on those who has the proximity to the
shopping malls. Opening up of the shopping malls is a fact
which the local kirana stores have to accept and thus
there is a need for them to get united and deliver some
innovative services to their customers.

The malls needs to covert footfalls into the actual

purchases if they want to earn profits as even today most
of the people visit for having fun and passing their time
rather then making the purchases.

The quality of the items provided need to be taken care of

as some section of the respondents said that they were
not satisfied by the quality of some of the products
provided by the mall which they wanted to purchase.

There is a need to provide some seating arrangements in

the shopping area as because of continuous walking
consumers feel tired and leave the shopping mall without
making significant purchases.

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 Conclusion

It is a fact that retail revolution in India is now unstoppable

and therefore the unorganized retail sector need to gear
up for their survival.
Numbers of studies have shown that in India till date the
impact on the unorganized retail sector is not that much
as was expected.
Various reasons have been given for this but one can not
ignore the fact that the consumption and the buying
pattern of the Indian consumer is changing and in long run
if the unorganized retail sector is not awakening it is
bound to face the problem of its survival.
The rise of organized retailing has transformed the way
Indian consumer spend and has brought a great buoyant
changes in the quality of life of the people in the metro,
non metro cities of India.

Indian society has accepted this retail revolution and this

new arena will offer Indian people numbers of new jobs,
high salaries, better living conditions, world quality
products, and services, a unique shopping experience,

52
and more social activities and the huge business
opportunity to the world retail players.

True, there will be some losers in the retail game, but

these are unlikely to be the local kirana stores or the
mom-and-pop stores as we call them.

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 BIBLIOGRAPHY

www.expresstextile.com

www.indiainbusiness.nic.in

www.domain-b.com

www.techwhack.com

Hindustan Times

Retailing: The Sunrise Sector-ICFAI Books

Retail Management- Gibson G. Vedamani

Business Line

Money Compass

Financial Express

The Economic Times

The Times Ascent

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