RETAIL INDUSTRY AND BUSINESS PLANS Submitted by: POONAM PANDEY BBA-III A7006409050 Faculty Guide: Ms.

NIMISHA KULSHRESHTHA Amity Business School Lucknow (SUMMER PROJECT REPORT SUBMITTED TOWARDS THE PARTIAL FULFILLMENT OF BACHELORS OF BUSINESS ADMINISTRATION)

AMITY BUSINESS SCHOOL AMITY UNIVERSITY LUCKNOW CAMPUS

STUDENTS CERTIFICATE

Certified that this report is prepared based on summer project undertaken by me, on the topic RETAIL INDUSTRY AND BUSINESS PLANS under the able guidance of Ms. Nimisha Kulshreshtha in partial fulfillment of the requirement for award of her degree of BACHELOR OF BUSINESS ADMINISTRATION from Amity University Uttar Pradesh , Lucknow .

DATE:

Signature: Poonam Pandey Student

Signature: Ms. Nimisha Kulshreshtha Faculty Guide

Signature: PROF. R.P SINGH Director (ABS)

FACULTY GUIDE CERTIFICATE

Forwarded herewith a summer project report on RETAIL INDUSTRY AND BUSINESS PLANS submitted by POONAM PANDEY, A7006409050 student of BBA, semester III. This project work has been done in partial fulfillment for degree of BACHELOR IN BUSINESS ADMINISTRATION from AMITY UNIVERSITY, UTTAR PRADESH

SIGNATURE: Ms. NIMISHA KULSHRESTHA Lecturer, Amity Business School Amity University

ACKNOWLEDGEMENT

I express my sincere gratitude to my mentor Ms. NIMISHA KULSHRESTHA, faculty guide, Amity School of Business, for her able guidance, continuous support and cooperation throughout my project report, without which the present work would not have been possible.

POONAM PANDEY BBA (2009-2012) Roll No. A7006409050

CONTENT

1. CHAPTER-1

INTRODUCTION TO RETAIL SECTOR

2. CHAPTER-2

ORGANISED RETAIL

3.

CHAPTER-3

DIFFERENT FORMS OF RETAILING

4.

CHAPTER-4

MARKET ANALYSIS

5.

CHAPTER-5

CONCLUSION

CHAPTER-1

INTRODUCTION TO RETAIL SECTOR

Retail in India
INDIA A Vibrant Economy & Resplendent Market

4th largest economy in PPP terms after USA, China & Japan To be the 3rd largest economy in terms of GDP in next 5 years. 2nd fastest growing economy in the world. The US $ 580 billion economy grew 8.2 percent in the year 03-04 Among top 10 FDI destinations Stable Government with 2nd stage reforms in place Growing Corporate Ethics (Labor laws, Child Labor regulations, environmental protection lobby, intellectual and property rights, social responsibility). Major tax reforms including implementation of VAT. US $ 130 billion investment plans in infrastructure in next 5 years 2nd Second most attractive developing market, ahead of China 5th among the 30 emerging markets for new retailers to enter

A country with the largest young population in the world- over 867 million people below 45 years of age More English speaking people in India than of in the whole of Europe 300 million odd middle class - the Real consumers - is catching the attention of the world With over 600 million effective consumers by 2010 India to emerge as one of the largest consumer markets of the world by 2010.

A COMBINATION OF factors seems to have triggered a wholesale capacity expansion by the organized retail industry in the country. The stock market has also developed a fancy for stocks of companies engaged in retail trade; these shares are outperforming the market indices by a good margin. The situation is such that even a company with virtually no track record of profitable functioning or dividend payout can price its offering at a hefty premium and expect to attract robust participation by investors and sustain interest in the secondary market too. Current profits in the organized retail trade may be good and the future prospects even more alluring. . Currently, the official policy is not the coming of foreign direct investment in retailing. But it is only a matter of time before the Government relents on it. Not only because it is in the very nature of evolution of the Indian economy, where more and more segments of economic activity are thrown open to overseas. Interests, but also because there is the danger of going against the commitments to the World Trade Organization. India may attract retaliation should it insist on keeping the door shut to foreign investments in retailing. Viewed from this perspective too, domestic players have an added interest in quickly expanding their presence across geographical regions and product segments.

Much has been written about how India's changing demographics and consumer behavior will open up opportunities for the growth of organized retailing as represented now by such players as Trent, Pantaloon, and Shopper's Stop. So, is the country then heading for a retail revolution? Though official statistics may belie the claim, there is strong empirical evidence that the average urban consumer is saving less today than he did a few years ago and, importantly, spending his income on a wider array of goods than earlier. India has not been able to escape the social trends of rising incomes, double salaries and nuclear families that have sparked retail revolution elsewhere.

Another process too has been at work. The global economy is in the third wave of value creation. In the first wave, goods that are mass-produced and sold to consumers at affordable prices by a multitude of producers. The second saw value being created through clever marketing and brand association. But as discerning consumers realized that many brands offered more or less identical products, it is dawning on producers that value can be created and sustained only by ensuring the continued patronage of consumers

through loyalty programmes. If the first wave of consumer spending addressed satisfaction of certain basic needs and the second the `perceived' values, this third wave is about a certain contextual element (ambience) to the satisfaction of basic and perceived needs that products embody.

Growth of Retail in India

India's retail sector is trying new clothes and with a three-year compounded annual growth rate of 46.64 per cent, retail is the fastest growing sector in the Indian economy. Traditional markets are making way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Westernstyle malls have begun appearing in metros and second-rung cities alike, introducing the Indian consumer to an unparalleled shopping experience.

Retail sector: on an upward curve

India's vast middle class and its almost untapped retail industry are key attractions for global retail giants wanting to enter new markets. While organized retail in India is only two per cent of the total US$ 215 billion retail industry, it is expected to grow 25 per cent annually, driven by changing lifestyles, strong income growth and favorable demographic patterns. KSA-Technopak, a retail consulting and research agency, predicts that by 2010, organized retailing in India will cross the US$ 21.5-billion mark from the current size of US$ 7.5 billion.

Retail space: up for grabs

By 2012, an estimated 72 million square feet of quality retail space will be available across India. There was a situation that there was not even a single shopping mall in India, but today, in Delhi, Mumbai and their suburbs, there are about 100 malls. Of the 700 new malls coming up all over India, 40 per cent are concentrated in the smaller cities. Organized retailing in small-town India is growing at a staggering 5060 per cent a year compared to 35-40 per cent in the large cities.

A push for branded retail

India's branded retail sector, estimated at about US$ 6 billion, makes up only three per cent of the total market, but is forecast to grow at 25-30 per cent a year over the next five years, with plush department stores and malls springing up across the country.

Food retail

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

The mobile revolution

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

market looks paltry, at just US$ 5.6 billion, with growth rate just half of the mobile market, and that too in a good year.

Kids retailing: no child's play

Kids retailing is growing by leaps and bounds in India and those in the industry say it is likely to see 3035 per cent growth per annum. From clothes to stationary, sportswear, outerwear, tailored clothing, eyewear, watches, fragrance, footwear and accessories, the list is endless. Apparel, however, remains the key revenue driver accounting for almost 80 per cent of total sales. According to industry insiders, The total apparel market in India for kids is around US$ 2.9 billion, out of which about US$ 668.2 780.5 million is branded apparel.

The retail road ahead

The Indian retail market is estimated at US$ 350 billion. But organized retail is estimated at only US$ 8 billion. However, the opportunity is hugeby 2012, organized retail is expected to grow to US$ 22 billion. With the growth of organized retailing estimated at 40 per cent over the next few years, Indian retailing is clearly at a tipping point. India is currently the ninth largest retail market in the world. And it is names of small towns like Dehradun, Vijayawada, Lucknow and Nasik that will power India up the rankings soon.

Success of Retail Sector

Indian retailing industry has seen phenomenal growth in the last 5 years. Organized retailing has finally emerged from the shadows of unorganized retailing and is contributing significantly in the growth of Indian retail sector. This report looks in to detail; the forces that have significantly influenced the Indian Retail Industry, in order to trace its future direction

Organized retail will form 10% of total retailing by the end of this decade. In the meantime, the organized sector will grow at the rate of around 30% per annum

Cultural and regional differences in India are the biggest challenges in front of retailers. These factors deter the retailers in India to adopt a single retail format . Hypermarket is emerging as the most favorable format for the time being in I ndia. The arrival of multinationals will further push the growth of this format

Convenience store (or its variation) format is the best way to compete with unorganized retailing in India.

Key Players in Indian Retail Sector

AV Birla Group has a strong presence in apparel retail and owns renowned brands like Allen

Solly, Louis Phillipe, Trouser Town, Van Heusen and Peter England. The company has investment plans to the tune of Rs 8000 9000 crores till 2010.

Trent is a subsidiary of the Tata group; it operates lifestyle retail chain, book and music retail

chain, consumer electronics chain etc. Westside, the lifestyle retail chain registered a turnover of Rs 3.58 mn in 2006

Landmark Group invested Rs. 300 crores to expand Max chain, and Rs 100 crores on

Citymax 3 star hotel chain. Lifestyle International is their international brand business.

K Raheja Corp Group has a turnover of Rs 6.75 billion which is expected to cross US$100

million mark by 2010. Segments include books, music and gifts, apparel, entertainment etc.

Reliance has more than 300 Reliance Fresh stores; they have multiple formats and their sale is

expected to be Rs 90,000 crores ($20 billion) by 2009-10.

Pantaloon Retail has 450 stores across the country and revenue of over Rs. 20 billion and is

expected to touch 30 million by 2010. Segments include Food & grocery, e-tailing, home solutions, consumer electronics, entertainment, shoes, books, music & gifts, health & beauty care services.

A shopping revolution is ushering in India where, a large population between 20-34 age groups in the urban regions is boosting demand by 11.1 percent in 2004-05 to an Rs 23,308 purchasing power. This has resulted in huge international retail investment and a more liberal FDI. In its market research report Indian Retail Sector An Outlook (2005-2010) analyzes the greatly divided Indian retail market and the trends in its business. Issues such as foreign investment restrictions, modern merchandizing in India, logistics and payment terms for distribution, role of channel members and growth trends in different regions are discussed. The market research report further analyzes the sustainability of the Indian retail

sector and on the basis of 25 domestic and international companies the report has given a suitable business model.

Five Reasons why Indian Organized Retail is at the brink of Revolution :

Scalable and Profitable Retail Models are thereby established for most of the categories Rapid Evolution of New-age Young Indian Consumers Retail Space is no more a constraint for growth Partnering among Brands, retailers, franchisees, investors and malls India is on the radar of Global Retailers Suppliers

CHAPTER-2

ORGANISED RETAIL

Retail

Retail is defined as .the sale of goods and commodities in small quantities to the ultimate consumer. Thus, retailing is the last leg in the channel through which goods travel from the producer to the consumer. Generally, a retailer does not effect any significant change in the product. (However, there may be exceptions like soft-drink vending machines that take in concentrate and give out a ready-to-drink beverage.)

Organized retail

Organized retail may be said to refer to a form of retailing, whereby consumers can buy goods in a similar purchase environment across more than one physical location. Such retail may entail the use of different store formats like single-product stores, department stores, malls, etc. The categories of goods retailed would include apparel, consumer durables, jewelry, footwear, accessories, beauty products, home dcor, books, music, etc.

Segments in retail
Retail as a whole can be broken into categories, depending on the type of products serviced. Food and groceries form the biggest category in the retail pie, accounting for around 76 per cent. However, it has the lowest organized retail penetration. This is indicative of the opportunity for organized retail growth in this segment. The footwear and clothing segments boast the highest penetration of organized retail, as players in these segments started setting up stores over a decade ago.

Of the organized retail market of Rs 350 billion, clothing and textiles have the largest share at 40 per cent. There are exclusive brand stores that stock and sell apparel; in addition, clothing is available in specialty

chains, hypermarkets and department stores. Food and grocery has the maximum scope for growth; at present, it accounts for only 19 per cent of the organized retail market.

The New Retail Entrepreneurs

Delhi-based Ebony has commenced a massive expansion in northern India with eight new stores and a combined retail space of 150,000 square feet. Besides sprucing up exiting stores in Delhi and Punjab, the company is expanding to other north Indian states.

Lifestyle, a part of the Dubai-based Landmark Group retail chain, now owns seven stores located across various metro cities. The company wants to double its presence to 14 stores by 2006, occupying a combined retail space of one million square feet.

 Mumbai-based lifestyle chain Pantaloon has spent around US $ 660000 this year to revitalize its brands and promote new brands.

Bangalore-based Shoppers Stop which currently has 15 stores spread over 9 of Indias largest cities, plans to open 35 more outlets in the next three years.

TCNS Clothing has 17 stores across the country and is planning to increase the number to 37, covering all major cities

ORGANIZED RETAIL TO GET BIGGER

Organized retail in India is on a high growth trajectory and is expected to grow at 25-30 per cent per annum in the next 5-6 years. The size of the retailing market is estimated to be around Rs 350 billion in 2004-05, with organized retailing accounting for a mere 3.5 per cent of Indias total retail market.

The retail industry growth is estimated to be slightly higher than GDP growth at constant prices. The penetration levels of organized retail are expected to touch 8 per cent by 2010, thereby taking the total organized retail business to around Rs 1,095 billion.

Organized retail is expected to grow at 25-30 per cent per annum, with home dcor, and food and grocery emerging as the fastest-growing segments. The proliferation of hypermarkets and supermarkets has led to a growth in food and grocery retail; thus, value retailing is seen to be gaining ground in India. The other high growth verticals are apparel and durables. Impulse goods like books and music are also gaining a larger share in the organized retail market, with players making stores more accessible to consumers.

KEY DRIVERS FOR RETAIL EXCELLENCE IN INDIA

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. Growth in Indian retail has been driven by the country's economic fundamentals over the past few years. Increasing number of nuclear families, easy financing options, increase in the population of working women and emerging opportunities in the service sector during the past few years have been the key growth drivers of the organized retail sector in India.

Consumers are now showing a growing preference for organized retail, resulting in increased penetration.

The following factors contribute for the growth of organized retailing:

Changes in demographics India has the lowest median age of 24 as compared to developed
countries. The composition of the Indian population is shifting towards the age group of 20-49 i.e. the working population with purchasing power. Thus, India has the largest young population in terms of sheer size and this young segment is the major driver of consumption as they have the ability and willingness to spend.

Increased credit friendliness

There has been a radical change in the Indian consumers

mindset regarding credit. With the easy availability of credit and declining interest rates, personal credit has witnessed growth. The boom in financing has resulted in an increase in spends on housing and

consumer durables such as tow-wheelers and cars. The use of plastic money has increased significantly total spending on shopping and eating out.

Rising Incomes India is the second fastest growing economy in the world. A larger number of
households are getting added to the consuming class with growth in income levels. Increasing instances of double incomes in most families coupled with the rise in spending power is further fuelling the growth of retail sector. Though this growth is most evident in urban areas, it has also taken place in rural markets.

Media There has been an explosion in media as well during the past decade. 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.

Consumer Behavior The growth of modern retail is linked to consumer needs, attitudes and
behavior. Rising income levels, education and global exposure have contributed to the evolution of the Indian middle class. As a result, purchasing and shopping habits have been inculcated and are increasing day by day. Today, people are willing to try new things and look different, which has increased spending on health and beauty products apart from apparels, food and grocery items.

Consumerism Cycle Being

the closest 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 shopshelf, consumers won't be able to buy it. Manufacturers have also realized that retailer recommendations matter, particularly in smaller towns.

Foreign Retailers The increasing attractiveness of the sector has drawn the interest of a number
of global retailers. With the opening up of the economy, more and more MNCs have entered the Indian

business arena through joint ventures, franchisees or even self-owned stores. Such as apparel, Benetton, Lifestyle and Zegna are already in business, and Dairy Farm has a number of retailing joint ventures in India.

The factors responsible for the development of the retail sector in India can be broadly summarized as follows:

Rising incomes and improvements in infrastructure are enlarging consumer markets and accelerating the convergence of consumer tastes.

Liberalization of the Indian economy which has led to the opening up of the market for consumer goods has helped the MNC brands like Kelloggs, Unilever, Nestle, etc. to make significant inroads into the vast consumer market by offering a wide range of choices to the Indian consumers.

Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc.

The Internet revolution is making the Indian consumer more accessible to the growing influences of domestic and foreign retail chains. Reach of satellite T.V. channels is helping in creating awareness about global products for local markets. About 47% of Indias population is under the age of 20; and this will increase to 55% by 2015.

As 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.

The Indian retail sector is estimated to have a market size of about $180 billion; but the organized sector represents only 2% share of this market. Most of the organized retailing in the country has just started recently, and has been concentrated mainly in the metro cities. India is the last large Asian economy to liberalize its retail sector. In Thailand, more than 40% of all consumer goods are sold through the super markets and departmental stores. A similar phenomenon has swept through all other Asian countries. Organized retailing in India has a huge scope because of the vast market and the growing consciousness of the consumer about product quality and services.

CHAPTER-3

DIFFERENT FORMS OF RETAILING

Emergence of new formats of retailing in India:

Popular Formats
Hypermarts Large supermarkets, typically (3,500 - 5,000 sq. ft) Mini supermarkets, typically (1,000 - 2,000 sq. ft) Convenience store, typically (7,50 - 1,000 sq. ft) Discount/shopping list grocer Traditional retailers trying to reinvent by introducing self-service formats as theyll as valueadded services such as credit, free home delivery etc.

The Indian retail sector can be broadly classified into:

FOOD RETAILERS

There are large number and variety of retailers in the food-retailing sector. Traditional types of retailers, who operate small single-outlet businesses mainly using family labour, dominate this sector .In comparison, super markets account for a small proportion of food sales in India. However the growth rate of super market sales has being significant in recent years because greater numbers of higher income. Indians prefer to shop at super markets due to higher standards of hygiene and attractive ambience. HEALTH & BEAUTY PRODUCTS With growth in income levels, Indians have started spending more on health and Beauty products. Here also small, single-outlet retailers dominate the market. However in recent years, a few retail chains specializing in these products have come into the market. Although these retail chains account for only a small share of the total market , their business is expected to grow significantly in the future due to the growing quality consciousness of buyers for these products. CLOTHING & FOOTWEAR

Numerous clothing and footwear shops in shopping centers and markets operate all over India. Traditional outlets stock a limited range of cheap and popular items; in contrast, modern clothing and footwear stores have modern products and attractive displays to lure customers. However, with rapid urbanization, and changing patterns of consumer tastes and preferences, it is unlikely that the traditional outlets will survive the test of time. HOME FURNITURE & HOUSEHOLD GOODS Small retailers again dominate this sector. Despite the large size of this market, very few large and modern retailers have established specialized stores for these products. However there is considerable potential for the entry or expansion of specialized retail chains in the country. DURABLE GOODS The Indian durable goods sector has seen the entry of a large number of foreign companies during the post liberalization period. A greater variety of consumer electronic items and household appliances became available to the Indian customer. Intense competition among companies to sell their brands provided a strong impetus to the growth for retailers doing business in this sector. LEISURE & PERSONAL GOODS Increasing household incomes due to better economic opportunities have encouraged consumer expenditure on leisure and personal goods in the country.

There are specialized retailers for each category of products (books, music products, etc.) in this sector. Another prominent feature of this sector is popularity of franchising agreements between established manufacturers and retailers.

MAJOR FORMATS OF IN-STORE RETAILING

Format Description The Value Proposition

Branded Stores

Exclusive showrooms either owned or Complete range available for a given franchised out by a manufacturer. brand, certified product quality

Specialty Stores

Focus on a specific consumer need, Greater carry most of the brands available Large stores having a wide variety of

choice

to

the

consumer,

comparison between brands is possible

Department Stores

products,

organized

into

different One

stop

shop

catering

to

varied/

departments such as clothing, house consumer needs. wares, furniture, appliances, toys, etc. Extremely outlets Stores offering discounts on the retail large self-service retail One stop shop catering to varied

Supermarkets

consumer needs

Discount Stores

price through selling high volumes and Low Prices reaping economies of scale Larger than a supermarket, sometimes Low prices, vast choice available

Hyper- mart

with a warehouse appearance, generally located in quieter parts of the city

including services such as cafeterias.

Convenience stores

Small self-service formats located in Convenient crowded urban areas.

location

and

extended

operating theirs.

Shopping Malls

An enclosure having different formats of in-store retailers, all under one roof.

Variety of shops available to each other.

CHAPTER-5

MARKET ANALYSIS

Currently the share of retail trade in India's GDP is around 12 per cent, and is estimated

to reach 22 per cent by 2010.

According to Government of India estimate the retail sector is likely to grow to a value

of Rs. 2,00,000 crore (US$45 billion) and could yield 10 to 15 million retail jobs in the coming five years; currently this industry employs 8% of the working population.

India continues to be among the most attractive countries for global retailers. According

to the Department of Industrial Policy and Promotion, approximately US$ 47.43 million was the amount of Foreign Direct Investment (FDI) inflow as on September 2009, in single-brand retail trading.

More than 80% of the retail sector in the country is concentrated in the large cities. A study reveals that among the more than 20 locations, for organized retail in India, Mumbai was found to be the most preferred location followed closely by Bangalore in the second position.

PRODUCTS & ITS DEVELOPMENTS:

1.SERVICE PROVIDED
Store Retailing The retail scene in INDIA is a dazzling array of independent shops, department stores, discount and offprice enterprises, convenience stores, membership warehouse clubs, national and regional chains, category-killer stores, conventional supermarkets, and other large-scale enterprises that seem to dominate the retail sector. The retailers will operate fixed point-of-sale locations designed to attract a high volume of walk-in customers. In general, stores have extensive merchandise displays and use mass-media advertising to attract customers. The retailers typically sell merchandise to the general public for personal or household consumption, but some also serve business and institutional clients.

Internet Retailing While shopping on the Internet is the entire buzz, independent brick-and-mortars (retailers with physical stores) dominate consumer sales and are expected to remain viable for several reasons. Foremost are their real-world presence, having a location that people can drive by, call, and walk through time and time again. A physical building lends credibility as a solid and reliable enterprise. It also provides an outlet, a destination, a gathering place for customers

2. PRODUCT-DESCRIPTIONS & SPECIFICATION:

From the retail shop the retailers will deal with branded and non-branded product. So in their business logistic portion is very important. The retailers are dealing with various types of product. So warehousing and inventory system would be quite critical. In case of grocery the retailers will deal this portion of their business through local farmers. In case electronics the retailers will have to supply their product from North India to various retail branch. So, that in case of inventory and warehousing would be depending upon the production area of that product.

3. QUALITY ASSURANCE
Quality: Here by in retail shop, the retailers will offer much companys product. As earlier the retailers have discussed that the retailers will provide many types of product to their customer by less price. Price: The retailers will work on low margins compared to other retail players. The retail margins in India are a meager 25 to 30 per cent for fashion brands (as, say, compared to 35-40 % of other players). Cost of prime land for the retail store is prohibitive. Land prices in prime localities across the metros have themselves become a major deterrent to sustaining a profitable retailing model for organized players Discount: Given widespread availability of the same brands, the retailers have to cope with the phenomenon of discounts offered by the smaller retailers. Large stores are able wrangle larger margins from most suppliers, but these margins are retained to meet the higher operating cost. Small retailers are tempted to pass on the lower overhead in the form of a discount to the customer to get them to their stores. In a middle class dominated, price-sensitive market like India, price manipulation is a strong in the arsenal of the small independent retailer. The retailers will dilute the strength of the retail market. With promotions becoming the order of the day, the retailers too have entered into price wars against each other. Up to 50% off sales and Two for one price offers have now become commonplace even at the top retail outlets across their country.

4. INVENTORY SYSTEM
Inventory management is a costly and time-consuming activity for any retail organization. Todays competitive retail environment requires real-time data communication between stores and the

corporate office for store-level activities-including items look-up, stock counts, and transfers-in order to improve the quality of inventory information, in-store efficiency, and sell-through.

SWOT Analysis
A SWOT analysis of the Indian organized retail industry is presented below:

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 segments.

2. Organized retail is only 3% of total retailing market in India. It is estimated to grow at the rate of 2530% p.a and reach INR 1,00,000 Crore by 2012.

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 its tomato purees &pastes.

Threat:
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.

CHAPTER-5

Conclusion
1. The Retail Sector in India can be split up into two, the organized and the unorganized. The

organized sector whose size is expected to triple by 2010 can be further split up into departmental stores, supermarkets, shopping malls etc.
2. In terms of value the size of the retail sector in India is $300 billion. The organized sector

contributes about 4.6% to the total trade. 3. The retail sector in India contributes 10% to the Gross Domestic Product and 8% to the employment of the country.

4. In terms of growth the FMCG retail sector is the fastest growing unit and the retail retailing to household care, confectionery etc, has lagged behind.
5. The foreign retail giants were initially restricted from making investments in India. But

now FDI of 51% is permitted in India only through single branded retail outlets. Multi brand outlets are still beyond their reach. Again they can only enter the market through franchisees. 6. On line retailing is still to leave a mark on the customers due to lacunae that we have already mentioned In a nutshell we may conclude that the retail industry in India has a bright future prospect. It is expected to enrich the Indian Economy in terms of income and employment.

BIBLIOGRAPHY

Websites:

www.scribd.com www.google.com

www.encyclopedia.com

Magazines & Periodicals:

Business Times Retail Asia Images Retail