Challenges in Retail business in india

The retail industry in india is in a phase of

transistion and hence is likely to face a whole
new set of challenges.For one generating large
free cash in flows for expansion is not easy. Retail
margins are already water thin,compared to
those Profit margin s after tax in india are 4-5%
compared to about 10% in the middle east
Bartisa,Dominos, and Shoppers shop all felt in to
cash trap.

Most retailers are trying to increase magins.
For instance,RPG group has started sourcing its
fresh produce directly from farmers.About 350
farmers in karnataka are doing contract farming
RPG. It can manage to sell it 15-20% cheaper than
the market
That is why store lables come in and to do
international lables,which offers margins of 40%.
Too many department stores, too many exclusive
outlets ,all too close to each other. Besides
customers do not prefer to travel for more than
20 minutes to visit a store

Earilers in India also faces certain challenges in
terms of real estates, legal, work force related
and certain other issues
REAL ESTATES
Location to be considered as a key component of
the retail strategy of any stores it also guides the
direction and success for retailing industry in
general.
Indian retail units have o struggle on account of
the shortage of real estates for new projects and
even retail space in central business districts is
out of reach for retailers due to price and High
demand
Poor state of retail estate in india can be attribute
in following factors
Stamp duty on transfer of property is very high
The Urban Ceiling Act and Rent Control Acts were
repealed just a few years back , but it has
distorted property markets in urban centers
The presence of pro- tenancy laws make it
difficult to remove a tenant or tenans
Land use conversion is time consumption and
complex , particularly in case of new shopping
centers, which are coming up on out of town
agricultural land.

Huge costs are involved In terms of time and
money in legal proccesses for property disputes
WORK FORCE
Organised retailers are facing multiple challenges
on labour front, such as limited supply of trained
workforce and laws, which hinder operations in
accodance with their business requirement.
The labour laws that protect store workers are
not flexible enough to support the organised
forms of retailing. Also traditional independent
retailers who used to generally engage child
labour are finding their cost of operations go up
after the imposition of the law forbidding child
labour completely

Some local government bodies after a series
of requests ,recently extended permission for
shopping centers to operate up to 9.30 P.M.
On all days including National Holidays
But extended working hours are contrary
exisiting labour laws. One of them is that
workforce can only be employed for a
specified number of hours and therefore to
operate stores for a long interval of time the
retailers have to depend on Multiple-Shift
duties
Consumer Goods suppliers require Restructuring
Consumer goods suppliers will need to make
certain strategic changes to help them do better
business with gaints like Big Bazaar, Reliance
Fresh, Food World etc
Modern format retail offers suppliers a chance to
sell assortments of products, in different sizes
and different bundling options.
Barcode is a critical business tool for organized
retail, where it helps track products from the
warehouse to store sheves and finally the
checkout counters.
When supplier dont provide barcoded products
retailers need to print their own barcodes and
then employ staff to sick them on every piece of
merchandise. In store like hyper city which carries
80000-100000 SKUs at any given time it means a
lot of sticking.
Distribution is again a key concept .modern stores
maintain lower inventories then retail traditional
retail nine days for hyper city and 2 days weeks
for Big Bazaar compared to over 3 weeks for most
kirana and losses due to stock out and fare
significant for bth he manufacturer and the
retailer.
The frozen transportation infrastructure in the
country is missing moreover one cant have
cold infrastructure in parts in has to be
present for the entire logistics.
In order to survive in todays tough climate
companies must continually innovative way to
creare stronger more direct links with their
customers
New store designs mus aim to please the
consumers sense of sight, sound, taste,touch,
and smell