RETAIL IN INDIA

M.Com Final
 INTRODUCTION
• Almost everything we use in our daily lives
including the food we eat, the clothes we wear,
and the things we need for our house and for
ourselves that are brought from the retail stores.
• Goods are manufactured all over the world but
the ultimately sold to us through these retail
stores.
• Retailing is the activity between the producer and
the individual consumer buying for personal
consumption
• One of the outstanding features of Indian life
is the number and variety of its retail shops.
• Both the retail players International as well as
domestic, looking at the India as potential
goldmine.
• It is found in latest research that India is the
5th most attractive destination for
international retail players as it is an emerging
retail market and has the highest retail density
in the world.
• Retailing in India is one of the important pillar
of its economy and accounts for about 15
percent of its Gross Domestic Product.
• The Indian retail industry is the fifth largest in
the world.
 EVOLUTION OF INDIAN RETAIL
SECTOR
• The Early Periods of Retailing – The historians have
found that trade existed even three or four thousand
years ago.
• In olden times there were no shops as we know them
today. At this time people lived in small, almost
entirely self-supporting communities.
• These ancient traders dealt in such commodities as
salt, wheat, cloth and leather.
• Bartering was the trading system where no money
involved, goods and services were exchange with
another person. This type of exchange was relied upon
by early civilization.
• The development of retailing in India – The
development of the retail trade has enabled it to
meet the changing demands of its customers and
of the economy.
• The real face of retail business has been visible in
the form of the neighborhood grocery shops.
• India’s retailing scenario includes a lot of small
retail outlets which comprise of Kirana stores,
General Stores, Chemist shops, Corner paan
beedi shops, bakeries and confectionary,
electrical, furniture, stationery, hardware,
vegetable and fruit shops etc.
• The beginning of organized retailing in India
can be traced to the pre-independence time
when many of the established textile business
houses took to retailing through company
owned show rooms or franchisee outlets.
• There were also many exclusive tailoring
shops which slowly expanded their activities
to become leading regional fashion retailers.
The organized retail evolution can be
divided into four phases :
I. Initial Phase of Retailing: This phase can be said
to be the period before 1990 (or pre 1990).
• During this phase, there were manufacturers
who had established their own retail store, to
quote few name, Bombay Dyeing, The Raymond
Group, Bata etc.
• Food world retail chain outlets was the first
from the RPG Group in the supermarket
segment.
II. Conceptualization of Retail : This phase can
be said to be the period post liberalization
i.e. between 1991-2005.
• During this period, there were many
organized retailers such as Shoppers Stop,
the Pantaloons etc who entered the retail
market.
• There were also many international
organized retailers such as McDonald’s,
Adidas, Nike, Reebok etc. who entered the
Indian retail market during this period.
III. Active Retail Expansion phase : This phase is
referred to that as the period of globalization
from 2005-2010.
• This period can be said to be very active phase
in the retail industry with the entry of many
retailers with various retail formats.
• Many corporate houses, such as the Reliances,
Tata, Mahindra, Aditya Birlas etc. became
retailers using different retail formats.
• Seeing the success of these corporate retailers
encouraged many global retailers such Metro
AG, Max Retail, Hypercity Shoprite, Carrefour,
Tesco, Zara etc.
IV. Consolidation and Growth Phase : This is the period from
the year 2010 onwards and we are presently in this
phase.
• The recession in the past few years was felt by the retail
sector too which witnessed an eleven per cent decline in
sales in 2008.
• This economic recession did drastically affect the
European and USA economies but not to that extent the
Indian Markets.
• So the challenges faced by the industry during such times
had been to focus on consolidation, to cut costs and
survive.
• Although since consumers have been showing a
willingness to purchase more goods and services with a
good disposable income in hand, the retail industry is
trying out innovative ways to woo the final consumers. It
STRUCTURE OF THE RETAIL INDUSTRY
IN INDIA:
• The term retailing refers to all forms of selling
to the ultimate user, generally called the
consumer.
• At least three distinct types of retailing are
carried on in India :
1. Selling in the retail store
2. E-Commerce
3.House to house selling
1. Selling in the retail store, where under one roof
is assembled a variety of merchandise for sale to
consumers; there are two forms of it one is
organized sector and the other is unorganized
sector.
2. E-Commerce – mail order selling in which all
forms of goods are attractively portrayed in
internet and the resultant orders filled by mail,
express, parcel post or freight ;
3. House to house selling, in which sales men call at
the homes of consumers and obtain orders for
merchandise for present or future delivery.
• India’s Retail sector has two broad
components.
• These are organized retailing and unorganized
retailing.
• The unorganized retailing dominates the total
retailing activity in India particularly in the
rural and semi-urban areas.
• Kirana stores are also popular in big cities and
metros.
• The unorganized sector includes thousands of
small retail shops (kirana shops and general
stores) spread over the entire geographical
area of the country.
• In every village, one or more retail shops also
called conventional or convenience stores
exist to meet the daily needs of local people.
• Unorganized Retailing covers more than 90%
of total retailing in India.
• The growth of unorganized retailing per
annum is nearly 10 percent.
• The organized retailing is comparatively recent
development in India.
• The malls, chain shops, large department stores
etc. are the examples of organized retailing.
• It refers to corporate based retail chains and
hypermarkets and privately owned large retail
shops.
• Organized retailing is becoming popular in urban
areas and metros. The mall culture is spreading
with fast speed.
• The share of organized retailing in total retail
business may be 6 to 10% percent or even more.
• Retail trade is conducted with the use of
different formats.
• Format is the structure or style of functioning,
which creates a unique identity for retailers
 A) Traditional Format
1.) Weekly Bazaars’ and Fair – The
merchants and traders were permitted
to set up a fair at the meeting place.
Here were sold the wares that would be
needed on the long, strenuous journey
ahead.
• Later, fairs became annual events and
merchants from far and near exhibited
and sold of grocery, utensils, spices,
grain, clothing, handmade items,
cosmetics and small consumer durables.
• As fairs became increasingly popular
with both the people urban and rural
people and other forms of
entertainment became associated with
them.
• As a result in the eighteenth and
nineteenth centuries fairs were
principally places of amusement with
ornaments and gadgets becoming the
principal articles sold.
• Today, fairs are still annual events in
many communities, particularly rural
areas.
2.) Kirana stores – As villages
became more densely
populated and began to expand
into cities, some general stores
started to carry only one line of
merchandise, such as groceries,
dry goods or shoes.
• In small towns and cities alike
there began to appear small
retail stores. Many of these
were small family stores where
parents and often their children
worked. In the same manner,
many small retail stores are
established and operated today.
• They are also known as
Convenience stores or Mom
and Pop Store.
3.) Hawkers- Hawker an individual seller who
carrying wares through the streets and
attracting attention calling the people by using
placards, signs or disclosing merchandise in a
public place.
4.)Peddlers - Peddler is a retailer who do have
fixed place for conducting his business but still
he regularly carries the goods for sale with
himself from place to place.
5.)Street vendors-Street Vendors who sale
goods in a market found in large enclosed
spaces instead of on a street particular days of
the week.
 B) Established Formats

1.Public Distribution System – PDS is the largest

single retail chain in the country. These makes
available food grains at a fair price to the
economically backward class of people.
2.Canteen Stores Department and the Post
Offices – CSD and PO are also very significant
outlets in Indian retail market. They are in
large number in the market.
4. Department Stores - Department
stores began to develop in the last
half of the nineteenth century,
many of them as outgrowth of dry
goods stores which added other
lines such as shoes, and men’s
clothing.
• A department store is a store
offering a wide variety of goods
under one roof.
• A department store is a retail
store that handles many different
lines of merchandise such as piece
goods, small wares, women’s
ready to wear and accessories,
men’s and boy’s wear, and house
furnishing.
3.Khadi and Village Industries Commission
(KVIC)- It is government backed outlets in
India. Today KVIC has more than 7000 stores
in all over the nation. There is huge change in
terms of its size and functioning of KVIC.
5.Consumer co-operative stores –
• There are two types of
consumer co-operative stores:
the city or urban cooperative
store and the rural or farm co-
operative.
• The city co-operative stores
have been the result of a group
of people.
• Another factor contributing to
the development of urban co-
operative stores was the desire
to establish standards of
pertinent facts about
merchandise, and to eliminate
advertising based on emotional
appeals rather than facts.
 C. EMERGING FORMATS :
1.) Exclusive retail outlets – Today India has a
host of both small and large formats with
exclusive stores having national and
international brands under one roof catering
to all sections of the society.
2.)Super-markets – Supermarkets
have been a fairly recent
development in the field of
retailing.
• These are large food stores
carrying a variety of merchandise
that the small and even medium-
sized grocery store cannot
approximate.
• They are attractively arranged and
present almost the appearance of
a department store. In many
cities, corporate chain
organizations are closing their
smaller units and building larger
supermarkets to take their places.
3)Hypermarkets - Hypermarkets
is a store that combines a
supermarket and a
department stores.
• It provides wide range of
exclusive merchandise at low
profit margins under one roof
including fresh groceries and
apparel.
• Therefore, their operating cost
is comparatively less than
other retail formats. When
planned, constructed and
executed correctly, hyper mart
caters to routine weekly
shopping needs in one trip.
• E.g. Dmart, Big Bazaar, Star
Bazaar etc.
4.)Malls— It has a range of retail shops at a
single outlet, endow with products, food and
entertainment under a roof.
• They are located mainly in metro cities, in
proximity to urban outskirts ranging from
60,000 sq. ft. to 7,00,000 sq. ft. and above.
E.g. Inorbit Mall, Metro Mall etc.
5.)Specialty Malls – Specialty malls are
frequently operated by independent retailers.
These stores make their appeal on the basis of
a single line or closely allied lines of goods.
Because these shops specialize in a limited
filed, they are able to offer a wide assortment
of goods, an extensive range in sizes, and the
newest styles
6.)Multiplexes – When a group of shops all
selling the same thing are brought together
under one management they become a
multiplexes. The multiplexes can afford to
employ experts in buying, accounting,
advertising and other functions of retailing.