-Project-on-Growth-of-Retail-Sector-in-India

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TABLE OF CONTENTS1. Industry Overview 05 2. Organized Retail Sector 10 3. Origin of retail 13 4.Indian Retail Industry 18 5. Retailing Formats in India 23 6. Specialty stores 25 7. Major Industry Players 33 8. The growth Drivers 44 9. Swot of the Market 5110. Challenges 55 11. Location Planning 58 12. Competitor Analysis 65 13. Futur

e Outlook 68 14. Merger and Acquisition 70


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Growth of Retail Sector in India 15. Technology in retail 75 16. Government initiatives and regulation 79 17. Research methodology 83 18. Research analysis 86 19. Conclusion 89 20. Consumer survey questionnaire 90 21. References 94

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Growth of Retail Sector in India

Industry Overview

Industry analysis of the Indian retail sector:Modern retailing has entered India in form of malls and huge complexes offeringshopping, entertainment, leisure to the consumer as the retailers experiment wit

h a variety of formats, from discount stores to supermarkets to hypermarkets tospecialty chains. However, kiranas still continue to score over modern formats mostly due to the convenience factor i.e. near to their house. This organized segment typically comprises of a large number of retailers, greater enforcement oftaxation mechanisms and better labour law monitoring system. It's no longer about just stocking and selling but about efficient supply chain management, developing vendor relationship quality customer service, efficient merchandising and even the labour class is also in the working process timely promotional campaigns.The modern retail formats are encouraging development of well-established and e

fficient supply chains in each segment ensuring efficient movement of goods fromfarms to kitchens, which will result in huge savings for the farmers as well asfor the nation. The government also stands to gain through more efficient colle

ction of tax revenues. Network marketing has been

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Growth of Retail Sector in Indiagrowing quite fast and has a few large players today. Gas stations are seeing action in the form of convenience stores, ATMs, food courts and pharmacies appearing in many outlets. In the coming years it can be said that the hypermarket route will emerge as the most preferred format for international retailers steppinginto the country. Estimates indicate that this sector will have the potential toabsorb many more hypermarkets in the next four to five years

List of retailers that have come with new formats:Retailer Formats Shoppers Stop mall Crossword shop Piramyd mall, Food retail Pantaloon Hypermarket Current Format New

Department Store

Quasi-

Large Bookstore

Corner

Departmental Store

Quasi-

Own brand store

Subhiksha Supermarket considering moving to self service Globus fashion stores Department Store Small

Traditionally, the kirana retailing has been one of the easiest ways to generateself-employment, as it required minimum investment in terms of land, labour andcapital. These store are not affected by the modern format of retailing. In ord

er to keep pace with the modern formats, kiranas have now started providing morevalue-added services like stocking ready to cook vegetables and other fresh produce. They also provide services like credit, phone service, home delivery etc.The organized retailing has helped in promoting several niche categories such aspackaged fruit juices, hair creams, fabric bleaches, shower gels, depilatory products and convenience and health foods, which are generally not found in the local kirana stores. Looking at the vast opportunity in this sector, big players like Reliance has announced its plans to become the country

s largest modern retainers by establishing a chain of stores across all major cities. Apart from metro cities, several small towns like Nagpur, Nasik, Ahmedabad, Aurangabad, Sholapur, Kolhapur and Amravati has seen the expansion of modern retails. Small towns in Maharashtra

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Growth of Retail Sector in Indiaare emerging as retail hubs for large chain stores like Pantaloon Retail becausemany small cities like Nagpur have a student population, lower real estate costs, fewer power cuts and lower levels of attrition. However, retailers need to adjust their product mix for smaller cities, as they tend to be more conservativethan the metros. In order for the market to grow in modern retail, it is necessary that steps are taken for rewriting laws, restructuring the tax regime, access

ing and developing new skills and investing significantly in India.

India is rated as the most attractive retail markets

Country Risk Country 25%

Market Attractiveness 25%

Market Saturation 30%

Time Pressure 20%

Rank

IndiaRussia China Turkey Thailand Malaysia Egypt Brazil Indias Rank

6252 68 51 64 70 51 52 24th

3458 40 56 41 49 35 56 14th

9171 53 66 59 58 85 57 1st

8092 90 65 71 40 30 20 7th

1st2nd 4th 9 12 18 25 29 1st

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Growth of Retail Sector in India Socio demographic factors will lead to faster growth of Organized retail in India: 100% 80% 60% 40% 20% 0% 1991 0-19 Yrs 1996 20-34 Yrs 2001 35-54 Yrs 2006 55+ Yrs 2010E 47% 47% 45% 42% 39% 9% 19% 24% 10% 20% 24%

9% 19% 25%

11% 22% 26%

12% 23% 27%

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Entertainment Durable 10% 1% Home 3%

Pharma 2%

Food & Grocery 14%

Clothing and Textile 36%

Health & Beauty 1% Books, Music & Gifts 3%

Watch & Jewellery 17%

Footwear 13%

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ORGANIZED RETAIL

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Growth of Retail Sector in India Emerging Retail Markets:India, Russia, China and Vietnam top the list of the most attractive emerging markets for retailers

investment in 2007, While India and Russia have held the top two spots since 2004, China

s booming consumer spending, together with retailers moving into second-tier cities, helped it rise to No. 3 from its No. 5 spot last year, according to the 2007 Global Retail Development Index from managementconsultant firm A.T. Kearney. The study based its results on four variables:

co

untry risk

, measuring political risk, debt and credit ratings;

market attractiveness

, encompassing retail sales per capita, population, infrastructure and regulations;

market saturation

; and

time pressure

. The higher the ranking, themore urgency for retailers to enter the market, according to the study, which ranks the top 30 emerging countries for retail development and focuses on mass-merchant and food retailers. "If you want to be an international player in retail,these are the markets that demonstrate the characteristics (where) you can be successful," said Laura Gurski, a co-author of the study and partner in A.T. Kearney

s consumer and retail practice. India has already attracted the attention ofglobal retailers like WalMart Stores Inc., which is working with India

s BhartiEnterprises to set up a joint venture for a cash-and-carry business. In India,foreign multiple-brand retailers, which sell diverse brands under one roof, are

limited to cash-and-carry and franchise or license operations. "India

s window of opportunity continues to be wide for retail investment and development," the report said. "Once India

s window closes for grocery retailers, there will be little opportunity for market domination in the main cities." The country

s growingpopulation of young urban professionals with disposable incomes and the nouveauriche has also made India attractive for luxury retailers. India has attracted"the low end and the high end because of the breadth of the consumer segments that are available," said Gurski. When variables stay constant, Gurski said, do-it-yourself, apparel and electronics retailers usually enter emerging markets sometwo years after international grocers establish themselves. Middle Eastern countries are also represented on the list, with Saudi Arabia ranking No. 10 India has emerged as the world

s most attractive destination for mass merchant and foodretailing, maintaining its 2005 position in an annual study of retail investmen

t attractiveness among 30 emerging markets. India was given the top ranking in management consulting company AT Kearney

s 2006 Global Retail Development Index (GRDI). "The Indian retail market is gradually but surely opening up, while China

s

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Growth of Retail Sector in Indiamarket becomes increasingly saturated," said Fadi Farra, a principal in AT Kearney

s Consumer Industries and Retail Practice and leader of the GRDI study. Muchto the surprise of market observers, China was ranked fifth in this year

s tally, declining one more place since 2005. While China remains very attractive, themarket is becoming increasingly saturate as and United Arab Emirates No. 18. GapInc announced last week it had struck a deal with two franchisees to open Gap s

tores in Saudi Arabia starting at the end of this year. Dubai has capitalized onconsumer desire for a more Western lifestyle and has established itself as a retail mecca, Gurski said. Despite its focus on luxury, Dubai is "just beginning to be populated by the bread-and-butter retailers of the United States and the Western world," she said. Retailers that have already established a presence in major Chinese cities like Shanghai and Beijing, or those that have been slow to gain a foothold there, are now looking at less developed markets in second-tier cities, the study found. "If the markets are saturated, they

re looking to make profits in the secondtier cities," Gurski said. But she cautioned that a separatestrategy is needed for the smaller markets since consumer tastes, ability to spend and willingness to embrace new formats may be different than in larger urbanareas. International retailers rush to establish a presence and build market sha

re, the study reveals. According to the study, Asia with a large 40 per cent ofthe top 20 markets has surpassed Eastern Europe as the

dominant region for global retail expansion.

"The learning is that timing is the most important sourceof competitive advantage for global and regional retailers in the globalizationrace. Knowing when to enter emerging retail markets is the key to success," saidFarra. Powering Asia

s charge are Vietnam, which has risen five places to thirdplace, and countries like Thailand, South Korea and Malaysia, all of which arein the top 15, After topping the ranking for two consecutive years in 2003 and 2004, Russia slipped to second place behind India last year and remained there in2006 too.

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Origin of Retail Sector

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Early Trade:When man started to cultivate and harvest the land, he would occasionally find himself with a surplus of goods. Once the needs of his family and local communitywere met, he would attempt to trade his goods for different goods produced elsewhere. Thus markets were formed. These early efforts to swap goods developed int

o more formal gatherings. When a producer who had a surplus could not find another producer with suitable products to swap, he may have allowed others to owe him goods. Thus early credit terms would have been developed. This would have ledto symbolic representations of such debts in the form of valuable items (such asgemstones or beads), and eventually money.

HOW RETAIL DEVELOPED:Peddlers and Producers:The Retail Trade is rooted in two groups, the peddlers and producers. Peddlers tended to be opportunistic in their choice of stock and customer. They would purchase any goods that they thought they could sell for a profit. Producers were interested in selling goods that they had produced.

General Store:

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Growth of Retail Sector in IndiaThis division continues to this day with some shops specializing in specific areas, reflecting their origins as outlets for producers (such as Pacific Concord of Hong Kong), and others providing a broad mix, known as General Store (such asCasey

s in the Midwest of the U.S.A.). Although specialist shops are still withus, over time, the general store has increasingly taken on specialist products.Customers have found this to be more convenient than having to visit many shops

thus the term "Convenience Store" has also been applied to these shops. As the popularity of general stores has grown, so has their size. This combined with theadvent of Self-Service has lead to the Supermarket, or Superstore.

Early Markets:Over time, producers would have seen value in deliberately overproducing in order to profit from selling these goods. Merchants would also have begun to appear.They would travel from village to village, purchasing these goods and selling them for a profit. Over time, both producers and merchants, would regularly taketheir goods to one selling place in the centre of the community. Thus, regular markets appeared.The First Shop : Eventually, markets would become permanent fixtures i.e. shops. These shops along with the logistics required to get the goods

to them were, the start of the Retail Trade.

The Birth of Distance Retailing:Defined as sales of goods between two distant parties where the deliverer has nodirect interest in the transaction, the earliest instances of distance retailing probably coincided with the first regular delivery or postal services. Such services would have started in earnest once man had learned how to ride a camel, horse etc. When individuals or groups left their community and settled elsewhere,some missed foodstuffs and other goods that were only available in their birthplace. They arranged for some of these goods to be sent to them. Others in theirnewly adopted community enjoyed these goods and demand grew. Similarly, new settlers discovered goods in their new surroundings that they dispatched back to their birthplace, and once again, demand grew. This soon turned into a regular trad

e. Although such trading routes expanded mainly through the growth of travelingsalesmen and then wholesalers, there were still instances where individuals purchased goods at long distance for their own use. A second reason that distance selling increased was through war. As armies marched through territories, they laid down communication lines stretching from their home base to the front. As wellas garnering goods from whichever locality they found themselves in, they wouldhave also taken advantage of the lines of communication to order goods from home.

Origins of RetailIt is likely that, as markets became more permanent fixtures they evolved into shops. Although advantageous in many respects, this removed the mobility that a peddler or traveling merchant may still have enjoyed. For some shopkeepers, it made sense to obtain extra stock and open up another shop, most probably operatedby another

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Growth of Retail Sector in Indiafamily member. This would recover business from peddlers and create new businessand the greater volume would allow the shopkeeper to strike a better deal withsuppliers. Thus the retail chain would have started. Its thought that this process would have started in china over 2200 years ago with a chain of shops owned by a trader called Lo Kass.

The First Self-Service Store:This all changed in 1915 when Albert Gerrard opened the Groceteria in Los Angeles, the first documented self-service store. This was soon followed a year laterby the Piggly Wiggly self-service store, founded by Clarence Saunders in Tennessee in the U.S.

Growth:This new type of shopping was more efficient and many customers preferred it. Although personal service stores remain to this day, this new concept started a rapid growth of self-service stores in the United States. Other countries were slow to take up the idea, but there has been a steady rise in the global amount ofself-service stores ever since.

EfficiencyThese entrepreneurs noticed that their staff had to spend a great deal of time taking grocery orders from customers. The groceries were stacked on shelves allowing customers to walk around and browse, collecting their shopping in a basket that was supplied. The shopkeeper would only need to tot up the final bill at theend of the process and transfer the goods from the basket to the customer and receive payment.

From Family Business to Formal Structure:Although retail chains would have been mostly run by families, as some chains grew, they would have needed to employ people from outside of their family. This was a limiting factor as there would have been a limit to the amount of trusted n

on family members available to help run the chain. Another, even more definite limiting factor was the distance the furthest shop would have been from the original shop. The greater the distance, the more time and effort would have been needed to effectively manage outpost shops and to service them with goods. There was, therefore, a natural barrier to expansion. That was the case until transportand communications became faster and more reliable. When this happened towards the end of the 19th century, chains became much bigger and more widespread. Manyof these businesses became more structured and formalized, leading to the retailchain that we see today.

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Indian Retail Industry

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UNORGANISED RETAIL SECTOR:

Today, retailing doesnt involve just dealing or marketing from shops, it includesanalyzing the market in an effort to provide reasonable prices together with anarray of options and experience to customers. The sole purpose of all this is r

etaining the brand loyalty of customers. Indian retail is currently a US$ 245 billion market and is anticipated to extend to almost US$ 385 billion mark by thenext five years. The Indian retail sector is currently sporting a brand new lookand together with a 46.64 per cent three-year Compounded Annual Growth Rate (CAGR), Conventional marketplaces are paving way for new shopping malls, the likesof superstores, shopping plazas, supermarkets and brand label stores. International style shopping centers have started dotting the skyline of cities and smaller towns, acquainting the Indian customer to a unique shopping experience. The retail industry in India is split up into the unorganized and organized retail segments. The unorganized retail sector includes the big, average and modest grocery stores and the chemist shops. A changeover is taking place from the conventional retail sector to organized retailing. But the unorganized segment still domin

ates and leads the industry. By 2010, the Indian retailing sector is anticipatedto become an Rs12.5 trillion market. The share of organized retailing is supposed to jump to about 10 per cent from the existing three per cent. The anticipated staggering growth in organized retailing provides an opportunity to expand themarket for both established and new players. According to the latest report India Retail Sector Analysis (200607)I by RNCOS, the total retail market is primarily focused in rural regions, which makes up 55 per cent or US$ 165 billion of theoverall retail market as opposed to urban segment, which represents 45 per centor US$ 135 billion of the gross retail market. The rural market is spread over627,000 villages, even though its centre of attention is focused around a core group of 100,000 villages that makes up 50 per cent of the rural population.

India represents the most compelling international investment opportunity for ma

ss merchant and food retailers looking to expand overseas, according to management consulting firm AT Kearney

s 2005 Global Retail Development Index (GRDI), anannual study of retail investment attractiveness among 30 emerging markets. India is rated as the fifth largest emerging retail market and is seen as a potential goldmine. Driving global brands into India is the greatly improved investmentclimate due to the recent relaxation of direct ownership restrictions on foreignretailers. The country

s retail market totals $330 billion, is vastly underserved and has grown by 10 per cent on an average over the past five years. The message for retailers on India is clear move now or forego prime locations and market positions that will soon become saturated. Global retailers that missed opportunities to capture first-mover advantage in China will make up for it in India.

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Growth of Retail Sector in IndiaThough India has more than five million retail outlets, they are greatly unorganized. There is no supply chain management perspective. In fact, out of the entire retail sector in India, the organized sector is only 25 per cent and the restis unorganized. 96 per cent of the retail outlets are smaller in area than the standard norms. The retail industry is divided into organized and unorganized sectors. Organized retailing refers to trading activities undertaken by licensed re

tailers who are registered for sales tax and income tax. These include corporatebacked hypermarket and retail chains and so on. Unorganized retailing is the traditional low-cost shops, handcarts and pavements and is by far the prevalent form of trade in India. The efficiency of organized sector in retailing is manifested in some of the newer supermarkets in urban/metropolitan India the produce iscleaner, fresher, well packed and often cheaper than the local shopkeeper. Thisis possible because of the far more efficient distribution system, which organized retail chains are employing, by cutting the layers of middlemen involved. There are other benefits too, of transforming the unorganized retail sector into an organized sector. Firstly, a number of new jobs will be created, far better paid than the underage labor working in the local shops. Secondly, the benefits tothe producer and consumer through better prices and lesser wastage; throwing up

exportable surpluses, which will also benefit the economy as a whole. Thus onecan see that allowing FDI in retailing is beneficial to all the stakeholders involved

The Big Bazaars and Spencers, the huge unorganized retail sector is finally beginning to see the merit of logging on, even if at a model scale. Taxation policiesalso push you to automate and the push is even harder for those looking to expand beyond their single store existence. Though its early days yet to measure it penetration in the unorganized retail industry, interest levels are surely raising fast. Its good to at least answer their questions. Though the interest is more with retailers who register good sales and volumes. Software available to the retailers is ShawMans RetailMagiK, which takes care of the front-end store needs, aswell as the back-end warehouse requirements. It would surely help the unorganize

d sector to get into technologies like bar-coding, which will make their operations more efficient. Some other features are a user-defined billing screen and discount with control mechanism from the headoffice, delivery order management, batch control and quick information search, among others. The product is a simpleto use. The screen design and the functionality are designed in such a way thatthe user need not press too many keys to get things done, says Khushroo Bagwadia,business development manager, Shawman Software. To begin with, most retailers look at decent entry-level solutions starting at Rs 25,000. However, there are cheaper quick-fix solutions available too. One can even deploy a computer and start with

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Growth of Retail Sector in Indiafinancial accounting programmers like Microsoft Excel, FoxPro and Tally. Small retailers seem next in line and vendors are also warming up to the opportunity. At the low-end however, smart inexpensive solutions are the need of the hour. Andsolutions providers like Microsoft, Polaris and Shawman are now working on developing smart tools for the retail enthusiasts. For small players with just one store, the investment on retail solutions go really low, anywhere between Rs 10,0

00 to Rs 25,000. Most of the time these solutions are developed by local firms,who at times compete with the big names in the industry. According to Oberoi ofPolaris, generally the mom-and-pop stores like to go for technology, which willget their work done at a reasonable cost. They avoid the high-end technology, and consider these as frills. They are not even bothered about upgrading, so the cheap systems are more than welcome. These solutions might not work for the mid-sized retailers with five stores, as then one need to scale it up and take care ofinventory and supply chain management, he says. Comparing the case with China, Vedamani suggests India is on the right track. In China, we find the organized sector to be 20-23% of the total industry. Here, the technology has advanced in phases, and so is the case in India.

Format

Description

The Value Proposition

Branded Stores

Complete range available for a Exclusive showrooms either owned or franchised out given brand, certified product by a manufacturer. quality Greater choice to the consumer, Focus on a specific consumer need, carry most of comparison betweenbrands is the brands available possible Large stores having a wide variety of products, organized into different departments such as One stop shop catering to v

aried/ clothing, house wares, furniture, appliances, toys, consumer needs. etc.

Specialty Stores

Department Stores

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Growth of Retail Sector in IndiaSupermarkets Extremely large self-service retail outlets One stop shop cateringto varied consumer needs

Stores offering discounts on the retail price through Discount Stores selling high volumes and reaping economies of Low Prices scale Hyper- mart Larger than a supermarket, sometimes with a Low prices, vast choice available warehouse appeara

nce, generally located in quieter including services such as parts of the city cafeterias. Small self-service formats located in crowded urban Convenient location and extended areas. operating hours. Enclosure having different formats of in-store Variety of shops available to each retailers, all under one roof. other.

Convenience stores

Shopping Malls

Formats adopted by the Retail Players in INDIA.

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Retailer

Original formatsSupermarket (Foodworld) Department Megastore) Store (Piramyd

Later FormatsHypermarket (Spencer

s)Specialty Store (Health and Glow) Discount Store (TruMart)

RPG Retail Piramal

s

Pantaloon Retail Department Store (Pantaloon) K Raheja Group stop) Tata/ Trent Landmark Group Others

Small format outlets (Shoppe) Supermarket(FoodBAZAR) Hypermarket (Big Bazaar) Mall (Central) Department Store (shopper

s Specialty Store (Crossword) DepartmentStore (Westside) Department Store (Lifestyle) Supermarket Hypermarket (TBA) Hype

rmarket (Star India Bazaar) Hypermarket (TBA)

Discount Store (Subhiksha, Margin Free, Apna Bazaar), Supermarket (Nilgiri

s), Specialty Electronics

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Retailing formats in India

1. Malls: The largest form of organized retailing today. Located mainly in metrocities, in proximity to urban outskirts. Ranges from

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Growth of Retail Sector in India60,000 sq ft to 7,00,000 sq ft and above. They lend an ideal shopping experiencewith an amalgamation of product, service and entertainment, all under a commonroof. Examples include Shoppers Stop, Pyramid, Pantaloon. 2. Specialty Stores:

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 focusing on

specific market segments and have established themselves strongly in their sectors. 3. Discount Stores: As the name suggests, discount stores or factory outlets, offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left over at the season. The product category can range from avariety of perishable/ non perishable goods. 4. Department Stores: Large storesranging from 20000-50000 sq. ft, catering to a variety of consumer needs. Further classified into localized departments such as clothing, toys, home, groceries, etc 5. Department Stores:

Departmental Stores are expected to take over the apparel business from exclusive brand showrooms. Among 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 s

q. ft) across India and even has its own in store brand for clothes called Stop!. 6. Hypermarts/Supermarkets:

Large self service outlets, catering to varied shopper needs are termed as Supermarkets. These are located in or near residential high streets. These stores today contribute to 30% of all food & grocery organized retail sales. Super Marketscan further be classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets ranging from of 3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personal sales. 7. Convenience Stores:

These are relatively small stores 400-2,000 sq. feet located near residential areas. They stock a limited range of high-turnover convenience products and are usually open for extended periods during the day, seven days a week. Prices are sl

ightly higher due to the convenience premium.

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Growth of Retail Sector in India 8.MBOs :

Multi Brand outlets, also known as Category Killers, offer several brands acrossa single product category. These usually do well in busy market places and Metros.

SPECIALITY STORES

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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 brande

d 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 is worth US$ 5.6 billion,with a growth rate that is half of the mobile market.

Kids retail:When it comes to Indian children, retailers are busy bonding--and branding: Monalisa, the Versace of kids is coming to India. Global lifestyle brand Nautica isbringing Nautica Kids. International brand Zapp tied up with Raymond to foray in

to kids

apparel.Disney launched exclusive chains which stock characterbased stationery. Pantaloon

s joint venture with Gini & Jony will set up a retail chainto market kids

apparel. Swiss kidswear brand Milou is collaborating with Tirupurbased Sreeja Hosieries. Turner International India Pvt Ltd. will launch CartoonNetwork Townsville and Planet POGO--two theme parks designed around its channels--in the National Capital Region. Sahara One Television has also signed a Memorandum of Understanding to source content from Spacetoon Media Group, Middle East

s largest kids

entertainment brand for animation and live action content. Leading the kids

retail revolution is the apparel business, which accounts for almost 80 per cent of the revenue, with kids

clothing in India following international fashion trends. According to research

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Growth of Retail Sector in Indiafirm KSA Technopak, the branded segment comprises US$ 701.7 million of the totalkids

apparel market-size of over US$ 3 billion. Industry experts say kids

retailing will touch annual growth of 30-35 per cent. Toys, stationary, sportswear,outerwear, tailored clothing, eyewear, watches, fragrance, footwear, theme parks, TV channels the segment is growing rapidly at 10 per cent per annum. Margins are in the range of 20-25 per cent (for dealers and distributors), while companie

s enjoy an average gross margin of about 10 per cent.

Agricultural retail:Agriculture across India is heralding the country

s second Green Revolution. 14states, including Maharashtra, Punjab, Andhra Pradesh and Rajasthan amended theAgricultural Produce Marketing Committee (APMC) act this year, along the lines of the Model APMC Act,

02, which allows farmers to sell their produce directly to buyers offering them the best price. Agricultural sectors such as horticulture, floriculture, development of seeds, animal husbandry, pisciculture, aqua culture, cultivation of vegetables, mushroom under cultivated conditions and servicesrelated to agro and allied sectors are open to 100 per cent FDI through the automatic route. For its e-Choupal scheme, ITC built internet kiosks in rural villa

ges so farmers can access latest information on weather, current market prices,foods-in-demand, etc. With a US$ 5.6 billion, multi-year investment in agriculture and retail, Reliance Retail will establish links with farms on several thousand acres in Punjab, West Bengal and Maharashtra. FieldFresh, planning to becomeIndia

s first large-scale exporter of produce, will annually pay farmers over US$ 30,000 to lease land for vegetables, to hire tractors and to pay their workers. Besides a five-year program with the Punjab government to provide several hundred farmers with four million sweet-orange trees for its Tropicana juices by 2008, PepsiCo--with agriculture exports worth US$ 40 million--also introduced farmers to high-yielding basmati rice, mangoes, potatoes, chilies, peanuts, and barley for its Frito-Lay snacks. Export potential and a rapidly growing domestic demand for reliable produce from new supermarket chains is driving change. With 77 per cent of India

s population relying on agriculture for a living, improved effi

ciency and new markets can benefit a large number of people.

International retailers :The Australian government

s National Food Industry Strategy and Austrade initiated a test marketing food retail in India wherein 12 major Australian food producers have tied up with India-based distributor AB Mauri to sell their products directly at retail outlets. The largest-ever 150-member British business delegation in India committed investments in the areas of food processing, agri retail

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Growth of Retail Sector in Indiaand manufacturing. It is also likely to press for the liberalisation of sectorslike financial & legal services and retail. US-based home delivery and logisticscompany, Specialised Transportation Inc, will enter the Indian market through astrategic alliance with Patel Retail, a subsidiary of Patel Integrated Logistics. Among other big international players, Wal-Mart has announced its plans for India in partnership with Bharti, Tesco is sure to try again, and Carrefour too m

ight finally find the right partner.

Supermarkets:Large self service outlets, catering to varied shopper needs are termed as Supermarkets. These are located in or near residential high streets. These stores today contribute to 30% of all food & grocery organized retail sales. Super Marketscan further be classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets ranging from of 3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personal sales. Supermarkets are relatively new entrants in the market. They are so called pioneers in organized food retailing and go by the western model in look and feel and format. This is what everybody means when they say organized food retailing.

Franchise outlets:

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Growth of Retail Sector in IndiaLike Tommy Hilfiger and Wal Mart, other US retailers are firming up their Indiaentry strategies and if they are already in, they are undergoing rapid expansion. Fashion brands DKNY is also al set to foray into the Indian fashion Industry through a franchisee agreement with Indian company, S. Kumar Starbucks recently expressed their interest in entering Indian company

Like Tommy Hilfiger and Wal-Mart, other US retailers are firming up their Indiaentry strategies and if they are already in, they are undergoing rapid expansion. Fashion brand DKNY is also all set to foray into the Indian fashion Industry through a franchisee agreement with Indian company, S Kumars.Starbucks recently expressed their interest in entering India through the franchise route, like theirAmericanF&B counterparts Pizza Hut, Subway, and the very successful McDonalds. McDonalds has major expansion plans lined up; in the next 3 years, it plans to open another 100 outlets in cities across India.

Hypermarket:A very large commercial establishment that is a combination of departmental store and a supermarket. The specific features of a hypermarket are the wide range o

f goods offered, quality service, quality display of goods on the shelves and complex systems providing for customers loyalty. Hypermarket is known for a wide range of goods offered. It consist of dozens of thousands of items, while similargoods can be offered in several forms. In order to work with such an assortmentit is necessary to group it into categories and sub categories that would unitegoods according to this or that criteria.

Shopping Malls:The new shopping malls that have been expanding their footprint across Indian cities are well designed, built on international formats of retailing and integrated with entertainment and restaurants to provide a complete family experience. Over 300 malls are expected to be built over the next two years and most Indian cities with over a million populations will be exposed to this modern method of r

etailing.

Shopping malls have existed in India since several decades but were designed andbuilt to house several shops in a single facility. These malls also known as Shopping Arcades offered only rows of shops, most of which were small stores thatpromised bargains for their various wares. These Shopping Arcades tried to maximize on their store space and did not offer any areas for recreation and entertainment.

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Growth of Retail Sector in IndiaThe present day malls are a creation of the past few years post 2000. They are designed professionally using a lot of international experience and combine shopping with a lot of brand building, recreation, food and entertainment. Malls alsohave a large format store that serves as their anchor for shopping and a prominent restaurant that anchors the food needs of visitors. Most malls also featurea multiplex cinema that offers entertainment to the visitors of the mall. Finall

y the mall has large atria and open spaces to allow visitors and families to hang-out.

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Organized Sector

Retail

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Product Segments:The organized retail business in India is very small. This is despite the fact that India is one of the biggest markets. Retail business contributes around 10-11 per cent of GDP. India also has the largest number of retailers, about 12 million, though they are mostly small. Most of the organized retailing in the countr

y has just started recently, and has been concentrated mainly in the metro cities. Organized retailing in India has a huge scope because of the vast market andthe growing consciousness of the consumer about product quality and services. Organized retail only accounts for 3% of the total retail industry as yet and is estimated to grow to $64 billion by the year 2015. As a result, the retailing space in the country will also rise by 15-20% by 2010. 50 million sq ft of qualityspace under development 7 major cities to account for 41 million sq ft development 300 malls, shopping centre and multiplexes under construction To open 35 hypermarkets, 325 large department stores, 1500 supermarkets and over 10,000 new outlets To add US $ 10 billion of business to organized retail. ASSOCHAM president,Anil K Agarwal says: The organized sector retailing is all set to grow at much faster speed than unorganized sector and the higher growth speed will alone be re

sponsible for its higher market share which has been projected for $17 billion by 2010-11. Cities and metropolis in which retailing will show booming prospectsinclude Mumbai, Delhi, Chennai, Kolkata, Bangalore and Kanpur, said Agarwal adding that the popular mode adopted for building shopping malls in these cities will be based on build, operate, lease and sell basis". The 4 major organized retail sectors are Food & Grocery, Clothing, Consumer Durables and Books & Music. In2003-04, private consumption expenditure in India amounted to Rs 1,690,000 crores (USD 375 billion) of which, retail sales constitute about 61% (USD 230 billion).In terms of penetration by the organized retail sector, footwear is the highest category, followed by clothing. Footwear is driven by the dominance of home grown players like Liberty as well as the 15% market share that MNC retailer Bata Commands. Foreign Presence, especially through the franchisee route, e.g. Adidas,Reebok, Nike etc. adds to this slice of the pie. Franchisee activity in this ca

tegory, especially in Tier II Cities, is pegged to rise.

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Estimated Growth in Organized Retail

2004 Large Segments Other Segments 1,924 1,315

2009 5,024 2,645 422 8,091

CAGR (%) 21% 15% 12% 18%

Non-store 239 Retailing Total Organized 3,478 retail The Four Large Segments: Food -Chain Stores -Single Large Stores Clothing -Manufacturer retailers -Chain stores -Single Large Stores Consumer durables Manufacturer retailers -Chain stores-Single Large Stores Book and Music -Chain Stores -Single Large Stores 391 32665 1,075 293 315 467

1,624 1,462 162 2,266 590 852 824

33% 35% 20% 16% 15% 22% 12%

359 141 98 120

822 284 298 240

18% 15% 25% 15%

97 54 43

310 202 108

26% 30% 20%

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Retail is amongst the fastest growing sectors in the country. Indiaranks First,ahead of Russia, in terms of emerging markets potential in retail and is deemeda Priority market for International retail.

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Major Industry Players

Nanz in North India, Nilgiris in the South, Pantaloon in the East and Crossroadin the West were the pioneers of the retail revolution in India. Nanz faced several obstacles in their business and had to finally down their shutters. Nilgiris

, due to some strange reason, did not see any logic to expand beyond the southern frontiers. Pantaloon went to scale up and become bigger and bigger to form theFuture Group, that is now omnipresent in almost all formats right from small groceries to e-tailing. Crossroads in Mumbai imparted some valuable lessons to their parent, the Piramyd Group, who has since then gone on an expansion drive withother formats of retailing in different cities.

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The big players in Indian retail landscape now are the Future Group, Shoppers Stop, Westside, Subiksha and RPG Spencer. The newcomers who are knocking at the gates are Reliance Retail, Bharti Walmart and Aditya Birla Trinethra. Here, we intend to do a brief profiling of the major players in order to understand the retail business in a better manner. 1 The Future Group

The Future Group, which was earlier known as PRIL (Pantaloon Retail India Limited) began as a trouser manufacturer in the mid 1980s. The Future Group is dividedinto six verticals Future Retail, Future Capital, Future Brands, Future Space,Future Media and Future Logistics. The Future Group started operations in the mid 1987s by incorporating the company as Manz Wear Private Limited. The company went on to manufacture ready made trousers under the Pantaloons brand name. It cameout with a public issue in 1991 and later changed their name to Pantaloon Fashions (India) Limited (PFIL). The first exclusive mens store called Pantaloon Shoppe was inaugurated in 1992. Pantaloons went for a franchisee route to expand thenumber of retail outlets and by 1995, it had reached to a crucial number of 70.The first departmental store called Pantaloons was opened in Kolkata in 1997 wit

h an investment of Rs 0.7 million. The store was a success and recorded revenuesof Rs 100 million within the first year of operations. In 1999, the companys name was changed to Pantaloon Retail (India) Limited (PRIL). The success of Pantaloons departmental stores encouraged PRIL to come up with other retailing formatssuch as Big Bazaar to retail low cost general merchandising, and Food Bazaar to retail food products. As of 2005, the Future Group has 3.5 million sq ft of retail space and over 100 stores across 25 cities in India. It employs more than 12,000people and has a customer base of more than 120 million. Kishore Biyani, the promoter of the group who likes to address himself as Chief Knowledge Officer has plans to launch 18 formats and over 3,340 stores, thereby turning the Future Groupinto a US$7 billion company with over US$1 billion in profits by the year 2010.

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2

Shoppers Stop

Shoppers Stop, promoted by the real estate group K Raheja, was one of the first m

overs to have set up a large retail outlet in New Delhi with international ambience. Shoppers Stop Ltd now has a considerable presence all over the country withoverr 7 lakh square feet of retail space and stocks over 200 brands of garmentsand accessories. The stores are spread all over India with presence in Mumbai, Delhi, Bangalore, Hyderabad, Jaipur, Pune , Kolkata, Gurgaon, Chennai & Ghaziabad. Shoppers Stop is also very well known for having pioneered several quality retailing concepts in India like CROSSWORD, HyperCITY and Mothercare. They are the only retailer from India to become a member of the prestigious Intercontinental Group of Departmental Stores (IGDS). Shoppers Stop is positioned as a family storedelivering a complete shopping experience. With its wide range of merchandise,exclusive shop-in-shop counters of international brands and world-class customerservice, Shoppers Stop brought international standards of shopping to the Indian

consumer providing them with a world class shopping experience. Shoppers Stops core customers represent a strong SEC A skew. They fall between the age group of 16 years to 35 years, the majority of them being families and young couples witha monthly household income above Rs. 20,000/- and an annual spend of Rs.1,50,000/-. A large number of Non - Resident Indians visit the shop for ethnic clothes in the international environment they are accustomed to.

The stores offer a complete range of apparel and lifestyle accessories for the entire family. From apparel brands like Provogue, Color Plus, Arrow, Levis, Scullers, Zodiac to cosmetic brands like Lakme, Chambor, Le Teint Ricci etc., ShoppersStop caters to almost every lifestyle need. Shoppers

Stop also retails its ownline of clothing namely Stop, Life , Kashish, Vettorio Fratini and DIY. The merchandise at Shoppers Stop is sold at a quality and price assurance backed by its g

uarantee stamp on every bill.

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Growth of Retail Sector in IndiaShoppers Stops customer loyalty program is called The First Citizen. The program offers its members an opportunity to collect points and avail of innumerable special benefits. Currently, Shoppers Stop has a database of over 2.5 lakh members whocontribute to nearly 50% of the total sales of Shoppers Stop. The Organisation, in 2000, along with ICICI ventures also acquired the reputed bookstore, Crossword,which offers the widest range of books along with CD-ROM, music, stationery and

toys. Services like Dial-a-book, Fax-a-book and Email-a-book enable customers toshop from their homes. Crossword currently has 18 Stores. Realising the role ofIT way back in 1991, Shoppers Stop was among the first few retailers to use scanners and barcodes and completely computerise its operations. Today it is one ofthe few stores in India to have retail ERP in place, which is now being integrated with Oracle Financials and the Arthur Planning System, the best retail planning system in the world. With the help of the ERP, they are able to replicate stores, open new stores faster and get information about merchandise and customersonline, which reduces the turnaround time in taking quick decision. Shoppers Stop has been very keen to understand the importance of distribution and logisticsin ensuring that merchandise is available on the shop floors. This has led the retail chain o streamline its supply chain. The company has developed process man

uals for each part of the logistics chain. These modules include vendor management, purchase order management, stock receiving systems, purchase verification and inventory build up, generation and fixing of price and store tags, dispatch ofstocks to the retail floor and forwarding of bills for payment. Shoppers Stop has a grand ambition to position itself as a global retailer. The company intendsto bring the worlds best retail technology, retail practices and sales to India.Currently, they are adding 4 to 5 new stores every year.

3

Trent Westside

Established in 1998, Trent operates some of the nation

s largest and fastest gro

wing retail store chains. A beginning was made in 1998 with Westside, a lifestyle retail chain, which was followed up in 2004 with Star India Bazaar, a hypermarket with a large assortment of products at the lowest prices. In 2005, it acquired Landmark, India

s largest book and music retailer. In a recently signed deal,Trent has agreed to anchor 12 malls set up by DLF Universal Ltd across the country, at its Westside, Landmark and Star India Bazaar outlets. This amounts to about 27 locations, totaling to about a million square feet of space. Trent retails garments and household accessories for men, women and children, cosmetics andperfumes at Westside, food, beverages, health and beauty products, vegetables, fruits, dairy products, consumer electronics and household items at Star India Bazaar and books, music and stationery at Landmark.

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Growth of Retail Sector in IndiaWestside has 25 outlets across 17 cities in India offering a variety of designsand styles in garments, footwear and accessories, as table linens, artifacts, home accessories and furnishings. Well-designed interiors, sprawling space, primelocations and coffee shops enhance the customers

shopping experience. Trent also runs another chain of retail stores called Star India Bazaar. Launched in 2004, Star India Bazaar provides a large assortment of high quality products made av

ailable at the lowest prices coupled with a unique shopping experience. Star India Bazaar is located in Ahmedabad and offers a wide choice of staple food, beverages, health and beauty products, vegetables, fruits, dairy products, consumer electronics and household items at the most affordable prices. Trent has also recently acquired a 76 per cent stake in Landmark, one of the largest books and music retail chains in India. Landmark commenced its operations in 1987 with its first store in Chennai, and now has nine stores in the major metros of the country. Earlier Landmark was focused on books, stationery and greeting cards. In 1996it added music to its product portfolio and also started the trend of stocking curios, toys, music, CDs and other gift items.

4. Piramyd Piramyd Retail is part of the Piramal Group, which has presence in di

verse sectors spanning Pharmaceuticals, Textiles, Real Estate, Engineering, Family Entertainment and Retail with manufacturing operations in 19 locations acrossfive states and employing over 18,000 people. The promoters launched the apparel business in 1999 under Piramyd Retail and Merchandising Pvt. Ltd. (PRMPL) while its food; home & personal care businesses (FHPC) were housed under CrossroadsShoppertainment Pvt. Ltd. (CSPL). As the apparel and food businesses individually reached a critical mass the management merged the two companies into Piramyd Retail Ltd. due to distant synergies in two businesses in March 2005. Pyramid also has a smaller format of stores called TruMart that caters to Food and PersonalCare products. Piramyd Retail currently has 5 Mega stores and 8 TruMart storesmainly in Maharashtra . The company plans to increase these

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Growth of Retail Sector in Indianumbers to 17 Mega stores and 69 TruMarts by 2008. The floor space is expected to be 5 times on successful expansion. The FHPC (Food & Personal Care) business is volume driven while the Lifestyle store is a margin driven business. Piramyd Retail plans to increase the contribution of private labels from existing 7% to 1820% of the revenues by 2010. Gross margins from private labels are over 40% andhence the company is planning to increase this business. Most of the stores are

on the lease format and the company is prone to higher lease rentals due to theoverall increase in real estate prices. This may bring the profit levels down substantially. Piramyd Retail did have a first mover advantage in many locationsbut it has actually failed to capitalise over this advantage. Its competitors like Pantaloon, Shoppers Stop and Trent gained larger benefits of their far more aggressive business & marketing strategy in the retail space.

5.

Subiksha

The Chennai based Subiksha grocery chain runs around 200 outlets all over the co

untry and its current turnover stands at Rs 224 crores. Their target customer isthe middle income value conscious buyers. The main aim of Subiksha is to offer afunctional and transactional shopping experience. This retail chain has no qualms and spends almost no money on creating a pleasant shopping experience, and

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Growth of Retail Sector in Indiaall stores are non-air conditioned. There is no false roofing or sparkling vitrified tiles on the floor. A few years ago, Subiksha did not even offer shoppers self service. The customer had to place an order at a computerized teller and thegoods were billed and delivered after cash is collected. Customers had to bringtheir own carrybags or pay to buy them from the store. Subiksha even attemptedto charge the customers for home delivery. However, now Subiksha has slightly tw

eaked their business model in order to create a better appeal to customers who were defecting to the competitors. The store formats are still small and nonairconditioned. But customers have the option to pick from shelf spaces. They also get shopping bags and free home delivery. But the selling USP(unique selling proposition) remains the same --Subiksha tries to be as close to the customer as possible and offers the lowest price and huge savings in comparison to competitors.Its slogan happens to be --- bachat mera adhikar hain (saving is my fundamental right).

6.

RPG Spencer

RPGs Spencer presently has 125 stores across 25 cities covering a retail tradingarea of half a million square feet and with a clientele of 3 million customers amonth. Spencer

s has a national footprint with seven hypermarkets, three supermarkets and 70 daily use outlets, called Dailies. All the newly opened Spencer

sstores stock every conceivable product that is required by a household on a daily basis. At Spencer

s Daily shoppers can get fresh fruits, vegetables, fast-moving consumer goods, household items, groceries, with regular offers and discounts. Spencer

s outlets are divided in to three retail formats. These are, Spencer

sHyper, the over 25,000-sq ft hypermarkets stocking over 25,000 items. The 8,000sq ft to 15,000-sq ft mini hyper stores, branded as Spencer

s Super and the daily purchase 4,000-sq ft to 7,000-sq ft Spencer

s Daily for groceries, fresh food,chilled and frozen products, bakery and weekly top up shopping.

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7.

Reliance Retail

On June 26, 2006, Mukesh Ambani, Chairman and Managing Director, Reliance Indust

ries Limited, announced a Rs 25,000-crore investment in the retail sector. Reliance Retail started its retail operation with Reliance Fresh, a grocery store that sells vegetables, fruits, personal care items and other food products. Soon, these retail outlets will also be selling apparel and footwear, lifestyle and home improvement products, electronic goods and farm implements and inputs. They willalso offer products and services in energy, travel, health and entertainment. Inaddition to this, partnerships would be developed to bring the best of global luxury brands to India as well. Reliance Retail plans to extend its footprint to cover 1,500 Indian cities and towns with outlets of a varied format, a mix of neighborhood convenience stores, supermarkets, specialty stores and hypermarkets. Reliance also plans to open restaurant outlets, financial services marts and tourism counters within its stores. Mukesh Ambanis ultimate ambition seems to be to cr

eate the Indian equivalent of Wal-Mart by scaling up the business to unprecedented heights to reach every nook and corner of the country. With its retailing venture, Reliance expected a revenue target of US $20 billion through its retail operations by 2010. Over a span of five years, RRL expects a 20% return-on-investment. The first store christened Reliance Fresh opened in November 2006 at Hyderabad.Within a few months they have now opened stores in Mumbai, Pune and Ahmedabad and plans foray into other cities on a rapid scale.

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8.

Bharti Wal-Mart

Bharti Retail (Pvt.) Ltd. unveiled the roadmap for its retail venture on 19th Fe

bruary, 2007 envisaging an investment of $2.5 billion with expectation of revenue of $4.5 billion (about Rs. 20,000 crore) from this business by 2015. The firstretail outlet is expected to open somewhere in the month of August . Bhartis plan is to invest $2.5 billion by 2015 and open stores across all major cities. This investment would be only for setting up front-end stores. The modalities for its back-end linkage, including its joint venture with the world

s largest retailer Wal-Mart, are in the process of being worked out. A high-level team from Wal-Mart was visited India in the later part of February to work out the details ofthe back-end chain. While Bharti would manage front-end of the retail venture, Wal-Mart would be

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Growth of Retail Sector in Indiainvolved in the back-end, including logistics, supply chain and cashand-carry, he added. The JV was presently scouting for 10 million sq. ft. of retail space, which would include hypermarkets, supermarkets and convenience stores and would provide employment to about 60,000 people. The company would open multi-format retail outlets in all cities with a population of about one million. Bharti is nowconducting a massive consumer survey to take a final decision on branding and p

romotional campaign. However, Bharti and Wal-Mart have been facing stiff opposition from the left parties and other political outfits who fear that the entry ofthe Bentonville giant will make life difficult for the small grocers and createmassive unemployment. They also expect Wal-Mart to take a tough stance on lowering prices and force farmers to sell their produce at lower rates. A lurking fear of monopolistic regime in the retail sector is also enhancing their fears. Both Bharti and Walmart are presently having a tough time in convincing the ministers, politicians, agriculturists, the NGOs and other pressure groups that their business model would serve to work in the best interests of all the stakeholders.

9.

Aditya Birla MORE

The Aditya Birla Group is India

s first truly multinational corporation. Globalin vision, rooted in values, the Group is driven by a performance ethic pegged on value creation for its multiple stakeholders. A US$ 24 billion conglomerate, with a market capitalization of US$ 23 billion and in the League of Fortune 500,it is anchored by an extraordinary force of 100,000 employees belonging to over25 different nationalities. Over 50 per cent of its revenues flow from its operations across the world. Our mission is to change the way people shop. We will give them more. says Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group. The more. for you

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Growth of Retail Sector in Indiaadvantage: more. promises a world-class pleasurable shopping experience to Indian consumers in their very own neighborhood. more. Quality, more. variety, more.convenience and more. value are the four delivery cornerstones of the more. chain of supermarket stores. more. MORE. Value MORE. promises best in market pricing. Linking up directly with farmers to source fresh fruits, vegetables and staples ensure great quality as well as great price. Add to this, the membership progr

am Club more. which provides convenience, customized shopping solutions and savings, and the more. value promise becomes all the more evident. More. Is an inspirational brand for an inspirational country. We have a bright and committed, enthusiastic team that represents the best experience from India and globally. MORE. also has a range of products from its own stable available across value, premium and select ranges. The products have been quality-checked and are available in attractive packaging at competitive prices. To avail additional benefits, at no extra charge, customers can also enroll for the membership program Club more.

10. VISHAL RETAIL :

Vishal is one of fastest growing retailing groups in India. Its outlets cater to

almost all price ranges. The showrooms have over 70,00 products range which fulfills all your household needs, and can be catered to under one roof. It is covering about 1282000 sq. ft. in 18 state across India. Each store gives you international quality goods and prices hard to match. The cost benefits that is derived from the large central purchase of goods and services is passed on to the consumer. What started as a humble one store enterprise in 1986 in Kolkata(erstwhile, Calcutta) is today a conglomerate encompassing 51 showrooms in 39 cities. Indias first hyper-market has also been opened for the Indian consumer by Vishal. Situated in the national capital Delhi this store boasts of the singe largest collection of goods and commodities sold under one roof in India. The groups prime focus is on retailing.

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The Vishal stores offer affordable family fashion at prices to suit every pocket. The groups philosophy is integration and towards this end has initiated backward integration in the field of high fashion by setting up a state of the art manufacturing facility to support its retail endeavors. Company has already tied upfor 5-lakh sq ft space and is looking for more. Company will come up with 32 new

stores this year. Company is doing research on more formats. Company is lookingfor opportunities of expansion in the South. Contribution of apparels businessat 53% may slightly come down to 50%. India is a big country and there is huge space for four-five big retail players. Vishal can always sustain growth in thisbig market. Company can sustain margins as it is going for backward integration.Currently manufacturing contributes 10% of the business, which in the next twoto three years, will go up to 25%. Company is increasing its focus on the non-apparel and FMCG segment. The current share of FMCG at 15% could go up to 20-25%.Apparel sales currently at 63% in the next 2-3 years should come down to 50% asthe company is now also focusing on different segments. With growth in volumes,the cost of sourcing will come down in the near future. Company will venture wherever it gets real estate space. Currently, it has very little space in the sout

h India. Eventually, it will have a pan-India set up.

11. METRO CASH & CARRY INDIA

METRO Group today, is the third largest trading and retailing group in the world. The company employs over 2,50,000 staff in 30 countries. In the year 2005 METRO Group had generated sales of over 55.7 billion; 53% of total sales came from outside Germany. METRO Cash & Carry started operations in India in 2003 with two Distribution Centres in Bangalore. With this METRO introduced the concept of Cash& Carry to India. These Centres offer the benefit of quality products at the best wholesale price to over 150,000

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Growth of Retail Sector in Indiabusinesses in Bangalore. METRO offers assortment of over 18000 articles across food and non food at the best wholesale prices to business customers such as Hotels, Restaurants, Caterers, Food and Non-food Traders, Institutional buyers and professionals. METRO

s Cash & Carry business model is based on a Business to Business (B2B) concept and focuses on meeting all the needs and requirements of business customers. It is a modern format of wholesale trading, catering only to bus

iness customers.

12. Viveks- The Unlimited Shop

Vivek Limited is a professionally managed public limited company carrying threeretail brands - Viveks, Jainsons, Premier and continuously adding to the formidable strength of 1000 employees. Vivek Ltd is the largest consumer electronics &home appliances retail chain in India. Viveks popularized several brands by creating visibility and have the distinction of being market leaders and trendsetters with continuous support from the principal companies. Viveks evolved its strategies to suit the larger scene where there was a stigma attached to borrowing. Very few hire purchase options were available and hence Viveks started Vivek Hire

Purchase and Leasing Ltd to finance consumer durables, which enhanced the coreretailing business also.Viveks grew from 3 stores to more than 52 stores and turnover increased to over Rs. 350 crores (USD 80 million) and also become a publiclimited company from a family run enterprise. In this process, 14 store Jainsons was bought over in 1999, 2 store Premier in 2001 and Spencers in 2002 and haverecently absorbed Spencers into the Premier brand. With the liberalization of economy and other changes in the global scene, Viveks streamlined the marketing and advertising activities and shopping ambience was improved.

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THE GROWTH DRIVERS

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Drivers of Retail Industry The Demography Dynamics: Approximately 60 per cent of

Indian population below 30 years of age. Double Incomes: Increasing instances of

Double Incomes in most families coupled with the rise in spending power. Plastic Revolution: Increasing use of credit cards for categories relating to Apparel,Consumer Durable Goods, Food and Grocery etc. Urbanization: increased urbanization has led to higher customer density areas thus enabling retailers to use lesser number of stores to target the same number of customers. Aggregation of demand that occurs due to urbanization helps a retailer in reaping the economies of scale. Covering distances has become easier: with increased automobile penetration and an overall improvement in the transportation infrastructure, covering distances has become easier than before. Now a customer can travel miles to reach aparticular shop, if he or she sees value in shopping from a particular location.

DRIVERS FOR GROWTH:

Indian consumers are rapidly evolving and accepting modern formats overwhelmingly. Retail Space is no more a constraint for growth. India is on the radar of Global Retailers and suppliers / brands worldwide are willing to partner with retailers here. Further, large Indian corporate groups like Tata, Reliance, Raheja, ITC, Bombay Dyeing, Murugappa & Piramal Groups etc and also foreign investors andprivate equity players are firming up plans to identify investment opportunities in the Indian retail sector. The quantum of investments is likely to sky-rocket as the inherent attractiveness of the segment lures more and more investors to

earn large profits. Investments into the sector are estimated at INR 20 25 billion in the next 2-3 years, and over INR 200 billion by end of 2010. Stocks in the retail sector are also becoming increasingly attractive from an investor

s point of view. Successful development of value based concepts as well as development of retail space in smaller cities and towns shall drive the organized retail into the next levels of cities. Retailers have responded to this phenomenon by introducing contemporary retail formats such as hypermarkets and supermarkets in the new pockets of growth. Prominent tier-II

cities and towns which are witnessing a pick-up in activity include Surat, Lucknow,

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Growth of Retail Sector in IndiaDehra Dun, Vijaywada, Bhopal, Indore, Vadodara, Coimbatore, Nasik, Bhubaneswar,Varanasi and Ludhiana among others. With consumption in metros already being exploited, manufacturers and retailers of products such as personal computers, mobile phones, automobiles, consumer durables, financial services etc are increasingly targeting consumers in tier II cities and towns. In addition, petro-retailingefforts of petroleum giants scattered through out the country

s landscape have

also ensured that smaller towns are also exposed to modern retailing formats. Onthe supply side, mall development activity in the small towns is also picking up at a rapid pace, thereby, creating quality space for retailers to fulfill their aggressive expansion plans. Thus, the retail boom

, 85% of which has so far been concentrated in the metros is beginning to percolate down to smaller cities and towns. The contribution of these tier-II cities to total organized retailing sales is expected to grow to 20-25%.

GROWING CONSUMER CLASS: Favorable demographic and psychographic changes relatingto India

s consumer class, international exposure, availability of increasing quality retail space, wider availability of products and brand communication aresome of the factors that are driving the retail in India. Over the last few year

s, many international retailers have entered the Indian market on the strength of rising affluence levels of the young Indian population along with the heightened awareness of global brands and international shopping experiences and the increased availability of retail real estate pace. Development of India as a sourcing hub shall further make India as an attractive retail opportunity for the global retailers. Retailers like Wal-Mart, GAP, Tesco, JC Penney, H&M, Karstadt-Quelle etc stepping up their sourcing requirements from India and moving from third-party buying offices to establishing their own wholly owned / wholly managed sourcing & buying offices shall further make India as an attractive retail opportunity for the global players. Manufacturers in industries such as FMCG, consumer durables, paints etc are waking up to the growing clout of the retailers as a shift in bargaining power from the former to the latter becomes more discernible. Already, a number of manufacturers in India, in line with trends in developed mar

kets, have set up dedicated units to service the retail channel. Also, instead of viewing retailers with suspicion, or as a necessary evil

as was the case earlier, manufacturers are beginning to acknowledge them as channel members to be partnered with for providing solutions to the end-consumer more effectively. The next level of opportunities in terms product retail expansion lies in categories such as apparel, jewellery and accessories, consumer durables, catering servicesand home improvement. These sectors have already witnessed the emergence of organized formats though more players are expected to join the bandwagon. Some of the niche

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Growth of Retail Sector in Indiacategories like Books, Music and Gifts offer interesting opportunities for the retail players. Indian consumer goods market is expected to reach $400 billion by2010. India has the youngest population amongst the major countries. There area lot of young people in India in different income categories. In India they donot have to face this dilemma largely because rapid urbanization, increase in demand, presence of large number of young population, any number of opportunities

are available . The bottom line is that Indian market is changing rapidly and isshowing unprecedented consumer business opportunity. Indian consumer class canbe classified according to the following criteria:

1. Income 2. Socio-Economic status 3. Age demographics 4. Geographical dispersion

1. Income Classification

Consumer Classes The Rich The Climbers The Aspirants The Destitute Total

Annual Income in Rs. Rs. 215,000 and more Rs. 22-45,000 Rs. 16-22,000 Below Rs.

16,000

1999 1.2 32.5 54.1 44 33 164.8

2004 2.0 54.6 71.6 28.1 23.4 180.7

2009 6.2 90.9 74.1 15.3 12.8 199.2

Change 416% 179% 37% -65% -61% 21%

The Consuming Class Rs 45- 215,000

Source: NCAER 2. Socio-Economic Classification: In addition to income classifica

tion and consumer classification, Indian households can also be segmented according to the occupation and education levels of the chief earner of the household(the person who contributes most to the household expenses). This is called as Socio-Economic Classification (SEC), which is mainly

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Growth of Retail Sector in Indiaused by market planners to target market before launching their new products. SEC is made to understand the purchase behavior and the consumption pattern of thehouseholds 3. Age Demographics: India is a very young nation, if compared withsome advanced and developed countries. Nearly two- thirds of its population is below the age of 35, and nearly 50 % is below 25. Age distribution if Indian population (In Millions) Year/ 2006 Age Below 4 yrs 5-14 yrs 15-19 yrs 20-34 yrs 35-

54 yrs 55 & above Total 113.5 221.2 122.4 279.1 239.2 118.7 1094.1 108.5 239.1 109.0 246.8 207.3 101.7 1012.4 119.5 233.2 90.7 224 178.1 88.7 934.2 2001 1996

Marketers explain that the boom in the consumption level and leisure related expenditure is because of this young population. It will have a significant impactover the consumer goods market. In addition to that, it is expected that this will generate trade opportunities and continuous investment in the economy. Thereis huge potential for further consumption of goods and services due to the increased level of disposable income. The expenditure on essential goods and serviceshas a higher share in developing countries as compared with that of developed countries. Consumption Trends Food Essentials 45.68%

Essential Services (water, power, rent, and 10.1% fuels) Clothing Footwear Medicare Transport & Communication Recreation, Education, and Culture Home Goods 4.9%0.63% 4.25% 14.51% Less than 4% 3.25%

4. Geographical Dispersion of market potential

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Growth of Retail Sector in IndiaThere is large difference in economic prosperity levels among several states inIndia, linked to the wealth creation from trade, industrial, and agricultural development. There are poor districts in many states, classified according to their market potential. India has 500 districts, out of which 150 districts (category A) and next 150 districts (category B) account for 78% and 15% of the nationalmarket potential respectively. Remaining 200 districts (category C) are backwar

d and account for only 7% of national market potential. Category C districts have 40% of the geographical share. GROWING ECONOMY Potential for all Formats to Thrive : Most of the global powerhouses in the retailing sector such as WalMart, Carrefour, Tesco etc have adopted multi-format and multiproduct strategies in order to customize their product offering for distinct target segments. Similar trends Identifying the future The important thing is to identify the

future that has already happened

- Peter Drucker

The important and distinctive are always the result of changes in values, perceptions and goals of people. Identify the changes that have already happened, exploit the changes that have already occurred and use them as opportunities. Dr William T Wilson, Chief Economist for Keystone India a Chicago-based firm providing

cross-border trade facilitation and asset management services in US are likelyto be exhibited in India as all formats present prospects for growth, the Reportsays. Further, with the emergence of larger store formats like superstores andhypermarkets in countries like UK, France, Germany, Spain since the 1980s and Eastern Europe more recently, traditional food retailers have been able to stock more extensive non-food ranges. In fact, Tesco, UK

s leading grocer, has become the number one apparel retailer in the Czech Republic and also a major player inHungary apart from being one of the fastest growing clothing retailers in the UK. Together with its rival, Wal-Mart-owned ASDA, Tesco is one of the food sector

s most successful exponents of clothing in Europe DISPOSABLE INCOME There is nopoint complaining, accusing or justifying that retailing business is only for larger players and multinational retailing companies. That

s total rubbish and rather an assumed limitation. Recent research finding is that by the year 2010, Ind

ia will have at least three million people with an annual income of over Rs 4,000,000. Mind you, this is the official, declared and straight income meaning there will be a considerable number of consumers with other sources of income! (I suppose). One could comfortably presume that one fourth of the three millions would reside in Bangalore. Considering the third successive year with great economicgrowth in India, it is obvious that we shall have more

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Growth of Retail Sector in Indiapeople with higher disposable income. With higher disposable income, the discerning Indian consumers are not going to be conscious about price alone. This emerging consumers would want something special, unique, different, better, customized and more. Find the synonyms and transliterate these into value offerings in your field of business and you have a gold mine, especially when you manage to connect with the customers

value and perception and India, said that after signifi

cant accelerations in economic growth recently, India

s economy is expected to equal or surpass Japan as the world

s third largest sometime in the year 2006. DrWilson also added that India

s economy measured in PPP (purchasing power parity) terms will eclipse the US$ four trillion mark in 2006, making it equal to or greater than Japan

s. Indian consumers are getting richer noticeably leading to higher disposable money. RISING INCOMES Over the past deacde , Indias middle and High Income group has grown at a rapid pace of over 10% per annum . Though this growth is most evident in urban areas, it has also taken place in rural markets.Further, the number of house holds earning above Rs.150,000 per annum is about 30 million today and is expected to grow to 80 million by 2007. This growing high-income population is triggering the demand for consumer goods, leading to the proliferation of Higher quality/higher priced products.

EXPLOSION OF MEDIA There has been an explosion in media as well during the pastdecade . Kick-started by the cable-explosion during the gulf war, television hasaccelerated to a pint where there are more cable connections than telephones inIndian homes and more than 100 channels are being aired at all times .This media bombardment has exposed the Indian consumer to the lifestyles of more affluentcountries and raised their aspirations from the shopping experience they want more choice , value , experience and convenience.

Private LabelsBrands, store labels, private label brands, store brands. These terms may seem to be synonyms of each other. However, when it comes to retailing, each of theseterms has a different meaning. While we all know what a brand is, a private labe

l and a store label are different from any other brand because they are productlines that are owned, controlled, merchandised and sold by a specific retailer in its own stores. Among Indian retailers, Stop, Life and Kashish by Shoppers

Stop, and ETC by Ebony are private label brands. According to Synovate, is the market research arm of global communications specialist Aegis Group, the growth ofprivate labels is about 2-3 times more than that of advertised brands .Among theproduct lines launched by retailers, the ones whose nomenclature is the name ofthe store itself are called store labels. Foodworld and Nilgiris have launchedtheir own brand of supermarket products under the "Foodworld" and "Nilgiris" brand names. There is a distinct advantage in naming the brand launched by the retailer after the same name as that of the store. But at the same time,

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Growth of Retail Sector in Indiathe store label also carries the burden of not only the success of the brand, but also the failure, which may have a negative rub-off effect on the retailer

s image. A store brand on the other hand is a brand name the retailer carries. Eachretailer, because of its unique offering, is a brand in itself, which is what the store brand signifies. Nallis, Modern Bazaar and The Home Store are store brands since each of them stands for a certain retail offering. Retailers are now a

ggressively moving into developing their own private labels as it not only makeseconomic sense in the form of retailers achieving higher margins, it also helpsthem to plug gaps in their product portfolio. For instance, in menswear, retailers say that gross margins on branded products vary from 25-38 per cent. Compared to that, the retailers can earn whopping margins of around 55-60 per cent on private labels. Private label products contribute to a retail brands differentiation. A retailer can achieve differentiation through a large (but not necessarilyexclusive) portfolio of private label products. Service adds to the differentiation, and together with a unique product range, results in a strong retail brand. They are not perceived as being interchangeable with similar private label products launched by other retailers (unlike manufacturers of branded products, which are the same regardless of the retailer). Introduction of an in house brand o

f products helps the retailer to have means with which they can compete head onwith the other branded products. An established private label brand provides theretailers a platform to negotiate with suppliers, and the retailers are thus self-sufficient in a certain category. They have more control over the merchandiseand are able to make the required changes and modifications to suit the changing customer profile much quicker. This brings about a more consistent and acceptable product portfolio, which also helps reduce mark-downs. A retailer can createa stronger emotional connect with the consumer as the experience is not just the store experience but also the product experience. An outside brand could be purchased from any outlet. This is not so in the case of private labels, so the product experience keeps bringing the consumer back The question is: why would retailers want to get into the trouble of launching an own brand when there are "n"number of local, regional and national brands for practically all kinds of prod

ucts? The reasons are multifold.

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