Organzed Retail in India. Opportunities and Challenges

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<ul><li><p>7/31/2019 Organzed Retail in India. Opportunities and Challenges</p><p> 1/9</p><p>Organized Retail in India</p><p>Opportunities &amp; Challenges</p></li><li><p>7/31/2019 Organzed Retail in India. Opportunities and Challenges</p><p> 2/9</p><p>Current Scenario</p><p> Today retailing is largest contributing sector to</p><p>country's GDP i.e. 10% as compared to 8% in China,6% in Brazil.</p><p> Modern retailing is capable of generatingemployment opportunities for 2.5 million people by</p><p>2010 in various retail operations and over 10million additional workforces in retail supportactivities.</p><p> Organised retail which presently account for only 4-</p><p>6% of the total market is likely to increase its shareto over 30% by 2013.</p><p> The total size of industry stands at $475 Billion andis expected to touch $650 Billion by 2015-16.</p></li><li><p>7/31/2019 Organzed Retail in India. Opportunities and Challenges</p><p> 3/9</p><p> Organized retailing is growing at 8%</p><p> 2nd largest contributor to GDP afteragriculture at 20%.</p><p> Pattern of consumption changing along withshopping trends.</p><p> Consumer spending increasing at 11%annually.</p><p> Almost 25 million sq. ft. retail spaceavailable.</p><p> Paradigm shift in shopping experience forconsumers pulling in more people.</p><p> Shortage of quality retail spaces ataffordable rates.</p><p> Government regulations on developmentof real estate(Urban Land Ceiling Act)</p><p>Need to provide Value for Money-squeezing margins</p><p> Lack of industry status.</p><p> Retail revolution restricted to 250 millionpeople due to monolithic urban-rural divide.</p><p> Lack of huge investments for expansion</p><p> Increasing urban population-moreparticipants in retail revolution.</p><p> Increase in consuming middle class</p><p>population. Social factors, like dual household income</p><p>has enhanced spending power.</p><p> Spends moving towards lifestyle productsand esteem enhancing products.</p><p> Average grocery spends at 42% of monthly</p><p> spends-presents a huge opportunity.</p><p> Increase in use of credit cards.</p><p> Rising rental costs affecting project viability Poor monsoons and low GDP Growth could</p><p>affect consumer spending Archaic labour laws are a hindrance to</p><p>providing 24/7 shopping experience. Personalized service offered by Kirana stores</p><p> Unavailability of qualified personnel tosupport exponential growth in retail.</p><p> Differentiate taxation laws hinderingexpansion</p><p>Opportunities</p><p>Strengths Weaknesses</p><p>Threats</p></li><li><p>7/31/2019 Organzed Retail in India. Opportunities and Challenges</p><p> 4/9</p></li><li><p>7/31/2019 Organzed Retail in India. Opportunities and Challenges</p><p> 5/9</p><p>30%</p><p>21%</p><p>7%</p><p>7%</p><p>14%</p><p>21%</p><p>Major Infrastructural problems in Organized Retail</p><p>Industry in India</p><p>Parking</p><p>Public TransportSquatting</p><p>Sewerage</p><p>Power Supply</p><p>Low Govt. investment</p></li><li><p>7/31/2019 Organzed Retail in India. Opportunities and Challenges</p><p> 6/9</p><p>Subhiksha</p><p>(Non-operational)</p><p>High Volume and Low Margin</p><p>Model</p><p>Low Price and Low</p><p>Margin</p><p>Fresh Fruit and</p><p>Vegetables, grocery,</p><p>pharmacy and mobile</p><p>phone</p><p>Faced in balancing in</p><p>mad expansion plan</p><p>and in deciding demand</p><p>prone product mix.</p><p>Pantaloon One stops shopping model(Over 2, 50,000 SKUs.) Maximising on Grossmargin Branded and Privatelabel apparel, Personal</p><p>care products, leather</p><p>products, Books, Music,</p><p>Toys,</p><p>Consumer durables,</p><p>Home Furnishing, Food</p><p>and Grocery</p><p>MRP Laws, Rising Realestate Price,</p><p>Unavailability of Land.</p><p>Reliance Fresh Farms to forks model is</p><p>adopted to operate business.</p><p>Disintegrates</p><p>intermediary andreduce cost of fresh</p><p>produce.</p><p>Fresh fruit and</p><p>vegetables, staples,FMCG and Dairy</p><p>products</p><p>Political Interface and</p><p>people movementsagainst the retail giant</p><p>at various places</p><p>Vishal Megamart Small format models which</p><p>later on</p><p>converted into hypermarket</p><p>model. Focusing on lower</p><p>middle income group</p><p>Price suit to every</p><p>targeted customer</p><p>House Hold</p><p>merchandise, groceries,</p><p>Footware, toys, home</p><p>furnishing, mobile</p><p>phones, watches,</p><p>toileteris items.</p><p>Managing the</p><p>expansion plans with</p><p>supervising demands of</p><p>consumers and keeping</p><p>economic of</p><p>scale high.</p><p>Globus Departmental Store Amazing Price suited to</p><p>every YOUTH.</p><p>Apparel for men,</p><p>women, kids and</p><p>accessories</p><p>Managing the</p><p>expansion plans with</p><p>supervising demands of</p><p>consumers and keeping</p><p>economic of scale high.</p><p>Coupon Mall One stop model targeting TierII and III cities.</p><p>Big Brand, big discount Apparel, Jewellery,luggage, home</p><p>furnishing</p><p>It will take time toposition the brand in</p><p>the mind of customer </p></li><li><p>7/31/2019 Organzed Retail in India. Opportunities and Challenges</p><p> 7/9</p><p>Recommendations</p><p> There is a need for setting up of Retailers Co-operatives</p><p>which function as distribution centres and warehouses. Itwill help the retailers to buy the products they wantdirectly from original manufacturers in bulk quantity.</p><p>Mergers of weak retailers and buy out weak retailers by astronger one are other important steps. This will give newretailers the desired leverages to be world class.</p><p>Networking of Independent firms believing the use oftechnology for business excellence and pressurizingsuppliers and others channel members to use compatibletechnology.</p></li><li><p>7/31/2019 Organzed Retail in India. Opportunities and Challenges</p><p> 8/9</p><p>Suggestions</p><p> Accord Industry Status to Retail : Industry status should be given to improve retail development, tofacilitate organised financing and to establish insurance norms.</p><p> Incentives for Investments : Tax holidays norms for cold storage chains, infrastructure and investments insupply chain should be enacted.</p><p> Comprehensive Legislation : Comprehensive legislation should be drafted and enacted with futuristicapproach.</p><p> Eliminating Archaic Laws : Laws, Essential Commodities Act, APMC Acts, Licensing restriction, differentialtaxes, stamp duties, should be simplified and put in proper place so that it would not hinder growth of retailsector. This will help in creating "Commodities Futures Markets".</p><p> Allow Foreign Direct Investment (FDI) in phased manner : Allow foreign direct investment in the</p><p>company according to financial planning. Rationalise the tax structure : The current multipoint taxation should be rationalised. Government should</p><p>introduce a uniform taxation system across the country to relax the law that hinder inter state flows of goods.</p><p> Amend the existing cumbersome labour laws: The existing labour laws needs to be amended on an urgentbasis in order to support the growth the growth of organised retailing and to develop India as a sourcing hub.</p><p> Announce a national policy for retail: The Government should announce a National Retail Policy thatallows the coexistence of both organised and unorganised retail and address issues such as sourcing, contractfarming, movement of goods across India and also defines clear cut guidelines for the functioning of retailsector in India.</p><p> Establishment of National Commission on Retail: The national commission on retail must be established.</p><p> Streamline the process of clearance</p><p> Encourage PPP model for infrastructural development</p><p> Reduce impediments to inter state movement of goods</p><p> Enforce uniform quality standards</p><p> Setup a regulatory body for the governing the operations of retail sector.</p></li><li><p>7/31/2019 Organzed Retail in India. Opportunities and Challenges</p><p> 9/9</p><p>References</p><p> Sanjay Manocha and Anoop Pandey, Organized Retailing in India :Challenges and Opportunities, VSRD International Journal of BusinessManagement Research, Vol. 2 (3), 2012, 65-80.</p></li></ul>

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