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CHAPTER 2
RETAIL IN INDIA
TMH Swapna Pradhan Retailing Management 3ed.1
Learning Objectives
The evolution of retail in India Key sectors in Indian retail Factors affecting the growth of retail in
India The aspect of FDI in retail Challenges faced by Indian retail
TMH Swapna Pradhan Retailing Management 3ed.
2
Retail In India: Some Facts & Figures
India has emerged as the fourth largest economy in the world in terms of Purchasing Power Parity
It is the twelfth largest consumer market in the world
Almost 21 million people are believed to be employed in the retail sector, which is 7% of the total national workforce
But, retail has not yet been accorded the status of an industry
TMH Swapna Pradhan Retailing Management 3ed.
3
The Concept Of Organised Retail
Unorganised sector- units whose activity is not regulated by any statute or legal provision, and/or those which do not maintain regular accounts
Unorganised form of retail - those forms of trade which sell an assortment of products and services ranging from fruits and vegetables to shoe repair
Organised form of retail- typically a multi-outlet chain of stores or distribution centres run by professional management
TMH Swapna Pradhan Retailing Management 3ed.
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The Evolution Of Retail In India
TMH Swapna Pradhan Retailing Management 3ed.
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Drivers Of Retail Change In India
Socio-economic factors Changing income profiles The age factor The changing role of women and the
evolving family structure The changing consumption basket Increased credit friendliness Geographical dispersion of market
potentialTMH Swapna Pradhan Retailing
Management 3ed.
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TMH Swapna Pradhan Retailing Management 3ed.
The Size Of Retail In IndiaSegment Composition Size (Rs.) Key players
Food and Grocery Fresh groceries, branded packaged foods, personal hygiene products and toiletries and dry unprocessed groceries
Total-1200,000 croreOrganised- 5000 crore
Food Bazaar, Subhiksha, Reliance Fresh
Food Services Fast Food, cafes, restaurants, locations offering catering services
Total-57,000 croreOrganised- 3,940 crore
McDonald’s, KFC, Jumbo King, Barista, Café Coffee Day
Clothing & Textiles Fabric manufacturers and readymade garments
Total-113,500 croreOrganised- 21,400 crores
Arvind Brands, Madura Garments, Raymond’s, Park Avenue
Consumer Durables Televisions, refrigerators, washing machines, air conditioners and microwaves
Total-41,500 croreOrganised- 4,300 crore
Strong regional players- Videocon Plaza, BPL Gallery, Vijay Sales
Footwear Footwear for men, women and children
Total-13,750 croreOrganised- 5200 crore
Bata, Metro Shoes, Lakhani, Adidas , Reebok
Jewellery Mainly, Gold Jewellery & diamonds
Total-52,000 croreOrganised- 1,450 crore
Tanishq, Gili
Books, Music and Gifts Various Books, Music and Gifts
Total-11,500 croreOrganised- 1,450 crore
Land Mark, Crossword, Higginbothams, Oxford Bookstore
7
Rural Realities: Beyond Urban Boundaries
What is rural? - Any habitation where the population density is less than 400 per
sq.km- Where at least 75 per cent of the male working population is
engaged in agriculture- Where there isn’t any municipality on board
Rural Retail opportunities
- Spurt in the purchasing capacity of farmers
- Marketable surplus of farm produce
- High incomes combined with low cost of living
- Consists of approximately 128 million households
Current key players- ITC- e-choupal, Hariyali Kisan BazaarsTMH Swapna Pradhan Retailing
Management 3ed.
8
Foreign Direct Investment In Retail
IMF-OECD Glossary of FDI terms and definitions
“Foreign direct investment reflects the objective of obtaining a lasting interest by a resident entity in one economy (‘‘direct investor’’) in an entity resident in an economy other than that of the investor (‘‘direct investment enterprise’’). The lasting interest implies the existence of a long-term relationship between the direct investor and the enterprise and a significant degree of influence on the management of the enterprise. Direct investment involves both the initial transaction between the two entities and all subsequent capital transactions between them and among affiliated enterprises, both incorporated and unincorporated."
In short, FDI is a method of allowing external finance into an economy.
TMH Swapna Pradhan Retailing Management 3ed.
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In India, FDI in retail is not allowedAn international retailer can enter the
Indian retail market through- Hi-Tech items/ items requiring specialized
after sales service Social sector items Medical and diagnostic items Items sourced from the Indian small sector Two-year test marketing
TMH Swapna Pradhan Retailing Management 3ed.
10
Foreign Direct Investment In Retail
Challenges To Retail Development In India
Lack of recognition as an industry High costs of real estate Very high stamp duties on transfer of
property Lack of adequate infrastructure Multiple and complex taxation system
TMH Swapna Pradhan Retailing Management 3ed.
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TMH Swapna Pradhan Retailing Management 3ed.
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Potential Entrants
Substitutes
Suppliers Buyers
Industry Competitors
Rivalry among existing firms
Source: Competitive Strategy, Michael Porter, pg 4
Bargaining power of suppliers
Threat of new entrants
Threat of substitute products or services
Bargaining power of buyers
Five Forces Of Competition