retail case of strategic management

7/30/2019 retail case of strategic management

http://slidepdf.com/reader/full/retail-case-of-strategic-management 1/22

WHAT LIES IN STORE FORTHE RETAILING INDUSTRY

IN INDIA?*

CASE ON :



RETAIL INDUSTRY ININDIA:

Ques 1. Identify the

opportunities & threats thatthe retailing industry in India

offers to local & foreigncompanies.



Environment threat and opportunity profile(ETOP) for a Retail industry in India :

ENVIRONMENTALSECTORS

NATURE OF IMPACT IMPACT OF EACHSECTOR

ECONOMICFAVOURABLE

The Indian consumersbehavior pattern haschanged. Now the Indianconsumer gets more hefty

pay- packages, isyounger, a large number of women are working,western influences, andmore disposable incomehave opened a lot of

opportunities in Indianorganized retail sector.The Indian consumer wants to shop, eat and getentertainment in one placeand is have given Indianorganized retail sector

an opportunity to grow.



POLITICAL FAVOURABLE

The Indian government in2005 allowed foreigndirect investment (FDI) insingle brand retail to 51%.This have opened up a lotof opportunities in Indiaorganized retail sector. In

fact 325 departmentalstores, 300 new malls, and1500 supermarkets arebeing built which showsthe tremendousopportunities in theorganized retail sector in

India.



POLITICAL UNFAVOURABLE

The Indian governmenthave allowed 51% foreigndirect investment (FDI) inthe India retail sector toone brand shops only.This have made the entryof global retail giants to

organized retail sector inIndia difficult. This is achallenge being faced bythe Indian organized retailsector.



REGULATORYUNFAVOURABLE

The biggest challengefacing the Indianorganized retail sector isthe lack of retail space.With real estate pricesescalating due toincrease in demand fromthe Indian organizedretail sector, it is posinga challenge to itsgrowth. With Indianretailers having to shellout more for retail space

it is effecting thereoverall profitability inretail.



MARKET FAVOURABL

E

Growth of Retail Companiesin India is still not yet in amatured stage with greatpotentials within this sectorstill to be explored. Theorganized retailing sector inIndia is only 3% and isexpected to rise to 25- 30% by

the year 2010. The Growth ofRetail Companies in India ismost pronounced in the metrocities of India, however thesmaller towns are also notlagging behind in this.



TECHNOLOGICAL FAVOURABLE

The availability ofsupply chainmanagement,

customer relationshipmanagement &merchandisingsoftware can helpmuch whileperforming activities

such as ordering &tracking inventoryitems, warehousing,transportation &customer profiling. ITis a tool that has been

used by retailersranging fromAmazon.com to eBayto radically changebuying behavioracross the globe.



SUPPLIER UNFAVOURABLE

The supplier environmentoffers the biggestconstraint on the growthof retailing industry inIndia. Reaching India’s

consumers costeffectively is a distribution

nightmare, owing to thesheer geographical size ofthe country and thepresence of traditional,fragmented distribution &retailing networks &erratic logistics.



External factor analysis summary(EFAS) : Retail industry in IndiaExternal strategic factors Weight Rating Weighted

Score

OPPORTTUNITIES :1. Indian consumer behavior

pattern has changed,ushering in a revolution inmodern shopping.

2. Growth in foreign directinvestment (FDI) in retail to51% in India.

3. The organized retailingsector in India is only 3%and is expected to rise to 25-30% by the year 2010.

4. IT implementation ensuresthe retailers capture the rightinformation, which flows toeveryone back office staff tothe head office managers.

0.15

0.5

0.10

0.05

4.0

3.5

3.0

2.5

0.60

0.18

0.30

0.13



External Strategic factors Weight Rating WeightedScore

THREATS :

1. Trained Manpower Shortageis a challenge faced byOrganized Retail sector inIndia.

2. Cut-throat competition fromthe 12 million mom-and-popstores. These are easily

accessible and provideservices like free homedelivery and goods at credit.

3. It is also facing challenges inthe form of shortages for management professionals,cash flow, supply chainmanagement and frauds.

4. Ambiguous PoliticalEnvironment.

0.05

0.15

0.10

0.05

2.5

4.0

3.0

2.5

0.13

0.60

0.30

0.13



Ques 2. Prepare an ETOP

for a company interestedin entering the Retailing

Industry in India.



ETOP for Wal-Mart : 'Wal-Mart Stores, Inc. is the world's largest

retailer, with $256.3 billion in sales in the fiscalyear ending Jan. 31, 2004. The companyemploys 1.6 million associates worldwidethrough more than 3,600 facilities in theUnited States and more than 1,570 units.



Environment threat and opportunityprofile (ETOP) for Wal-Mart : ENIRONMENTALSECTORS

NATURE OF IMPACT IMPACT OF EACHSECTOR

ECONOMIC

FAVOURABLE

The Indian consumersbehavior pattern haschanged. Now the Indianconsumer gets more hefty

pay- packages, isyounger, a large number of women are working,western influences, andmore disposable incomehave opened a lot of opportunities in Indian

organized retail sector.The Indian consumer wants to shop, eat and getentertainment in one placeand is have given Wal-Mart an opportunity togrow.



POLITICALUNFAVOURABLE

The Indian governmenthave allowed 51%foreign directinvestment (FDI) in theIndia retail sector to onebrand shops only. Thishave made the entry ofglobal retail giants toorganized retail sectorin India difficult. This is

a challenge being facedby the Wal-Mart in Indianretail sector. Being aglobal retailer meansthat you are exposed topolitical problems in thecountries that youoperate in.



MARKET UNFAVOURABLE

Being number one meansthat you are the target ofcompetition, locally andglobally. Cut-throatcompetition from the 12million mom-and-popstores. These are easily

accessible and provideservices like free homedelivery and goods atcredit.





RETAILING INDUSTRYEVOLUTION IN INDIA: The emergence of the neighborhood ï¿½Kiranaï¿½ stores

catering to the convenience of the consumers

Era of government support for rural retail: Indigenousfranchise model of store chains run by Khadi & VillageIndustries Commission

1980s experienced slow change as India began to open upeconomy.

Textiles sector with companies like Bombay Dyeing,Raymond's, S Kumar's and Grasim first saw theemergence of retail chains

Later Titan successfully created an organized retailingconcept and established a series of showrooms for itspremium watches

The latter half of the 1990s saw a fresh wave of entrantswith a shift from Manufactures to Pure Retailers.

For e.g. Food World, Subhiksha and Nilgiris in food and



Post 1995 onwards saw an emergence of shopping centers, Mainly in urban areas, with

facilities like car parking Targeted to provide a complete destination

experience for all segments of society .

Emergence of hyper and super markets trying to

provide customer with 3 Vï¿½s - Value, Varietyand Volume

Expanding target consumer segment: The Sachetrevolution - example of reaching to the bottom of

the pyramid. At year end of 2000 the size of the Indian

organized retail industry is estimated at Rs.13,000 crore

Retail today has changed from selling a productor a service to sellin a ho e an as iration and



SOME FACTS OF RETAILINDUSTRY IN INDIA:

Retail Sector is the most booming sector in the Indianeconomy. Some of the biggest players of the worldare going to enter the industry soon. It is on thethreshold of bringing the next big revolution after the

IT sector. Although organized retail market is not sostrong as of now, it is expected to grow manifolds bythe year 2010. The sector contributes 10% of theGDP, and is estimated to show 20% annual growthrate by the end of the decade as against the currentgrowth rate of 8.5%. A CRISIL report says that theIndian retail market is the most fragmented in theworld and that only 2% of the entire retailing businessis in the organized sector. This suggests that the

potential for growth is immense. There are about 300



Estimates and predictions for retail sector:

At present, the industry is estimated to be atmore than US$ 400 billion by a study of McKinsey.

The Economist Intelligence Unit (EIU)

estimates the retail market in India willincrease to US$608.9 billion in 2009 fromUS$394 billion in 2005.

KPMG Report says that the organized retailwould grow at a higher rate than the GDP inthe next five years.

The retail sector would generate employment

for more than 2.5 million people by the year



Some of the players present in the industry:

Archies, Bata India Ltd, Big Bazaar,Crossword, Ebony Retail Holdings Ltd.,Fabmall, Food Bazaar, Globus Stores Pvt.Ltd., Health and Glow, Liberty Shoes Ltd.,MTR Foods Ltd., Music World EntertainmentLtd., Pantaloon Retail India Ltd., ShoppersStop, Style SPA Furniture Ltd, Subhiksha,

Titan Industries, Lifestyle, etc. New entrants entering the market soon will

be:

Reliance Retail Ltd, Wal-Mart Stores,Carrefour Tesco Boots Group etc

Documents

retail case of strategic management