Organized retailing in India: challenges and opportunities

Available ONLINE www.vsrdjournals.com

VSRD-IJBMR, Vol. 2 (3), 2012, 65-80

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1Assistant Professor, 2Associate Professor, 1,2MBA Department, BVIMR, New Delhi, INDIA. *Correspondence : [email protected]

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Organized Retailing in India : Challenges and Opportunities

1Sanjay Manocha* and 2Anoop Pandey

ABSTRACT

The retail landscape in India is changing rapidly and is being scrutinized by large scale investments by foreign

and domestic players. Market liberalization and changing consumer behaviour have sown the seeds of a retail

transformation. Indian retailing is growing fast and imparting the consumer preferences across the country.

Today retailing is largest contributing sector to country's GDP i.e. 10% as compared to 8% in China, 6% in

Brazil. Modern retailing is capable of generating employment opportunities for 2.5 million people by 2010 in

various retail operations and over 10 million additional workforces in retail support activities. Organised retail

which presently account for only 4-6 percent of the total market is likely to increase its share to over 30% by

2013.It offers huge potential for growth in coming years. India is becoming most favoured retail destination in

the world.

Keywords : Revolution, Market Liberalization, Modern Retailing Techniques, Consumerism, Challenges &

Opportunities.

1. INTRODUCTION

The emergence of Retail in India is cause for success of Indian organized Retail & Marketing. With the help of

modern management techniques we will become the specialist Retailers in future. We know that the relationship

between the Retailer & customer is very close than other chains of distribution.

India is a nation of shopkeepers. We can see more than 12 million retail outlets in India, and India has highest

density of retail outlets in the world. Retail Industry in India is at present estimated to be more than US $ 250

billion. On that part of organized retailing is estimated 3.5% i.e. $ 7.47 billion. In future by the year 2010 the

vision of Industry is to attain the goal which is estimated US $ 23 billion in organized retail.

Sanjay Manocha et al / VSRD International Journal of Business & Management Research Vol. 2 (3), 2012

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2. OBJECTIVES

This research Paper is prepared for following objectives:

To Check Growth & Development of Indian Retail Industry

To Check Impact of Organized Retailing in India.

To Check Challenges of Modern retailing In India.

Future of Modern Retailing in India.

At the end paper will cover each objective comfortably followed by conclusion and recommendation.

3. THE EVOLUTION OF RETAIL IN INDIA

While barter is considered to be the oldest form of retail trade, since independence, Retail in India has evolved

to support the unique needs to our country given its size and complexity. Haats, Mandis and Melas have always

been a part of the Indian landscape. They will continue to be present in most parts of the country and form an

essential part of life and trade in various areas.

The PDS or the Public Distribution System would easily as the single largest retail chain existing in the country.

The evolution of the public distribution of grains in India has its origin in the ‘rationing’ system introduced by

the British during the World War II. The System was started in 1939 in Bombay and subsequently extended to

other cities and towns. By the year 1946, as many as 771 cities / towns were covered. The system was abolished

post war, however, on attaining Independence, India was forced to reintroduce it in 1950 in the face of renewed

inflationary pressures in the economy.

Tracing the evolution of Indian retail would be incomplete without mention of the Canteen Stores Department

and the Post Offices in India.

The Khadi & Village Industries (KVIC) was also set up post independence. Today, there are more than 7,050

KVIC stores across the country. The Co-operative movement was again championed by the government which

set up Kendriya Bhandras in 1963. In Maharashtra, Bombay Bazaar, which stores under the label Sahakari

Bhandar, and Apna Bazaars run a large chain of Co-operative stores.

In the past decade, the Indian marketplace has transformed dramatically. However from the 1950’s to the 80’s

investments in various industries was a limit due to the low purchasing power in the hands of the consumer and

the Governments policies favoring the small- scale sector? It was at this time that many steps towards

liberalization were taken in the period of 1985-90. It was at this time many restrictions on private companies

were lifted, and in the 1990’s the Indian economy slowly progressed from state led to becoming ‘market

friendly’.

While independent retail stores chain like Akbarally’s Vivek’s and Nalli’s have existed in India for a long time,

the first attempts at organized retailing were noticed in the textiles sector. One of the pioneers in this field was

Raymond’s which set up stores to retail fabric. It also developed a dealer network to retail its fabric. These


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Dealers sold a mix of fabrics of various textile companies. The Raymond’s distribution network today of 20,000

retailers and over 429 showrooms across the country.

Other textile manufacturers who also set up their own retail chains were reliance – which set up Vimal

Showrooms – and Garden Silk Mills with Garden Vareli. It was but natural that with the growth of textile retail,

readymade branded apparel could not be far behind and the next wave of organized retail in India saw the likes

of Madura Garments, Arvind Mills, etc, set up showrooms for branded mens wear. With the success of the

branded mens wear store, the new age departmental store arrived in India in the early nineties.

Fig. 1: Evolution of Retail in India

This was in a sense, the beginning of new era retail in India. The fact that post liberalization, the economy had

opened up and a new large middle class with spending power had emerged, helped shape this sector. The vast

middle class market demanded value for money products, a better shopping ambience, more convenience and

one stop shopping. This has fuelled the growth of departmental stores, supermarkets and other specialty stores.

The concept of retail as entertainment came to India with the advent of mails. The development of malls is now

visible not only in the major metros but also in the other parts of the country.

4. LITERATURE REIVEW

Retail marketing has become Buzzword in the modern business scenario. It being an important component of

the service sector, has played a vital role in restructuring the economies both in developed as well as the

developing countries. The present worth of the global retail Industry being 6.6Tn. Dollars. It is a famous adage

“Retailers are Billionaires and Billionaires are Retailers”. The global practices in the world such as availability

of large variety of retail Formats such as Hypermarkets, supermarkets, Departmental stores and Mega Malls

were initially considered as the Western Concepts but their relevance in the developing countries presently in

Asia, Africa and Latin America cannot be undermined. The innovative business practices and trends evolving on

global basis such as variety of Retail Formats, Increased Customer focus, FDI/Franchising arrangements, along

with Multiple sourcing, Visual Merchandising, Automated retailing through Vending and E-Tailing and the

presence of Private brands has resulted in not only enriching the retail business giants but also provided the

consumers with the International shopping experiences and Convenience. The relevance of these upcoming

trends for the transitional and developing economies is immense particularly in the perspective of different types

Traditional Formats

Itinerant Salesman Haats Moles Mandis etc

Established Formats

Kirana Shops Convenience Company PDS / Fair Price

Stores Co-operative

Stores Pan


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of political set-ups, Social preferences and objectives, economic conditions, prevailing legal environment and

input technological levels available with them. It also serves them as a guide to develop and implement their

own indigenous retail strategies. The difference in the mega and micro environments of developing nations from

the developed ones is to be carefully analyzed before applying the international business practices and a proper

SWOT analysis has become the need of the hour.

The Retail Market in India has undergone significant changes in the last 10 years. The organized retail market is

expected to grow 25-30 % annually and would triple in size from the current US $ 330 billion to US $ 427

billion by 2010 & US $ 637 by 2015. Retail is contributing 10% to our GDP and is the largest source of

employment after Agriculture. The Indian market has seen vast changes in political, Economic and Social

environment which has a great impact on Consumption. The retail Market has been divided into traditional and

the organized sector with the entry of both Indian and the foreign corporates. Likewise is the scenario in the

Market in Delhi/NCR.

The Indian market has witnessed vast improvements in political, Social &economic environment which

indirectly has also great impact on the Consumption pattern. Now with the entry of both the India and the

foreign Corporate in the Indian Retail scenario the market has got division into the Traditional and the organized

sector. The Indian retail scenario is facing the same issues and challenges as the Mom and Pop stores in other

developing nations with the emergence of big box retailers. The various issues to be faced are such what would

be the future pattern of consumption with what type of formats preference by the consumer and whether it will

lead to effect on the Unorganized traditional retailers. This research is developed to overcome this gap.

Organised retail segment has been growing at a blistering pace, exceeding all previous estimates. According to a

study by Deloitte Haskins and Sells, organised retail has increased its share from 5 per cent of total retail sales in

2006 to 8 per cent in 2007. The fastest growing segments have been the wholesale cash and carry stores (150 per

cent) followed by supermarkets (100 per cent) and hypermarkets (75-80 per cent). Further, it estimates the

organised segment to account for 25 per cent of the total sales by 2011.Driven by changing lifestyles, strong

income growth and favourable demographic patterns, Indian retail is expanding at a rapid pace. Mall space,

from a meagre one million square feet in 2002, and to touch an estimated 60 million square feet by end-2008,

says Jones Lang LaSalle's third annual Retailer Sentiment Survey-Asia.

The frenetic pace of development in retail sector has led to estimates by Goldman Sachs that the Indian

economic growth could actually exceed that of china by 2015. It is a common belief that this country has

immense potential to deliver the faster growth over next 50 years. (Source: India’s Economic growth may beat

China by 2015: Goldman Sachs, Asia Pulse, Feb7, 2005) In the year 2004, the ratio of organized-Unorganized

retail was 3:97 which is expected to be 9:91 by 2010.It is not only the global players such as Walmart, Tesco,

Carrefour trying to capture the retail pie in Indian market but also the Indian domestic corporate behemoths like

Reliance, AV Birla Group, Bharti group etc. doing the same at a galloping pace.

The consumer decision making process is a complex phenomenon. The purchase of goods or services includes a

number of factors that could affect each decision. There are still various issues to be addressed such as the

Customers patterns of Consumption, The customer preference regarding the Types of Retail Format and

influence of Shopping Malls on the Consumer Purchase Behavior. Also whether the rise of the Modern


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Organized Retailing will lead to affect the Traditional unorganized Retailers. Furthermore the Comparative

Analysis regarding the acceptability of the mall concept and the impact of Shopping Malls on the general living

standard of the society are being considered. There is increased sophistication in Customers shopping pattern

which has led to emergence of big retail chains in metros, mini metros and towns now becoming the next target.

There is a drastic change in the customer’s tastes and preferences leading to radical transformation in their

lifestyle and the spending patterns thereby giving rise to new business opportunities. This generic growth, driven

by changing lifestyle and strong increment in income is to be supported by the favorable demographic patterns.

The development of Mega malls in India is adding a new dimension to this booming retail sector. The groups of

visionary corporates working constantly to improve upon urban shopping experience through the Shopping

Malls concept is the latest move in the retail sector.

India is a nation of shopkeepers as well as Shoppers. It is a common practice that retailers and marketers often

strive to learn how and why people shop. The decision making regarding purchase of goods and services has

become more complex and includes a number of factors which are important for Consumers. They are wooed by

Advertising, news articles and direct Mailings providing ample information in this IT Age along with the mixed

messages. The addition of a number of variety store, goods stores and shopping Malls with the availability of

Multi-component products and Electronic purchasing capabilities have played a crucial role in widening the

choice for Consumers and have complicated Decision Making( Halfstrom et.al., 1992)

According to study by Sproles and Kendall (1986), the Consumer Decision Making style can be defined as a

mental orientation characterizing a consumers approach to making choices. The consumer decision making style

can be broadly classified into three types of approaches such as

The Psychographic / Lifestyle Approach

Consumer Typology Approach (CT)

Consumer Characteristics approach

The Psychographic or lifestyle focuses in several hundreds of characteristics related to Consumer Behaviour, the

CT Approach classifying consumers into various types while Consumer Characteristics approach focusing on

several cognitive dimensions of consumer decision making (cf Fan et al,1998)

The consumer behavior literature suggests that the Academicians and researchers are interested in knowing the

underlying decision style of shoppers. The consumers approach shopping with certain decision making traits

which combine together to form the Consumer Decision making style. They are identified into various

categories such as economic shoppers, personalizing shoppers, ethical shoppers, apathetic shoppers, store loyal

shoppers, recreational shoppers, Convenience shoppers, price oriented shoppers, Brand loyal shoppers, Name

conscious shoppers, problem solving shoppers, quality shoppers, fashion shoppers, Brand conscious shoppers,

and impulse shoppers etc. (Bellenger & Korgaonkar,1980,Darden and Reynolds 1971,stone 1954, William,

Painter and Nicholas ,1978,Moschis,1976,Stephenson and Willet,1969)

By using the Consumer characteristics approach, Sprole (1985) developed 50 Items to profile the consumer

decision making style. He used the data collected from 111 undergraduate women in two classes at the


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University of Arizona and employed a factor Analysis technique, Sproles found the Six Consumer decision

making styles. He described the traits as

Perfectionism

Value Consciousness

Brand Consciousness

Novelty Fad-Fashion Consciousness

Shopping Avoider Time Saver Satisficer

Confused, support seeking Decision Maker

In a later study Sprole & Kendall (1986) developed a comprehensive Instrument called CSI or Consumer Style

Inventory to measure decision making styles. The instrument was administered to 482 students in 29 Home

economics classes in five High schools in the Tuscon Arizona area (cf; Fan J.X.1998). this instrument measured

eight mental characteristics of consumer decision making such as Perfectionism, Brand Consciousness, Novelty

fashion consciousness, recreational, price value consciousness ,impulsiveness, confused by over-choice and

Brand loyal/Habitual ( cf; Mitchell, Vincent Wayne,2001)

The Indian consumer and his behavioral response towards the development of organized retail can be attributed

to the economic and social changes taking place in the country. The growing fragmentation of consumers into

multiple segments with different values and buying priorities is the natural outcome. They have become more

pragmatic, educated and demanding learning the time and money management. The Value for Money concept

rather than simply low prices has become the order of the day. The study by ETIG (Economic Times

Intelligence Group also confirm this. According to Sen (2000), in case of Hypermarkets main motives of

preference in decreasing order are low prices, possibility of buying everything at same place and general

appearance of the store. Other investigations emphasize the co-existence of several store

formats(Chandrashekhar,2001) while other studies point out the relationship between the type of store and the

type of Products(Sen,2000,Bhatnagar,2002).These studies indicate the utility of specialized and traditional

stores for fresh products, while

Hypermarkets are chosen for general shopping and also frozen foods, groceries and beverages. Perishables have

less chance of selling through the Hypermarkets.

The literature refers to a great diversity of methodologies, to varying temporal and spatial contexts and to

different store types which makes both generalizations and typology construction difficult. Simply the emotional

and affective perspective will not work rather the functional and objective attributes will guide the decision

regarding the store patronage such as Price, product quality (Doyle and Fenwick,1974-

75.Beaden,1977),Assortment and Location(Stephenson,1969,Schiffman et.al,1977) .Concerning the emotional

and intangible attributes, the most important one are atmosphere and store characteristics Sales Personnel and

Advertising (Martineau,1958,Stephenson,1969)


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5. RESEARCH METHODOLOGY

5.1. Research Objectives

The following objectives for the research work were formulated.

To Check Growth & Development of Indian Retail Industry

To Check Impact of Organized Retailing in India.

To Check Challenges of Modern retailing In India.

Future of Modern Retailing in India.

5.2. Research Design

The research design for the present study was basically descriptive and exploratory in nature. The study started

with exploratory research design in order to have a deeper insight of the changing retailing environment. This

help the researcher formulate the research hypothesis for the present study. The descriptive research design was

used to describe the relationship between various dependent / Independent variables which were explored during

exploratory study.

5.3. Limitation of Research

The present study is largely exploratory in nature. Thus not withstanding its richness of data, it lacks control of

variables (either through experimental design or through statistical techniques) influencing the research results.

Time is a constant factor, so our expectations are not fully satisfied; there is a scope to improve it.

6. PRESENT SCENARIO OF RETAIL INDUSTRY IN INDUSTRY

India is witnessing changing life styles, increased incomes, the demographic variabilities and vibrant

democracy. Indian retailing is expanding and is expected to reach at US$637 billions by 2015.Modern retail is

soon capturing 22% share in total retail by 2010 with the expansion of 12 millions outlets and provision of

creating 1.5 millions jobs in 2 to 3 years. The industry is playing vital role in the economic growth of the

country. The concept of shopping is moving in and around hypermarkets, supermarkets, specialty stores and in

other formats.

Changing life styles are promoting changes in retail environment. Time constraints and traffic congestion,

increase in disposable incomes has created a need for new types of retail format. Getting the right product at

right time at lowest possible cost is an advantage of consumers in the edge of retail transformation.

Table 1 : Global Scenario of Organised Retail

Country

Share of Organised

Retail (in %)

Share of Unorganized

Retail (In %)

Remarks


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India 6 94 Immense Opportunity for the growth of organized retailing.

China 20 80 Organised retail growth phase is going on. South Korea

15 85 Immense opportunity for the growth of modern retailing

Indonesia 25 75 Organised retailing is developed. Philippines 35 65 Organised retailing is developed Thailand 40 60 Organised retailing is highly developed Malaysia 50 50 Organised retailing is highly developed.

(Source: Articles on Retailing in Business Line, www.thehindubusinessline.com)

Table 2 : Evolution of Modern Retailing in India

Decade / Years

Description

Early 1980's Peddlers, vegetables, vendors Neighbourhood kiran store, sole clotting on consumer durables 1980-1990 Few organized retail players from textile industry –Bombay Dyeing, Raymond, S Kumars,

Grasim 1991 Turning Point with liberalized economy, i.e. dilution of stringent laws, NAZ, International

players enter into Indian Market

Table 3 : Journey of Organised Retail in India

Year Growth Function 2000 First Phase Entry, Growth, Expansion, Top Line forces 2005 Second Phase Range, Portfolio, Former Options 2008 Third Phase End to end supply chain management, Backend operation, Technology, Process 2011 Fourth Phase M&A, Shakeout, Consolidation, High Investment

(Source: A Report by Ernst Young for IBEF,www.ibef.org/download%5c Retail_220708.pdf)

Table 4 : Gaurav Path for Indian Retail

Year Retail Market ($US billion)

Retail Space (mn. sf.)

Organised Retail Penetration (%)

2004 275 31 3 2006 300 52 4 2008 353 90 7 2009 383 145 9 2010 416 200 12

(Source: Assocham conference on Re-inventing retail in New Delhi on 26th September 2008,

www.assocham.org/events/recent/event_271/vikas_visal.pdf.)

Table 5 : Types of Modern Formats : Characteristics of Formats

Hypermarket It ranges from 50000 -100000 sqft. Offers a large basket of products, ranging from grocery, fresh and processed food, beauty and household products, clothing and appliances, etc

Supermarket Supermarkets, generally large in size (4000-25000sqft.) and typical in layouts, offer not only household products but also food as an integral part of their services. The family is their target customer and typical examples of this retailing format in India are Apna Bazaar, Sabka Bazaar, Haiko, Nilgiri's, Spencer's from the RPG Group, Food Bazaar from Pantaloon Retail, etc.

Department Store

It caters variety of consumer needs. It ranges from 10000 – 60000 sqft. Examples are Shopper Stop ,Pentaloon, Westicides, Ebony, Life Style, Dubai Based etc.

Specialty Store

It focuses on special market segments and generally ranges from 2000-5000 sqft.

Discount Store

Factory outlets provide an opportunity to get discount on MRP. Products category can be perishable /or non perishable.


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Convenience Store

400-2000 sqft.

MALL Largest forms of modern retailing range from 60000 sqft. To 700000 and above sqft. It provides ideal shopping experiences with products, services and entertainment under one common roof. Examples are City Mall36,Pentaloon Pyramid and Shoppers Stop etc.

(Sources: www.iimcal.ac.in/community/consclub/ppts/retail.ppt (PPT. of Lakshmi Narayana Swamy and

Mudit Sharma, IIMCAL), AND ICRIER Study on Impact of Organised Retailing on Unorganised Sector 2008)

Table 6 : Modern Retail Formats Used In India Retailers Cities Format Stores Expansion BigBazaar 26 Hypermarket 36 225 stores by 2010 Spencer's All India Hypermarket 7 60 by 2008-09 Star India Bazaar

Ahmadabad Hypermarket 1 2 more store are planned in Mumbai and Bangalore

Shoppers Stop Mumbai Hypermarket 1 23 stores by 2010 Vishal Megamart

28 Hypermarket 46 410 stores by 2010.

Reliance Retail

Hyderabad ,Delhi, Jaipur, Mumbai

Hypermarket 100 1000 hypermarkets.

Food Bazaar 28 Supermarket 49 250 stores by 2009 Nilgiri 16 Supermarket 29 170 by 2009 Sabka Bazaar Delhi Supermarket 25 Mega Expansion plan Trumart 5 Supermarket 11 128 Stores by 2010.

(Source: Techno Pak Analysis on Retail Outlook 2007 and FICCI Retail Report 2007: Organised Retailing:

Unfinished Agenda and Challenges Ahead)

7. ORGANISED/MODERN RETAILING

Indian corporates major like Reliance, ITC, Bharti, Tatas, Rahejas, Piramals and Pantaloons have entered into

the segments but more and more players are showing interest in USD350b (APPROX.) Indian Retail Market.

Growth of organised retailing is limited to few metros, state capitals, tier I and tier II cities where no. of middle

and higher income people is large and choice of high priced products they sought for.

8. RURAL RETAIL FORWARD MARKET

Country rural market is offering great opportunities for Modern retailers for opening of stores in villages.46% of

rich and well-off population is living in rural areas and 60% of them are living in 17% of total villages. It creates

good scope for investment in rural areas in retailing.

9. ADVANTAGE MODERN RETAILING

1) Employment Generation

2) Increasing efficiency in Agriculture

3) Enhance shopping experience for consumers

4) Creating a positive social Change

5) Economies of Scale

Employment Generation: Modern retailing has the potential for generating employment of 2.5millions people


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by 2010 in various retail operations and more than 10millions in indirect retail activities including contract

production and processing, supply chain and logistics, retail real estate development and management.

Increasing efficiency in Agriculture : The concept of middleman in food supply chain is matter of yesterday.

Farmers are cultivating crops as per the demand of retailers. Customers are getting benefits of reduced pricing

while the farmers are receiving higher returns for their produce. Only organized retail provides mass marketing

of processed and package foods.

Enhanced shopping experience for consumers: Trends of shopping with entertainment is gaining momentum

because of time and traffic congestion. An organised retail offers one stop shopping with many product baskets

at single location. These formats add experience of large scale purchase, consumer preference, excellent

ambience and choice of merchandising.

Creating Positive Social Change : Retailing leads to improvement in local infrastructure by providing

adequate parking facilities, ATM, a safe and secure environment which encourages the setting up of 24 hrs.

Convenience stores, a hygienic ambience to the consumer's etc. This is enabling positive social change in the

industry.

10. ECONOMIES OF SCALE

They are going for vertical integration from outlets to establish malls.

Table 7 : Challenges to Organised Retailing

Challenges Implication Fragmented Supply Chain High wastage and high product cost Multiple Legislative Laws Hinder fast expansion and increase overall cost. Cumbersome Labour Laws Limits organized retail business of 24*7 Escalating real estate prices Higher operational costs Complexity in tax structure Rate, classification and procedure is different across the country Shortage of Manpower Beginning of specialized training centre and specialized course on retail Cultural Disparity Understanding customer choice and preferences is different Industry status Far away from benefits of Industry status

Figure 1


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11. KEY PLAYER ANALYSIS : (Subhiksha, Pantaloon, Reliance Fresh, Vishal Mega mart, Coupon Mall, Trent, Globus, Mother Dairy)

11.1. Subhiksha

Subhiksha was the retail venture of the Chennai-based, Vishwapriya Group. The Subhiksha Trading Services

discount chain was launched in 1997.

Subhiksha Model : High Volume and Low Margin Model

This model focused on Small sized functional stores locating in high population density areas with close

proximity to each other.

Product Mix : Fresh Fruit and Vegetables, grocery, pharmacy and mobile phone.

Challenges Faced in balancing in mad expansion plan and in deciding demand prone product mix.

Today Subhiksha is no more in the market but it played vital role in popularizing modern retail in India.

11.2. Pantaloon

Pentaloon Retail India Limited is flagship of Future Group of Companies, based at Kolkatta. The group is

incorporated by Mr. Kishore Biyani. PRIL is the first retail store in hypermarket format. The group is

recognized as multi format retailers.

PRIL Model : One stops shopping model

Under one roof you can get vast range of merchandise with over 2, 50,000 SKUs.

Product Mix : Branded and Private label apparel, Personal care products, leather products, Books, Music, Toys,

Consumer durables, Home Furnishing, Food and Grocery.

Pricing Strategy : Maximising on Gross margin

Challenged Faced : MRP Laws, Rising Real estate Price, Unavailability of Land.

11.3. Reliance Fresh

Reliance Fresh is the venture of Reliance Industry Limited in foods and vegetables. It is first modern retail

enterprise in food sector which has potential of approx $500bilion market. It is one of the best examples of

agribusiness industries which boost economic integration in rural areas and villages.

Reliance Fresh Model : Farms to forks model is adopted to operate business. Small and medium size stores

vary from 1500 sqft. to 3000 sqft.

Product Mix : Fresh fruit and vegetables, staples, FMCG and Dairy products.

Pricing Strategy : Disintegrates intermediary and reduce cost of fresh produce.


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Reliance fresh is focusing on value to customer.

Challenged Faced : Political Interface and people movements against the retail giant at various places.

11.4. Vishal Megamart

Vishal Mega mart is established in 1986 in Kolkatta. The group is conglomerate today having 180 showrooms

across the country. Vishal is one of the fastest retail groups in India. The outlets cater to almost all price range.

Vishal Megamart Model : Small format models at the time of initial phase in tier I and tier II cities and later on

converted into hypermarket model. Focusing on lower middle income group.

Product Mix : House Hold merchandise, groceries, Footware, toys, home furnishing, mobile phones, watches,

toileteris items.

Pricing Strategy : Price suit to every targeted customer.

Challenges : Managing the expansion plans with supervising demands of consumers and keeping economic of

scale high.

11.5. Coupon Mall

It is retail arms of Prateek Life Styles. It came in existence in late 2007 in Bangalore. The group is focusing

upon middle class segment with big discount.

Coupon Mall Model : One stop model targeting tier II and III cities.

Product Mix : Apparel, Jewellery, luggage, home furnishing.

Pricing Strategy : Big Brand, big discount.

Challenges Faced : It will take time to position the brand in the mind of customer.

11.6. Trent

Trent is a flagship company of Tata Group established in 1998.The Company having four retail dimensions in

life style (WESTICIDES), Hypermarket Chain (STAR BAZAR), BOOKS AND Music Chain (LANDMARK)

and a complete family fashion store (FASHION YATRA.).

Trent Model : Multiple Format Model : Trent Limited was the first company in India to position itself as an

in-house single brand store in garments and household accessories. The firm's business model follows the

acquisition route with a strategy to get a jump start and take advantage of the already experienced manpower,

infrastructure, front-end property, and gained knowledge.

Pricing Strategy : The Westside clothing line is generally conceived to be slightly expensive compared to other

brand


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Challenges : Lack of Trained manpower, Attrition Rate.

11.7. Globus

It has been launched by Rajan Raheja Group in January 1998.Started from Indore and 24th the new one at

Nagpur, journey is continue with a mission to democratize fashion and be 'the' iconic youth fashion brand in

India. The store aim to create deep connections with the Indian youth through inspiring product design,

signature store experiences and compelling marketing. The concept of the Privilege Club which is the best way

to ensure 100% card to benefit ratio is the unique selling proposition of the store.

Product Mix : apparel for men, women, kids and accessories - work wear, campus wear, club and lounge

dressing and genres Western, Indian and mix-n-match. A well matched sizing ensures a good fit for the Indian

silhouettes.

Pricing Strategy : Amazing Price suited to every YOUTH.

Model: Department Store : At present the group is venturing into specialty stores.

Challenges Faced: Managing the expansion plans with supervising demands of consumers and keeping

economic of scale high.

11.8. Mother Dairy

Mother Dairy was established in 1974 with a view of making liquid milk available to city consumers. It is set up

by National Dairy Development Board under first phase of operation flood programme. Mother Dairy also

markets dairy products such as ice cream, dahi, lassi, butter cheese dairy whitener, Dhara range of edible oils

and Safal of fresh fruit and vegetables frozen vegetables and fruit juices.

Mother Dairy Model : Mother Dairy follows cooperative models. This model directs the formation of

federation, by the help of village level societies and district level unions, whose prime responsibilities is the

marketing of milk and milk products.

Pricing Strategy : Mother dairy ensures that farmers get market price by offering quality produce and also

provide the produce to the consumers at reasonable prices through minimizing costs.

Challenges Faced : Company is facing competition from other organised retailers and increased imports. The

quality of milk, low yields, falling cattle health are some major challenges faced by company.

12. CONCLUSION

Retailing provides a crucial link between producers and consumers in modern market economy. Retail in India

is most dynamic industry and represents a huge opportunity both for domestic and international retailers.

Modern retailing is not threat to independent Mom and Pop stores as most of the consumers said that they never

stopped visiting Kirana stores. They strongly agreed on coexistence of both is requirement of the day. Their

frequency of going to kirana stores is reduced but its kind of opportunities for reorienting Mom and Pop stores


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for attracting more customers. So, organised retailing is beneficial for India because it’s not alarming to create

conflict with unorganized stores but reshaping unorganized stores into budding/nascent organised stores.

Modern retailing has miles to go in India. The growth of modern formats has been much slower in India as

compared to other countries and the development of this sector is restricted by the presence of regulatory and

structural constraints.

13. RECOMMENDATIONS

13.1. Certain Steps Are Required To Make Indian Retailing World Class Is Mentioned Below

1. There is a need for setting up of Retailers Cooperatives which functions as distribution centres and

warehouses. It will help the retailers to buy the products they want directly from original manufacturers in

bulk quantity.

2. Mergers of weak retailers and buy out weak retailers by a stronger one are other important steps. This will

give new retailers the desired leverages to be world class.

3. Networking of Independent firms believing the use of technology for business excellence and pressurizing

suppliers and others channel members to use compatible technology.

13.2. Suggestion for Retail Reforms

1. Accord Industry Status to Retail : Industry status should be given to improve retail development, to

facilitate organised financing and to establish insurance norms.

2. Incentives for Investments : Tax holidays norms for cold storage chains, infrastructure and

investments in supply chain should be enacted.

3. Comprehensive Legislation : Comprehensive legislation should be drafted and enacted with futuristic

approach.

4. Eliminating Arachic Laws : Laws, Essential Commodities Act, APMC Acts, Licensing restriction,

differential taxes, stamp duties, should be simplified and put in proper place so that it would not hinder

growth of retail sector. This will help in creating "Commodities Futures Markets".

5. Allow Foregin Direct Investment (FDI) in phased manner : Allow foreign direct investment in the

company according to financial planning.

6. Rationalise the tax structure : The current multipoint taxation should be rationalised. Government

should introduce a uniform taxation system across the country to relax the law that hinder inter state

flows of goods.

7. Streamline the process of clearance

8. Encourage PPP model for infrastructural development


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9. Amend the existing cumbersome labour laws: The existing labour laws needs to be amended on an

urgent basis in order to support the growth the growth of organised retailing and to develop India as a

sourcing hub.

10. Announce a national policy for retail: The Government should announce a National Retail Policy

that allows the coexistence of both organised and unorganised retail and address issues such as

sourcing, contract farming, movement of goods across India and also defines clear cut guidelines for

the functioning of retail sector in India.

11. Establishment of National Commission on Retail: The national commission on retail must be

established. The function of commission should be :

a) To set clear target for giant retailers for procurement.

b) To formulate rules on entry of foreign players and compliance with social safeguards.

c) To develop cooperative stores for eradicating the problems of limited marketing and

promotions.

d) To facilitate the way of setting up Agricultural Perishable Produce Commission for ensuring

the procurement prices for perishable commodities.

12. Reduce impediments to inter state movement of goods

13. Enforce uniform quality standards

14. Setup a regulatory body for the governing the operations of retail sector.

14. LIMITATION OF RESEARCH PAPER

It will be plausible to note conditions of this study that limit the extent of legitimate generalizations and thus

limit the extent of legitimate generalization of this study. The shortcomings may be stated as follows:

14.1. Lack of in –depth Approach

Notwithstanding its comprehensive coverage, the present study may be criticized because it misses an in –depth

analysis of the type the psychologists or anthropologists have often conducted. The study has not been analyzed

by using any psychometric test or econometric test. The study is totally based on the practices being followed by

the industries and has been viewed from marketing point of view.

14.2. Retailing is a continuous process.

Retail marketing has been described as a race without a finish time. Because definitive answers to questions of

retailing are not always available and absolute retailing excellence is more an ideal than a realistic goal, it is best

to view e-tail as a series of small steps on a learning curve. This study too small is a step in this direction and

should be treated as a small contribution to the academic world.


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14.3. Accuracy and dependability of Interpretative material used as plausible Reasons

Most of the interpretative material used as plausible reasons for research findings of the present study consisted

of the opinions of executives and general masses from a number of industrial settings of different nature,

speculation and haunches of researcher rather than conclusions and inferences drawn from empirical studies.

Explicitly, this study must be viewed with circumspection and appropriate regard from human frailties.

15. REFERENCES [1] CRISIL Research-Retailing Annual Review 2009

[2] HSBC Global Research-India Consumer Brands & Retail, October 2007

[3] Tata Strategic Management Group-Organised Retailing in India: The next growth frontier, 2006

[4] The McKinney Quarterly-Tracking the growth of Indian Middle class, November 2007

[5] Idea taken from Research Article titled, “Retailing in India: The Way Ahead” written by Binod Kumar

Sinha, Faculty Member in ICFAI Business School Raipur.

[6] Various Press Sources, The Economic Times, The Hindu Business Line, The Indian Express, The Hindu,

The Business Standard

[7] Various websites. www.commerce.nic.in,www.rediff.com,www.timesofindia.com,

[8] www.indiaretailing.com

[9] www.indianmba.com

[10] Dutt, D.2004, ‘An outlook for Retailing in India, Vision2005’ (Form a presentation by KSA Technopak at

MDI Gurgaon in January and February).

[11] Kotler, Philip 2000, Marketing Management, 10th Ed., Prentice Hall of India Pvt Ltd, New Delhi.

[12] Knight Frank India Research (Mumbai) 2002, ‘Searching for space’, Praxis Business Line, January.

[13] Chandrasekhar, Priya 2001, ‘Retailing in India: Trends and opportunities’, Business Line: Catalyst,

February 15.

[14] Devasahayam, Madona 1998, ‘Big Deal’, Praxis Quarterly Journal on Management, August, Vol.2, No.2.

[15] Majumdar, S.2002, ‘FDI in retailing: India as a supermarket’, Business Line, Tuesday, Sep17.

[16] Kannan, S. 2001, ‘Huge potential awaits retailing’, Business line, Thursday, September 13.

[17] Jagannathan, V.2001, ‘Vivek’s – a store more reputed than the brands it sells’, Business Line, February 5.

[18] Bhushan, R.2002, ‘The show begins here’, Business Line, Thursday, December 26.

[19] Aroor, S. and Singh, S.2004, ‘Market Dynamics: Cigarette Retailer as The New King’, The Financial

Express, Net Edition, May 4.

[20] Delhi Economic Indicators, 2000-2001.

[21] SPICE 2003, Vol. 1 No.7.

[22] Gupta, R., ‘Pharma retailing gains momentum in India’, www.galtglobalreveiw.com

Organized retailing in India: challenges and opportunities

Business

management

consumer decision

tier ii cities

consumer characteristics

indian retail

indian retail

check growth

research design