Manufacturers look forward to the following gains: Organized retail would stimulate progress as well as improve efficiency: Manufacturers

s felt that the advent of modern retail will stimulate their growth as well. Initially, this will be because of increased demand created by organized retailers in order to fill retail shelf space, and, subsequently, because of increased consumption created by the consumers exposures to categories and brands at modern retail formats. They also felt that the need to service large buyers demanding lower prices and greater efficiencies will force large manufacturers to invest in people, processes, and technology to streamline their own production and distribution operations.

Organized retail will aid development of new FMCG categories. Manufacturers anticipate that organized retail will help in the development of new product categories particularly higher priced categories, categories that have a high degree of consumer involvement and those which benefit from consumer touch and feel like personal care products and eatables. Further, since modern retail facilitates faster customer feedback, they will be able to effect improvements in products and brands and go to market faster.

Organized retails sourcing and distribution network will benefit manufacturers. Manufacturers felt that, currently, most of organized retail is operating through the traditional supply chain with its multiplicity of intermediaries. As organized retail grows and large retailers have their distribution centers (DC) and IT infrastructure in place, manufacturers will be able to supply directly to these retailers. This would help reduce transaction costs on logistics, packaging, credit, commissions, etc. Elimination of intermediaries would also bring in more transparency in the flow of operations.

FDI in Single-Brand Retail

While the precise meaning of single-brand retail has not been clearly defined in any Indian government circular or notification, single-brand retail generally refers to the selling of goods under a single brand name. Up to 100 percent FDI is permissible in single-brand retail, subject to the Foreign Investment Promotion Board (FIPB) sanctions and conditions.

These conditions stipulate that: Only single-brand products are sold (i.e. sale of multi-brand goods is not allowed, even if produced by the same manufacturer).Products are sold under the same brand internationally Single-brand products include only those identified during manufacturing. Any additional product categories to be sold under single-brand retail must first receive additional government approval.

FDI in single-brand retail implies that a retail store with foreign investment can only sell one brand. For example, if Adidas were to obtain permission to retail its flagship brand in India, those retail outlets could only sell products under the Adidas brand. For Adidas to sell products under the Reebok brand, which it owns, separate government permission is required and (if permission is granted) Reebok products must then be sold in separate retail outlets.

FDI in Multi-Brand Retail

FDI in multi-brand retail generally refers to selling multiple brands under one roof. Currently, this sector is limited to a maximum of 49 percent foreign equity participation.

These are positive step and it will encourage international brands to set up shop in India. On the other hand, this will also lead to competition among Indian players. It will be the consumers who stand to gain. This would not change the market dynamics immediately as it will take some time for these plans to fructify. The growing dominance of multinational companies in the country's $200 billion retail business, had warned that any move to increase FDI in the retail sector would ruin the business of small and medium traders scattered over the country.

Organized retailers in India are opposing the entry of MNCs in retail trading because of their predatory pricing strategy that wipes out competition, when the Government decides to allow foreign players to enter the retail space; it should first restrict them to lifestyle products segment before permitting them to spread their wings into other areas like grocery marketing that has a direct impact on `kirana stores'.

FDI in retail trade has forced the wholesalers and food processors to improve, raised exports, and triggered growth by outsourcing supplies domestically. FDI in retail sector has been a key driver of productivity growth in Brazil, Poland and Thailand. This has resulted in lower prices to the consumer, more consumption and higher profit for the producer.

Impact of organized retail on unorganized Retail

China, which brought in global retailers like Wal-Mart in 1996, has just about 20 per cent of organized retail meaning the argument that unorganized retail gets decimated, is fallacious. 1. FDI in retailing was permitted in China for the first time in 1992. Foreign retailers were initially permitted to trade only in six Provinces and Special Economic Zones. Foreign ownership was initially restricted to 49%. 2. Foreign ownership restrictions have progressively been lifted and, and following Chinas accession to WTO, effective December, 2004, there are no equity restrictions. 3. Employment in the retail and wholesale trade increased from about 4% of the total labour force in 1992 to about 7% in 2001. The numbers of traditional retailers were also increased by around 30% between 1996 and 2001. 4. In 2006, the total retail sale in China amounted to USD 785 billion, of which the share of organized retail amounted to 20%. 5. Some of the changes which have occurred in China, following the liberalization of its retail sector, include: Over 600 hypermarkets were opened between 1996 and 2001 The number of small outlets (equivalent to kiranas) increased from 1.9 million to over 2.5 million Employment in the retail and wholesale sectors increased from 28 million people to 54 million people from 1992 to 2001

THE EFFECTS OF FDI IN RETAIL TO INDIAN FARMERS AND CONSUMERS 1. Wal-Mart will provide better prices to Farmers One of the biggest arguments in favour of Big Box Retail has been that this will eliminate multiple layers of middlemen thereby giving better prices to the farmers. In theory this does sound very plausible, but in practice by eliminating layers of middleman Big Box retail manifests itself instead as the single biggest middleman leading to an Oligarchy very few Big Box retailers providing limited choice for both the farmers and end consumers. Empirical evidence in developed countries tells us that in reality the farmers get squeezed by Big Retailers and get paid very poorly for their produce: - Farmers in Punjab have supposedly benefitted by indulging in Contract Farming for Bharti-Wal-Mart, PepsiCo (Lays Chips) etc. But there have also been reports of big firms entering into contract farming agreements with the farmers and then going back on their commitment when the produce is available cheaper from other sources.

2. Wal-Mart will not threaten local Kirana stores as they will build stores far away from urban centres The business model of Wal-Mart in the US has been to build massive stores in the suburbs offering free parking to shoppers. Real Estate availability and low car ownership makes that model unviable in India. That doesnt Wal-Mart will employ same strategy in India. Look at Tesco in the UK, almost every street/area has a small Tesco store which resembles a local Kirana Shop. Why will not Big Box retail adopt that model in India? Lately Wal-Mart in the US plans to open smaller shops called MiniExpress which resembles to take on local mom n pop stores.

3. Wal-Mart will provide additional employment One of the biggest arguments in favour of Wal-Mart has been that it will provide additional employment. Entry of big retail is touted to create millions of additional jobs. This again is not supported by experiences in the west. Indian Retail largely dominated by family owned Kirana stores already employs more than 4 million people. In addition to these a significant number of people work in the supply chain and distribution areas. The government only talk about the jobs Wal-Mart is expected to created but does not consider the jobs that will be lost due to shutting down of thousands of Kirana stores. What this means is that in the near future an owner of Kirana store may end up becoming a minimum wage labourer in a Big Box Retail store.

4. Wal-Mart will provide better wages to workers It is argued that Wal-Mart will help get workers get better pay. This is far from the truth. Wal-Mart is a cost competitor driving down costs of suppliers, farmers and employees to ensure low prices can be offered to consumers and large profits for the shareholders. Wal-Mart is known to provide one of the lowest paying jobs. Empirical evidence and studies show this: - Wal-Marts average annual pay of $20,774 is below the US Federal Poverty Level for a family of four 5. - Wal-Mart employees earn 20 percent less than retail workers on average. - Wal-Mart not only drives down wages of its own employees but also reduces wages in supporting industries. National Employment Law Project (NELP) study shows that WalMarts outsourcing depresses wages In U.S. Warehouses

5. Wal-Mart will bring in much needed FDI Wal-Mart is touted to bring in the much needed FDI into India by making it mandatory to invest $100 million into the country. This looks to be very good proposition but there are lot of ifs and buts: - Will this investment be made via Mauritius route to ensure no taxes can be levied on any future transactions? - Like it happened in the case of Dabhol and 2G scam tainted telecom companies, which were touted as FDI turned out to be a big NPA on Indian banks as the proposed FDI dollars were in reality rupee loans. - Most importantly over the year how much of money from India will be taken away by Wal-Mart as profits for its US Shareholders?

6. Wal-Mart will provide technology I find this particular argument hilarious. What is the propriety technology that WalMart will bring? Indian IT services firms are some of the biggest providers of technology services to the likes of Wal-Mart. Why cannot existing Indian Retailers get access to the same technology?

7. States have the freedom to prevent entry of Big Box Retailers This is one of the biggest canards being spread by the government. India is a signatory

to the Bilateral Investment Promotion & Protection Agreement (BIPAs) which makes it mandatory for the state governments to let the likes of Wal-Mart operate. It simply means if Reliance Retail or Foodworld has shops in West Bengal, Mamata Banerjee cannot ban foreign retailers alone! In addition a Kerala HC judgment struck down the previous Left Front government decision to ban Indian Big Retail under the Shops & Establishments act If Wal-Mart truly provided all the benefits being claimed why does our government shy away from telling us that Wal-Mart is banned in many big cities of the US like New York, San Francisco, San Diego and so on? By eliminating middleman, distributors and small time retailers, Wal-Mart has become the single biggest middleman gobbling away all the profits from the farm to the fork, thus helping the founder Sam Waltons family earn a combined wealth in excess of $100 billion which is roughly equal to the wealth of the bottom 40% of Americans combined. Do we in India want emulate the US and help accelerate this wealth of the Waltons at the cost of our farmers, consumers and Kirana shop owners is the big question.

Other Benefits FDI in retail is expected to bring the investment and expertise necessary to modernize and develop the farm and manufacturing sector. Analysts estimate that the retail market in India, currently worth $500 billion, will grow to $1.3 trillion by 2020. Organized retail is expected to reach 20-25% of total retail by 2020 (from a current 56%). The prospect of higher growth in the food and grocery category is particularly attractive because over fifty percent of Indias workforce is employed in the farm sector. Therefore, advocates see a significant role for FDI for the economic development of the country as a whole. FDI proponents also point to the employment potential of the food retail sector, specifically in aggregators and low-level processors. They project that such investment would create new off-farm jobs for 50-60 million low-skilled workers, enough to absorb new entrants to the work force as well as those potentially displaced by the market efficiencies introduced by FDI (projected to be a segment of small farmers). FDI would also bring investment in post-harvest infrastructure that would increase the shelf-life of produce and minimize food wastage (now as high as 20-30%). Moreover, new investment would result in other positive externalities such as better seeds and stricter standards that would increase quality and productivity while lowering costs. FDI in retail should also be cross-cutting and modernize not only retail and agriculture, but also manufacturing.

Out of the companies that responded to this survey, 23% were established before 1990. Players like Tribhovandas Bhimji Zaveri, Nilgiris, and Bombay Swadeshi Stores, to name a few, have been successfully operating in the sector for decades. Over the past five decades any of todays retail majors like Vijay Sales, Khadims, Fabindia, Rhythm House and Apollo Pharmacy made headway for the sector and mostly operated only in the metros; however, the scenario changed dramatically postliberalization. The Indian Retail Industry is the 5th largest retail destination and the second most attractive market for investment in the globe after Vietnam as reported by AT Kearneys seventh annual Globe Retail Development Index (GRDI), in 2008.The growing popularity of Indian Retail sector has resulted in growing awareness of quality products and brands. The whole of Indian retail has made life convenient, easy, quick and affordable. Indian retail sector specially organized retail is growing rapidly, with customer spending growing in unprecedented manner. It is undergoing metamorphosis. Till 1980 retail continued in the form of kiranas that is unorganized retailing. Later in 1990s branded retail outlet like Food World, Nilgiris and local retail outlets like Apna Bazaar came into existence. Now big players like Reliance, Tatas, Bharti, ITC and other reputed companies have entered into organized retail business. The multinationals with 51% opening of FDI in single brand retail has led to direct entrance of companies like Nike, Reebok, Metro etc. or through joint ventures like Wal-mart with Bharti, Tata with Tesco etc. The retail industry in India is currently growing at a great pace and is expected to go up to US$ 833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018 at a CAGR of 10%. As the country has got a high growth rate, the consumer spending has also gone up and is also expected to go up further in the future. In the last four years, the consumer spending in India climbed up to 75%. As a result, the Indian retail industry is expected to grow further in the future days. By the year 2013, the organized sector is also expected to grow at a CAGR of 40%. The key factors that drive growth in retail industry are young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets. Also, rising incomes and improvements in infrastructure are enlarging consumer markets and accelerating the convergence of consumer tastes. Liberalization of the Indian economy, increase in spending per

capita income and the advent of dual income families also help in the growth of retail sector. Moreover, consumer preference for shopping in new environs, availability of quality real estate and mall management practices and a shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc. also contributes to the spiral of growth in this sector. Furthermore, the Internet revolution is making the Indian consumer more accessible to the growing India is going through a radical economic change. Though it is in a very infant stage, people can feel the climate is changing. The unorganized retailers takes the lion's share in the Indian retail sector, but the organized retailers are growing at a good pace, and have increased 10%. This is to be the largest sector after the agricultural sector. The increase in the number of consumers twinned with the introduction of organized sector has brought numerous corporate investments in retail sector. The entry of super markets, enormous departmental stores, and shopping malls has encouraged the retailers to look at new business plans of expansion. An economic growth on a monumental scale is offered by the Indian retail sector, equally in the national and international market which in turn will generate a huge source of employment and a variety of options for the consumers. The retail scenario in India is unique. Much of it is in the unorganized sector, with over 12 million retail outlets of various sizes & formats. Almost 96% of these retail outlets are less than 500 sq. in size, the per capita retail space in India being 2 sq. compared to the US figure of 16 sq. Indias per capita retailing space is thus the lowest in the world. With more than 9 outlets per 1000 people India has the largest number in the world. Most of them are independent and contribute as much as 96% to the retail sales. Because of the increasing number of nuclear families, working women, greater work pressure and increased commuting time, convenience has become a priority for Indian consumers. They want everything under one roof for easy access and multiplicity of choice; this offers an excellent opportunity for organized retailers in the country.

The growth and development of organized retailing in India is driven by two main factors lower prices and benefits the consumers cant resist. According to experts, economies of scale drive down the cost of supply chain, allowing retailers to offer more benefits offered to the customer.

Contribution to the economic growth: Better quality products and services would lead to better competition More exports bring more foreign direct investments Organized Indian retail sector would encourage tourism Along with the employment boom there would be a vast development in the expertise of the human resource There would remain future scope for improvements in agriculture, small, and medium scaled with the help of the Indian retail sector

Retail sector is witnessing exponential growth in Indian market hence promising the employment for larger population of India in every geographical sector. Indian retail sector is rapidly growing; the companies are doing their expansion & entering into new market. The increased competition & potential of semi urban & rural market is leading companies to enter in the new semi urban market, which in result generating huge number of employment in this sector. Companies are giving good packages for the employees to get good talent & to retain best talent. It is the great opportunity for the youngsters of India to get good job. But at the same time if they want a good

career in this sector they need to develop their skills, qualification & need to do quality hard work.

The growth of organized retail will enhance the employment potential of the Indian economy. While providing direct employment in retail, it will drive the growth of a number of activities in the economy which in turn will open up employment opportunities to several people. This includes the small manufacturing sector especially food-processing, textiles and apparel, construction, packing, IT, transport, cold chain, and other infrastructure. It may adversely affect employment in unorganized retail and the trade intermediaries associated with the traditional supply channels but the additional jobs created will be much higher than those that are lost. An important point to be noted is that while the jobs that organized retail displaces are the low-end, low-quality, underproductive ones, the new jobs created are the high quality, productive ones. It also generates a number of jobs for unskilled labour for the tasks of sorting, grading, labelling, etc. Finally, but most importantly, the employment generated by organized retail is building a quality labour class that is gaining vocational training in skilled and unskilled jobs at the graduate and tenth class level. To meet the growing demand of trained professionals in the retail industry, several management and training institutes conforming to the international standards of certification have been launched across the country. Foreseeing the demand for trained staff, leading organized retailers are creating their captive human resources pool through internal training and programmes and tie-ups with retail management schools.

Foreign direct investment (FDI) in the retail sector is likely to create as many as 10 million jobs in a span of 10 years, making it the largest sector in organised employment, says a report. According to Indian Staffing Federation (ISF), an apex body of the flexi staffing industry in India, FDI in retail can create around 4 million direct jobs and almost 5 to 6 million indirect jobs including contractual employment within a span of 10 years.

EMPLOYMENT GENERATION BY INDIAN ORGANIZED RETAIL SECTOR Lots of employment generation by Indian Organized Retail Sector in the near future. India is going through a radical economic change. Though it is in a very infant stage, people can feel the climate is changing. The unorganized retailers take the lion's share in the Indian retail sector, but the organized retailers are growing at a good pace, and promise an increase of proportion. This is to be the largest sector after the agricultural sector. The increase in the number of consumers twinned with the introduction of organized sector has brought numerous corporate investments in retail sector. The entry of super markets, enormous departmental stores, and shopping malls has encouraged the retailers to look at new business plans of expansion. An economic growth on a monumental scale is offered by the Indian retail sector, equally in the national and international market which in turn will generate a huge source of employment and a variety of options for the consumers. The Ernst & Young's report 'The Great Indian Retail Story', anticipates that the Indian retail sector would come up with 13 million employment opportunities within the year 2013.

STRATEGY Overview: In the last two lessons, we have seen the meaning of retailing, functions and importance of retailing, and the overview of retailing. Further we have also seen various types of In - store and non-store retailing in general and department stores chain stores and franchise in particular. In this lesson we will look into the function of strategy, elements of retail strategy, and achieving competitive advantage and positioning.

Function of a strategy The primary purpose of a strategy is to provide a method, route, way or channel with the clean direction to follow in managing a business over the planning period. A successful strategy should satisfy three requirements.

First, a strategy must help to achieve coordination among various functional areas to the organization. Second, strategy must clearly define how resources are to be allocated. At any level of the organization, resources are limited. Strategy entails allocating resources to achieve the goals set with in the time frame.

Third strategy must show how it can lead to a superior market position. A good strategy takes cognizance of existing and potential competitors and their strengths and weaknesses.

Retailers classified by marketing Strategies Whatever its form of ownership, a retailer must develop marketing mix strategies to succeed in its chosen target markets. In retailing, the marketing mix emphasizes product assortment, price, location, and promotion and customer services designed to aid in the sale of a product. They include credit, delivery, gift wrapping, product installation, merchandise returns, store hours, parking and- very important personal service.

We will now describe the classification of retail stores, paying particular attention to the following three elements of their marketing mixes: Breadth and Depth of Product assortment Price Level Amount of customer services.

Type of store

Breadth & depth of Assortment Very broad, deep Broad, shallow

Price level

Amount of customer service Wide array Relatively few

Department store Discount store

Avoids price competition Emphasis low prices

Limited-line Specialty Off-price retailer Super market Convenience Care house club

Narrow, deep Very narrow, deep Narrow, deep Broad, deep Narrow Very broad

Traditional type avoid price competition Avoids price competition Emphasis low prices low prices High prices Low prices

Vary by type Standard Few Few Few Few

Stores of different sizes face distinct challenges and opportunities. Buying, Promotion, Staffing and expense control are influenced significantly by whether store's sales volume is large or small. Size of a retail business creates certain merits Small retailers face a variety of difficulties and many fail. The strong economy during the second half of the 1990s helped small merchants hold their own, however. In fact the number of failures was lower than last decade and just below the level at the start of the decade. How do small retailers succeed? They understand their target markets very well. Then, in seeking to satisfy their consumers, they need to differentiate themselves from large retailers. Here are two possible avenues not just to survival but to success. Many consumers seek benefits that small stores often provide better than large stores. For instance, some people seek high levels of shopping convenience. Small outlets located near residential areas offer much convenience. Other consumers desire abundant personal service. A small store's highly motivated owner-manager and customer-oriented sales staff may surpass a large store on this important shopping dimension. Numerous small retailers have formed or joined contractual vertical marketing systems. These entities called voluntary chains or franchise systems - give members

some of the advantages of large stores, such as specialized management, buying power and a well-known name. OPERATING EXPENSES AND PROFITS Total operating expenses for retailers average 28% of retail sales. In comparison wholesaling expenses run about 11% of wholesale sales or 8% of retail sales. Thus roughly speaking, retailing costs are about 2l/2 times of the costs of wholesaling when both are stated as a percentage of the sales of the specific type of middlemen. Higher retailing costs are the result of dealing directly with ultimate consumers-answering their questions, showing them different products and so on. Compared to wholesale customers, ultimate consumers typically expect more convenient locations with nicer decor, both of which drive up retailers' costs. Also relative to wholesalers, retailers typically have lower total sales and lower rates of merchandise turnover. Retailers buy smaller quantities of merchandise, again compared to wholesalers, so their overhead costs are spread over a smaller base of operations. Furthermore, retail sales people often cannot be used efficiently because customers do not come into stores at a steady rate. COMPETITIVE ADVANTAGE WITH SPECIAL REFERENCE TO PHYSICAL FACILITIES Another competitive advantage of retailers will be how they create physical facilities which represent the distribution element of a retailer's marketing mix. Some firms engage in non-store retailing by selling on hire or through catalogs or door to door, for example-but many more firms rely on retail stores. Firms that operate retail stores must consider four aspects of physical facilities.

LOCATION It is frequently stated that there are three keys to success in retailing: Location, Location, and Location! Although overstated, this axiom does suggest the importance that retailers attach to location. Thus a stores site should be the first decision made about facilities. Considerations such as surrounding population, traffic and cost determine where a store should be located. Size This factor means the total square footage of the physical store, not the magnitude of the firm operating the store. These are much different factors. A firm may be quite large with respect to total sales, but each of its outlets may be only several thousand square feet in size. Design This factor refers to a stores appearance, both interior and exterior over its competitor.

Layout The amount of space allocated to various product lines, specific locations of products and a floor plan of display tables and racks comprise the store's layout. As would be expected, the location, size, design and layout of retail stores are based on where consumers live and how they like to go about their shopping. Consequently, the bulk of retail sales occur in urban, rather than rural, areas. And suburban shopping areas have become more and more popular, where as many down town areas have declined.

ASSESSINGCOMPETITORSCURENT STRATEGIES The first part in competitor analysis is to determine how competitors are attempting to achieve their objectives. This question is addressed by examining their past and current marketing strategies.

MARKETINGSTRATEGY Many authors have attempted to explain the concept of strategy. At the retail level, a marketing strategy can be thought of three major components: target selection of customers, core strategy (i.e. positioning and differential advantage), and implementation (i.e. supporting marketing mix). The first major component is the description of the market segment(s) to which competing brands are being marketed. Market segments can be described in various ways. Since few brands are truly mass marketed, the key is to determine which group each competitor has targeted. The second strategy component is what is called the core strategy. This is the basis on which the rival is competing, that is its key claimed differential advantage(s).Differential advantage is a critical component of strategy because it usually forms the basic selling proposition around which the brand's communications are formed. It is also called the brand's positioning. The final strategy component of competitors that must be assessed in the supporting marketing mix. The mix provides insight into the basic strategy of the competitor and specific tactical decisions. These decisions are what customers actually see in the market place. In fact, customers are exposed to price, advertising, promotion and other marketing mix elements.

TECHNOLOGY STRATEGY An important task is to access the technological strategies of the major competitors. This can be done by using the following framework of six criteria. 1. Technology selection or specialization 2. Level of competence. 3. Sources of capability: Internal vs External 4. R&D investment level. 5. Competitive timing: Initiate vs Respond 6. Retail policies. These decisions generally lead to better understanding of retailers' competitors.

PORTERS FIVE FORCE MODEL:

1. Threat of New Entrants: One trend that started over a decade before has been a decreasing number of independent retailers. While the barriers to start up a new store are not impossible to overcome, the ability to establish favorable supply contracts, leases and be competitive is becoming virtually impossible. There vertical structure and centralized buying gives chain stores a competitive advantage over independent retailers. 95% of the market is made up of small, non computerized family run stores. Now there are finally signs that the Indian government dropping its traditional protectionist stance

and opening up its retail market to greater overseas investment. It has already allowed 51% ownership in single-brand goods leading to entry of McDonalds, Marks & Spencer, Body Shop and Ikea and with proposal of raising the ownership to 100% will attract more foreign retailers. Also with allowing investment by foreign retailers in multi-brand retailing in a phased manner will lead to more inflow of foreign investors in Indian retail sector. On the whole threat from new entrants in retail industry is high.

2. Power of Suppliers: Historically, retailers have tried to exploit relationships with supplier. A great example was in the 1970s, when Sears sought to dominate the household appliance market. Sears set very high standards for quality; suppliers that did not meet these standards were dropped from the Sears line. This could also be seen in case of Walmart that places strict control on its suppliers. A contract with a big retailer like Walmart can make or break a small supplier. In retail industry suppliers tend to have very little power.

3. Power of Buyers: Individually, consumers have very little bargaining power with retail stores. It is very difficult to bargain with the clerk at Big Bazaar for better price on grapes. But as a whole if customers demand high-quality products at bargain prices, it helps keep retailers honest. Taking this from Porters side of the coin we can say customers have comparatively high bargaining power in unorganized sector than in organized sector.

As the customer will demand products from organized units he will be more focused towards quality aspect.

4. Availability of Substitutes: The tendency in retail is not to specialize in one good or service, but to deal in wide range of products and services. This means what one store offers is likely to be same as that offered by another store. Thus threat from substitutes is high. 1. Competitive Rivalry: Retailers always face stiff competition and must fight with each other for market share and also with unorganized sector. More recently, they have tried to reduce cut throat pricing competition by offering frequent flier points, memberships and other special services to try and gain the customers loyalty. Thus retailers give each other stiff but healthy competition which is evident from their aggressive marketing strategies and segment policies.

Challenges before the Organized Retail Sector The organized retail sector has recently emerged from its nascent stage but has shown significant growth owing to the changing buying behavior of the Indian consumers. Retailing in India is gradually inching its way forward to become the next boom industry. But, the Indian educated class is yet to explore the options of a lucrative career in the organized retail sector. The challenges faced by the organized retail sector are: Shortage of desirable talent and lack of skilled manpower. The inefficiencies in the current supply chain and the presence of numerous intermediaries are difficult to curtail.

The quality of produce demanded by the consumer is still far from what our framers produce. The rapid growth of the organized retail segment is checked by the numerous clearances that are required to set up a retail outlet Lack of basic infrastructure like roads, power, water etc. is a major shortcoming that needs to be addressed in order to procure as well as supply on a pan India basis.

Property and real estate issues, Need of Huge capital, Competition from unorganized sector, Shortage of talented professionals, Stringent labor laws, Government restrictions on the FDI and Differential tax rates for various states Intrinsic complexity of retailing rapid price changes, constant threat of product obsolescence and low margins

Lack of Retailing Courses and study options Provision of training in handling, storing, transporting, grading, sorting, maintaining hygiene standards, upkeep of refrigeration equipment, packing, etc.

Quality regulation, certification & price administration bodies can be created at district and lower levels for upgrading the technical and human interface in the rural to urban supply chain.

Credit availability for retail traders must be encouraged with a view to enhancing employment and higher utilization of fixed assets. This would lead to less wastage (India has currently the highest wastage in the world) of perishables, enhance nutritional status of producers and increase caloric availability.

Several successful models of integrating very long food supply chains in dairy, vegetable, fish and fruit have been evolved in India. Cross integrations of these unique foods supply chains will provide new products in new markets increasing consumer choice, economic activity and employment.