FINAL FIELD WORK REPORT

ON

RETAIL STORES IN INDIA

SUBMITTED BY:

SUBMITTED TO:

Abhishek Anand
Abhishek Singh
Ajinkya Balsare
Alok Bhargav
Amit Sharma
Anand Mohan
Anoop Mangal
Anurag Tikku

Dr. Jyoti Mishra

TABLE OF CONTENT

1. Introduction

2. Objectives

3. Methodology

4. Company Profile

18

5. E-Retailing

21

6. Indian E-Retailing Scenario

24

7. Challenges of Retail sector in India

28

8.

Conclusions

38

9.

References

39

10. Questionnaire

40

ACKNOWLEDGEMENT

ABSTRACT
Retailing consists of all the activities involved in selling goods or services directly to the final
consumers for personal non-business use. A Retailer or Retail Store is any business enterprise
whose sales volume comes primarily from retailing
Any organization selling to final consumers-whether it is manufacturer, wholesaler or retailer-is
doing retailing. It does not matter how the goods or services are sold (by person, mail, telephone,
internet etc) or where they are sold (in store, on the street, or in consumers home).
Retailing is one of the pillars of the economy in India and accounts for 35% of GDP.The retail
industry is divided into organised and unorganised sectors. Over 12 million outlets operate in the
country and only 4% of them being larger than 500 sq ft in size. Organised retailing refers to
trading activities undertaken by licensed retailers, that is, those who are registered for sales tax,
income tax, etc. These include the corporate-backed hypermarkets and retail chains, and also the
privately owned large retail businesses. Unorganised retailing, on the other hand, refers to the
traditional formats of low-cost retailing, for example, the local kirana shops, owner manned
general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors.1
India is like growing child in the field of organized retailing and marketing, almost all Major
retail chain like-Big Bazaar, Reliance fresh, Shopper stop, Spencers, Fab-Mall and incoming big
one Bharti-Wal-Mart are focusing their energy on developing the retail outlets to reach the
customer and deliver the goods in better and faster and cheaper than its competitors.. So this
project is about different marketing strategies which are used by retailers. The strategy like buyer
behavior, mapping the market system, e-commerce, positioning & competitive advantage,
promotion, pricing & distribution and service marketing.

INTRODUCTION
Organized retail in India has the potential to add over Rs 2,00,000 crore ($45 billion) business by
the Year 2010 generating employment for some 2.5 million people in various retail
operations and over 10 million additional workforce in retail support activities including
contract production & processing, supply chain & logistics, retail real estate development &
management etc.
After leading the IT bandwagon, India is poised to grow as a Retail hub. It is imperative to
sustain the modernization of the retail sector and dispel the myth that the game is big Vs
small or traditional Vs modern or organized Vs unorganized or local Vs foreign. What is
needed is to create an appropriate environment to propel retail where all benefit.

6
India's huge population, has the potential for mammoth consumption if given the power of
spending and that is only possible through large scale development generating employment
which is already happening with retail as the driving force. Talking about the key challenge
areas for the retail growth the major concerns are over escalating real estate cost, scarcity of
skilled workforce and structured supply of merchandise which could be tacked in cooperation with the retail industry and the support organizations. Organized sector accounted
for Rs. 55,000 crore ($12.4 billion) business at current prices in the calendar year 2006
increasing its share to 4.6% of the total Indian Retail Value that stood at Rs. 12,00,000 crore
($270 billion).2 Moving forward, organized retailing is projected to grow at the rate of about
37 per cent in 2007 and 42 per cent in 2008. Going by the current growth trend and
considering the fact that existing prominent players in organized retail have stepped up their
expansion drive with Reliance announcing big plans and other Indian corporate houses too
evincing keenness on investing heavily in this sector as also the inking of the joint-venture
between the world's largest retailer Wal-Mart and Bharti The organized retail in India has
indeed gained top speed and is now on the verge of take-off. According to recent
predictions, of the Rs.12, 00,000 crore retail market, food & grocery retail is by far the
single largest block estimated to be worth a whopping Rs.7, 43,900 crore, but more than 99
per cent of this market is dominated by the neighborhood kirana stores. At present, India's
retail sector is largely unorganized, with about 15 million tiny outlets catering to consumer
needs across the country it employs the second-largest number of people after agriculture.
Organized retail is now focused primarily on the 300 million urban "middle classes'' and an
additional 200 million rural rich, who form a consumer market worth more than US$100
billion. So, there is enough ground for the modern and the traditional formats to co-exist.
The Indian economy is integrating with the world, and yet it simultaneously has its own
dynamics, which cushion global shocks as in no other country. India had kept the retail
sector largely closed to outsiders to safeguard the livelihood of nearly 15 million small
storeowners and only allows 51 per cent foreign investment in single-brand retail with prior
government permission. FDI is also allowed in the wholesale business. Single-brand
retailers such as Louis Vuitton, Fendi, L Ladro, Nike and Toyota can operate now on their
own. Metro is already operating through the cash-and-carry wholesale mode. The growth
of the Indian economy is now manifesting itself in the growing purchasing power of its
citizens. A ten to twelve per cent increase in the economy's disposable income and a much
higher one in urban areas are also reflecting itself in the way goods and services are bought
and sold.
REVIEW OF LITERATURE
Indian retail industry is the largest industry in India, with an employment of around 8% and
contributing to over 10% of the country GDP .Retail industry in India is expected to rise 25%
yearly being driven by strong income growth, changing life styles, and favorable demographic
patterns.
The network of retailer has reached every nook and corner of the country, so any product
produce anywhere in the country can be easily accessed by the buyers from any location. Thus,
the spatial convenience of Indian retailers is very high. According to ORG-MARG, the total
number of all kind of retail outlets in India was 51,30,000 during 1996-1997. This means that
one retail outlets exists against an average of almost 190 persons. Shopping in India has witness
2

7
a revolution with the change in the consumer buying behavior and also alteration in the whole
format of shopping .Indian retail is dominated by a large number of small retailers consisting of
the local kirana shop, owner-manned general stores, chemists, footwear shops , apparel shops ,
paan and beedi shops, hand cart hawkers, pavement vendors etc. Which together make up the
so called unorganized retail or traditional retail.

OBJECTIVES:

To understand Retail Industries of India

To study the perception of unorganized retail over organized retail store.

To study the effect of organized retail store over unorganized retail store.

To do SWOT analysis of unorganized retail store.

Hypothesis
H1. There is a significant difference in effect of organized retail store on unorganized retail
store. (i.e., unorganized retail type specific)
H2. There is an association between class of people and preference in retail choice (organized or
unorganized)

RESEARCH METHODOLGY:
Type of Research: Exploratory or Formulative Research

9
The research has been conducted within the data and information available to gain new insight
into Retail Industries and for the area specified i.e. ascertaining the factors which have a bearing
on setting

up of a Retail chain in India.

The current scenario is observed and an attempt has been done to relate the various variables.
Data collection process: The data collected is through secondary data.
The Secondary data was collected from various magazines, journals and visiting various
websites.
LIMITATION OF THE STUDY:

The scope of the topic chosen in very wide.

No primary research.

Time and money constraints.

Unavailability of data as Retail Industries is a new concept for Indian organized retail
market.

TABLE1: Unorganized retail share in different country

Country

Share of unorganized trade (per cent)

(2005)

India

47

China

37

Poland

60

Indonesia

50

Russia

43

Brazil

35

Thailand

40

Malaysia

55

USA

25

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More about Indian Retail :

Hypermarkets to be the preferred format for the international retailers entering India
Malls to move beyond the metros, increase presence in tier II cities
Organized retail penetration highest across footwear, clothing segment.

Franchising gaining steam with retailers.3

Retail sales in India amounted to be about Rs.7400 billion in 2002, expanded at an average
annual rate of 7% during 1999-2002. With the upsurge in economic growth during 2003, retail
sales are also expected to expand at a higher pace of nearly 10%. Across the country, retail sales
in real terms are predicted to rise more rapidly than consumer expenditure during 2003-08. The
forecast growth in real retail sales during 2003- 2008 is 8.3% per year, compared with 7.1% for
consumer expenditure.
Modernization of the Indian retail sector will be reflected in rapid growth in sales of
supermarkets, departmental stores and hypermarts. Sales from these large-format stores are set to
expand at growth rates ranging from 24% to 49% per year during 2003-2008, according to a
report by Euromonitor International, a leading provider of global consumer-market intelligence.
Table 2:
Retail
Trade

2005

2006

2007

2008

2009

2010

Retail Sales
15,409 17,360 19,465 21,715 24,215 27,107
(Rs Bn)
Retail sales
349.4 385.8 421.3 467.0 516.3 564.7
(Us $bn)
Retail Sales
volume
6.0
growth (%)

7.5

7.7

6.9

6.8

7.3

Retail sales
US$ Value 13.6
growth (%)

10.4

9.2

10.8

10.6

9.4

Source: EIU
The trends that are driving the growth of retail sector in India are:

Low share of organized retailing

Falling real estate prices
Increase in disposable income and customer aspiration
Increase in expenditure for luxury items

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Table 3: INDIA RETAIL: 2006

Retail Segments

India
Organised %
Retail
Retail
Organised
Value
(Rs.Crore) in 2006
(Rs.Crore)

Clothing, Textiles &

113,500
Fashion Accessories

21,400

18.9

Jewellery

60,200

1,680

2.8

Watches

3,950

1,800

45.6

Footwear

13,750

5,200

37.8

Health & Beauty care

3,800
services

400

10.6

Pharmaceuticals

42,200

1,100

2.6

Consumer
Durables,
Home
48,100
Appliances/equipments

5,000

10.4

Mobile
handsets.
21,650
Accessories & Services

1,740

8.0

Furnishings, Utensils,
Furniture-Home
& 40,650
Office

3,700

9.1

Food & Grocery

5,800

0.8

Catering Services (F &

57,000
B)

3,940

6.9

Books, Music & Gifts

13,300

1,680

12.6

Entertainment

38,000

1,560

4.1

743,900

US$ 270 US$ 12.4

Billion
Billion
Source: IMAGES F&R Research
Quick Stats of Indian Retail
Markets

Market size (total) 2006: US$ 300 bn/annum

Market size (total) 2010: US$ 427 bn/annum
Market size (total) 2015: US$ 637 bn/annum
Market size (modern retail) 2006: US$ 9-12 bn/annum
Market size (modern retail) 2011: US$ 60 bn/annum
Annual rate of growth (modern retail): 35%
Penetration (modern retail) 2006: 3 to 4%
Penetration (modern retail) 2010: 10%

12
Investment
New Investment by 2011: US$ 30 billion
Employment

No. of persons employed (total): 21 mn

No. of new jobs in next two years: 2 mn.

Wealth
No. of dollar designated millionaires in India (2006) 100,015
Retail Space

Typical space per outlet: 100 to 500 sq. ft.

Space occupied (modern retail): 35 mn sq. ft.
Operating Malls 2007: 114 (35 mn sq. ft.)
New Malls under construction: 361 (117 mn sq. ft.)
New space distribution: 65% (top 7 cities), 35% (tier II & III cities)
New space distribution (among top 7 cities): NCR 34%, Mumbai 23%, Rest 43%

The size of the opportunity

Research done by the Tata Strategic Management Group (TSMG) indicates that over the next 10
years, the total retail market in India is likely to grow at a compounded annual growth rate
(CAGR) of 5.5 per cent (at constant prices) to USD374 billion (Rs 16,77,000 crore) in 2015. The
organised retail market is expected to grow much faster, at a CAGR of 21.8 per cent to USD55
billion (Rs 246,000 crore) in the same time frame, garnering around 15 per cent of overall retail
sales. Based on our projections, the top five organised retail categories by 2015 would be food,
grocery and general merchandise; apparel; durables; food service; and home improvement.
(Table 3).

13

Table 3: Organised retail market in India (Rs crore)

Where is the opportunity?

Retailers inspired by the Wal-Mart story of growth in small town America are tempted to focus
on smaller towns and villages in India. However, a careful analysis of the town strata-wise
population, population growth, migration trends and consumer spend analysis reveals a very
different picture for India.
As per our estimates, the share of the 35 towns with a present population of greater than 1
million in India's total population would grow much faster than their smaller counterparts, from
10.2 per cent today to reach 14.4 per cent by 2025. Simultaneously, the share of these towns in
the overall retail market would grow from 21 per cent today to 40 per cent by 2025.
Within these top 35 towns, an estimated 70 to 80 per cent of retail trade could be in the organised
sector. This is similar to the experience in China, where in cities like Shanghai and Beijing, the
organised sector accounts for 70 to 80 per cent of overall retail trade in certain categories.
Retailers should therefore focus on the top 37 towns in the next decade, as the opportunity in

14
smaller towns and rural India would be smaller and more fragmented, compared to the larger
towns.

Table 3: Organised retail market in India

There are a few key trends that one observes in international markets that have a bearing on
India.
CATEGORIES OF INDIAN RETAIL
Corporate Houses
Tatas: Tata Trent
RPG group: Food World, Health and Glow, etc
ITC: Wills Life Style
Rahejas (Shoppers Stop), Hiranandani (Haiko), DLF (DT cinemas) etc.
Dedicated brand outlets
Nike, Reebok, Zodiac etc
Multi-brand outlets
Vijay Sales, Viveks etc
Manufacturers/ Exporters
Pantaloons, Bata, Weekender
Classifying Indian retail

15
Modern Format retailers
Supermarkets (Food world)
Hypermarkets (Big Bazaar)
Department Stores (S Stop)
Specialty Chains (Ikea)
Company Owned Company Operated

Traditional Format Retailers

Kiranas: Traditional Mom and Pop Stores
Kiosks
Street Markets
Exclusive /Multiple Brand Outlets

RETAILING FORMATS IN INDIA

Malls:
The largest form of organized retailing today. Located mainly in metro cities, in proximity to
urban outskirts. Ranges from 60,000 sq ft to 7, 00,000 sq ft and above. They lend an ideal
shopping experience with an amalgamation of product, service and entertainment, all under a
common roof. Examples include Shoppers Stop, Piramyd, and Pantaloon.
Department Stores:
Departmental Stores are expected to take over the apparel business from exclusive brand
showrooms. Among these, the biggest success is K Raheja's Shoppers Stop, which started in
Mumbai and now has more than seven large stores (over 30,000 sq. ft) across India and even has
its own in store brand for clothes called Stop!.
Specialty Stores:
Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer Crossword, RPG's
Music World and the Times Group's music chain Planet M, are focusing on specific market
segments and have established themselves strongly in their sectors.
Hypermarkets/Supermarkets:
Large self service outlets, catering to varied shopper needs are termed as Supermarkets. These
are located in or near residential high streets. These stores today contribute to 30% of all food &
grocery organized retail sales. Super Markets can further be classified in to mini supermarkets
typically 1,000 sq ft to 2,000 sq ft and large supermarkets ranging from of 3,500 sq ft to 5,000 sq
ft. having a strong focus on food & grocery and personal sales.
Discount Stores:

16
As the name suggests, discount stores or factory outlets, offer discounts on the MRP through
selling in bulk reaching economies of scale or excess stock left over at the season. The product
category can range from a variety of perishable/ non perishable goods
Convenience Stores:
These are relatively small stores 400-2,000 sq. feet located near residential areas. They stock a
limited range of high-turnover convenience products and are usually open for extended periods
during the day, seven days a week. Prices are slightly higher due to the convenience premium.

Department Stores:
Large stores ranging from 20000-50000 sq. ft, catering to a variety of consumer needs. Further
classified into localized departments such as clothing, toys, home, groceries, etc.
MBOs:
Multi Brand outlets, also known as Category Killers, offer several brands across a single product
category. These usually do well in busy market places and Metros.
Large Indian retailers
Hypermarket: Big Bazaar, Giants, Shoprite, Star
Department store: Lifestyle, Pantaloons, Piramyd, Shoppers Stop, Trent
Entertainment: Fame Adlabs , Fun Republic, Inox, PVR
Why is Retailing Important?
As the final link between consumers and manufacturers, retailers are a vital part of the business
world. Retailers add value to products by making it easier for manufactures to sell and
consumers to buy. It would be very costly and time consuming for you to locate, contact and
make a purchase from the manufacturer every time you wanted to buy a candy bar, a sweater or a
bar of soap. Similarly, it would be very costly for the manufactures of these products to locate
and distribute them to consumers individually. By bringing multitudes of manufacturers and
consumers together at a single point, retailers make it possible for products to be sold, and,
consequently, business to be done.
Retailers also provide services that make it less risky and more fun to buy products. They have
salespeople on hand who can answer questions, may offer credit, and display products so that
consumers know what is available and can see it before buying. In addition, retailers may
provide many extra services, from personal shopping to gift wrapping to delivery, that increase
the value of products and services to consumers.
According to the National Retail Federation, 1 in 5 American workers are employed in the retail
industry. The Department of Labor estimates that since 1990, 700,000 new jobs have been
created in the retail sector. That's 13% of all new jobs in the United States. At present, more
jobs are provided in retailing than the entire U.S. manufacturing sector.

17

RETAIL: PROCESS FLOW

The Process Flow of retail starts from the Manufacturer, manufactures is the one who produces
the items for selling into the market. It can be a farmer, tailor or any other mass producer. From
manufacturer items are sending to the retailer through wholesaler or vendor.
Finally retailers sell the products to the customers through retail outlets.
Different Retailing companies adopt different process flows for their business. Some acquire
products directly from the manufacturer, thus making the job of the wholesalers or vendor
redundant while others use more than one channel to offer services to their customers.

TYPES OF RETAIL
Retailing can be broadly divided into two categories-Store and Non-Store Retailing.
Non-Store retailing falls into four main categories:
Direct Selling: followed by companies and banks like Amway, Eureka Forbes, and Tupperware
etc.

18
Direct Marketing (includes telemarketing and internet selling) followed by catalog marketers like
Otto-Burlington, Amazaon.com, Indiatimes.com
Automatic Vending: is used to sell products like milk, beverages, and magazines and to dispense
money (ATMs)
Buying Service: is a store less retailer serving a specific clientele-usually employees of large
organizations
There are three major types of retailing.
Market: A physical location where buyers and sellers converge. Usually this is done on town
squares, sidewalks or designated streets and may involve the construction of temporary
structures (market stalls).
Shop or Store Trading: Some shops use counter-service, where goods are out of reach of
buyers, and must be obtained from the seller. This type of retail is common for small expensive
items (e.g. jewelry) and controlled items like medicine and liquor. Self-service, where goods may
be handled and examined prior to purchase, has become more common since the Twentieth
Century.
Virtual retail: where products are ordered via mail, telephone or online without having been
examined physically but instead in a catalog, on television or on a website. Sometimes this kind
of retailing replicates existing retail types such as online shops or virtual marketplaces such as
eBay or Amazon.
Buildings for retail have changed considerably over time. Market halls were constructed in the
middle Ages, which were essentially just covered marketplaces. The first shops in the modern
sense used to deal with just one type of article, and usually adjoined the producer (baker, tailor,
and cobbler). In the nineteenth century, in France, arcades were invented, which were a street of
several different shops, roofed over. From this there soon developed, still in France, the notion of
a large store of one ownership with many counters, each dealing with a different kind of article
was invented; it was called a department store. One of the novelties of the department store was
the introduction of fixed prices, making haggling unnecessary and browsing more enjoyable.
This is commonly considered the birth of consumerism. In cities, these were multi-story
buildings which pioneered the escalator.

19

Company Profile
Pantaloon Retail India Ltd.
Pantaloon Retail (India) Limited, is Indias leading retailer that operates multiple retail formats in
both the value and lifestyle segment of the Indian consumer market. Headquartered in Mumbai
(Bombay), the company operates over 7 million square feet of retail space, has over 1000 stores
across 51 cities in India and employs over 25,000 people.
The companys leading formats include Pantaloons, a chain of fashion outlets, Big Bazaar, a
uniquely Indian hypermarket chain, Food Bazaar, a supermarket chain, blends the look, touch
and feel of Indian bazaars with aspects of modern retail like choice, convenience and quality and
Central, a chain of seamless destination malls. Some of its other formats include, Depot, Shoe
Factory, Brand Factory, Blue Sky, Fashion Station, aLL, Top 10, mBazaar and Star and Sitara.
The company also operates an online portal, futurebazaar.com.
A subsidiary company, Home Solutions Retail (India) Limited, operates Home Town, a largeformat home solutions store, Collection i, selling home furniture products and E-Zone focused
on catering to the consumer electronics segment.
Pantaloon Retail was recently awarded the International Retailer of the Year 2007 by the USbased National Retail Federation (NRF) and the Emerging Market Retailer of the Year 2007 at
the World Retail Congress held in Barcelona.
List of pantaloon retail brand
FASHION: Pantaloons, Central Big Bazaar and Fashion Station
FOOD: Food Bazaar
GENERAL MERCHANDISE: Central Malls and Big Bazaar
SPECIALITY RETAILING: All , Blue Sky

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HOME: Home Town, E-Zone, Furniture Bazaar, Electronics Bazaar, Collection I and Mela
BOOKS AND STORES: Depot
COMMUNICATIONS: M- Zone and Converge M
WELLESS: Star and Sitara
E-TAILING: Futurebazaar.Com
FOOTWEAR: Show Factory

Competitors of Pantaloon Retail

RPG Retail-Formats: Music World, Books & Beyond, Spencers Hyper, Spencers
Super, Daily & Fresh
The Tata Group-Formats: Westside, Star India Bazaar, Steeljunction, Landmark,
Titan Industries with World of Titans showrooms, Tanishq outlets, Chroma.
Raheja Corp Group-Formats: Shoppers Stop, Crossword, Hyper City, Inorbit
Lifestyle International-Lifestyle, Home Centre, Max, Fun City and International
Franchise brand stores.
Pyramid Retail-Formats: Pyramid Megastore, TruMart
Nilgiris-Formats: Nilgiris supermarket chain
Subhiksha-Formats: Subhiksha supermarket pharmacy and telecom discount chain.
Trinethra- Formats: Fabmall supermarket chain and Fabcity hypermarket chain
Vishal Retail Group-Formats: Vishal Mega Mart
BPCL-Formats: In & Out
Reliance Retail-Formats: Reliance Fresh
Reliance ADAG Retail-Format: Reliance World
German Metro Cash & Carry
Shoprite Holdings-Formats: Shoprite Hyper

Success factor of pantaloon retail

The following factors have helped Pantaloon emerge as a leading domestic retailer:

Brand equity and early mover advantage;

Entrepreneur led, professionally managed and experienced team;
Strong projects and operations capabilities;
Vast range of lifestyle and value retailing products and services;
Strong focus on systems and processes;
Strong distribution and logistics network and supply chain; and

21

Large base of loyal customer

Financial of Pantaloon Retail

Brief Financials (in Rs. Mn.)
Period ending (months)
Net sales
Other Income
Total Income
Cost of goods sold
OPBDIT
PAT
Gross Block
Equity capital
EPS (Rs.)
DPS (Rs.)
BV (Rs.)
P/E range (x)
Debt / Equity (x)
Operating margin (% of OI)
Net margin (% of OI)

31-Dec-2007(6)
23131.90
20.50
23152.40
21079.60
2072.80
613.40
301.50
9.0
2.6

30-Jun-2007 (12)
32371.20
24.30
32395.50
30115.70
2279.80
1200.40
7670.70
293.50
8.18
0.51
74.42
44.62 290.71
1.19
7.0
3.7

30-Jun-2006 (12)
18677.71
40.41
18718.11
17156.99
1561.12
641.58
3660.05
268.85
23.86
2.50
195.99
46.31 - 87.59
1.14
8.3
3.4

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E-Retailing
E-tailing is the selling of retail goods on the Internet. Short for "electronic retailing," e-tailing is
synonymous with business-to-consumer (B2C) transaction. The focus of e-tailing is on consumer
shopping, not business-to-business commerce. The intent of e-tailing is to provide a customer
value proposition that is different from real space stores. This value proposition often includes:
Cheaper prices, Increased flexibility, Convenience and Consumer Empowerment of the shopping
process. E-tailing has can also be advantageous for the E-tailers who can target wider customer
base, moreover they dont have to spend on real estate and brick and mortar which saves a large
amount of money for them which e-tailers can pass on to the customers in the form of discounts
and offers-tailing is in nascent stage in India. Though there are some multinational players that
are setting up their operation in metro cities of India but still there is a lack of enthusiasm in local
players. E-tailing can revolutionize the entire retail industry. Several organized retail companies
like Pantaloons and Futures group have made ambitious plans to enter the e-tail market but still a
huge market remains untapped. Besides, a new population of customers called netizens is
emerging, who are spending more time in front of their PCs. This new genre of customers is the
harbinger of huge profits that e-tailers can earn by foraying into this sunrise industry.
like Pantaloons and Futures group have made ambitious plans to enter the e-tail market but still a
huge market remains untapped. Besides, a new population of customers called netizens is
emerging, who are spending more time in front of their PCs. This new genre of customers is the
harbinger of huge profits that e-tailors can earn by foraying into this sunrise industry.
TYPES OF E-RETAILERS
E-tailing companies can be of two types:
Pure-click Companies

23
Brick and click Companies
Pure-click Companies: Those which have launched a website without any previous existence as
a firm ,like search engines, commerce sites selling books,music,stocks etc.Eg-amazon.com,ebay.in,rediff.com etc.
Brick-and-click Companies: Existing companies that have added and online site for
information and/or e-commerce. Eg-fabmall.com, futurebazaar.com.

ADVANTAGES/DISADVANTAGES OF E-RETAILING.
ADVANTAGES (CONSUMER PERSPECTIVE)
E-retailing reduces the physical pain of going out to supermarkets and other retail
outlets. (Especially in bad weather conditions).
E-retailing helps consumers in saving time by providing them convenient accessibility,
one touch accessibility.
E-retailing also helps consumers to seek out the lowest prices or best deal available for
items and services.
It also provides access to infinite variety of products available online as consumers can
browse through products that are made all round the world.
DISADVANTAGES (CONSUMER PERSPECTIVE)
E-tailing lags touch and feel factor, demonstration of the products is not available.
E-shopping can be very risky and insecure as the sensitive information like credit card
details is involved in the transaction and hackers can fraudulently acquire it.
Quality of the product may not be the same as prescribed on the net.
Many shoppers enjoy shopping with friends; this enjoyment is lost in e-shopping.
Consumer must be knowledgeable about the use of internet, moreover an internet
connection and computer is must for online shopping.
ADVANTAGES (RETAILERS PERSPECTIVE)

24

Retailers can target large number of consumers as geographical

constraints are reduced.

Retailers can leverage a lot of Cost Advantage as cost of retail space is

reduced.

Transportation cost from manufacturer to retailer is reduced, which

can be passed on to
Customers or towards more margins.

As there is no constraint of space, more products can be provided and

displayed, which
help in diversifying portfolio.
DISADVANTAGES (RETAILERS PERSPECTIVE)
Retailers have to build in a lot of trust due to intangibility of products and have to spend heavily
for the same.
Retailers have to maintain a sound distribution system for proper delivery mechanism
E-retailing may lead to Channel Conflict to avoid it integration between Online and
Offline channels are required.
Fraudulent purchases from customer end can also create problem for the retailers

REQUISITES FOR ONLINE RETAILERS FOR BETTER CUSTOMER EXPERIENCE

Brand Leverage

A developed Brand recognition and trust will have lower

consumer acquisition costs and higher conversion rates in case
of browsers to buyers.

Induce Customers
online by creating
incentives

As the cost of serving customer online is less, some of the funds

should be diverted for encouraging the consumers to use eretailing facilities.

Making most of
The rich knowledge base and strong relationship that retail
customer information player may have developed over the years should be used to
and relationships
anticipate consumer needs and preferences.
Efficient use of
distribution
infrastructure

Distribution infrastructure is the most important part of online

retailing. All the cost advantage and convenience will be lost if
a company does not possess a proper distribution channel to
serve the consumer needs.

Exploit

Partnering can speed execution give access to critical skills, and

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Opportunities for
partnering

generate additional equity from incumbents assets.

Managing channel
conflicts

Moving online can trigger conflicts between channels. Online

players need to find creative ways to avoid conflict within the
company and its supply chain.

THE INDIAN E-RETAIL SCENERIO

A lot of water has flown into the river Ganges since the dotcom bubble burst in 1999 and ecommerce has shown many interesting trends since then . Sensex is touching magical 12000
mark and GDP is growing at 9% which makes Indian customers rich by causing an increase in
its disposable income. This new generation of rich Indian customers is ready to spend more
money for its convenience and is becoming more teachsavvy. This has acted as a panacea which
was once ailing in the early 2000.Now E-commerce is growing at a rapid pace in India. The
value of online consumer purchases doubled to about Rs11.8bn in fiscal year 2005/06 compared

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to the previous fiscal year, according to estimates from the Internet & Mobile Association of

India (IAMAI).
FIGURE-II
Low-value products such as travel and ticketing, electronic gadgets, clothes, music and books
dominate retail e-commerce transactions in India Certain online services like matrimonial
matchmaking, job searching, auctions, share trading and banking are also becoming increasingly
popular. The most interesting trend in B2C e-commerce is that the travel industry has emerged as
the fastest-growing category. IDC expects the travel space to grow at a CAGR of 140 percent to
reach Rs 1,430 crore in 2006. With the launch of online ticketing by the Indian Railways, and
almost all the domestic airlines, growth in this space is expected to take off very soon.
According to IDC, which closely follows market swings in the B2C segment, estimates that the
total Indian market size was Rs 126.9 crore for 2001, Rs 238.3 crore for 2002, it rose to Rs 570
crore in 2004-05 and further to
Rs 2300 crore in 2006-07[DNA Jul 06]
with a (CAGR) of 79 %.
In 2005-06, Indian consumers spent Rs11.80 billion on Fabmall, Rediff, India times and Sify.
Online purchases have nearly quadrupled, from 200,000 in 2002-03 to 790,000 in 2005-06.
According to IDC, online B2C e- commerce is growing at 80 percent every year. Apart from this
there is 125 % growth in the online travel sphere (60 percent of the total e-commerce pie) Annual
online consumer purchasing reached approximately US$130 million in 2004-2005

FIGURE-III

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INTERNATIOANL RETAILERS IN INDIA
The world's largest retailer by sales, Wal-Mart Stores Inc and Sunil Mittal's Bharti Enterprises
have entered into a joint venture agreement and
they are planning to open 10 to 15 cash-and-carry facilities over seven years. The first of the
stores, which will sell groceries, consumer appliances and fruits and vegetables to retailers and
small businesses, is slated to open in north India by the end of 2008. Carrefour, the worlds
second largest retailer by sales, is planning to setup two business entities in the country one for
its cash-and-carry business and the other a master franchisee which will lend its banner, technical
services and know how to an Indian company for direct-to-consumer retail.
The worlds fifth largest retailer by sales, Costco Wholesale Corp (Costco) known for its
warehouse club model is also interested in coming to India and waiting for the right opportunity.
Opposition to the retailers' plans have argued that livelihoods of small scale and rural vendors
would be threatened. However, studies have found that only a limited number of small vendors
will be affected and that the benefits of market expansion far outweigh the impact of the new
stores.
How international players are present:
Franchise
International company gives name and technology to local partner. Gets royalty in
return
In case master franchise is appointed for region or country, he has right to appoint
local franchisees
Nike, Pizza Hut, Tommy Hilfiger, Marks and Spencer, Mango
Manufacturing
Company sets up Indian arm for production
Bata India. It also has right to retail in India

Distribution
International company sets up local distribution office
Supply products to Indian retailers to sell
Also set up franchised outlets for brand
Swarovski, Hugo Boss
Wholesale trading
Cash and Carry operations
100% FDI permitted
Metro Cash n Carry

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RECENT TRENDS

Retailing in India is witnessing a huge revamping exercise as can be seen in the graph
India is rated the fifth most attractive emerging retail market: a potential goldmine.
Estimated to be US$ 200 billion, of which organized retailing (i.e. modern trade) makes
up 3 percent or US$ 6.4 billion
As per a report by KPMG the annual growth of department stores is estimated at 24%
Ranked second in a Global Retail Development Index of 30 developing countries drawn
up by AT Kearney.

FUTURE DIRECTIONS
POSITIVES:

AT Kearney has estimated Indias total retail market at US$ 286 bn* which is expected to
grow at a compounded 30 per cent over the next five years.

29

With the organized retail segment growing at the rate of 25-30 per cent per annum,
revenues from the sector are expected to triple from the current US$ 7.7 billion to US$ 24
billion by 2010.
The share of modern retail is likely to grow from its current 2 per cent to 15-20 percent
over the next decade
Over next two years India will see several Indian retail businesses attaining a critical
mass as growth in the industry picks up momentum driven by two key factors:
Availability of quality real estate and mall management practices
Consumer preference for shopping in new environments
Wal-Mart: huge plans for India. Moving a senior official from its headquarters in
Bentonville, Arkansas, to head its market research and business development functions
pertaining to its retail plans in India.
New York-based high-end fashion retailer Saks Fifth Avenue has tied up with realty
major DLF Properties to set up shop in a mall in New Delhi.
Tommy Hilfiger, retailer of apparels, expects to open one store each in Delhi,
Ahmadabad, Luck now and Bangalore in the next four months.

CONCERNS

70 million square feet of mall space is expected to be available by end of 2008, which
might lead to over-capacity of malls
Lack of differentiation among the malls that are coming up. One option may be to look at
specialization.
Poor inventory turns and stock availability measures - retailers clearly need to augment
their operations.
Operations of retailers and suppliers are not integrated. Efficient replenishment practices
practiced in the Indian auto and auto-component industry can be leveraged to implement
efficient supply chain management techniques.
Supplier maturity, in terms of adherence to delivery schedules and delivering the quantity
ordered, is an issue
Sales tax laws - lead to retailers having state-level procurement and storage leads to
Indian retailers having higher inventories. VAT has helped alleviate this a bit.
Increased adoption of IT and shrinkage management will be a critical area.
Supply chain and customer relations followed by merchandising, facilities management
and vendor development are areas which have significant gaps and proactive training is a
key imperative for overcoming these.

INDIA Vs WORLD

Indian retail is fragmented with over 12 million outlets operating in the country. This is in
comparison to 0.9 million outlets in USA, catering to more than 13 times of the total
retail market size as compared to India

30

India has the highest number of outlets per capita in the world - widely spread retail
network but with the lowest per capita retail space (@ 2 sq. ft. per person)
Annual turnover of Wal-Mart (Sales in 2001 were $219 billion) is higher than the size of
Indian retail industry. Almost 100 times more than the turnover of HLL (India's largest
FMCG Company).
Wal-Mart - over 4,800 stores (over 47 million square meters) where as none of India's
large format store (Shoppers' Stop, Westside, Lifestyle) can compare.
The sales per hour of $22 million are incomparable to any retailer in the world. Number
of employees in Wal-Mart is about 1.3 million where as the entire Indian retail industry
employs about three million people.
One-day sales record at Wal-Mart (11/23/01) $1.25 billion - roughly two third of HLL's
annual turnover.
Developed economies like the U.S. employ between 10 and 11 percent of their workforce
in retailing (against 7 percent employed in India today).
60% of retailers in India feel that the multiple format approach will be successful here
whereas in US 34 of the fastest-growing 50 retailers have just one format
Inventory turns ratio: measures efficiency of operations. The U.S. retail sector has an
average inventory turns ratio of about 18. Many Indian retailers KPMG surveyed have
inventory turns levels between 4 and 10.
Global best-practice retailers can achieve more than 95 percent availability of all SKUs
on the retail shelves (translating into a stock-out level of less than 5 %).The stock-out
levels among Indian retailers surveyed ranged from 5 to 15 percent.

CHALLENGES OF RETAIL IN INDIA

To become a truly flourishing industry, retailing needs to cross the following hurdles:

Automatic approval is not allowed for foreign investment in retail.

Regulations restricting real estate purchases, and cumbersome local laws.
Taxation, which favors small retail businesses.
Absence of developed supply chain and integrated IT management.
Lack of trained work force.
Low skill level for retailing management.
Intrinsic complexity of retailing rapid price changes, constant threat of product
obsolescence and low margins.

DATA ANALYSIS AND INTERPRETATION

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FOR TESTING HYPOTHESIS AND OBJECTIVE WE HAVE USED SPSS SOFTWARE

QUESTION1

Frequency

Percent

Valid 1

36

18.0

23

11.5

23

11.5

36

18.0

15

7.5

21

10.5

24

12.0

22

11.0

200

100.0

Total

Interpretation
Out of 200 frequency there are 36 local kirana shop and general store .24 are apparel shop ,
23 are paan and beedi, and chemist shop . hand craft hawker are with the least (i.e 15)

QUS2
Frequency

Percent

Valid 1

157

78.5

43

21.5

200

100.0

Total

Interpretation

38
Most of the population having a retails shop, there are few number of wholesaler. Thus, retail
sector is mostly effected by the organized retail store i.e.78.5%.
Cross tabs
Case Processing Summary
Cases
Valid
N
QUS3 *
QUS7

Missing

Percent
199

99.5%

Total

Percent
1

.5%

Percent
200

100.0%

Interpretations
In the cases of Question 3 & 7 is showing the class of the people in which class of people have
more perception about the organized and unorganized stores. There are many high class of
people which are demanded for the quality of product and service.
QUS3 * QUS7 Cross Tabulation
Count
QUS7
1

Total

QUS3 1

11

34

14

23

32

87

10

24

21

67

11

32

55

24

21

67

199

Total

Interpretations

39
People will preferred to organized retail store because they are providing variety as well as
quality of product. Class of the people generally visit to store because they belong to lower and
middle class.

Chi-Square Tests
Value

Df

Asymp. Sig. (2-sided)

12.383a

12

.415

Likelihood Ratio

13.330

12

.345

Linear-by-Linear
Association

.000

.998

N of Valid Cases

199

Pearson Chi-Square

Interpretations
From above table researcher can conclude that there is no association between the organized and
unorganized sectors (as value=0.415 which greater than0.01) further reasearcher can conclude
that there is no difference between organized and unorganized retail stores from the view of
unorganized retail stores owners .
One way

40

Descriptives
VAR00001
N

Mean

36

7.44

23

7.39

23

7.74

36

7.08

15

7.40

21

8.14

24

7.54

22

7.77

200

7.52

Total

Interpretation
Means: Apparel shop is the highest mean (i.e. 8.14) in unorganized retail sector .footwear shop
is the second highest with (7.77) and the third highest is the paan and beedi shop with (7.74).
Fourth is the General store shop with (7.54) followed by pavement vendor is the least mean with
(7.08).
ANOVA
VAR00001
Sum of
Squares
Between Groups

Mean
Square

df

18.330

2.619

Within Groups

349.545

192

1.821

Total

367.875

199

F
1.438

Sig.
192

Interpretation:
Since the affect of organized sector, we have to check the hypothesis 2 that is, There is an
association between class of people and preference in retail choice (organized or unorganized).
Than restrain apply one way ANOVA from the table it can seen in the mean.
Since mean is the effect of our on unorganized with the highest mean that is apparel shop but it is
not statically significant.

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CONCLUSION
Based on the in depth study across the selected samples with a fair representation of the
population there is a reasonable market potential for retail sector across the pune .
More countries were found favoring the Indian retail structure then competitors products.
Also the flexibility in the product price contributed a lot increasing its potential.
More consumers of upper class prefer to buy product from organized retail store. On the other
hand , middle and lower class people depend on unorganized sector.
Moreover to some extent organized retail sector is hampering the unorganized retail sector.

42

REFERENCES
(1) [http://www.ksa-technopak.com/pdf/irf-9sept2006.pdf Impending Economic Impact of A
Resurgent Indian Retail Sector]
(2) ICRIER Survey of Indian Retail Sector - Indian Realty News
(3) Economic and financial indicators 27th Oct 2007
(4) India's Retail Revolution - CNN Money
(5) www.google.com
(6) www.economictimes.indiatimes.com
(7) www.businessworld.in
(8) www.economist.com
(9) www.wikipidia.org
(10) www.kpmg.com

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(11) www.ey.com

Questionnaire
Name of the shop
Location
1. In which type of business you are engaged in?
Local kirana shop
Paan and beedi
Chemists
General store

(
(
(
(

)
)
)
)

Hand-craft hawker (
Pavement vendor
(
Apparel shop
(
Footwear shop
(

)
)
)
)

2. Are you,
Retailer

wholesaler

3. People would always prefer to go to organized retail store regularly?

Strongly agree
Normal

( )
( )

Agree
Dis-agree

( )
( )

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4. Organized retail store provide facility like shopping ambience, friendly outlet, single
point of purchase did it effect your business?
Yes

No

5. Global brands like Spencer, Reliance Fresh, Wall-mart and More are acquiring your
market?
Strongly agree
Normal

(
(

)
)

Agree
Dis-agree

(
(

)
)

6. Which class of people generally visit to your store?

Lower
(
Above two (

)
)

Middle
All

(
(

)
)

Upper

7. Do you provide variety of choices in products to customer?

Yes

No

8. Do you have benefit of providing credit facilities to your loyal customer?

Yes

No

9. Do you think that the home delivery service provided by you attracts more customer
rather than buying products from retail shop?
.
10. Do you think that the discount facility provided by organized retail shop will
Attract more customers?
Yes

No

11. Which type of product provides you more profit in your shop?
.
12. Express your opinion towards organized retail shop?
.

THANK YOU

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