Professional Documents
Culture Documents
FDI in Retail Sector
FDI in Retail Sector
PROJECT REPORT ON
FOREIGN DIRECT INVESTMENT IN INDIA-
GROWTH OF INDIAN RETAIL SECTOR
IN PARTIAL FULLFILMENT FOR BACHELORS OF FINANCIAL
MARKET STUDIES
20112012
PROJECT GUIDE
PROF: JENNIE PRAJITH
SUBMITTED BY:
MR. SINGH ALOK AKHILESH
ROLL NO: 3168
This is to certify that the work entered in this journal is the work of MR. SINGH
ALOK AKHILESH T.Y.BF/M 3076 have successfully completed a project report
on the FOREIGN DIRECT INVESTMENT IN INDIA-GROWTH OF INDIAN
RETAIL SECTOR.
Topic terms of the year 2011-2012 in the college as lay down by the college
authority.
_______________
Date: __________ External Examiner
DECLARATION
_______________
Signature
ACKNOWLEDGEMENT
I would like to heart fully acknowledge my gratitude and thanks to all the
panelists who took active part in accomplishing my project.
At the very outset, I wish to thank Prof. JENNIE PRAJITH, who helped me
to choose such an interesting topic to work upon as a full fledged project and
guiding me at each step interacting with him gave me a completely different view
to look at a subject, throughout its completion.
I am also thankful to all the faculty of my institute, who helped me in giving
all the required information in a very cooperative manner. The project would not
have been possible without the help of my friends and colleagues who have been
patient enough with me.
SR. INDEX PAGE
NO. NO.
EXECUTIVE SUMMARY
1 INTRODUCTION
1.1 OBJECTIVES OF THE STUDY
1.2 RESEARCH METHODOLOGY
2 COMPANY PROFILE
2.1 INTRODUCTION TO COMPANY
2.2 HISTORY OF COMPANY
2.3 PARTNERS OF COMPANY
2.4 AREA OF OPERATIONS AND INNOVATIONS
2.5 BOARD MEMBERS
2.6 MILESTONES TO SUCCESS
2.7 AWARDS AND ACHIVEMENTS
3 CONCEPTUAL FRAMEWORK
3.1 INTRODUCTION TO FOREIGN DIRECT INVESTMENT
3.2 HISTORY OF FOREIGN DIRECT INVESTMENT
3.3 RETAIL REFORMS IN INDIA
3.4 ORIGINS OF RETAIL SECTOR
3.5 INDIAN RETAIL INDUSRTY
3.6 TYPES OF INDIAN RETAIL SECTOR
3.7 FOREIGN DIRECT INVESTMENT IN INDIA
3.8 FOREIGN DIRECT INVESTMENT POLICIES IN INDIA
3.9 SINGLE AND MULTI- BRAND RETAILING
3.9 CHALLENGES AND ATTRACTIONS FOR RETAILING IN
INDIA
3.11 QUALITATIVE ANANLYSIS
3.12 IMPACT OF FOREIGN DIRECT INVESTMENT ON VARIOUS
STAKEHOLDERS
3.13 BENEFITS AND OPPOSE OF FOREIGN DIRECT INVESTMENT
IN INDIA
4 COLLECTION AND ANALYSIS OF DATA
5 INTERPRETATION OF DATA
6 SUGGESTION AND RECOMMENDATION
7 CONCLUSION
APPENDICES
BIBLOGRAPHY
Executive summary
Foreign direct investment (FDI) is investment directly into production in a country by a company located
in another country, either by buying a company in the target country or by expanding operations of an
existing business in that country. Foreign direct investment is done for many reasons including to take
advantage of cheaper wages in the country, special investment privileges such as tax exemptions offered
by the country as an incentive to gain tariff-free access to the markets of the country or the region.
Foreign direct investment is in contrast to portfolio investment which is a passive investment in the
securities of another country such as stocks and bonds.
Indian retail industry is one of the sunrise sectors with huge growth potential. According to the
Investment Commission of India, the retail sector is expected to grow almost three times its current levels
to $660 billion by 2015. However, in spite of the recent developments in retailing and its immense
contribution to the economy, retailing continues to be the least evolved industries and the growth of
organized retailing in India has been much slower as compared to rest of the world.
Undoubtedly, this dismal situation of the retail sector, despite the on-going wave of incessant
liberalization and globalization stems from the absence of an FDI encouraging policy in the Indian retail
sector. In this context, the present paper attempts to analyse the strategic issues concerning the influx of
foreign direct investment in the Indian retail industry. Moreover, with the latest move of the government
to allow FDI in the multiband retailing sector, the paper analyses the effects of these changes on farmers
and agri-food sector. The findings of the study point out that FDI in retail would undoubtedly enable India
Inc. to integrate its economy with that of the global economy. Thus, as a matter of fact FDI in the
buzzing Indian retail sector should not just be freely allowed but should be significantly encouraged.The
paper ends with a review of policy options that can be adopted by Competition Commission of India.
This project includes primary and secondary data. Primary data consists of original information
gathered for specific purpose. The primary data is collected through questionnaire. The
questionnaire is through common instrument collecting primary collection. I collected the data
through questionnaire from different small eating joints. Secondary data consists
information which has already been collected by someone or an organization for
some other purpose or research study .
1.1 Introduction
Retail trade contributes around 10-11% of Indias GDP and currently employs over 4 crore
people. Within this, unorganized retailing accounts for 96% of the total retail trade. Traditional
forms of low-cost retail trade, from the owner operated local shops and general stores to the
handcart and pavement vendors together form the bulk of this sector. Since the organized sector
accounts for less than 8% of the total workforce in India and millions are forced to seek their
livelihood in the informal sector, retail trade being an easy business to enter with low capital and
infrastructure needs, acts as a kind of social security net for the unemployed. Organized retailing
has witnessed considerable growth in India in the last 10-12 years and is growing at a much
faster rate than the overall retail sector. This trend of an increasing share of retail trade coming
under the organized sector inevitably causes displacement of small retailers in the unorganized
sector and affects their livelihood. This needs to be kept in mind while discussing the impact of
FDI in retail trade.
Organised retailing, in India, refers to trading activities undertaken by licensed retailers, that is,
those who are registered for sales tax, income tax, etc. These include the publicly traded
supermarkets, 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 mom and pop store, owner manned general stores,
paan/beedi shops, convenience stores, hand cart and pavement vendors, etc. Organised retailing
was absent in most rural and small towns of India in 2010. Supermarkets and similar organized
retail accounted for just 4% of the market.
On 14 September 2012, the government of India announced the opening of FDI in multi brand
retail, subject to approvals by individual states. This decision has been welcomed by economists
and the markets, however has caused protests and an upheaval in India's central government's
political coalition structure. On 20 September 2012, the Government of India formally notified
the FDI reforms for single and multi brand retail, thereby making it effective under Indian law.
1.2Objective of study
To understand the concept of Relationship marketing and its application to the Indian retail
stores.
To understand customers perceptions and evaluate the key Retail attributes and their effect
on relationship marketing
To identify and evaluate the changing waves, opportunities and challenges in Indian
2. Secondary data:-
PRIMARY DATA:-
Primary data consists of original information gathered for specific purpose. The primary data is
collected through questionnaire. The questionnaire is through common instrument collecting
primary collection. I collected the data through questionnaire from different small eating joints.
SECONDARY DATA:-
It is the data which has already been collected by someone or an organization for some other
purpose or research study .The data for study has been collected from various sources:
Books
Journals
Magazines
Internet source
2. SOURCE OF DATA:-
Secondary sources:-
It is the data which has already been collected by some one or an organization for some other
purpose or research study .The data for study has been collected from various sources:
Books
Journals
Magazines
Internet sources
After collecting the Secondary data the next phase will be collection of primary data
using Questionnaires.
The questionnaire will be filled by around 100 people who will be mainly from Navi
Mumbai region.
The sample will consist of people who are employed or visitors of Retail chain stores
The data collected will be then entered into MS Excel for analysis of the data collected
from the questionnaire.
3. SAMPLING TETCHINESS:-
Initially, a rough draft was prepared a pilot study was done to check the accuracy of the
Questionnaire and certain changes were done to prepare the final questionnaire to make it more
judgmental.
A) SAMPLING AREA: - The area of the research was Navi Mumbai city only
B) SAMPLING SIZE: - The sample size was restricted to only 100 respondents.
C) SAMPLING UNIT: -
The respondents who were asked to fill out the questionnaire in the Navi Mumbai Region are
the sampling units. These respondents comprise of the persons dealing in organized Retail store.
The people have been interviewed in the open market, telephonic interviews and through other
sources also.
E) RESEARCH INSTRUMENT:-
The research is primarily both exploratory and descriptive in nature. The sources of information
are both primary and secondary. The secondary data has been taken by referring to various
magazines, newspapers, internal sources and internet to get the figures required for the research
purposes. The objective of the exploratory research is to gain insights and ideas. The objective of
the descriptive research study is typically concerned with determining the frequency with which
something occurs. A well structured questionnaire was prepared for the primary research and
personal interviews were conducted to collect the responses of the target population.
Time:
1 month
Result will be the knowledge about customers preference towards exclusive and multi-
brand retail outlet that will be helpful to find out the factors that influence the satisfaction
level of customer.
It will be helpful to know the connection between demographic factors of consumer like
age, income, education and choice of people for different types of product.
4. LIMITATION OF STUDY
1. LIMITED TIME:
The time available to conduct the study was only 1 months. It being a wide topic had a
limited time.
2. LIMITED RESOURCES:
Limited resources are available to collect the information about the Organized Retail
trade.
3. VOLATALITY:
Organised Retail trade is so much volatile and it is difficult to forecast anything about it
whether you trade through online or offline
4. LIMITED SURVEY
The survey was restricted to only 100 respondents
5. LIMITED AREA
The study was limited to only in Navi Mumbai city.
2 Company Profile
Type Public
Industry Retailing
Founded 2001
Revenue Rs 6000 crores (in 2011) (Big Bazaar and Food Bazaar combined)
Website www.bigbazaar.com
Big Bazaar is a chain of hypermarket in India. As of June 2, 2012 there are 214 stores across 90
cities and towns in India and employs over 36000 people. covering around 16 million sq.ft. of
retail space. Big Bazaar is designed as an agglomeration of bazaars or Indian markets with
clusters offering a wide range of merchandise including fashion and apparels, food products,
general merchandise, furniture, electronics, books, fast food and leisure and entertainment
sections.
Big Bazaar is part of Future Group, which also owns the Central Hypermarket, Brand Factory,
Pantaloons, eZONE, HomeTown, futurebazaar.com, KB's Fair Price to name a few and is owned
through a wholly owned subsidiary of Pantaloon Retail India Limited that is listed on Indian
stock exchanges.
2.2 History of Big Bazaar
Big Bazaar was launched in September, 2001 with the opening of its first four stores in Calcutta,
Indore, Bangalore and Hyderabad in 22 days. Within a span of ten years, there are now 161 Big
Bazaar stores in 90 cities and towns across India. By September 2012 BIG BAZAAR will have
two more stores in North east namely SILCHAR and JORHAT in Assam.
In 2008, Big Bazaar opened its 100th store, marking the fastest ever organic expansion of a
hypermarket. The first set of Big Bazaar stores opened in 2001 in Kolkata, Hyderabad and
Bangalore. The groups specialty retail formats include, books and music chain, Depot,
sportswear retailer, Planet Sports, electronics retailer, Ezone, home improvement chain, Home
Town and rural retail chain, Aadhar, among others. It also operates popular shopping portal,
futurebazaar.com.
Future Capital Holdings, the groups financial arm provides investment advisory to assets worth
over $1 billion that are being invested in consumer brands and companies, real estate, hotels and
logistics. It also operates a consumer finance arm with branches in 150 locations. Other group
companies include, Future Generali, the groups insurance venture in partnership with Italys
Generali Group, Future Brands, a brand development and IPR company, Future Logistics,
providing logistics and distribution solutions to group companies and business partners and
Future Media, a retail media initiative. The groups presence in Leisure & Entertainment
segment is led through, Mumbai-based listed company Galaxy Entertainment Limited. Galaxy
leading leisure chains, Sports Bar and Bowling Co. and family entertainment centres, F123.
Through its partner company, Blue Foods the group operates around 100 restaurants and food
courts through brands like Bombay Blues, Spaghetti Kitchen, Noodle Bar, The Spoon, Copper
Chimney and Gelato.
Future Groups joint venture partners include, US-based stationery products retailer, Staples and
Middle East-based Axiom Communications. Future Group believes in developing strong insights
on Indian consumers and building businesses based on Indian ideas, as espoused in the group s
core value of Indianness. The groups corporate credo is, Rewrite rules, Retain values.
Big Bazaar was started by Kishore Biyani, the Group CEO and Managing Director of Pantaloon
Retail India. Though Big Bazaar was launched purely as a fashion format including apparel,
cosmetics, accessory and general merchandise, over the years Big Bazaar has included a wide
range of products and service offerings under their retail chain. The current formats includes Big
Bazaar, Food Bazaar, Electronic Bazaar and Furniture Bazaar. The inspiration behind this entire
retail format was from Saravana Stores, a local store in T. Nagar, Chennai
The stores are customized to provide the feel of mandis and melas while offering the modern
retail features like Quality, Choice and Convenience. As the modern Indian family's favorite
retail store, Big Bazaar is popularly known as the "Indian Walmart".
On successful completion of ten years in Indian retail industry, in 2011, Big Bazaar has come up
a new logo with a new tag line: Naye India Ka Bazaar, replacing the earlier one: 'Isse Sasta Aur
Accha Kahin Nahin'.
FUTURE GROUP
Future Group is Indias leading business group that caters to the entire Indian consumption
space. Led by Mr. Kishore Biyani, the Future Group operates through six verticals: operates
through six verticals: Retail, Capital, Brands, Space, Media and Logistics.
Apart from Pantaloon Retail, the groups presence in the retail space is complemented by group
companies, Indus League Clothing, which owns leading apparel brands like Indigo Nation,
Scullers and Urban Yoga, and Galaxy Entertainment Limited that operates Bowling Co, Sports
Bar, F123 and Brew Bar.
The groups joint venture partners include French retailer ETAM group, US-based stationary
products retailer, Staples and UK-based Lee Cooper. Group Company, Planet Retail, owns and
operates the franchisee of international brands like Marks & Spencer, Next, Debenhams and
Guess in India. The groups Indian joint venture partners include, Manipal Healthcare,
Talwalkars, Blue Foods and Liberty Shoes.
Future Capital Holdings, the groups financial arm, focuses on asset management and consumer
credit. It manages assets worth over $1 billion that are being invested in developing retail real
estate and consumer-related brands and hotels. The group has launched a consumer credit and
financial supermarket format, Future Money and soon plans to offer insurance products through
a joint venture with Italian insurance major, Generali.
The group is currently developing over 50 malls and consumption centers across the country
and has formed a joint venture company focusing on mall management with Singapore-based
CapitaLand, one of Asias largest property companies .
Future Groups vision is to, deliver Everything, Everywhere, Every time to Every Indian
Consumer in the most profitable manner. The group considers Indian-ness as a core value and
its corporate credo is - Rewrite rules, Retain values.
Future Group understands the soul of Indian consumers. As one of Indias retail pioneers with
multiple retail formats, we connect a diverse and passionate community of Indian buyers, sellers
and businesses. The collective impact on business is staggering: Around 300 million customers
walk into our stores each year and choose products and services supplied by over 30,000 small,
medium and large entrepreneurs and manufacturers from across India. And this number is set to
grow.
Future Group employs 35,000 people directly from every section of our society. We source our
supplies from enterprises across the country, creating fresh employment, impacting livelihoods,
empowering local communities and fostering mutual growth.
2.3 Different Partners of Future Group
Partner -1
Pantaloon Retail (India) Limited, is India's leading retail company with presence across
multiple lines of businesses. The company owns and manages multiple retail formats that cater
to a wide cross-section of the Indian society and is able to capture almost the entire
consumption basket of the Indian consumer. Headquartered in Mumbai (Bombay), the
company operates through 5 million square feet of retail space, has over 331 stores across 40
cities in India and employs over 17,000 people. The company registered a turnover of Rs.
2,019 crores for FY 2005-06.
Pantaloon Retail forayed into modern retail in 1997 with the launching of fashion retail chain,
Pantaloons in Kolkata. In 2001, it launched Big Bazaar, a hypermarket chain that combines the
look and feel of Indian bazaars, with aspects of modern retail, like choice, convenience and
hygiene. Food Bazaar, food and grocery chain and launch Central, a first of its kind seamless
mall located in the heart of major Indian cities, followed this. Some of its other formats include,
Collection i (home improvement products), E-Zone (consumer electronics), Depot (books,
music, gifts and stationary).
Partner-2
CENTRAL
Central, the showcase seamless mall concept is one of the more popular offerings in the lifestyle
segment that celebrates shopping in India. During the year, Central capitalized on its positioning
of being a destination where citizens can just come and unwind, whether its for shopping for a
wide range of national and international brands, enjoying their favorite cuisine at the multiple
specialty restaurants and food courts or watching the latest movie releases at the in-house
multiplexes.
Partner -3
PLANET RETAIL
A young and emerging India is also eager to experience international brands. We sensed this
opportunity some time back and have built a strong portfolio of international brands through our
strategic partnership with Planet Retail Holdings Pvt. Ltd. The alliance with Planet Retail provides
access to international fashion retail chains like Marks & Spencer, with 9 stores at present; Guess
the US brand that has 12 retail stores currently, and the Spanish brand Womens Secret which is
retailed through 2 outlets. Planet Retail also has a multi-brand international sportswear format
under the brand Planet Sports. The company is the sole licensee for sportswear brands such as
Converse, Spalding and the Athletes Foot the venture has also launched other formats like Sports
Warehouse, Accessorize, Monsoon, Next, and Debenhams.
The company operates various formats such as Shop-in-shops, Exclusive Brand Outlets and
Department Stores in the international brand space. Some of the global fashion brands Accessorize,
Nautica, Next, Debenhams, Lavie, etc. are brought into the country by the company. We are in
talks with a slew of other international brands that wish to foray in India. The Planet Retail team
consists of retail experts that not only deliver on the jobs but also cherish their roles. This keeps the
working atmosphere upbeat and energy levels high!
Over the years, Planet Retails marketing excellence has won many prestigious local and
international awards for brands like The Body Shop. The company today stands at a store count of
over 60 standalone stores. With a strong focus on process optimization, the company is aiming for
1 mn sq ft of Retail space within the next 5 years.
Partner -4
Depot
Reading as a habit is ingrained into the Indian psyche from time immemorial. However, it is
being increasingly associated with a select few. The company believes that existing formats in
the segment offer an intimidating environment that alienates the masses. The company has
therefore taken this initiative of launching a chain of books, music and gifts stores that will once
again democratize the reading habit in the country. The company believes that with 1.2 billion
people, the habit of reading can become a strong business proposition. Depot seeks to work with
communities in and around the area where it is located and hopes to attract the entire family to
spend quality time together. It is focusing on the introduction of old classics and books in
regional languages with an objective to make these affordable to a mass audience.
Partner -5
Fashion Station
Partner -6
Home Improvement
Partner -7
COMMUNICATION
Partner -8
The total number of middle to high income households is projected to reach 105 million by 2010,
thereby adding a large number of people to the consuming class. These demographic numbers
represent a young nation, which has an increased propensity to spend in restaurants and other
food service sectors, fuelling growth in the Leisure, Restaurants and Entertainment industries.
Partner -9
Star and Sitara
Star & Sitara, the beauty services offering, doubles as a unique parlor and salon for men and
women. Customers will be treated to the best quality hair and skin services at unbelievable
prices. One such store was operational as on the 30th June 2006.
Partner -10
E-TAILING
The emergence of a mass base of net savvy Indians is realty today. Access to Internet is no longer
limited to a small segment of young, male urban people. Cutting across age groups, gender,
geography and socio-economic backgrounds, Indians are taking to the net like fish to water. It is
estimated that there are at least 25 million Indians who access the Internet on a regular basis.
Falling prices of personal computers and laptops coupled with increasing penetration of internet,
and broadband services is driving more and more Indians to the Internet. In fact, Indians are no
longer limiting their Internet usage to email and chatting. Online shopping has finally come of
age. As the leading retailer in India, Pantaloon could ill afford to overlook this emerging
segment. There is a sufficiently large segment of online shoppers whose consumption spends
needs to be captured. Its with this belief that the company started exploring this area. Pantaloon
perceives its online business as yet another delivery format that can potentially reach out to 25
million customers. Future Bazaar, has modeled itself on a unique complete retailer platform. E-
tailing requires extensive sourcing capabilities, warehousing capacity, buying trends
understanding & most importantly a robust & efficient logistic backend. Future Bazaar leverages
the offline brand equity and brick & mortar presence of the group via multi channel integration
to benefit on economy of scales, economy of scope in promotion & distribution and utilizing the
offline learning into online & vice-versa to grow at a faster pace. As a new delivery format,
Future Bazaar can benefit from the learnings and expertise gathered in existing formats as well
as boost sales at these formats through the online sale of gift vouchers
Partner -11
Liberty Shoes
Partner -12
Indoctum In 1980, when Gini & Jony began, it fed off a modest workshop with just 4 stitching
machines. Some 30 years later, Gini & Jony now has two state-of-the-art manufacturing facilities
in the city of Daman (Gujrat) and Baddi (Himachal Pradesh).
Over two million garment items are produced at these facilities every year. Plus, two million
more garments are sourced from dedicated production units from across the world.
Partner -13
Food Bazaar
Across India, food habits vary according to community, customs and geography. Food Bazaar,
through its multiple outlets addresses this. At the same time it offers best quality products at
wholesale prices to a wide cross section of the India population. Food Bazaar effectively blends
the look, touch and feels of the Indian bazaar with the choice, convenience and hygiene that
modern retail provides. The food and grocery division of the company was launched in 2002-03
and has grown to 47 stores nationwide at the end of the current financial year. Most stores are
located within Big Bazaar, Central and Pantaloons and act as strong footfall generators. There are
separate stand-alone Food Bazaars as well. The business contributed just fewer than 50 per cent
of value retailing, and about 20 per cent to the companys turnover during 2005-06. Food Bazaar
offers a variety of daily consumption items, which include staples, soaps and detergents, oils,
cereals and biscuits. On the product category side, the primary segregation is done on the basis of
staples, fresh produce, branded foods and home and personal care products.
Companys Vision:
Future Group shall deliver Everything, Everywhere, Everytime for Every Indian Consumer in
the most profitable manner.
Companys Mission:
We shall infuse Indian brands with confidence and renewed ambition. We shall be efficient,
cost- conscious and committed to quality in whatever we do. We shall ensure that our positive
attitude, sincerity, humility and united determination shall be the driving force to make us
successful.
Big Bazaar shares the vision and belief that the customers and stakeholders shall be served only
by creating and executing future scenarios in the consumption space leading to economic
development.
Big Bazaar will be the trendsetters in evolving delivery formats, creating retail realty, making
consumption affordable for all customer segments - for classes and for masses.
Big Bazaar shall infuse Indian brands with confidence and renewed ambition.
Big Bazaar shall be efficient, cost- conscious and committed to quality in whatever they do.
Big Bazaar ensures positive attitude, sincerity, humility and united determination shall be the
driving force to make them successful.
2.4 Operations and Innovations
Operations
Most Big Bazaar stores are multi-level and are located in stand-alone buildings in city centers as
well as within shopping malls. These stores offer over 200,000 SKUs in a wide range of
categories led primarily by fashion and food products.
Food Bazaar, a supermarket format was incorporated within Big Bazaar in 2002 and is now
present within every Big Bazaar as well as in independent locations. A typical Big Bazaar is
spread across around 50,000 square feet (4,600 m2) of retail space. While the larger metropolises
have Big Bazaar Family centres measuring between 75,000 square feet (7,000 m2) and 160,000
square feet (15,000 m2), Big Bazaar Express stores in smaller towns measure around 30,000
square feet (2,800 m2).
Big Bazaar has the facility to purchase products online through its official web page, and offers
free shipping on some of their products
Innovations
Wednesday Bazaar
Big Bazaar introduced the Wednesday Bazaar concept and promoted it as Hafte Ka Sabse Sasta
Din. It was mainly to draw customers to the stores on Wednesdays, when least number of
customers are observed. According to the chain, the aim of the concept is "to give home makers
the power to save the most and even the stores in the city don a fresh look to make customers
feel that it is their day"
With a desire to achieve sales of Rs 26 Crore in a one single day, Big Bazaar introduced the
concept of "Sabse Sasta Din". The idea was to simply create a day in a year that truly belonged
to Big Bazaar. This was launched on January 26, 2006 and the result was exceptional that police
had to come in to control the mammoth crowd. The concept was such a huge hit that the offer
was increased from one day to three days in 2009 (24 to 26 Jan) and to five days in 2011 (22-26
Jan).
Maha Bachat
Maha Bachat was started off in 2006 as a single day campaign with attractive promotional offers
across all Big Bazaar stores. Over the years it has grown into a 6 days biannual campaign. It has
attractive offers in all its value formats such as Big Bazaar, Food Bazaar, Electronic Bazaar and
Furniture Bazaar - catering to the entire needs of a consumer.
On February 12, 2009 Big Bazaar launched "The Great Exchange Offer", through with the
customers can exchange their old goods in for Big Bazaar coupons. Later, consumers can redeem
these coupons for brand new goods across the nation.
2.5 BOARD MEMBERS
Mr. Kishore Biyani Founder and group Chief Executive Officer of Future Group.
Anshuman Singh Managing Director & CEO, Future Supply Chain Solutions Ltd.
Santosh Desai Managing Director & CEO, Future Brands India Ltd.
INDEPENDENT DIRECTORS:
o Mr. S Doreswamy.
o Dr. D O Koshy.
Three Big Bazaar stores launched within a span of 22 days in Kolkata, Bangalore and
Hyderabad
2002
Food Bazaar becomes part of Big Bazaar with the launch of the first store in Mumbai at High
Street Phoenix
2003
Big Bazaar enters Tier II cities with the launch of the store in Nagpur
Big Bazaar welcomes its 10 million-th customer at its new store in Gurgaon
2004
Big Bazaar wins its first award and national recognition. Big Bazaar and Food Bazaar awarded
the countrys most admired retailer award in value retailing and food retailing segment at the
India Retail Forum
A day before Diwali, the store at Lower Parel becomes the first to touch Rs 10 million turnover
on a single day
2005
Initiates the implementation of SAP and pilots a RFID project at its central warehouse in
Tarapur Launches a unique shopping program: the Big Bazaar Exchange Offer, inviting
customers to exchange household junk at Big Bazaar
Mohan Jadhav sets a national record at Big Bazaar Sangli with a Rs 1,37,367 shopping bill. The
Sangli farmer becomes Big Bazaars largest ever customer.
Big Bazaar launches Shakti, Indias first credit card program tailored for housewives
2007
Big Bazaar partners with Futurebazaar.com to launch India's most popular shopping portal
Big Bazaar initiates the "Power of One" campaign to help raise funds for the Save The Children
India Fund
Pantaloon Retail wins the International Retailer of the Year at US-based National Retail
Federation convention in New York and Emerging Retailer of the Year award at the World Retail
Congress held in Barcelona.
2008
Big Bazaar becomes the fastest growing hypermarket format in the world with the launch of its
101st store within 7 years of launch
Big Bazaar dons a new look with a fresh new section, Fashion@Big Bazaar
Big Bazaar joins the league of Indias Business Super brands. It is voted among the top ten
service brands in the country in the latest Pitch-IMRB international survey
Big Bazaar initiated the Mega Saving "Monthly Bachat Bazaar" campaign, to provide
exceptional deals on groceries and food items during the first week of every month
2009
Big Bazaar initiates Maha Annasantarpane program at its stores in South India a unique
initiative to offer meals to visitors and support local social organizations
Big Bazaar captures almost one-third share in food and grocery products sold through modern
retail in India
Mahendra Singh Dhoni and Asin, youth icons of India, were chosen as the brand ambassadors of
Big Bazaar
Big Bazaar announced the launch of 'The Great Exchange Offer'Formed a joint venture with
Hidesign to launch Holii, a new brand of handbags, laptop bags and other accessories.
2010
Future Value Retail Limited is formed as a specialized subsidiary to spearhead the groups value
retail business through Big Bazaar, Food Bazaar and other formats.
Big Bazaar wins CNBC Awaaz Consumer Awards for the third consecutive year. Adjudged the
Most Preferred Multi Brand Food & Beverage Chain, Most Preferred Multi Brand Retail Outlet
and Most Preferred Multi Brand One Stop Shop
Big Bazaar connects over 30,000 small and medium Indian manufacturers and entrepreneurs
with around 200 million customers visiting its stores
Big Bazaar opens its fourth store in Kanpur at Jajmau which is the largest leather tannery
garrison of Asia
2011
Big Bazaar forays into the rural wholesale and distribution business through Aadhaar
Wholesale store at Kalol, Gujarat.
Big Bazaar has come up a new logo with a new tag line: Naye India Ka Bazaar.
Future Group has launched its latest venture, Foodhall a premium food destination across 10
metros in India
Entered into an agreement with Hindustan Unilever to co-develop and co-brand bakery
products, which would be sold exclusively at Big Bazaar stores.
2012
Big Bazaar entered into a five year multi-million dollar deal with Cognizant Technology
Solutions for IT infrastructure services that support Future Group's network of stores,
warehouses, offices, and data centers.
Partnered with Disney to launch "Kidz Cookies", exclusively for kids across India. Big Bazaar
is planning to add further value to its retail services by offering Value added services like
grinding, de-seeding, vegetables cutting at free of cost.
COMPETITORS
1. Hyper market: Spencers, Vishal Retail, Magnet, Star India Bazaar, Shop Rite.
2. Department stores: Shoppers Stop, Pyramid Mega Store, Lifestyle, Globus, Westside
and Central Mall.
7. Consumer Durable Chains: Viveks, Tata Croma, Vijay Sales, Sumaria and Sony Mony.
3.1 Introduction to Foreign Direct Investment
Prior to understanding the economic progress of India, it is vital to first identify the
current economic status of India so that it is easy to retrace the process leading to the current
status. India presently enjoys the status of an attractive emerging market. However, this status
has been the result of numerous economic reforms adopted over the years. India intent to open its
markets to foreign investment can be traced back to the economic reforms adopted during two
prime periods- pre- independence and post independence.
Pre- independence, India was the supplier of foodstuff and raw materials to the
industrialised economies of the world and was the exporter of finished products- the economy
lacked the skill and means to convert raw materials to finished products. Post independence with
the advent of economic planning and reforms in 1951, the traditional role played changes and
there was remarkable economic growth and development. International trade grew with the
establishment of the WTO. India is now a part of the global economy. Every sector of the Indian
economy is now linked with the world outside either through direct involvement in international
trade or through direct linkages with export and import transactions of other sectors in the
economy.
India has a number of advantages which make it an attractive market for foreign capital
namely, political stability in democratic polity, steady and sustained economic growth and
development, significantly huge domestic market, access to skilled and technical manpower at
competitive rates, fairly well developed infrastructure. FDI has attained the status of being of
global importance because of its beneficial use as an instrument for global economic integration.
In the post-liberalisation period, with increase in GDP, rising per capita income and
proliferation of brands, there have been changes in the purchase behaviour of Indian consumers.
The large consumer base has attracted many global retailers and domestic corporates to invest in
modern retail in India. The government has partially allowed FDI in single-brand retail to give
consumers greater access to foreign brands. At present, there is a debate in India on whether FDI
should be allowed in multi-brand retail. In this context, this paper analyses the impact of the
retail FDI policy on Indian consumers and make policy recommendations for the Indian
government. Based on a primary survey of Indian consumers, the paper examines their shopping
behaviour across different product (branded and non-branded) categories, knowledge of foreign
brands and attitude towards further liberalising FDI in retail. The factors determining the choice
of modern retail outlets are also examined.
The paper showed that the purchase of brands varies across different product categories
and for some, consumers show distinct preference for non-branded products, which are
purchased from traditional outlets. Thus, both traditional and modern retail can coexist in India.
Knowledge and use of foreign brands, especially luxury brands, is low. A majority of the
respondents is in favour of allowing FDI in retail. The paper points out that consumer welfare
should be a key determinant of the retail FDI policy. The government should allow FDI in multi-
brand retail, which will enhance brand knowledge, choices available to consumers and help to
promote branding in certain segments like fruits and vegetables where there are only a few
brands available.
There has been a change in Indian consumers consumption pattern, shopping behaviour
and brand consciousness with the growth in GDP and rise in per capita income in the post-
liberalisation period. Economic development, rise in purchasing power and brand proliferation
has led to retail modernisation in India. Various store and non-store formats have evolved. In
2010, the Indian retail market was valued at $435 billion of which the share of modern retail was
7 per cent. The sector is expected to grow to $535 billion by 2013 with the share of modern retail
at 10 per cent. In 2007, India was ranked the twelfth largest consumer market and it is expected
to be the fifth-largest consumer market by 2025.
The growing Indian market has attracted a number of foreign retailers and domestic
corporates to invest in this sector. Although FDI is not allowed in multi-brand retail, foreign
retailers have entered the Indian market through other routes such as franchising.
The Indian government is aware that the large market, growing consumerism and brand-
consciousness can help sustain high economic growth. It also wants to develop India as an
outsourcing hub for foreign retailers. To give Indian consumers greater access to foreign brands,
in 2006, 51 per cent FDI in single-brand retail was permitted, subject to certain conditions. India
is probably the only country in the world, which has a brand-based FDI retail policy.
At present, there is a debate among policymakers on whether FDI should be allowed in multi-
brand retail and whether such investment should be subject to conditions. While supporters of
FDI in retail have argued that it will lead to better supply chain management and reduce
inflation, the impact on Indian consumers is largely ignored.
3.2 History of Foreign Direct Investment
At the time of independence, the attitude towards foreign capital was one of fear and
suspicion. This was natural on account of the previous exploitative role played by it in draining
away resources from this country.
The suspicion and hostility found expression in the Industrial Policy of 1948 which,
though recognizing the role of private foreign investment in the country, emphasized that its
regulation was necessary in the national interest. Because of this attitude expressed in the 1948
resolution, foreign capitalists got dissatisfied and as a result, the flow of imports of ca[ital goods
got obstructed. As a result, the prime minister had to give following assurances to the foreign
capitalists in 1949:
1. No discrimination between foreign and Indian capital. The government o India will not
differentiate between the foreign and Indian capital. The implication was that the government
would not place any restrictions or impose any conditions on foreign enterprise which were not
applicable to similar Indian enterprises.
2. Full opportunities to earn profits. The foreign interests operating in India would be permitted
to earn profits without subjecting them to undue controls. Only such restrictions would be
imposed which also apply to the Indian enterprises.
Though the Prime Minister stated that the major interest in ownership and effective
control of an undertaking should be in Indian hands, he gave assurance that there would be no
hard and fast rule in this matter.
By a declaration issued on June 2, 1950, the government assured the foreign capitalists
that they can remit the he foreign investments made by them in the country after January 1, 1950.
in addition, they were also allowed to remit whatever investment of profit and taken place.
Despite the above assurances, foreign capital in the requisite quantity did now flow into
India during the period of the First plan. The atmosphere of suspicion had not changed
substantially. However, the policy statement of the Prime Minister issued in 1949 and continued
practically unchanged in the 1956 Industrial Policy Resolution, had opened up immense fields to
foreign participation. In addition, the trends towards liberalization grew slowly and gradually
more strong and the role of foreign investment grew more and more important.
The government relaxed its policy concerning majority ownership in several cases and
granted several tax concessions for foreign personnel. Substantial liberalization was announced
in the New Industrial Policy declared by the government on 24th July 1991 and doors of several
industries have been opened up for foreign investment.
Prior to this policy, foreign capital was generally permitted only in the those industries where
Indian capital was scarce and was not normally permitted in those industries which had received
government protection or which are of basic and/or strategic importance to the country. The
declared policy of the government was to discourage foreign capital in certain inessential
consumer goods and service industries.
The government also laid down that in all those industries where foreign capital
investment is allowed, the major interest in ownership and effective control should always be in
Indian hands (this condition was also often relaxed).
3.3 Retail Reforms in India
Pre-Independence Reforms:
Under the British colonial rule, the Indian economy suffered a major set-back. An
economy with rich natural resources was left plundered and exploited to the hilt under the
English regime. India is originally a agrarian economy. Indias cottage industries and trade were
abused and exploited as means to pave the way for European manufactured goods. Under the
British rule the economy stagnated and on the eve of independence India was left with a poor
economy and the textile industry as the only life support of the industrial economy.
India has been having a robust economic growth since 1991 when the government of
India decided to reverse its socially inspired policy of a retaining a larger public sector with
comprehensive controls on the private sector and eventually treaded on the path of liberalization,
privatisation and globalisation.
During early 1991, the government realised that the sole path to India enjoying any status
on the global map was by only reducing the intensity of government control and progressively
retreating from any sort of intervention in the economy thereby promoting free market and a
capitalist regime which will ensure the entry of foreign players in the market leading to
progressive encouragement of competition and efficiency in the private sector. In this process,
the government reduced its control and stake in nationalized and state owned industries and
enterprises, while simultaneously lowered and deescalated the import tariffs. All of the reforms
addressed macroeconomic policies and affected balance of payments. There was fiscal
consolidation of the central and state governments which lead to the country viewing its finances
as a whole. There were limited tax reforms which favored industrial growth. There was a
removal of controls on industrial investments and imports, reduction in import tariffs. All of this
created a favorable environment for foreign capital investment.
As a result of economic reforms of 1991, trade increased by leaps and bounds. India has
become an attractive destination for foreign direct and portfolio investment.
Post Independence Reforms:
Indias struggle post independence has been an excruciating financial battle with a slow
economic growth and development which were largely due to the political climate and impact of
the economic reforms. The country began it transformation from a native agrarian to industrial to
commercial and open economy in the post independence era. India in the post independence era
followed what can be best called as a trial and error path. During the post independence era, the
Indian Economy geared up in favour of central planning and resource allocation. The
government tailored policies that focussed a great deal on achieving overall economic self-
reliance in each state and at the same time exploit its natural resource. In order to augment trade
and investments, the government sought to play the role of custodian and trustee by intervening
in the practice of crucial sectors such as aviation, telecommunication, banking, energy mainly
electricity, petrol and gas.
The policy of central planning adopted by the government sought to ensure that the
government laid down marked goals to be achieved by the economy thereby establishing a
regime of checks and balances. The government also encouraged self sufficiency with the intent
to encourage the domestic industries and enterprises, thereby reducing the dependence on foreign
trade. Although, initially these policies were extremely successful as the economy did have a
steady economic growth and development, they werent sustained. In the early 1970s, India had
achieved self sufficiency in food production. During the 1970s, the government still continued
to retain and wield a significant spectre of control over key industries such as power, mining,
transportation and communications.
The government of Manmohan Singh, prime minister, announced on 24 November 2011 the
following:
India will allow foreign groups to own up to 51 per cent in "multi-brand retailers", as
supermarkets are known in India, in the most radical pro-liberalisation reform passed by an
Indian cabinet in years;
single brand retailers, such as Apple and Ikea, can own 100 percent of their Indian stores,
up from the previous cap of 51 percent;
both multi-brand and single brand stores in India will have to source nearly a third of
their goods from small and medium-sized Indian suppliers;
all multi-brand and single brand stores in India must confine their operations to 53-odd
cities with a population over one million, out of some 7935 towns and cities in India. It is
expected that these stores will now have full access to over 200 million urban consumers in
India;
multi-brand retailers must have a minimum investment of US$100 million with at least
half of the amount invested in back end infrastructure, including cold chains, refrigeration,
transportation, packing, sorting and processing to considerably reduce the post harvest losses and
bring remunerative prices to farmers;
the opening of retail competition will be within India's federal structure of government.
In other words, the policy is an enabling legal framework for India. The states of India have the
prerogative to accept it and implement it, or they can decide to not implement it if they so
choose. Actual implementation of policy will be within the parameters of state laws and
regulations.
The opening of retail industry to global competition is expected to spur a retail rush to
India. It has the potential to transform not only the retailing landscape but also the nation's ailing
infrastructure.
A Wall Street Journal article claims that fresh investments in Indian organized retail will
generate 10 million new jobs between 20122014, and about five to six million of them in
logistics alone; even though the retail market is being opened to just 53 cities out of about 8000
towns and cities in India.
According to Bloomberg, on 3 December 2011, the Chief Minister of the Indian state of
West Bengal, Mamata Banerjee, who is against the policy and whose Trinamool Congress brings
19 votes to the ruling Congress party-led coalition, claimed that Indias government may put the
FDI retail reforms on hold until it reaches consensus within the ruling coalition. Reuters reports
that this risked a possible dilution of the policy rather than a change of heart.
India Today claimed that the resistance to Indian retail reforms is primarily because it has
been badly sold, even though it can help fix the exploitation of Indian farmers by the decades-old
"arhtiya" and "mandi" monopoly system. India Today claims the policy is good for the small
Indian farmer and the Indian consumers.
Several newspapers claimed on 6 December 2011 that India parliament is expected to
shelve retail reforms while the ruling Congress party seeks consensus from the opposition and
the Congress party's own coalition partners. Suspension of retail reforms on 7 December 2011
would be, the reports claimed, an embarrassing defeat for the Indian government, suggesting it is
weak and ineffective in implementing its ideas.
Anand Sharma, India's Commerce and Industry Minister, after a meeting of all political
parties on 7 December 2011 said, "The decision to allow foreign direct investment in retail is
suspended till consensus is reached with all stakeholders.
On January 11, 2012, India approved increased competition and innovation in single-
brand retail.
The reform seeks to attract investments in production and marketing, improve the
availability of goods for the consumer, encourage increased sourcing of goods from India, and
enhance competitiveness of Indian enterprises through access to global designs, technologies and
management practices. In this announcement, India requires single-brand retailer, with greater
than 51% foreign ownership, to source at least 30% of the value of products from Indian small
industries, village and cottage industries, artisans and craftsmen.
Mikael Ohlsson, chief executive of IKEA, announced IKEA is postponing its plan to
open stores in India. He claimed that IKEA's decision reflects Indias requirements that single-
brand retailers such as IKEA source 30 percent of their goods from local small and medium-
sized companies. This was an obstacle to IKEA's investment in India, and that it will take IKEA
some time to source goods and develop reliable supply chains inside India. Ikea announced that
it plans to double what it sources from India already for its global product range, to over $1
billion a year, within three years. IKEA in the near term, plans to focus expansion instead in
China and Russia, where such restrictions do not exist.
Multi -brand retail reforms
Centre's move to allow foreign direct investment in multi-brand retail, power exchange
and civil aviation have potential to bring revival in the investors' confidence and also
strengthening the economy as a whole.
On September 14,2012, Centre gave green signal to 51% FDI in multi-brand retail, 49%
investment by foreign airlines in aviation sector and also sale of equity in four public sector
units.
Farmer groups
Various farmer associations in India have announced their support for the retail reforms.
For example:
Shriram Gadhve of All India Vegetable Growers Association (AIVGA) claims his organization
supports retail reform. He claimed that currently, it is the middlemen commission agents who
benefit at the cost of farmers. He urged that the retail reform must focus on rural areas and that
farmers receive benefits. Gadhve claimed, "A better cold storage would help since this could
help prevent the existing loss of 34% of fruits and vegetables due to inefficient systems in place."
AIVGA operates in nine states including Maharashtra, Andhra Pradesh, West Bengal, Bihar,
Chattisgarh, Punjab and Haryana with 2,200 farmer outfits as its members.
Bharat Krishak Samaj, a farmer association with more than 75,000 members says it
supports retail reform. Ajay Vir Jakhar, the chairman of Bharat Krishak Samaj, claimed a
monopoly exists between the private guilds of middlemen, commission agents at the sabzi
mandis (India's wholesale markets for vegetables and farm produce) and the small shopkeepers
in the unorganized retail market. Given the perishable nature of food like fruit and vegetables,
without the option of safe and reliable cold storage, the farmer is compelled to sell his crop at
whatever price he can get. He cannot wait for a better price and is thus exploited by the current
monopoly of middlemen. Jakhar asked that the government make it mandatory for organized
retailers to buy 75% of their produce directly from farmers, bypassing the middlemen monopoly
and India's sabzi mandi auction system.
Consortium of Indian Farmers Associations (CIFA) announced its support for retail
reform. Chengal Reddy, secretary general of CIFA claimed retail reform could do lots for Indian
farmers. Reddy commented, India has 600 million farmers, 1,200 million consumers and 5
million traders. I fail to understand why political parties are taking an anti-farmer stand and
worried about half a million brokers and small shopkeepers. CIFA mainly operates in Andhra
Pradesh, Karnataka and Tamil Nadu; but has a growing members from rest of India, including
Shetkari Sanghatana in Maharashtra, Rajasthan Kisan Union and Himachal Farmer
Organisations.
Prakash Thakur, the chairman of the People for Environment Horticulture & Livelihood
of Himachal Pradesh, announcing his support for retail reforms claimed FDI is expected to roll
out produce storage centers that will increase market access, reduce the number of middlemen
and enhance returns to farmers.[70] Highly perishable fruits like cherry, apricot, peaches and
plums have a huge demand but are unable to tap the market fully because of lack of cold storage
and transport infrastructure. Sales will boost with the opening up of retail. Even though India is
the second-largest producer of fruits and vegetables in the world, its storage infrastructure is
grossly inadequate, claimed Thakur.
Economists and entrepreneurs
B. Muthuraman, the president of the Confederation of Indian Industry, claimed the retail
reform would open enormous opportunities and lead to much-needed investment in cold chain,
warehousing and contract farming.
Organized retailers will reduce waste by improving logistics, creating cold storage to
prevent food spoilage, improve hygiene and product safety, reduce counterfeit trade and tax
evasion on expensive item purchases, and create dependable supply chains for secure supply of
food staples, fruits and vegetables. They will increase choice and reduce Indias rampant
inflation by reducing waste, spoilage and cutting out middlemen. Fresh investment in organized
retail, the supporters of retail reform claim will generate 10 million new jobs by 2014, about five
to six million of them in logistics alone.
Organized retail will offer the small Indian farmer more competing venues to sell his or
her products, and increase income from less spoilage and waste. A Food and Agricultural
Organization report claims that currently, in India, the small farmer faces significant losses post-
harvest at the farm and because of poor roads, inadequate storage technologies, inefficient supply
chains and farmer's inability to bring the produce into retail markets dominated by small
shopkeepers. These experts claim India's post-harvest losses to exceed 25%, on average, every
year for each farmer.
Supporters of retail reform, The Economist claims, say it will increase competition and
quality while reducing prices helping to reduce India's rampant inflation that is close to the
double digits. These supporters claim that unorganized small shopkeepers will continue to exist
alongside large organized supermarkets, because for many Indians they will remain the most
accessible and most convenient place to shop.
Chief Ministers of Indian states
Supporters of retail reform who have voiced the need to promote organized retail include
Chief Ministers of several states of India, several belonging to political parties that have no
affiliation with Congress-led central government of India. The list includes the Chief Ministers
of Maharashtra, Andhra Pradesh, Tamil Nadu and Gujarat. In a report submitted earlier in 2011,
these Chief Ministers urged the Prime Minister to prioritize reforms to help promote organized
retail, shorten the retail path from farm to consumer, allow organized retail to buy direct from
farmers at remunerative produce prices, and reduce farm to retail costs. Similarly, the Chief
Minister of Delhi has come out in support of the retail reform, as have the Chief Ministers of the
two farming states of Haryana and Punjab in north India., The Chief Ministers of Haryana and
Punjab claim that the announced retail reforms will immensely benefit farmers in their states.
The Chief Minister of the state of Maharashtra - the state with the highest GDP in India
and home to its financial capital Mumbai - has also welcomed the retail reform.
Current supermarkets
Existing Indian retail firms such as Spencer's, Foodworld Supermarkets Ltd, Nilgiri's and
ShopRite support retail reform and consider international competition as a blessing in disguise.
They expect a flurry of joint ventures with global majors for expansion capital and opportunity to
gain expertise in supply chain management. Spencer's Retail with 200 stores in India, and with
retail of fresh vegetables and fruits accounting for 55 per cent of its business claims retail reform
to be a win-win situation, as they already procure the farm products directly from the growers
without the involvement of middlemen or traders. Spencers claims that there is scope for it to
expand its footprint in terms of store location as well as procuring farm products. Foodworld,
which operates over 60 stores, plans to ramp up its presence to more than 200 locations. It has
already tied up with Hong Kong-based Dairy Farm International. With the relaxation in
international investments in Indian retail, Indias Foodworld expects its global relationship will
only get stronger. Competition and investment in retail will provide more benefits to consumers
through lower prices, wider availability and significant improvement in supply chain logistics.
3.4 Origin of Retail Sector
When man started to cultivate and harvest the land, he would occasionally find himself
with a surplus of goods. Once the needs of his family and local community were met, he would
attempt to trade his goods for different goods produced elsewhere. Thus markets were formed.
These early efforts to swap goods developed into more formal gatherings. When a producer who
had a surplus could not find another producer with suitable products to swap, he may have
allowed others to owe him goods. Thus early credit terms would have been developed. This
would have led to symbolic representations of such debts in the form of valuable items (such as
gemstones or beads), and eventually money.
The Retail Trade is rooted in two groups, the peddlers and producers. Peddlers tended to
be opportunistic in their choice of stock and customer. They would purchase any goods that they
thought they could sell for a profit. Producers were interested in selling goods that they had
produced.
General Store:
This division continues to this day with some shops specializing in specific areas,
reflecting their origins as outlets for producers (such as Pacific Concord of Hong Kong), and
others providing a broad mix, known as General Store (such as Casey's in the Midwest of the
U.S.A.).
Although specialist shops are still with us, over time, the general store has increasingly taken on
specialist products. Customers have found this to be more convenient than having to visit many
shops - thus the term "Convenience Store" has also been applied to these shops.
As the popularity of general stores has grown, so has their size. This combined with the
advent of Self-Service has lead to the Supermarket, or Superstore.
Early Markets:
Over time, producers would have seen value in deliberately over-producing in order to
profit from selling these goods. Merchants would also have begun to appear. They would travel
from village to village, purchasing these goods and selling them for a profit. Over time, both
producers and merchants, would regularly take their goods to one selling place in the centre of
the community. Thus, regular markets appeared.The First Shop : Eventually, markets would
become permanent fixtures i.e. shops. These shops along with the logistics required to get the
goods to them were, the start of the Retail Trade.
Defined as sales of goods between two distant parties where the deliverer has no direct
interest in the transaction, the earliest instances of distance retailing probably coincided with the
first regular delivery or postal services. Such services would have started in earnest once man
had learned how to ride a camel, horse etc.
When individuals or groups left their community and settled elsewhere, some missed
foodstuffs and other goods that were only available in their birthplace. They arranged for some
of these goods to be sent to them. Others in their newly adopted community enjoyed these goods
and demand grew. Similarly, new settlers discovered goods in their new surroundings that they
dispatched back to their birthplace, and once again, demand grew. This soon turned into a regular
trade. Although such trading routes expanded mainly through the growth of traveling salesmen
and then wholesalers, there were still instances where individuals purchased goods at long
distance for their own use. A second reason that distance selling increased was through war. As
armies marched through territories, they laid down communication lines stretching from their
home base to the front. As well as garnering goods from whichever locality they found
themselves in, they would have also taken advantage of the lines of communication to order
goods from home.
Origins of Retail
It is likely that, as markets became more permanent fixtures they evolved into shops.
Although advantageous in many respects, this removed the mobility that a peddler or traveling
merchant may still have enjoyed. For some shopkeepers, it made sense to obtain extra stock and
open up another shop, most probably operated by another family member. This would recover
business from peddlers and create new business and the greater volume would allow the
shopkeeper to strike a better deal with suppliers. Thus the retail chain would have started. Its
thought that this process would have started in china over 2200 years ago with a chain of shops
owned by a trader called Lo Kass.
This all changed in 1915 when Albert Gerrard opened the Groceteria in Los Angeles, the
first documented self-service store. This was soon followed a year later by the Piggly Wiggly
self-service store, founded by Clarence Saunders in Tennessee in the U.S.
Growth:
This new type of shopping was more efficient and many customers preferred it. Although
personal service stores remain to this day, this new concept started a rapid growth of self-service
stores in the United States. Other countries were slow to take up the idea, but there has been a
steady rise in the global amount of self-service stores ever since.
Efficiency
These entrepreneurs noticed that their staff had to spend a great deal of time taking
grocery orders from customers. The groceries were stacked on shelves allowing customers to
walk around and browse, collecting their shopping in a basket that was supplied. The shopkeeper
would only need to tot up the final bill at the end of the process and transfer the goods from the
basket to the customer and receive payment.
From Family Business to Formal Structure:
Although retail chains would have been mostly run by families, as some chains grew,
they would have needed to employ people from outside of their family. This was a limiting factor
as there would have been a limit to the amount of trusted non family members available to help
run the chain. Another, even more definite limiting factor was the distance the furthest shop
would have been from the original shop. The greater the distance, the more time and effort would
have been needed to effectively manage outpost shops and to service them with goods. There
was, therefore, a natural barrier to expansion. That was the case until transport and
communications became faster and more reliable. When this happened towards the end of the
19th century, chains became much bigger and more widespread. Many of these businesses
became more structured and formalized, leading to the retail chain that we see today.
3.5 Indian Retail Industry
Most Indian shopping takes place in open markets or millions of small, independent
grocery and retail shops. Shoppers typically stand outside the retail shop, ask for what they want,
and can not pick or examine a product from the shelf. Access to the shelf or product storage area
is limited. Once the shopper requests the food staple or household product they are looking for,
the shopkeeper goes to the container or shelf or to the back of the store, brings it out and offers it
for sale to the shopper. Often the shopkeeper may substitute the product, claiming that it is
similar or equivalent to the product the consumer is asking for. The product typically has no price
label in these small retail shops; although some products do have a manufactured suggested retail
price (MSRP) pre-printed on the packaging. The shopkeeper prices the food staple and
household products arbitrarily, and two consumers may pay different prices for the same product
on the same day. Price is sometimes negotiated between the shopper and shopkeeper. The
shoppers do not have time to examine the product label, and do not have a choice to make an
informed decision between competitive products.
India's retail and logistics industry, organized and unorganized in combination, employs
about 40 million Indians (3.3% of Indian population). The typical Indian retail shops are very
small. Over 14 million outlets operate in the country and only 4% of them being larger than 500
sq ft (46 m2) in size. India has about 11 shop outlets for every 1000 people. Vast majority of the
unorganized retail shops in India employ family members, do not have the scale to procure or
transport products at high volume wholesale level, have limited to no quality control or fake-
versus-authentic product screening technology and have no training on safe and hygienic storage,
packaging or logistics. The unorganized retail shops source their products from a chain of
middlemen who mark up the product as it moves from farmer or producer to the consumer. The
unorganized retail shops typically offer no after-sales support or service. Finally, most
transactions at unorganized retail shops are done with cash, with all sales being final.
Until the 1990s, regulations prevented innovation and entrepreneurship in Indian
retailing. Some retails faced complying with over thirty regulations such as "signboard licences"
and "anti-hoarding measures" before they could open doors. There are taxes for moving goods to
states, from states, and even within states in some cases. Farmers and producers had to go
through middlemen monopolies. The logistics and infrastructure was very poor, with losses
exceeding 30 percent.
Through the 1990s, India introduced widespread free market reforms, including some
related to retail. Between 2000 to 2010, consumers in select Indian cities have gradually begun to
experience the quality, choice, convenience and benefits of organized retail industry.
In the year 2012, the Indian retail sector is estimated to be Rs. 18,673 billion and it
accounts for around 15 percent of GDP and 8 percent of total employment. The sector is highly
fragmented with about 96 percent of the stores in the unorganized sector. The Kirana stores
(Mom and Pop stores) number around 12 million spread across 5,000 towns and 600,000 villages
throughout India. These are mostly family owned with family labor. At the bottom of the
pyramid is millions of pavement stalls in India. Low overhead requirements and lack of
regulation resulted in low entry barriers which led to overcrowding of the sector and consequent
low productivity.
Retail GDP growth
The basic socio-economic model of the Kirana stores is repeated interactions with
customers closely located geographically- trust in exchange arising through repeated
interactions. Most of the expenditure of Indian consumers is on food, on average about 50
percent of the total retail, which would be a lot higher for low income groups. Majority of Kirana
stores stack up with food grains and dry foods. Fruits and vegetables are sold by pavement stalls
and relatively better organized larger vendors both coexisting side by side. The products are
procured from wholesalers located in certain central part of a city. In the case of fruit and
vegetable vendors, they procure the products everyday at the dawn and ship them to their sale
locations. Since they do not have access to formal credit, they have to manage working capital
effectively- everyday sales have to cover the everyday purchase costs of goods plus a margin on
the sale. Most Kirana stores and wholesalers offer credit to their customers. Boston Consulting
Group (2012) estimated that the retail sales were $ 471 billion with 7 percent share for the
organized retail ($ 34 billion) in 2011.
1. 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, Pyramid, Pantaloon.
2. 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.
3. Discount Stores:
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.
4. 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.
5. 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!.
6. 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.
7. 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.
8. 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.
Specialty stores in retail sector
Food retail :
Food dominates the shopping basket in India. The US$ 6.1 billion Indian foods industry,
which forms 44 per cent of the entire FMCG sales, is growing at 9 per cent and has set the
growth agenda for modern trade formats. Since nearly 60 per cent of the average Indian grocery
basket comprises non-branded items, the branded food industry is homing in on converting
Indian consumers to branded food.
The retail market for mobile phones -- handset, airtime and accessories -- is already a
US$ 16.7 billion business, growing at over 20 per cent per year. In comparison, the consumer
electronics and appliance market is worth US$ 5.6 billion, with a growth rate that is half of the
mobile market.
Kids retail:
When it comes to Indian children, retailers are busy bonding--and branding: Leading the
kids' retail revolution is the apparel business, which accounts for almost 80 per cent of the
revenue, with kids' clothing in India following international fashion trends. According to
research firm KSA Technopak, the branded segment comprises US$ 701.7 million of the total
kids' apparel market-size of over US$ 3 billion.
Industry experts say kids' retailing will touch annual growth of 30-35 per cent. Toys,
stationary, sportswear, outerwear, tailored clothing, eyewear, watches, fragrance, footwear, theme
parks, TV channels the segment is growing rapidly at 10 per cent per annum. Margins are in
the range of 20-25 per cent (for dealers and distributors), while companies enjoy an average
gross margin of about 10 per cent.
Agricultural retail:
Agriculture across India is heralding the country's second Green Revolution. 14 states,
including Maharashtra, Punjab, Andhra Pradesh and Rajasthan amended the Agricultural Produce
Marketing Committee (APMC) act this year, along the lines of the Model APMC Act, '02, which
allows farmers to sell their produce directly to buyers offering them the best price.
With a US$ 5.6 billion, multi-year investment in agriculture and retail, Reliance Retail
will establish links with farms on several thousand acres in Punjab, West Bengal and
Maharashtra. Field Fresh, planning to become India's first large-scale exporter of produce, will
annually pay farmers over US$ 30,000 to lease land for vegetables, to hire tractors and to pay
their workers.
International retailers :
The Australian government's National Food Industry Strategy and Austrade initiated a
test marketing food retail in India wherein 12 major Australian food producers have tied up with
India-based distributor AB Mauri to sell their products directly at retail outlets.
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.
Supermarkets are relatively new entrants in the market. They are so called pioneers in
organized food retailing and go by the western model in look and feel and format. This is what
everybody means when they say organized food retailing.
Franchise outlets:
Tommy Hilfiger and Wal Mart, other US retailers are firming up their India entry
strategies and if they are already in, they are undergoing rapid expansion. Fashion brands DKNY
is also al set to foray into the Indian fashion Industry through a franchisee agreement with Indian
company, S. Kumar Starbucks recently expressed their interest in entering Indian company
Like Tommy Hilfiger and Wal-Mart, other US retailers are firming up their India entry
strategies and if they are already in, they are undergoing rapid expansion. Fashion brand DKNY
is also all set to foray into the Indian fashion Industry through a franchisee agreement with
Indian company, S Kumars.Starbucks recently expressed their interest in entering India through
the franchise route, like their AmericanF&B counterparts Pizza Hut, Subway, and the very
successful McDonalds. McDonalds has major expansion plans lined up; in the next 3 years, it
plans to open another 100 outlets.
Hypermarket:
The new shopping malls that have been expanding their footprint across Indian cities are
well designed, built on international formats of retailing and integrated with entertainment and
restaurants to provide a complete family experience. Over 300 malls are expected to be built over
the next two years and most Indian cities with over a million populations will be exposed to this
modern method of retailing.
Shopping malls have existed in India since several decades but were designed and built to
house several shops in a single facility. These malls also known as Shopping Arcades offered
only rows of shops, most of which were small stores that promised bargains for their various
wares. These Shopping Arcades tried to maximize on their store space and did not offer any areas
for recreation and entertainment.
The present day malls are a creation of the past few years post 2000. They are designed
professionally using a lot of international experience and combine shopping with a lot of brand
building, recreation, food and entertainment. Malls also have a large format store that serves as
their anchor for shopping and a prominent restaurant that anchors the food needs of visitors.
Most malls also feature a multiplex cinema that offers entertainment to the visitors of the mall.
Finally the mall has large atria and open spaces to allow visitors and families to hang-out.
Format Description The Value Proposition
It also shows that by 2020 the size of the organized retail to be around $ 260 billion with
a penetration of 21 percent. Increasing middle class incomes and use of automobiles,
refrigerators, credit cards and adoption of technology for supply chain is expected to shift the
balance in favor of organized retail in metros and small towns.
Growth of Indian retail sector
The Indian retail market, which is the fifth largest retail destination globally, has been
ranked as the most attractive emerging market for investment in the retail sector by AT Kearney's
eighth annual Global Retail Development Index (GRDI), in 2009. As per a study conducted by
the Indian Council for Research on International Economic Relations (ICRIER), the retail sector
is expected to contribute to 22 per cent of India's GDP by 2010.
With rising consumer demand and greater disposable income, the US$ 400 billion Indian
retail sector is clocking an annual growth rate of 30 per cent. It is projected to grow to US$ 700
billion by 2010, according to a report by global consultancy Northbridge Capital. The organised
business is expected to be 20 per cent of the total market by then. In 2008, the share of organised
retail was 7.5 per cent or US$ 300 million of the total retail market.
India continues to be among the most attractive countries for global retailers. Foreign
direct investment (FDI) inflows as on September 2009, in single-brand retail trading, stood at
approximately US$ 47.43 million, according to the Department of Industrial Policy and
Promotion (DIPP).
India's overall retail sector is expected to rise to US$ 833 billion by 2013 and to US$ 1.3
trillion by 2018, at a compound annual growth rate (CAGR) of 10 per cent. As a democratic
country with high growth rates, consumer spending has risen sharply as the youth population
(more than 33 percent of the country is below the age of 15) has seen a significant increase in its
disposable income. Consumer spending rose an impressive 75 per cent in the past four years
alone. Also, organised retail, which is pegged at around US$ 8.14 billion, is expected to grow at
a CAGR of 40 per cent to touch US$ 107 billion by 2013.
62 34 91 80 1st
52 58 71 92 2nd
68 40 53 90 4th
51 56 66 65 9
64 41 59 71 12
70 49 58 40 18
51 35 85 30 25
52 56 57 20 29
Today, retailing doesnt involve just dealing or marketing from shops, it includes
analyzing the market in an effort to provide reasonable prices together with an array of options
and experience to customers. The sole purpose of all this is retaining the brand loyalty of
customers. Indian retail is currently a US$ 245 billion market and is anticipated to extend to
almost US$ 385 billion mark by the next five years. The Indian retail sector is currently sporting
a brand new look and together with a 46.64 per cent three-year Compounded Annual Growth
Rate (CAGR), Conventional marketplaces are paving way for new shopping malls, the likes of
superstores, shopping plazas, supermarkets and brand label stores. International style shopping
centers have started dotting the skyline of cities and smaller towns, acquainting the Indian
customer to a unique shopping experience. The retail industry in India is split up into the
unorganized and organized retail segments.
The unorganized retail sector includes the big, average and modest grocery stores and the
chemist shops. A changeover is taking place from the conventional retail sector to organized
retailing. But the unorganized segment still dominates and leads the industry. By 2010, the Indian
retailing sector is anticipated to become an Rs12.5 trillion market. The share of organized
retailing is supposed to jump to about 10 per cent from the existing three per cent. The
anticipated staggering growth in organized retailing provides an opportunity to expand the
market for both established and new players. According to the latest report India Retail Sector
Analysis (200607)I by RNCOS, the total retail market is primarily focused in rural regions,
which makes up 55 per cent or US$ 165 billion of the overall retail market as opposed to urban
segment, which represents 45 per cent or US$ 135 billion of the gross retail market. The rural
market is spread over 627,000 villages, even though its centre of attention is focused around a
core group of 100,000 villages that makes up 50 per cent of the rural population.
Though India has more than five million retail outlets, they are greatly unorganized.
There is no supply chain management perspective. In fact, out of the entire retail sector in India,
the organized sector is only 25 per cent and the rest is unorganized. 96 per cent of the retail
outlets are smaller in area than the standard norms. The retail industry is divided into organized
and unorganized sectors. Organized retailing refers to trading activities undertaken by licensed
retailers who are registered for sales tax and income tax. These include corporate backed
hypermarket and retail chains and so on. Unorganized retailing is the traditional low-cost shops,
handcarts and pavements and is by far the prevalent form of trade in India. The efficiency of
organized sector in retailing is manifested in some of the newer supermarkets in
urban/metropolitan India the produce is cleaner, fresher, well packed and often cheaper than
the local shopkeeper. This is possible because of the far more efficient distribution system, which
organized retail chains are employing, by cutting the layers of middlemen involved.
The Big Bazaars and Spencers, the huge unorganized retail sector is finally beginning to
see the merit of logging on, even if at a model scale. Taxation policies also push you to automate
and the push is even harder for those looking to expand beyond their single store existence.
Though its early days yet to measure it penetration in the unorganized retail industry,
interest levels are surely raising fast. Its good to at least answer their questions. Though the
interest is more with retailers who register good sales and volumes.
Small retailers seem next in line and vendors are also warming up to the opportunity. At
the low-end however, smart inexpensive solutions are the need of the hour. And solutions
providers like Microsoft, Polaris and Shawman are now working on developing smart tools for
the retail enthusiasts. For small players with just one store, the investment on retail solutions go
really low, anywhere between Rs 10,000 to Rs 25,000. Most of the time these solutions are
developed by local firms, who at times compete with the big names in the industry.
Undeniably, around 96% of Indian retail sector is unorganized and hence majority of
sales take place through unorganized stores popularly known as kirana or mom-and-pop stores.
The unorganized retail sector is expected to grow at about 10% per annum with sales rising from
309 billion in 2006-07 to reach US $ 496 billion in 2011-12. Despite the steady expansion of
organized retailers.
Formats adopted by the Retail Players in INDIA.
Department Store
Piramal's Discount Store (TruMart)
(Piramyd Megastore)
Department Store
(shopper's stop) Supermarket
K Raheja Group
Specialty Store Hypermarket (TBA)
(Crossword)
Department Store
Tata/ Trent Hypermarket (Star India Bazaar)
(Westside)
Kirana I - Sells bakery products, dairy and processed food, home and personal care and
beverages.
Kirana II - Sells categories available at a kirana I store plus cereals, pulses, spices and
edible oils.
Apparel - Sells mens wear, womens wear, innerwear, kinds & infant wear.
Widespread:
Unbeaten caliber of small traders is they naturally widespread. In metros, urban, towns
and rural, they are everywhere. Especially, its really wonder that they all form a network
indirectly, which is very large and spread all across India. Very interestingly it is not really a
network since each shop or store or small vendor is individual or family owned and has no
connection with each other, however since large FMCG like Unilever, Procter & Gamble,
Colgate-Palmolive, Coca Cola, Pepsi and ITC uses them as their final point of retail to the
consumers.
Population:
Indias strength is its population and giant purchasing power of such really helped India
to compete with the global recession and downtrends in all most all the business areas,
exempting few areas. By 2050, According to the United Nation Population Fund (UNFPA)s
State of the World Population 2008 report, while Indias 1.5 per cent average population growth
rate, in comparison to chinas 0.6 per cent for (2005- 2010) will make it make it the populous
country by 2050. India's population is likely to reacharound 1.5 billion by 2025, according to a
United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) projection.
Credit Facility:
Another important key factor, relates to the strong relationship between customer and
shopkeeper, which is mutual beneficiary affair - credit facility. The lower - lower class, lower
-upper class, and also the lower - middle class are the beneficiaries of this facility. The 2004-05
data on the distribution of population among these various groups classified on the basis of
consumption expenditure show that 6.4% of the population is extremely poor, 15.4% is poor,
19.0% is marginal and 36.0% belongs to the vulnerable group. This means that together, a
staggering 77% of the population lives on less than Rs 20 per day, which barely reaches up to the
povertyline.
Bargaining power:
Another important factor and fundamental right of a consumer, bargaining power is safe,
more specifically its alive while trading with unorganised retailers, where as it is vanished in
the latest formats of retailing i.e., in the organizing retailing. The funda of shopping and
showcasing their bargaining skills for the most of the women is only allowed while negotiating
with the unorganised retailing only.
Less Overheads:
For a shopkeeper the overheads are very less because the shop rent, electricity, employee
wages, labour wages, transportation costs are nominal when compared to organised sectors, the
margins are lucrative thus allowing the sellers to sell, at low price to the customer.
Auxiliary Services:
Apart from the above, there are few other factors which are oxidants and also boosters to
unorganised retailing. Another advantage of Kirana shops is their capability of providing so
many auxiliary services to the customers. The services are like providing tea, snacks, photocopy,
local telephone, STD/ISD, fax, courier bookings, travel bookings, newspapers, stationary and
more. The latest service joined among them is one stop store for all the major mobile recharge
coupons, which is helping a lot to the telecommunication firms by saving their setup costs as
well as maintenance costs of opening their showrooms in each.
Dominance in Food & Grocery retailing
The food business in india is largely unorganized adding up to barely Rs.400 billion with
other large players adding another 50 percent to it. The all India consumption is close to Rs.9000
billion, with the total urban consumption around Rs.3,300 billion. This means that aggregate
revenues of large food players is currently only 5 percent of the total Indian market, and 15-20
percent of total urban food consumption. Most food is sold by local marketers like vendors, road
side push cart sellers, or tiny kirana shops.
The unorganized sector will grow @10% per annum but given the relatively weak
financial of the unorganized sector and the space constraints on their compansion prospects, this
sector alone will not be able to meet the growing demand. The unorganized sector will expand
further due to its proximity, goodwill, credit sales, bargaining, loose items, convenient timings
and rome delivery.
ORGANISED RETAIL SECTOR
Retail Industry in India, contributing over 10 per cent to the countrys GDP and
accounting for around 8 per cent of the employment, is the largest among all the industries. Over
the years, it has come forth as one of the most dynamic and fast paced industries.
Online retail
Rural Retail
More than 95 per cent of the Indian retail sector falls in the unorganized sector category.
Organized retail is expected to grow from 5-6 per cent to 14-18 per cent of the total retail market
by 2015.
Organized retail sectors penetration level is 85 per cent in US, 80 per cent in France, 66 per
cent in Japan, 20 per cent in China and, merely 5-6 per cent in India. This confirms that India is
at an early stage of evolution in the organized retail space and has a huge growth potential.
Organised retail is still in the stages of finding its feet in India even now. Though
organised trade makes up over 70-80% of total trade in developed economies, Indias figure is
low even in comparison with other Asian developing economies like China, Thailand, South
Korea and Philippines, all of whom have figures hovering around the 20-25% mark. These
figures quite accurately reveal the relative underdevelopment of the retail industry in India.
Emerging Retail Markets:
India, Russia, China and Vietnam top the list of the most attractive emerging markets for
retailers' investment in 2009, While India and Russia have held the top two spots since 2005,
China's booming consumer spending, together with retailers moving into second-tier cities,
helped it rise to No. 3 from its No. 5 spot last year, according to the 2009 Global Retail
Development Index from management consultant firm A.T. Kearney.
The study based its results on four variables: 'country risk', measuring political risk, debt
and credit ratings; 'market attractiveness', encompassing retail sales per capita, population,
infrastructure and regulations; 'market saturation'; and 'time pressure'.
The higher the ranking, the more urgency for retailers to enter the market, according to
the study, which ranks the top 30 emerging countries for retail development and focuses on
mass-merchant and food retailers.
India has already attracted the attention of global retailers like Wal-Mart Stores Inc.,
which is working with India's Bharti Enterprises to set up a joint venture for a cash-and-carry
business. In India, foreign multiple-brand retailers, which sell diverse brands under one roof, are
limited to cash-and-carry and franchise or license operations.
Nanz in North India, Nilgiris in the South, Pantaloon in the East and Crossroad in the
West were the pioneers of the retail revolution in India. Nanz faced several obstacles in their
business and had to finally down their shutters. Nilgiris, due to some strange reason, did not see
any logic to expand beyond the southern frontiers. Pantaloon went to scale up and become bigger
and bigger to form the Future Group, that is now omnipresent in almost all formats right from
small groceries to e-tailing. Crossroads in Mumbai imparted some valuable lessons to their
parent, the Piramyd Group, who has since then gone on an expansion drive with other formats of
retailing in different cities.
The big players in Indian retail landscape now are the Future Group, Shoppers Stop,
Westside, Subiksha and RPG Spencer. The newcomers who are knocking at the gates are
Reliance Retail, Bharti Walmart and Aditya Birla Trinethra. Here, we intend to do a brief
profiling of the major players in order to understand the retail business in a better manner.
The success of Pantaloons departmental stores encouraged PRIL to come up with other
retailing formats such as Big Bazaar to retail low cost general merchandising, and Food
Bazaar to retail food products. As of 2005, the Future Group has 3.5 million sq ft of retail space
and over 100 stores across 25 cities in India. It employs more than 12,000 people and has a
customer base of more than 120 million.
Shoppers Stop
Shoppers Stop, promoted by the real estate group K Raheja, was one of the first movers
to have set up a large retail outlet in New Delhi with international ambience. Shoppers Stop Ltd
now has a considerable presence all over the country with overr 7 lakh square feet of retail space
and stocks over 200 brands of garments and accessories. The stores are spread all over India with
presence in Mumbai, Delhi, Bangalore, Hyderabad, Jaipur, Pune , Kolkata, Gurgaon, Chennai &
Ghaziabad.
Shoppers Stops customer loyalty program is called The First Citizen. The program
offers its members an opportunity to collect points and avail of innumerable special benefits.
Currently, Shoppers Stop has a database of over 2.5 lakh members who contribute to nearly 50%
of the total sales of Shoppers Stop.
Trent Westside
Established in 1998, Trent operates some of the nation's largest and fastest growing retail
store chains. A beginning was made in 1998 with Westside, a lifestyle retail chain, which was
followed up in 2004 with Star India Bazaar, a hypermarket with a large assortment of products at
the lowest prices. In 2005, it acquired Landmark, India's largest book and music retailer.
Trent retails garments and household accessories for men, women and children,
cosmetics and perfumes at Westside, food, beverages, health and beauty products, vegetables,
fruits, dairy products, consumer electronics and household items at Star India Bazaar and books,
music and stationery at Landmark.
Westside has 25 outlets across 17 cities in India offering a variety of designs and styles in
garments, footwear and accessories, as table linens, artifacts, home accessories and furnishings.
Well-designed interiors, sprawling space, prime locations and coffee shops enhance the
customers' shopping experience.
Piramyd
Piramyd Retail is part of the Piramal Group, which has presence in diverse sectors
spanning Pharmaceuticals, Textiles, Real Estate, Engineering, Family Entertainment and Retail
with manufacturing operations in 19 locations across five states and employing over 18,000
people.
Piramyd Retail currently has 5 Mega stores and 8 TruMart stores mainly in Maharashtra .
The company plans to increase these numbers to 17 Mega stores and 69 TruMarts by 2008. The
floor space is expected to be 5 times on successful expansion.
The FHPC (Food & Personal Care) business is volume driven while the Lifestyle store is
a margin driven business. Piramyd Retail plans to increase the contribution of private labels from
existing 7% to 18-20% of the revenues by 2010. Gross margins from private labels are over 40%
and hence the company is planning to increase this business. Most of the stores are on the lease
format and the company is prone to higher lease rentals due to the overall increase in real estate
prices. This may bring the profit levels down substantially.
Subiksha
The Chennai based Subiksha grocery chain runs around 200 outlets all over the country
and its current turnover stands at Rs 224 crores. Their target customer is the middle income
value conscious buyers. The main aim of Subiksha is to offer a functional and transactional
shopping experience. This retail chain has no qualms and spends almost no money on creating a
pleasant shopping experience, and all stores are non-air conditioned. There is no false roofing or
sparkling vitrified tiles on the floor.
A few years ago, Subiksha did not even offer shoppers self service. The customer had to
place an order at a computerized teller and the goods were billed and delivered after cash is
collected. Customers had to bring their own carrybags or pay to buy them from the store.
Subiksha even attempted to charge the customers for home delivery.
Reliance Retail
On June 26, 2006, Mukesh Ambani, Chairman and Managing Director, Reliance
Industries Limited, announced a Rs 25,000-crore investment in the retail sector.
Reliance Retail started its retail operation with Reliance Fresh, a grocery store that
sells vegetables, fruits, personal care items and other food products. Soon, these retail outlets will
also be selling apparel and footwear, lifestyle and home improvement products, electronic goods
and farm implements and inputs.
Reliance Retail plans to extend its footprint to cover 1,500 Indian cities and towns with
outlets of a varied format, a mix of neighborhood convenience stores, supermarkets, specialty
stores and hypermarkets. Reliance also plans to open restaurant outlets, financial services marts
and tourism counters within its stores.
The Aditya Birla Group is India's first truly multinational corporation. Global in vision,
rooted in values, the Group is driven by a performance ethic pegged on value creation for its
multiple stakeholders. A US$ 24 billion conglomerate, with a market capitalization of US$ 23
billion and in the League of Fortune 500, it is anchored by an extraordinary force of 100,000
employees belonging to over 25 different nationalities. Over 50 per cent of its revenues flow
from its operations across the world. Our mission is to change the way people shop. We will
give them more. says Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group. The more.
for you advantage: more. promises a world-class pleasurable shopping experience to Indian
consumers in their very own neighborhood. more. Quality, more. variety, more. convenience and
more. value are the four delivery cornerstones of the more. chain of supermarket stores. more.
METRO CASH & CARRY INDIA
METRO Group today, is the third largest trading and retailing group in the world. The
company employs over 2,50,000 staff in 30 countries. In the year 2005 METRO Group had
generated sales of over 55.7 billion; 53% of total sales came from outside Germany. METRO
Cash & Carry started operations in India in 2003 with two Distribution Centres in Bangalore.
With this METRO introduced the concept of Cash & Carry to India. These Centres offer the
benefit of quality products at the best wholesale price to over 150,000 businesses in Bangalore.
METRO offers assortment of over 18000 articles across food and non food at the best wholesale
prices to business customers such as Hotels, Restaurants, Caterers, Food and Non-food Traders,
Institutional buyers and professionals. METRO's Cash & Carry business model is based on a
Business to Business (B2B) concept and focuses on meeting all the needs and requirements of
business customers. It is a modern format of wholesale trading, catering only to business
customers.
Bharti Wal-Mart
Bharti Retail (Pvt.) Ltd. unveiled the roadmap for its retail venture on 19 th February, 2007
envisaging an investment of $2.5 billion with expectation of revenue of $4.5 billion (about Rs.
20,000 crore) from this business by 2015. The first retail outlet is expected to open somewhere in
the month of August .
Bhartis plan is to invest $2.5 billion by 2015 and open stores across all major cities. This
investment would be only for setting up front-end stores. The modalities for its back-end linkage,
including its joint venture with the world's largest retailer Wal-Mart, are in the process of being
worked out.
A high-level team from Wal-Mart was visited India in the later part of February to work
out the details of the back-end chain. While Bharti would manage front-end of the retail venture,
Wal-Mart would be involved in the back-end, including logistics, supply chain and cash-and-
carry, he added.
The JV was presently scouting for 10 million sq. ft. of retail space, which would include
hypermarkets, supermarkets and convenience stores and would provide employment to about
60,000 people. The company would open multi-format retail outlets in all cities with a
population of about one million. Bharti is now conducting a massive consumer survey to take a
final decision on branding and promotional campaign.
However, Bharti and Wal-Mart have been facing stiff opposition from the left parties and
other political outfits who fear that the entry of the Bentonville giant will make life difficult for
the small grocers and create massive unemployment. They also expect Wal-Mart to take a tough
stance on lowering prices and force farmers to sell their produce at lower rates. A lurking fear of
monopolistic regime in the retail sector is also enhancing their fears. Both Bharti and Walmart
are presently having a tough time in convincing the ministers, politicians, agriculturists, the
NGOs and other pressure groups that their business model would serve to work in the best
interests of all the stakeholders.
3.7 Foreign Direct Investment in India
Starting with the market reforms initiated in 1991, India gradually opened up its economy
to FDI in a wide range of sectors. The licence-raj system was dismantled in almost all the
industries. The infrastructure sector which was in dire need of capital welcomed foreign equity.
FDI was especially encouraged in ports, highways, oil and gas industries, power generation and
telecommunication. Consumer goods and service sector which was once completely off-limits
for foreign equity was also gradually opened up. The reserve bank of India set up an automatic
approval system which allowed investments in slabs of 50, 51 or 74% depending on the priority
of the industry, as defined by the government. The foreign investment limits were slowly raised
and some sectors saw the limits raised to 100%.
The reforms thus led to a gradual increase in FDI in India. Table 3 shows the FDI flow to
India after the structural reforms began in 1991. As can be seen from the table, FDI increased
from a non-existent value in the start to about $4 billion a year. It should be noted that till 2000,
the figure of FDI reported actually underestimates the amount of FDI according to IMF
definition. This is because the Indian government had its own definition of FDI and did not
include heads like reinvested earnings, proceeds of foreign listings and foreign subordinated
loans to domestic subsidiaries. But, the government recognized this problem and after a study
undertaken in 2003, the standard definition of FDI as suggested by the IMF was adopted by the
Indian government.
The Indian retail market is estimated to be US$ 450 billion and one of the top five retail markets
in the world by economic value. India is one of the fastest growing retail markets in the world,
with 1.2 billion people. India's retailing industry is essentially owner manned small shops. In
2010, larger format convenience stores and supermarkets accounted for about 4% of the industry,
and these were present only in large urban centers. India's retail and logistics industry employs
about 40 million Indians (3.3% of Indian population). Until 2011, Indian central government
denied foreign direct investment (FDI) in multibrand retail, forbidding foreign groups from any
ownership in supermarkets, convenience stores or any retail outlets. Even single-brand retail was
limited to 51% ownership and a bureaucratic process. In November 2011, India's central
government announced retail reforms for both multi-brand stores and single-brand stores. These
market reforms paved the way for retail innovation and competition with multi-brand retailers
such as Walmart, Carrefour and Tesco, as well single brand majors such as IKEA, Nike, and
Apple. The announcement sparked intense activism, both in opposition and in support of the
reforms. In December 2011, under pressure from the opposition, Indian government placed the
retail reforms on hold till it reaches a consensus. In January 2012, India approved reforms for
single-brand stores welcoming anyone in the world to innovate in Indian retail market with 100%
ownership, but imposed the requirement that the single brand retailer source 30% of its goods
from India. Indian government continues the hold on retail reforms for multi-brand stores.[7]
IKEA announced in January that it is putting on hold its plan to open stores in India because of
the 30% requirement.[8] Fitch believes that the 30% requirement is likely
to significantly delay if not prevent most single brand majors from Europe, USA and Japan from
opening stores and creating associated jobs in India
Entry Options For Foreign Players prior to FDI Policy
Although prior to Jan 24, 2006, FDI was not authorised in retailing, most general players ha\d
been operating in the country. Some of entrance routes used by them have been discussed in
sum as below:-
1. Franchise Agreements
It is an easiest track to come in the Indian market. In franchising and commission agents
services, FDI (unless otherwise prohibited) is allowed with the approval of the Reserve Bank of
India (RBI) under the Foreign Exchange Management Act. This is a most usual mode for
entrance of quick food bondage opposite a world. Apart from quick food bondage identical to
Pizza Hut, players such as Lacoste, Mango, Nike as good as Marks as good as Spencer, have
entered Indian marketplace by this route.
2. Cash And Carry Wholesale Trading
100% FDI is allowed in wholesale trading which involves building of a large distribution
infrastructure to assist local manufacturers.[7] The wholesaler deals only with smaller retailers
and not Consumers. Metro AG of Germany was the first significant global player to enter India
through this route.
Some foreign brands give exclusive licences and distribution rights to Indian companies.
Through these rights, Indian companies can either sell it through their own stores, or enter into
shop-in-shop arrangements or distribute the brands to franchisees. Mango, the Spanish apparel
brand has entered India through this route with an agreement with Piramyd, Mumbai, SPAR
entered into a similar agreement with Radhakrishna Foodlands Pvt. Ltd.
The foreign brands such as Nike, Reebok, Adidas, etc. that have wholly-owned subsidiaries in
manufacturing are treated as Indian companies and are, therefore, allowed to do retail. These
companies have been authorised to sell products to Indian consumers by franchising, internal
distributors, existent Indian retailers, own outlets, etc. For instance, Nike entered through an
exclusive licensing agreement with Sierra Enterprises but now has a wholly owned subsidiary,
Nike India Private Limited.
3.8 FDI Policy in India
Foreign Investment in India is governed by the FDI policy announced by the Government
of India and the provision of the Foreign Exchange Management Act (FEMA) 1999. The Reserve
Bank of India (RBI) in this regard had issued a notification, which contains the Foreign
Exchange Management (Transfer or issue of security by a person resident outside India)
Regulations, 2000. This notification has been amended from time to time.
The foreign investors are free to invest in India, except few sectors/activities, where prior
approval from the RBI or Foreign Investment Promotion Board (FIPB) would be required.
It will be prudent to look into Press Note 4 of 2006 issued by DIPP and consolidated FDI
Policy issued in October 2010[5] which provide the sector specific guidelines for FDI with
regard to the conduct of trading activities.
a) FDI up to 100% for cash and carry wholesale trading and export trading allowed under the
automatic route.
b) FDI up to 100 % with prior Government approval (i.e. FIPB) for retail trade of Single
Brand products.
FDI encouraging policy can remove the present limitations in Indian system such as
Infrastructure
There has been a lack of investment in the logistics of the retail chain, leading to an
inefficient market mechanism. Though India is the second largest producer of fruits and
vegetables (about 180 million MT), it has a very limited integrated cold-chain infrastructure,
with only 5386 stand-alone cold storages, having a total capacity of 23.6 million MT. , 80% of
this is used only for potatoes.
intermediaries often flout mandi norms and their pricing lacks transparency. Wholesale
regulated markets, governed by State APMC Acts, have developed a monopolistic and non-
transparent character. According to some reports, Indianfarmers realize only 1/3rd of the total
price paid by the final consumer, as against 2/3rd by farmers in nations with a higher share of
organized retail.
No Global Reach
The Micro Small & Medium Enterprises (MSME) sector has also suffered due to lack of
branding and lack of avenues to reach out to the vast world markets. While India has continued
to provide emphasis on the development of MSME sector, the share of unorganised sector in
overall manufacturing has declined from34.5% in 1999-2000 to 30.3% in 2007-08. This has
largely been due to the inability of this sector to access latest technology and improve its
marketing interface.
The Government has not categorically defined the meaning of Single Brand anywhere
neither in any of its circulars nor any notifications.
In single-brand retail, FDI up to 100 per cent is allowed, subject to Foreign Investment
Promotion Board (FIPB) approval and subject to the conditions mentioned in Press Note 3 that
(a) only single brand products would be sold (i.e., retail of goods of multi-brand even if produced
by the same manufacturer would not be allowed), (b) products should be sold under the same
brand internationally, (c) single-brand product retail would only cover products which are
branded during manufacturing and (d) any addition to product categories to be sold under
single-brand would require fresh approval from the government.
While the phrase single brand has not been defined, it implies that foreign companies
would be allowed to sell goods sold internationally under a single brand, viz., Reebok, Nokia,
Adidas. Retailing of goods of multiple brands, even if such products were produced by the same
manufacturer, would not be allowed.
Going a step further, we examine the concept of single brand and the associated conditions:
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 and not the Reebok
brand, for which separate permission is required. If granted permission, Adidas could sell
products under the Reebok brand in separate outlets.
Now, taking an example of a large departmental grocery chain, prima facie it appears that
it would not be able to enter India. These chains would, typically, source products and, thereafter,
brand it under their private labels. Since the regulations require the products to be branded at the
manufacturing stage, this model may not work. The regulations appear to discourage own-label
products and appear to be tilted heavily towards the foreign manufacturer brands.
There is ambiguity in the interpretation of the term single brand. The existing policy
does not clearly codify whether retailing of goods with sub-brands bunched under a major parent
brand can be considered as single-brand retailing and, accordingly, eligible for 51 per cent FDI.
Additionally, the question on whether co-branded goods (specifically branded as such at the time
of manufacturing) would qualify as single brand retail trading remains unanswered.
On September 14,2012, Centre gave green signal to 51% FDI in multi-brand retail, 49%
investment by foreign airlines in aviation sector and also sale of equity in four public sector
units.
History has witnessed that the concern of allowing unrestrained FDI flows in the retail
sector has never been free from controversies and simultaneously has been an issue for
unsuccessful deliberation ever since the advent of FDI in India. Where on one hand there has
been a strong outcry for the unrestricted flow of FDI in the retail trading by an overwhelming
number of both domestic as well as foreign corporate retail giants; to the contrary, the critics of
unrestrained FDI have always fiercely retorted by highlighting the adverse impact, the FDI in the
retail trading will have on the unorganized retail trade, which is the source of employment to an
enormous amount of the population of India.
The antagonists of FDI in retail sector oppose the same on various grounds, like, that the
entry of large global retailers such as Wal-Mart would kill local shops and millions of jobs, since
the unorganized retail sector employs an enormous percentage of Indian population after the
agriculture sector; secondly that the global retailers would conspire and exercise monopolistic
power to raise prices and monopolistic (big buying) power to reduce the prices received by the
suppliers; thirdly, it would lead to asymmetrical growth in cities, causing discontent and social
tension elsewhere. Hence, both the consumers and the suppliers would lose, while the profit
margins of such retail chains would go up. Many trading associations, political parties and
industrial associations have argued against FDI in retailing due to various reasons. It is generally
argued that the Indian retailers have yet to consolidate their position. The existing retailing
scenario is characterized by the presence of a large number of fragmented family owned
businesses, who would not be able to survive the competition from global players. The examples
of south East Asian countries show that after allowing FDI, the domestic retailers were
marginalised and this led to unemployment.
Attraction
Retailing is being perceived as a beginner and as an attractive commercial business for
organized business i.e. the pure retailer is starting to emerge now. Indian organized retail industry
is one of the sunrise sectors with huge growth potential. Total retail market in India stood at USD
350 billion in 2007-08 and is estimated to attain USD 573 billion by 2012-13.
Organised retail industry accounts for only 5.5% of total retail industry and is expected to reach
10% by 2012 (http://business.rediff.com). AT Kearney, the wellknown international management
consultancy, recently identified India as the second most attractive retail destination globally
from among thirty emergent markets. It has made India the cause of a good deal of excitement
and the cynosure of many foreign investors eyes. With a contribution of an overwhelming 14%
to the national GDP and employing 7% of the total workforce (only agriculture employsmore) in
the country, the retail industry is definitely one of the pillars of the Indian economy Foreign
companies attraction to India is the billion-plus population. Also, there are huge employment
opportunities in retail sector in India. Indias retail industry is the second largest sector, after
agriculture, which provides employment. According to Associated Chambers of Commerce and
Industry of India (ASSOCHAM), the retail sector will create 50,000 jobs in the next few years.
As per the US Census Bureau, the young population in India is likely to constitute 53per cent of
the total population by 2020 and 46.5 per cent of the population by 2050 much higher than
countries like the US, the UK, Germany, China etc. Indias demographic scenario is likely to
change favourably, and therefore, will most certainly drive retail sales growth, especially in the
organised retail segment. Even though organised retailer shave a far lesser reach in India than in
other developed countries, the first-mover advantage of some retail players will contribute to the
sectors growth. India in such a scenario presents some major attractions to foreign retailers.
There is a huge, industry with no large players. Some Indian large players have entered just
recently like Reliance, Trent. Moreover, India can support significant players averaging $1 bn. in
Grocery and $0.3- 0.5 bn. in apparel within next ten years. The
transition will open multiple opportunities for companies and investors. In addition to these,
improved living standards and continuing economic growth, friendly business environment,
growing spending power and increasing number of conscious customers aspiring to own quality
and branded products in India are also attracting to global retailers to enter in Indian market.
3.11 Qualitative Analysis
Porters Five Force Model
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 favourable 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, uncomputerised
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.
5. 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.
SWOT Analysis of Retail Sector:
1. Strengths:
Major contribution to GDP: the retail sector in India is hovering around 33-35% of GDP as
compared to around 20% in USA.
High Growth Rate: the retail sector in India enjoys an extremely high growth rate of
approximately 46%.
High Potential: since the organised portion of retail sector is only 2-3%, thereby creating lot
of potential for future players.
High Employment Generator: the retail sector employs 7% of work force in India, which is
right now limited to unorganised sector only.Once the reforms get implemented this percentage
is likely to increase substantially.
2. Weaknesses (limitation):
Lack of Competitors: AT Kearneys study on global retailing trends found that India is least
competitive as well as least saturated markets of the world.
Highly Unorganised: The unorganised portion of retail sector is only 97% as compared to US,
which is only 20%.
Low Productivity: Mckinsey study claims retail productivity in India is very low as compared
to its international peers.
Shortage of Talented Professionals: the retail trade business in India is not considered as
reputed profession and is mostly carried out by the family members (self-employment and
captive business). Such people are not academically and professionally qualified.
No Industry status, hence creating financial issues for retailers: the retail sector in India
does not enjoy industry status in India,thereby making difficult for retailers to raise funds.
3. Opportunities (benefits):
There will be more organization in the sector: Organized retail will need more workers.
According to findings of KPMG , in China, the employment in both retail and wholesale trade
increased from 4% in 1992 to about 7% in 2001, post reforms and innovative competition in
retail sector in that country.
Healthy Competition will be boosted and there will be a check on the prices (inflation):Retail
giants such as Walmart, Carrefour, Tesco, Target and other global retail companies already have
operations in other countries for over 30 years. Until now, they have not at all become
monopolies rather they have managed to keep a check on the food inflation through their healthy
competitive practices.
Create transparency in the system: the intermediaries operating as per mandi norms do not
have transparency in their pricing. According to some of the reports, an average Indian farmer
realises only one-third of the price, which the final consumer pays.
Intermediaries and mandi system will be evicted, hence directly benefiting the farmers and
producers: the prices ofcommodities will automatically be checked. For example, according to
Business Standard, Walmart has introduced Direct Farm Project at Haider Nagar in Punjab,
where 110 farmers have been connected with Bharti Walmart for sourcing fresh vegetables
directly.
4. Threats:
Current Independent Stores will be compelled to close. This will lead to massive job loss as
most of the operations in big stores like Walmart are highly automated requiring less work force.
Big players can knock-out competition: they can afford to lower prices in initial stages,
become monopoly and then raise prise later.
India does not need foreign retailers: as they can satisfy the whole domestic demand.
Remember East India Company it entered India as trader and then took over politically.
The government hasnt able to build consensus.
Primary among these is the concern regarding the kirana stores as well other locally operated
Mom and Pop stores being adversely affected by the entry of global retail giants such as
Walmart, Carrefour and Tesco. As these brands would come with advanced capabilities of scale
and infrastructure in addition to having deep pockets, it is argued that this would result in the loss
of jobs for lakhs of people absorbed in the unorganised sector.
Fears have also been raised over the lowering of prices of products owing to better
operational efficiencies of the organised players that would affect the profit margins of the
unorganised players.
Instability surrounding the political arena with a number of scams of varying magnitudes
doing the rounds has also led to a sense of uncertainty among foreign investors. Many Industry
experts though, feel that the reservations against the introduction of Multi-Brand retail are mostly
misplaced. The successful deployment of 100%FDI in China is a case in point. Partial FDI in
retail was introduced in 1992 in China. Subsequently, in December 2004, the Chinese retail
market was fully opened up to utilise the enormous manpower and wide customer base available
that has led to a rapid growth of the sector. Today, its retail sector is the second largest (in value)
in the world with global retailers such as Walmart, 7-Eleven and Carrefour comprising 10% of
the total merchandise.
Myth: Organized global retailers eat up local retail chains including mom and pop
stores
Truth: China, which brought in global retailers like Wal-Mart in 1996, has just
about 20% 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 2000.
Impact on Consumers and existing Supermarkets
Supermarkets tend to charge consumers lower prices and offer more diverse products and
higher quality than traditional retailersthese competitive advantages allow them to spread
quickly, winning consumer market share. In most countries supermarkets offer lower prices first
in the processed and semiprocessed food segments. Only recently, mainly in the first- and
second-wave countries have supermarket prices for fresh fruits and vegetables been lower than
traditional retailers (except in India). The food price savings accrue first to the middle class, but
as supermarkets spread into the food markets of the urban poor and into rural towns, they have
positive food security impacts on poor consumers. For example, in Delhi, India, the basic foods
of the urban poor are cheaper in supermarkets than in traditional retail shops: rice and wheat are
15% cheaper and vegetables are 33% cheaper.
Existing Indian retail firms such as Spencer's, Foodworld Supermarkets Ltd, Nilgiri's and
ShopRite support retail reform and consider international competition as a blessing in disguise.
They expect a flurry of joint ventures with global majors for expansion capital and opportunity to
gain expertise in supply chain management. Spencer's Retail with 200 stores in India, and with
retail of fresh vegetables and fruits accounting for 55% of its business claims retail reform to be
a win-win situation, as they already procure the farm products directly from the growers without
the involvement of middlemen or traders. Spencers claims that there is scope for it to expand its
footprint in terms of store location as well as procuring farm products. Foodworld, which
operates over 60 stores, plans to ramp up its presence to more than 200 locations. It has already
tied up with Hong Kong-based Dairy Farm International. With the relaxation in international
investments in Indian retail, Indias Foodworld expects its global relationship will
only get stronger.
Benefits
The allowing of FDI in retail is one of the most crtical reforms taking place in India post
the great reforms period of 1991. Well the only difference is that this time around there we are
not staring at bankrupcty but only at slow down in the economy. There has been huge hue and
cry amongst the opposition benches and the some of the allies of the rulling party over the new
policy to allow upto 51% FDI in multi brand retail in India.
Before understanding the benefits of FDI in retail. Let us understand what the policy states:
The truth is much different from its told , following are TEN direct benefits of entry of multi
brand retail in India.
1) Direct benefit to Farmers: The biggest beneficiary of FDI in retail will be directly the
farmers in India. Across the world the big retail giants buy the produce directly from the farmers,
thereby eliminating the middle men. Thus farmers will get much better price which can be atleast
15-20% higher than the existing price they get.
In present system the farmers get approx only 30-35% of the retail price, rest all is taken
over by middle men like traders etc. For eg during the onion shortage in India most of the
hoarding was done by onion traders, whereas they got price as high as Rs. 35 Kg, the farmer got
only Rs. 4-5 Kg.Thus farmers will directly benefit from direct purchase.
2) Reduction in Food Inflation: The incoming of FDI will bring in strong competition amongst
the retailers at the same time the elimination of middle men who are also the hoarders of stocks
will help reducing the supply constraint. The direct purchase policy of bigger retailers will help
in passing on the benefit of low procurement cost directly to consumers. Thus helping in
reducing food based inflation to a great extent.
3) Earning of Forex: India will earn a great amount of foreign exchange reserves from the
investments which the mega multi brand retailers will do in India. Each retailer is suppose to do
minimum of 100 million dollars, considering that setting up an average one store costs 5-10
million dollars, one can easily expect to get investment upto 1 billion dollar from each retailer in
total, which can be approx 15-25 billion dollars spread over 5 years.
4) Huge Employment Benefits: The international model suggests that all those countries which
opened up multi brand retail to FDI added huge amount of employment. In India the government
expects it to generate atleast 1 million employment over the next few years.
It is very critical to note that the government is allowing Foreign retailers to open retail
stores in India in joint venture with Indian partners only in top 53 cities with a population of 1
million and above.
5) Drop in Food Wastage: A huge chuck of almost 30-40% of total food is wasted in
transportation and poor storage facilities. Not to mention the millions of grains that rot in
govermennt godowns every year. The government has made it compulsory for the foreign
retailers to invest alteast 50% of the investment in infrastructre. Thus it will become critical for
them to reduce food wastage by making better storage and quick transport facilities available.
6) Better Consumer Choice: The other major beneficial will the consumer. Since most of the
retail stores operate over a very large format they generally have a large amount of SKUs
(products). Thus they will store as much variety as possible. Which generally kirana stores do not
keep since they are not sure of its sale.
7) Benefit to Kirana Stores: Well dont be surprised from this point but its true. As per
government approved policy it is compulsory for the mega retailers to have 30% of their sales
from small retailers. The Punjab state is a perfect example of this cash and carry model.
At the same time one must realise that the kirana store retailers have been paying a high
price to middle men to procure good, which they can now procure at much lower price from the
bigger multi brand foreign retailers. At the same time the multi brand retailers with FDI will be
allowed to sell only in 53 big cities with population of more than one million. Thus the Kirana
stores can directly benefit from buying from cities and selling them in their towns.
8) Creation of backend Infrastructure: The government has made it compulsory for the
foreign brand multi retailer to invest alteast 50% if there amount into back end infrastructre.
Thus giving a boost to facilites like cold storage, food grain banks etc, ..
9) More Purchase from SMEs: Its been made mandatory by the government for the mega brand
multi retailers to procure at least 30% of its requirement from SMEs. Till today its been very
difficult for the SMEs to sell their products via kirana stores since non existence of brand. The
kirana stores used to reject the goods produce by SMEs due to lower offload. But the multi brand
retailer will have to compulsorily purchase from the SME upto 30%.
10) Overall growth: Indias GDP has been slowing down since last few quarters. The influx of
foreign funds will lead to huge incoming of investments in critical sectors like construction,
employments etc. Such investment will easily contribute up to 0.5% to the GDP growth backed
by other critical reforms. Though the government has to bring down interest rates to boost
growth, it also has to bring in more reforms.
Biggest Loser will be the middle men, who have been hoarding the goods time and again to
make super profits and to work against interest of consumers thereby leading to super inflation.
Thus one can safely say that government has done a pretty good home work before coming up
with FDI in Indian mulit brand retail. At the same time one must not forget that Kirana stores
as in India also exists in US alongside Walmart which is mostly in outskirts of city.
At a time when Prime Minister Manmohan Singh is refusing to rollback the decision to open the
retail sector to foreign direct investment saying it will benefit our country, the American
President Obama thinks otherwise. In a tweet on Saturday (Nov 26), President Obama wrote:
support small businesses in your community by shopping at your favourite local store.
While President Obama is talking of what is good for America, Manmohan Singh too is adamant
on protecting American interests. It is primarily for this reason that Manmohan Singhs assertion
that retail FDI will benefit our country and improve rural infrastructure, reduce wastage of
agricultural produce and enable our farmers to get better prices for their crops is not borne on
facts. In the midst of the rhetorical contests in the TV studios, the real facts have been sacrificed
for the sake of political partisanship.
A lot has been said and written about the virtues of allowing FDI in retail into India. Let
me make an attempt to answer some of the bigger claims that Commerce Minister Anand Sharma
as well as the Prime Minister have repeatedly made. Frankly, their arguments seem to be driven
more by political expediency rather than any economic understanding, and that is more
worrying.
First, the biggest argument in favour of multi-brand retail is that it will create 10 million jobs by
the year 2010. There is no justification for this claim. In the United States, Wal-Mart dominates
big retail. It has a turnover of US $ 400 billion, and employs 2.1 million people. Ironically, the
Indian retail sector too has a turnover of US $ 400 billion, but has 12 million shops and employs
44 million people. It is the Indian retail which is a much-bigger employer, and any effort to allow
Wal-Mart will only destroy millions of livelihoods.
Take the case of England. The two big retail giants are Tesco and Sainsbury. Both had
committed to create 24,000 jobs between them, in the past two years. A British government
enquiry found out that instead of creating any additional job, these two big retail companies had
actually thrown out 850 people from existing jobs. The big retail units which failed to create jobs
in their own countries cannot be expected to create additional employment in India.
Second, Anand Sharma says that retail FDI will provide 30 per cent more income to farmers.
There can be no bigger lie than this. In the US, for instance, if Wal-Mart was able to enhance
farm incomes there was no reason why the America government would dole out a massive
subsidy of US $ 307 billion under the US Farm Bill 2008, which basically makes a budgetary
subsidy provision for the next five years. Most of these subsidies are clubbed in the category of
Green Box under the WTO. And as per an UNCTAD-India study, if the Green Box subsidies are
withdrawn, American agriculture faces a collapse.
Third, big retail helps remove the middlemen and therefore provides a better price to farmers.
Again, it is a flawed argument and is not borne on any evidence. Studies show that in America in
the first half of 20th century, for every dollar worth of produce a farmer sold, 70 cents was his
income. In 2005, farmers income had fallen to 4 per cent. This is despite the presence of Wal-
mart and other big retailers in America.
In other words, the middlemen are not squeezed out as is the general understanding but in
reality their number actually increases. A new battery of middlemen quality controller,
standardiser, certification agency, processor, packaging consultant etc now operate under the
same retail hub and have been walking away with farmers income. Moreover, due to the sheer
size and buying power, big retail generally depresses producer prices. In England, Tesco for
example paid 4 per cent less to producers. Low supermarket prices in Scotland have forced irate
farmers to form a coalition called Fair Deal Food to seek better price for their farm produce.
Fourth, retail FDI will source 30 per cent from the small and medium enterprises and therefore
will benefit Indian manufacturers. This is an afterthought, especially after a section of the media
highlighted the discrepancy. Even though Anand Sharma says 30 per cent products would be
sources from within the country, the facts remains that under the WTO agreements, India cannot
limit the big retail from outsourcing its products from anywhere in the world.
Using the WTO provisions, multi-brand retail will flood the Indian market with cheaper
Chinese manufactured goods thereby wiping out the domestic SME sector. At the same time, the
Indian Stamp on multi-brand retail that Anand Sharma claims will have at least 60 per cent
investment on back end systems is also not based on facts. As per the definition of back-end,
anything that is not front-end becomes back-end and has to be self-certified. Which means
even the expenses on the corporate headquarter becomes back-end investment. In any case, 51
per cent FDI in cold storages etc is already provided and yet no investment has come.
Fifth, more importantly, in an eye-opening study entitled Wal-Mart and Poverty, Pennsylvania
State University in the United States has clearly brought out that those American states that had
more Wal-Mart stores in 1987, had higher poverty rates by 1999 than the states where fewer
stores were set up. This is something that the government is not talking about but should ring an
alarm bell for a country which is reeling in poverty, hunger and squalor.
18-40 45
40-60 15
60 above 10
No. of customers age wise
10%
30% Below 18
15%
18-40
40-60
60 above
45%
Analysis
From the table, and pie chart depicted above, the distribution of the population under study is
evident. Of the 100 respondents who answered the questionnaire, 45% indicated that their ages
fell in the category 18-40 years 30% indicated below 18, 15% indicated 40-60 year and 10%
indicated 60 above.
Male 65
Female 35
35%
Male
Female
65%
Analysis
From the table, and pie chart depicted above, the distribution of the consumers is evident. Of the
100 respondents who answered the questionnaire, 65 were female and 35 were male. It is evident
from the responses and the subsequent tabulation that the number of female respondents was
higher than that of the male respondents in the population under study. Female are the major
buyers at Organized Retail store.
Electronic media 30
Word of mouth 40
Print media 20
Hoarding 10
Source of Knowledge
10%
30% Electronic media
20% Word of mouth
Print media
Hoarding
40%
Analysis
From the table, and pie chart depicted above, the distribution of the consumers is evident. Of the
100 respondents who answered the questionnaire, 40% people got information about Big Bazaar
from word of mouth 30% from electronic media ,20% from print media ,10% from Hoardings.
Frequency Total
Once a week 41
Fortnightly 30
Once a month 22
After 2 to 3 Month 07
Occupation of the consumer No. of Consumer
Business 24
Service 46
Housewife 20
Student 10
Shopping Frequency
7%
Once a week
22% 41% Fortnightly
Once a month
After 2 to 3 Month
30%
Analysis
from the survey of 100 customers, major 41% consumer are visit to spencer mall once in a
week. 30% Fortnightly or twice in a month. 22% people visit once in a month & remaining
07% customers are visit to spencer mall after 2 to 3 months.
10%
24%
Business
20%
Service
Housewife
Student
46%
Analysis
The above pie diagram graph shows that most consumers are belong to Service group about
46%, and 24% consumers are businessmen rests of consumers are housewife 20% and only 10%
are students.
More than Rs. 10,000 & less than Rs. 20,000 P.M. 20
More than Rs. 20,000 & less than Rs. 40,000 P.M. 45
5%
30% 20% Less then 10,000
10,000-20,000
20,000-40,000
More then 40,000
45%
Analysis
From the above pie diagram it is the clear that the sample size made from 5% are from whose
monthly income is less than 10,000 Rs P.M. 20% from more than 10,000 but less than 20,000 Rs.
45% customer from more than 20,000 but less than 40,000 Rs. 30% customer from whose
monthly income is more then 45,000
Print Media 52
Analysis
According to above pie diagram 52% customer knew about the Spencer from print media,
5% from fair, 28% from neighbor & relative & remaining 15% knew from local cable network.
5000-10,000 51
10,000-20,000 14
Shopping budget
Analysis
The below given was the interpretation of the average monthly shopping budget for the
sample size in the project survey. In the sample size most of the people 51% were able to do
shopping between Rs. 5000-10000. About 20% people able to do shopping less then Rs5000
but more then Rs2000. About 14% people able to do shopping up to Rs20000. People do
shopping below Rs2000 is only 4% and rest of consumers shop more then Rs20,000.
Yes 80
No 20
Response
20%
Yes
No
80%
Analysis
From the survey of 100 visitors of Organized retail stores, major chunk that is 80% consumer
knew, 21% consumer knew about only few, & 20% consumer are not know about various
product of Spencer or Organized retail stores.
Q.10) Product you most like to purchase from Organized retail store
Product No of customer
clothes 42
Grossly product 16
Electronic product 12
Footwear& Others 12
Product
12% clothes
Grossly product
18% 42%
Electronic product
Sports & toys
12%
Footwear& Others
16%
Analysis
From the above pie diagram 42% customers are most likely purchase cloths, 16% customer are
most likely to purchase to grossly product, 12% customers like to buy electronic products. sports
and toy are purchase by 18% customer.
Reason No of customer
Good services 36
Cost efficient 16
Availability of product 26
Easily available 22
Reason
Analysis
above chat 36% customer prefer Spencer due to its good services, 16% due to cost efficient, 26%
due to availability of every product under a roof & remaining, 16% are prefer Spencer due to
easily available of required products in Organized retail stores.
Q.12) Which Organized retail store do you visit often?
Stores No of customer
Big Bazaar 42
Shopper Stop 16
West Side 14
Central 20
Any Other 08
Stores
8% Big Bazaar
20% Shopper Stop
42%
West Side
Central
14%
Any Other
16%
Analysis
there are more then 10 mall situated in different area of Navi Mumbai most of the consumer 42%
of the customer are purchase from Big Bazaar,20% from Central,16% from Shopper stop
remaining 30% are purchasing from West Side and other organized retail stores.
Q.13) Customer Preferences for shopping from Retail chains:
Reasons No of customer
Ambience 12
location 18
Discount Schemes 10
Quality 25
Any Other 03
Reasons
Ambience location
3% 12% Wide range of choices Discount Schemes
10%
18% Quality Customer Service
25%
22% Any Other
10%
Analysis
The consumers of sample size were visiting the big retail outlets most i.e. 25% because of their
good Quality and 22% for their Wide range of choices.10% consumers go for schemes and
discounts offers as well as Customer Service. After that they also going there for the Ambience
experience about 12%. The location of the store is also a big concern about 18% for the
consumers. Thereafter they are also looking for good customer services. They want to get well
treated by the sales persons of the stores. Remaining shopping from Retail chains with other
reasons.
Q.14) Consumers Preferences to purchase from Organized retail chain stores
Offer No of customer
Others 10
Offer
Analysis
From the survey of 100 visitors,50% consumer prefer to purchase from spencer due to off on
print price, 28% due to buy one get one free & 12% due to lottery coupon offer & remaining
consumers have other offer.
Q.15) Consumers response if any product is not available at time
Response No of customer
Wait for it 28
Response
Wait for it
8% Go to another branch of
28%
Spencer
42% Purchase from other Retail
store
22%
Purchase from local Market
Analysis
from the survey, 42% customer are go for another retail store when any product is not available
at the time of purchase, 28% are wait for it, 22% purchase from another branch of Spencer ,&
8% purchase from local market.
Q.16) Consumers Preferences to purchase from local grocery store
Product No of customer
Clothing 12
Pharmacy 30
Durables 18
Product
Analysis
From the survey of 100 consumers,30% consumer prefer to purchase Pharmacy product from
local grocery store . 22% customers purchase Furniture and fixtures. Food and Grocery &
Durables products consumers purchase in equally manner 18%. Remaining 12% purchase
Clothing from local grocery store
Q.17) Price of product in Organized retail stores are appropriate as compare to other local
grocery store
Response No of customer
Yes 93
No 07
Response
7%
Yes
No
93%
Analysis
From the survey, Most of the customers 93% customers are think that price of product in
Organized retail stores are appropriate as compare to other local grocery store.
Q.18) Consumers satisfaction about brands available in Organized retail stores
Response No of customer
Yes 98
No 02
Response
2%
Yes
No
98%
Analysis
From the table, and pie chart depicted above, the satisfaction level among the customers about
brands Of the 100 respondents who answered the questionnaire, 98 replied yes that they were
satisfied with the big brands available in Organized retail stores and there were only 02 people
who were not satisfied with brands available in Organized retail.
Q.19) The emergence of retail chains will create unemployment problems:
Response No of customer
Strongly Agree 12
Agree 18
Disagree 17
Strongly Disagree 10
Response
Strongly Agree
10% 12% Agree
17% 18% Neither Agree Nor
Disagree
Disagree
43% Strongly Disagree
Analysis
From the table, and pie chart depicted above, the distribution of the consumers is evident. Of the
100 respondents who answered the questionnaire,43% customers says that they neither agree
nor disagree about unemployment problems creates by retail chains. 18% are agreeing with the
statement. Only 17% of people are disagree with the statement.
Strongly Agree 36
Agree 26
Disagree 13
Strongly Disagree 06
Response
Strongly Agree
6% Agree
13%
36% Neither Agree Nor
19% Disagree
Disagree
26% Strongly Disagree
Analysis
From the table, and pie chart depicted above, the distribution of the consumers is evident. Of the
100 respondents who answered the questionnaire36% customers are strongly agree with the
statement about FDI in Retail Sector will contribute to the Growth Momentum .26% customers
agree with statement.19% customers completely confuse with statement.13% people disagree
with statement.
Yes 94
No 06
Response
6%
Yes
No
94%
Analysis
From the table, and pie chart depicted above, the distribution of the consumers is evident. Of the
100 respondents who answered the questionnaire most of the customers about 94% are says that
there is to be need to improve polices regarding FDI in retail sector . Only 06% consumers says
that there is no need to develop polices of FDI in retail
Yes 72
No 28
Response
28%
Yes
No
72%
Analysis
The above table and pie diagram shows that the 72% of the people of Navi Mumbai society
supported the government decision to permit 51% FDI in multi-brand. This means that they liked
to have foreign brands in India. The rest 28% people of Navi Mumbai society were not
supporting the government decision to permit 51% FDI in multi-brand.
Will benefit 23
Cant say 41
Impact
23%
Will benefit
41%
Will not benefit
Cant say
36%
Analysis
The above pie diagram shows response of the 100 respondents that the 41% of the people of
Navi Mumbai were of the view that the un-organized retail sector will not be benefitted by the
FDI in retail. This means that majority of the people of Navi Mumbai were of the view that the
organized retail sector will capture the un-organized retail sector. The rest 23% of the people of
Navi Mumbai were of the view that there will be no major impact of organized retail sector over
the un-organized retail sector in India. The left over 36% were not having the adequate
information about the recent issue.
5 Interpretation of data
Generally youth and mens are the main customers at Organized retail stores. Electronic
media has an great impact on customers they are getting aware about new products and
related offers. Most of the customers visiting in Organized retail stores is serviceman or
salaried persons having income between 20,000-40,000 per month and spend Rs.5000-
10,000 p.m for shopping.
Due to availability of all products under one roof and near by their house helps customers to
shop weekly and shop fresh from every visit. Discounts and promotional schemes plays a very
important role in attracting the crowed to the Organized retail stores Average no of People are
using the organize retail from months and they are willing to come down.Most of people are
aware of the Spencers.Big Bazaar is leading Spencer with their wide variety of products as well
as quality.When it comes to the CSA (customer sale associate) service most of customer of
Spencers are not so much happy with their service quality.
Almost every person contacted or interviewed said that he/she has visited malls. Maximum
number of respondents said they are aware of Organized retail stores.All the customers want
that their time should not waste after shopping, number of cashiers should be increased
,waiting process management should be made good.The emergence of retail chains may be
create unemployment problems but it will not affect social harmony in society.Findings
reveal that majority of the customers prefer to purchase from retail outlets on
cash payment mode. This indicates that there are better opportunities for
growth in Indian retail sector.
Almost every person support FDI in multi-brand retail but few of them not support foreign trade.
This means that they were having the fear of the foreign trade and were of the view that it can
repeat the history where East India Company came to India in the past and captured India
through the business.FDI in retail create huge damage in structure of un-organized retail,un-
organised retail may suffer from huge losses. According to customer there is need to develop
better supply chain in market and multinational corporations with their huge amount of FDI in
retail sector will contributes momentum growth toward society. The findings of the study point
out that FDI in retail would undoubtedly enable India Inc. to integrate its economy with that of
the global economy
By engaging local producers, organised retail provides them with an access to a much broader
consumer set. For instance, a leading retailer operating in north India has engaged a local pickle
manufacturer in Amritsar and invested to upgrade its equipment. Organised retail provides higher
quality of goods on account of the predefined and stringent standards adopted by the retailers.
And of course the price will be cheaper. Studies have shown that consumers, on an average, will
save at least 10% on daily use goods
The state of urban planning in India is such that there is as yet no ceiling on the size or number
of retail outlets that may be started in a designated commercial zone. The ministry of urban
development at the central level has no jurisdiction over urban area planning in the states except
in the case of exceptional laws pertaining to the coastal regions, forests, the Delhi region and
union territories. It is clear that land use laws/zoning laws are not the most commonly used
regulatory devices against large format retailing and at present the land use laws in urban centres
are in the most pliant condition since the local governments implement them and they are most
susceptible to omission and commission on behalf of real estate developers who, in turn, share a
common interest with corporate retailers When municipalities allow big retail projects, they are
scrutinised to ensure that they meet the requirements of regional planning.
Upgrade Wholesale Markets to Serve Retailers and Farmers Better. Small shops and wet-market
stall operators typically source food products from wholesale markets, which typically buy from
small farmers. Upgrading wholesale markets infrastructure and services is thus important to the
whole traditional supply chain. Private-sector actors are helping traditional retailers (and
supermarket independents and chains) obtain the services and products they need.
7 Conclusion
Indian retail sector is growing very fast in the Indian Economy. The turnover of organised retail
sector is increasing year by year in the India is second most important FDI destination after
ChinaIndian retail industry is one of the sunrise sectors with huge growth potential. According to
the Investment Commission of India, the retail sector is expected to grow almost three times its
current levels to $660 billion by 2015. However, in spite of the recent developments in retailing
and its immense contribution to the economy, retailing continues to be the least evolved
industries and the growth of organized retailing in India has been much slower as compared to
rest of the world.
The report reveals that there is huge scope for the growth of organized retailing and improvement
of organised retail sector in India.With the changing lifestyle, modernization and westernization
there exists a huge scope for the growth of organised retail sector and is therefore a threat to
unorganized retailing. organised retail store are able to provide almost all categories of items
related to food, health, beauty products, clothing & footwear, durable goods so it become quite
easier for the customer to buy from one shop and hence is a convinient way of shopping when
compared to unorganized retailing.
This paper has discussed trends in FDI and development from an historical perspective. The level
and relative importance of FDI has fluctuated over time, and was high in the early part of the 20 th
century, low in the middle part and growing and high towards the end. Recently there has been an
increase in FDI to developing countries, though concentrated in a few regions and countries. Inward
FDI to developing countries has always been concentrated in a handful of countries, in part reflecting
their economic wealth, but also reflecting the ability of countries to create the conditions that
efficiency and strategic asset seeking FDI need, including appropriate and good quality human
resource and technological capabilities.
Indian retail supports more than 30 million people. These have taken to retail as the government
has failed to create employment opportunities for them. It is disguised unemployment These
millions will rise against FDI in retail. Most of the respondent during my survey did agree to the
fact that improvements had been made in the FDI Policy in terms of openness and
competitiveness since the time of the reforms, However, they still think there is a huge scope of
further improvements.
8 Appendices
Questionnaire
Name: Mobile no:
Age:
Sex: ..
Occupation:
Education:
Q. 1 income group
r. Seema somani Dr. Gajanan Wader Dr. Rinku Shantanu Mrs.Farhat Sheikh
a) 0-2000 b)2000-5000
c) 5000-10000 d) 10000-20000
a) Yes b) No
a) Good Services
b) Cost efficient
d) Easily available
location
Discount Schemes
quality
Customer Service
Q. 12 Do the Organized retail stores give various offer time to time? If yes/ then Which type
offer you prefer to purchase from retail chain stores? (Yes/No)
d) Others
a) Wait for it
Q. 14 Which products do you normally buy from your local grocery store
a) Food and Grocery b) Clothing
c) Furniture and fixtures d) Pharmacy
d) Durables
Q. 16 Are price of product in Organized retail stores are appropriate as compare to other
a) Yes b) No
a) Yes b) No
e) Strongly Disagree
e) Strongly Disagree
Q. 20 Do you think there is need to be improvement in policies for FDI in retail sector
a) Yes b) No
a) Yes b) No
Q.22 What do want to say about impact on un-organized retail sector over FDI in retail
c) Cant say
9 Bibliography
www.indiabiznews.com
www.business.mapofindia.com,
www.indiainfoline.com
www.economywatch.com
www.en.wikipedia.org
www.rediff.com
www.ibef.org
Newspapers
Business World
Business Report 2010
The Indian Dream
Business & Economy