Future and Challenges in Retail Business

Presented By:
ANKIT SHAH S-320
FARAZ QURESHI S-318
KAPIL JAIN S-308
NISHANT KARMAVAT S-310
RAVI PANDEY S-314










Project report submitted in fulfillment of the requirements for third
year of Bachelor of Management Studies
KHAR EDUCATION SOCIETY



RETAIL
MANAGEMENT


















Declaration


We, FARAZ QUIRESHI, ANKIT SHAH, RAVI PANDEY, KAPIL JAIN,
NISHANT KARMAVAT Students of Khar Education Societys College of
Commerce and Economic of T.Y.B.M.S. (SEMESTER VI) hereby declare
that we have completed this project on FUTURE AND CHALLENGES IN
RETAIL BUSINESS in the academic year 2011-2012. The information
submitted is true and original to the best of my knowledge.











(SIGNATURE OF THE STUDENTS)





ACKNOWLEDGEMENT

It is the matter of great pleasure and privilege to be able to present this
project report on FUTURE AND CHALLENGES IN RETAIL BUSINESS.
The compilation of the project is a milestone in the life of the management
students and its execution is inevitable with the co-operation of the project guide.
We wish to record a deep sense of respect and gratitude to our project guide, Prof.
Kishore Dave for his encouragement to course of our work. It is due to the
enduring effort and guidance of our guide that ultimately made it success.
We also take this opportunity to express our deep regards and gratitude to
the Principle Dr.Nandini Deshmukh mam and would like to thank the head of
B.M.S. department Prof. Jaya Dudani who gave us guidance to take up and pursue
the project.











Table Of Contents
1. Introduction
2. Retail Marketing
3. Types of Retail Format
4.
THE INDIAN RETAIL SCENE
5.
STRATEGIES, TRENDS AND OPPORTUNITIES
6. PROBLEMS FACED IN INDIA
7. Recent Trends
8.
CHALLENGES & OPPORTUNITIES
9.
CONCLUSION
10.









INTRODUCTION

The India Retail Industry is the largest among all the industries, accounting for
over 10 per cent of the countrys GDP and around 8 per cent of the employment.
The Retail Industry in India has come forth as one of the most dynamic and fast
paced industries with several players entering the market. But all of them have
not yet tasted success because of the heavy initial investments that are required
to break even with other companies and compete with them. The India Retail
Industry is gradually inching its way towards becoming the next boom industry.

The total concept and idea of shopping has undergone an attention drawing
change in terms of format and consumer buying behavior, ushering in a
revolution in shopping in India. Modern retailing has entered into the Retail
market in India as is observed in the form of bustling shopping centers, multi-
storied malls and the huge complexes that offer shopping, entertainment and
food all under one roof.

A large young working population with median age of 24 years, nuclear families in
urban areas, along with increasing workingwomen population and emerging
opportunities in the services sector are going to be the key factors in the growth
of the organized Retail sector in India. The growth pattern in organized retailing
and in the consumption made by the Indian population will follow a rising graph
helping the newer businessmen to enter the India Retail Industry.

In India the vast middle class and its almost untapped retail industry are the key
attractive forces for global retail giants wanting to enter into newer markets,
which in turn will help the India Retail Industry to grow faster. Indian retail is
expected to grow 25 per cent annually. Modern retail in India could be worth US$
175-200 billion by 2016. The Food Retail Industry in India dominates the shopping
basket. The Mobile phone Retail Industry in India is already a US$ 16.7 billion
business, growing at over 20 per cent per year. The future of the India Retail
Industry looks promising with the growing of the market, with the government


policies becoming more favorable and the emerging technologies facilitating
operations.


























Retail Marketing

Retull Murketlng lncludes ull the uctlvltles lnvolved ln selllng goods or servlces dlrectly to
flnul consumes for personul, non-buslness use. Any orgunlzutlon selllng to flnul consumers -
- whether u munufucturer, wholesuler, or retuller ls dolng retulllng. It does not
mutter how the goods or servlces ure sold (by Person, Mull, Telephone, Vendlng Muchlne,
or Internet) or where they ure sold (ln u store, on the street, or ln the consumers home).
There ure muny upprouches to understundlng und deflnlng retull murketlng; most emphuslze
retull murketlng us the buslness uctlvlty of selllng goods or servlces to the flnul consumer,
but whut we emphuslzed upon ls deflned us follows:
Any buslness thut dlrects lts murketlng efforts towurds sutlsfylng the flnul
consumer bused upon the orgunlzutlon of selllng goods und servlces us u
meuns of dlstrlbutlon
The concept ussumed wlthln thls deflnltlon ls qulte lmportunt. The flnul consumer wlthln the
dlstrlbutlon chuln ls u key concept here us retullers ure ut the end of the chuln und ure
lnvolved ln u dlrect lnterfuce wlth the consumer.
A retuller or retull store ls uny buslness enterprlse, whose sules volume comes prlmurlly
from retulllng. Retull orgunlzutlons exhlblt greut vurlety und new forms keep emerglng.
There ure store retullers, non-store retullers, und retull orgunlzutlons. Consumers toduy cun
shop for goods und servlces ln u wlde vurlety of stores. The best-known type of retuller ls
the depurtment store. A retuller ls ut the end of the dlstrlbutlve chunnel. He provldes goods
und servlce to the ultlmute consumers. Thls he does through hls smull orgunlzutlon, wlth the
help of u few personnel. In un lndlvlduul retull store there ls not much scope for orgunlzutlon
except ln the sense thut the shopkeeper hus to orgunlze und upportlon hls tlme und
resources. The need for orgunlzutlon becomes essentlul us soon us he hlres people und
enters lnto purtnershlp or tukes the help of members of hls fumlly ln runnlng hls store. A
retuller deuls ln un ussortment of goods to cuter to the needs of consumers. Hls ob|ectlve ls
to muke muxlmum proflt out of hls enterprlse. Wlth thut end ln vlew he hus to pursue u
pollcy to uchleve hls ob|ectlve. Thls pollcy ls culled retulllng mlx. A retulllng mlx ls the
puckuge of goods und servlces thut store offers to the customers for sule. It ls the
comblnutlon of ull efforts plunned by the retuller und embodles the ud|ustment of the retull
store to the murket envlronment. Retulllng mlx, u communlcutlon mlx und u dlstrlbutlon mlx;
The muxlmum sutlsfuctlon to the customers ls uchleved by u proper blend of ull three.


The success of the retull stores, therefore, depends on customers reuctlon to the retulllng
mlx whlch lnfluences the proflts of the store, lts volume of turnover, lts shure of the murket,
lts lmuge und stutus und flnully lts survlvul.

There ure three muln phuses ln the llfe of u retulllng lnstltutlon. These ure: -
Innovation (Entry)
Trading Up
Vulnerability.

In the entry stuge, u new retuller enters wlth new prlce uppeul, llmltlng product offerlngs,
Spurton Stores & Llmlted servlces. Its monopoly power over the others ls lts prlce
udvuntuge, whlch meuns thut lt offers products ut low prlces so us to get u competltlve edge
over lts competltors.

In the trudlng up stuge, the retuller sturts expundlng. It expunds ln terms of product offerlng,
better servlces, und lmproved lnterlors. Wlth ull these, lt sturts churglng u blt hlgher prlces.

In the vulnerublllty stuge, there ls u gup ln the murket leuvlng some spuce for the new
pluyers to come ln. thls ls due to lncreuse ln the prlces by the retuller.
I huve ulreudy explulned the three stuges ln llfe of u retull lnstltutlon. Normully these stuges
ure there ln the llfe of u retull lnstltutlon. But ull these muy not be necessurlly there ln every
retull lnstltutlon. For lnstunce, uny retull lnstltutlon turgetlng the upper cluss muy sturt ltself
wlth u lurge vurlety & hlgh prlce.
Types OF Retull Murketlng





Thls brlngs to broudly ldentlfy und cutegorlze the types of retull murketlng, whlch ure
deflned us follows:
Store Retailing
Non store Retailing

p Store Retulllng
Store retulllng provldes consumers to shop for goods und servlces ln u wlde vurlety of stores
und lt ulso help the Consumers to get ull the needed goods und servlces from one shop only.
The dlfferent types of store retulllng ure glven below:


Speclulty Stores
These stores focus on lelsure tustes of dlfferent lndlvlduuls. They huve u nurrow product llne
wlth deep ussortment such us uppurel stores, sportlng goods stores, furnlture stores, florlsts
und bookstores. These stores ure usuully expenslve und sutlsfy the needs of selected
consumers who huve llklng or preference for excluslve thlngs.
Depurtmentul Store
These stores ure usuully bullt ln lurge ureu und keep vurlety of goods under one shed. It ls
usuully dlvlded lnto dlfferent sectlons llke clothlng, klds sectlon, home furnlshlngs,
electronlc uppllunces und other household goods. In u depurtmentul store u consumer cun
buy vurlety of goods under one shed.
Supermurket
These stores ure relutlvely lurge, low cost, low murgln, hlgh volume, self servlce operutlons
deslgned to serve totul needs for food, luundry und household mulntenunce products.
Supermurkets eurn un operutlng proflt of only 1 percent on sules und 10percent on net
worth.
Convenlence Stores
These ure relutlvely smull stores locuted neur resldentlul ureu, open for long hours seven
duys u week, und currylng u llmlted llne of hlgh turnover convenlence products ut sllghtly
hlgher prlces thun depurtmentul stores. Muny such stores ulso huve udded tukeout
sundwlches, coffee und pustrles.
Off - Prlce Retuller
These stores sell goods ut low prlce wlth lower murglns & hlgher volumes. These stores sell
goods wlth deterloruted quullty. The defects ure normully mlnor. Thls turget ut the persons
belonglng to the lower lncome group, though some huve u collectlon of lmported goods
ulmed to turget the younger generutlon. The compuny owned showroom selllng the seconds
products ls u typlcul exumple of off - prlce retuller.
Dlscount Store

These stores sell stundurd merchundlse ut lower prlces by ucceptlng lower murglns und
selllng hlgher volumes. The use of occuslonul dlscounts or specluls does not muke u
dlscount store. A true dlscount store regulurly sells lts merchundlse ut lower prlces, offerlng
mostly nutlonul brunds, not lnferlor goods.


In recent yeurs, muny dlscount retullers huve truded up. They huve lmproved decor, udded
new llnes und servlces, und opened suburbun brunchesull of whlch hus led to hlgher costs
und prlces und us some depurtment stores huve cut thelr prlces to compete wlth dlscounters.
Not only thut, dlscount stores huve moved beyond generul merchundlse lnto speclulty
merchundlse stores, such us dlscount sportlng goods stores, electronlcs stores, und book
stores.
Cutulog Showroom
Cutulog showrooms generully sell u broud selectlon of hlgh-murkup, fust-movlng, brund-
nume goods ut dlscount prlces. These lnclude |ewelry, power tools, cumerus, lugguge smull
uppllunces, toys, und sportlng goods. Cutulog showrooms muke thelr money by cuttlng costs
und murglns to provlde low prlces thut wlll uttruct u hlgher volume of sules. Cutulog
showrooms huve been struggllng ln recent yeurs to hold thelr shure of the retull murket.




p Non-store Retulllng
It ls unother type of retull murketlng. Dlfferent types of non-store retulllng ure glven below:
Dlrect Selllng
Dlrect selllng whlch sturted centurles ugo wlth ltlnerunt peddlers hus burgeoned lnto u S9
bllllon lndustry, wlth over 600 compunles selllng door to door, offlce to offlce, or ut home
sules purtles. A vurlunt of dlrect selllng ls culled multllevel murketlng, whereby compunles
such us Amwuy recrult lndependent buslnesspeople who uct us dlstrlbutors for thelr
products, who ln turn recrult und sell to sub dlstrlbutors, who eventuully recrult others to sell
thelr products, usuully ln customer homes.
Dlrect Murketlng
Dlrect murketlng hus lts roots ln mull-order murketlng but toduy lncludes reuchlng people ln
other wuys thun vlsltlng thelr homes or offlces, lncludlng telemurketlng, televlslon dlrect
response murketlng, und electronlc shopplng.
Automutlc Vendlng
Automutlc vendlng hus been upplled to u conslderuble vurlety of merchundlse, lncludlng
lmpulse goods wlth hlgh convenlence vulue (clgurettes, soft drlnks, cundy, newspuper, hot
beveruges) und other products (hoslery, cosmetlcs, food snucks, hot soups und food,
puperbucks, record ulbums, fllm, T-shlrts, lnsurunce pollcles, und even flshlng worms).













THE INDIAN RETAIL SCENE

India is the country having the most unorganized retail market. Traditionally it is a
familys livelihood, with their shop in the front and house at the back, while they
run the retail business. More than 99% retailers function in less than 500 square
feet of shopping space .Global retail consultants KSA Technopak have estimated
that organized retailing in India is expected to touch Rs:35,000 crore in the year
2005-06. The Indian retail sector is estimated at around Rs:900,000 crore, of
which the organized sector accounts for a mere 2 per cent indicating a huge
potential market opportunity that is lying in the waiting for the consumer-savvy
organized retailer.

Purchasing power of Indian urban consumer is growing and branded merchandise
in categories like Apparels, Cosmetics, Shoes, Watches, Beverages, Food and even
Jewellery, are slowly becoming lifestyle products that are widely accepted by the
urban Indian consumer. Indian retailers need to advantage of this growth and
aiming to grow, diversify and introduce new formats have to pay more attention
to the brand building process. The emphasis here is on retail as a brand rather
than retailers selling brands. The focus should be on branding the retail business
itself. In their preparation to face fierce competitive pressure, Indian retailers
must come to recognize the value of building their own stores as brands to
reinforce their marketing positioning, to communicate quality as well as value for
money. Sustainable competitive advantage will be dependent on translating core
values combining products, image and reputation into a coherent retail brand
strategy.

There is no doubt that the Indian retail scene is booming. A number of large
corporate houses like Tatas, Rahejas, Piramalss, Goenkas have already made
their foray into this arena, with beauty and health stores, supermarkets, self-
service music stores, new age book stores, every-day-low-price stores, computers
and peripherals stores, office equipment stores and home/building construction
stores. Today the organized players have attacked every retail category. The
Indian retail scene has witnessed too many players in too short a time, crowding
several categories without looking at their core competencies, or having a well
thought out branding strategy.




STRATEGIES, TRENDS AND OPPORTUNITIES 2007

Retailing in India is gradually inching its way toward becoming the next boom
industry. The whole concept of shopping has altered in terms of format and
consumer buying behavior, ushering in a revolution in shopping in India. Modern
retail has entered India as seen in sprawling shopping centers, multi-storied malls
and huge complexes offer shopping, entertainment and food all under one roof.
The Indian retailing sector is at an inflexion point where the growth of organized
retailing and growth in the consumption by the Indian population is going to take
a higher growth trajectory. The Indian population is witnessing a significant
change in its demographics. A large young working population with median age of
24 years, nuclear families in urban areas, along with increasing workingwomen
population and emerging opportunities in the services sector are going to be the
key growth drivers of the organized retail sector in India.

Growth over 1997-2010
India in 1997 allowed foreign direct investment (FDI) in cash and carry wholesale.
Then, it required government approval. The approval requirement was relaxed,
and automatic permission was granted in 2006.Between 2000 to 2010, Indian
retail attracted about $1.8 billion in foreign direct investment, representing a very
small 1.5% of total investment flow into India.
Single brand retailing attracted 94 proposals between 2006 and 2010, of which 57
were approved and implemented. For a country of 1.2 billion people, this is a very
small number. Some claim one of the primary restraints inhibiting better
participation was that India required single brand retailers to limit their
ownership in Indian outlets to 51%. China in contrast allows 100% ownership by
foreign companies in both single brand and multi-brand retail presence.
Indian retail has experienced limited growth, and its spoilage of food harvest is
amongst the highest in the world, because of very limited integrated cold-chain
and other infrastructure. India has only 5386 stand-alone cold storages, having a
total capacity of 23.6 million metric tons. However, 80 percent of this storage is
used only for potatoes. The remaining infrastructure capacity is less than 1% of
the annual farm output of India and grossly inadequate during peak harvest


seasons. This leads to about 30% losses in certain perishable agricultural output in
India, on average, every year
Indian laws already allow foreign direct investment in cold-chain infrastructure to
the extent of 100 percent. There has been no interest in foreign direct investment
in cold storage infrastructure build out. Experts claim that cold storage
infrastructure will become economically viable only when there is strong and
contractually-binding demand from organized retail. The risk of cold storing
perishable food, without an assured way to move and sell it, puts the economic
viability of expensive cold storage in doubt. In the absence of organized retail
competition and with a ban on foreign direct investment in multi-brand retailers,
foreign direct investments are unlikely to begin in cold storage and farm logistics
infrastructure.
Until 2010, intermediaries and middlemen in India have dominated the value
chain. Due to a number of intermediaries involved in the traditional Indian retail
chain, norms are flouted and pricing lacks transparency. Small Indian farmers
realize only 1/3rd of the total price paid by the final Indian consumer, as against
2/3rd by farmers in nations with a higher share of organized retail. The 60%+
margins for middlemen and traditional retail shops have limited growth and
prevented innovation in Indian retail industry.
India has had years of debate and discussions on the risks and prudence of
allowing innovation and competition within its retail industry. Numerous
economists repeatedly recommended to the Government of India that legal
restrictions on organized retail must be removed, and the retail industry in India
must be opened to competition. For example, in an invited address to the Indian
parliament in December 2010,Jagdish Bhagwati, Professor of Economics and Law
at the Columbia University analyzed the relationship between growth and poverty
reduction, then urged the Indian parliament to extend economic reforms by
freeing up of the retail sector, further liberalization of trade in all sectors, and
introducing labor market reforms. Such reforms Professor Bhagwati argued will
accelerate economic growth and make a sustainable difference in the life of
India's poorest.
A 2007 report noted that an increasing number of people in India are turning to
the services sector for employment due to the relative low compensation offered
by the traditional agriculture and manufacturing sectors. The organized retail
market is growing at 35 percent annually while growth of unorganized retail
sector is pegged at 6 percent.


The Retail Business in India is currently at the point of inflection. As of 2008, rapid
changes with investments to the tune of US $ 25 billion were being planned by
several Indian and multinational companies in the next 5 years. It is a huge
industry in terms of size and according to India Brand Equity Foundation (IBEF), it
is valued at about US$ 395.96 billion. Organized retail is expected to garner about
16-18 percent of the total retail market (US $ 65-75 billion) in the next 5 years.
India has topped the A.T. Kearneys annual Global Retail Development Index
(GRDI) for the third consecutive year, maintaining its position as the most
attractive market for retail investment. The Indian economy has registered a
growth of 8% for 2007. The prediction for 2008 is 7.9%. The enormous growth of
the retail industry has created a huge demand for real estate. Property
developers are creating retail real estate at an aggressive pace and by 2010, 300
malls are estimated to be operational in the country.

Growth after 2011
Before 2011, India had prevented innovation and organized competition in its
consumer retail industry. Several studies claim that the lack of infrastructure and
competitive retail industry is a key cause of India's persistently high inflation.
Furthermore, because of unorganized retail, in a nation where malnutrition
remains a serious problem, food waste is rife. Well over 30% of food staples and
perishable goods produced in India spoil because poor infrastructure and small
retail outlets prevent hygienic storage and movement of the goods from the
farmer to the consumer.
One report estimates the 2011 Indian retail market as generating sales of about
$470 billion a year, of which a miniscule $27 billion comes from organized retail
such as supermarkets, chain stores with centralized operations and shops in
malls. The opening of retail industry to free market competition, some claim will
enable rapid growth in retail sector of Indian economy. Others believe the growth
of Indian retail industry will take time, with organized retail possibly needing a
decade to grow to a 25% share. A 25% market share, given the expected growth
of Indian retail industry through 2021, is estimated to be over $250 billion a year:
a revenue equal to the 2009 revenue share from Japan for the world's 250 largest
retailers.


The Economist forecasts that Indian retail will nearly double in economic value,
expanding by about $400 billion by 2020. The projected increase alone is
equivalent to the current retail market size of France.
In 2011, food accounted for 70% of Indian retail, but was under-represented by
organized retail. A.T. Kearney estimates India's organized retail had a 31% share in
clothing and apparel, while the home supplies retail was growing 20% to 30% per
year. These data correspond to retail prospects prior to November announcement
of the retail reform.
p Mull Munlu: The Developlng Mull Culture ln Indlu
Modern mulls mude thelr entry lnto Indlu ln the lute 1990s, wlth the estubllshment of
Crossrouds ln Mumbul und Ansuls Pluzu ln Delhl. By eurly 2001, severul mull pro|ects were
unnounced. Accordlng to murket estlmutes, close to 12 mllllon sq. ft. of mull spuce ls belng
developed ucross severul cltles ln the country, of whlch 10 mllllon sq. ft. ls expected to be
operutlonul by end of 2003 (see Tuble below). Wlth thls, rentuls for retull propertles huve
shown u murked decllne, whlch hus brought down the breuk-even levels of the retull
pro|ects. Moreover, retullers would now huve uccess to retull-speclflc propertles, whlch wlll
lncreuse thelr efflclencles.












PROBLEMS FACED IN INDIA :
There ure u number of reusons behlnd thls frugmented retull murket. Some of the mu|or
reusons belng:
Poverty und lower llterucy levels.
Low per cupltu lncome.
Suvlngs focused und less lndulgence mlndset.
Restrlctlons on lntru-stute good movement.
Hlgh tuxes.
No exposure to medlu.
Hlgh lmport dutles on lmported goods.
FDI ln retulllng ls not ullowed.
Retulllng ls not consldered us u buslness or lndustry by the government.
Hltherto none of the buslness schools ln Indlu were offerlng speclullzed courses
on retulllng.
Expenslve supply chuln.
Besldes thls there ls other reusons too, whlch led to stlfllng of growth of orgunlzed segment
of retulllng sector und whlch lnsteud led to hlghly frugmented murket.
Toduy ln Indlu we huve more thun 12 mllllon retull outlets und most of then ure fumlly run
und locully owned. There ure very few nutlonully present retull stores. In Indlu the process of
buylng und selllng ut these unorgunlzed retull outlets, ls hlghly churucterlzed by burgulnlng
und negotlutlons. But slowly wlth lncreuslng lnfluence of medlu und urbunlzutlon the murket
ls shlftlng towurds orgunlzed segment. Seelng the huge murket slze of retull buslness ln the
country und the current level of orgunlzed segment, muny pluyers huve |umped lnto the fruy
und muny ure wultlng for the rlght opportunlty to enter lt.



Mull Locutlon Rute / Sq. ft.

Crossrouds Turdeo, Mumbul 225-250
Ansuls South Ex, Delhl 175-200
Nlrmul Llfestyle Mulund, Mumbul 75-90
Runwuls Mull Mulund, Mumbul 75-90
Kurnuvut Mull Thune, Mumbul 65-85
Ruhe|u Mlnd spuce Mulud, Mumbul 60-80
Cuble Corporutlon Borevull, Mumbul 55-75
Suhuru Gurguon 50-70
MGF Mulls Metroplltlun & Pluzu Gurguon 65-85*
DLF Gurguon 65-85
Shlpru Noldu 80-180
Forum KolKottu 100
Clty Center KolKottu 55
Ruve 3 Kunpur 45-55
Inox Burodu 75
Spencers Pluzu Phuse III Chennul 70
Indore, Nuslk und Julpur Mulls 45-55
Hyutt, Mumbul & Leelu, 175-300
Phoenlx Mulls Lower Purel, Mumbul 100-125


Internutlonul pluyers
Internutlonul Pluyers Retull Ventures In Indlu

Lundmurc Group, Dubul Llfestyle Chuln of Depurtmentul Stores
Metro, Germuny Hypermurket
Shoprlte, South Afrlcu Supermurket, Hypermurket
Nunz, Germuny Supermurket
Murks & Spencer, UK Appurel Retuller
Mungo, Spuln Appurel Retuller
McDonulds, USA Food Retuller
Domlnos USA Food Retuller
Trlcon Restuurunt, USA Food Retuller












etuller Current Formut New Formuts
Shoppers' Stop Depurtment Store Quusl-mull
Crossword Lurge bookstore Corner shops
Pyrumld Depurtment Store Quusl-mull, food retull
Puntuloon Own brund store Hypermurket
Vltun Supermurket Suburbun dlscount store
Foodworld Food supermurket Hypermurket, Foodworld express
Glob us Depurtment Store Smull fushlon stores
Efoodmurt Food super murket Aggregutlon of Klrunus
Metro Depurtmentul store Cush und curry
S Kumur's Depurtmentul store Dlscount store


RECENT TRENDS
y Retailing in India is witnessing a huge revamping exercise as can be seen in the
graph
y India is rated the fifth most attractive emerging retail market: a potential
goldmine.
y Estimated to be US$ 200 billion, of which organized retailing (i.e. modern trade)
makes up 3 percent or US$ 6.4 billion
y As per a report by KPMG the annual growth of department stores is estimated at
24%
y Ranked second in a Global Retail Development Index of 30 developing countries
drawn up by AT Kearney.
y Multiple drivers leading to a consumption boom:
o Favorable demographics
o Growth in income
o Increasing population of women
o Raising aspirations: Value added goods sales
y Food and apparel retailing key drivers of growth
y Organized retailing in India has been largely an urban
y Phenomenon with affluent classes and growing number of double-income
households.
y More successful in cities in the south and west of India. Reasons range from
differences in consumer buying behavior to cost of real estate and taxation laws.
y Rural markets emerging as a huge opportunity for retailers reflected in the share
of the rural market across most categories of consumption
o ITC is experimenting with retailing through its e-Choupal and Choupal Sagar rural
hypermarkets.
o HLL is using its Project Shakti initiative leveraging women self-help groups
toexplore the rural market.
o Mahamaza is leveraging technology and network marketing concepts to act as an
aggregator and serve the rural markets.
y IT is a tool that has been used by retailers ranging from Amazon.com to eBay to
radically change buying behavior across the globe.
y E-tailing slowly making its presence felt.




RETAIL SALES IN INDIA















CHALLENGES & OPPORTUNITIES

Retailing has seen such a transformation over the past decade that its very
definition has undergone a sea change. No longer can a manufacturer rely on
sales to take place by ensuring mere availability of his product. Today, retailing is
about so much more than mere merchandising. Its about casting customers in a
story, reflecting their desires and aspirations, and forging long-lasting
relationships. As the Indian consumer evolves they expects more and more at
each and every time when they steps into a store. Retail today has changed from
selling a product or a service to selling a hope, an aspiration and above all an
experience that a consumer would like to repeat.

For manufacturers and service providers the emerging opportunities in urban
markets seem to lie in capturing and delivering better value to the customers
through retail. For instance, in Chennai CavinKares LimeLite, Maricos Kaya Skin
Clinic and Apollo Hospitals Apollo Pharmacies are examples, to name a few,
where manufacturers/service providers combine their own manufactured
products and services with those of others to generate value hitherto unknown.
The last mile connect seems to be increasingly lively and experiential. Also,
manufacturers and service providers face an exploding rural market yet only
marginally tapped due to difficulties in rural retailing. Only innovative concepts
and models may survive the test of time and investments.
However, manufacturers and service providers will also increasingly face a host
of specialist retailers, who are characterized by use of modern management
techniques, backed with seemingly unlimited financial resources. Organized
retail appears inevitable.

Retailing in India is currently estimated to be a US$ 200 billion industry, of which
organized retailing makes up a paltry 3 percent or US$ 6.4 billion. By 2010,
organized retail is projected to reach US$ 23 billion. For retail industry in India,
things have never looked better and brighter. Challenges to the manufacturers
and service providers would abound when market power shifts to organized
retail.






CONCLUSION

The retail sector has played a phenomenal role throughout the world in
increasing productivity of consumer goods and services. It is also the second
largest industry in US in terms of numbers of employees and establishments.
There is no denying the fact that most of the developed economies are very
much relying on their retail sector as a locomotive of growth. The India Retail
Industry is the largest among all the industries, accounting for over 10 per cent
of the countrys GDP and around 8 per cent of the employment. The Retail
Industry in India has come forth as one of the most dynamic and fast paced
industries with several players entering the market. But all of them have not yet
tasted success because of the heavy initial investments that are required to
break even with other companies and compete with them. The India Retail
Industry is gradually inching its way towards becoming the next boom industry.