ISSUES, CHALLENGES AND REMEDIES OF RETAIL MARKET IN HARYANA

Submitted in the partial fulfillment for Ph.D registration

SUPERVISOR: Dr. R.R. Saini (Associate Professor) M.D. University Rohtak.

Research Scholar: Rekha Grewal

( M.Com. , M.Phil.)

Department of Commerce M.D. University, Rohtak 2012

1

Introduction: Retail means selling goods and services in small quantities directly to customers. Retailing consists of all activities involved in marketing of goods and services directly to consumer for their personal family and household use. Retailing consists of goods from a permanent location (a retail store) in small quantities directly to consumers. These consumers may be individual buyers or corporate buyers. Retailing consists of the sale, and all activities directly related to the sale of goods or services to the ultimate consumers for personal, non-business use. Retailing encompasses the business activities involved in the selling of goods & services to the consumers for their personal, family or house hold use. Retail industry in India is largely unorganized & predominantly consists of small Independent and over managed shops. The liberalized financial and political environment in India has prompted a large number of entrants into the countrys rapidly growing retail industry during the past few years. The fundamental drivers of change are the increasing per capita income, growing Gross Domestic Product (GDP) and the availability of customer finance. Retailing in the general sense consists of business activities that are involved in buying and selling of goods and services to the final consumers. Items ranging from bread and butter to automobiles, apparels and airline tickets are sold by the retail industry. In India and even in Haryana, after agriculture, retail business is the second largest sector that provides vast employment opportunities. However, at present, retailing in India is at crossroads. On one side, retail sales are reaching new heights year after year and on the other side, traditional Indian retailers ( Kirana Stores) are facing numerous challenges. In Haryana retailing industry is becoming intensely competitive, as more and more payers are targeting for the same set of customers.
2

The major retail players are Pantaloons Retail, Shoppers Stop, Reliance, etc. Retailing is one of the biggest sectors and it is witnessing revolution in Haryana. The new entrant in retailing in Haryana signifies the beginning of retail revolution. Haryana's retail market is expected to grow tremendously in next few years. The Windows of Opportunity shows that Retailing in Haryana was at opening stage in 1995 and now it is in growing stage in 2012. Haryana's retail market is expected to grow tremendously in next few years. In peaking stage, the market is developing quickly and also ready for modern retailing. Countries, which are in Peaking stage, are India, Ukraine and Vietnam. Retailers entering this stage have the best chance for long-term success. Retailers at this stage should enter through local representations, sourcing offices and new stores. Wal-Mart success in china in the late 1990's and early 2000's gives us the importance of committing to a promising high-growth market at right time. In next stage, the market is still big and growing, but the space for new entrants will become tighter and retailers should act quickly at this stage because retailers at this stage have limited time to explore, and also their margin for error is thin. In general, they should act according to the established rules and should be open to face the competition from international retailers. No matter how the characteristics of the consumer, product, store, or purchase situation might differ, price represents the monetary expenditure that the consumer must incur in order to make a purchase. From the vast literature on pricing, we highlight three areas that are of direct relevance to consumers image and choice of retailers.

In Haryana, the most of the retail sector is unorganized. And In India, the retail business contributes around 11 percent of GDP. Of this, the organized retail sector accounts only for about 3 percent share, and the remaining share is contributed by the unorganized sector. The main challenge facing the organized sector is the competition from unorganized sector. Unorganized retailing has been there in India for centuries, these are named as mom-pop stores. The main advantage in unorganized retailing is consumer familiarity that runs from generation to generation. It is a low cost structure; they are mostly operated by owners, have very low real estate and labor costs and have low taxes to pay. In last decade the retail sector has witnessed a level of transformation. 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. Organized retail business in Haryana is very small but has tremendous scope. In organized retailing will grow faster than unorganized sector and the growth speed will be responsible for its high market share. Retailing will show good prospects in cities like Mumbai, Delhi, Chennai, Kolkata, Bangalore and Kanpur. After Dubai, Singapore and Hong Kong, In India after Delhi, haryana will be the next big retail destination, According to Confederation of Indian Industries whose findings have shown that Haryana has the good resources and good conditions for the retail sector. A big part of the total earnings of the Government of Haryana is achieved from the retail sector. The organized sector is expected to grow faster than GDP growth in next few years driven by favorable demographic patterns, changing lifestyles, and strong income growth. This organized retail sector mix includes supermarkets, malls, departmental stores. and these players might capture a big share of total market, within next five years.
4

Growth drivers in Haryana for Retail sector:-

Rising incomes and improvements in infrastructure are enlarging consumer markets and accelerating the convergence of consumer tastes.

Liberalization of the Indian economy Increase in spending Per capita Income. Advent of dual income families also helps in the growth of retail sector.

Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc.

Consumer preference for shopping in new environments.

The Internet revolution is making the Indian consumer more accessible to the growing influences of domestic and foreign retail chains. Reach of satellite T.V. channels is helping in creating awareness about global products for local markets. Haryana's retail industry is the second largest sector, after agriculture, which provides large employment opportunities to the people. According to Associated Chambers of Commerce and Industry of India, the retail sector will create 50,000 jobs in next few years. Retail companies are starting retail management courses in partnership with management institutes, roping in talent from other sectors and developing comprehensive career growth and loyalty plans for existing employees.
5

Top players like Pantaloon Retail India Limited, Trent, Shopper's Stop, RPG Group and ebony are virtually on their toes. Consider the plans of largest player, The Pantaloon Retail India Ltd, the company has developed a comprehensive strategy, where in it expects that in 2years, it will not recruit any new managers from outside. Pantaloon has the concept of partnership with educational Institute to run retail courses across the entire chain. The students join the course and they are given an appointment letter by Pantaloon to become employees. Pantaloon is also planning to tie up with Ahmedabad-based National Institute of Design to start a course in visual merchandising. "The apex body of Indian organized retailers, Retailers Association of India is also lending help hand to tide over the shortage of employees in organized retail sector. Trend has also started in-house learning programs and now goes to under graduate colleges to recruit students. Since, the job market is hugely receptive to this with more and more business schools focusing on the sector and large retailers setting up retail academics. Issues of retail market in Haryana:The very first issue is Cost and profit issue. In retailing the profit margins are very low and due to various factors affecting the retail market cost is increasing. The second issue is retaining skilled manpower for a long time. The demand and supply of skilled manpower for retailing sector is also a point to be considered. Understanding the buying behavior of various consumers in retail market is also needed.

In Haryana the Retailing industry has a long way to go and to become a truly flourishing industry, retailing needs to cross the following hurdles: OR Challenges of Retailing in Haryana:

Competition from unorganized sector. Pressure of govt. policies, rules and regulations Pressure of competitive strategies. Inequality in income. Inequality in living standards In retail sector, Automatic approval is not allowed for foreign investment.

Taxation, which favours small retail businesses. Developed supply chain and integrated IT management is absent in retail sector.

Lack of trained work force. Low skill level for retailing management. Intrinsic complexity of retailing- rapid price changes, threat of Product obsolescence and low margins.
7

Organized retail sector has to pay huge taxes, which is negligible for small retail business.

The challenges facing the Indian organized retail sector are various and these are stopping the Indian retail industry from reaching its full potential. The behavior pattern of the Indian consumer has undergone a major change. This has happened for the Indian consumer is earning more now, western influences, women working force is increasing, desire for luxury items and better quality. He now wants to eat, shop, and get entertained under the same roof. All these have lead the Indian organized retail sector to give more in order to satisfy the Indian customer. The biggest challenge facing the Indian organized retail sector is the lack of retail space. With real estate prices escalating due to increase in demand from the Indian organized retail sector, it is posing a challenge to its growth. With Indian retailers having to shell out more for retail space it is effecting there overall profitability in retail. Trained manpower shortage is a challenge facing the organized retail sector in India. The Indian retailers have difficultly in finding trained person and also have to pay more in order to retain them. This again brings down the Indian retailers profit levels. The Indian government have allowed 51% foreign direct investment (FDI) in the India retail sector to one brand shops only. This have made the entry of global retail giants to organized retail sector in India difficult. This is a challenge being faced by the Indian organized retail sector. But the global retail giants like Tesco, Wal-Mart, and Metro AG
8

are entering the organized retail sector in India indirectly through franchisee agreement and cash and carry wholesale trading. Many Indian companies are also entering the Indian organized retail sector like Reliance Industries Limited, Pantaloons, and Bharti Telecoms. But they are facing stiff competition from these global retail giants. As a result discounting is becoming an accepted practice. This too bring down the profit of the Indian retailers. All these are posing as challenges facing the Indian organized retail sector. The challenges facing the Indian organized retail sector are there but it will have to be dealt with and only then this sector can prosper. Remedies and suggestions to overcome these challenges are as follows: The government should provide well infrastructure for retail market on reasonable prices. Various training schools and institutions should be opened to provide skilled manpower. The retailers should pay adequate wages and allowances to retain manpower. The corporate sector should fulfill their social responsibilities. Taxation policies, rules and regulations implement by the govt. on retail market should be liberal. Building laws should be made favouring retail market. Review of literature: With the growing realization that brands are one of a firms most valuable intangible assets, branding has emerged as a top management priority in the last decade. Given its highly competitive nature, branding can be especially important in the retailing industry to influence customer perceptions and drive store choice and loyalty. We integrate lessons from branding and retail image research to provide a better understanding of how retailers create their brand images, paying
9

special attention to the role of the manufacturer and private label brand assortment. On one hand, the growth of promotions and private labels has been seen by many as an indicator of growing retailer power. On the other hand, the growth of discounters and warehouse clubs has put immense pressure on traditional retailers and significantly increased retail competition both within and between retail formats. Since a large portion of most retailers revenue and profit comes from selling manufacturer brands, which many of their competitors also offer, building their own equity is a particularly challenging problem, but one with big potential rewards. Such equity insulates them from competing retailers, which has the direct impact of increasing revenue and profitability, and the indirect impact of decreasing costs as their leverage with brand manufacturers also increases. Although many important branding principles apply, retailer brands are sufficiently different from product brands that the actual application of those branding principles can vary. Retailer brands are typically more multi-sensory in nature than product brands and can rely on rich consumer experiences to impact their equity. Retailers also create their brand images in different ways, e.g., by attaching unique associations to the quality of their service, their product assortment and merchandising, pricing and credit policy, etc. In most consumer industries, the image and equity of retailer brands also depends on the manufacturer brands they carry and the equity of those brands. Retailers use manufacturer brands to generate consumer interest, patronage, and loyalty in a store. Manufacturer brands operate almost as ingredient brands that wield significant consumer pull, often more than the retailer brand does. To the extent "you are what you sell," manufacturer brands help to create an image and establish a positioning for the store. At the same time, retailers compete with manufacturers for consumer pull to increase their relative market power and their share of the total channel profit. In doing so, they may sell some of their own brands. In
10

fact, in industries like apparel, one can find several examples of retailers who carry only their own private label products. Private label products may have their own unique brand names or be branded under the name of the retailer. They allow the retailer to differentiate its offerings from competing retailers, although often without the support afforded manufacturers brands. Understanding how a retailer should be positioned and how the brand assortment sold by the retailer is related to its image are thus of critical importance. Some retailers have managed their brands more effectively than others, as is evident in their performance. The purpose of this article is to (1) integrate the lessons from branding and retail image research to provide a better understanding of how retailers create their brand images; (2) review what we know about how the types of brands that retailers sell manufacturer brands and private labels influence and are influenced by the retailers brand image. And (3) highlight some important areas that deserve further research in the form of three sets of research priorities. Justification of the study: Today, Retailing is very hot issue because it is the only business which is capturing a large part of the market. Since ancient times a very large part of the society is engaged in this business. Till date there is lot of research has been done on this topic. but in my opinion, this research is not enough. More work is required in this area. Thats why I want to do more research on this topic. According to the present scenario, a lot of research is required in this area. Retailing has a very big scope in todays market. A big part of the GDP comes from the retailing itself. Even government of India has also allowed 51% FDI in retailing. This is going to affect the market at a very large scale. I want to analyse the issues and challenges of retailing in Haryana and how to overcome these challenges.

11

Research Objectives: To review the progress of retailing in Haryana. To understand the change in marketing mix due to entering the organized Retailing sector in Haryana. To understand the various strategies for establishing organized retailing sector in Haryana. To understand the level of awareness of the customer and the segment to which he belongs. To diagnose the financial performance of the retailing market. To suggest/recommend some concrete ways/ strategies to improve the organizational and operational efficiency of the retailing sector.

Research Methodology: The researcher will conduct the research on the basis of stratified random sampling. Then the sample will be subdivided in the groups which are mutually exclusive and include all items presented in the area of study. It will be more representative, more concentrated geographically and with the greater accuracy. The various parameters like population of the different districts in urban and rural area, education level, income level etc. are likely to be decided on the later stages. Hypotheses:The researcher will take null hypothesis that there is no any issues and challenges in the retail market in Haryana. After setting the null hypothesis we will set up a suitable significance level. The confidence which rejects or retains a null hypothesis depends upon the significance
12

level adopted. The level of significance is either 5% or 1% in which we would accept or reject the null hypothesis. Nature and Source of Data:The database for this study would be both primary as well as secondary. Sources of secondary data:The secondary data for the present study may be collected from various authentic documents. The data may be taken from published govt. sources like statistical abstracts of Haryana of different years, budget records of Haryana, annual reports of planning commission, reports from World Bank and central statistical organization (CSO). Collection of primary data:It is the first hand information, which is to be collected from the ultimate consumer. This will include a preparation of questionnaire containing a series of questions keeping in mind the variables to be explored and described by the researcher. The researcher may conduct direct interview for collecting first hand information. Sampling:Sampling is the selection of some part of an aggregate. A sample is a small part of total existing events, objects or the information. Researcher thinks to collect first hand information from at least 500 consumers. It will include consumers from all the divisions of Haryana.
13

Data analysis tools:After collecting the data from primary and secondary sources these would be arranged in tabular forms in sequential and chronological order. To analyse and interpret the data various mathematical and statistical tools/ techniques like average, percentage, ratio proportions and time series etc. would be applied. Limitations of the Study: Every study on new social or commercial phenomena faces a typical situation, namely a shortage of academic references, and often an abundance of non-academic ones. To be cautious when engaging Social Media as marketing tools: blind limitations and haphazard implementation can lead to disappointments and misjudgments as to the real value of these tools. In this respect, several of the ideas and models presented in this introductory study will become the focus of further study and empirical analysis as hypotheses to be tested. A review of the adoption status of applications by the retail sector indicates that only a limited number of retailers have adopted one or more Social Media-based approaches to their marketing strategy. marketers realize that traditional forms of marketing become increasingly ineffective. Consumers trust other consumers much more than corporate communications.

14

Conclusion and suggestions: Retailing is one of the biggest sectors and it is witnessing revolution in Haryana. The new entrant in retailing in Haryana signifies the beginning of retail revolution. Haryana's retail market is expected to grow tremendously in next few years. The Windows of Opportunity shows that Retailing in Haryana was at opening stage in 1995 and now it is in growing stage in 2012. Haryana's retail market is expected to grow tremendously in next few years. The status of the retail industry will depend mostly on external factors like Government regulations and policies and real estate prices, besides the activities of retailers and demands of the customers also show impact on retail industry. The government should provide well infrastructure for retail market on reasonable prices. Various training schools and institutions should be opened to provide skilled manpower. The retailers should pay adequate wages and allowances to retain manpower. Chapterisation plan: The tentative chapterisation scheme may be as follows: 1. 2. 3. 4. 5. 6. 7. Introduction. Review of literature. Issues, challenges and remedies of Retail marketing. Research Methodology and scope of the study. Analysis and Interpretation of the data. Conclusions and suggestions. Bibliography.

15

Bibliography: 1. 2. 3. 4. 5. 6. Tata Mcgrawhill- Retail in detail. Fundamentals of Retailing ( Author- K.V.S. Madaan). Retail Management (Author- Chetan Bajaj). The Art of Retailing (Author- Lamba). S.P. Gupta, Statistical methods (sultan chand and sons). Research Methodology, Methods and techniques by C.R. Kothari (New age publications). 7. Business research methodology (J.K. Sachdeva). 8. Retail marketing (Peter McGoldrick). 9. Marketing management (T.N. Chhabra).

16