Dept of Commerce and Management studies Andhra University

UGC Seminar On new trends in business education

4th Dec, 2012

Session on Experience sharing with retail Focus

Under the Esteemed Guidance of Prof. B. Mohan Venkat Ram

By:

Sobha Rani Peddini

Retail Basics

Definition: A business or person that sells goods to the consumer, as opposed to a

wholesaler or supplier, who normally sell their

goods to another business.

Retail consists of the sale of goods or

merchandise for final consumption by the user and not for further sale or processing.

Organized Retailing trading activities undertaken by licensed retailers those who are registered for sales tax, income tax, etc., these include the corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses. Unorganised retailing traditional formats of low-cost retailing, for example, the local kirana shops, owner manned general stores, etc

Major global Retailers

Retailer Wal-Mart Stores Carrefour Group The Home Depot, Inc The Kroger Co. Royal Ahold Metro AG Target Corporation Albertsons,Inc. Sears, Roebuck and Co. Kmart Corporation Home Country USA France USA USA Netherlands Germany USA USA USA USA

Major Domestic Players

Retail Group Future Group K.Raheja group Tata group RPG Landmark Group Bharati-walmart Reliance group A V Birla Group Metro Viveks Ltd Store Pantaloon Shoppers stop West side Spencers Lifestyle Walmart Reliance retail Louis Phillipe, Van Heusen Metro cash and carry Viveks

Retail Formats

Other classification of retail formats

Mom-and-pop Stores Family owned businesses Department stores Karachiwala Category Killers best buy, sports authority Malls Forum mall, Spencer Plaza Discount Stores Brand factory

Supermarkets Trinethra
Hypermarkets -- Big bazaar

Indian Retail Scenario At A Glance

The contribution of retail industry to Indias GDP is more than 13%.

Spreads over more than 6 million outlets (2.4 million

urban and 3.6 million in rural).

There is no supply chain management perspective.

Over 8 per cent of Indias population is engaged in retail

Indian Retail Scenario At A Glance

Indias per capita retailing space is the lowest in the

world. (2 square feet).

In India still, more than 60% sales in retail comes from

food items only

No role model for Indian suppliers and retails to adapt

or expand in the Indian context. Hence Indian

retailers have to find a suitable model and adopt it to the Indian context.

Indian Retail Scenario At A Glance

Indias first true shopping mall was inaugurated in

1999 in Mumbai. (This mall is called Crossroads).

An FDI Confidence Index survey showed that the

retail industry is one of the most attractive sectors

for FDI (foreign direct investment) in India.

Issues in International Retailing

Legislation and Regulation -- FDI Taxation and Cross Border Shopping Variations in Retailing Practice and Customs

Introduction to fdi
FDI refers to the capital inflows from abroad that is invested in or to enhance the production capacity of the economy
Methods:

The foreign direct investor may acquire voting power of an

enterprise in an economy through any of the following methods:

by incorporating by acquiring shares through a merger or an acquisition of an unrelated enterprise joint venture with another investor or enterprise

FDI in India
Name of the sector Insurance Broadcast sector Increase in FDi 49% 74%

Retail and consumer products(Multi brand) Retail and consumer products (single brand)
Aviation

51%

100%
49%

Scope of FDI in retail sector

After agriculture, retail sector is the

highest employer, employing 7% of the total

work force in the country.

Retailing in India accounts for more than

13% of its GDP

Scope of FDI in retail sector

Better cold storages prevent loss of fruits and vegetables Opening up of large retail houses will upgrade systems, supply chain, upgrade people and their abilities and skills. Consumers will be benefited first

FDI in Retail
On September 14th 2012, Government of India allowed FDI in Multi-brand retail up to 51% and in single brand

retail up to 100%
The choice of allowing FDI has been left to state governments. The Chief Ministers of Delhi, Assam, Maharashtra, Andhra Pradesh, Rajasthan, Uttarakhand, Haryana and

Governments of the State of Manipur and the Union

Territory of Daman & Diu and Dadra and Nagar Haveli, have expressed support for the policy in writing.

Some Regulations of FDI

The establishment of the retail sales outlets will be in compliance of applicable State laws/ regulations, such as the Shops and Establishments Act etc. Retail sales outlets may be set up only in cities with

a population of more than 10 lakh as per 2011 Census

In States/ Union Territories not having cities with population of more than 10 lakh as per 2011 Census, retail sales outlets may be set up in the cities of their choice, preferably the largest city

FDI proposed conditions

1} Minimum investment of US $100 million 2} At least 50% of total FDI brought in shall be invested in 'backend infrastructure' within three years of the induction of FDI back-end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house, agriculture market produce infrastructure etc.

FDI proposed conditions

3} Expenditure on land cost and rentals, if any, will
not be counted for purposes of backend

infrastructure
4} There is a conditionality requiring at least 30% procurement from Indian small industries 5} State Governments are also responsible for aspects ancillary to MBRT, such as zoning regulations, warehousing requirements, access, traffic, parking and other logistics

Safeguards
A three year timeframe has been fixed for setting
up the back-end infrastructure This condition will bind the foreign investors to invest in critical back-end infrastructure, which is a felt need across the country It would also make the foreign investors accountable for proper implementation of the

condition.
Farmers stand to benefit from the significant

reduction in post-harvest losses

 There is a conditionality requiring at least 30%

procurement from Indian small industries This would enable them to get integrated with global retail chains. This, in turn, will enhance their capacity to export products from India The final decision will be taken by the state governments

This gives a control on approvals for number,

size, format and type of retailer, based on the favorable conditions of that concerned state

Benefits
Global experience indicates that organized and unorganized retail co-exists and grow Consumers stand to gain the most.. firstly, from the lowering of prices that would result from supply chain efficiencies secondly, through improvement in product quality

Benefits
The young people joining the workforce will

benefit from the creation of employment

opportunities The policy will facilitate greater FDI inflows, additional and quality employment, global best practices and benefit consumers and farmers in the long run

FDI- Vizagites perspective

Age of the individuals

Sample distribution

51 & above 2% 41-50 8% Upto 20 8%

Male 44% Female 56%

31-40 22%

21-30 60%

Occupation of individuals
43.5% 37%

6%

9%

4.5%

business employes Student

H.W

Others

Growth of Shopping malls in recent years is beneficiary to the customers

40 35 30 25 20 21.5% 21.7%

37.5%

37%

22%

Female Male

15
10 16% 5 0 Strongly agree Agree 15.3%

12%

3.5%
10% 3% Disagree Strongly disagree 0.5%

Central Governments recent decision on FDI helps for the growth of retailing in India
50 45 40 35 30 25 20 15 10 5 0 Strongly agree Agree Disagree 8% 13% 17.2% 15.3% 3.5% Strongly Disagree 28.3%

45.5%

30%
Female Male

21%

14.7%

Where do you prefer to shop?

60

52%
50

48%

40
25.7% 30 30% Female Male 20

10

22.3%

22%

0
Kirana Shops Shopping mall

Do you think foreign retailers intervention will effect small scale retailers business
90

82%
80
70 60 50 Female 40 30 Male 49%

18%
20 10 11.4% 0 Yes No 33% 6.6%

Do you think foreign retailers offer products at cheaper rates

80 70 60 50 40 30 20 29.6% 10 0 Yes No 17.7% 38.4%

68%

32%

Female Male

14.3%

Conclusion
Entry of foreign investors into the country will improve the GDP of the nation. It creates efficient storage facilities, infrastructures, improve supply chain matrix, upgrades the existing technology ,

creates millions of jobs and consumers are benefited

more The studies shows that FDI approval is more beneficial to the nation in the long run, but with some conditions in order to safeguard the interests of small and middle intermediaries.

Conclusion
The small scale intermediaries are however given priority by the foreign players as they need local networking for

their business activities. But still few will be endangered

because of their low supply capabilities.

Majority of Vizagites opined that they will get quality

products at a cheaper rates. They also opined that the small scale retailers will be effected by the intervention of big players. Majority of the sample agreed with the Central Governments recent decision.

Thank You
Under the Esteemed Guidance of Prof. B.Mohan Venkat Ram