Retail Marketing in India

Retail Marketing in India.
CHAPTER: 1
INTRODUCTION
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1. INTRODUCTION
“Any business that directs its marketing efforts towards satisfying the final
consumer based upon the organization of selling goods and services as a means of
distribution”
A retailer or retail store is any business enterprise whose sales volume comes
primarily from retailing. Retail organizations exhibit great variety and new forms keep
emerging. There are store retailers, non store retailers, and retail organizations.
Consumers today can shop for goods and services in a wide variety of stores. The best-
known type of retailer is the department store. Japanese department stores such as
Takashimaya and Mitsukoshi attract millions of shoppers each year. These stores feature
art galleries, cooking classes, and children’s playgrounds.
A retailer is at the end of the distributive channel. He provides goods and service
to the ultimate consumers. This he does through his small organization, with the help of a
few personnel. In an individual retail store there is not much scope for organization
except in the sense that the shopkeeper has to organize o apportions his time and
resources. The need for organization becomes essential as soon as he hires people o
enters into partnership or takes the help of members of his family in running his store. A
retailer deals in an assortment of goods to cater to the needs of consumers. His objective
is to make maximum profit out of his enterprise. With that end in view he has to pursue a
policy to achieve his objective. This policy is called retailing mix. A retailing mix is the
package of goods and services that store offers to the customers for sale. It is the
combination of all efforts planned by the retailer and embodies the adjustment of the
retail store to the market environment. Retailing mix a communication mix and a
distribution mix. The maximum satisfaction to the customers is achieved by a proper
blend of all three.
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The success of the retail stores, therefore, depends on customers’ reaction to the
retailing mix which influences the profits of the store, its volume of turnover, its share of
the market, its image and status and finally its survival.
There are three main phases in the life of a retailing institution. These are: -
 Innovation ( Entry )
 Trading Up
 Vulnerability.
In the entry stage, a new retailer enters with new price appeal, limiting
In the entry stage, a new retailer enters with new price appeal, limiting product
offerings, Spartan Stores & Limited services. Its monopoly power over the others is its
price advantage, which means that it offers products at low prices so as to get a
competitive edge over its competitors.
1.2 Retail: A strong pillar of Indian economy
Retailing is the last mile infrastructure to access and deliver goods to consumers. Retail
forms the backbone of the nation's delivery system and its importance can be exemplified
by the network of 15,000 KVIC outlets which support 4 lakh plus small and medium
handicraft manufacturers across the country.
It also serves as the last mile infrastructure to the manufacturers as well as the
government for tax collection. For instance, the success of the VAT proposal depends on
its being able to be implemented at the retailer level, but nobody has consulted with them
as a body yet on this issue. Furthermore, retailing is also an important and large
contributor to the GDP and a major employment generator. In India, for the last four
years its contribution to the GDP was around 13%. The sector gainfully employs 6-7%
of the total workforce in India.
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1.3 Changing Retail Landscape
Indian retail is fragmented with over 12 million outlets operating in the country and only
4% of them being larger than 500 square feet in size. This is in comparison to 0.9 million
outlets in USA, catering to more than 13 times of the total retail market size as compared
to India. Thus India has the highest number of outlets per capita in the world with a
widely spread retail network but with the lowest per capita retail space (@ 2 sq. ft. per
person).
Recently, majority of store formats have hit India. Yet traditional format stores namely
the kirana shops, pan/bidi shop, hardware shops, weekly haats and bazaars form the bulk.
Formats like department stores, malls, speciality stores as well as discounters are shaping
the burgeoning organized sector in India.
Though still in its infancy with less than 2% share of the retail sector, organized retail has
definitely struck its roots in India. What we are looking now are more corporate backed
organized retail operations. Till seven years back organized retail was largely restricted to
the southern India, barring the Bata chain. Organized retail has now shifted gears and is
moving ahead with accelerated speed throughout the country, without any direct
incentive provided by the government. Organized retail is growing at a rate of about 40%
per annum over the last three years.
With a size of Rs. 15,000 crore (USD 3 billion), organized retail is very much on track
according to KSA Technopak's projections made in 2003 based on in-house research.
The projections claimed that organized retail would grow to be a Rs. 35,000 crore (USD
7.1 billion) by 2008.
4
CHAPTER: 2
REVIEW
OF
LITERATURE
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2. Review of Literature
The literature base retail marketing has been growing with speed in recent years,
though the attention devoted to these two areas is scant (for services) or largely
nonexistent (for retailing).
As Discuss by Creating a fit between competencies and functional strategies not only
provides the possibility of a sustainable competitive advantage but can lead to the
achievement of high levels of performance (Day & Wensley, 1988). Although the
literature contains research in the area of strategies that can impact upon retail
performance, most of the studies have often been concerned with retail structure (eg
Bates 1989), Although the literature contains research in the area of strategies that can
impact upon retail performance, most of the studies have often been concerned with retail
structure (eg Bates 1989).In general, few of the retail change theories have been given
unanimoussupport. All have been noted to suffer from one thing or another. The Wheel
ofRetailing has garnished the lion’s share of research interest and associated
scrutiny. The Wheel has been severely criticised as well as having been held up
as “the best thing going” that seems to do a reasonable job of explaining retail
change. Brown, Stephen (1990 ) are critical of the wheel of retailing. A review of the
changes brought about by the availability of novel modes of marketing communications
and purchase transaction databases on retail marketing has been conducted. The results
indicate the need for a reorientation of the role of retailers in the new marketing
environment. Retail establishments are advised to shift their concentration from
distribution activities towards integrated communications to better manage their
relationships with their clients,(eg. Mulhern, Francis J,1997,)A trend does increased
services research does seem to be growing (eg., Tax and Stuart 1997).Service orientation
(Homburg et al 2002) and a range of marketing mix strategies (e.g. Walters 1988;
Lowson, 2001; Lynch, Keller, & Ozment 2000; Palmer & Markus 2000; Radder 1996;).
Little or no study particularly in Australia has examined whether or not the marketing
competencies possessed by small to medium sized retial organizations can influence their
level of business performance. This study was designed to determine if there are
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significant differences in the competitive marketing competencies possessed by the high

level performing and low level performing small to medium sized retail businesses in
South East Queensland. Leszczyc & Timmermans, (1997) and Kim and Park, (1997)
revealed that the studies on store choice have mostly dealt with individual choices and the
studies have investigated the drivers of store choice taking individuals as the samples
(mostly housewives). Little research exists, which analyses the shopping behavior with a
family or household as a unit. Researchers have found that, store choice and shopping trip
timing decisions tend to differ for individuals and households as a result of personal
differences, household composition, and activity patterns. The need for a fresh
perspective while developing theories to explain the new developments has been stressed
by Bennett et al. (1998). The Indian retail environment is witnessing several changes on
the demand side due to increased per capita income, changing lifestyle and increased
product availability.
Sarma ,(2000) explained that because of their small size, Indian retailers have very
little bargaining power with manufacturers and perform only a few of the flows in
marketing channels unlike in the case of retailers in developed countries.
Fernandes et al. (2000) suggested the fact that modernization in retail formats is
likely to happen early in categories like dry groceries, electronics, men apparel, books,
music. Some reshaping and adaptation may also happen in fresh groceries, women’s
apparel, fast food, and personal care products.
American Productivity & Quality Center, (2001) has proved in its studies that
benchmarking has a powerful impact on organizations. It has broken established
paradigms, created a readiness for action, and has provided models of excellence.
Nathan, (2001) reported that the traditional formats like hawkers, grocers and paan
shops co-exist with modern formats like supermarkets, and non store retailing channels
such as multilevel marketing and tele-shopping. Example of modern formats include
department stores like Akbarallys , supermarkets like Food World, franchise stores like
Van Heusen and Lee, discount stores like Subhiksha, shop-in-shops, factory outlets and
service retailers.
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Chapter: 3
RESEARCH
METHODOLOGY
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3. RESEARCH METHODOLOGY
The methods adopted to fulfill the objective of the study that included collecting primary
and secondary data. I conducted the survey in order to gather the information’s from the
knowledgeable person of retail stores on the issue reverent to my thesis topic.
3.1 SCOPE OF THE STUDY

The scope of my study restricts itself to analyze the retail marketing profitability drivers
on the basis of Garments, Gifts, Cards and Music Department where as in the recent trend
its seen that the key players in this Industry are more emphasizing on the Garments,
Personal Grooming, Home furnishings, Life style and Footwear Departments in their
Stores.
3.2 OBJECTIVES OF THE STUDY

The over all objective of the thesis is to throw light on “PRESENT AND FUTURE PROSPECT
OF RETAIL MARKETING IN INDIA”
3.2.1 SUB OBJECTIVE
 To study the current Retail scenario in India.
 To give introduction about retail marketing.
 To find out Future growth potential of Retail Marketing in India.
 To find out the strategies adopted by Indian retailers to sell their products in Indian
market.
 To find out the International retailers eyeing the Indian market.
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3.3 RESEARCH DESIGN

Research Type
Descriptive method is used in the research.
3.4 DATA COLLECTION METHODS

Data will be collected for the study.
Secondary Sources – The secondary sources used are already in existence

in the form of books, internet periodicals and institutes brochures.
Magazines The Franchising World.
Journals Indian Management.
Websites: www.franchiseindia.com
www.ksatechnopak.com
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CHAPTER: 4
FINDINGS
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4.1 Retailing in India – Past, present and future
Retailing, considered a sunrise industry today after InfoTech, is the most happening
industry with almost all the big players vying for a share of the coveted pie. Buoyed by a
strong increase in private consumption (see raph), retailing is one industry that is waiting
to explode.
Today however, organized retailing is less than 2 per cent of the retailing industry in
India, that is, about Rs 5,000 crore. Therefore, there is no real retail revolution in India;
the industry is still in the stages of infancy.
Table: 4.1 Share of Organized Retail

2003 2006 2008
Total Retail (US $ Billion) 150 180 225
Organized Retail (US $ Billion) 1.1 3.3 7
% Share of organized Retail. 0.7 1.8 3.2
Source: KSA Techno pack
Organized retailing is bound to grow tremendously provided the right marketing

strategies are adopted. Retail businesses have broken rank and seem poised to surge
ahead with renewed vigour, optimism, confidence and cap-ability.
There is an incredible amount of activity in terms of creation of retail oriented space

across India. As per some estimates, there are over 200 retail mall projects under
construction or under active planning stage spanning over 25 cities. This may translate
into over 25 million sq. ft. of new retail space in the market within next 24 months.
Huge retail formats, with high quality ambience and very courteous and ambivalent sales
staff, are the regular features of retail formats in most Asian countries. However, in India
except for a few big towns where modern retailing formats abound, these features are
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grossly missing. ETIG expects organised retailing to slowly penetrate the second rung
and smaller towns which will catapult the growth rate for the sector.
Even though the big retail chains are concentrating on the upper segment and selling
products at higher prices like Crossroads, Akbarally's and Shopper's Stop, retail stores are
sprouting that cater to the needs of middle class. With a huge middle class population, the
retailers like RPG's
Food world are tapping this market. The market is flooded with products branded
and unbranded. The customers are in a dilemma as to pick which one. Simon Bell of AT
Kearney says "There is a close relation between the growth of brands and the growth of
the organized retailing. Companies selling branded products prefer to have big and
organized retail outlets such as supermarkets where they can be differentiated from
unbranded products"
Though doubts have been cast on the future of Indian retailing it is our belief that the
retail boom is yet to happen. While the industry is in the introduction stage in most
geographies, it has just entered the growth region in the metro cities. Today, the right
product mix, right sourcing strategy, and the right communications are the mantras for
success.
This paper begins by analyzing the retail formats in the present Indian scenario and
proceeds to outline the key strategic factors in retailing. In the last part the paper shows
the challenges facing retail and our recommendations for making organized retailing a
success.
4.1.1 Organized retail formats in India
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Each of the retail stars has identified and settled into a feasible and sustainable
business model of its own.
 Shoppers' Stop - department store format
 Westside - emulated the Marks & Spencer model of 100 per cent private label, very
good value for money merchandise for the entire family
 Giant and Big Bazaar - hypermarket/cash & carry store
 Food World and Nilgiris – supermarket format.
 Pantaloons and The Home Store - speciality retailing
 Tanishq has very successfully pioneered a very high quality organized retail business
in fine jewellery.
4.1.2 Structure of the retailing industry according to ownership

patterns:-
 An unaffiliated or independent retailer
 A chain retailer or corporate retail chain
 A franchise system
 A Leased Department (LD)
 Vertical Marketing System (VMS)
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 Consumer Co-operatives
A new entrant in the retail environment is the 'discounter' format. It is also is known as
cash-and-carry or hypermarket. These formats usually work on bulk buying and bulk
selling. Shopping experience in terms of ambience or the service is not the mainstay here.
RPG group has set up the first 'discounter' in Hyderabad called the Giant. Now Pantaloon
is following suit.
Two categories of customers visit these retail outlets.
1. The small retailer. For example, a customer of Giant could be a dhabawala who needs
to buy edible oil in bulk.
2. The regular consumer who spends on big volumes (large pack sizes) because of a price
advantage per unit.
4.1.3 Key Strategic Factors in Retailing
The key to success is identifying a superior value-promise and who is in a better

position to do it than retailers? Retailers are the closest to the point of purchase and have
access to a wealth of information on consumer shopping behavior. Retailers have some
unique advantages for managing brands such as continuous and actionable dialogue with
consumers, control over brand
Presentation at point-of-sale, control over shopping environment, display
location/adjacencies, and signage. And they have used this advantage with tremendous
success.
Figure:4.1 The 3 stages of evolution of the trade channel are shown in the exhibit
below:-
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EXTENDED LIMITED DIRECT
MANUFACTURER MANUFACTURER MANUFACTURER
DEPO/CNF DEPO/CNF
DISTRIBUTOR
RETAILER
RETAILER
SHOPPER SHOPPER
SHOPPER
As seen, the role of the intermediary is being diminished gradually, which has
obvious implication of backlash of the trade channel upwards towards the suppliers. This
is more severe in countries such as India, where the channel economics in favour of the
middlemen is still strong enough given the fragmentation of the retail sector. Therefore
when Food World, the
Largest grocer in India has a “direct supply” contract with over 20% of its key suppliers;
it gives rise to conflict of interest with the distribution infrastructure that suppliers have
painstakingly built over the years. Thus companies like HLL have evolved a distinct
distribution channel altogether (called “Modern Trade”) to service the needs of such large
grocers. Even the mom and pop stores (known as kirana shops) are affected due to this
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“unfair” back-end advantage extended by the supplier to its leading accounts (the
emerging supermarket chains).
The strategies adopted by the retailer to compete with branded goods are illustrated by
the following diagram. Branding the store and following a private label strategy is the
key strategy which helps the retailer to compete with branded products.
Figure: 4.2
Maximize customer Keep Formats

Leverage Brands traffic & Constant.
Profitability.
Develop Reinvigor
Brand the Strong ate
Private New
Store Existing
Level Optimize Formats. For
Stratergy
Assortment
Loyalty Cards.
Pricing &
Promotion
Strategy.
Online
shopping.
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4.1.4 Challenges Ahead For Retailing
The unorganized nature of retailing has stunted its growth over several years. "Lack of
industry status affects financing prospects and stunts growth of the industry", says
Kishore Biyani, managing director, Pantaloon Retail India. In the current scenario, only
players with deep pockets have been able to make it big. In addition to the advent of
Internet, there are many other challenges which retailers have to address.
(a) Human Resources

Availability of trained personnel and retaining the human resources is a major challenge
for these big retailers. The bigwigs like Crossroads offer high compensation and create a
cohesive environment that makes an employee proud to be a part of such big retail
chains.
(b ) Space and Infrastructure
To establish a retail shop / mall, the real estate and the infrastructure are very vital. The
expenditure and availability on both the accounts do hinder the growth of the retail chain.
The lack of secondary infrastructure also affects the logistics and supply chain
management for retail companies.
(c) Absence of retailer friendly laws
India still does not have retail-friendly laws especially relating to the movement of
goods from one state to another. Retailers need to put in a whole lot of products from
different parts of the country at times from outside the country on the shelf. But question
of multiple tax levels is an issue. Then there are laws like shops cannot be open for all
seven days, shops have to be open after or close before a certain time which affects
operations.
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(d) Future perspective
We should see fundamental shifts in the way Indians shop in the very near future. The
Year 2003 could well be a landmark year for organised Indian retailing. According to a
recent study done by ETIG the organized retail industry is expected to grow by 30 per
cent in the next five years and is expected to touch Rs. 45,000 crore. Thus, the growth
potential for the organised retailer is enormous. In the next 2-3 years, India will finally
see operations of a number of very serious international players not withstanding the
current restrictions on FDI in retail. Metro from Germany is a very successful and
resourceful retailer and their cash & carry format should offer
a good run for money to others. Some others will also find perfectly legitimate ways to
operate in India, for example, Marks & Spencer, Mango and Shop rite.
(e) Change Accelerators

The following factors will be significant in driving growth in the retail sector:
 Consumer factors
Increase in income\
Working women
Changes in lifestyle – demand for “global” trends
 Supply side factors
Growing importance of retailing in political and economic agenda
Real estate reforms to be undertaken in the next 24 months
Major restructuring of the manufacturing sector easing product
Supply constraints for efficient retailing
Reduction in import duties-offering more global sourcing options
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Which categories will grow?
The single biggest opportunity in India in organized retailing is bound to be food and
groceries; it is in this sector that the largest amount of consumer spends is concentrated.
This sector has maximum opportunity for investments and entrepreneurs to come in and
try to make the supply chain a little more efficient.
Consumer durables are another promising sector because, with increasing purchasing
power, consumers tend to spend the most on this category. Also, there is nothing to
prevent a company from putting up shops outside the city limits, because consumer
durables are a premeditated purchase. Further-more, availability of finance options has
increased spending in this sector.
Third are home products with increasing private ownership of homes by relatively young
couples, across most major cities in India, national retail chains offering home furniture
(and accessories) have great potential.
Finally, personal care products, pharmaceutical products, and healthcare services have
tremendous growth potential. Recently, we have seen some interest from organised
healthcare players like Max, Fortis, Birlas and the Reliance group
Which formats will grow?

KSA Technopak's research suggests the top four formats to emerge in the next five years
are:
* Shopping Malls
* Specialty Stores (in new categories such as office products, specialty food, optical and
travel)
* Departmental Stores
* Supermarket.
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4.2 FUTURE GROWTH POTENTIAL OF

RETAIL MARKETING IN INDIA.
The overall retail market in India is likely to grow by 36% to touch Rs 8, 00,000 crore by
2012 from the current level of Rs 5, 88,000 crore, according to an Associated Chambers
of Commerce and Industry of India (Assocham) study.
The study points out that of the overall retail market, the organised sector in retail
marketing is expected to touch Rs 16,000 crore by 2012 from the present size of Rs 5,000
crore. The retail market at Rs 5,000 crore, includes the organised food and grocery (Rs
600 crore). Assocham president Mahendra K Sanghi said that initiatives from all the state
governments and the Centre are prime factors that will encourage the entry of the
organised sector into retailing in the next few years.
These initiatives include allocation of land at concessional rates, grants of loans at

liberalized interest rates to promoters of shopping malls, and rationalization of state
levies.
He pointed out that the expansion and diversification of the organised sector in retail
marketing is currently under way because of the demand factor.
The other reason which substantiates major foray of the organised sector into retail
marketing is the availability of real estate and infrastructure facilities in most of the states
for setting up retail stores.
“Such laws will no longer be there in the near future as liberalization has already reached
its advanced stage and states are competing with one and another for attracting
investment. This will motivate and encourage the foray of organised sector into retailing,
particularly when the entry of FDIs into retailing is being strongly opposed by a section
of society and polity as well,” according to the release.
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According to Assocham estimates, the retail sector will create 50,000 jobs annually in the
coming five years.
The retail sector is the second largest source of employment and job market is receptive
to retailing experience, with business schools focusing on the sector and large retailers
setting up retail academies.
4.2.1 GROWTH POTENTIAL
Our published results for 2008 show a sales decline of 6.7% on account of Discounting of
non value adding businesses and divestments. Our domestic FMCG business was flat
with the growth in Home & Personal Care being offset by a decline in Foods. This may
lead to a question on our growth potential. Indeed, there is a common misconception that
our categories are mature with little scope for growth. In fact, the very opposite is true.
Several of our categories still have low user ship levels. In addition, the actual amount
used per capita is far lower in India as compared to other countries, as shown below:
Table: 4.2.2 Per Capital Consumptions (Kgs)
Fabric Wash Personal Wash Toothpaste Shampoo Tea

India 2.63 0.50 0.07 0.04 0.64
Thailand 4.71 0.87 0.40 0.38 -
Brazil 9.03 1.46 0.61 0.72 -
UK 13.90 1.31 0.23 0.40 2.28
Also, the GDP growth of about 5% is driving up discretionary income of our

consumers by about 8% per annum. Literacy levels are rising, creating higher aspirations
further fuelled by the world they see on television. There is no doubt that today's
consumer wants a better quality of life which is what our brands help realize.
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However, HLL is faced with the challenge that FMCG markets, after growing in strong
double-digits throughout the nineties are now declining in value for the last couple of
years. Why is this happening? In urban India, consumers are now being exposed to and
are trying several new categories, such as mobile phones, leisure, durables etc, and are,
therefore, down-trading their FMCG purchases. Rural demand has been dampened by
three unusually poor monsoons in the last four years. We believe that both these factors
are transitory in nature and FMCG markets will surely find a new growth equilibrium. Be
that as it may, we are leaders in many FMCG categories, and are taking active steps to re-
attract consumer spending to our brands. We are doing this by providing exciting, new
and differentiated benefits as well as greater value, thereby leading growth. We have
every confidence in the validity of this approach given our experience in recent
years, whereby several of our biggest brands, supported by such innovation, have
grown strongly, even in this very challenging context.
4.2.2 FOCUSSING THE COMPANY
With increased competition for the consumer’s wallet in today’s market environment,
driving growth requires a much higher level of resource in all areas, be it technology,
media spend or people talent. A consumer brand in everyday life is our area of core
competence both in India and globally with Unilever and thus our area of focus. Two
years ago, the FMCG business accounted for 85% of HLL. Today, 95% of HLL is its
FMCG business, of which 86% is domestic, with 9% being exports of consumer brands.
Over the years, we had entered several non-FMCG businesses in line with national
priorities. These businesses were successful and created good value. However, with the
opening up of India, staying in these businesses would have required us to invest heavily
in accessing technology and achieving world-class competitiveness. In line with our
strategy, we have exited non-FMCG businesses like Animal Feeds, Seeds, Flavours &
Fragrances, Nickel Catalyst and Adhesives with total sales of over Rs.600 crores. In
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doing so, we have secured good value realising in all Rs.430 crores with a profit on
disposal of over Rs.260 crores.
We also had a very broad export portfolio covering several areas which also has
been restructured and focused. Going forward, the major thrust is on driving exports of
our consumer brands primarily to other Unilever companies from whom we receive
considerable support. This is an area where we see enormous potential for growth, given
our clear competitive advantage. Indeed we are already supplying Tea bags to Singapore,
Australia, Japan and the USA, Personal Products to the Middle East, Far East and African
countries and are marketing Pears globally. In all, such exports already constitute over
40% of our total exports of US $ 300 million. We are also driving exports in other chosen
areas where India has a competitive advantage, like Rice, Castor and Marine products.
Marine products, for example, have huge potential given India’s long coastline and
Sustainable fishing capability. We are the largest exporters of Marine products from India
and have already built up a leading position in shrimp exports to the demanding markets
of the USA and Europe. We also acquired Amalgam, a leader in value-added Marine
products, to drive further growth in this area. At the same time, we have discontinued a
number of non value-adding exports. Our continuing exports are now growing by about
15%.
4.2.3 TACKLING COMPETITIVE CHALLENGES
In pursuit of growth, we are acutely conscious of the challenge posed by

competition, especially the low price players. This phenomenon is not new to us in India
or indeed to other developed markets where low price local players and trade brands co-
exist with large branded players like ourselves. We are quite clear that we will be able to
sustain growth in the face of such competition as we have done in the past. In the
Laundry market where there are over a thousand local players, our brand Wheel is now
the clear market leader and the largest brand in HLL. What is more, this has not come at a
cost to our bottomline as it is strongly profitable. In Personal Wash also, we grew our
business by double-digits last year in the face of very aggressive low price competition.
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We will compete with low price competitors by playing to our strengths using our
strongest brands backed by superior technology and the lowest cost supply chain. We will
succeed in this by leveraging our unique combination of local and global scale.
4.2.4 LEVERAGING HLL SCALE FOR GROWTH
The power of HLL’s scale is derived from its combined volume of about 4 million
tonnes, sales of Rs.10,000 crores and its presence across more than 20 distinct consumer
categories. HLL's brands are available in 3 million outlets and touch the lives of two out
of three Indians. We are leveraging this scale to derive competitive advantage and
sustainable growth.
(a) Deeper Commitment to Rural India
Our scale also gives us the opportunity to build the deepest possible direct distribution
reach into rural India, where over 70% of our population lives. Interior villages are
difficult to access because of weak infrastructure. In addition, a large proportion is media
dark with no awareness of any brands. By consolidating our categories we are
establishing a single distribution channel for rural India. We have already appointed 6000
sub-stockiest for rural markets, and are now covering approximately 50,000 villages,
reaching about 250 million consumers. In addition, we have also embarked upon an
ambitious direct distribution programme called Project Shakti to reach the smallest of
villages. Our vision is to reach over 100,000 villages, thereby touching about 100 million
rural consumers. We have already piloted
this initiative in 5000 villages and are now extending this rapidly. Project Shakti provides
a unique micro-enterprise opportunity for under-privileged rural women. Armed with
micro-credit from banks, they become direct-to-home distributors in these small villages,
providing relevant products as well as improving the overall awareness of nutrition and
hygiene. In turn, they benefit through sustainable income, thereby creating a virtuous
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cycle of growth. Project Shakti uniquely combines our business interest with our ongoing
commitment to the development of rural India and women.
(b) Partnering Modern Trade

In addition to our ongoing commitment to the traditional grocery trade, we are
building a special relationship with the small but fast emerging modern trade. Our scale
enables us to provide superior customer service including daily servicing, improving their
range availability whilst reducing inventories. We are using the opportunity of interfacing
more directly with our consumers in this retail environment through specially designed
communication and promotions. This is building traffic into the stores while yielding
high growth for our business.
4.2.5 BUILDING PROCESSED FOODS
There is a big opportunity to grow Processed Foods, which are still a very small
proportion of the overall largely commoditized foods market.
(a) Foods Market Structure
Processed 6%
Semi Processed 16%
Unprocessed 78%
However, developing this market will require relevant and differentiated products which
cater to Indian tastes and habits as well as sustained and considerable investment and
time for market development. Over the years, we had grown our Foods and Beverages
business, organically and through acquisition to significant scale. However, it was
necessary for us to increase the inherent profitability profile in several areas in order to
generate the capacity to invest in market development. Over the last couple of years, our
gross margins have improved by 9%, albeit at the cost of some topline, thereby providing
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the fuel to invest in both innovation and differentiation. We have reduced our losses in
Ice-cream significantly, and considerably improved the performance of the recently
acquired Modern Foods. Going forward, our priority is to lead growth of this market
through innovation. We have recently launched Kissan Bistix, Kissan Mr. Fruit, Lipton
Ice, Modern Atta Bread and the Knorr Annapurna Culinary range, all of which have met
with an encouraging response.
4.2.6 TALENT FOR GROWTH
Finally, the most important determinant of our growth is the quality of our people.
We are deeply privileged to continue to attract the very best talent as the number one
preferred employer at leading campuses. We are also encouraging diversity in our talent
skills, especially for our newer businesses, and are also bringing in a large number of
talented women. Our training programmes have been revamped to expose entrants to
local and global business they spend time in Indian villages and international cities all
within a 12-month training programme. HLL's wide variety of categories and Unilever's
global operations provide enormous development opportunities through organized career
planning. A lot of emphasis has always been placed on skill development today we are
also concentrating on building individual and leadership capabilities. We offer an
energizing and empowering environment enabled by creating small teams focused on key
initiatives. We have found this the best way of combining both scale and speed. Deeper
in the company, in factories and offices, we are unleashing the talent and creative
potential of all employees through initiatives such as TPM.
In conclusion, let me say that HLL's most valuable assets are its brands and people.
Today's market is very dynamic and increasingly competitive. We have confidence in our
strategy and are learning to grow even in declining markets. We are putting in place key
enablers to build our capability for sustained high performance. We have brands with rich
heritage and strong consumer equity. We have people who bring the power of their ideas
and execution to exploit the full potential of our brands towards delivering continued
profitable growth for Hindustan Lever.
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4.3 HOW DO INDIAN RETAILERS SELL THEIR PRODUCT
This brings to broadly identify and categorize the types of retail marketing, which are
defined as follows:
1. Store Retailing
2. Nonstore Retailing
Store Retailing:
 Departmental Store
 Convenience Stores
 Specialty Stores
 Discount Store
 Catalog Showroom
Non Store Retailing:
 Direct Marketing
 Automatic Vending
 Direct Selling
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4.3.1 Store Retailing
Store retailing provides consumers to shop for goods and services in a wide variety of
stores and it also helps the Consumers to get all the needed goods and services from one
shop only. The different types of store retailing are given below:
(a) Departmental Store

These stores are usually build in large area and keep variety of goods under one shed. It
is usually divided into different sections like clothing, kids section, home furnishings,
electronic appliances and other household goods. In a departmental store a consumer can
buy variety of goods under one shed.
(b) Convenience Stores

These are relatively small stores located near residential area, open for long hours seven
days a week, and carrying a limited line of high turnover convenience products at slightly
higher prices than departmental stores. Many such stores also have added takeout
sandwiches, coffee and pastries.
(c) Off - Price Retailer

These stores sell goods at low price with lower margins & higher volumes. These stores
sell goods with deteriorated quality. The defects are normally minor. This target at the
persons belonging to the lower income group, though some have a collection of imported
goods aimed to target the younger generation. The company owned showroom selling the
seconds products is a typical example of off - price retailer.
(d) Specialty Stores

These stores focus on leisure tastes of different individuals. They have a narrow product
line with deep assortment such as apparel stores, sporting goods stores, furniture stores,
florists and bookstores. These stores are usually expensive and satisfy the needs of
selected consumers who have liking or preference for exclusive things.
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(e) Supermarket
These stores are relatively large, low cost, low margin, high volume, self service
operations designed to serve total needs for food, laundry and household maintenance
products. Supermarkets earn an operating profit of only 1 % on sales and 10% on net
worth.
(f) Discount Store

These stores sell standard merchandise at lower prices by accepting lower margins and
selling higher volumes. The use of occasional discounts or specials does not make a
discount store. A true discount store regularly sells its merchandise at lower prices,
offering mostly national brands, not inferior goods.
In recent years, many discount retailers have “traded up”. They have improved
decor, added new lines and services, and opened suburban branches—all of which has led
to higher costs and prices. And as some department stores have cut their prices to
compete with discounters.
Not only that, discount stores have moved beyond general merchandise into
specialty merchandise stores, such as discount sporting goods stores, electronics stores,
and bookstores.
(g) Catalog Showroom

Catalog showrooms generally sell a broad selection of high-markup, fast-moving,
brand-name goods at discount prices. These include jewelry, power tools, cameras,
luggage small appliances, toys, and sporting goods. Catalog showrooms make their
money by cutting costs and margins to provide low prices that will attract a higher
volume of sales. Catalog showrooms have been struggling in recent years to hold their
share of the retail market.
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(h) 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.
Agricultural sectors such as horticulture, floriculture, development of seeds, animal
husbandry, pisciculture, aqua culture, cultivation of vegetables, mushroom under
cultivated conditions and services related to agro and allied sectors are open to 100 per
cent FDI through the automatic route.
For its e-Choupal scheme, ITC built internet kiosks in rural villages so farmers can access
latest information on weather, current market prices, foods-in-demand, etc. 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.
Besides a five-year program with the Punjab government to provide several hundred
farmers with four million sweet-orange trees for its Tropicana juices by 2008, PepsiCo--
with agriculture exports worth US$ 40 million--also introduced farmers to high-yielding
basmati rice, mangoes, potatoes, chilies, peanuts, and barley for its Frito-Lay snacks.
Export potential and a rapidly growing domestic demand for reliable produce from new
supermarket chains is driving change. With 77 per cent of India's population relying on
agriculture for a living, improved efficiency and new markets can benefit a large number
of people.
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4.3.2 Non Store Retailing
It is another type of retail marketing. Different types of nonstore retailing are

given below:
(a) Direct Marketing
Direct marketing has its roots in mail-order marketing but today includes reaching
people in other ways than visiting their homes or offices, including telemarketing,
television direct response marketing, and electronic shopping.
(b) Automatic Vending
Automatic vending has been applied to a considerable variety of merchandise,
including impulse goods with high convenience value (cigarettes, soft drinks, candy,
newspaper, hot beverages) and other products (hosiery, cosmetics, food snacks, hot soups
and food, paperbacks, record albums, film, T-shirts, insurance policies, and even fishing
worms).
(c) Direct Selling
Direct selling which started centuries ago with itinerant peddlers has burgeoned
into a $9 billion industry, with over 600 companies selling door to door, office to office,
or at home sales parties. A variant of direct selling is called multilevel marketing,
whereby companies such as Amway recruit independent businesspeople who act as
distributors for their products, who in turn recruit and sell to sub distributors, who
eventually recruit others to sell their products, usually in customer homes.
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Shoppers’ Stop
Pioneers in organized retailing in India, Shoppers' Stop Ltd., was started by the
Rahejas, with the very first outlet being in Mumbai (a retail area of 4500 sq. ft.) in 1991.
It now holds around 1,95,000 sq. ft. of retail space from Shoppers' Stop alone. It also
has chain of stores in other formats, with Cross words and Shoppersstop.Com under its
wings.
 Shoppers' Stop, is a specialty chain of garment and accessory retail stores with
outlets in Mumbai, Bangalore, Hyderabad, Jaipur, and New Delhi.
 Crosswords is a specialty chain of books, music and gifts retail stores with outlets in
Mumbai, Bangalore, Ahmedabad, Delhi, Pune, Nasik, Goa and Vadodara.
 Shoppersstop.Com (India) Pvt. Ltd is 100% subsidiary of Shoppers' Stop Ltd. It

has been floated with the intention of breaking down location barriers and helping
customers from around the world to "Feel the Shoppers' Stop shopping experience",
online.
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MARKETING MIX OF SHOPPERS’ STOP
(a) Product:
Shoppers’ Stop offers their customers a range of the finest national and
international brands, and a quality and price assurance that is backed by their guarantee,
stamped on every bill: "We are responsible for the goods we sell."
With the increasing number of nuclear families, working women, greater work
pressure and increased commuting time, consumers are looking for convenience. And,
convenience is defined as having everything under one roof, longer hours and
multiplicity of choice. Shoppers Stop has gauged the changing trends and in response to
this it houses a variety of products under one roof thus providing the customers with
value for time in addition to value for money.
The product range includes the following items:
 Cosmetics
 Jewellery
 Perfumes
 Watches
 Sun glasses
 Bags
 Apparels for men, women and children
 Sports equipment
 Home furnishings
(b) Price
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Pricing is not as important as convenience, today’s consumer is more upbeat

about `money spending' and more conscious about `time spending', and the consumer
prefers shopping for most of their requirements from a single store.
Most of the products at Shoppers’ Stop are branded. One of the prominent
features of branded products is the fact that they are available at the same prices within a
particular geographical region. Therefore, in terms of pricing its products Shoppers Stop
can exercise only a limited amount of control.
(c) Place
Shoppers' Stop's first outlet in Delhi opened in December last year that took the
total number of stores to seven. The company has two stores in Mumbai and one each in
Bangalore, Hyderabad, Jaipur and Chennai. The company is planning to open a store in
Kolkata.
Massive expansions have been planned for Delhi by opening four new centers. The
objective is to make state-of-the-art malls to "make shopping comfortable.” Another
place where the company intends to sell its products in a big way is the internet.
(d) Promotion
Shoppers' Stop has been positioned as a store that offers its customers an
international shopping experience. In their efforts to provide this experience, they have
held, numerous path breaking events and promotions, which have got them both national
and international accolades besides the appreciation of their customers.
As already taken up earlier some of the hugely popular promotional schemes taken
by the company are:
o The Festival of India

o Parikrama
o The Disney Carnival
o DOTY - The Designer Of The Year
o Valentines Day
o Diwali
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Here we should remember that the four Ps of marketing mix represents the
sellers’ view of the marketing tools available for influencing buyers. From a buyer’s
point of view, each marketing tool is designed to deliver a customer benefit. The sellers’
four Ps correspond to the customers’ four Cs.
Winning companies are those who can meet customer needs economically and
conveniently and effective communication.
SWOT ANALYSIS OF SHOPPERS’ STOP
Strengths
 Prime location
 Experienced and competent management
 Highly trained and motivated sales force
 Brand equity
 Large scale operations in various cities throughout the country allows them to
reap the benefits of “economies of scale”
 Large floor space allowing for better visual merchandising
 Large area also allows to stock a large variety of products under one roof
 Financial backing by the Raheja Group
Weaknesses
 A large organization structure leads to delayed decisions. This can prove fatal for
a business in the dynamic fashion industry. Shoppers Stop has a centralized
purchasing department in Mumbai, this fact sometimes results in delayed
decisions in adapting to changing market trends.
 Large scale of operations sometimes acts as a barrier to personalized customer
relations.
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 Large scale operations lead to reduced flexibility by increasing the amount of

overheads and a huge commitment in terms of fixed costs
Opportunities
 According to the Consumer Outlook study, consumers are generally satisfied with
the service that organized retailers extend to them. More importantly, they are
increasingly regarding these organized retailers as providing `value-for-money’.
These findings indicate that large retailers will capture most of the higher
consumer spending.
 Apart from the metros, cities like Ahmedabad, Pune, Lucknow, Indore and
Coimbatore have shown substantial retail presence. Most sport modern retail
formats like supermarkets, department stores and specialty chains. These markets
are expected to show exponential growth in the next few years. Thus Shoppers
Stop has the opportunity to explore new markets
Threats
 The time when retailers had to worry about competition only from their peers
down the street has come to an end. Shoppers Stop is now facing increased
competition in the form of international retail chains that are making a beeline
towards the highly potential Indian markets. Moreover many big Indian business
houses are also vying a space in the Indian retail scene
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4.3.3 RETAIL MARKETING PROMOTION IN INDIA

ROLE OF ADVERTISING AND DIFFERENT MEDIA
. The most efficient method of reaching method of reaching these potential

customers for most retail is the marketing tool known as advertising. For purposes of
definition:
Advertising is any paid form of non personal presentation and promotion of ideas,
goods, or services by an identified sponsor. The definition points out the true role of
advertising in the promotional mix of a store.
 Advertising id non personal: The retailer cannot expect advertising to do all the
selling. It will not replace personal selling effort where it is needed. Advertising and
personal selling must complement one another.
 Advertising can sell something besides a product: The retailer should use
advertising to sell the service of the store. For many retailers, services are their only
differential advantage. For some retailers, selling ideas as also significant. If a retailer is
trying to promote a civic cause o a unique or different retailing image, this idea may be
presented through the store’s advertising.
 Advertising is a paid form of promotion:
promotion: The retailer can control the placement
and content of the advertising for the store.
 Advertising requires an identified sponsor: The retailer wants to be sure the

store is identified. A retailer should take extra care to insure that a potential customer has
no doubt as to the name of the store and where the store is located.
As a retailer studied the store’s advertising program, factors to be considered
include.
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 Advertising’s effect on the retail image

 Characteristics of available media
 Advertising schedule
 Advertising budget
 Cumulative effect of advertising
 Objective of advertising
 Coordination of advertising with the other parts of the marketing program.
By examining these key factors, a retailer can improve his understanding of the
role and capabilities of advertising. This understanding should in turn results in a more
effective and more efficient advertising campaign. Each of these factors for effective
advertising are equally important to well-planned advertising. Although advertising’s
effect on the retail image will be discussed first, non of the seven advertising areas in
many stronger than any other in the chain of advertising success.
VARIOUS MODES OF ADVERTISING.
For an advertisement to be effective it must be noticed, read, comprehended, believed and

acted upon For one who has no objective, nothing is relevant.
It is very much important to set the objective of the ad to be delivered for any of the
product. The product is either of the FMCG, Consumer Durable, Service product, etc. but
even that the company is looking for the promotion activities which help them in
promoting the product. Advertising objectives, like organizational objectives, should be
operational. They should be effective criteria for decision making and should provide
standards with which results can be compared. Furthermore, they should be effective
tools, providing a line between strategic and tactical decision.
Knowledge of the various available advertising media and their various methods of
application for retail situation is a vital to a well-planned, successful advertising program.
For a given situation, there are particular media that would be appropriate for a retailer to
use.
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 Outdoor Advertising
 Transit Advertising
 Special Advertising
 Direct Mail Advertising
 “Donation” Advertising
 Newspaper Advertising
 Magazine Advertising
 Television Advertising
4.3.4 RETAIL MARKETING IN INDIA
Retail marketing is the most important part of the entire logistics chain in a
business especially in consumer related products. Without proper retailing the companies
can't do their business. Retailing is the process of selling goods in small quantities to the
public and is not meant for resale. Retail is derived from the French word retailer,
meaning to cut a piece off or to break bulk.
There are various ways of making goods available to consumers like:
 Company to distributor to wholesaler to retailer to consumer
 Company to salesperson to consumer
 Company to consumers (online/ phone/ catalog ordering).
These three are among the most common ways of making the goods available to
consumers. But in India the three layered system of distributor, wholesaler and retailer,
forms the backbone of the front-end logistics of most of the consumer-good companies.
In this system the company operating on all India basis appoints hundreds of
distributors across the country that supplies to various retailers and wholesalers.
Wholesalers in turn can either directly sell in the market or can supply to retailers. The
current retailing system prevalent across the country is highly fragmented and
unorganized. Anyone with some money and some real estate can open a small shop and
become a retailer catering to the locality in which he opens the shop.
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There are a number of reasons behind this fragmented retail market. Some of the
major reasons being:
 Poverty and lower literacy levels.
 Low per capita income.
 Savings focused and less indulgence mindset.
 Poor infrastructure facilities like roads etc.
 Restrictions on intra-state good movement.
 High taxes.
 No exposure to media.
 High import duties on imported goods.
 FDI in retailing is not allowed.
 Retailing is not considered as a business or industry by the government.
 Hitherto none of the business schools in India were offering specialized courses on
retailing.
 Expensive supply chain.
Besides this there is other reasons too, which led to stifling of growth of
organized segment of retailing sector and which instead led to highly fragmented market.
Today in India we have more than 12mn retail outlets and most of then are
family run and locally owned. There are very few nationally present retail stores. In India
the process of buying and selling at these unorganized retail outlets, is highly
characterized by bargaining and negotiations. But slowly with increasing influence of
media and urbanization the market is shifting towards organized segment. Seeing the
huge market size of retail business in the country and the current level of organized
segment, many players have jumped into the fray and many are waiting for the right
opportunity to enter it.
4.3.5 Present Retail Scenario in India
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 Retail experts find Indian industry promising

 Retail Sales To Touch Rs. 45,000 Cr. By 2012.
 Mall Mania: The Developing Mall Culture In India
 The Traditional Retail Scene And The Challenge Posed By The Internet.
(a) Retail experts find Indian industry promising
The retail movement in India has acquired the critical mass that is required for
rapid acceleration in terms of industry growth as well as geographical spread. The Indian
retail industry can no longer be called nascent.
The spread of super stores to the northern cities such as Delhi, Chandigarh, Jaipur
and Kolkata is evidence of the fact that organized retailing in India has emerged from its
southern bastion.
The retailing boom is being driven by increased expectations as well as changing
shopping behavior of the urban Indian consumer. With the increasing number of nuclear
families, working women, greater work pressure and increased commuting time,
consumers are looking for convenience. And, convenience is defined as having
everything under one roof, longer hours and multiplicity of choice.
On the supply side, the current inefficient supply chain in India, particularly for
food items has led a few players to consolidate their operations to take advantage of
economies of scale and match consumer expectations in terms of delivery as well as
space. So, we have a situation where both demand and supply side dynamics are fuelling
the growth of organized retailing in India, although improvements in the supply chain are
yet to fully match with consumer expectations.
The future growth need not necessarily come only from the big metros, where
there already exists a good retail network. The fact that big Indian retail chains are
moving into places like Indore or Chandigarh is an important indicator of future growth.
For the Rs. 5000-crore organized retail industry it is, perhaps, time to tap the relatively
smaller cities.
(b) Retail Sales to Touch Rs. 45,000 Cr. By 2012
43
Retail is exciting, and action in the sector promises to hot up. KSA a leading
international consultancy believes the organized sector will grow six folds to almost Rs
45,000 crore by 2012. The share of organized sector in total retail sales will grow from
one per cent now to six per cent by 2012.While projections can be slippery, hard facts
point to exciting growth ahead for this sector.
According to KSA, organized retailing is focusing on only SEC-A cities, India’s
23 largest cities. That is where a large portion of the country's urban population exists.
Today 82 per cent of organized retailing comes from the top six cities and 12 per cent
from the next four. KSA says the top 10 cities provide 94 per cent of organized retail
sales in India.
By 2012, KSA projects the top six cities will account for 66 per cent of total
organized retailing and the next four for 20 per cent. The top 10 cities will account for 86
per cent of organized retail sales. There could be variations in growth patterns in different
segments. The second half of the top 10 cities will provide large growth for food and
groceries, while the top six would still be the growth centers for consumer durables,
believes KSA.
The spread of organized retailing is unlikely to be a national phenomenon yet.
This appears to be the case so far. South India, particularly Chennai, Hyderabad and
Bangalore, have seen the emergence of chain stores or large format stores. While
garment stores have been around for sometime, other segments like food and groceries,
consumer durables and even books and music have witnessed the emergence of organized
players in large cities in South India. The lack of trained manpower or alternatively the
tremendous scope the sector has to provide employment is another issue.
(c) Mall Mania: The Developing Mall Culture In India
Till late last year, there were just three international style shopping malls in India
Spencer in Chennai, Crossroads in Mumbai, Ansal Plaza in New Delhi and Sriram’s
Arcade in Kolkata. By the end of 2005, that number will have jumped to at least 20.
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It looks like a virtual stampede. Fifteen players with a cumulative investment of

Rs 375 crore are set to change cityscapes across India. In the next one year, close to 40-
lakh square feet of retail space will be developed. In three years, this will rise to 70-lakh
sq ft.
As the retail industry evolves, consumers want more variety before making their
purchase decision. A study on consumer outlook suggests that over 80% of consumers
want a wide range of products at hand while shopping. This signifies that people are
finally ready for multi-option complexes.
Many old-time corporates are seriously considering using their idle assets. It
makes sense for landowners to develop it and keep the returns rather than sell it outright
or even lease it, especially when there is opportunity here. It is perhaps the best way to
use an idle real estate asset.
The limited kitty of brands has yet another significant knock-on effect - the
typical size of Indian malls. In the US and South-East Asia, malls are as large as 50 lakh
sq ft. Spencer is by far the largest mall in India - it occupies 7 lakh sq ft and even that is
dwarfed by Asia's largest mall, the 4-million sq ft mega mall in Malaysia. Even the 26
malls that are being planned are likely to measure between 50,000 sq ft and 2 lakh sq ft.
The Indian mall cannot offer too many choices in terms of brands. So, developing a very
large mall can never be sustainable.
(d) The Traditional Retail Scene And The Challenge Posed By The Internet
The Internet is changing the structure and definition of tradable services

worldwide, according to the World Trade Organization’s report on Electronic Commerce.
It predicts that the Net will profoundly transform inter-organizational commerce, retail,
and Government procurement sectors worldwide.
The ripple-effect of these changes is affecting the sale of items like books, PCs,
apparel, tickets and music in advanced Internet economies like the U.S. and will soon
impact India as well.
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Close to $7.8 billion worth of retail goods were sold via the Net in the U.S. in
2001. Deep product selection, easy shipping, and attractive online promotions made items
like books and apparel a favourite with Net shoppers.
Leading online service America Online (AOL) reported that the majority of the
goods sold in the record-breaking Christmas '98 season (amounting to over $1 billion)
consisted of toys, apparel and books.
And it is actually in the business-to-business sector, and not the business-to-
consumer sector, that the Net is expected to have its most dramatic impacts as companies
hook up Intranets and Extranets to cut costs, improve efficiency, and create whole new
market spaces.
Such trends are becoming visible in the Asian context as well. For instance, the
site of trade information publisher AsianSources.com, a business-to-business trade
inquiry hub, is facilitating millions of dollars of international trade leads for Asian
companies in the manufacturing, pharmaceutical and apparel sectors.
From humble email messaging and real-time market research to online sourcing
and e-retailing, the Net has much to offer Indian businesses. Sectors like the apparel
industry have only recently begin to sit up and take notice of the potential of e-business
for a wide range of activities in apparel design and development, such as online brand
building, visual merchandising, and data warehousing.
Retailing will undergo tremendous change in India in the next decade, according
to Simon Bell, principal consultant for retail practice at A.T. Kearney (India).
One of the key global trends in the retail industry is the "battle of the formats"
between different kinds of outlets: value discounters, specialty stores, small
independents, mega-stores, and non-store retailing. In addition to catalogue and Tele-
shopping, a new but fast growing segment in the non-store category of outlets is the e-
retail center, or Web-based merchandising driven by e-commerce.
Online sales for the U.S. apparel industry amounted to $157 million in 2002, but
will shoot up to at least $650 million by year 2004.
These trends will soon be replicated in India as well. According to estimates by
the year 2010, more than 20 per cent of the apparel retail turnover in India would be
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accounted for by organized chains, who will use sophisticated information technology to
cut costs, improve market responsiveness and manage customer loyalty programs.
This new trend is best typified by Shoppers' Stop, which has invested heavily in
retailing technology such as an ERP system and has also launched a Web site
www.shoppersstop.com.
The company is "determining" integrated customer demographic and psycho
graphic information from multiple offline and online sources to better understand
customer buying habits, said Mr. Naveen Singh, marketing manager of Shoppers' Stop.
In fact, quite a few Indian apparel organizations are already online, with
"brochure ware" Web sites providing basic information - such as the Indian Apparel
Export Promotion Council, Balaji Garments, Polo India, Meenakhi Sarees, and
www.apprelindia.com.
There are hardly any examples of third-party business-to-business sites in India,
which could serve as online hubs for strengthening cooperation and information sharing
between apparel manufacturers and retailers for mutual growth and business
opportunities.
Sites like www.clothesnet.com and www.fashionwindows.com in the U.S. are
superb examples of online business communities geared towards the apparel sector. They
feature email newsletters, searchable business inquiry message boards, and directories of
companies offering services like visual merchandising and niche garment design.
E-retailing is moving into the accelerated growth stage in the U.S., but is still at
the early development stage in India. Leveraging Net-based technologies will be key for
apparel companies and brands wishing to operate at the "warp speed" of the information-
age economy. The Web will allow apparel stores to make more products more accessible
to more consumers. E-commerce in India is very much alive, of course, with sites
offering books for sale in Bombay, vegetables in Delhi, and movie tickets in Bangalore.
IDC (India) estimates that the value of sales over the Net in India will mushroom to
Rs.1,200 crore in year 2004, if the Internet user base takes off.
Sites like Rediff-on-the-Net already have about 20,000 registered users for their e-
commerce service, which was launched in August 2001. 90 per cent of the payments
occur via credit cards, and 10 per cent via cheques. The average purchase amount is Rs.
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600. Online retailers must ensure smooth logistics, encourage repeat traffic, anticipate
consumer needs, offer slick navigation, and build strong online relationships with Internet
users.
The Indian apparel sector however, faces other challenges in areas like urban land
market ceilings, lack of industry status, conservative consumer spending habits, neglect
of rural markets, lack of confidence from the financial community, and low levels of
professionalism.
Besides, the Indian fashion industry is just about a decade old, as compared to
more than a century for Western Counterparts. And as compared to other emerging
economies like Brazil and South-East Asian countries, India is 20 years behind in
adoption of large-scale retail models. However, efforts are on to clear these hurdles and
move ahead smoothly and swiftly. Some of these are as follows:
 To better equip the Indian garment industry with nationwide market grasp, the
National Council of Advanced Economic Research (NCAER) will take on the
apparel industry as a major focus for a future study.
 Educational institutes like NIFT are stepping up course offerings and internship
programs for students in areas like Internet marketing.
 In terms of online assistance, more than a hundred Web solutions companies have
sprung up all over India, offering services ranging from basic Web page
publishing to international marketing and consulting strategies. Companies like
Polaris and Net Base Computing are already working on Web-based solutions for
the retail industry.
 The drivers for creating an organized, modernized retail sector for Indian apparel
will thus be factors like economies of scale, time-to-market, and the use of
information technologies like the Internet.
48
4.4 International Retailers eyeing Indian Market.

Retail giants heading towards Indian stores.
An excess of International apparel brands and retail giants are waiting to capitalize on
the Indian market place in a big way. If you are thinking about the growing importance
attached to India, attribute it to the country’s rise as global business process outsourcing
(BPO) hub. Indian Gen Y, earning loads of ‘disposable’ cash in the BPOs, has been
found to the single largest consumer for international apparel brands. International brands
and retailers have released that their brands have a high recall values amongst the urban
Indian youth, even when their products are not present in the world and now scouting for
opportunities. Tommy Hilfiger, the latest entrant in the market has decided to open seven
exclusive stores by October 2004 and three more by Feb 2005.
Table: 4.4.3 International Retailers eyeing Indian Market.
Retailer Type Status

Wal-Mart Hypermarkets Wait & watch
Marks & Spencer Lifestyle stores Already in
7-Level Supermarkets Evaluating
Carrefour Multi-format retailer Postponed Entry
Auchan Hypermarkets Evaluating
Shop rite Supermarkets Opening in Mumbai.
Dairy Firm Multi-format retail Tied up with RPG
Metro Cash & Carry Already in
Mango Apparel retail Already in
Landmark Lifestyle stores Already in
*Source: The Franchising World.
4.4.1 International retailers
49
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.
The largest-ever 150-member British business delegation in India committed investments
in the areas of food processing, agri retail and manufacturing. It is also likely to press for
the liberalization of sectors like financial & legal services and retail.
US-based home delivery and logistics company, Specialised Transportation Inc, will
enter the Indian market through a strategic alliance with Patel Retail, a subsidiary of Patel
Integrated Logistics.
Among other big international players, Wal-Mart has announced its plans for India in
partnership with Bharti, Tesco is sure to try again, and Carrefour too might finally find
the right partner.
50
Figure: 4.4.3 Retail formats
(a) 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.
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.
51
(b) Franchise outlets:
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 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 Kumar’s.Starbucks recently expressed their interest in
entering India through the franchise route, like their American F&B counterparts Pizza
Hut, Subway, and the very successful McDonald’s. McDonald’s has major expansion
plans lined up; in the next 3 years, it plans to open another 100 outlets in cities across
India.
(c) Hypermarket:
A very large commercial establishment that is a combination of departmental store and a
supermarket.
The specific features of a hypermarket are the wide range of goods offered, quality
service, quality display of goods on the shelves and complex systems providing for
customers loyalty.
Hypermarket is known for a wide range of goods offered. It consist of dozens of

thousands of items, while similar goods can be offered in several forms. In order to work
with such an assortment it is necessary to group it into categories and sub categories that
would unite goods according to this or that criteria.
52
(d) Shopping Malls:

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.
4.4.2 Wal – Mart plans to enter India.
The Indian Retail sector may soon see the world’s biggest retailer, Wal-Mart Stores, Inc.
on its radar. The $245billion company has reportedly initiated studies on the Indian
market and is working on a big-bang entry, once FDI norms are relaxed. The company is
interested in India as a destination for stores of there own, exploring possible
opportunities for presence. However, for business reasons, Wal-Mart does not say much
about specific investment plans. The US-based gaint operates 1,494 stores in the
international market. Wal-Mart plans to open 120 to 130 additional stores in the existing
markets in current fiscal.
53
Anglo-Dutch petroleum giant Shell is coming to expand its retail marketing activities
in India
Anglo-Dutch petroleum giant Shell is committing a sum of Rs 250 crore to expand its
retail marketing activities in India. Vikram Mehta, chairman of Shell group of companies
in India, said the petrol stations will be established in the South. Shell, which announced
the launch of its first petrol station in India at Bangalore after a gap of 28 years, intends
to launch these stations on its own. “We are not willing to disclose how many stations
will be established for this amount. Our national roll-out will occur after the first phase is
completed,” Mr. Mehta said. Shell is the single largest corporate investor in India, having
invested $825m (around Rs 3,500 crore), he added. It has the permission to launch as
many as 2,000 petrol stations. The giant got the Union government’s nod for the retail
foray only in September this year. The group intends to adhere to the prescribed norms of
opening petrol stations in rural centers. The government norms stipulate that 5.5% of
each player’s petrol station network be in rural areas. The group has a MoU with MRPL
to lift the stock for petroleum. MRPL, which is now a part of the ONGC stable, runs a
12m tonne refinery in Mangalore. Each Shell station will stock petrol and diesel, besides
having a convenience store. Mr. Mehta said that Shell intended to stick to knitting and
was not looking at investing in any petro-chemical venture in India.
54
CHAPTER: 5
CONCLUSION
55
5.1 Conclusion for

How can it be done? (Past, Present & Future)
For a start, these retailers need to invest much more in capturing more specific market
intelligence as well as almost real-time customer purchase behavior information. The
retailers also need to make substantial investments in understanding/acquiring some
advanced expertise in developing more accurate and scientific demand forecasting
models. Reengineering of product-sourcing philosophies aligned more towards
collaborative planning and replenishment should then be next on their agenda. The
message, therefore, for the existing small and medium independent retailers is to closely
examine what changes are taking place in their immediate vicinity, and analyze whether
their current market offers a potential redevelopment of the area into a more modern
multi-option destination. If it does, and most commercial areas in India do have this
potential, it would be very useful to form a consortium of other such small retailers in
that vicinity and take a pro-active approach to pool in resources and improve the overall
infrastructure. The next effort should be to encourage retailers to make some investment
in improving the interiors of their respective establishments to make shopping an
enjoyable experience for the customer.
56
5.2 CONCLUSION FOR GROWTH
Finally, the most important determinant of our growth is the quality of our people.
We are deeply privileged to continue to attract the very best talent as the number one
preferred employer at leading campuses. We are also encouraging diversity in our talent
skills, especially for our newer businesses, and are also bringing in a large number of
talented women. Our training programmes have been revamped to expose entrants to
local and global business they spend time in Indian villages and international cities all
within a 12-month training programme. HLL's wide variety of categories and Unilever's
global operations provide enormous development opportunities through organized career
planning. A lot of emphasis has always been placed on skill development -- today we are
also concentrating on building
individual and leadership capabilities. We offer an energizing and empower-ing
environment enabled by creating small teams focused on key initiatives. We have found
this the best way of combining both scale and speed. Deeper in the company, in factories
and offices, we are unleashing the talent and creative potential of all employees through
initiatives such as TPM.
In conclusion, let me say that HLL's most valuable assets are its brands and people.
Today's market is very dynamic and increasingly competitive. We have confidence in our
strategy and are learning to grow even in declining markets. We are putting in place key
enablers to build our capability for sustained high performance. We have brands with rich
heritage and strong consumer equity. We have people who bring the power of their ideas
and execution to exploit the full potential of our brands towards delivering continued
profitable growth for Hindustan Lever.
57
5.3 Conclusion for

How do Indian retailers sell their product?
The Indian retail industry is now beginning and growing day by day. Multi brand.
Even Ebony is trying to follow the chain system and very soon they are planning to open
their outlet in Gujarat.
They are strongly tied to independent intermediaries, which they cannot easily
give up. But they must eventually realign themselves with the high-growth vertical
marketing systems on less attractive terms.
Furthermore, vertical marketing systems constantly threaten to bypass large
manufacturers and setup their own manufacturing. The new competition in retail
marketing is no longer between independent business units but between whole systems of
centrally programmed networks (corporate, administered, and contractual) competing
against one another to achieve the best cost economies and customer response.
In India the retail sector is the second largest employer after agriculture, although it is
highly fragmented and predominantly consists of small independent, owner – managed
shops .There are over 12 million retail outlets in India , and organised retail trade is worth
about Rs.12,90,000 crore (September,2003). The country is witnessing a period of boom
in retail trade, mainly on account of a gradual increase in the disposable incomes of the
middle and upper-middle class households. More and more corporate houses including
large real estate companies are coming into the retail business, directly or indirectly, in
the form of mall and shopping center builders and managers. New formats like super
markets and large discount and department stores have started influencing the traditional
looks of bookstores, furnishing stores and chemist shops. The retail revolution, apart
from bringing in sweeping, positive changes in the quality of life in the metros and bigger
towns, is also bringing in slow changes in lifestyle in the smaller towns of India. Increase
in literacy,exposure to media, greater availability and penetration of a variety of
consumer goods into the interiors of the country, have all resulted in narrowing down the
spending differences between the consumers of larger metros and those of smaller towns.
58
CHAPTER: 6
BIBLIOGRAPHY
AND
REFERENCES
59
6.1 BIBLIOGRAPHY
Books:
1. Philip Kotler -- Marketing Management
2. V. K. Dubey -- Retail Management
Journals:
1. Business World
2. The Franchising World.
Internet:
1. francchiseindia.com
2. Google.com
3. Altavista.com
4. MSN.com
60
6.2 REFERENCES
 Aaker, D 1992, Strategic Market Management, John Wiley & Sons, Inc, Canada.
 Bates,A1989, “The Extended Specialty Sore: A Strategic Opportunity for the 1990s’,
Journal of Retailing, vol. 65,no. 3, pp.379-88.
 Conant, J, Smart, DT, & Solano-Mendez, R 1993, ‘Generic Retailing Types,
Distinctive Competencies, & Competitive Advantage’, Journal of Retailing, vol.
69, no. 3, Fall, pp. 254 – 279.
 Day, GS. & Wensley, R. 1988, ‘Assessing Advantage: A Framework for Diagnosing
Competitive Superiority’, Journal of Marketing, vol. 52, no. 2, April, pp. 1 – 20.
 Fernandes, M., Gadi, C., Khanna, A., Mitra, P. and Narayanaswamy, S. (2000),
India’s retailing comes of age, McKinsey Quarterly, 4 (6): 95-102.
 Homburg, C, Hoyer, WD & Fassnacht, M 2002, ‘Service Orientation of a Retailer’s
Business Strategy: Dimensions, Antecedents, & Performance Outcomes’, Journal
of Marketing, vol. 66, no. 4, p. 86.
 Lawson, RH 2001, ‘Customised operations strategies for retailers in fast moving
consumer industries’, International Review of Retail, Distribution and Consumer
Research, vol. 11, 2, 201-24.
 Leszczyc, P., Sinha, A. and Timmermans, H. J. P. (1997), Consumer Store Choice
Dynamics: An Analysis of the Competitive Market Structure for Grocery Stores.
Journal of Retailing, 76 (3): 323-345.
 Lynch, DF. Keller, SB. & Ozment, J 2000, ‘The Effects Of Logistics Capabilities
And Strategy On Firm Performance‘ Journal of Business Logistics, vol. 21 Issue 2,
p47 .
 Mulhern, Francis J.Publisher: Elsevier B.V.,Publication Name: International
Journal of Research in Marketing ,SN: 0167-8116 ,year: 1997.
 Nathan, N.V.R. (2001). Requirement for store based retailing”, Indian
Management, 40 (3): 35-39
 Palmer, JW & Markus, ML 2000, ‘The Performance Impacts of Quick Response
and Strategic Alignment in Specialty Retailing’, Information Systems Research,
vol. 11, no. 3, p. 241
 Radder, L 1996, ‘The Marketing Practices of Independent Fashion Retailers:
Evidence from South Africa’, Journal of Small Business Management, vol. 34, no.
1, January, pp. 78 – 84.
 Sharma, M.K. (2000). Some issues in retail management in India,Vision, 4 (1): 35-
40.
 Tax, Stephen S. and Ian Stuart (1997) “Designing and Implementing New Services:
The Challenges of Integrating Service Systems”, Journal of Retailing,Vol. 73, No.
1 Pp.105-134.
 Walters, RG. 1988, ‘Retail Promotions & Retail Store Performance’, Journal of
Retailing, vol. 64, No 2, Summer, pp. 153 – 180.
61
1 Appendices
Exhibit 1.1 :Present Indian Scenario
1.1.1Retail Realities:
 Unorganized market: Rs. 583,000 crores
 Organized market: Rs.5,000 crores
 5X growth in organised retailing between 2002-2008
 Over 4,000 new modern retail outlets in the last 3 years
 Over 5,000,000 sq. ft. of mall space under development
 The top 3 modern retailers control over 750,000 sq. ft. of retail space
 Over 400,000 shoppers walk through their doors every week
 Growth in organized retail on par with expectations and projections of the last
5 years: on course to touch Rs. 45,000 crores (US$ 7 Billion) or more by
2011-2012.
62
Table 7.1.4 Major players:
FOOD AND GROCERY FASHION OTHERS

Reliance Fresh Shoppers’ Stop Vivek’s
Vishal Mega Mart Westside Planet M
Big Bazar Lifestyle Music World
Spencer Pyramid Crossword
Globus Life spring
Ebony Gautier
Pantaloon
Figure: 7.1.4 Key Categories:
4% 7% 12%
11% 9%
2%
3%
52%
Transport Housing
Food beverage and tobacco Entertainment
Healthcare Clothing/Footwear
Miscl Furniture/Home
63

Retail Marketing in India

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Retail Marketing in India.

1.2 Retail: A strong pillar of Indian economy

1.3 Changing Retail Landscape

significant differences in the competitive marketing competencies possessed by the high

3.1 SCOPE OF THE STUDY

3.2 OBJECTIVES OF THE STUDY

3.2.1 SUB OBJECTIVE

 To study the current Retail scenario in India.

 To give introduction about retail marketing.

 To find out Future growth potential of Retail Marketing in India.

 To find out the International retailers eyeing the Indian market.

3.3 RESEARCH DESIGN

3.4 DATA COLLECTION METHODS

Secondary Sources – The secondary sources used are already in existence

4.1 Retailing in India – Past, present and future

Table: 4.1 Share of Organized Retail

Source: KSA Techno pack

Organized retailing is bound to grow tremendously provided the right marketing

There is an incredible amount of activity in terms of creation of retail oriented space

4.1.1 Organized retail formats in India

 Shoppers' Stop - department store format

 Giant and Big Bazaar - hypermarket/cash & carry store

 Food World and Nilgiris – supermarket format.

 Pantaloons and The Home Store - speciality retailing

4.1.2 Structure of the retailing industry according to ownership

 An unaffiliated or independent retailer

 A chain retailer or corporate retail chain

 A Leased Department (LD)

 Vertical Marketing System (VMS)

4.1.3 Key Strategic Factors in Retailing

The key to success is identifying a superior value-promise and who is in a better

EXTENDED LIMITED DIRECT

MANUFACTURER MANUFACTURER MANUFACTURER

Maximize customer Keep Formats

4.1.4 Challenges Ahead For Retailing

(a) Human Resources

(c) Absence of retailer friendly laws

(d) Future perspective

(e) Change Accelerators

Which categories will grow?

Which formats will grow?

4.2 FUTURE GROWTH POTENTIAL OF

These initiatives include allocation of land at concessional rates, grants of loans at

4.2.1 GROWTH POTENTIAL

Table: 4.2.2 Per Capital Consumptions (Kgs)

Fabric Wash Personal Wash Toothpaste Shampoo Tea

Also, the GDP growth of about 5% is driving up discretionary income of our

4.2.2 FOCUSSING THE COMPANY

4.2.3 TACKLING COMPETITIVE CHALLENGES

In pursuit of growth, we are acutely conscious of the challenge posed by

4.2.4 LEVERAGING HLL SCALE FOR GROWTH

(a) Deeper Commitment to Rural India

(b) Partnering Modern Trade

4.2.5 BUILDING PROCESSED FOODS

(a) Foods Market Structure

4.2.6 TALENT FOR GROWTH

4.3 HOW DO INDIAN RETAILERS SELL THEIR PRODUCT

Non Store Retailing:

4.3.1 Store Retailing

(a) Departmental Store

(b) Convenience Stores

(c) Off - Price Retailer

(d) Specialty Stores