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The Indian Retail Sector

The Indian retail industry is divided into organised and unorganised sectors. Organised retailing
refers to trading activities undertaken by licensed retailers, that is, 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, on the other hand, refers to the
traditional formats of low-costretailing, for example, the local kirana shops, owner manned general
stores, paan/beedishops, convenience stores, hand cart and pavement vendors, etc. The Indian
retail sector is highly fragmented with 97 per cent of its business being runby the unorganized
retailers like the traditional family run stores and corner stores. The organized retail which until
recently was at a very nascent stage is picking up pace and hence bringing in a huge opportunity for
prospective new players.In the past couple of years organized retail has emerged as one of the most
dynamic industries in India. The retail revolution, as it is sometimes referred to, is being driven by a
new wave of consumerism in urban India fuelled by rising incomes and a growing economy.
Traditional markets are making way for new formats such as department stores, hypermarkets,
supermarkets and specialty stores. Western-style malls have begun appearing in metros and second-
rung cities alike, introducing the Indian consumer to an unparalleled shopping experience. India͛s
retail sector is on an upward curve. India͛s vast middle class and its almost untapped retail industry
are key attractions for global retail giants wanting to enter newer markets.This new opportunity has
attracted a diverse group of companies to the retail business from home grown entrepreneurs to big
industrial groups and multinational retail giants. While many of the Indian retail companies have
already made significant investments in setting up their infrastructure, others have lined up
substantial commitments. Business conglomerates like Bharti,Reliance and Tata among others have
plans to invest billions of dollars in retail business.India͛s retail sector is wearing new clothes and
with a three-year compounded annualgrowth rate of 46.64 per cent, retail is the fastest growing
sector in the Indian economy. 

On one hand where markets in Asian giants like China are getting saturated, the AT Kearney's 2006
Global Retail Development Index (GRDI), for the second consecutive year Placed India the top retail
investment destination among the 30 emerging markets across the world.Over the past few years,
the retail sales in India are hovering around 33-35 per cent of GDP as compared to around 20 per
cent in the US. The table gives the picture of India͛s retail trade as compared to the US and China.
The last few years witnessed immense growth by this sector, the key drivers being changing
consumer profile and demographics, increase in the number of international brands available in the
Indian market, economic implications of the Government increasing urbanization, credit availability,
improvement in the infrastructure, increasinginvestments in technology and real estate building a
world class shopping environmentfor the consumers. In order to keep pace with the increasing
demand, there has been a hectic activity in terms of entry of international labels, expansion plans,
and focus on technology, operations and processes.This has lead to more complex relationships
involving suppliers, third party distributors and retailers, which can be dealt with the help of an
efficient supply chain. A proper supply chain will help meet the competition head-on, manage stock
availability; supplier relations, new value-added services, cost cutting and most importantly reduce
the wastage levels in fresh produce.Large Indian players like Reliance, Ambanis, K Rahejas, Bharti
AirTel, ITC and many others are making significant investments in this sector leading to emergence
of big retailers who can bargain with suppliers to reap economies of scale. Hence, discounting is
becoming an accepted practice. Proper infrastructure is a pre-requisite in retailing,which would help
to modernize India and facilitate rapid economic growth. This would help in efficient delivery of
goods and value-added services to the consumer making a higher contribution to the
GDP.International retailers see India as the last retailing frontier left as the China͛s retail sectoris
becoming saturated. However, the Indian Government restrictions on the FDI are creating ripples
among the international players like Walmart, Tesco and many otherretail giants struggling to enter
Indian markets. As of now the Government has allowed only 51 per cent FDI in the sector to ͚one-
brand͛ shops like Nike, Reebok etc. However,other international players are taking alternative routes
to enter the Indian retail market indirectly via strategic licensing agreement, franchisee agreement
and cash and carry wholesale trading (since 100 per cent FDI is allowed in wholesale trading).

Quick facts on Indian Retail Sector

à? Indian Retail sector is the fifth largest global retail destination

à? The Indian retail market has been ranked by AT Kearney's eighth annual Global Retail
Development Index (GRDI), in 2009 as the most attractive emerging market for investment
in the retail sector

à? Currently the share of retail trade in India's GDP is around 12 per cent, and is estimated to
reach 22 per cent by the end of 2010.

à? According to Government of India estimate the retail sector is likely to grow to a value of Rs.
2,00,000 crore (USRs 45 billion) and could yield 10 to 15 million retail jobs in the coming five
years; currently this industry employs 8% of the working population

à? India continues to be among the most attractive countries for global retailers. According to
the Department of Industrial Policy and Promotion, approximately USRs 47.43 million was
the amount of Foreign Direct Investment (FDI) inflow as on September 2009, in single-brand
retail trading

ABC Company will have two function heads:

1)? To provide training and mentoring programs to its client companies.

 2)? A consulting organisation for franchise owners.

Training and mentoring programs

It aims to provide top-quality professional development and coaching services. Our company
believes the retail sector has specific skill shortages in:

? Sales skills

? Product knowledge

? Customer communication

? Customer service

? Small business management

? Food handling and hygiene

? Workplace training and supervision, and where appropriate assessment skill

? Severe shortage of trainers.

? Insufficiency of the current education system to address the new processes.

Having identified the above flaws/gaps in the retail sector the company will have the training
program centred on bridging these gaps.

The objectives for ABC Company over the next three years are:

à? Achieve sales revenues of approximately 40, 00,000 by end of year one.

à? Achieve sales revenues of approximately 75, 00,000 by year three.
à? Achieve a of 60% client mix large business/30% small /10% entrepreneurial per year.
à? >ove into a larger office space by the end of the first year.

The company will provide its professional development services in the most effective manner and
with an ongoing comprehensive mentorship program to provide 100% client satisfaction. The
company will consider each contract as an agreement not between a business and its clients, but
between partners who wish to create a close and mutually-beneficial long-term relationship. This
will help to provide greater long-term profits through referrals and repeat business.
ABC Companywill institute the following key procedures to reach its goals:
à? The creation of a unique, upscale, innovative environment that will differentiate ABC Company
from other professional development businesses of this kind.
à? The Training salespeople to become complaint with various policies and procedures.
à? To build skills in the employees for a healthy customer relationship and establishing connect.
à? To help articulate standards and right scripts for training using a professional pedagogy.
ABC Company is a start-up limited liability company (LLC) consisting of 8 memebers. Each will be
investing significant amounts of his/her own capital into the company to cover start-up costs and
future growth. ABC Company will be limited in a small office space in Pune.
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profits through referrals and repeat business. ABC Company must also be able to maintain financial
balance, charging a high value for its services, and delivering an even higher value to its clients.
1.3 Keys to Success
1.? Excellence in fulfilling the promise--completely confidential, reliable, trustworthy expertise and
information
2.? Developing visibility to generate new business leads
3.? Leveraging from a single pool of expertise into multiple revenue generation opportunities:
retainer coaching, project consulting, workshop facilitation and individual coaching
4.? Consistently developing productive and thought-provoking learning experiences to maintain
growth and success with each client
5.? Our use of state-of-the-art technology
6.? Easy access to services
7.? Establishing a seasoned advisory team

Company Summary
The True Group LLC, doing business as ABC Company, is a start-up limited liability company
consisting of one principle officer with industry experience of 15 years in sales, professional
development training and business operations. The company was formed to take advantage of the
perceived weakness of existing professional development opportunities, in terms of quality and
client satisfaction. ABC Company will be owned and operated by Frank Smith. >r. Smith will be
investing significant amounts of his own capital into the company and may also seek a loan to cover
start-up costs and future growth.
ABC Company will be located in a home office in Anytown, >I. The facilities required for workshops
will be contracted with professional service firms, community facilities, colleges or universities or
contract office facilities.
The company plans to use its existing contacts and the combined customer base of >r. Smith to
generate both short and long-term coaching contracts. Its long-term profitability will rely on focusing
on professional contracts that will be obtained through strategic alliances, a comprehensive
marketing program and a successful referral program.
2.1 Company Ownership
The ABC Company is a privately owned limited liability company owned by Frank Smith.
2.2 Start-up Summary
Total start-up expenses (including legal costs, logo design, stationery and related expenses, and
franchise fee) comes to Rs 22,250. Start-up assets required include Rs 2,500 in short-term assets
(office furniture, etc.) and Rs 8,000 in initial cash to handle the first few months of operations as
sales play through the cash flow.
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On Demand Coaching (for time restricted clients) includes but is not limited to, private and objective
business or professional coaching, affordable and "on-demand," access to coaching via phone/email.
Special Projects includes strategic business planning and implementation, marketing plans and
implementation, leadership development, people management and systematizing businesses.
Beginning in year two (2006), ABC Company will provide a separate and comprehensive career
counseling service which will include but will not be limited to, resum assistance, interviewing skills,
job seeking strategies and networking opportunities.

>arket Analysis Summary

ABC Company will focus on small business owners, managers and entrepreneurs who are concerned
that their businesses have not grown at the rate they want or need them to, frustrated that they are
spending too much time in their businesses and may be burning out and worried that their business
will not survive without them. These companies will have revenues of Rs 10 million or less.
According to the July, 2002 census, there are approximately 81,600 small businesses in the 5 county
Anytown >etropolitan area. Although the majority are manufacturing based, there are a significant
number of service related companies. ABC Company will not take a position of industry expert but of
leadership and development expert; therefore industry will not have an impact on any prospective
markets.
4.1 >arket Segmentation
ABC Company will focus on two markets within the city of Pune.The segments will be as follows :
1) The small business segment (businesses with more than one employee/owner),
2) and The entrepreneur segment.
Although the company can handle larger organizations, the greatest benefit will come to businesses
with under Rs 10 million in annual sales. The majority of these companies are comprised of
"entrepreneurs" who are gifted in the work of their business, but typically do not have the resources
to have in-house staff dedicated to strategic planning, professional development and/or coaching.
Our goal is to eventually obtain approximately two-thirds of all our business from the small business
segment, since this generates the greatest cash flow. Furthermore, this segment has the lowest
percentage of variable costs. The small business segment is considered to be the company's cash
cow.
Initially the company will focus on the two segments in just the Pune industrial area. However, by
the end of the three-year projections, the company expects to be serving the entire town and major
>etropolitan area. The >arket Analysis table and chart show the number of small businesses in
each of the areas.
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3.? Professional Service Firms # This group includes doctors, lawyers, accountants, engineers,
consultants, etc. Continuing education requirements move this group to spend training dollars
disproportionate to their size, more than Rs 11 billion per year.

4.? Individuals # Those who buy training with their own money and on their own time. This group
spends more than Rs 2.5 billion on training and they tend to be highly motivated.
4.3.1 Competition and Buying Patterns
The key element in purchase decisions made at ABC Company client level is trust in the professional
reputation and reliability of the professional development firm. The professional development
industry is pulverized and disorganized, with thousands of smaller consulting organizations and
individual consultants for every one of the few dozen well-known companies.
Competitors range from major international name-brand consultants to tens of thousands of
individuals. One of ABC Company's challenges will be establishing itself as a real professional
development company, positioned as a relatively risk-free corporate purchase.
When dealing with the small or entrepreneurial business market, cost or price will be one of the
greatest obstacles ABC Company will face. It will be up to ABC Company to assist its clients in the
discovery of how much it may cost them NOT to pursue professional development and establish ABC
Company as the most effective solution to their challenges.
With time, reputation and referrals will allow for a steady stream of new clients as well as regular
price increases. This is not a business to build brand as much as it is to build reliability.

Strategy and Implementation Summary

Emphasize results
We will differentiate ourselves with results. We will establish our business offering as a clear and
viable alternative for our target market, from the scores of unrefined, one-time seminar, consulting,
and "feel good motivational" companies.
Build a relationship-oriented business
Build long-term relationships with clients, not single-visit deals. Become their advisor and partner of
choice. >ake them understand the value of long-term relationships.
Focus on target markets
We need to focus our offerings on small business owners and entrepreneurs who have a passion for
their business and have the willingness to work for what they receive. We do not want to compete
for the buyers who seek "get rich quick" types of resources. We need to be able to sell to smart,
quality-conscious clients.
5.1 Competitive Edge
The most unique benefit that ABC Company offers to clients is the ability to experience ongoing,
reinforcement development, versus a typical "one-time" seminar format. ABC Company provides
development and support for a year or more. Since each Strategic Workshop client will be
immediately qualified for one-on-one coaching, we will manage and monitor the specific progress of
each client to ensure appropriate development.
5.2 >arketing Strategy
ABC Company plans to reach their target companies by four methods which have been proven to be
effective. They are:
Lead Generation Program: ABC Company will do a direct mailing to 3,000 potential customers in the
A and B county areas. Interested companies reply by mail or phone. In this industry, an average of
3% of the recipients typically respond.
Sample Previews: These are invitation-only workshops that ABC Company will host for referral
sources (i.e., accountants, attorneys, financial planners, insurance professionals) as well as owners of
businesses in a target market. The previews will be the actual first year program offered to paying
clients. The intent is to provide value and proof of the Strategic Workshop process so that clients will
be comfortable making referrals. ABC Company will be responsible for the generation of the lists to
which these invitations will be sent. The franchiser, ABC Company, recommends that one of these
briefings be held monthly. Referral sources and business owners who attend and are interested will
have a follow-up call made to them to further discuss what ABC Company can do for their company.
Free Talks/Networking: These are talks given to Chambers of Commerce, trade councils, professional
organizations, etc. It has been industry experience that it is most beneficial to have at least two of
these talks per month and attend two networking events per month.
Referrals: Referrals will not be a large part of ABC Company's business until late in the first year. In
the second and third year they should account for as much as 50% of new business.
Other Income Generators: Special Project Assistance. This includes writing private programs for
specific businesses, designing custom programs and retainer based coaching on an ongoing basis.
5.3 Sales Strategy
ABC Company will make a significant profit through the delivery of top-of-the-line professional
development services. The company will see profit within the first year due to beneficial word-of-
mouth advertising and referral networking. The company expects to double its clientele every six
months, for the first 18 months.
Pricing
Strategic Workshops (two year program) - Rs 3000 for year one, Rs 2500 for year two. Includes 1
hour per month one-on-one coaching.
Platinum Package - Rs 5000 for one year of Strategic Workshops, 1 hour per month of one-on-one
coaching & membership to the On Demand Coaching.
Gold Package - Rs 4000 for one year of Strategic Workshops, 1 hour per month of one-on-one
coaching.
Silver Package - Rs 3000 for one year of Strategic Workshops
Second year - Rs 2500 per year for any client continuing with Strategic Workshops (applies to
workshop only)
One-on-one Coaching - Rs 125/hr for any personalized coaching for non-workshop clients. Rs 100/hr
for workshop clients.
On Demand Coaching - Rs 250 per month. minimum purchase of 3 months.
Special Projects - Priced as needed
5.3.1 Sales Forecast
ABC Company expects a slow start to 2005, but a strong finish with referral marketing beginning to
replace hard marketing dollars. The core business will be the Strategic Workshops, which have a
second year tied to the initial purchase (two year program - Rs 3,000 for year one, Rs 2,500 for year
two). Based on this, we should be able to obtain and manage a 25% increase in sales. Sales
exceeding the 25% would place a tremendous burden on the acceptable delivery of
service. Consistent efforts made by ABC Company based on the marketing plan will drive enough
opportunities to supply both initial and ongoing growth. At this growth rate, ABC Company will be in
a position to hire one more salesperson beginning year four (2008).
Potential obstacles to achieving these results:
1.? Prospecting/marketing plan not followed
2.? Poor delivery of service
3.? Any health problems of owner
 

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>anagement Summary
The initial management team depends on the founder himself, with little back-up. As we grow,
we will take on additional consulting, sales, and marketing help.
6.1 Personnel Plan
The following table is the personnel plan for ABC Company. The table reflects the hiring of a second
full-time salesperson / coach in year 2.

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Financial Plan
Our financial plan is based on conservative estimates and assumptions. We will need initial
investment to make the financials work, but the owner is prepared to contribute that funding.
We can minimize risk factors by:
1.? Obtaining initial capitalization of the company to sustain operations through year one
2.? >aintaining low overhead through the use of shared office space and home-based office
through year one
3.? Developing a strong customer base through aggressive marketing
4.? Creating strong community ties and involvement
5.? Eliminating collection costs, by establishing cash/credit/debit card only facilities
7.1 Start-up Funding
The start-up costs are to be financed by the owners' personal funds.


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7.2 Projected Profit and Loss
The following table and chart shows the projected Profit and Loss for ABC Company. The majority of
our operating expenses are the owner's payroll, benefits and taxes. This includes a standard PPO
health plan, since the owner is sole provider of services; if he gets sick, sales stop. The second largest
category is >arketing and Promotion, necessary for establishing brand recognition and generating
new business, as a start-up.
The moving expenses in December and increased rent starting at the same time reflect the planned
move into an office space, and out of the owner's home.
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 Rs 9,053 Rs 2,901 Rs 2,137
+
è( Rs 21,123 Rs 6,769 Rs 4,987
+
è(*

 25.93% 5.61% 3.39%

7.3 Break-even Analysis

Break-even data is presented in the chart and table below.

"

%


  
)P


"

%

 Rs 1,94,800
   1


N
è

2

&
  13%
c 

)U
  Rs 1,69,300

7.4 Projected Cash Flow

The following table and chart show the Cash Flow for ABC Company. After the first six months, cash
flow should be positive for all months. We expect an initial period of decreasing cash balance, until
sales reach mid-year targets.
 èV

V,
 ]ear 1 ]ear 2 ]ear 3

W




( X

 



 Rs 40,73,350 Rs 60,30,200 Rs 73,56,750
&

( X

  Rs 40,73,350 Rs 60,30,200 Rs 73,56,750
 

W



Y Y Y Y



32 34 */ W


 Rs 0 Rs 0 Rs 0
+
,
",Z Rs 0 Rs 0 Rs 0
+
,X

&
-

(

. Rs 0 Rs 0 Rs 0
+
,Z 
 
&
 Rs 0 Rs 0 Rs 0


(X


  Rs 0 Rs 0 Rs 0


(Z 
 
  Rs 0 Rs 0 Rs 0
+
,[

W


 Rs 0 Rs 0 Rs 0
&

W


 Rs 40,73,350 Rs 60,30,200 Rs 73,65,750


]ear 1 ]ear 2 ]ear 3
c 
 
( X

 


 Z Rs 30,17,200 Rs 56,91,750 Rs 71,16,400
&

X

  Rs 30,17,200 Rs 56,91,750 Rs 71,16,400
 



Y Y Y Y



32 34 */ è
 X Rs 0 Rs 0 Rs 0
è
W


(
",Z Rs 0 Rs 0 Rs 0
X

&
è
W


 Rs 0 Rs 0 Rs 0
Z 
 
&
è
W


 Rs 0 Rs 0 Rs 0
è

X


  Rs 0 Rs 0 Rs 0
è

Z 
 
  Rs 0 Rs 0 Rs 0
\
  Rs 0 Rs 0 Rs 0
&


 Rs 30,17,200 Rs 56,91,750 Rs 71,16,400
+

V, Rs 10,56,150 Rs 3,38,450 Rs 2,49,350

"


 Rs 15,03,650 Rs 18,42,100 Rs 20,91,450
7.5 Projected Balance Sheet
The following table presents the Balance Sheet for ABC Company. It shows our projected steady
increase in Net Worth over the next three years. As a consulting company, we do not need a great
deal in the way of assets, so the largest factor in the Balance Sheet is our cash balance.

è]
"





 ]ear 1 ]ear 2 ]ear 3

 


 

 Rs 15,03,650 Rs 18,42,100 Rs 18,42,100
^


  Rs 1,25,000 Rs 1,25,000 Rs 1,25,000
_



  Rs 16,28,650 Rs 19,67,100 Rs 22,16,450
` 
 
 
` 
 
  Rs 0 Rs 0 Rs 0
 

a


 Rs 0 Rs 0 Rs 0
_

` 
 
  Rs 0 Rs 0 Rs 0
_


  Rs 16,28,650 Rs 19,67,100 Rs 22,16,450



&

 

 ]ear 1 ]ear 2 ]ear 3


&


",`  Rs 0 Rs 0 Rs 0
^


&
 Rs 0 Rs 0 Rs 0
&


&
 Rs 0 Rs 0 Rs 0
` 
 
&
 Rs 0 Rs 0 Rs 0
_


&
 Rs 0 Rs 0 Rs 0
è
 

 Rs 16,85,000 Rs 16,85,000 Rs 16,85,000
b


c
`  (Rs 11,12,500) (Rs 56,350) Rs 2,82,100
c
`  Rs 10,56,150 Rs 3,38,450 Rs 2,49,350
_



 Rs 16,28,650 Rs 19,67,100 Rs 22,16,450
_


&

 

 Rs 16,28,650 Rs 19,67,100 Rs 22,16,450
+
$ Rs 16,28,650 Rs 19,67,100 Rs 22,16,450
7.6 Business Ratios
The following table shows the projected business ratios. We expect to maintain healthy ratios for
profitability, risk, and return. The industry comparisons are for >anagement Consulting Services, SIC
code 8742.

b

  
 ]ear 1 ]ear 2 ]ear 3 Industry Profile


/, 0.00% 48.04% 22.15% 7.74%
_
è

( 

 
^


  7.68% 6.35% 5.64% 48.61%
_



  100.00% 100.00% 100.00% 77.64%
` 
 
  0.00% 0.00% 0.00% 22.36%
_


  100.00% 100.00% 100.00% 100.00%


&
 0.00% 0.00% 0.00% 31.75%
c 
 
&
 0.00% 0.00% 0.00% 18.72%
d


&
 0.00% 0.00% 0.00% 50.47%
+
$ 100.00% 100.00% 100.00% 49.53%
è

(




 100.00% 100.00% 100.00% 100.00%
/ )
c  86.92% 88.82% 88.91% 100.00%

c 3/


5  

 60.99% 83.21% 85.52% 83.82%
c 


 
 c c 

 0.00% 0.00% 0.00% 1.12%
d
è("
(
e


 

 37.04% 8.02% 4.84% 2.69%
)
f
 

 0.00 0.00 0.00 1.69
6% 0.00 0.00 0.00 1.36
d d

g
& 

  0.00% 0.00% 0.00% 56.50%
è

f
+
$ 92.64% 24.58% 16.07% 2.64%
è

f

  92.64% 24.58% 16.07% 6.07%
 
f
  ]ear 1 ]ear 2 ]ear 3
+
è()
c  25.93% 5.61% 3.39% n.a
f
c 64.85% 17.21% 11.25% n.a
f
 
d
 è

&
 
 8.98 12.17 12.17 n.a
d d


 
 2.50 3.07 3.32 n.a
g
&f
 
g
&+
$ 0.00 0.00 0.00 n.a


&h
&h 0.00 0.00 0.00 n.a
 f
 
+
$%c 

 Rs16,28,650 Rs19,67,100 Rs22,16,450 n.a
e



c
 0.00 0.00 0.00 n.a
 
f
 

 

 0.40 0.33 0.30 n.a
d

g
&* 

  0% 0% 0% n.a
d
 
 0.00 0.00 0.00 n.a


*+
$ 2.50 3.07 3.32 n.a
g
 è
 0.00 0.00 0.00 n.a