w




c Traditionally retailing in India can be traced to

c The emergence of the neighborhood µKirana¶ stores catering to the convenience of the
consumers
c Era of government support for rural retail: Indigenous franchise model of store
chains run by Khadi & Village Industries Commission
c 1980s experienced slow change as India began to open up economy.
c Textiles sector with companies like Bombay Dyeing, Raymond's, S Kumar's and Grasim
first saw the emergence of retail chains
c Later Titan successfully created an organized retailing concept and established a series
of showrooms for its premium watches
c The latter half of the 1990s saw a fresh wave of entrants with a shift from
Manufactures to Pure Retailers.
c For e.g. Food World, Subhiksha and Nilgiris in food and FMCG; Planet M and Music
World in music; Crossword and Fountainhead in books.
c Post 1995 onwards saw an emergence of shopping centers,
c mainly in urban areas, with facilities like car parking
c targeted to provide a complete destination experience for all segments of society
c Emergence of hyper and super markets trying to provide customer with 3 V¶s - Value,
Variety and Volume
c Expanding target consumer segment: The Sachet revolution - example of reaching to
the bottom of the pyramid.
c At year end of 2000 the size of the Indian organized retail industry was estimated at
Rs. 13,000 crore
c The Indian retail market, which is the fifth largest retail destination globally, has been
ranked as the most attractive emerging market for investment in the retail sector by AT
Kearney's eighth annual Global Retail Development Index (GRDI), in 2009. The share of
retail trade in the country's gross domestic product (GDP) was between 8Ȃ10 per cent in
2007. It is currently around 12 per cent, and is likely to reach 22 per cent by 2010.

c Banks, capital goods, engineering, fast moving consumer goods (FMCG), software
services, oil marketing, power, two-wheelers and telecom companies are leading the sales
and profit growth of India Inc in the fourth quarter of 2008-09. India continues to be
among the most attractive countries for global retailers. At US$ 511 billion in 2008, its
retail market is larger than ever and drawing both global and local retailers. Foreign
direct investment (FDI) inflows as on July 2009, in single-brand retail trading, stood at
approx. US$ 46.60 million, according to the Department of Industrial Policy and
Promotion (DIPP).
c The organised retail sector, which currently accounts for around 5 per cent of the Indian
retail market, is all set to witness maximum number of large format malls and branded
retail stores in South India, followed by North, West and the East in the next two years.

c According to the report ǮMall Realities India 2010ǯ by leading property consultants, Jones
Lang LaSalle Meghraj and Cushman & Wakefield India in association with Shopping
Centres Association of India, over 100 malls of over 30 million sq feet of new shopping
centre space are projected to open in India between 2009 and end-2010.

c Further, this sector is expected to invest around US$ 503.2 million in retail technology
service solutions in the current financial year. This could go further up to US$ 1.26 billion
in the next four to five years, at a CAGR of 40 per cent.
c India has one of the largest numbers of retail outlets in the world. The sector is
witnessing exponential growth with retail developments taking place not only in major
cities and metros but even in tier-II and tier-III cities in India.

c Marks & Spencer Reliance India is planning to open 35 more stores over the next five
years, according to Mark Ashman, CEO of the company. The 51:49 joint venture between
UKǯs Marks and Spencer and Reliance Retail Ltd already has 15 stores in India.

c Carrefour SA, Europeǯs largest retailer, may start wholesale operations in India by 2010
and plans to set up its first cash-and-carry outlet in the National Capital Region.
Currently, Carrefour exports goods worth US$ 170 million from India to Europe, UAE,
Indonesia, Europe, Thailand, Singapore and Malaysia.

c Jewellery manufacturer and retailer, Gitanjali Group and MMTC are jointly setting up a
chain of exclusive retail outlets called ShuddiȂSampurna Vishwas. The joint venture,
which plans to open around 60 stores across India by end of this year, will retail
hallmarked gold and diamond jewellery.
‡‡

M1] 

M1] ‡

A-1 A-1 Mumbai

A-1 A-1 Delhi

A-1 A-1 Kolkata

A-1 A-1M Chennai

A-1 A-1 Bangalore

A-1 A-1M yderabad

A A Ahmedabad

A A Pune

A A Surat

A A Kanpur

A A Coimbatore

A A Lucknow

A A Nagpur

A A Jaipur

A A Visakhapatnam
A A Vijayawada
 ›   
  w

c %
The largest form of organized retailing today. Located mainly in metro cities, in proximity to
urban outskirts. Ranges from 60,000 sq ft to 7,00,000 sq ft and above. They lend an ideal
shopping experience with an amalgamation of product, service and entertainment, all
under a common roof.Examples include Shoppers Stop, Piramyd, Pantaloon.

À É
É


‡hains such as the Bangalore based Kids Kemp, the Mumbai books retailer ‡rossword,
RPG's Music World and the Times Group's music chain Planet M, are focusing on specific
market segments and have established themselves strongly in their sectors.

À m É


ôs the name suggests, discount stores or factory outlets, offer discounts on the MRP
through selling in bulk reaching economies of scale or excess stock left over at the
season. The product category can range from a variety of perishable/ non perishable
goods
m
  

÷


 

  
 
 





 
   
  



Departmental Stores are expected to take over the apparel business from exclusive
brand showrooms. Among these, the biggest success is K Raheja's Shoppers Stop,
which started in Mumbai and now has more than seven large stores (over 30,000 sq.
ft) across India and even has its own in store brand for clothes called Stop!.

À {


É




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.

À ‡ 


É


These are relatively small stores 400-2,000 sq. feet located near residential areas. They stock
a limited range of high-turnover convenience products and are usually open for extended
periods during the day, seven days a week. Prices are slightly higher due to the convenience
premium.

À %
 B
Multi Brand outlets, also known as ‡ategory Killers, offer several brands across a single
product category. These usually do well in busy market places and Metros.
›   
  w

w 

 m 








 ›


›
É
w
c Retailing in India is witnessing a huge
revamping exercise as can be seen in the
graph
c India is rated the fifth most attractive
emerging retail market: a potential
goldmine.
c Estimated to be US$ 200 billion, of which
organized retailing (i.e. modern trade)
makes up 5 percent or US$ 6.4 billion
c As per a report by KPMG the annual
growth of department stores is estimated
at 24%
c Ranked second in a Global Retail
Development Index of 30 developing
countries drawn up by AT Kearney.
 ›





›




 




 




 





 
Retailing in India is still
evolving and the sector is witnessing a series of experiments
across the country with new formats being tested out. Ex.
g

 past majority of the twelve Quasi-mall, sub-urban discount stores, ‡ash and carry etc.
million stores are small "father and son"
outlets É


Biggest challenge for organised retailing to
create a ³customer-pull´ environment that increases the



  Mostly small individually amount of impulse shopping. Research shows that the
owned businesses, average size of outlet chances of senses dictating sales are upto 10-15%. Retail
equals 50 s.q. ft. Though India has the chains like MusicWorld, Baristas, Piramyd and Globus are
highest number of retail outlets per capita laying major emphasis & investing heavily in store design.
in the world, the retail space per capita at
2 s.q. ft per person is amongst the lowest.




 


hey are expected to
spearhead the organised retailing revolution. Stores trying to
›

 Nearly two thirds of the stores
are located in rural areas. Rural retail emulate the model of Wal-Mart. Ex. Big Bazaar, Bombay
industry has typically two formsB "Haats" Bazaar, RPGs.
and ³Melas". Haats are the weekly
markets B serve groups of 10-50 villages g






To meet the
and sell day-to-day necessities. Melas are
larger in size and more sophisticated in
terms of the goods sold (like Tps)
challenges of organized retailing such as large cineplexes,
and malls, which are backed by the corporate house such as
'ônsals' and 'PpRµ the unorganized sector is getting
organized. 25 stores in Delhi under the banner of Provision
mart are joining hands to combine monthly buying. Bombay
Bazaar and Efoodmart formed which are aggregations of
Kiranas.
 ›





c % 











c Favorable demographics
c Growth in income
c Increasing population of women
c Raising aspirations : Value added goods sales
c   







 

c 



in India has been largely an urban phenomenon with affluent classes and growing
number of double-income households.
c More successful in cities in the south and west of India. Reasons range from differences in consumer buying
behavior to cost of real estate and taxation laws.
c  


emerging as a huge opportunity for retailers reflected in the share of the rural market
across most categories of consumption
c ITC is experimenting with retailing through its e-Choupal and Choupal Sagar Ȃ rural hypermarkets.
c LL is using its Project Shakti initiative Ȃ leveraging women self-help groups Ȃ to explore the rural
market.
c Mahamaza is leveraging technology and network marketing concepts to act as an aggregator and serve
the rural markets.
c w is a tool that has been used by retailers ranging from Amazon.com to eBay to radically change buying
behavior across the globe.
c Ǯe-tailingǯ slowly making its presence felt.
c Companies using their own web portal or tie-sups with horizontal players like Rediff.com and
Indiatimes.com to offer products on the web.
 %

› 
 
Leading Retailers
c Indiaǯs top retailers are largely
lifestyle, clothing and apparel
stores

c This is followed by grocery

stores

c Following the past trends and

business models in the west
retail giants such as Pantaloon,
Shoppersǯ Stop and Lifestyle are
likely to target metros and small
cities almost doubling their
current number of stores

c These Walmart wannabes have

the economy of scale to be low Ȃ
medium cost retailers pocketing
narrow margin
 w
  


c Indian retail is fragmented with over 12 million outlets operating in the country. 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
c India has the highest number of outlets per capita in the world - widely spread retail network but with
the lowest per capita retail space (@ 2 sq. ft. per person)
c Annual turnover of Wal-Mart (Sales in 2001 were $219 billion) is higher than the size of Indian retail
industry. Almost 100 times more than the turnover of LL (India's largest FMCG company).
c Wal-Mart - over 4,800 stores (over 47 million square meters) where as none of India's large format store
(Shoppers' Stop, Westside, Lifestyle) can compare.
c The sales per hour of $22 million are incomparable to any retailer in the world. Number of employees in
Wal-Mart are about 1.3 million where as the entire Indian retail industry employs about three million
people.
c One-day sales record at Wal-Mart (11/23/01) $1.25 billion - roughly two third of LL's annual turnover.
c Developed economies like the U.S. employ between 10 and 11 percent of their workforce in retailing
(against 7 percent employed in India today).
c 60% of retailers in India feel that the multiple format approach will be successful here whereas in US 34
of the fastest-growing 50 retailers have just one format
c Inventory turns ratio: measures efficiency of operations. The U.S. retail sector has an average inventory
turns ratio of about 18. Many Indian retailers KPMG surveyed have inventory turns levels between 4 and
10.
c Global best-practice retailers can achieve more than 95 percent availability of all SKUs on the retail
shelves (translating into a stock-out level of less than 5 %).The stock-out levels among Indian retailers
surveyed ranged from 5 to 15 percent.
S 



 
c AT Kearney has estimated Indiaǯs total retail market at US$ 202.6 billion which is expected to grow
at a compounded 30 per cent over the next five years.
c With the organised retail segment growing at the rate of 25-30 per cent per annum, revenues from
the sector are expected to triple from the current US$ 7.7 billion to US$ 24 billion by 2010.
c The share of modern retail is likely to grow from its current 2 per cent to 15-20 percent over the next
decade
c Over next two years India will see several Indian retail businesses attaining a critical mass as growth
in the industry picks up momentum driven by two key factors:
c Availability of quality real estate and mall management practices
c Consumer preference for shopping in new environments
c Wal-Mart : huge plans for India. Moving a senior official from its headquarters in Bentonville,
Arkansas, to head its market research and business development functions pertaining to its retail
plans in India.
c New York-based high-end fashion retailer Saks Fifth Avenue has tied up with realty major DLF
Properties to set up shop in a mall in New Delhi.
c Tommy ilfiger, retailer of apparels, expects to open one store each in Delhi, Ahmedabad, Lucknow
and Bangalore in the next four months.
 S 




 
c 68 million square feet of mall space is expected to be available by end of 2007, which might lead
to over-capacity of malls
c Lack of differentiation among the malls that are coming up. One option may be to look at
specialization.
c Poor inventory turns and stock availability measures - retailers clearly need to augment their
operations.
c Operations of retailers and suppliers are not integrated. Efficient replenishment practices
practiced in the Indian auto and auto-component industry can be leveraged to implement
efficient supply chain management techniques.
c Supplier maturity, in terms of adherence to delivery schedules and delivering the quantity
ordered, is an issue
c Sales tax laws - lead to retailers having state-level procurement and storage leads to Indian
retailers having higher inventories. VAT has helped alleviate this a bit.
c Increased adoption of IT and shrinkage management will be a critical area.
c Supply chain and customer relations followed by merchandising, facilities management and
vendor development are areas which have significant gaps and proactive training is a key
imperative for overcoming these.
c Wal-Mart recently announced it would jump into the appliance business, a
category that has historically been considered a difficult business for
traditional discount retailers. Despite the prerequisites of high square footage,
product service and knowledge, delivery and low margins, Wal-Mart obviously
believes there is opportunity and will once again counter conventional retail
wisdom.
c In the age of proprietary brands, Wal-Mart, which garnered a cult following of
sorts for its Sam's Choice sodas and cookies as well as Old Roy pet foods, will
challenge the palates of the nation's wine enthusiasts with its own collection of
wines to be known as Alscott Vineyards.
c ome Depot, which has pushed the parameters of its basic DIY business with
design experts, installation options, and home delivery, is now offering home
improvement loans of up to $30,000 in its stores and on line.
c Sears, which keeps on testing new ideas but seldom gets recognized for its
efforts, has debuted several new refinements to its new store prototypes which
reflect more mass merchant characteristics than department store flourishes.
The retailer created a computer center where consumers may read their email,
take computer classes, prepare presentations, print digital photos and fax or
scan materials. In addition, to enhance the customers shopping experience and
exploit the Starbucks coffee phenomenon, Sears is testing Cafe Roebuck in
several of its new stores.
c Sam's Club, taking a page from the catalog side of Sears, continues to
expand its merchandise offerings beyond the concrete floor and
treasure-hunt atmosphere of its clubs, with specialty catalogs. Sam's
now offers four editions: Child Care Catalog, Office Furniture,
Domestics Collection and Vending Catalog. A oliday Gift catalog will
also be released later this month.

c Lowe's has found a niche, as have other retailers, in developing a side

business in food service. The home improvement retailer is continuing
to expand its relationship with food kiosk operator Dominic's of New
York. The miniature kiosk is now operating in front of more than 40
Lowe's stores offering a limited quick service menu featuring freshly-
made sausage, steak and chicken sandwiches.

c Toys "R" Us, which acquired the mall-based Imaginarium chain last
year, is rolling out the concept as a store-within-a-store format.
c Barnes & Noble, which acquired Babbages earlier this year, is hoping to build a side
business in games as it did in music and coffee. The retailer is planning a test that will
feature an electronic games store-within-a-store in its traditional book stores.

c These are just some examples of initiatives that retailers are pursuing in order to
capitalize on consumer trends and differentiate their concepts in the marketplace. They
are also examples of the continued blurring of retail as well as alliances with non-
traditional partners.

c One can argue, and have some fun doing so, about whether some of these efforts make
strategic sense or not.

c But one fact is certain: These types of efforts will only continue as retailers are more
willing than ever to embrace change in search of growth and prosperity in a cutthroat

marketplace .
 É


c AT Kearny
c Forrester Research 2006
c KPMG-FICCI Report
c http://www.indiainbusiness.nic.in/