RETAILING ASSIGNMENT

RIZWAN HABIB ALOK JAIN JOSEPH CHERIAN

ROLL-131 ROLL-013 ROLL-073

[BOOKS AND STATIONERY]

SUBMITTED ON 12TH DECEMBER 12, 2012

Q1.BRIEF ABOUT THE PRESENT STATUS OF PRODUCT CATEGORY INDUSTRY IN INDIA (5 MARKS) INTRODUCTION A. STATIONERYs CURRENT MARKET ANALYSIS Stationery is as much an object of desire as any other consumer goods. There are an estimated 250 million students studying in 1.5 million schools in India. The stationery market is estimated at Rs 10,000 crore, of which manufacturers retain about 60 per cent. The stationery retailing market in India is still largely (98.8 per cent) characterised by mom-and-pop stores, each one serving a catchment radius of no more than two km. Stationery Industry is a very heterogeneous group of business usually associated with the Schools, Colleges, and Office and plays a very crucial role in working of any organization across the globe. This category includes Paper stationery which comprises of a vast collection of products like exercise books, note books, stitch, glued & tape pads, refill pads, flap over pads, subject books, plastic cover books etc. The huge greeting card market, autograph books, party invites etc, is also a part of this segment. Paper stationery market over the years has gained immense popularity in the school and office segment throughout the world. It is expected that Stationery industry has a flourishing future in its coming years in India and over a period is estimated to grow at 30 % p.a. Falling under the category of Small and Medium Enterprises in majorly most of the countries, this sector has lot to offer in terms of employment, tax revenues, it can be an important source of new innovative products, extensive local knowledge of resources, and can be a major service provider to the larger organizations. However, this sector like other sectors has certain bottlenecks which hinder the growth of this sector like burdensome regulatory frameworks, Lack of tax incentives and subsidies, Absence of investor-friendly environment.

Indian stationery Industry: Opportunities and Challenges In the international arena India is providing more scope for development and trends; however, with excellent quality, the Indian products are very much in demand. The Indian SMEs associated with stationery market has witnessed tremendous dynamic changes. In the last decade the Indian market has increased varieties to be exported in markets and has produced big market percentage. Indian Paper Stationery Industry, which is a part of the huge and scattered Indian stationery Industry, has been going through tremendous alteration in recent years. Despite fierce competition from neighboring markets, its scattered nature and the constantly changing trends, the paper stationery industry makers continue to make every effort, due to which the fruitful results are coming slowly and steadily. Indian companies have learnt that innovation, performance and versatility are the key area to be focused upon. Taking the points under consideration, the businessmen are now researching and developing new products, as the market is now more of consumer oriented which is always looking for cost effective prices. This is because of the attitude of buyer which is now ready to spend more if are liable product is offered to him. With seasonal export market which stays from April-June major importing countries like U.S.A., Australia, Canada, major African countries and Middle East are the ones which accept Indian designs and style comfortably. With extreme precautions, and the good quality products offered and new marketing strategies are followed, the government has also come out with various incentives for SMEs. Particularly for stationary industry if we quote would be the education enhancement schemes which are giving growth to this sector. The Indian stationery market is also influenced by macroeconomic development, national income and lasts but not the least the ever-growing Indian population. The Indian stationery Industry is highly unorganized and the organized players are estimated to be less than the unorganized sector players due to which unorganized stationery players are expanded throughout the industry and controls major market share.

However, Indian stationary industry is facing major competition from the Importers especially Chinese manufacturers are the most competitive among all the otherworld market players as they have an advantage of mass production capacity, aggressive favorable government export policy, simplified low taxation and well developed infrastructure. B. BOOKS/E-BOOKS CURRENT MARKET ANALYSIS The books market in India (non-academic) is estimated to be Rs 2,000 crore, of which around 15 per cent is from organised retailers. Key leading organised retail chains includes Crossword, Odyssey, Reliance Time out, Landmark, Om Book Shop, and Oxford etc. More than 75 per cent stores of these large chains are in top eight cities. Besides this online channel is also significant with players like Flipkart, India plaza, Infibeam etc. The market of books is particularly in tribal areas due to non-availability of proper book retail stores. In the current market scenario the traditional book concept has been replaced by e-book concept. The demand for e-Books in India at present is lower than the other e-Publications such as e-Journals and certainly behind its print counterpart. The reasons are varied and can range from psychological factors to lack of availability or limited circulation of economically priced eBook readers. A report by Forrester indicates that the US will lead the demand for eBooks content with sales over US $500 million. Demand for eBooks in India and Industry Dynamics The demand for e-Books enjoys a positive linear relationship with a few factors such as increase in computer, internet and mobile phone usage. Moreover, from a bottom up approach point of view, the acceptance of an e-Book depends upon the degree of convenience that the reader enjoys with the electronic medium and the vernacular in which the book is available.

Industry association such as CII is lobbying for orchestrated growth of the industry and the Government of Indias education sector reforms through its current 5 Year Plan can make the industry conducive for attaining quick growth. Growth Drivers of the eBooks Market in India Publishers recognizing the early bird advantage Younger population Big time acceptance amongst students for studying and amongst organizations conducting research Literacy rates consistently improving e-Books provide quick access to information and all downloadable Consistent increase in mobile telephony, internet and computer usage Intensive engagement with international publishers Perceived Challenges of the eBooks Market in India

Other Marketing Challenges of the eBooks Market in India Still lower internet penetration and lower broadband speeds Low e-Commerce and online purchasing activities Lack of confidence in using secured payment gateways, low internet banking and credit/debit card penetration Lack of proper eBook reading devices Inadequate governmental support and handholding

Q2. IDENTIFY THE VARIOUS RETAIL FORMATS THAT EXIST IN INDIA TO ADDRESS DIFFERENT CUSTOMER SEGMENTS (5 MARKS) STORE BASED RETAILERS BOOK CAF FRANCHISE The Book Caf franchise is driven by the third generation book selling idea where books are delivered to any caf at anytime through ERP software. The book store franchise aims at opening its outlets both in city shopping malls and also at suburban areas. The multi-format book retail franchise has set up multi-format structure which is very flexible. It needs only a maximum of 1500 and a minimum of 300 square feet. The retail book outlet has made its presence known in places such as DehraDun, Jaipur, Chandigarh, New Delhi, Lucknow and Indore. MALLS Malls are the most common retail formats having a variety of players under one roof. Malls vary widely in size from 60,000 sq ft to 7, 00, 000 sq ft. Odyssey is a fully owned subsidiary of Deccan Chronicle Holdings Limited. Today, Odyssey operates through 31 stores in 13 cities with 1.76 lakh sq.ft of retail space under its operations. Depot, is one of the youngest brands from the Future Group stable Books & Beyond, a new vertical of Spencers Retail launched its first store in 2007. The company has aggressively extended the footprint of Books & Beyond ever since, with stores in Kolkata, SPECIALITY STORES Speciality stores are the retail outlets of the companies focusing on specific market segments. Examples of speciality stores are CROSSWORD,SAPNA BOOK HOUSE Office Linc, a retailing arm of Kolkata-based Linc Pens & Plastics. The company has 10 Just Lincstores all over India DISCOUNT STORES These are the stores which offer heavy discount on products and depend on bulk business (i.e. economies of scale) to achieve profitability. The product categories can include both perishable

and non-perishable items. Big Bazaar is an example of a discount store.

DEPARTMENT STORES These are the large stores (20,000 sqft to 50,000 sqft) serving a variety of consumer needs. These stores have designated sub-areas for different items like Office stationery and books. Shoppers Stop, Westside are examples of departmental stores where one can find books and stationery CONVENIENCE STORES These are relatively small (400 2000 sq ft) stores located near residential areas. Spencer, Reliance Fresh are prominent examples of convenience stores which have stocks of classmate notebooks,Navneet notebooks. Oxford Bookstore introduced two new retailing formats with Oxford

Junior and Oxford Express. The first dedicated bookstore for children in India, Oxford Junior was opened in Kolkata in July 2006. Shortly,Oxford Express was launched at the Wipro Campus in Bengaluru. This was followed by similar smaller retail outlets in Shillong. Franchisee operations began in 2006 with Oxford Express in Shillong. Subsequently, new franchisees opened up in Bengaluru, Kolkata, Guwahati, Dimapur, Siliguri, Jaipur, South Goa etc. NON-STORE RETAILERS Electronic Retailers: flipkart, Indiaplaza.in, landmark ,homeshop18, Asian Agencies, www.oxfordbookstore.com ,skoolshop.com, allschool stuff Catalog and Direct Mail Retailers-Book Publishers e.g. Arihant Publishers,Oxford Group Q3.Scope for growth of organized retail in the product category in India (5 marks). In this section, you shall identify the scope in different geographical area, scope for entry of MNC etc RETAILING OF BOOKS IN INDIA Emergence of Online retailers Books are among the first categories to get impacted by the online channel since this category has high product standardisation, low ticket value and low risk associated with product damage/

obsolescence. The price advantage offered by online retailers makes this a lucrative category for online shoppers. This is already visible globally, and similarly in India, the books category has seen the emergence of many online retailers, which has affected traditional booksellers sales with several of them estimated to have seen decline in their sales. While players have announced plans to expand, increasingly quality real estate (location as well as rentals) as well as pricing pressure from online retailers will make it challenging for them to do so. Going forward we will see brick and mortar book sellers evolving formats and adopting multi-channel approach store based retailers like Crossword and Om Book Shop have recently ventured into online portals and will focus on reaching out and scaling up through this channel. The pressure on these chains will be to remain relevant to consumers while competing with online retailers. Unique features provided by retailers What is noteworthy is that these savvy retailers have quickly responded to the changing needs and expectations of the customers. In order to increase the market, most of these bookstores decided to cater to a wide audience with its unique product mix of books, DVDs, music, stationery and toys. This was done to ensure that people who were traditionally not book buyers would visit the shop. More footfalls always lead to more sales. What are also on offer are beverages like coffee and tea, along with light refreshments. While Crossword has tied up with Barista, the Oxford Bookstore has the Cha Bar, managed by the Park chain of hotels. These bookstores have been instrumental in developing new marketing strategies for book retailing in India. Crossword introduced value-added services like home delivery, with Dial-abook, Fax-a-book and Email-a-book programmes. Another defined strategy to draw people to books and to its outlets is innovative events, which include book launches, interactive discussions with authors, book reading sessions, childrens hour, Pictionary contests, book reading, quizzes, slide shows etc. These stores also offer a platform to literary-minded people to voice their concern on current social issues.

Opportunities for organised retailers in India What is perhaps surprising is that despite having the largest English speaking population, India continues to have the advantage of enjoying one of the lowest retail price tags on books. Even Thailand has the same price as the US and UK markets, but in India the prices are around onethird of the US price. For instance a book priced at $20 in the US will sell at $6 in India. This competitive pricing has helped the Indian book market to grow rapidly. The margins in book trade are around 20-30 per cent, which perhaps justifies the large space and the value additions provided by the retailers. The huge cost of rentals in India is a roadblock for retailers. The operating costs are huge as rentals account for almost 16-20 per cent of the turnover, when globally the average is around 6 per cent. STATIONERY RETAIL IN INDIA. Major players Future Group and Reliance Retail are some of the players who have sensed an opportunity here and have launched niche brands such as Staples and Office Depot. Dalmia, formed an online B2B office supplies company called Officedge. This company became part of a joint venture with Staples and Pantaloon Retail in 2007 and is now called Staples Future, which is today the largest organised office products reseller in India. Reliance launched a joint venture with US-based office stationery chain Office Depot in April 2008 to bring businessto-business office stationery into the country.

SCOPE FOR ENTRY BY MNCs Foreign multi-brand retailers, who did not want to enter India through cash-and-carry route, may now explore Indian presence, as they would be able to directly own stake in multi-brand retailing. Foreign retailers such as Sainsbury's, Lawson and others may now explore Indian retail market. Multi-brand foreign retailers that have already invested in India under cash-and-carry arrangements, such as Wal-Mart, Metro, Carrefour, Tesco, and Woolworths, now have an option to invest in Indian companies undertaking direct retailing. In existing single-brand retail joint ventures, the foreign multinational joint-venture partner would have the flexibility to raise its stake in the venture beyond 51%. For existing Indian retail players, such as Reliance, Trent, Shoppers Stop and the Future Group, this could provide further options to raise long-term capital for expansion and to attract partnerships with some global players. This will help bring capital as well as global best practices and retail expertise to the Indian businesses. THE END