Marketing Research Assignment

Market opportunity Analysis (India)

Retail Industry

Name: Tejas Gosavi

Roll no.: 39

Contents
1.

Introduction ..................................................................................................................................................................... 3

2.

External environment: ..................................................................................................................................................... 4

2.1.

Market Size ............................................................................................................................................................. 4

2.2.

Investment Scenario ............................................................................................................................................... 5

2.3.

Key trends catalysing change among retail businesses .......................................................................................... 6

2.4.

Global positioning of Indian retail .......................................................................................................................... 8

2.5.

Organised retail opportunity .................................................................................................................................. 8

2.6.

Challenges in Indian organised retail .................................................................................................................... 10

2.7.

Regulatory Environment ....................................................................................................................................... 11

2.7.1.

FDI in retail .................................................................................................................................................. 11

2.7.2.

Implications of Goods and Services Tax ...................................................................................................... 12

2.7.3.

Income growth to drive demand for organised retail ................................................................................. 12

2.8.

Growth opportunities in Indian retail industry ..................................................................................................... 13

3.

Retail Industry structure ................................................................................................................................................ 14

4.

Competitive landscape ................................................................................................................................................... 16

5.

4.1.

The major retail players in India ........................................................................................................................... 16

4.2.

Classification of Retail sector ................................................................................................................................ 17

4.3.

Porters 5 forces model for retail ......................................................................................................................... 17

Top 5 players in India ..................................................................................................................................................... 19

5.1.
5.1.1.

Business overview ....................................................................................................................................... 19

5.1.2.

Winning combination of brands and retail ................................................................................................. 20

5.1.3.

ABFRL: Widest distribution network in the fashion space .......................................................................... 20

5.2.

Future retail ltd. .................................................................................................................................................... 20

5.2.1.

FUTURE RETAIL: INDIAS LEADING RETAILER IN MULTIPLE RETAIL FORMATS ............................................ 21

5.2.2.

Future Fashion ............................................................................................................................................ 22

5.2.3.

Future Food ................................................................................................................................................ 23

5.2.4.

Future technology ....................................................................................................................................... 23

5.2.5.

Future Supply chain .................................................................................................................................... 24

5.3.
5.3.1.
5.4.
5.4.1.
5.5.

6.

Aditya Birla Fashion & Retail Ltd (ABFRL) ............................................................................................................. 19

Shoppers Stop ..................................................................................................................................................... 24

S.W.O.T. Analysis ........................................................................................................................................ 26
Kewal Kiran Clothing Limited() ............................................................................................................................. 30
Core Strengths ............................................................................................................................................ 30
Trent Ltd. .............................................................................................................................................................. 30

5.5.1.

Operations Westside .................................................................................................................................. 31

5.5.2.

Operations Star Bazar: ................................................................................................................................ 32

5.5.3.

Risk and Concerns ....................................................................................................................................... 32

Conclusion ...................................................................................................................................................................... 33

1. Introduction
The Indian Retail Industry is the largest among all the industries, accounting for over 10 per cent of
the countrys GDP and around 8 per cent of the employment. The Retail Industry in India has come
forth as one of the most dynamic and fast paced industries with several players entering the market.
But all of them have not yet tasted success because of the heavy initial investments that are
required to break even with other companies and compete with them. The India Retail Industry is
gradually inching its way towards becoming the next boom industry.
The total concept and idea of shopping has undergone an attention drawing change in terms of
format and consumer buying behavior, ushering in a revolution in shopping in India. Modern
retailing has entered into the Retail market in India as is observed in the form of bustling shopping
centers, multi- storied malls and the huge complexes that offer shopping, entertainment and food all
under one roof.
A large young working population with median age of 24 years, nuclear families in urban areas, along
with increasing workingwomen population and emerging opportunities in the services sector are
going to be the key factors in the growth of the organized Retail sector in India. The growth pattern
in organized retailing and in the consumption made by the Indian population will follow a rising
graph helping the newer businessmen to enter the India Retail Industry.
In India the vast middle class and its almost untapped retail industry are the key attractive forces for
global retail giants wanting to enter into newer markets, which in turn will help the India Retail
Industry to grow faster. Indian retail is expected to grow 25 per cent annually. Modern retail in India
could be worth US$ 175-200 billion by 2016. The Food Retail Industry in India dominates the
shopping basket. The Mobile phone Retail Industry in India is already a US$ 16.7 billion business,
growing at over 20 per cent per year. The future of the India Retail Industry looks promising with the
growing of the market, with the government policies becoming more favourable and the emerging
technologies facilitating operations.
India is the country having the most unorganized retail market. Traditionally it is a familys
livelihood, with their shop in the front and house at the back, while they run the retail business.
More than 99% retailers function in less than 500 square feet of shopping space. Global retail
consultants KSA Technopak have estimated that organized retailing in India is expected to touch Rs
35,000 crore in the year 2005-06. The Indian retail sector is estimated at around Rs 900,000 crore, of
which the organized sector accounts for a mere 2 per cent indicating a huge potential market
opportunity that is lying in the waiting for the consumer-savvy organized retailer.
Purchasing power of Indian urban consumer is growing and branded merchandise in categories like
Apparels, Cosmetics, Shoes, Watches, Beverages, Food and even Jewellery, are slowly becoming
lifestyle products that are widely accepted by the urban Indian consumer. Indian retailers need to
advantage of this growth and aiming to grow, diversify and introduce new formats have to pay more
attention to the brand building process. The emphasis here is on retail as a brand rather than
retailers selling brands. The focus should be on branding the retail business itself. In their
preparation to face fierce competitive pressure, Indian retailers must come to recognize the value of
building their own stores as brands to reinforce their marketing positioning, to communicate quality
as well as value for money. Sustainable competitive advantage will be dependent on translating core
values combining products, image and reputation into a coherent retail brand strategy.
Source: Indian journal of research, vol.3, issue 3

2. External environment:

2.1.

Market Size

The Boston Consulting Group and Retailers Association of India published a report titled, Retail
2020: Retrospect, Reinvent, Rewrite, highlighting that Indias retail market is expected to nearly
double to US$ 1 trillion by 2020 from US$ 600 billion in 2015, driven by income growth, urbanisation
and attitudinal shifts.
The report adds that while the overall retail market is expected to grow at 12 per cent per annum,
modern trade would expand twice as fast at 20 per cent per annum and traditional trade at 10 per
cent.
Retail spending in the top seven Indian cities amounted to Rs 3.58 trillion (US$ 53.7 billion), with
organised retail penetration at 19 per cent as of 2014. Online retail is expected to be at par with the
physical stores in the next five years.
India is expected to become the worlds fastest growing e-commerce market, driven by robust
investment in the sector and rapid increase in the number of internet users. Various agencies have
high expectations about growth of Indian e-commerce markets. Indian e-commerce sales are
expected to reach US$ 55 billion by FY2018 from US$ 14 billion in FY2015. Further, India's ecommerce market is expected to reach US$ 220 billion in terms of gross merchandise value (GMV)
and 530 million shoppers by 2025, led by faster speeds on reliable telecom networks, faster
adoption of online services and better variety as well as convenience.
Indias direct selling industry increased 6.5 per cent in FY2014-15 to Rs.7,958 crore (US$ 1.19 billion)
and is expected to reach a size of Rs.23,654 crore (US$ 3.55 billion) by FY2019-20, as per a joint
report by India Direct Selling Association (IDSA) and PHD.

2.2.

Investment Scenario

The Indian retail industry in the single-brand segment has received Foreign Direct Investment (FDI)
equity inflows totalling US$ 344.9 million during April 2000September 2015, according to the
Department of Industrial Policies and Promotion (DIPP).
With the rising need for consumer goods in different sectors including consumer electronics and
home appliances, many companies have invested in the Indian retail space in the past few months.

Amazon India expanded its logistics footprint three times to more than 2,100 cities and
towns in 2015, as Amazon.com invested more than US$ 700 million in its India operations
since July 2014.

Adidas AG, reknowned for its Adidas and Reebok sports brands, has become the first foreign
sports company to get government approval to open 100 per cent foreign-owned stores in
India.

Walmart India plans to add 50 more cash-and-carry stores in India over the next four to five
years.

Aeropostale, an American teen fashion retailer, has chosen to enter India over China, and
expects India to be among its top three markets over the next four years with revenue target
of Rs 500 crore (US$ 75 million).

Opinio, a hyperlocal delivery start-up, has raised US$ 7 million in a Series-A funding from
Gurgaon-based e-commerce fulfilment service firm Delhivery along with investment from
Sands Capital and Accel Partners.

Textile major Arvind Limited has announced a partnership with Sephora, owned by LVMH
Moet Hennessy Louis Vuitton, a French luxury conglomerate, in order to enter into the
beauty and cosmetics segment.

Mobile wallet company MobiKwik has partnered with Jabong.com to provide mobile
payment services to Jabongs customers.

DataWind partnered with HomeShop18 to expand its retail footprint in the country. Under
the partnership, HomeShop18 and DataWind would jointly launch special sales programmes
across broadcast, mobile and internet media to provide greater access to the latters tablet
range.

FashionAndYou has opened three distribution hubs in Surat, Mumbai and Bengaluru to
accelerate deliveries.

Abu Dhabi-based Lulu Group plans to invest Rs 2,500 crore (US$ 375 million) in a fruit and
vegetable processing unit, an integrated meat processing unit, and a modern shopping mall
in Hyderabad, Telangana.

Aditya Birla Retail, a part of the US$ 40 billion Aditya Birla Group and the fourth-largest
supermarket retailer in the country, acquired Total hypermarkets owned by Jubilant Retail.

With an aim to strengthen its advertising segment, Flipkart acquired mobile ad network
AdiQuity, which has a history of mobile innovations and valuable experience in the ad space.

US-based Pizza chain Sbarro plans an almost threefold increase in its store count from the
current 17 to 50 over the next two years through multiple business models.

2.3.

Key trends catalysing change among retail businesses

Trend 1: Consumer buying behaviour is evolving faster than before; buyers expect not only a
frictionless but also a real experience.
Todays consumer is socially empowered, tech-savvy, information rich and time starved. The
resulting level of disruption driven by this generation of consumers is unprecedented. Their ability to
influence fellow consumers and companies alike is magnified well beyond that of previous
generations. As a result, these consumers expect the world to be at their fingertips, at a place and
time of their convenience. They dont go shoppingthey are shopping 24X7. Further, they want an
authentic shopping experience that is customised to their needs
Trend 2: Competitive intensity is on the rise like never before; the growth of well-funded ecommerce companies coupled with hyper-local regional players can lead to consolidation in store
footprints for many retailers.
The rise in e-commerce is forcing traditional brick-and-mortar retailers to rethink their store formats
and numbers. At present, e-commerce is confined to the metro-dwelling, web-savvy, computer-and
smartphone-using professional class. It is the same class that is also being served by big corporaterun stores. Right now, this retail segment, more than small shopkeepers, faces a threat from ecommerce. Sales per sq ft for big Indian retail stores has been declining due to this competition. The
decline is particularly noticeable in segments like music, electronics, books and apparel. For the past
three years, many big retailers have cut down on their new store openings as a result of competition
from e-commerce.
Trend 3: Birth of the experience store will set new benchmarks in overall customer and brand
experience
While the purchase journey is still centered on the physical store, the practice of omnichannel
retailing has helped transcend physical boundaries for both the customer and the retailer. Over a
relatively short period of time, Indian customers seem to have comfortably embraced multichannel
shopping. This change has also come about as a result of the smartphone revolution in the country.
Trend 4: Indians are learning to look beyond products and are ready to invest in services
One of the key drivers in the growth of online retail is going to be the onset of services which will
bring in a whole new arena of business that was not perceived as retail into the purview of this
business. Services associated with the product such as installation, insurance, extended warranty,
annual maintenance contract (AMC), etc. did not qualify as key differentiators, now Indian
consumers are looking beyond the product and are expecting organisations to understand their
needs and offer end to end solutions.
Trend 5: Curation, localisation, and reimagining the overall value proposition of products is needed
for retailers to woo customers
The retail industry is facing an explosion of creativity and retailers are pulling out all the stops to woo
their customers. Brands like Chumbak, Happily Unmarried and India Circus have carved a niche for
themselves with their quirky design themed lifestyle products. Retailers like Forever 21 and Zara,
also considered as pioneers in fast fashion, have seen meteoric success with their unique fresh off
the ramp style and youthful appeal. Similarly, gourmet food retailers and several fashion and
apparel retailers have gathered their most loyal followers on the basis of their specially-curated
collections. Apparel and fashion retailers are increasingly launching collections which have been
handpicked by youth icons and fashion designers at affordable prices. Recently, a popular restaurant

aggregator application added a list of restaurants curated by popular celebrity chef George
Calombaris to their collection.
Product exclusivity, which has traditionally been a forte of luxury retailers, has caught on as a
marketing strategy across categories and prices ranges. Food and beverage products, electronics,
and the fashion and apparel segment saw several exclusive product launches through their online
channel as a strategy to attract maximum consumers in the past year. Retailers are becoming
extremely conscious of maintaining exclusivity in their product portfolios.
Trend 6: Supply chain management will see a fair amount of shake-up; goods and services tax
(GST) and collaborations across the supply chain will define what it takes to reach the consumer
The three key value propositions of price, assortment and service offered by online stores are
changing the reasons to shop at a traditional brick-and-mortar store. The traditional supply chains
are simply not set up to handle this demand for variety, speed and convenience. Although many
online retailers are able to promise a wider assortment of products and faster deliveries at highly
discounted prices, most of them are still grappling with building lean processes to create a resilient
and responsive supply chain that is cost-effective.
Trend 7: Managing risks will become critical, giving rise to tougher security standards
Fraud can be a pressing challenge for the retail industry, with the potential to impact finances, erode
customer trust and impact brand value. Retail companies tend to have several third-party
touchpoints such as vendors/suppliers, transporters, manufacturers/subcontractors, packers,
stockists, distributors, or other service providers, that can significantly increases the risk of collusive
frauds that are difficult to detect.
Trend 8: Store skills will improve; investments in training will increase to create retail employees of
the future
With the concept of retail in India changing from a product focussed to a consumer-focussed
industry, people management will play a critical role. Retailers will therefore take renewed and
focussed approaches to engage and train their store employees.
Trend 9: New high streets will emerge and with extensive data available, including shopping
patterns of the underserviced, newer physical stores will come up in Tier II cities to cater to their
requirements better
We have seen the steady rise of Tier II and tier III cities as new hubs for retail consumption. Ecommerce players now have tangible data which proves that regions beyond metros have been
driving sales comparable to traditional consumption centers. The increasing sale of smartphones and
the consequent increase in Internet user base has led to the emergence of small towns as eommerce hubs, while physical retailers continue to face challenges like high real estate costs, labour,
sourcing and supply chain management, along with the conditions applicable for multi-brand and
single-brand retail trading in India. Retailers who were interviewed as part of our survey also
vouched for the growing demand from Tier II and Tier III cities and omnichannel assistance to
overcome any infrastructural inefficiency. The increasing demand will lead to higher confidence
among retailers to invest in real estate in these cities.
Source: pwc report

2.4.

Global positioning of Indian retail

India was ranked fifth in 2012 on the Global Retail Development Index, by AT Kearney, highlighting it
as one of the key foreign investment destinations worldwide. However, in 2013, the rank fell to
fourteenth possibly due to slow spending and general economic slowdown, along with policy
concerns over approval of multi-brand retail across several states in India. This trend is expected to
reverse soon supported by factors such as improving demographics, rising disposable income levels,
expansion of organised retail sector into Tier 2 and 3 cities, changing consumer habits, etc. This
could provide a wide window of opportunities for national and international players in the next five
to ten years.

Indian advantage

Demand potential
Healthy

economic growth, changing

demographic profile, increasing
disposable incomes, changing consumer
tastes and preferences are driving
growth in the organised retail market in
India
Rapid urbanisation with increasing
purchasing power has led to growing
demand

Innovation in financing
Collective

efforts of financial houses

and banks with retailers are enabling
consumers to go for durable products
with easy credit

Increasing investments
Foreign

retailers are continuously

entering the Indian market
Cumulative FDI inflow in retail for
September 2015 was USD344.93 million;
this is expected to increase when 51 per
cent FDI in multi-brand retail is approved,
and the limit in single-brand retail is
raised to 100 per cent

Policy support
About

51 per cent FDI in multibrand

retail
FDI of up to 100 per cent in singlebrand
retail and for cash and carry (wholesale)
trading and exports
Introduction of Goods and Service
Tax (GST) as a single unified tax system
from next fiscal year

Source: Ernst & Young, Technopak, TechSci Research

2.5.

Organised retail opportunity

The Union budget has been rolled out by the new government, with promotion of overall economic
growth as a key objective. FY15 has witnessed policy continuity and pursuit of certain reform
measures aimed at reviving growth and surmounting structural constraints in the economy. On the
other hand, the level of interest rates is still viewed by the markets to be on the higher side and a
key factor in stifling investment commitments by industry.
Near term issues notwithstanding the organized retail opportunity in India continued to attract
interest from both large Indian business houses and multinational retailers. It is our belief that over
the medium to long term, most of the earlier arguments in favour of the sector continue to be valid.

Consistent with the coverage in earlier reports, the following constitute the principal arguments in
favour of organized retailing.
Penetration of Organised retail:
About 8% of the total retail market in India is accounted for by the modern/ organized retail
sector. The remaining market is served by small, independent retailers with an average of 500 sq.
feet trading space, fragmented across sub-segments and offering limited shopping conveniences
to customers. They are supported by a network of manufacturers, distributors and wholesale
traders who operate with many global and local brands. This is in contrast to an average of 80%
plus penetration of organized retail in many developed nations. Further, 69% of Indias
population lives in rural areas & this population contributes just 54% of the total retail
consumption. In the recent years we have seen increasing traction for organized retail not only in
tier 1 and tier 2 cities but in tier 3 cities as well.
Demographics
India is a young nation, with two third of the population under 35 years of age. While the global
median age for population is 33 years, Indias median age is around 23 years. The high
percentage of youth population should drive the demand for more fashionable clothing as well as
for ready meals & processed food due to their increased propensity to consume. The increasing
desire to look good & presentable influenced by western culture and exposure to online & social
media have boosted the organized retail markets. Immense scope is seen for banners offering an
innovative product range to meet the aspirations of the brand conscious consumers with evolving
preferences.

Higher Disposable Income

Most research studies suggest rising incomes in the next decade. This is likely to continue
propelling consumption by the middle class. Therefore, targeting the mid-market seems to offer
substantial revenue potential. As the chart below depicts, number of households (in mn) with
annual income brackets in the range of ` 90000 to ` 10 lakhs is expected to increase significantly
over the next decade.

The demographics coupled with less than 10% of the work force being directly employed by the
organized sector seems to contribute to a constant shift upwards in the reference point of the
average consumer in terms merchandize aspired for. Besides the huge untapped market and the
opportunity afforded by the demographics, the following factors/ trends are seen contributing to
growth in spending overall, and particularly for organized retail over the medium term:
Changing family level organization/ role definitions and exposure
More nuclear families
Increase in the number of working women
Kids being more informed and demanding
Increasing exposure to and influence of cosmopolitan media; consequent adoption of Western
habits and markedly higher brand consciousness
Easier availability of jobs (especially Outsourcing & IT related); BFSI & related employment is
expected to increase to over 12 million in the coming decade
Increased availability of credit/ social acceptance of consumption aided by borrowings; it is
estimated that about 15% of the people in urban cities are currently making monthly payments for
loans

2.6.

Challenges in Indian organised retail

Cost pressures there has been significant inflation in energy costs and common area
maintenance charges in malls in the last few years
Availability of retail talent the last few years have seen challenges related to paucity and
retention of trained talent
Quality real estate there is limited availability of quality real estate. This, coupled with high
rentals and non-adherence to committed schedule by builders pose significant challenges to
deployment of strategic plans related to expansion
Local legislations multiple local legislations across the country make it challenging for any
organization with pan-India presence
Supply chain management multiple issues with respect to infrastructure pose obstacles in
ensuring availability for customers
Complexity in taxation inconsistent tax regime across various states makes it difficult to
manage a pan-India network of stores

 Creating differentiation - Creating differentiation in the value proposition has proven to be a

game changer, while at the same time, factors like disruption caused by online retailing, access to
capital, customer loyalty, and increased competition in the market continue to plague retail
businesses.
Changing consumer behaviour is the single biggest driver of changes in retail models across
categories - The evolving customer behaviour, a result of disruptive technological changes and
the megatrends mindset, has made retailers reconsider their operating models.
Indian consumers still shop less than their Global counterparts; the average tickt size in India is
smaller across categories

2.7.

Regulatory Environment

2.7.1. FDI in retail

Liberalisation of the FDI policy in retail sector could further provide impetus to the entry of large
international retailers. The first movers are expected to be international retailers in single brand
retail across categories like fashion/apparel, watches, shoes, etc. followed by international multibrand retailers in food and grocery, where there are large domestic players who will look at JVs and
tie-ups.
Benefits of FDI in Indian Retail

Increase in
employment

Infrastructure
investment

Sector

Wholesale cash and

carry trading
Single brand product
retailing
Multi-brand, frontend retail

Source: ibef.org

Removing
middlemen

Benefitting
Indian
manufacturers

Technological
advancement

Entry Route

Automatic
Foreign investment
and promotion board
Foreign Investment
and Promotion board

FDI Limit

100%
100%
51%

2.7.2. Implications of Goods and Services Tax

Supply chain structure
Introduction of Goods and Service Tax (GST) as a unified tax regime would lead to a re-evaluation
of procurement and distribution arrangements
Removal of excise duty on products would result in cash flow improvements
Pricing and profitability
Elimination of tax cascading is expected to lower input costs and improve profitability
Application of tax at all points of supply chain is likely to require adjustments to profit margins,
especially for distributors and retailers
Cash flow
Tax refunds on goods purchased for resale implies a significant reduction in the inventory cost of
Distribution
Distributors are also expected to experience cash flow from collection of GST in their sales, before
remitting it to the government at the end of the tax-filing period
System changes and transition management
Changes need to be made to accounting and IT systems in order to record transactions in line with
GST requirements
Appropriate measures need to be taken to ensure smooth transition to the GST regime through
employee training, compliance under GST, customer education and inventory credit tracking

2.7.3. Income growth to drive demand for organised retail

Multiple drivers are leading to strong growth in Indian retail through a consumption boom
Significant growth in discretionary income and changing lifestyles are among the major growth
drivers of Indian retail
Easy availability of credit and use of plastic money have contributed to a strong and growing
consumer culture in India
Acceptance and usage of e-retailers by consumers are increasing due to convenience and secured
financial transactions
Expansion in the size of the upper middle class and advertisement has led to greater spending on
luxury products and high brand consciousness

Source: IMF

2.8.

Growth opportunities in Indian retail industry

Large number of retail outlets

India is the fifth largest preferred retail destination globally
The sector is experiencing exponential growth, with retail development taking place not just in
major cities and metros, but also in Tier-II and Tier-III cities
Rural markets offer significant growth potential
FMCG players are focusing on rural market as it constitutes over 33 per cent of FMCG consumer
base in India
With increasing investment in infrastructure, retailers would be able to increase their access to
high-growth potential rural markets
Private label opportunities
The organised Indian retail industry has begun experiencing an increased level of activity in the
private label space
Private label strategy is likely to play a dominant role as its share in the US and the UK markets is
19 per cent and 39 per cent, respectively, while its share in India is just 6 per cent. Stores like
Shopper Stop, Lifestyle generates 15 to 25 per cent revenues from private label brands. Growth of
online retail is also augmenting the growth of private label brand in India
Sourcing base
Indias price competitiveness attracts large retail players to use it as a sourcing base
Global retailers such as Walmart, GAP, Tesco and JC Penney are increasing their sourcing from
India and are moving from third-party buying offices to establishing their own wholly-owned/whollymanaged sourcing and buying offices
Luxury retailing
Luxury retailing is gaining importance in India. This includes fragrances, gourmet retailing,
accessories, and jewellery among many others. The Indian consumer is ready to splurge on luxury
items and is increasingly doing so.
The Indian luxury market is estimated around USD1.16 billion, yearly growth rate of luxury market
is 13 per cent.
This will make India the 12th largest luxury retail market in the world by 2020
Source: TechSci Research, IBEF

3. Retail Industry structure

The retail industry continued in India in the form of Kiranas till 1980. Soon, following the
modernisation of the retail sector in India, many companies started pouring in the retail industry in
India like Bombay Dyeing, Grasim etc. As has been mentioned earlier the retail sector in India can be
widely split into the organised and the unorganized sector. The unorganized sector is predominant.
We may discuss in detail the different divisions of the retail sector in India.
Unorganized Retail Sector
The unorganized retail sector basically includes the local kiranas, hand cart, the vendors on the
pavement etc. This sector constitutes about 98% of the total retail trade. But Foreign Direct
Investment in the retail sector is expected to shrink the employment in the unorganized sector and
expand that in the organized one.
Organised Retail Sector
In the organised sector trading is undertaken by the licensed retailers who have registered
themselves to sales as well as income tax. The organised retail sector have in their ambit, corporate
backed hypermarkets and retail chains. The private large business enterprises are also included
under the organised retail category.
The organised retail sector can be further subdivided into:
Instore Retailers
This type of retail format is also known as the brick and mortar format. These retail stores are in the
form of fixed point sale outlets. They are specially designed to lure the customers. There are
different types of stores through which the instore retailers operate.
Branded Stores appear in the form of exquisite showrooms. Here the total range of a particular
brand is available and the quality of the product is certified by the government.
There are also multi brand specialty stores that sell a series of brands so that the consumer can
choose from the wide array of brands.
Department stores have a large number of brands and products catering to all basic needs to
luxurious items as well.
Supermarkets are basically self service retail stores.Discount Stores offer commodities at reduced
prices.In Hyper Marts customers have wide variety of products to choose from and they are also
available at discounted rates.
Convenient stores are located in prominent places within the reach of majority of the customers and
do not operate in stringent work hours.
Shopping Malls are a storehouse of a large variety of retail shops situated close to each other.
Retail Formats in India
The retail formats in India can be categorised into the traditional and the modern forms. The
traditional format includes Kiranas, street markets, kiosks and multiple brand stores.

The modern format, on the other hand includes supermarkets, hypermarkets, department stores
and specialty chains.
In discussing about the structure of the retail sector in India we cannot forgo forecourt retailing and
trade parks.
Trade parks
Trade parks are basically business complexes that promote international trade. The global players
here have access to the top Indian exporters. To the buyers this would prove to be a boon since they
do not have travel to far off towns to enter into business deals with the exporters, especially in
places where infrastructure is very poor. By this the exporters not only enhance their visibility but
they also enjoy a host of other advantages. They can design libraries, studio etc, in order to attract
potential customers.
Forecourt Retailing
This type of retailing is done by the oil companies in order to increase their revenue. They not only
deliver fuel but also offer other services to its customers.

4. Competitive landscape
4.1.

The major retail players in India

4.2.

Classification of Retail sector

Retail

Departmental
stores

Pantaloon has 104

stores
Westside operates
86 stores
Shoppers Stop has
66 stores
Reliance Retail
launched Trends in
this format and
currently has nearly
100 stores across
India

Supermarkets/
convenience
stores

Hypermarkets

Pantaloon Retail is
the leader in this
format, with 512 Big
Bazaar stores and
online franchisees
HyperCITY (16
stores), Trent,
Spencers (Spencer
Hyper), Aditya Birla
Retail, and Reliance
are other players

Aditya Birla Retail

(1735 stores)
Spencers Daily
(134 stores)
Reliance Fresh
(700 stores)
REI 6Ten (350
stores)
Big Bazaar (512
franchisees stores)

Specialty stores

Titan Industries is
a large player, with
430 World of Titan,
174 Tanishq, and
336 Titan Eye+
shops
Vijay Sales,
Croma, and EZone
are into consumer
electronics
Landmark and
Crossword focus
on books and gifts

Source: Company websites, Press Release

4.3.

Porters 5 forces model for retail

Threat of new
entrants (High)

Bargaining
power of buyers
(High)

Competitive
rivalry
(Moderatehigh)

Bargaining
power of
suppliers (Low)

Threat of
substitutes
(Low)

Cash & carry

stores

Metro started the

cash-and-carry
model in India; the
company operate
16 stores across
Mumbai, Kolkata,
Delhi, Punjab,
Hyderabad and
Bengaluru
Reliance opened
its first cash- and
carry store in
September 2011
and plans to open
20 stores by the end
of the fiscal

1. Competitive rivalry
Entry of foreign players in the market and e-retailers have intensified competition
Customers low switching cost increases competition
The Indian retail sector is highly fragmented, which increases competition
With India being an attractive retail market, there is a high level of competition.
Competition is characterised by many factors, including assortment, products, price,
quality, service, location, reputation, credit etc. Aggressive e-commerce and digital
retailing coupled with new entrants such as business houses and international players are
intensifying the competition at a rapid pace.

2. Threat of new entrant

Entry as a retailer is quite simple. However, players need to establish strong distribution
channels and achieve economies of scale to compete
3. Threat of substitutes
Threat of substitute products is low. However, customers may purchase products from a
local store instead of purchasing from a retailer
4. Bargaining power of suppliers
Retailers have low switching costs, which make the supplier power low. Larger retailers
can easily switch to different suppliers.
The bargaining power of suppliers varies depending upon the target segment, the format
followed, and products on offer. Suppliers tend to have lower bargaining power with
organised players. However, the unorganised sector has a dominant position, still
contributing about more than 90% to the total retail market. There are few players who
enjoy an edge over others on account of being established players and enjoying brand
distinction.
5. Bargaining power of buyers
The consumers are price sensitive, and have information about the product and its price
Low switching cost gives customers high bargaining power

5. Top 5 players in India

5.1.

Aditya Birla Fashion & Retail Ltd (ABFRL)

Aditya Birla Fashion & Retail Ltd (ABFRL) (erstwhile Pantaloons Fashion & Retail) is Indias leading
fashion lifestyle entity. It includes endearing brands and retail businesses of Madura Fashion &
Lifestyle (Madura) and Pantaloons, respectively. ABFRL has the largest retail footprint of 5.4 million
square feet. Further, it owns a network of over 2,100 exclusive brand stores.

5.1.1. Business overview

Aditya Birla Fashion and Retail Ltd. (ABFRL) is Indias leading Fashion Lifestyle entity. ABFRL hosts
India's largest fashion network with more than 6,000 points of sale across ~200 cities and towns
(including about 2,000 exclusive ABFRL brand outlets). ABFRL boasts of creating more than 20,000
new designs every year.
The companys umbrella includes; Madura Fashion & Lifestyle and Pantaloons. Madura Fashion &
Lifestyle is engaged in retailing of apparel brands. It owns several reputed brands under its portfolio
including top four fashion brands of India - Louis Philippe, Van Heusen, Allen Solly, and Peter England
each of which clocked revenues of around Rs. 1,000 crore during FY15.
Pantaloons Fashion & Retail Ltd is among the top 3 large format fashion retailers and the largest
branded womenswear retailer in India.
ABFRL is well poised to exploit the growth opportunity: With rising disposable income & shift in
consumer preference towards branded apparels, it is projected that the modern apparel retail is
expected to reach USD 37 bn in the next five years from about USD 16 bn currently. According to
industry estimates, the overall apparel market is expected to grow at a steady pace to reach USD
100 billion by 2020 from around USD 60 billion currently. As, ABFRLs owns right mix of brands
that straddle across price point and categories, we believe it is well poised to exploit the strong
growth opportunity.
Brands play: Madura has a strong presence in the branded apparels space with an impressive
bouquet of reputed fashion brands in its kitty viz; Louis Philippe, Van Heusen, Allen Solly, Peter
England. The brands are widely available at different price points and have created a sharp and
distinct positioning. Further, it is the owner/perpetual licensor of these reputed brands. Madura
has undertaken an aggressive stores addition (more than 400) in the last two years and is
planning to add ~100 EBOs each in FY17E and FY18E. We believe steady strore expansion plans
would drive revenue and margins going ahead. Thus, we expect Madura revenue to grow at
~11% CAGR over FY15-18E with EBITDA margin increasing to 10% in FY18.
Pantaloons acquisition a strategic fit: Madura is predominantly in the menswear category with
small presence in the womenswear and kidswear segments. With Pantaloons acquisition, the
company has been able to plug this gap as it has a strong bouquet of brands across womenswear
(42% of revenue) and kidswear (11%). Thus, it is a strategic fit in the portfolio and would fortify
the overall groups position in the brands and retail business. Further, Pantaloons unique
business model of Design to Retail and higher mix of private label brands will lead to better
gross margin profile. Post the acquisition of Pantaloons, the company has adopted a strategy of
rapid stores addition (more than 50) and refurbishing its existing stores with an objective of
improving customer footfalls. Further, ABFRL plans to add ~30-35 stores each in FY17E and

FY18E. Thus, we expect Pantaloons revenue to grow at a CAGR of ~27% over FY15-18E with
EBITDA margin growing to 5.5% in FY18E.
Source: FundsIndia

5.1.2. Winning combination of brands and retail

5.1.3. ABFRL: Widest distribution network in the fashion space

ABFRL has a strong distribution network with the expanse of its brand scape spread across the retail,
departmental stores, multi-brand outlets (MBOs) and other channels. ABFRL (combined entity
Pantaloons and Madura) has the largest retail footprint of 5.4 million square feet (mn sq ft). It owns
a network of over 2,100 exclusive brand stores. It has a pan India reach with presence in more than
375 cities and towns. While Madura currently generates ~60% of its revenue from MBOs and
department stores (~4000 MBOs and ~3000 shop-in-shops), the exclusive brand outlets (EBOs)
accounts for the rest. As on 31st Dec, 2015, the brands store network of Madura was spread across
1,842 EBOs and 162 value stores. Similarly, the store network of Pantaloons was spread across 123
stores and 28 factory outlets. This multi-channel distribution strategy facilitates Madura to enhance
its reach. While Madura is planning to add ~100 EBOs each in FY17E and FY18E, ABFRL plans to add
~30-35 each Pantaloons stores in FY17E and FY18E. The aggressive stores expansion (~500) over the
last two years has put some pressure on the margin. However, we believe with steady network
expansion going forward coupled with greater number of mature stores in the overall count would
aid in margin expansion. Source: FundsIndia

5.2.

Future retail ltd.

Future Retail is the flagship company of Kishore Biyanis Future Group, Indias retail pioneer catering
to the entire Indian consumption space. It is Indias leading retailer, it ensures trust through quality
products, innovative offerings & affordable prices which help customers to achieve better quality of

life every day. It serves customers through over 10 million square feet retail space in 95 cities across
the country.
Through multiple retail formats, it connects a diverse and passionate community of Indian sellers,
buyers and businesses. Each year over 300 million customers walk into Future Retail stores and
choose products and services supplied by over 30,000 large, medium and small manufacturers and
entrepreneurs from across India. Company operates multiple retail formats in the hypermarket,
supermarket and home segment of the Indian consumer market including:
Big Bazaar A unique Indian hypermarket chain.
Fashion at Big Bazaar Affordable fashion destination aimed to make India thoda aur stylish.
Food Bazaar A hitherto unseen blend of a typical Indian bazaar and International supermarket
atmosphere.
Foodhall A premium lifestyle food destination.
eZone eZone brings to you the latest in electronics at the lowest prices.
Home Town Onestop destination for every need of the aspirational Indian home owner.
As Indias leading retailer, Future Retail Ltd inspires trust through innovative offerings, quality
products and affordable prices that help customers achieve a better quality of life every day. It serve
customers in 95 cities across the country through around 10 million square feet of retail space.
Future Retail is the flagship company of Future Group, Indias retail pioneer catering to the entire
Indian consumption space. Through multiple retail formats, it connect a diverse and passionate
community of Indian buyers, sellers and businesses. The collective impact on business is staggering:
Around 300 million customers walk into the stores each year and choose products and services
supplied by over 30,000 small, medium and large entrepreneurs and manufacturers from across
India.
Source: http://www.futureretail.co.in/
1987

Pantaloons, one of India's first formal trouser brands, is launched

2002

Food Bazaar, the supermarket chain is launched

2007

Big Bazaar partnered with Futurebazaar.com to launch India's most popular

shopping portal

2010

Future Value Retail Ltd is formed as a specialized subsidiary to spearhead the

group's value retail business through Big Bazaar, Food Bazaar and other formats

2013

Future Group officially launched India's largest State of the Art Logistical
Distribution Hub at Nagpur

5.2.1. FUTURE RETAIL: INDIAS LEADING RETAILER IN MULTIPLE RETAIL FORMATS

Revenues expanded at a CAGR of 2.4 per cent during Future Retail sales growth (USD billion)
FY0815

Hypermarket and supermarket formats have a network of nearly 319 stores, encompassing
an area of over 10 million square feet
Under Future Fashion, the company owns a portfolio of 24 leading brands and covers more
than 98 cities
Big Bazaar is ranked the third most trusted brand and the most trusted retailer of 2014 for
providing quality services
Future Group and Bharti Retail combine retail business to create one of India's biggest retail
conglomerate and will create chain of 570 stores in 243 cities across India in next 3 to 5
years

Pantaloon retail success factors:

1. Ground up development
2. The right joint ventures at the right time
3. A winning team
4. Versatile training to employees
5. Multiple formats, Multiple brands comprehensive retail experiment
6. It has a god understanding of the Indian retail sector and its customer

5.2.2. Future Fashion

The strength for this segment is that while around ` 3000 crore of sales registered through fashion,
accessories and footwear segment, more than 90% is through own brands of the Future Group. It

gives the format the ability to respond faster to consumers and yet maintain a high consistency and
market leadership in pricing, positioning, availability and experience. Apart from its existing stable of
winning brands like DJ&C, Knighthood, Shristi, Lee Cooper Originals and Chalk, a number foreign
brands like Converse and Champion were introduced within the store.

5.2.3. Future Food

Food is the biggest consumption category in India with spending amounting to 21% of Indias GDP. It
is also the category that is evolving at the fastest pace creating new opportunities for retailers,
entrepreneurs and manufacturers. The companys presence through Big Bazaar hypermarkets and
more recently through Foodhall gourmet stores, allows it to target the entire cross-section of
customers. Apart from catering to a very evolved and globally aware consumer, Foodhall has
become as a valuable platform to give an early insight into new trends, brands and categories that
are becoming mainstream. The impact of Foodhall goes much beyond the size of its business and is
today shaping the experience, assortment and customer service of the food section of Big Bazaar.
Big Bazaar customers visit fortnightly or monthly for their grocery shopping. However, fresh fruits
and vegetables, dairy and bakery are products which bring the customer to its door steps more
frequently. These are the products which are driven by their freshness quotient and therefore
demand higher care, sanitation and hygiene. The companys quest to ensure abundant availability
with best in class freshness quotient continues across the Big Bazaar chain. Price leadership will
continue to remain a key consumer proposition in the food business. The companys size and scale
helps offer a wide range and low prices to its consumers.

5.2.4. Future technology

Future Retail depends on a robust technology backend that supports its business from generating
around 87 million bills generated last year, to merchandize planning and delivery to 401 stores in
122 cities, data science and analytics from 26 million customer loyalty data, transactions with
thousands of supply partners and capturing real time data, analyzing several performance
parameters and aiding managerial decisions to improve business outcomes. Simultaneously, it is
aggressively working towards making technology and digital interfaces pervasive in all its customer
interactions. Its technology enabled assisted commerce initiative, Big Bazaar Online, is built around a
franchise network wherein a franchisee-owned tablet helps untapped customers place orders and
deliver to their homes located in areas not covered by its retail formats. Big Bazaar Online now has
512 franchisee/representatives covering 101 cities and 3079 pin codes and makes available 20,562
products on these web-enabled tablets. Most of these are in cities wherein there is no retail outlet
of the group. During the forthcoming year this network will move prototype phase to a full-fledged
business offering 50,000 products and becoming a force-multiplier for our physical network
FACT - Billing and checkout is the most important customer touch point in a retail store. Aside from
being the point of sale, the process of billing and checkout gains its importance due to the loyalty
and repeat buying that it can generate for a store. The company has more than 3,800 customer
checkouts that churn out approximately 86 million bills every year, with an average of 6.59 minutes
spent per bill.
GATI is an initiative that has been taken up by Big Bazaar to ameliorate the two most crucial aspects
of a checkout - speed and customer engagement. Upgrading of cashiers, a more convenient design
(for both - customers and cashiers) of the billing area, a smoother process for exception handling
and engaging customers to participate in improving convenience for fellow customers plays vital
roles in giving the last phase of shopping experience a neat finish.

5.2.5. Future Supply chain

The companys logistics is run through its specialized subsidiary, Future Supply Chain Solutions
Limited, among the countrys most technologically advanced, integrated supply chain companies.
Born as a specialized subsidiary in 2007, the companys expertise is evident from the fact that today
almost two-thirds of the companys revenues come from clients outside the Future Group.
Futures Supply chain at a glance:
Number of Pin codes covered
Capacities deployed on all routes
Number of Routes on daily basis
Fleet of trucks
Warehouse

: 13,000 + pincodes
: 3 Lac tonnes per month
: 214
: 1050+ (leased)
: Warehouse box space of 3.6 million sq ft
across India
Terminals/Parks
: Logistics Parks in Bhiwandi, Nagpur,
Hyderabad, Haryana and Logistics Terminals
in the top 14 locations of India
Number of Client
: 500+ clients with turnovers ranging upto
USD $ 40 bn
Key Clients
: ITC, Tata Motors, Mondelez, McCain,
Jubilant Foodworks, Pantaloons, Reliance
Comm, Clarks Footwear, P&G, Kelloggs,
Future Retail, Skechers, Future Lifestyle
Fashions, Reckitt Benkiser, , NEI, AGS
Transact, Hitachi, FCEL
Range of commodities
: FMCG, QSR, Food Processors, Dairy,
Poultry, Apparel & Lifestyle, ATM,
Healthcare & Life Sciences, Refrigerators.
Air Conditioners, Compressors, Toys,
Kitchen accessories, Furniture, Industrial
products, Plasticware, Stationary, Pumps &
Pipes, Fragrances & Flavours, Cables
Range of services including basic and value-added services (VAS): 4PL Consulting, Contract
Logistics, Express & FTL, VAS (Kitting & reverse Logistics), Marketplace, International Logistics, ECommerce, Temperature Controlled & Cold Chain

5.3.

Shoppers Stop

One of the largest chain of department stores in India

74 Shoppers Stop stores (excluding Crossword and other formats) in 33 cities
Gross retail turnover of Rs 34.05 billion (US$ 544 million) in FY 2014-15
Net profit of Rs 407.3 million (US$ 6.51 million) in FY 2014-15

Shoppers Stop Ltd (SSL) is Indias prominent retail group and a pioneer in the organised retail
industry in India. From a single store in 1991, the company today is one of the largest chain of
department stores in the country. Shoppers stop offers customers an international shopping
environment and a world-class shopping experience with a wide assortment of national and
international brands across categories such as fashion apparel, accessories, cosmetics, perfumes,
home and kitchenware.

Over the years, Shoppers Stop has continued to introduce exciting new brands and collections and
has created a differentiator through its exclusive and non-exclusive retail arrangements with worldclass brands.
With a strong business model, the company is well equipped for a stable growth trajectory. In FY
201415, Shoppers Stop Ltd achieved a gross retail turnover of Rs 34.05 billion (US$ 544 million).
Source: http://www.shoppersstop.com
Shoppers Stop: The leader in diversified market strategy
2015

Awarded Most Admired Retailer of the Year Department Store at the IRF 2015

2014

Shoppers Stop received Energy Efficiency Initiative Award at Global Green Leadership
Awards 2014

2010

Ups stake in Hypercity Retail (India) Ltd to 51 per cent

2008

Wins Emerging market retailer of the year award at the World Retail Congress

2005

Launches Make-up Art Cosmetics (MAC) and Homestop retail store

2003

Receives IT User award for best IT practices in Retail Category award

2000

Acquires Crossword Indias leading retail book chain

5.3.1. S.W.O.T. Analysis

Strengths
First Citizens: The Loyalty Programme First Citizens Club has continued to be one of the main
strengths of the business. Shoppers Stop crossed the 4.12 million mark in memberships, making
it one of the largest loyalty programme in the country across sectors. The Company continues to
believe that its loyalty programme is not only a source of substantial competitive advantage, but
also a very strong strategic tool. The company believes that its First Citizens will continue to drive
its growth by increased average expenditure in our stores, aided by targeted promotional
activities. The fan base on social media has also been increasing, with more than 7.9 million fans
on Facebook page. They see significant opportunities on both these platforms for engaging our
customers.
Strong focus on Systems, Processes and People: The company continues to invest in our retail
front end as well as back end processes with IT enablement. The Company believes that
continuous investment in people, process and technology will drive sustainable and profitable
growth for the Company. In the past year, SS undertaken a number of new initiatives in the
technology deployment and continue to improve our current information technology capabilities
and processes.
Strong Distribution and Logistics Network and Supply Chain: SS has created a robust distribution
and logistics network, with four regional distribution centres covering more than 450,000 square
feet handling over 400,000 SKUs per year and working 24x7. The organisation strongly believes
that the hub-and-spoke model followed by it for its distribution network, will stand it in good
stead for the expansion envisaged in the forthcoming years.
Enhancing our Human Capital: The company continues to Develop their Customer Care
Associates (CCAs) across all levels through Development & Assessment centres for promotion
decisions, career planning and succession planning. Individual and organisational development is
the primary objective of the assessment centre. We also conduct Associate Satisfaction survey
every year and derive ASI scores, which helps us in identifying the index scores of respect,
credibility, fairness and pride with the organisation. We continue to benchmark our
compensation and benefits through consultants, with the best in the industry to pay our
associates accordingly. We benefit from our Promoters association with the real estate business
and their relationships with developers, which have helped us acquire preferred properties at
competitive rates. Our investment in new stores in last four to five years has resulted in to a
robust network of 77 department stores at prominent catchments spread across the country. SS
is also parallelly embarking on its omnichannel journey to tap into the exponential e-commerce
growth in India.
Management Strength & Corporate Governance: The Company has a professional and wellestablished management team. Furthermore, the Companys unwavering focus on good
Corporate Governance has been a beacon for the industry. Their internal and external auditors
are amongst the Big 4 audit firms of the globe. The Board has 6 Independent Directors with Rich
& Diverse Experience across Industries and Geographies.
Strong Brand: Shoppers Stop has been a forerunner in establishing a Pan India Retail Brand. Our
strong brand image, helps us in being, the first choice for shopping by elite customers, anchor
tenant for mall operators & place to launch new brands for all brands & suppliers. The Company
has successfully grown gross margins year on year due to the brand strength. Shoppers Stop was

Felicitated at the India Fashion Forum with 16th Images Most Admired Fashion Retailer: Omni
Channel Initiative: Multi Brand Award.

Risks and Concerns

Execution: SS believes the key risk to their growth is execution risk. The Company has a strong
execution team and we believe it has the capability to execute varied retail formats.
Employee Retention: The Company believes that employee satisfaction and retention is of prime
importance. The demand for experienced personnel in modern retail will only increase in the
near term and long-term. The Company believes that this problem will persist until the industry
reaches a steady growth phase.
Pressure on Retail Lease Rentals: Rent is one of the largest components in a retail business fixed
costs, and the case is no different for the Company. The permission of 100% FDI in single brand
retail is also one of the reasons for increased demand for prominent catchments in key malls
consequently resulting in to higher rentals. Power cost and service tax is also a matter of concern
as they put substantial pressure on profits.
Internet Usage: Indias Internet user base is currently third largest in the world. This, coupled
with the rising consumer confidence in online retail, is driving the growth of e-commerce in the
country. With a significant number of Indian consumers turning Internet users, and eventually,
online shoppers, selling through the online channel is set to redefine retail. The Company in order
to counter the impact of loss in business due to online e-commerce sales, has designed a two
pronged strategy which includes, Omni-channel approach to driving sales with the emphasis on
seamless and engaging customer experience and plans to sell products and brands online via tie
up with leading online e-commerce portals.
Development of New Technologies: E-commerce Platforms being adopted by Brands themselves
or by B2C & B2B Applications; as well as the obsolescence of older technologies could have a
significant impact on the performance of the Company. The Company will be making focused and
substantial investments to embrace new technologies and infrastructure for the Omni channel,
which is a combination of physical store and online site.
Vendor Production Capacity: The Companys expansion plans combined with renewed vigour on
the e-commerce retail segment & possible new entrants in the brick & mortar segment of retail,
these factors may trigger a constraint in terms of vendors reaching their production/supply
capacity. The Company is looking at establishing new sources within and outside India, to
mitigate the problem.
Government Levies: Retail is currently not viewed as an industry in India. Hence, there are
certain levies/cascading effect of taxes on the business which are proving to be a very large
burden as there are no modes for the industry to recover or pass on these levies. Delay in the roll
out of the GST regime is also a matter of concern.
Investee Companies: The Company has invested in other entities and lower than expected
returns from these entities will have an impact on the cash flows and consolidated results of the
Company.

Opportunities
Geographical Reach: The Company continues to increase its Pan-India footprint. The Companys
strategy to increase the number of departmental stores, and therefore improve city wise
penetration in new cities, increase market share in existing cities through additional new stores in
those cities, and new stores in tier II cities, remains unchanged. Over the last five years the
Companys retail space has increased from 2.3 million square feet for the year ended 31st March,
2011 to 4.28 million square feet for the year ended 31st March, 2016 which is an impressive
increase of 86%.
Format Diversification and Expansion: The Company, in its constant endeavour to capture wallet
share, has diversified into multiple formats viz., HomeStop which retails hard and soft furnishing,
M.A.C., Bobby Brown, Estee Lauder & Clinique which retail high end makeup & skin care
products, Mother Care which retails infant and kids merchandise and airport retailing, by tying up
with the Nuance Group AG of Switzerland. The Company has also made a successful foray into
Internet retailing through its e-retailing portal. The Company continues to expand these formats
successfully and will maintain a focus on them.
Private & Exclusive Brands: The Private Brand Business is at a new phase of growth the journey
has started from being just fashion Labels to becoming National Brands with high customer
traction and Brand recall. The first step has been to move to a Brand lead vertical and give each
brand its own DNA and Brand identity. The financial growth has been mapped season-overseason so as to increase the share of Private Brand contribution to the Chain. The Product, Trend
mapping, Visual merchandising, in-store Presentation, Brand building, discounting and phasing
strategy is being worked upon at a category level so as to bring a diverse and unique assortment
and experience for the consumer. Through Brand building and engagement of loyalty customers
we are pushing for analytics driven sales and are also working closely with Marketing to increase
footfall and get more new customers to the store.
Omni Channel: Shoppers Stop embarked on a 3 Year omni-channel journey last year to tap into
the exponential e-commerce growth in India. The Company has plans for focused investments in
technology & operations set-up over the next few years to provide seamless shopping
experiences online & in-store for our customers and drive profitable revenue growth through
digital. As part of the Year 1 phase we have re-launched our website and introduced brand new
mobile apps in both Android PlayStore & iOS AppStore based on the SAP Hybris platform. This
year your Company will be investing in a CRM (Microsoft Dynamics) and a WMS (JDA) to build on
cross-channel customer service, supply chain & operations capabilities enabling customer
journeys such as Click N Collect, Endless Aisle & Ship From Store. Your Company believes more
consumers across the country will embrace Shoppers Stop through its digital shopping channels
due to the convenience of shopping our full assortment at best prices across channels viz. stores,
mobile, website with the added advantage of being able to return, exchange anytime, anywhere.

Threats
Economic Slowdown: Economic slowdowns have a direct impact on consumption. Retail being
the end service provider of consumption in the supply/value chain, is bound to face difficulties in
an environment of economic slowdown. The Company continuously looks at stepping up the
marketing activities and strong cost control to protect the Companys profitability.

 Threat of New Entrants: With India continuing to be an attractive retail market, the Company
expects many new entrants into the sector, thus increasing competition. However, the
nationwide footprint, excellent customer service levels, look & feel of the stores, competitive
product offerings & capability of its management team to execute the business operations &
expansion are the few factors amongst many which would certainly help the Company to retain
its market share.
Competitive Rivalry in the Industry: There is intense rivalry among leading national retailers for
new locations and quality real estate. The Company believes that it has a robust pipeline of stores
for future expansion. Growing competition from online players, price war among e-tailers for
ramping up sales by offering steep discounts, attractive deals and lucky draws on a range of
products, has brought disruption to the traditional retail sector. Availability of quality real estate
space at commercially viable cost and at desired locations is a greatest challenge and will impact
the growth of the Company.
Source: Annual report

5.4.

Kewal Kiran Clothing Limited()

The inception of the KKCL group dates back to the 1980s when there was no global denim brand in
India. The brands goal was to create unique best fits at the best prices. Since then, it has been a
constant endeavour of the Company to bring value to a fashion conscious generation of customers
in-spite of the challenges in the economy like rising prices, slow growth and high interest rates.
The major brands under KKCL are Killer, LawmanPg3, Integriti and Easies. They design, manufacture
and market jeans, casual wear, smart-formals, formals and accessories. K-Lounge and Addictions are
the Exclusive Brand Outlets as well as retail formats which operate in many cities in India and the
Middle East. The total store count is 316 with presence in 192 cities across 25 states in India.

5.4.1. Core Strengths

1. Experience: The Company enjoys an experience of more than two decades in Indias branded
apparel sector.
2. Diversified Product base: The companys diversified product base addresses the requirements of
the customers; comprising its wide gamut of casual, formal and semi formal product range.
3. Client Focus: The Company periodically updates products to address emerging customer
requirements. We exercise the highest levels of professionalism in our work and relationships
and are committed to continuous improvement in our pursuit of excellence.
4. Quality: The Companys products are benchmarked against high class quality levels and all our
manufacturing units are certified ISO 9001:2008 and the Vapi unit is additionally certified ISO
14001:2004.
5. Manufacturing facilities: We use state-of-the-art technologies in jeans manufacturing processes.
Our core competence in the manufacturing process, driven by innovation, helps us offer the best
products to our customers.
6. Strong distribution network: At KKCL, our wide network of distribution channels helps us remain
in touch with our diverse and expanding customer base. This network also keeps us abreast of
their changing requirements.
7. Environment friendly: The Company invests in environment-friendly manufacturing techniques to
produce consumer friendly apparel.

5.5.

Trent Ltd.

Trent is a retail operations company established in 1998 that owns and manages a number of retail
chains in India. The company runs lifestyle chain Westside, one of Indias largest and fastest growing
chains of lifestyle retail stores; Star Bazaar, a hypermarket chain; Landmark, a books and music
chain; and Fashion Yatra, a complete family fashion store.
Westside is the mainstay of the retailing business of Trent. It has a number of stores in India, which
offer clothes, footwear and accessories for men, women and children, along with furnishings, artifacts and a range of home accessories. Star Bazaar offers a wide choice of products, including staple
foods, beverages, health and beauty products, vegetables, fruits, dairy and non-vegetarian products.
Landmark has a range of over 100,000 titles in books and music, and also stocks movies, toys, gift
items and stationery. Fashion Yatra represents the stores that bring quality fashion at low prices to
value conscious customers in towns across India.
Source: http://www.tata.co.in/company/profileinside/Trent

Trent: Innovate, Grow, Sustain

2014

Launches sixth Westside store in Delhi

2013

Launches third Star Bazaar store at Magarpatta City, Pune

2011

Westside gets into gourmet retailing, added gourmet and chocolate section

2008

Announces the launch of first hypermarket 'Star Bazaar' at Koramangala,

Bengaluru

5.5.1. Operations Westside

Source: Annual report

Source: Annual report

Source: Annual report

5.5.2. Operations Star Bazar:

Source: Annual report

5.5.3. Risk and Concerns

Retail real estate availability and costs: Significant number of global retailers already having
presence in India & other global brands (especially under the single-brand umbrella) plan to roll
out stores and consequently, the shortage of quality malls/ standalone real estate in high street
locations is seen as a major impediment to the expansion plans of the organized retail in the near
term. We see the emphasis on standalone properties being critical to mitigating this risk to an
extent.
Talent availability: As observed in earlier years, the availability of relevant talent at acceptable
compensation levels continues to be an issue. And employing expatriates, with the attendant
higher costs, becomes inevitable in certain areas due to paucity of talent as we attempt to scale
up significantly.
Electricity availability & costs: Electricity is one of the largest components of our costs and has
increased significantly in recent years, especially in States like Maharashtra. Separately, higher
power deficits in select cities has led to increased load shedding and has meant more reliance on
generators, which has added to costs our stores in Chennai are a case in point.
Reconfiguration of Landmark: Given market conditions and developments, the Landmark format
is currently in the process of being shaped into a family entertainment format, with focus on toys,

front list adult & childrens books, tech accessories and stationery. The Company is still faced with
the challenge of establishing Landmark as a viable the family entertainment format.
Deep discounting by online retailers: Several online players have sought to disrupt the retail
market, especially in the last year, with deep discounting funded by overseas shareholders. The
sustainability of such deep discounting is debatable but we need to nevertheless handle the
onslaught and continue to be relevant to our target audiences.
Indirect taxation: The indirect tax regime with its multiplicity of charges and levies continues to
be an issue (should be addressed at least partly when the proposed GST regime is implemented
but even on that account both the rate and mechanics would still have material implications for
our operations). The primary negatives being the increase in the service tax has contributed to an
increase in the already high cost of occupancy and there is continuing litigation in this regard.
This is a significant financial charge to an industry which already faces pronounced challenges.

6. Conclusion
The retail industry in India is one of the most promising sectors in the Indian economy, with a high
level of innovation and disruption being witnessed along decades. The post liberalisation era
provided lucrative opportunities to businesses to spread their wings take a flight of success they had
been patiently waiting for. With the proliferation of retail businesses in India there arose intense
competition which compelled organisations to innovate in their product offerings to stand out of the
crowd. Suddenly the Indian market also started flooding with competition from foreign market and
Indian players were finding it difficult to sustain the pace of growth they had experienced until then.
Since then the Indian retail market has been seeing turbulence considering the highly competitive
scenario driving organisations crazy in the bid to prove themselves and increase their market share.
Today it is difficult than ever to sustain your success in the Indian retail scene and even the biggest
corporations strive hard to get their piece of the pie.
But, with government envisioning a truly global market in India and reforms like 100% FDI, The
Indian retail scene became livelier than ever before. Such reforms paved the way for many business
to introduce new products and business models into the industry thus fuelling competition and a
cycle of intense business innovation.
The macro environment suggests that theres lot of room new businesses to take root into the
Indian retail market, but the fact to observe here is that the overall competitive landscape projects
an antithetic scenario where every organisation is on its feet and is ready to counter any lurking
threat, whether it be a new product or a completely different customer experience. Such an
environment requires organisations to do their homework to the best of their capabilities and enter
the retail arena having a good taste of the ever volatile Indian customer behaviour. The only thing
that rules in the retail industry the degree of customer satisfaction you can provide and the level of
customer experience you can provide to your customer to lure them into buying your products and
services and creating a long-lasting relationship.