THE EXUBERANT AGE OF RETAIL IN INDIA

*Rizwana Atiq - Lecturer,Department of Business Administration, Integral University, Lucknow

Abstract

India has stepped in the exuberant age of retail. It ranks second after Russia as the most alluring
destination for retailers among 30 emerging markets, according to the Global Retail Development
Index developed by AT Kearney, a consultancy. The 10-12% increase in the economy’s disposable
income can be seen clearly by the way goods and services are being brought and sold. Retail Trade
contributes 10-11% of India’s GDP and currently employs over 4 crore people.

THE DRIVE FOR RETAIL :

The reason for the boom in retail is the gradual increase in disposable incomes of the middle and
upper class household. Countries like US, Japan, U.K. have started out sourcing business activities
and are willing to pay a handsome package to those who deserve. The out sourcing will create 10-
24 million jobs by 2020. The Indian youth is zealous, Intelligence and has the will to work hard. This
is attracted foreign business organizations in the country where by increasing the income levels and
the purchasing power of consumers. The Indian consumer has a great amount of disposable income
which has increased demand level of the country. This demand is accompanied by the desire to get
the best quality. In India over 65% of the population is below 35 years of age and 54% are below
25 years. They have enough to pay for all their dream desires. Moreover there is a switch from joint
family to nuclear family and DINK segment is making its presents felt. Driven by changing lifestyles,
strong income growth and favourable demographic patterns, Indian retail is expanding at a rapid
pace.

Mall space, from a meager one million square feet in 2002, is expected to touch an estimated 60
million square feet by end-2008, says Jones Lang LaSalle's third annual Retailer Sentiment Survey-
Asia.

The Indian consumer wants the best . This has increased demand for exclusive brands . Now Nike
has over 100 outlets and Reebok has over 400 outlets. Thus the increase consumption pattern is
having a direct bearing on the growth of retail sector. The consumption in 2005-06 was Rs.
2124000 Crore (Approximately 480 billion.)

THE INDIAN RETAILERS:

1. RPG:-It was the first to get into retail Business in India.Foodworld began as adivision of Spencer&
Co., a part of RPG Group in May 1996,with supermarket in Chennai.Today Foood world is a separate
company: a joint venture between Spencer & Co. and Dairy Farm international.

2. The TATA Group It has signed a joint venture for a new subsidiary, Infiniti retail, a large format
multi brand chain for consumer durables. For lifestyle and the food and grocery segment, it
operates through its retail arm Trent. Trent forayed into the hypermarket business with Star India
Bazar.

3. Pantaloons Retail: The Company’s value retailing includes includes Big Bazar which is a
hypermarket, Food Bazar which is a supermarket and Fashion Station, popular fashion stores.
Pantaloon Retail (India) Limited is part of the future Group. The Future Group operates through
many verticals viz Future retail, Future Capital, Future Space, Future Logistics and Future Group.

4. Vishal Retail Group: The store has spread over 25000 Sqft. It offers fashion accessories, grocery
product, apparel & Electrical gadgets. The Group entered the hypermarket segment with its first
such store in Udaipur.

5. Reliance Retail: It has set a revenue target by 2010-11 which is about double of the present
revenues of all organized retail business in India. Reliance operates Qwik Mart, quick transaction
stores offering the convenience of buying household food and non-food merchandise, music, take-
away café and convenience-oriented ancillary services without a price penalty.
6. Subhiksha: The stores are small sized and functional with average size of 1500-2000sqft.

7. Nilgiri’s: The Company’s strategy is backward integration with an increase focus on fresh fruit
and vegetables.

8. Trinethra:- It is a South based grocery chain. The stores in Kerala to have a bakery attached for
which the Company has tied up with Ann’s Bakery.

A LOOK AT THE RETAIL FORMATS

1.Department Store : This represents retail outlets that stocks a wide range of merchandise. Stores
often provide customers with exclusive membership cards on purchases up to a certain value. The
major players are Ebony, Globus, Life Style, Shoper’s Stop and Westside.

2.Super market : They are self service stores which concentrate on the prize aspect to attract
customers like Food Bazaar, Subhiksha and Fab-mall. Supermarket is a self-service store offering a
range of food and household articles.

3.Hyper market : It is a department store combined with super market although in India the hyper
markets are not well developed still we have a few player like Reliance retail, Big Bazaar and a few
more. The latest to make a big splash in the retail scene is the Aditya Birla Retail (ABRL), the retail
arm of the $24-billion Aditya Birla Group, which plans to invest between Rs 250 and Rs300 crore for
setting up a dozen hypermarkets under the brand name 'More Megastore' in the country. The
hypermarkets will offer 60,000 products sourced through over 500 suppliers say company officials.
The group also plans to open 'Family Stores' stocking apparel from Madura Garments, the owner
Louis Philippe, Van Heusen, Allen Solly and Peter England brands and also distributes the
international brand Esprit in India.

4. Discount Store : It is a department store except that it sells products at a lower prize for example
The Loot and My Dollar Store.

5. Specialty Store : They offer a large range of selections within a single merchandise category for
example The Gold Souk in Gurgaon and the Music World and Planet M.

6. Conveyance Store : The stock most essential and FMGC products like food items and several
products of daily use. The major players are Red Shop and My Mart. Although world wide they are
open through out the day and night but this is not so all the palyers within this format in India.

7.Kiosk : they are small retails outletswhich are open on all sides and sell consumer goods like
edibles and snacks, newspapers and so on. emphasis is on designing the kiosk façade-thet sport
attractrive colour schemes. Some of the players are Mr. Orange , Cookie Man, Corn Man ,Kidz on
Wheelz and so on.

TIE-UPS IN RETAIL

Indian retailers are trying to tie-up with global brands through franchise and licensing agreement
because they benefits both the partners. The global companies have funds expertise and goodwill
while the Indian companies have the right feel of the domestic market.

? India has global retail giants like Bharti-Wal-Mart. Wal-Mart's (the world's biggest retailer) tie up
with Bharti Enterprises for cash & carry operations, seems to have encouraged French retailer
Carrefour, to enter the Indian market through the wholesale route.

? Mukesh Ambani-controlled Reliance Retail is entering into talks with UK fashion retailer Marks &
Spencer (M&S) to float an equal joint venture for apparel, gourmet food and cafes. The gourmet
food format may be integrated with Reliance Fresh wherever possible. This would help M&S attain
immediate scale in food business as Reliance Fresh has 491 stores selling foods, fruits and
vegetables, and may be scaled up to 1,400 stores by the end of next fiscal. Marks & Spencer is
present in India through a franchisee arrangement with Planet Retail since 2001 and operates more
than 20 stores in India out of its 760-strong global network. Within four months of rolling out its
first store in November 2007, Reliance Retail opened 500 stores in various formats, spanning 3-
million square ft of occupied space in various cities.

? Home Solutions Retail India (HSRIL), a part of the Kishore Biyani-owned Future Group, will soon
start retailing lightings and electrical products under the Bijli Ghar brand. This is the first time a
major corporate retailer has unveiled plans to enter the unorganised Rs80,000 crore lighting market
dominated by small and medium city and region-specific players across the country. The company
already has a joint venture with Asian Electronics and Idiom Design & Consulting to launch the
products. The lighting stores will open in 80 Big Bazaar outlets across the country and, in the next
six to nine months, the company is planning of opening standalone stores, targeting revenues of
Rs100 crore in the first year of operations.

FUTURE AHEAD IN RETAIL

Merrill Lynch which is a an advisory firm, expects the Indian Retail industry to grow to US$300
billion by 2010.

• Spencer's is planning to set up 500 more stores by June 2008 with an investment of nearly US$
125.89 million.

• Hypercity is planning to set up 250 Expresscity stores in the convenience store format across the
country in the next five years.

• DLF plans to invest US$ 4.02 billion over four years to develop about 20 large shopping malls
across the country.

• Israeli mall developer Plaza Center NV plans to invest US$ 1.25 billion over the next five-seven
years to set up 50 malls in India.

The domestic retail sector is picking up pace with more and more Indian companies entering the
sector either on their own or in alliance with foreign retailers to set up premium or niche outlets.

While Indian companies such as Bharti, Reliance Retail, Essar, Future Group, Shoppers Stop and the
Aditya Birla Group are still trying to consolidate their markets, others such as Mahindra & Mahindra,
realty groups like Parsvnath and DLF, two-wheeler maker Hero Honda, chemicals and foods firm
Jubilant group and brokerage and realty firm Indiabulls have announced plans to enter the retail
sector.

Tobacco major ITC is planning to set up more of its Wills Lifestyle, John Players and Miss Players
stores across the country. The company plans to increase the number of Wills Lifestyle stores from
250 to 400 by the end of 2008-09. These stores will come up on the lines of the concept store,
designed keeping cultural context and customer profile in mind.

Kishore Biyani–owned Future Group, India’s largest Retailer has planned to investRs. 3,600 crore in
100 stores in 30 cities.

ORGANISED RETAILING

According to industry estimates, the overall size of the retail sector in India is expected to touch
$427 billion by 2010 and $637 billion by 2015 with the organised segment expected to account for
22 per cent by 2010. An additional 700 million Sqft of quality retail space over and above what is
currently available will be required by 2011. Consulting firm Ernst & Young predicts that the
organised retail market in India will touch approximately $30 billion by 2010.

Presently the share of organized retailing in India is abysmally low .The bulk of retailing is carried
out by 12 m kirana which are mostly family owned. According to McKinsey, a consultancy about
96% of these kirana have 500 sq ft or less space

The advent of foreign rivals is viewed with some trepidation by India Retailers
The small retailers fear being wiped out while the large ones feel their shared eroded. It is definitely
true that Foreign retailers can help improve efficiency among local organized retailers. The entry of
foreign competition can lower prices. We cannot, in fact should not hurt the interest of the local
retailers We need to size up the retail market into segments and then decide as to which segment
can be organized and which one need to be left unorganized for the time being.

FDI in Retail will destroy employment in the kirana stores and create retail monopolies.

India has the highest shop density in the world with 11 shops per 1000 persons, much higher than
European and other Asian countries.

We need to think of these small retailers before trying to enforce organized retailing in the country.
The giant organized retailers may start using their monopoly and stampede the unorganized small
retailers. Acceleration in organized retailing would make business unviable for the several such
retailers. As there is great unemployment in the country and the small scale retailing provides
livelihood security to about 20 million urban workers and 12 million rural workers, we cannot afford
to put an end to it. The introduction of organized retailing would snatch the bread and butter and
jeopardize the livelihoods of the millions in our country. We cannot encourage the entry of large
retailers unless we have planned a livelihood for the vast majority.

KEEP THE RETAIL GOING

There is great competition in the retails sector. Thus arises the need of competent work force
accompanied by Technology. Employees in the Retail Sector should be given proper training to deal
with the customers. Those working in the retail sector should have a cheerful disposition because
they may have to encounter short tempered customers.

• Store Employees should be empowered so that they are under no pressure to deal with the
customers.

• All retailers should have consumer advisory boards.

• There should be customer research . Those employees who provide good service should be
rewarded .

• Indian retails should follow the example of JC Penny whose sales associates give questionnaires to
shoppers which are later analyzed to improve service.

• Retailers should always be ready to devise innovative ways to over come the problems of
customize.

• Retails brands get built by developing personal relationship with consumer the important and
frequent customers should be recognized and should be given free gifts and guaranties.

• The retailer should be able to display their product very beautifully in order to attract the side of
the customer.

The Indian retails sector is in a state of evolution. The Indian retailers should understand that
retailing has to be taken as a brand in a self. More than 99% of the Indian retailers function in less
than 500 Sqft of shopping space. It is a challenge for the Indian Retails Industry to create a
scenario making job exciting to the younger generation so as the attract them. It is difficult but not
impossible to satisfy the culturally diverse consumers of the country.

CONCLUSION:-

India is an enormous market, of which we are seeing only the tip of the iceberg. If the changes
which are taking place in the metros retail start to percolate in the all the urban settlements then
there will be a real revolution in the Indian Retail. Indian Retail market is worth a mammoth 350
billion dollars. Such is the underlying potential for Retail trading in the country.
A single large retailer should not be allowed to capture the large market share. The Indian
Government should not make haste in inviting the foreign retailers instead it should wait to see the
great power of the Indian retailers. Indian retailers have to learn both the art and science of
retailing by looking at the way the giant retailers are organizing and managing their activities .
Indian retailer needs to be innovative and needs to understand the regional variations in consumer
tastes

We Indians can celebrate our spending power and also channelise our spending towards healthy
consumption for overall development of the country.

REFEENCES:-

Books:-

• Retailing Management,5th Edition, Michael Levy and Barton A Weitz, Tata McGraw-Hill Publishing
Company

• Retail Management - A Strategic Approach ,9th Edition, Berry Berman and Joel R. Evans, Prentice
Hall

Links:-

• www.imagesretail.com

• www.indiaretailforum.in

• www.retailindia.typepad

Read more: http://www.articlesbase.com/marketing-articles/the-exuberant-age-of-retail-in-india-

354650.html#ixzz0sngCbo5S
Under Creative Commons License: Attribution