A

Contemporary issue in Management

On

Retail Industry: challenges in

India
Prepared by : Kishan Jivani
Class : M.B.A (Sem-1)
Roll No: 37
Seat NO: 010037
Ac. Year: 2018 - '19
Guided by : Prof.(Dr.) Mayur parmar
Submitted : Saurashtra University - Rajkot
Smt. R. D. Gardi department of
business management
CONTENTS

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SR.NO. CONTENTS PG. NO
1. INTRODUCTION 3

2. DEFINATION 4

3. MAJOR ISSUES IN THE WAY OF 5

RETAIL GROWTH IN INDIA
4. STRATEGIES TO BE ADOPTED 7

5. MALL 8

6. GENERAL STORES 9

7. SUPERMARKET 10

8. ONLINE RETAIL 11

9. REFERENCES 12

INTRODUCTION

The India Retail Industry is the largest among all the industries, accounting for
over 10 per cent of the country’s 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.

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The total concept and idea of shopping has undergone an attention drawing
change in terms of format and consumer buying behaviour, 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 centres, 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.

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 DEFINITION

Retail is the act of selling commodities in small parcels or quantities. The

quantities may be in single yard, pound, gallon etc. Retailing involves selling of
goods or merchandise from a fixed location i.e. a department store, kiosk, mail
etc, for direct consumption by the purchaser.

Also, the footfalls have fallen drastically in Gujarat, especially in Ahmedabad.

This has resulted in a reduction in sales by 30 per cent. Moreover, there have
been layoffs happening to some extent as well," adds Shah. Last year, the denim
major launched its retail brand 'Dextase' which is witnessing a decline in
footfalls as of now.

However, some are witnessing a steady growth in retail markets of Gujarat.

According to Rajan Malhotra, chief executive officer of Future group's Big
Bazaar, "Gujarat has been a steady market for us, neither going up or moving
downwards. In fact, apart from the one store in Ahmedabad which was
converted into a Brand Factory outlet, all our existing stores in Gujarat are
doing reasonably well, even during recession."

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Talking about the current trend in the retail market, Malhotra says that most of
the products have shown an upward market trend. "The worst is behind us and
most categories have started showing strong trends now. Among them are
fashion and merchandise as against food, which had been strong throughout. As
for categories like mobiles and furniture, there is a still a lull but their markets
have also started showing an upward trend. As for recruitments, they happen as
and when new stores open. We are planning to expand our retail presence by
opening two new stores in Sangli and Hyderabad soon, besides four stores in the
next month," he says.

Experts opine that the while on one hand some retailers are facing a tough time
in Gujarat, there have been others who are still on a hiring spree. "The retail
scenario has been bad this season since the number of stores have not gone up.
Several retailers have shelved lot of their plans as well. Yet, there have been
others who have been hiring for the front end which is a good sign," points out
Piyush Sinha, faculty member at Indian Institute of Management, Ahmedabad
(IIM-A).

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 MAJOR ISSUES IN THE WAY OF RETAIL GROWTH IN INDIA

1.Underdeveloped Supply Chain:India lacks quality logistics infrastructure

which hinders scaling up of retailing operations. Accordingly supply chain
management systems have very low penetration especially in the rural area.
Underdeveloped logistics infrastructure, absence of national cold chain
networks, lack of national distribution networks and hubs create key bottleneck
for retail sector growth.

2. Inadequate Utilities:Inadequacy of basic infrastructure like power, transport

and communication creates difficulty in sustaining retail operations across the
large geographical spread of country. Inadequate reliable power, water, gas
sources, public transport facilities, inadequate telecommunication and internet
facilities prevent the fastest growth of retail business in India.

3. IT Infrastructure Hurdles:Reliable IT infrastructure is important for

managing modern supply chains which are the backbone of any retailing
business and India face a clear problem in this area as the non-urban areas have
limited IT infrastructure. Low automation level in supply chain and point of
sales systems, no real time link between suppliers-warehouses-retail stores, lack
of online presence of retailers, prevents India for large scale organized retailing
development.

4. Real Estate Hurdles:Archaic laws prevent the much needed growth in real
estate development, which imperative for retail growth. High real estate costs,
Archaic and user-unfriendly land laws, lack of proper city planning models are
the most critical issue facing organized retailers in India. This problem is
particularly severe in urban areas where a lack of transparency and correct
practices increases land cost.

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5. Taxation Hurdles:The tax structure in India is still complex and evolving,
creating challenges for retailers. Inconsistent Octroi and entry tax structure,
VAT and multiple taxation issues, Large grey market presence act as deterrents
for organized retailing in India. Similarly non-uniform VAT regimes across
states lead to differential pricing of goods and multiple taxation formats for the
same goods in different states.

6. Supply Base Hurdles:The supply base for the retail sector is fragmented due
to government policies and legacy issues which prevent economies of scale in
retail sector. The fragmented supply base, underdeveloped supplier relationship
management programs, inadequate quality assurance processes prevent the
growth of retail business in India.

7. Inadequate Human Resources:There is hardly any systematic effort to train

manpower for the retail sector, which can create a bottleneck for growth. Lack
of trained personnel at all levels, stringent employment and industry laws,
fragmented industry approach to human resources prevent the growth of retail
sectors in India.

8. Limited Consumer Insights:There is limited knowledge about the consumer

behavior due to limited market research conducted on the huge population in
towns and rural areas. Lack of detailed region-specific customer data, lack of
adequate data on consumer spending patterns, absence of a central body to
aggregate industry information will prevent the growth of retail sector in India.

9. Insufficient Government Incentives:Government is yet to create any major

sector specific policies to boost the retail sector. Lack of industry specific
incentives, inconsistent agriculture and fertilizer subsidies becomes major
constraints for the growth of retail business in India.

10. Policy Related Hurdles:The policy environment in India is complex,

creating challenges for growth and establishment of new business. Lack of
industry status for retail, numerous license, permit and registration requirements
becomes the major obstacles for the growth of retail business in India.

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 STRATEGIES TO BE ADOPTED

1. The retail sector needs to proactively seek government help to develop the
basic infrastructure as maximum benefits can be obtained from supply chain
development.

2. Basic telecommunication and internet facilities in rural area should be

improved. Government need to proactively develop IT infrastructure, both
urban and rural to drive retail sector growth.

3. Retail forums need to drive government of remove real estate hurdles for
development of organized retailing and industry in general.

4. Political consensus is needed to eradicate taxation hurdles for retail

development in India.

5. India can form national retail federation (US model) that provides
certification for various retail aspects, including quality assurance, skills
standards, customer service certification, sales certification, management
certification and testing of sites.

6. It is an urgent need for large and mid-size retailers to join hands in

developing training institutes to develop talent.

7. India can develop consumer confidence index like advanced countries that
measures consumer sentiment on various business and environmental issues.
Adequate data regarding consumption patterns that may lead to significant
savings in terms of store operations, category management and merchandising
functions.

8. Government should grant industry status to retail. Some of the world largest
companies are retailers, Indian companies are also entering the space and it is
appropriate that the government should support them.

9. Single window clearance models which makes it ideals for retailers, and
minimizes time lost in bureaucratic paper work.

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10. Retailer associations need to consistently engage with governments to bring
standardization across policies.

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 There are different types of Retail industries in India.

Malls

The largest form of organized retailing today. Located mainly in metro cities, in
proximity to urban outskirts. Ranges from 60,000 sqft to 7,00,000sqft and
above. They lend an ideal shopping experience with an amalgamation of
product, service and entertainment, all under a common roof. Examples include
Walmart, D-mart, Pantaloon, etc.

Challenge:

In metro cities mall culture is become very famous, so there are many new
malls opened and so that competition become very hard and there are large
number of goods so in tough competition it may possibility of unsold goods.

Suggestion:

If the goods are unsold then they can sell it out in discount rates and incurred
their cost.

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General Stores

A grocery store is a retail store that sells food and other non-food items. Large
grocery stores that stock products other than food, such as clothing or household
items are called supermarkets. Some large supermarkets also include a
pharmacy and an electronics section, the latter selling DVDs, headphones,
digital alarm clocks, and similar items. Small grocery stores that mainly sell
fruits and vegetables are known as produce markets (U.S.)
or greengrocers (Britain), and small grocery stores that predominantly sell
prepared food, such as candy and snacks, are known as convenience
stores or delicatessens.

Challenge:

In urban area the mall culture take place of general stores, people like to
go in malls for shopping rather than small shops because it give customer
wide range for choose.

Suggestion:

The retailer can give different facilities to customer so that customer attract and
come from stores, like Free home delivery, take less profit margin, exchange
goods if needed.

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Supermarkets
Large self-service outlets, catering to varied shopper needs are termed as
Supermarkets. These are located in or near residential high streets. These stores
today contribute to 30% of all food & grocery organized retail sales. Super
Markets can further be classified in to mini supermarkets typically 1,000 sqft to
2,000 sqft and large supermarkets ranging from of 3,500 sqft to 5,000 sq ft.
having a strong focus on food & grocery and personal sales. There were many
supermarkets in India like Adani, Subhiksha, V-mart.

Challenge:

Because of mall-culture the supermarkets are crashed, everyone knows that

Adani was very big brand and they have 1500 shops in all over India but
therefore they cannot stay in market competition. In Rajkot, V-mart were to face
same situation.

Suggestion:

To continue the business the supermarkets can merged with mall, they can open
their shops in mall a get benefits.

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Online Retail
Now a days this trend become very famous, in Indian market.Online
shopping or e-shopping is a form of electronic commerce which allows
consumers to directly buy goods or services from a seller over theInternet using
a web browser. Alternative names are: e-web-store, e-shop, e-store, Internet
shop, web-shop, web-store, online store, online storefront and virtual store.
Mobile commerce (or m-commerce) describes purchasing from an online
retailer's mobile optimized online site or app.
An online shop evokes the physical analogy of buying products or services at
a bricks-and-mortar retailer or shopping center; the process is called business-
to-consumer (B2C) online shopping. In the case where a business buys from
another business, the process is called business-to-business (B2B) online
shopping. The largest of these online retailing corporations
are Alibaba, Amazon.com and eBay. Retail success is no longer all about
physical stores. This is evident because of the increase in retailers now offering
online store interfaces for consumers. With the growth of online shopping,
comes a wealth of new market footprint coverage opportunities for stores that
can appropriately cater to offshore market demands and service requirement.

Challenge:

The biggest challenge for online marketing is, customer trust and customer
satisfaction, it is possible that a person want to purchase a product but for
payment he have no facility like credit card, debit card or e-wallet.

Suggestion:

The companies can give facility like payment at time of delivery.

References

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-‘The Art of RETAILING’ A. J. Lamba (member of Management
at Wal-Mart)

-en.wikipedia.org/wiki/Retailing_in_India

-www.fibre2fashion.com/industry...retail-industry.../indian-retail-
industry

-www.ijbmi.org/papers/…2/D232022.pdf

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