RETAIL SCENARIO IN INDIA

Modern Formats/
Historic/Rural Traditional/Perv Government
International
Reach asive Reach Supported

Exclusive Brand
Outlets
Hyper/Super
Markets
Department Stores
PDS Outlets Shopping malls
Khadi Stores
Cooperatives
Convenience
Stores
Mom and
Pop/Kiranas
Weekly
Markets
Village Fairs
Melas

source of entertainment neighbourhood stores availability low

cost
Industry shopping
evolution exp/ efficiency

 Traditionally retailing in India can be traced to

– The emergence of the neighborhood ‘Kirana’ stores catering to
the convenience of the consumers
 – Era of government support for rural retail: Indigenous franchise
model of store chains run by Khadi & Village Industries
Commission
 1980s experienced slow change as India began to open up economy.
 Textiles sector with companies like Bombay Dyeing, Raymond's, S
Kumar's and Grasim first saw the emergence of retail chains
 Later Titan successfully created an organized retailing concept and
established a series of showrooms for its premium watches
 The latter half of the 1990s saw a fresh wave of entrants with a shift
from Manufactures to Pure Retailers.
 For e.g. Food World, Subhiksha and Nilgiris in food and FMCG;
Planet M and Music World in music; Crossword and Fountainhead in
books.
 Post 1995 onwards saw an emergence of shopping centers,
– mainly in urban areas, with facilities like car parking
– targeted to provide a complete destination experience for all
segments of society
 Emergence of hyper and super markets trying to provide customer
with 3 V’s - Value, Variety and Volume
 Expanding target consumer segment: The Sachet revolution -
example of reaching to the bottom of the pyramid.
 At year end of 2000 the size of the Indian organized retail industry is
estimated at Rs. 13,000 crore

Retailing formats in india

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

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

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

 Department Stores:
Large stores ranging from 20000-50000 sq. ft, catering to a variety of
consumer needs. Further classified into localized departments such as
clothing, toys, home, groceries, etc. Departmental Stores are expected to
take over the apparel business from exclusive brand showrooms. Among
these, the biggest success is K Raheja's Shoppers Stop, which started in
Mumbai and now has more than seven large stores (over 30,000 sq. ft)
across India and even has its own in store brand for clothes called Stop!.

 Hypermarts/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 sq ft to 2,000 sq ft and large supermarkets ranging from of 3,500 sq ft
to 5,000 sq ft. having a strong focus on food & grocery and personal sales.

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

 MBO’s :
Multi Brand outlets, also known as Category Killers, offer several
brands across a single product
category. These usually do well in busy market places and Metros.
Recent Trends

 Retailing in India is witnessing a huge revamping exercise as can be

seen in the graph
 India is rated the fifth most attractive emerging retail market: a
potential goldmine.
 Estimated to be US$ 200 billion, of which organized retailing (i.e.
modern trade) makes up 3 percent or US$ 6.4 billion
 As per a report by KPMG the annual growth of department stores is
estimated at 24%
 Ranked second in a Global Retail Development Index of 30
developing countries drawn up by AT Kearney.

Retail sales in India

Traditionally three factors have plagued the retail industry:

Unorganized : Vast majority of the twelve million stores are small "father
and son" outlets

Fragmented : Mostly small individually owned businesses, average size of

outlet equals 50 s.q. ft. Though India has the highest number of retail outlets
per capita in the world, the retail space per capita at 2 s.q. ft per person is
amongst the lowest.

Rural bias: Nearly two thirds of the stores are located in rural areas. Rural
retail industry has typically two forms: "Haats" and “Melas". Haats are the
weekly markets : serve groups of 10-50 villages and sell day-to-day
necessities. Melas are larger in size and more sophisticated in terms of the
goods sold (like TVs)

Recent changes:

Experimentation with formats: Retailing in India is still evolving and the

sector is witnessing a series of experiments across the country with new
formats being tested out. Ex. Quasi-mall, sub-urban discount stores, Cash
and carry etc.

Store design : Biggest challenge for organised retailing to create a

“customer-pull” environment that increases the amount of impulse shopping.
Research shows that the chances of senses dictating sales are upto 10-15%.
Retail chains like MusicWorld, Baristas, Piramyd and Globus are laying
major emphasis & investing heavily in store design.
Emergence of discount stores: They are expected to spearhead the organised
retailing revolution. Stores trying to emulate the model of Wal-Mart. Ex. Big
Bazaar, Bombay Bazaar, RPGs.

Unorganized retailing is getting organized: To meet the challenges of

organized retailing such as large cineplexes, and malls, which are backed by
the corporate house such as 'Ansals' and 'PVR‘ the unorganized sector is
getting organized. 25 stores in Delhi under the banner of Provision mart are
joining hands to combine monthly buying. Bombay Bazaar and Efoodmart
formed which are aggregations of Kiranas.
  Multiple drivers leading to a consumption boom:
– Favorable demographics
– Growth in income
– Increasing population of women
– Raising aspirations : Value added goods sales
 Food and apparel retailing key drivers of growth
 Organized retailing in India has been largely an urban phenomenon
with affluent classes and growing number of double-income
households.
 More successful in cities in the south and west of India. Reasons
range from differences in consumer buying behavior to cost of real
estate and taxation laws.
 Rural markets emerging as a huge opportunity for retailers reflected in
the share of the rural market across most categories of consumption
– ITC is experimenting with retailing through its e-Choupal and
Choupal Sagar – rural hypermarkets.
– HLL is using its Project Shakti initiative – leveraging women
self-help groups – to explore the rural market.
– Mahamaza is leveraging technology and network marketing
concepts to act as an aggregator and serve the rural markets.
 IT is a tool that has been used by retailers ranging from Amazon.com
to eBay to radically change buying behavior across the globe.
 ‘e-tailing’ slowly making its presence felt.
 Companies using their own web portal or tie-sups with horizontal
players like Rediff.com and Indiatimes.com to offer products on the
web.

Major retailers

 India’s top retailers are largely lifestyle, clothing and apparel stores
 This is followed by grocery stores
 Following the past trends and business models in the west retail giants
such as Pantaloon, Shoppers’ Stop and Lifestyle are likely to target
metros and small cities almost doubling their current number of stores
 These Wal-Mart wannabes have the economy of scale to be low –
medium cost retailers pocketing narrow margin
India vs the world

 Indian retail is fragmented with over 12 million outlets operating in

the country. This is in comparison to 0.9 million outlets in USA,
catering to more than 13 times of the total retail market size as
compared to India
 India has the highest number of outlets per capita in the world -
widely spread retail network but with the lowest per capita retail space
(@ 2 sq. ft. per person)
 Annual turnover of Wal-Mart (Sales in 2001 were $219 billion) is
higher than the size of Indian retail industry. Almost 100 times more
than the turnover of HLL (India's largest FMCG company).
 Wal-Mart - over 4,800 stores (over 47 million square meters) where as
none of India's large format store (Shoppers' Stop, Westside,
Lifestyle) can compare.
 The sales per hour of $22 million are incomparable to any retailer in
the world. Number of employees in Wal-Mart are about 1.3 million
where as the entire Indian retail industry employs about three million
people.
 One-day sales record at Wal-Mart (11/23/01) $1.25 billion - roughly
two third of HLL's annual turnover.
 Developed economies like the U.S. employ between 10 and 11
percent of their workforce in retailing (against 7 percent employed in
India today).
  60% of retailers in India feel that the multiple format approach will be
successful here whereas in US 34 of the fastest-growing 50 retailers
have just one format
 Inventory turns ratio: measures efficiency of operations. The U.S.
retail sector has an average inventory turns ratio of about 18. Many
Indian retailers KPMG surveyed have inventory turns levels between
4 and 10.
 Global best-practice retailers can achieve more than 95 percent
availability of all SKUs on the retail shelves (translating into a stock-
out level of less than 5 %).The stock-out levels among Indian retailers
surveyed ranged from 5 to 15 percent.

Future direction: Positives

 AT Kearney has estimated India’s total retail market at US$ 202.6

billion which is expected to grow at a compounded 30 per cent over
the next five years.
 With the organised retail segment growing at the rate of 25-30 per
cent per annum, revenues from the sector are expected to triple from
the current US$ 7.7 billion to US$ 24 billion by 2010.
 The share of modern retail is likely to grow from its current 2 per cent
to 15-20 percent over the next decade
 Over next two years India will see several Indian retail businesses
attaining a critical mass as growth in the industry picks up momentum
driven by two key factors:
– Availability of quality real estate and mall management
practices
– Consumer preference for shopping in new environments
 Wal-Mart : huge plans for India. Moving a senior official from its
headquarters in Bentonville, Arkansas, to head its market research and
business development functions pertaining to its retail plans in India.
 New York-based high-end fashion retailer Saks Fifth Avenue has tied
up with realty major DLF Properties to set up shop in a mall in New
Delhi.
 Tommy Hilfiger, retailer of apparels, expects to open one store each
in Delhi, Ahmedabad, Lucknow and Bangalore in the next four
months.
  68 million square feet of mall space is expected to be available by end
of 2007, which might lead to over-capacity of malls
 Lack of differentiation among the malls that are coming up. One
option may be to look at specialization.
 Poor inventory turns and stock availability measures - retailers clearly
need to augment their operations.
 Operations of retailers and suppliers are not integrated. Efficient
replenishment practices practiced in the Indian auto and auto-
component industry can be leveraged to implement efficient supply
chain management techniques.
 Supplier maturity, in terms of adherence to delivery schedules and
delivering the quantity ordered, is an issue
 Sales tax laws - lead to retailers having state-level procurement and
storage leads to Indian retailers having higher inventories. VAT has
helped alleviate this a bit.
 Increased adoption of IT and shrinkage management will be a critical
area.
 Supply chain and customer relations followed by merchandising,
facilities management and vendor development are areas which have
significant gaps and proactive training is a key imperative for
overcoming these.

Unlimited Opportunity

RETAIL SCENARIO IN INDIA

Unlimited Opportunity

Contents
The Global Retail Industry: An Overview
Retail Scene in India: Touching Meteoric Scales
Different Forms of Retailing
Malls in India
Challenges of Retailing in India
Retail as an Employment Generator
Retail Industry in the East: Current Scenario, Growth Prospects and
Upcoming
Projects
Retail Education in the East
Factors needed to promote the Industry in West Bengal
Conclusion

The Global Retail Industry : An Overview

Retail has played a major role world over in increasing productivity across a
wide range ofconsumer goods and services .The impact can be best seen in
countries like U.S.A., U.K.,\Mexico, Thailand and more recently China.
Economies of countries like Singapore,Malaysia, Hong Kong, Sri Lanka and
Dubai are also heavily assisted by the retail sector.Retail is the second-
largest industry in the United States both in number of establishmentsand
number of employees. It is also one of the largest world wide. The retail
industryemploys more than 22 million Americans and generates more than
$3 trillion in retail sale annually. Retailing is a U.S. $7 trillion sector.Wal-
Mart is the world’s largest retailer. Already the world’s largest employer
with over1million associates, Wal-Mart displaced oil giant Exxon Mobil as
the world’s largest company when it posted $219 billion in sales for fiscal
2001. Wal-Mart has become the most successful retail brand in the world
due its ability to leverage size, market clout, and
efficiency to create market dominance. Wal-Mart heads Fortune magazine
list of top 500 companies in the world. Forbes Annual List of Billionaires
has the largest number (45/497) from the retail business.

1999 2002 2005

Total Retail (US$ Billion) 150 180 225

Organized Retail (US$ 1. 1 3.3 7
Billion)

% Share of Organized 0.7 1.8 3.2

retail

Top Retailers Worldwide

Rank Retailer Home Country

1 Wal-Mart Stores, Inc. U.S.A.

2 Carrefour Group France
3 The Kroger Co. U.S.A.
4 The Home Depot, Inc. U.S.A.
5 Metro Germany

Retail Scenario in India : Touching Meteoric Scales

As the corporates – the Piramals, the Tatas, the Rahejas, ITC, S.Kumar’s,
RPG Enterprises, and mega retailers- Crosswords, Shopper’s Stop, and
Pantaloons race to revolutionize the retailing sector, retail as an industry in
India is coming alive. Retail sales in India amounted to about Rs.7400
billion in 2002, expanded at an average annual rate of 7% during 1999-2002.
With the upturn in economic growth during 2003, retail sales are also
expected to expand at a higher pace of nearly 10%. Across the country, retail
sales in real terms are predicted to rise more rapidly than consumer
expenditure during 2003-08. The forecast growth in real retail sales during
2003- 2008 is 8.3% per year, compared with 7.1% for consumer
expenditure. Modernization of the Indian retail sector will be reflected in
rapid growth in sales of supermarkets, departmental stores and hyper marts.
Sales from these large-format stores are to expand at growth rates ranging
from 24% to49% per year during 2003-2008, according to a latest report by
Euro monitor International, a leading provider of global consumer-market
intelligence. A. T. Kearney Inc. places India 6th on a global retail
development index. The country has the highest per capita outlets in the
world - 5.5 outlets per 1000 population. Around 7% of the population in
India is engaged in retailing, as compared to 20% in the USA. In a
developing country like India, a large chunk of consumer expenditure is on
basic necessities, especially food-related items. Hence, it is not surprising
that food, beverages and tobacco accounted for as much as 71% of retail
sales in 2002. The share of food related items had, however, declined over
the review period, down from 73% in 1999. This is not unexpected, because
with income growth, Indians, like consumers elsewhere, have started
spending more on non-food items compared with food products. Sales
through supermarkets and department stores are small compared with overall
retail sales. Nevertheless, their sales have grown much more rapidly, at
almost a triple rate (about 30% per year during the review period). This high
acceleration in sales through modern retail formats is expected to continue
during the next few years, with the rapid growth in numbers of such outlets
due to consumer demand and business potential. The factors responsible for
the development of the retail sector in India can be broadly summarized as
follows:

• Rising incomes and improvements in infrastructure are enlarging consumer

markets and accelerating the convergence of consumer tastes. Looking at
income classification, the National Council of Applied Economic Research
(NCAER) classified approximately 50% of the Indian population as low
income in 1994-95; this is expected to decline to 17.8% by 2006-07.
• Liberalization of the Indian economy which has led to the opening up of
the market for consumer goods has helped the MNC brands like Kellogg’s,
Unilever,Nestle, etc. to make significant inroads into the vast consumer
market by offering a wide range of choices to the Indian consumers.

• Shift in consumer demand to foreign brands like McDonalds,

Sony,Panasonic,etc.

• The internet revolution is making the Indian consumer more accessible to

the growing influences of domestic and foreign retail chains. Reach of
satellite T.V. channels is helping in creating awareness about global
products for local markets.About 47% of India’s population is under the age
of 20; and this will increase to 55% by 2015. This young population, which
is technology-savvy, watch more than 50 TV satellite channels,and display
the highest propensity to spend, will immensely contribute to the growth of
the retail sector in the country. As India continues to get strongly integrated
with theworld economy riding the waves of globalization, the retail sector is
bound to take big leaps in the years to come.The Indian retail sector is
estimated to have a market size of about $ 180 billion; but the organised
sector represents only 2% share of this market. Most of the organised
retailing in the country has just started recently, and has been concentrated
mainly in the metro cities. India is the last large Asian economy to liberalize
its retail sector. In Thailand, more than 40% of all consumer goods are sold
through the super markets and departmental stores. A similar phenomenon
has swept through all other Asian countries. Organised retailing in India has
a huge scope because of the vast market and the growing consciousness of
the consumer about product quality and services.A study conducted by
Fitch, expects the organized retail industry to continue to growrapidly,
especially through increased levels of penetration in larger towns and metros
and
also as it begins to spread to smaller cities and B class towns. Fuelling this
growth is the growth in development of the retail-specific properties and
malls. According to the estimates available with Fitch, close to 25mn sq. ft.
of retail space is being developed and will be available for occupation over
the next 36-48 months. Fitch expects organized retail to capture 15%-20%
market share by 2010. A McKinsey report on India says organised retailing
would increase the efficiency andproductivity of entire gamut of economic
activities, and would help in achieving higher GDP growth. At 6%, the share
of employment of retail in India is low, even when compared to Brazil
(14%), and Poland (12%).
Different Forms of Retailing : Emergence of new formats of retailing in
India

Popular Formats

• Hyper marts

• Large supermarkets, typically (3,500 - 5,000 sq. ft)

• Mini supermarkets, typically (1,000 - 2,000 sq. ft)

• Convenience store, typically (7,50 - 1,000 sq. ft)

• Discount/shopping list grocer

• Traditional retailers trying to reinvent by introducing self-service formats

as well as value-added services such as credit, free home delivery etc.

The Indian retail sector can be broadly classified into:

a) FOOD RETAILERS
There are large number and variety of retailers in the food-retailing sector.
Traditional types of retailers, who operate small single-outlet businesses
mainly using family labour, dominate this sector .In comparison, super
markets account for a small proportion of food sales in India. However the
growth rate of super market sales has being significant in recent years
because greater numbers of higherincome Indians prefer to shop at super
markets due to higher standards of hygiene and attractive ambience.

b) HEALTH & BEAUTY PRODUCTS

With growth in income levels, Indians have started spending more on health
and beauty products .Here also small, single-outlet retailers dominate the
market .However in recent years, a few retail chains specializing in these
products have come into the market. Although these retail chains account for
only a small share of the total market , their business is expected to grow
significantly in the future due to the growing quality consciousness of
buyers for these products .

c) CLOTHING & FOOTWEAR

Numerous clothing and footwear shops in shopping centers and markets

operate all over India. Traditional outlets stock a limited range of cheap and
popular items; incontrast, modern clothing and footwear stores have modern
products and attractive displays to lure customers. However, with rapid
urbanization, and changing patterns of consumer tastes and preferences, it is
unlikely that the traditional outlets will survive the test of time.

d) HOME FURNITURE & HOUSEHOLD GOODS

Small retailers again dominate this sector. Despite the large size of this
market, very few large and modern retailers have established specialized
stores for these products. However there is considerable potential for the
entry or expansion of specialized retail chains in the country.

e) DURABLE GOODS

The Indian durable goods sector has seen the entry of a large number of
foreign companies during the post liberalization period. A greater variety of
consumer electronic items and household appliances became available to the
Indian customer. Intense competition among companies to sell their brands
provided a strong impetus to the growth for retailers doing business in this
sector.

f) LEISURE & PERSONAL GOODS

Increasing household incomes due to better economic opportunities have

encouraged consumer expenditure on leisure and personal goods in the
country. There are specialized retailers for each category of products (books,
music products, etc.) in this sector. Another prominent feature of this sector
is popularity of franchising agreements between established manufacturers
and retailers.

Malls in India

Over the last 2-3 years, the Indian consumer market has seen a significant
growth in the number of modern-day shopping centers, popularly known as
‘malls’. There is an increased demand for quality retail space from a varied
segment of large-format retailers and brands, which include food and apparel
chains, consumer durables and multiplex operators. Shopping-centre
development has attracted real-estate developers and corporate houses across
cities in India. As a result, from just 3 malls in 2000, India is all set to have
over 220 malls by 2005. Today, the expected demand for quality retail space
in 2006 is estimated to be around 40 million square feet. While previously it
was the large, organized retailers –with their modern, up-market outlets, and
direct consumer interface- who had been a key factor driving the growth of
organized retail in the country, now it is the malls which are playing the role.

Factors such as availability of physical space, population densities, city

planning, and socio-economic parameters have driven the Indian market to
evolve, to a certain extent, its own definition of a ‘mall’. For example, while
a mall in USA is 400,000 to 1 million sq.ft. In size, an Indian version can be
anywhere between 80,000 sq.ft. And 500,000 sq.ft. By 2005, total mall
space in the 6 cities of Mumbai, Bangalore, Hyderabad, Chennai, Kolkata,
and National Capital Region (Delhi, Noida, Gurgaon) is expected to increase
to over 21.1 million sq. ft. Compared to other big cities, Kolkata and
Hyderabad are relatively new entrants in the mall segment, but are
witnessing quick growth. Smaller cities like Pune, Ahmedabad, Lucknow,
Ludhiana, Jaipur, Chandigarh and Indore, are also expected to see a
formidable growth in the growth of malls in the near future. But malls in
India need to have a clear positioning through the development of
differential product assortment and differential pricing, in order to compete
effectively in a growing mall market. Segmentation in malls, like up-market
malls, mid-market malls, etc. , proper planning, correct identification of
needs, quality products at lower prices, the right store mix, and the right
timing, would ensure the success of the ‘mall revolution’ in India.

Challenges of Retailing in India

Retailing as an industry in India has still a long way to go. To become a

truly flourishing industry, retailing needs to cross the following hurdles:

• Automatic approval is not allowed for foreign investment in retail.

• Regulations restricting real estate purchases, and cumbersome local

laws.
 • Taxation, which favors small retail businesses.

• Absence of developed supply chain and integrated IT management.

• Lack of trained work force.

• Low skill level for retailing management.

• Intrinsic complexity of retailing – rapid price changes, constant threat

of product

obsolescence and low margins.

The retailers in India have to learn both the art and science of retailing by
closely following how retailers in other parts of the world are organizing,
managing, and coping up with new challenges in an ever-changing
marketplace. Indian retailers must use innovative retail formats to enhance
shopping experience, and try to understand the regional variations in
consumer attitudes to retailing. Retail marketing efforts have to improve in
the country -advertising, promotions, and campaigns to attract customers;
building loyalty by identifying regular shoppers and offering benefits to
them; efficiently managing high-value customers; and monitoring customer
needs constantly, are some of the aspects which Indian retailers need to
focus upon on a more pro-active basis

Despite the presence of the basic ingredients required for growth of the
retail industry in India, it still faces substantial hurdles that will retard and
inhibit its growth in the future. One of the key impediments is the lack of
FDI status. This has largely limited capital investments in supply chain
infrastructure, which is a key for development and growth of food retailing
and has also constrained access to world-class retail practices. Multiplicity
and complexity of taxes, lack of proper infrastructure and relatively high
cost of real estate are the other impediments to the growth of retailing. While
the industry and the government are trying to remove many of these hurdles,
some of the roadblocks will remain and will continue to affect the smooth
growth of this industry. Fitch believes that while the market share of
organized retail will grow and become significant in the next decade, this
growth would, however, not be at the same rapid pace as in other emerging
markets. Organized retailing in India is gaining wider acceptance. The
development of the organized retail sector, during the last decade, has begun
to change the face of retailing, especially, in the major metros of the country.
Experiences in the developed and developing countries prove
thatperformance of organised retail is strongly linked to the performance of
the economy as a whole. This is mainly on account of the reach and
penetration of this business and its scientific approach in dealing with
customers and their needs. In spite of the positive prospects of this industry,
Indian retailing faces some major hurdles (see Table 1), which have stymied
its growth. Early signs of organized retail were visible even in the 1970s
when Nilgiris (food), Viveks (consumer durables) and Nallis (sarees) started
their operations. However, as a result of the roadblocks (mentioned in Table
1), the industry remained in a rudimentary stage. While these retailers gave
the necessary ambience to customers, little effort was made to introduce
world-class customer care practices and improve operating efficiencies.
Moreover, most of these modern developments were restricted to south
India, which is still regarded as a ‘Mecca of Indian Retail’.

Factors description implications

Barriers to � FDI not permitted in � Absence of global
FDI pure retailing players
� Franchisee � Limited exposure to
arrangement allowed best practices
Lack of � Government does � Restricted
Industry not recognize the availability of finance
Status industry � Restricts growth and
scaling up

Structural � Lack of urbanization � Lack of awareness of

Impediments � Poor transportation Indian consumers
infrastructure � Restricted retail
� Consumer habit of growth
buying fresh foods � Growth of small,
 Administered pricing one-store formats, with
unmatchable cost
structure
� Wastage of almost
20%-25% of farm
produce
High Cost of � Pro-tenant rent laws � Difficult to find
Real � Non-availability of good real estate in terms
Estate government land, of
zoning restrictions location and size
� Lack of clear � High land cost
ownership titles, high owing to constrained
stamp supply
� Disorganized nature
of transactions

Duty 10%
Supply Chain � Several segments � Limited product
Bottlenecks like food and apparel range
reserved for SSIs � Makes scaling up
� Distribution, difficult
logistics constraints – � High cost and
restrictions of purchase complexity of sourcing
 and movement of food & planning
grains, absence of cold � Lack of value
chain infrastructure addition and increase in
� Long intermediation costs by
chain almost 15%
Complex � Differential sales tax � Added cost and
Taxation rates across states complexity of
System � Multi-point octroi distribution
� Sales tax avoidance � Cost advantage for
by smaller stores smaller stores through
tax
evasion
Multiple � Stringent labor laws � Limits flexibility in
Legislations governing hours of operations
work, minimum wage � Irritant value in
payments establishing chain
� Multiple operations;
licenses/clearances adds to overall costs
required
Availability of � Highly educated � Lack of trained
Talent class does not consider personnel
retailing a profession of � Higher trial and error
choice in managing retail
� Lack of proper operations
training � Increase in personnel
costs
Manufacturers � No increase in � Manufacturers refuse
Backlash margins to dis-intermediate and
pass on intermediary
margins to retailers
Customer � Local consumption � Leads to product
Preferences habits proliferation
� Need for variety � Need to stock larger
� Cultural issues number of SKUs at
store
level
� Increases complexity
in sourcing & planning
� Increases the cost of
 store management

Retail as an Employment Generator

The retail sector can generate huge employment opportunities, and can lead
to job-led economic growth. In most major economies, ‘services’ form the
largest sector for creating employment. US alone have over 12% of its
employable workforce engaged in the retail sector. The retail sector in India
employs nearly 21 million people, accounting for roughly 6.7% of the total
employment. However, employment in organized retailing is still very low,
because of the small share of organized retail business in the total Indian
retail trade. The share of organized retailing in India, at around 2%, is
abysmally low, compared to 80% in the USA, 40% in Thailand, or 20% in
China, thus leaving the huge market potential largely untapped. A modern
retail/retail services sector has the potential of creating over 2 million new
(direct) jobs within the next 6 years in the country (assuming only 8-10%
share of organized retailing), according to Arvind Singhal, CMD, KSA
Technopak. Retail can create as many new jobs as the BPO/ITeS sector in
India. A strong retail front-end can also provide the necessary fillip to
agriculture & food processing, handicrafts, and small & medium
manufacturing enterprises, creating millions of new jobs indirectly. Through
its strong linkages with sectors like tourism and hospitality, retail has the
potential of creating jobs in these sectors also. Though the Planning
Commission has identified retail as a prospective employment generator, in
order to strengthen the multiplier effect of the growth in organized retailing
upon the overall employment situation, a pro-active governmental support
mechanism needs to evolve for nurturing the sector. Issues like FDI in retail,
allocation of government-controlled land on more favorable terms, strong
political and bureaucratic leadership, etc., need to be addressed adequately.

Retail Sector in the East: Current Scenario, Growth Prospects and

Upcoming Projects
The retail sector in Eastern India is largely Kolkata-centric. The city of
Kolkata has come a long way in terms of retail maturity with a proliferation
of brands and organized retail chains. Shopping trends in the city have
witnessed a radical shift over the recent years; from the conventional trader
run stand alone shops to more organized & large retail formats. Evidently,
the future of retailing in the city lies in new-age shopping malls, which
provide variety, value and convenience in a more comfortable environment.
This is also evident by a surge in the consumer spending on branded goods
in the recent times; for example the city's Music World outlet has recorded
the highest earnings per square feet amongst all its outlets in the country.
The city has also welcomed the other retail chains such as Pantaloons,
Westside and Shopper’s Stop. Though Kolkata has been a bit late in
catching up with the retail revolution in the country, the city has great
potential to become a retail hub in the near future. Going by the 1991
census, the city qualifies as the second largest metro market in India; nearly
one out of every six shops located in the countries top 25 cities, can be
traced to Kolkata. To market strategist, Kolkata undoubtedly is an ideal
location for the growth of the retail industry. Besides being the principal
retail-and-services market to a vast hinterland comprising of the eastern and
northeastern states of the country, the city also serves as a center of trade and
commerce for the region. Its proximity to Bangladesh, a country of 13 crore
consumers, and to the South-East Asian markets, is another factor for which
the city is fast emerging as a vibrant business center. The Kolkata Port and
the Haldia Port are also instrumental in acting as gateways to landlocked
countries like Nepal and Bhutan. The disposable incomes of Kolkatans have
also been on the rise – according to a report by the National Council of
Applied Economic Research (NCAER), about 62% of the households in
Kolkata had annual incomes of up to Rs.18, 000 in 1985-86; while just a
decade later, the figure had touched Rs.25, 000-77,000 for some 61% of the
households. The city truly represents an amalgamation of the advantages of
a metro city, and the comparatively modest living costs of a non-metro town.
Lately, Kolkata has emerged as a strong prospective destination in the
expansion plans of retailers and is now perceived as a latent but highly
potential market. Prominent retail chains like Music World, Westside,
Dominos, Pizza Hut, Shopper’s Stop, Wills Sport, Barista, and Pantaloons
have already established their presence in the market. Apart from these new-
age, large retail chains which have started operating successfully in the city,
there are a large number of traditional, specialized markets like the
Bowbazar market, Bagri market, China bazaar, Lake market, Burrabazar
market, Chandni market, etc., and high-street markets at Park Street,
Esplanade area, Camac Street, Shakespeare Sarani, Gariahat, which offer a
wide variety of items like stationary items, dairy products, electronic goods
and appliances, glassware, crockery, wooden furniture, jewellery, musical
instruments, fruits, flowers, vegetables, fish, flesh meat, textiles, spices, dry
fruits, sugar, salt, groceries, paints, hardware items, etc. Besides these
markets, there is mall-format, non-branded shopping complexes/malls like
the A/C Market, Vardaan Market, New Market, and the Shreeram Arcade,
which offer a wide variety of items, from garments, watches, and footwear,
to consumer durables like household electronic gadgets.
The local retail chains which have become household names in Bengal
include‘Arambagh Hatcheries Ltd.’, Khadim’s, and Sree Leathers.

Operational since 1998, Arambagh Hatcheries Ltd. is today one of the

foremost companies in the marketing of poultry products Encouraged by the
success of its “chicken” brand, and the realization that there was a void in
the Kolkata market for quality food stuff sold under a single roof, the
company took the initiative in starting “convenience stores” named
“Arambagh’s Food Mart” in 2000. An aggressive expansion strategy has
seen the company’s physical strength grow to 14 outlets in Kolkata, with
another 5-6 outlets being in the pipeline. Each of these stores are between
500 & 800 sq. ft. in dimension, and packed with at least 4000-4500 food and
other FMCG items. Good quality, the right quantity, use of correct weights,
and a low MRP are the main factors which have contributed to an impressive
growth of this chain. Arambagh has tie ups with Nicco Park, wality Walls,
Kellogs India and Frito Lays, among others. These tie ups help the chain in
product and services promotion.

Both Khadim’s and Sree Leathers are local footwear companies which
have been tremendously successful, and have now reached out to
international markets. Khadim’s has exclusive showrooms not only in West
Bengal, but also in states like Bihar, Jharkhand, Tripura, Orissa, Madhya
Pradesh, Andhra Pradesh, Karnataka, Gujarat, and Tamil Nadu. The
company offers products like Premium shoes, Gents’ shoes, Ladies’ shoes,
Kids’ shoes, and Leather Accessories. Khadim’s has become the destination
for people from all walks of life, with a great range of footwear to choose
from. The motto of the company is to provide good quality fashionable
shoes at affordable prices.

Sree Leathers entered the Kolkata market in 1987 with its first outlet in the
city at Lindsay Street, which became hugely successful. The company’s
second mega outlet at Free School Street, which has a floor area of more
than 7500 sq. ft., provides a great shopping experience to its customers.
Today the company has a number of outlets scattered over West Bengal,
Orissa and Bihar, and has ventured into the international markets of the
Middle East, Singapore, Maldives, USA, Denmark, Greece, Germany,
Netherlands and Austria. Sree Leathers has started a new R&D section under
the guidance of Italian and German experts, to enhance the comfort level of
its products, and has plans of setting up a modern footwear factory at Kasba
Industrial area in Kolkata. The two prominent fun-entertainment/amusement
parks in Kolkata which have gained immense popularity among the masses,
particularly children, are Nicco Park, and Aquatica.

Situated in Salt Lake, and spread over an area of 40 acres, Nicco Park,
promoted by the Nicco Group, can be termed as the ‘Disneyland of West
Bengal’, with a variety of unusual and exciting games and rides like the Toy
Train, Cable Car, Tilt-a-Whirl, Water Chute, Water Coaster, Flying Saucer,
Pirate Ship, and Moonraker. The Cave Ride is the latest addition, and is
perhaps the only of its kind in this part of the world.

Aquatica, an 8-acre water park, is situated at Rajarhat in Kolkata, which

came up in 2000.This Theme Park offers visitors a cool respite from the heat
and grime of city life. The park, which can accommodate around 5000
people, has an artificial river meandering through it. Visitors can swim and
wade in the river water, which is recycled every hour or maintaining the
cleanliness. Aquatica has breathtaking rides such as the Black Hole, ornado
and Wave Pool. The Aqua Dance Floor, where visitors can sway to non-stop
music, has water spraying nozzles on the roof which fill the surrounding air
with water. Aquatica also hosts big events and programmers like fashion
shows which are great crowd-pullers. The medium and large-format,
branded and non-branded shopping complexes/malls which have come up in
Kolkata, and are operating successfully, are:

• Forum: It is a two lakh square feet mall, situated on Elgin Road , in South
Kolkata with Shopper’s Stop as anchor .This shopping mall established by
Sunsam properties within the Saraf Group was opened to the public in
March 2003 , with the launch of Shopper’s Stop. Along with the retail
brands having their outlets, the Forum also houses, a 300 capacity food court
and a 4-auditorium multiplex called INOX. The multiplex, INOX has been
the first of its kind in the city, having a sitting capacity for over 1000
viewers, and situated over 30000 square feet. Hence it can be really a great
experience of shopping and movie-going for the Kolkatans, who do not want
to compromise on the quality aspect. The retail outlets at Forum have
witnessed almost 30-35 % increase in sales after the opening up of the
multiplex in 2003. Most retailers are extremely happy with the growth rate
and expect their sales to increase further in the coming month’s .At INOX,
ticket sales have been averaging at almost 90% of the theatre capacity – the
highest box office sales amongst all the multiplexes in the country. Forum
has truly changed the experience of Kolkatans with regard to shopping and
entertainment in the city.

• 22 Camac Street: This large format-shopping complex is located on

Camac Street .The retail brands like Pantaloons ,Westside , Pizza Hut ,
Planet M, Grain of Salt and Add Life , have already set up their outlets in the
complex. It has 4 distinct blocks with a common atrium. The most
advantageous aspect here is its huge parking space in the basement. It also
houses smaller multi-branded outlets. The footfalls stay steady throughout
the week and gets to an uncontrollable high over the weekend .Some of the
outlets rank among the leading individual retail outlets of the country. The
total floor area of the complex is 380,000 square feet, and has 4 restaurants
and 3 banquet halls.

• Metro Plaza: Situated on Ho Chi Minh Sarani , this is basically a large

scale retail cum office development area . The lower three floors with an
area of 50,000-60,000 square feet is meant for retail business. Along with
the retail units there is also a space for Bowling which is frequented by
younger people.

• Emami No. 1: This mall is located on Lord Sinha Road . Its close
proximity to the Chowringhee-Park Street belt helps it to cater to a large
section of quality conscious consumers. The usual facilities of power
backup, vertical transportation and parking are available over here. The
biggest is advantage that it faces is its car parking area, which has a meager
capacity of just 70 cars at a time. The biggest attraction here is its
“Landmark bookstore“on the third floor, which has a wide range of books,
music and stationary items.

• City Centre: The recently inaugurated ‘City Centre’ project adds another
feather to the already vibrant retail business in the city. The project,
promoted by industrialist Harshvardhan Neotia, and located at Salt Lake, has
been designed by one of India’s best known architects, Charles Correa. ‘City
Centre’ is a dynamic mix of shopping mall, Cineplex (INOX), entertainment
area, food court, offices, and residences- nestling amidst open spaces, lush
greens, and the contours of an ideal cityscape. Big brands like Shopper’s
Stop and Adidas have set up their shops in the complex. There are several
aspects to ‘City Centre’; with no boundaries to separate it from the street, it
is open to everyone- all income and age groups. The Complex has a parking
space for as many as 800 cars, 14 entry and exit points, and large spaces to
amble around. The ‘City Centre’, which is the single-largest architectural
endeavor in Kolkata in recent times, has truly changed the way the city
looks, and complements the city’s artistic heritage. The location of the
project makes Salt Lake the epicenter of not just its immediate population
(nearly half a million), but also of the upcoming, adjoining township of
Rajarhat (with an expected population of about 750,000).

• Enclave: Spread over 36,000 sq. ft., the Enclave, has come up at up-
market Alipore, and has five shopping levels, and an open-to-sky atrium.
The complex, promoted by the Calcutta Metropolitan Group, has fine
restaurants including Food Bar, Red Bar, Cookie Bar, coffee shops, a
children’s’ entertainment zone named ‘Kool Kids’, among other facilities.
Another prominent supermarket which offers a wide range of products, and
provides customers with a great shopping experience, is C3- The market
Place. The shop commands over 6100 sq.ft. in the heart of Kolkata, at Lee
Residency, 26, Lee Road. The approximately 25,000-strong product menu
includes a wide range of products like fresh fruits and vegetables, rare herbs,
groceries, ready-to-eat food, personal-care items, confectionaries,
chocolates, home-care products, newspapers, magazines, and so on.

Though the retail business mainly revolves around Kolkata, towns like
Durgapur, Siliguri and Haldia also have the potential of becoming busy
retail addresses. Already, the Durgapur City Centre project, promoted by
Bengal Shristi Infrastructure development Ltd., has come up in Durgapur, in
Burdwan district. The project, which was inaugurated on the 10th of August,
2003, is a modern, multi-facility, multi-utility, urban plaza, spread over a
sprawling 370,000 sq.ft. It is a confluence of shopping, commerce,
entertainment, education, recreation, health, hospitality, medical amenities,
and premium residential accommodation. Lush green open spaces, an
integrated entertainment multiplex, and various other urban amenities,
provide a fascinating experience. Durgapur is well-connected by both rail
and road, and the project location is easily accessible from the bordering
towns of Asansol, Ranigunj, Santiniketan, and Burnpur.

A number of prominent projects in the retail sector are coming up in

Kolkata. Some of these are:

• South City: The upcoming, 31-acre South City project promises of a

lifestyle of international standards. The project will have four 35-storey
residential towers, a sprawling club, a shopping mall with entertainment
zones, and a multiplex. Modern technology will ensure earthquake
resistance, high-speed elevators, adequate firefighting and protection
systems, internal security and traffic management, and all conceivable civic
comforts. The in-complex South City Academy, spread over 3.5 acres, will
be equipped with a learning resource center, gym, cafeteria, an auditorium
for extracurricular activities like debates, dramatics, and sports, and a soccer
field. The South
City Club will have an air-conditioned sports center, guest rooms, banquet
facilities, swimming pools, a dining restaurant, a pub lounge, a business
center, and a health club, among other things. The mega complex will also
have India’s largest shopping mall- the Junction, spread across an area of
700,000 sq.ft., which will have large anchor stores, a multiplex, a food court,
a six-screen Cineplex, an entertainment zone, and parking space for nearly
800 cars. The team behind this big venture comprises a host of experienced
architects and developers. Among them are : Dulal Mukherjee & Associates
(the principal architects); Smallwood Reynolds Stewart Stewart &
Associates Inc., the Atlanta-based international design consultants; Peridian
Asia PTE Ltd., Singapore-based landscape architects; Meinhardt (Singapore)
PTE Ltd., structural consultants; and MN Consultant, structural engineers.

• Mani Square: Mani Square, a proposed project on a 4-acre plot next to

Apollo Gleneagles Hospital on E.M.Bypass, will have a 500,000 sq ft.
space, which will include a technology park, a 6-screen multiplex , a food
court , business club , a multilevel 1000-car parking area , a 40,000 sq ft.
hyper mart ( “Giant” ), as well as other direct retail stores .Designed and
engineered by SAA Architects of Singapore and Meinhardt of Australia ,
and promoted by the Mani Group, Mani Square will be the single stop
solution to all requirements of modern-day professionals and customers .
The project will have ready-to-use centrally air-conditioned offices with
100% power back-up ,lease lines and round-the-clock support services ,
which will be extremely attractive for IT and ITeS companies .Retail giants
like Lifestyle , Westside , Shoppers’ Stop and Cineplex majors like Shringar
and PVR have already shown interest to set up units in the complex .

• Fort Knox: Fort Knox, a mega jewellery mall, owned and promoted by the
Fort Group, is scheduled for a September, 2004 inauguration. The project, a
9-storied complex, on an area of approximately 80,000 sq.ft. will have an
estimated 37 showrooms, 40 offices, backed by 4 lifts, 8 escalators. The Fort
Group is confident about eliciting a positive consumer response, and
providing the customer with a comfortable, secure, and refreshing shopping
experience, by creating access to the best products, from the
best jewelers, at the best prices. The project, which is coming up at Camac
treet, will have a formidable line-up of security measures including alarm
system with instant links to the police headquarters and fire services, 24-
hour armed security guards, etc.

• Gariahat Mall: Gariahat Mall, which is coming up at an area between the

Gariahat crossing, and the Rashbehari- EM Bypass Connector, will
approximately be of 80,000 sq.ft., and will be accessible from every point in
the southern belt of the city. The 5-floor structure will boast of world-class
facilities and ambience, an expansive atrium, high ceilings, capsule lifts, and
multi-level access up to the top floor. The scientific fusion of lofty ceilings,
flat slabs, and a central atrium illuminated by natural light, is intended to
evoke a sense of space, height, and depth. While an entire block has been
earmarked for the anchor shop, the 3rd and the 4th floors are entirely
reserved for jewellery outlets, and the 5th floor will house restaurants and
eating places. Toplight Commercials Ltd. (TCL), one of the prominent real-
estate developers in Kolkata, and the promoter of the mall, expects to
complete the project by December, 2004.

• Metropolis: The 1,41,000 sq.ft. ‘Metropolis’ will be one of Kolkata’s

newest retail-cumentertainment\ addresses. The complex will have a 4-
screen, 1000-seater Cineplex, a 6- outlet food court, a sports bar, a
restaurant, and a 350-capacity car park. Being developed by the Calcutta
Metropolitan Group (CMG), the ‘Metropolis’ is designed by the reputed
architectural firm, Peddle Thorp International of Hong Kong, and will come
up at an area adjacent to CMG’s prestigious existing residential complex,
‘Hiland Park’, which has about 900 apartments and 35 penthouses.
‘Metropolis’ will have the HyattRegency, ITC Sonar Bangla, Peerless
Hospital, and Udayan Condoville among its distinguished neighbors.

• Pam Shopping Centre: The marvellous Pam Shopping Centre, promoted

ointly by Pam Developers, and the Kolkata Municipal Corporation, is
scheduled for an end- August (2004) inauguration. This 60,000 sq. ft. eye-
catcher at Rashbehari Avenue, will boast of a unique reflective glass curtain,
and an artistically landscaped entrance ramp, besides having five levels of
shopping. The Complex will have shops selling a wide range of products
including garments, and jewellery.

• Homeland: Homeland, a 1,00,000 sq. ft. exclusive shopping mall,

promoted by the Merlin Group, is coming up in the heart of Central Kolkata,
close to Chowringhee and Elgin Road crossing. The five-storied, centrally
air-conditioned shopping center will have stylish spaces ranging from 300
sq. ft. to 2000 sq. ft., and spacious exhibition and product launch area. The
mall will also have ATM centers at convenient points, internationally styled
café and food stops, 24-hour power backup facility, and adequate car
parking facilities.

• Silver Springs: ‘Silver Springs’, a prestigious joint venture project

between Bengal Silver Springs Projects Ltd. and the Kolkata Municipal
Corporation, is due for a December, 2005 completion. Shapoorji Pallonji has
done the piling of ‘Silver Springs’, and renowned architect J.P.Agarwal has
designed the project. The project will have around 500 residential flats, 10
high-rises of 18 and 14 stories, a magnificent shopping mall named ‘Silver
Arcade’, of 70,000 sq.ft. area, and a ‘Spring Club’ of an area of 70,000 sq.ft.
The vendors at the shopping mall include Mainland China and a Hyundai
dealer- showroom. ‘Silver Arcade’ will be a G+3 mall, with the 3rd floor
being taken up by Mainland China for 3 specialty restaurants; while the 2nd
floor will have a Food Court with 17 multi-cuisine food counters. The mall
will be backed by a large parking space for 150 cars. ‘Silver Springs’ will
boast of a modern, up-market residential complex, the shopping mall, ‘Silver
Arcade’, a Montessori School, an AC Community Hall, among other new-
age facilities.
Bhubaneshwar is another city, which has the potential of becoming a retail
hotspot in the East. The city is fast developing into a bustling center for
economic activity, with software giants like Infosys and Satyam have
already set up their offices. This is giving rise to a new breed of consumers
with high disposable incomes; thereby creating lifestyle and aspiration levels
at par with other fast-moving metropolitan cities. Bhubaneshwar represents
two faces of retailing - one, a traditional store evolving with time, and
another, a recently inaugurated mall from a group that is credited with
having revolutionized the retail scenario in Kolkata.

• Satyam Shivam Sundaram: This 25 year old multi-brand department

store is famous for its offerings in textiles and ready-to-wear garments. The
uniqueness of the store lies in its ability to inculcate the latest retail concepts
in terms of selection and display of merchandise in-store ambience, and
other attractive features. This 8,000 sq ft. store, which is being upgraded to a
16,000 sq ft. one, spends a good amount of money annually on brand-
promotion exercises. At the store, half of the retail space is devoted to
menswear , 25 % to women’s’ wear , 15% to children’s wear , and the rest
10% to teenagers . About Rs. 25 lakh in systems, while the standing stock of
merchandise is worth about Rs. 5 crore.

• Forum Mall: Bhubaneshwar’s Forum mall, launched on 29th of

March,2004, is expected to bring in a turning point in the city’s retailing and
retail real-estate development. Located at Kharvel Nagar, Unit III, in the
Central Business District, the mall is the brainchild of Rahul Saraf, the man
who masterminded the success of Forum at Kolkata. The 4-level Forum mall
has a total area of 170,000 sq.ft., with 115,000 sq.ft. devoted to the retail and
F&B. The ground, first, and second floors, is dedicated to pure retailing,
while the food court and entertainment zones are located on the third floor.
The top floor is reserved for IT and related business and trade. The
prominent brands that have taken space in the mall include Big Bazar
(anchor), Pizza Hut, Moustache, Dukes, Sree Leathers, Baskin Robins,
Planet M, among others. The upcoming brands include Benetton,
Blackberry’s, Chandrani Pearls, Bata, and Siyaram’s. The mall has received
a great response; the average footfalls being 7000 per day, with expectations
of an increase to 8000. Forum has not only become a shopping destination
for the people of Bhubaneshwar, but also for people from surrounding areas
like Cuttack and other towns in the state.
The retail revolution is slowly making changes in lifestyle in smaller towns
also. This is evident from the fact that even a small town like Bhagalpur in
Bihar, today has its own shopping mall. The already operational shopping
center, named “Sriyash Aap Ka Apna Bazar”, located at Jiwan Sagar
Towers, D.N. Singh Road, has been promoted by the Kishorepuria Group of
Companies. The 2 floor- Rs.1.10 crore project has about 11,000 sq.ft. of
total retail space, and offers a wide range of products like garments,
appliances, furniture, cosmetics, electronic items, among others. The mall,
which has a parking space for 10 cars, and 50 motorbikes, has received great
response- the average footfalls being 900-950. There are plans to further
improve infrastructural facilities in the complex; a well equipped food court
is coming up, with Hindustan Lever Ltd. (HLL) as one of the possible
partners. The East is fast emerging as a formidable retail market. The spread
of retailing beyond Kolkata would create an integrated ‘retail zone’ which
would change the way people in this part of India work and live.

Retail Education in the East

The retail sector, which is poised for robust future growth, needs more and
more professionally qualified personnel, with specialized knowledge in
retailing. It is thus necessary to have more and more business schools in the
country, which offer specialized courses in retailing.
The need for providing quality retail management education has been
recognized by the
ICFAI Business School in Kolkata, which offers a comprehensive retail
management programme that enables the students to critically analyze the
retailing process, the environment within which it operates, and the
institutions and functions that are performed. The course aims to make
students aware of the differences between retail marketing strategy and
financial strategy, and provides knowledge of merchandise management. he
programme inculcates analytical skills useful for retail decision-making, and
provides a foundation for those students who plan to make career in the field
of retailing or related disciplines. The course covers critical topics like
understanding the retail customer, and institutions; retail marketing
strategies; retail organization & management; pricing strategies; retail
selling; logistics & information systems, etc.

Recently, the International School of Business & Media has, in its newly
inaugurated campus at Salt Lake, Kolkata, started offering a 2-year full-time
Post Graduate Programme in Management, with retail management as on of
the specializations. The course covers essential topics like retail organization
& management; introduction to risk management; retail location analysis;
branding the retail organization; retail marketing & sales strategy, etc. This
course has been launched looking at the tremendous growth potential of the
retail sector in the coming years, and aims to gear up students to the rapidly
changing business environment. Quality retail education is necessary to
create a vast pool of qualified retail management professionals who can
tackle the challenges of this intensely competitive industry. To cater
to the increasing demand for technically efficient workforce in the retail
sector, more and more management institutions in the country should design
and introduce innovative retail management programmes.

Factors needed to promote the Sector in West Bengal

A number of important issues need to be addressed suitably to foster the
further growth, and ensure competitiveness of the retail sector in West
Bengal/Kolkata. These can be summarized as follows :

• The principal issue with the development of retail in Kolkata is the acquisition of
appropriate spaces for retail, and the cost thereof in the city. One of the main components
of the cost of such spaces is the incidence of tax in terms of Kolkata Municipal
Corporation Act, 1980. The KMC Act stipulates that an amount of 40% of the annual
value as determined u/s 174 of the Act will be the amount of tax, in addition to which the
premises that are used for non-residential purposes (which includes all retail and
commercial establishments), there will be an additional levy of surcharge of 0% of the
above tax. This effectively translates into a tax of 60% on the annual value (being the
gross annual rental reduced by 10% for maintenance) of a property, which is an
extremely high tax threshold. Formatted retail, which is a developing industry, cannot
afford such high rates of tax which it must effectively bear to transparently acquire
property for the conduct of its business in Kolkata. These rates are amongst the highest in
the world, and discourage the growth of the retail business. The municipal tax in Kolkata
is so high, that the total expense on commercial, rental premises becomes much more
expensive than in other fast growing cities like Bangalore, Hyderabad, Chennai, etc.

Conclusion
In India the retail sector is the second largest employer after agriculture,
although it is highly fragmented and predominantly consists of small
independent, owner – managed shops .There are over 12 million retail
outlets in India , and organized retail trade is worth about Rs.12,90,000 crore
(September,2003). The country is witnessing a period of boom in retail
trade, mainly on account of a gradual increase in the disposable incomes of
the
middle and upper-middle class households. More and more corporate houses
including large real estate companies are coming into the retail business,
directly or indirectly, in the form of mall and shopping center builders and
managers. New formats like super markets and large discount and
department stores have started influencing the traditional looks of
bookstores, furnishing stores and chemist shops. The retail revolution, apart
from ringing in sweeping, positive changes in the quality of life in the
metros and bigger owns, is also bringing in slow changes in lifestyle in the
smaller towns of India. Increase in literacy, exposure to media, greater
availability and penetration of a variety of consumer goods into the interiors
of the country, have all resulted in narrowing down the spending differences
between the consumers of larger metros and those of smaller towns.
However, the supply of quality real estate space would be instrumental in
propelling the future growth momentum of the retail sector in India. The
addition of better and affordable retail space would enable retailers to deliver
more better-quality products and services to the consumers, resulting in
increase in operational efficiencies and decline in costs for the\ supply chain.
India is one of the complex real estate markets in the world due to the large
degree of variation and inconsistence in the market practice and regulatory
norms. A combined effort by both central and state governments in terms of
appropriate zoning laws, transparency in ownership, and availability of loans
for retail land, is very much necessary for reducing existing bottlenecks.
Accordance of ‘industry status’ to retail in India is an issue that needs to be
addressed soon. Recognition would ease financing prospects, as well as
standardize and unify taxes for the industry. An alignment of the retail sector
with the tourism sector could also promote India as a global shopping hub.
For the retail sector to achieve further growth, the spread of organized
retailing has to become a national phenomenon. According to KSA
Technopak, a leading consulting firm, the organized sector will grow to
almost Rs.30, 000 crores by 2005, representing 6% of the total retail market.
The top 6 cities will account for 66% of total organized retailing. Although
many international retailers and brands still regard India as too difficult, they
would welcome the opportunity to create an appropriate joint venture, if they
felt India was changing. The growth of the organized retail industry in the
country will mean thousands of new jobs, increasing income levels and
living standards, better products, and services, a better shopping experience,
and more social activities.
==============================o

Impact of Malls on Small Shops and Hawkers

A small sample survey of the impact of malls on small shops and hawkers in Mumbai
points to a decline in sales of groceries, fruits and vegetables, processed foods, garments,
shoes, electronic and electrical goods in these retail outlets, ultimately threatening
50 per cent of them with closure or a major decline in business. Only 14 per cent of the
sample of small shops and hawkers has so far been able to respond to the competitive
threat of the malls with the institution of fresh sales promotion initiatives.

Organized corporate retailing is poised to become the business of the decade in India.
Retailing presently contributes about 10 per cent of India’s gross domestic product (GDP)
and 6-7 per cent of employment. With some 15 million retail outlets, India has the
highest retail density in the world. But only 4 per cent of these outlets are more than 500
sq ft in size and almost all are family owned shops and establishments [Mukherjee and
Patel 2005]. The value of organized retail is expected to grow 2.8
times in the coming four years to a Rs 1,000 billion industry, attracting many global
retail chains like Wal-Mart, Tesco, and Carrefour [Outlook, October 16, 2006].
Foreign direct investment (FDI) up to 51 per cent in single brand retail was permitted
last year and multi-brand retail is expected to open up to FDI soon.
Meanwhile, Indian retail chains like Reliance Retail, Croma, and Aditya Birla group,
S Kumars, Shoppers’ Stop, Westside, Subhiksha, and Trinethra have all been
consolidating their realty, brands, market shares and locations. Retail giants, the
largest being Wal-Mart-Bharti, Reliance, AV Birla group and Future group (Pantaloon),
plan to expand the share of organized retail from the current 3 per cent
to approximately 15-20 per cent in four years by investing more than $ 25 billion
(excluding real estate investment). Of the proposed investment, 60-65 per cent will
go towards setting up the supply chain for food and groceries [CII – A T Kearney
2006]. What is particularly disquieting is the pace at which corporate retail chains
are entering and expanding in the retail market, with analysts quoted as saying that India
is attempting to do in 10 years what took 25-30 years in other major global markets.
However, to-date there is very little understanding of what the impact of corporate retail
will be on the so-called unorganized retail sector and the agricultural sector (the country’s
two largest sources of employment). This preliminary study is aimed at investigating the
impact of malls on small shops and hawkers.
Methodology
We have a randomly chosen sample of 82 small retail shops and establishments
(Defined in terms of size, inventory and employment) and 30 hawkers within about
One-kilometre radius of a mall in Greater Mumbai. Thirty of these small retail shops
Were in Lower Parel in the vicinity of a mall, 10 were near a new mall in Mumbai
Central and the remaining 42 were located in the vicinity of two malls in the Bhandup-
Mulund area. The hawkers were scattered over these areas, 16 in Lower Parel, 11 in
Bhandup-Mulund and the remaining in Mumbai Central. In all, 112 responses
Were obtained. The retail outlets, including those that processed and sold food, were
all run by owners or caretakers. Such retail outlets are referred to as “unorganised”
retailers. A mall typically has a large real estate infrastructure spread over many thousand
sq ft where a number of specialty retail chains and a supermarket coexist. Four
malls, one each in Lower Parel and Bombay Central, and two in Mulund were chosen
on the basis of the time they have been in operation. It is assumed that the older
The mall, the more discernible and long-lasting is the impact on nearby small shops and
hawkers. The Phoenix Mall in Lower Parel is at least four years old, the Mulund malls
are less than three years old but more than one year old, and the Bombay Central one was
3/4 months old at the time of our survey. Shops in both Mulund and Bhandup
Within a one-kilometre radius had been surveyed in assessing the impact of the two malls
in Mulund. A questionnaire was administered to the shop owners or operators in the
absence of the owners. The first part sought basic information on floor size, value of
inventory and employment, both family and non-family. The second part of the
questionnaire sought data on the impact on sales, profits, employment, working hours and
high value customers lost, if any. This part of the questionnaire sought information from
the respondents with reference to the period after the mall started operations in their area.
The third part asked the respondents to attribute causes for the decline in sales, if any.
The factors causing competitive disadvantage were listed – cost prices, operating costs,
taxes, selling price, and any others. The respondents were also asked to rank the intensity
of the threat they faced and whether their children would continue operating the shop.
Finally, a special section for hawkers asked them if bribe payments, eviction drives and
harassment by agents of malls had increased.
Table 1: Distribution of Sample
Shops/Hawkers by Floor Space

Sq Ft Number Per Cent of Total

Hawkers 30 28
≤ 100 sq ft 14 13
100-200 25 22
200-300 22 20
300-400 10 9
500-600 6 5
More 4 4
Total 112 100

Table 2: Distribution of Sample

Shops/Hawkers by Value of Inventory
Rs Lakh Number of Per Cent
Shops/Hawkers of Total
<1 7 6
1-5 44 39
5-10 41 37
10-20 16 14
20-50 3 3
More than 50 1 1
Total 112 100

Table 3: Pattern of Employment in

Sample Shops/Hawkers’ Stalls
Number Per Cent of
Shops/Hawkers of Total
Stalls
Self-employed family 67 60
members only

Family members and 45 40

employees

Total 112 100

Survey Results
The survey results are presented in Tables 1 to 13. If we exclude the hawkers who have
no shop floor area, then 52 per cent of the sample represents shops and establishments
less than 300 sq ft in size (Table 1). The most frequent shops in the sample are shops less
than 200 sq ft (Table 1). 82 per cent of the shops had an inventory of less than Rs 10 lakh
(Table 2). 60 per cent had no employees other than family members (Table 3). The
average employment per shop was 3.5 persons; the most frequent type of shop had two
family members manning operations. So the sample was largely composed of the family-
owned small shop. 71 per cent of the respondents reported falling sales (Table 5). In only
18 per cent of the shops/hawkers were the sales unaffected by the large retail chain malls.
Only 11 per cent reported an increase in sales (Table 5). These were shops offering
products and services not available in the malls, e g, stationery, photocopying facilities,
courier services, mobile phone and computer accessories. Some eateries close to the
malls reported an increase in sales due to patronage of the mall employees. Most
frequently shops reported a 20 per cent fall in sales (Table 6) but the intensity
varied by type of product. 64 per cent reported a loss of high value customers (Table 7).
Particularly important is the fact that the decline in sales is not limited to grocery stores.
Unbranded garment shops, shoe shops and electrical retailers, all seem to have suffered
(Table 8). This may lead to deeper questions regarding the changing class composition
and shifts in consumption patterns in the vicinity of the malls. It may also indicate the
loss of real purchasing power among the classes in the vicinity of the malls that used to
patronize unbranded garment and shoe shops. There have been cases of job loss in
some shops and establishments. In all nine retailers had fired their staff over the period
since the mall came up. In all 11 hired help had been retrenched, which is less than 3
per cent of the original workforce of 401 persons. Hence, despite the sales downturn
there has been no significant decline in employment so far. This reflects the family basis
of the sector where a decline in sales is not matched by retrenchment but results in
shrinking earnings per head. If the downward pressures continue to intensify, some more
retrenchments may occur; however, closures seem immanent.
Sales decline is evenly distributed by value of inventory up to 25 lakhs (Table 10).
The decline in sales has most frequently impacted larger shops in the size range of
400-500 sq ft and 300-400 sq ft and least commonly the size range of 100-200 sq ft
(Table 9). But the less than 100 sq ft size shops are also frequently affected (Table 9).
Seventy-one per cent of the sample reported a sales decline, but only 14 per cent
reported some new sales promotion initiatives, due perhaps to the low capital
base, low profit margins and poor availability of skilled manpower. Tele orders,
home delivery and sales on credit were the main types of new initiatives. Nearly all
of them did not advertise at all. However, the shops particularly in Parel, for example,
suffered from a shortage of manpower and capital, a result of a narrow and
deteriorating working capital base. Parel is particularly badly affected because of
the loss of high value customers like mill workers. As the mills closed down one
after another the shops and eating places lost their clients. The new real estate
development in the area has brought corporate offices, and with these a new class
of people whose preference patterns and needs are unfamiliar. Despite the falling
sales, 96 per cent of the retailers have not increased their working hours. The main
reason is once again an inability to afford additional hired help while the existing
Workers, mainly family members, are already working for 11 to 14 hours per day.
Hence, there seemed little scope for additional man-hours or work intensification.
Sixty-three per cent of the sample said that they felt threatened by the malls (Table 13).
16 per cent of them felt threatened withclosure, 34 per cent feared a major decline in
business and 13 per cent expected a minor decline (Table 1, 3). So 50 per cent of the
sample was expecting serious trouble. 82 per cent said that their children would
not continue with the business. Yet only 11 per cent of the sample of 112 shops/
hawkers were involved in a campaign against the malls. It would be useful to compare
the two areas where malls have been around for an adequate period of time, like in Parel
and in the Bhandup/Mulund area. Nirmal Lifestyle is close to Bhandup, R Mall is
in Mulund. Nirmal is two years old and R Mall is three years old. Phoenix Mall
in Lower Parel is four years old. There were 53 respondents (retail shops and
hawkers) in the Bhandup-Mulund area (1 km radius area around the two malls). In
this area both malls are not mo than three years old. There were 46 respondents from
the Parel area where the mall is at least four years old. All respondents were asked to
recall and evaluate their sales since the mall started in their respective area. The
Bhandup and Lower Parel area responses have been summarised in Tables 14 and
15 respectively. In Lower Parel, 89 per cent of those who reported a drop in sales
recorded a decline in sales in the last four years itself when the mall was in operation.
Within this category of people who date their decline in sales over the last four years, 61
per cent said they experienced decline in the last two years, which may possibly indicate
an intensification of impact over time. This
can be viewed against 5.6 per cent of respondents reporting the drop to the period
when the mall did not exist. In the Mulund/ Bhandup area, figures were respectively
93 per cent reporting a sales decline, and within this category, 75 per cent said the decline
occurred in the last two years. The two malls are less than three years old. Only 4.5 per
cent of the respondents in the area dated their decline in sales to the period when the
malls did not exist. Hawkers are at the bottom of the retail pyramid, on the streets, readily
availableand handy for customers. They are a featureof all urban spaces globally.
Municipal authorities have fought battles to evict them, but with little success. Street
trading is one of the points of entry for migrants into the working life of the city; it is also
one of the traditional supplementary activities of the families of the working poor,
particularly for women [Lubell 1991]. The number of hawkers in Mumbai is estimated at
two and a half lakh [Government of India 2004]. But the number of unlicensed hawkers
has been rising steadily since the Municipal Corporation in Mumbai has officially
stopped issuing licences since 1978. Our sample of 30 hawkers was located within a safe
distance of the malls in Parel and Bhandup-Mulund areas. Mall developers have been
particularly hostile to hawkers. 72 per cent of them had no co-worker to help them, while
about 21 per cent had another person, usually from the family, to help them. Hawkers,
particularly women and children, are predictably at the receiving end now, facing
increasing eviction drives and harassment around the malls. 41 per cent reported an
increase in eviction drives, 24 per cent in harassment by agents of the
malls, while 17 per cent reported an increase in bribes and hafta (Table 12). Mall
promoters have joined the conflict to evict hawkers and revamp their precincts. 72 per
cent of the hawkers were experiencing a fall in sales and all reported falling profits,
which means falling income for them.
The Macro Picture
The competition for urban space between the organised and the informal retailer is
becoming more intense. With rural-urban migration and general unemployment in the
cities, the organised sector is unable to absorb labour in sufficient quantities. In the post-
liberalisation period, the rate of growth of employment in the organised sector is barely
0.34 per cent, lower than in the pre-liberalisation phase, and 3.6 times lower than the
growth rate of employment in the informal sector in the same period. The informal sector
grows with “passive proletarianisation”; the direct producers do not get into salaried
positions in the formal labour market [UN Human Settlements Programme 2003]. As
fresh migrants into the city join the reserve army of the urban unemployed, incomes
within the sector tend to drop [Roberts 2004]. There is growing inequality within
the informal sector as there is between the formal and informal. The weakest and the
smallest shoulders have to bear the heaviest burden of informalisation [Breman 2003].
If the number of malls and retail chains multiply, the sales impact on small shops is
likely to be intensified and earnings will keep falling till all these microaccumulators
become micro-subsistence seekers. Informal sector employment can be
classified into at least two sub-categories – an intermediate sector, which has a reservoir
of micro-enterprises and the community of the poor, residual and underemployed
labour [Davis 2006]. FDI in retail and the growth of large corporate retail
trade will slowly erode the informal petty accumulators and increase the masses of
the informal proletariat. The wage employment generated in
unorganised retail is informal employment. Informal employment, by its very definition,
implies the absence of formal contracts, rights and bargaining power. Hence,
deteriorating business conditions here will increase petty exploitation and worsen the
lot of the wage earners. The informal proletariat is also the most vulnerable; it
is composed of unskilled, fresh immigrants from rural areas and is least mobile of the
workforce. In a survey-based study [A Mukherjee and N Patel 2005] sponsored by Indian
Council for Research on International Economic Relations, the researchers make a case
for introduction of FDI in organized retail over a period of five to six years to boost the
pace at which the sector is growing. An organised retail sector, they suggest, will ensure
better quality, prices and service quality to the consumer. It will encourage investment in
the supply chain, link local suppliers to large global markets and improve the quality of
employment. Their sample of 391 respondents was spread out over 14 types of
participants in theretail sector, from domestic organized retailers, real estate developers,
foreign players and manufacturers to unorganized retailers spread over eight cities. The
sample however had only 64 domestic unorganized retailers, 50 workers in the
unorganized retail, and no hawkers. Since this sector generates 6 to 7 per cent of total
employment in the economy, there is a need to focus some research on the impact of
organised retail and FDI in retail on this segment alone and the present study is such an
attempt. Will organised retail and related activity absorb the 40 million persons currently
employed in the sector? An average mall employs not more than 500 personnel directly
n its various retail outlets.1 This estimate excludes contract staff like housekeepers,
loaders, security staff, etc. Mumbai has about 27 malls now. Even if they were to increase
to a thousand (so as to impact unorganised retail in all areas) not more
than 50,000 would be employed directly. However, not less than five lakh people
are employed in the unorganised retailing sector in Mumbai and they would in all
possibility be adversely affected. The dislodgement and unemployment effect could be
far greater than the employment effect. Moreover, the shop floor staff in
the malls have at least high school level qualifications, unlike their counterparts in
the small shops, most of whom are barely literate and cannot be rehabilitated in
organised retail. In the present study the focus has been entirely on this segment and the
impact onthem is quite clearly damaging; only a few (14 per cent) were able to upgrade
their services or respond to the changed circumstances. An escalation of competition
from corporate retail and FDI will thus hasten their decline. There is a need to extend this
research by using a larger sample across the country, with a control group of retailers
as yet unaffected by organised retailing so as to fully grasp the income and employment
impact. Also, as the supply chains of the organised retailers develop, there is
a need to study their impact on the welfare of the ultimate producers and consumers
whom they are supposed to benefit. Whatever international evidence we have
at hand indicates the dangers of monopoly capital in retailing for geographically
distributed small producers who are not in a position to bargain for a fair price with these
bulk buyers.

Table 9: Sales Decline of Sample Shops/Hawkers by Shop Size as a Result of Mall

Operations.
Number of Total number of Percent of shops and
size of shops/ Shops/hawkers shops and hawkers hawkers showing
hawkers stall sq. ft showing sales decline in sales.
decline
Tiny < 100 23 31 74
100-200 11 14 35
200-300 13 25 52
300-400 18 22 82
400-500 9 10 90
500-600 4 6 67
>600 2 4 50
Total 80 112 71

Table 10: Sales Decline of Sample Shops/Hawkers by Business Inventory

Size as a Result of Mall Operations

inventory as on (I) as on Number of Total Per Cent

(RS lakh) Shops/ Number of Shops/
(Rs Lakh) Hawkers of Shops Hawkers
Showing Sales /Hawkers Showing
Decline Sales
Decline

<I 5 7 71
1≤I<5 31 44 70
5 ≤ I < 10 29 41 71
10 ≤ I < 25 13 16 81
25 ≤ I < 50 2 3 67
I ≥ 50 0 1 0
Total 80 112 71

Table 11: Perception of Economic Disadvantage vis-à-vis the Malls by the

Sample Shops/Hawkers
Compared to Malls ‘Yes’ ‘No’ Per Cent
of Total
Responding
‘Yes’
Cost price is higher 24 88 21

Transport and 9 103 8

handling
cost is higher

Taxes are higher 58 54 52

Selling price is 26 86 23
higher