INDUSTRY PROFILE

The Indian retail industry is the fifth largest in the

world. Comprising of organized and unorganized sectors, India retail industry is one of the
fastest growing industries in India, especially over the last few years. Though initially, the retail
industry in India was mostly unorganized,
however with the change of tastes and
preferences of the consumers, the industry is getting more popular these days and getting
organized as well. With growing market demand, the industry is expected to grow at a pace of
25-30% annually. The India retail industry is expected to grow from Rs. 35,000 crore in 2004-05
to Rs. 109,000 crore by the year 2010.

Growth of Indian Retail

According to the 8th Annual Global Retail Development Index (GRDI) of AT Kearney, India
retail industry is the most promising emerging market for investment. In 2007, the retail trade in
India had a share of 8-10% in the GDP (Gross Domestic Product) of the country. In 2009, it rose
to 12%. It is also expected to reach 22% by 2010.

According to a report by Northbride Capita, the India retail industry is expected to grow to US$
700 billion by 2010. By the same time, the organized sector will be 20% of the total market
share. It can be mentioned here that, the share of organized sector in 2007 was 7.5% of the total
retail market.

Major Retailers in India

Pantaloon:

Pantaloon is one of the biggest retailers in India with more than 450 stores across the country.
Headquartered in Mumbai, it has more than 5 million sq. ft retail space located across the
country. It's growing at an enviable pace and is expected to reach 30 million sq. ft by the year
2010. In 2001, Pantaloon launched country's first hypermarket ‘Big Bazaar’. It has the following
retail segments:
• Food & Grocery: Big Bazaar, Food Bazaar
• Home Solutions: Hometown, Furniture Bazaar, Collection-i
• Consumer Electronics: e-zone
• Shoes: Shoe Factory
• Books, Music & Gifts: Depot
• Health & Beauty Care: Star, Sitara
• E-tailing: Futurebazaar.com
• Entertainment: Bowling Co.
Tata Group
Tata group is another major player in Indian retail industry with its subsidiary Trent, which
operates Westside and Star India Bazaar. Established in 1998, it also acquired the largest book
and music retailer in India ‘Landmark’ in 2005. Trent owns over 4 lakh sq. ft retail space across
the country.

RPG Group

RPG Group is one of the earlier entrants in the Indian retail market, when it came into food &
grocery retailing in 1996 with its retail Foodworld stores. Later it also opened the pharmacy and
beauty care outlets ‘Health & Glow’.

Reliance

Reliance is one of the biggest players in Indian retail industry. More than 300 Reliance Fresh
stores and Reliance Mart are quite popular in the Indian retail market. It's expecting its sales to
reach Rs. 90,000 crores by 2010.

AV Birla Group

AV Birla Group has a strong presence in Indian apparel retailing. The brands like Louis Phillipe,
Allen Solly, Van Heusen, Peter England are quite popular. It's also investing in other segments
of retail. It will invest Rs. 8000-9000 crores by 2010.

Retail formats in India

Hypermarts/supermarkets: large self-servicing outlets offering products from a variety of

categories.
• Mom-and-pop stores: they are family owned business catering to small sections; they are
individually handled retail outlets and have a personal touch.
• Departmental stores: are general retail merchandisers offering quality products and
services.
• Convenience stores: are located in residential areas with slightly higher prices goods due
to the convenience offered.
• Shopping malls: the biggest form of retail in India, malls offers customers a mix of all
types of products and services including entertainment and food under a single roof.
• E-trailers: are retailers providing online buying and selling of products and services.
• Discount stores: these are factory outlets that give discount on the MRP.
 • Vending: it is a relatively new entry, in the retail sector. Here beverages, snacks and other
small items can be bought via vending machine.
• Category killers: small specialty stores that offer a variety of categories. They are known
as category killers as they focus on specific categories, such as electronics and sporting
goods. This is also known as Multi Brand Outlets or MBO's.
• Specialty stores: are retail chains dealing in specific categories and provide deep
assortment. Mumbai's Crossword Book Store and RPG's Music World are a couple of
examples.
Challenges facing Indian retail industry
• The tax structure in India favors small retail business
• Lack of adequate infrastructure facilities
• High cost of real estate
• Dissimilarity in consumer groups
• Restrictions in Foreign Direct Investment
• Shortage of retail study options
• Shortage of trained manpower
• Low retail management skill
The Future

The retail industry in India is currently growing at a great pace and is expected to go up to US$
833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018 at a
CAGR of 10%. As the country has got a high growth rates, the consumer spending has also gone
up and is also expected to go up further in the future. In the last four year, the consumer spending
in India climbed up to 75%. As a result, the India retail industry is expected to grow further in
the future days. By the year 2013, the organized sector is also expected to grow at

The BMI India Retail Report for the third-quarter of 2010, forecasts that the total retail sales will
grow from US$ 353 billion in 2010 to US$ 543.2 billion by 2014. With the expanding middle
and upper class consumer base, there will also be opportunities in India's tier II and III cities. The
greater availability of personal credit and a growing vehicle population to improve mobility also
contribute to a trend towards annual retail sales growth of 11.4 per cent. Mass grocery retail
(MGR) sales in India are forecast to undergo enormous growth over the forecast period. BMI
further predicts that sales through MGR outlets will increase by 154 per cent to reach US$ 15.29
billion by 2014. This is a consequence of India's dramatic, rapid shift from small independent
retailers to large, modern outlets.

BMI forecasts consumer electronic sales at US$ 29.86 billion in 2010, with over the counter
(OTC) pharmaceutical sales at US$ 3.28 billion. The latter is predicted to be the fastest growing
retail sub-sector and BMI forecasts that sales will reach US$ 6.18 billion by 2014, an increase of
88.5 per cent.

China and India are predicted to account for almost 91 per cent of regional retail sales in 2010
and by 2014 their share of the regional market is expected to be more than 92 per cent. Growth in
regional retail sales for 2010-2014 is estimated by BMI at 72.2 per cent, an annual average of 14
per cent. India should experience the most rapid rate of growth in the region, followed by China.
For India, its forecast market share of 13.9 per cent in 2010 is expected to increase to 14.3 per
cent by 2014.

Moreover, for the 4th time in five years, India has been ranked as the most attractive nation for
retail investment among 30 emerging markets by the US-based global management consulting
firm, A T Kearney in its 8th annual Global Retail Development Index (GRDI) 2009. India
remains among the leaders in the 2010 GRDI and presents major retail opportunities. India's
retail market is expected to be worth about US$ 410 billion, with 5 per cent of sales through
organised retail, meaning that the opportunity in India remains immense. Retail should continue
to grow rapidly—up to US$ 535 billion in 2013, with 10 per cent coming from organised retail,
reflecting a fast-growing middle class, demanding higher quality shopping environments and
stronger brands, the report added. Bharti Retail strengthened its position in northern India by
opening 59 stores, Bharti Wal-Mart is expected to open 10 to 15 wholesale locations in the next
three years, and Marks & Spencer is considering plans to open additional outlets in the next few
years.

Established retailers are tapping into the growing retail market by introducing innovative store
formats. Spencer's Retail, More (owned by Aditya Birla Group) and Shoppers Stop (owned by K
Raheja Group) already plan to expand.

According to a McKinsey & Company report titled 'The Great Indian Bazaar: Organised Retail
Comes of Age in India', organised retail in India is expected to increase from 5 per cent of the
total market in 2008 to 14 - 18 per cent of the total retail market and reach US$ 450 billion by
2015.

Furthermore, according to a report titled 'India Organised Retail Market 2010', published by
Knight Frank India in May 2010 during 2010-12, around 55 million square feet (sq ft) of retail
space will be ready in Mumbai, national capital region (NCR), Bengaluru, Kolkata, Chennai,
Hyderabad and Pune. Besides, between 2010 and 2012, the organised retail real estate stock will
grow from the existing 41 million sq ft to 95 million sq ft.

India continues to be among the most attractive countries for global retailers. Foreign direct
investment (FDI) inflows between April 2000 and April 2010, in single-brand retail trading,
stood at US$ 194.69 million, according to the Department of Industrial Policy and Promotion
(DIPP).

• Leading watchmaker Titan Industries Limited plans to invest about US$ 21.83 million for
opening 50 premium watch outlets Helios in next five years to attain a sales target of US$
87.31 million. "We are looking to open Helios outlets in Mumbai, Delhi, Hyderabad,
Kolkata, Chennai, Pune, Ahmedabad etc in next 12 months," said Ajoy Chawla, Vice
President (Retail), Titan.
• British high street retailer, Marks and Spencer (M&S) plans to significantly increase its
retail presence in India, targetting 50 stores in the next three years. M&S currently
operates 17 stores in India through a joint venture (JV) with Reliance Retail.
 • Chinese retail major, Yishion has entered the Indian market and plans to have at least 125
points of sales, including exclusive stores and multi-brand outlets, across India by 2012.
It will open its first exclusive store in New Delhi by September 2010.
• Spain's Inditex, Europe's largest clothing retailer opened the first store of its flagship Zara
brand in India in June 2010. It further plans to open a total of five Zara outlets in India.
• Bharti Retail, owner of Easy Day store—supermarkets and hypermarts—plans to invest
about US$ 2.5 billion over the next five years to add about 10 million sq ft of retail space
in the country by then, according to a company spokesperson.
• Raymond Weil plans to invest US$ 883,665 in India during 2010, according to Olivier
Bernheim, President and CEO, Raymond Weil.

Policy Initiatives

FDI up to 51 per cent under the Government route is allowed in retail trade of Single Brand
products, according to the Consolidated FDI Policy document.

Road Ahead

According to industry experts, the next phase of growth is expected to come from rural markets.

According to a market research report published in June 2008 by RNCOS titled, 'Booming Retail
Sector in India', organised retail market in India is expected to reach US$ 50 billion by 2011. The
key findings of the report are:

• Number of shopping malls is expected to increase at a CAGR of more than 18.9 per cent
from 2007 to 2015
• Rural market is projected to dominate the retail industry landscape in India by 2012 with
total market share of above 50 per cent
• Driven by the expanding retail market, the third party logistics market is forecasted to
reach US$ 20 billion by 2011
• Apparel, along with food and grocery, will lead organised retailing in India

Exchange rate used: 1 USD = 45.81 INR (as on June 2010)

Background and inception of the

company
Setup in 1996, Megamart is a venture of the prestigious Arvind Ltd. In spite of being a value
retail chain, Megamart boasts of providing an excellent shopping experience. The brand believes
that 'no frills' ought not to come at the cost of great ambience, customer-friendly store layouts
and well designed interiors.

Megamart arrived at a time when multi-brand discount outlets were still an unheard of
phenomenon and changed the rules of the retailing in India. By keeping overheads and other
costs to a bare minimum, it was able to pass on maximum savings to customers. Today,
Megamart is the largest player in this segment.

Megamart operates in 2 formats – Megamart stores that occupy around 2000 – 4000 sq. ft. and
BIG Megamart stores that occupy 30,000 – 60,000 sq. ft.

BIG Megamart stores have on offer more than 200 of the top international & national brands
with fabulous offers throughout the year. Add to this some of the best deals around and you have
a shopping experience that is truly unparalleled.

Megamart store network is growing at a rapid pace by adding 5000 Sq. ft. every week.

Megamart, a pioneer in the apparel value-retail segment, is today the largest value-retail chain in
India. By offering customers complete value-for-money through best of deals throughout the
year with some of the top international and national apparel brands all at fabulous deals. The
chain is spread over 60 cities with around 160 stores across the country giving you a guarantee of
mega brands and mega savings.

Nature of the business carried

VALUE- RETAILING

Value retailing is a big format store concept, where branded products and accessories are sold
under best deals. This concept is mainly planned mainly for II and III tier cities with the
promotion of mega savings offer. These cities have good potential providing as aspiration to the
consumers to buy products at best deals. Value retail stores offer products with an inexpensive
price tag. Also their promotions take the guise of price-cuts, added freebies, off-labels, added
discounts on big bill-sizes and many more.

Earlier, the strong blow of recession also caused a noticeable shift in consumers preferences
causing a sloth in the retail growth. Consumers restricted their shopping budgets, and opted to
buy goods at discount sales, and during promotional offers. But, even after the world has
recovered from recession, the consumers who were used to buying products on discounts and
offers continue to seek the same. They prefer to buy quality items at prices that are
comparatively less than branded ones. This helped the value retailers to reap solid gains, and
larger format value retail concept stores were started. The concept of large format stores gave
way for more return on investments comparatively over small format stores.

Growth of value Retailers:

A decade before, a product that was sold in the market at a discounted rate would arouse
suspicions in the consumers minds regarding its worth. More often, these kinds of products
comprised of seconds, and rejected items. But, this phenomenon took a complete turn with the
emergence of value retailing concept. Customers prefer to make the most of what these stores are
offering them. These products prove to be defect free and also provided a shopping experience to
customers that were similar to the high streets.

Value retailing remains on a high priority in the consumers shopping list increasing sales for
factory outlets, closeout stores, and off-price products. H&M, Primark (UK), New Look, The
buckle, Aeropostale, and Fast retailing are a few of the successful value retailers to name. They
provide quality goods at inexpensive prices; products that are neither seconds, nor rejected.
While their main stores hold stock of new merchandise matching with the current seasons, the
surplus stock gives way to this new retail concept. Merchandise are sold at these stores with
round the year discounts ranging anywhere from 20-80%.

Despite all the appealing discounts they get, the consumers need not have to compromise in
terms of the ambience offered along with the quality customer service. The interior of the store
initiates the shoppers to have an aspiration to own a brand, and also provide the ability to buy it.
The only limitations of these stores being, that they relay on surplus stock, and sell merchandise
that is a season old, but most of the shoppers do not have any complaints regarding the same.

There is a shift in the price-fashion arena, and this shift is being aptly utilized by the value
retailers. The rapid growth of value retailing poses a tremendous threat to traditional retailers.
Top brands include; Gap, Nordstrom, American Eagle, Abercrombie & Fitch etc. The trend of
value retailers offering apparels at 365 days discount is penetrating deeper into the market
segment day by day posing a threat to the branded apparel makers. Value retail outlets can be
defined as a big retail stop in the organized apparel sector. It offers everything under one roof,
especially at a price range not available in branded outlets. The growing power of value retailers
is likely to create a deep impact on textile and apparel manufacturers also. Differentiating on
value curves, apparel manufacturers will have to follow different levels for each segment, i.e. for
brands and value retailers.
Consumers of today are more spoilt for choices, having the option of choosing among global
brands, local brands, and private labels. Value retail formats hold a promise to the consumers
that they get value for every penny they spend.

Vision, Mission and Quality Policy

The underlying theme running across the broad spectrum of all business activities at Arvind is
that of enhancing lifestyles of people, across all diversities and demographics.

To serve that end, the corporate vision for Arvind states: 'We will enable people to experience a
better quality of life by providing enriching and inspiring lifestyle solutions'.

PHILOSOPHY

WE BELIEVE
In people and their unlimited potential. In content and focus in problem solving. In teams for
effective performance. In intellect & its power.

WE ENDEAVOUR
To select, train and coach people to obtain higher responsibilities. To nurture talent to build
leaders for tomorrow's corporation. To reward, celebrate and activate all intellectual business
contributions.

WE DREAM
Of excellence in all endeavours. Of mutual benefit and prosperity. Of making the world a better
place to live in. We Make Things Happen.

Products Profile

Fashion Mart offers complete range of fashion accessories like jewellery, stoles and scarves,
handbags & clutches, belts, fragrances, wallets, sunglasses, watches, cosmetics and beauty care
products.

Home Mart is a one stop destination offering you a wide variety of home solutions to chose such
as bed sheets, comforters, pillow fillers , cushion fillers, towels etc
It also offers a complete range of kitchen ware like crockery, mugs, non-stick cookware, storage
containers, curtains and a complete range in kitchen linen.

Travel Mart offers a wide range of travel gear like suitcases, backpacks, duffle bags and
strolleys. One could also chose from an attractive range of travel accessories like locks, key
chains, laptop bags etc

Women's Wear
Western wear
Megamart Stores
Auburn Hill, Cherokee

BIG Megamart
Cherokee, Allen Solly, Scullers, Auburn Hill, Expozay, Tantra, Miss Players, Global Trendz

Ethnic wear
Megamart Stores
Aurelia, Karigari

BIG Megamart
Karigari, W, Nayans, Sushilas, Aurelia, Huur, Neerus, Zariwala, Estyle, Charms by Prafful,
Leisha

Lingerie

Megamart Stores
Skinn
BIG Megamart
Amante, Lovable, City Girl, Juliet

Men's Wear
Formal Wear
Megamart Stores
Auburn Hill, Colors, Excalibur, Elitus, Turtle

BIG Megamart
Louis Philippe, Ruggers, Van Heusen, Peter England, Excalibur Elitus, Auburn Hill, Pan
America, Park Avenue, Celebrity, Options, Wills Lifestyle

Casual Wear
Megamart Stores
Ruggers Cherokee

BIG Megamart
Cherokee, US Polo, Scullers, Farenheit, Indigo Nation, Allen Solly, Parx, Enryca, V., Color Plus,
Classic Polo, Lerros, Giordano, Dockers, Kmark, Tantra, Prostyle, Allen Solly Youth,

Ethnic Wear
Megamart Stores
Karigari

BIG Megamart
Manu, Karigari, Yash

Suits & Blazers

Megamart Stores
Auburn Hill, Excalibur, Elitus, Arrow

BIG Megamart
Parx, Auburn Hill, Excalibur, Elitus, Belmonte, Shapes, Thomas Scott, Wills Lifestyle, John
Players, Notting Hill

Innerwear
Megamart Stores
Skinn, VIP

BIG Megamart
VIP, Hanes, Skinn, Euro

Youth's Wear
Denims
Megamart Stores
Flying Machine, Lee, Levis, Newport, Pepe, Signature, Spykar, US Polo, Wrangler, Colt, Edge,
Cherokee, Miss Cherokee

BIG Megamart
Colt, Pepe, Newport, Wrangler, Lee, Levis, Lemax, Cherokee, Signature, Spykar, Jealous 21,
Flying Machine

Casual Wear
Megamart Stores
Lee, Signature, Wrangler, Miss Cherokee, Flying Machine

BIG Megamart
Ruggers, Dockers, Kappa, Indian Terrain, Colt, Spykar, Flying Machine, Lee, Wrangler, Levis,
V., Stori, Bossini, MTV, Bay Island, Cherokee, UCB, Basics, Tantra, Crocodile, Classic Polo,
Greg Norman

Sports wear
Megamart Stores
Colt, Newport, Flying Machine, Lee, Wrangler, Cherokee

BIG Megamart
Edge, Reebok, Nike

Kid's Wear
Apparel
Megamart Stores
Cherokee, Disney Kids

BIG Megamart
Gini & Jony, Drop, Seals, Globe, Disney Kids, Isabelle, Karigari, Myfaa, UCB Kids

Toys
Megamart Stores
Not available

BIG Megamart
Mera Toys

Area of Operation
National level operation- The chain is spread over 60 cities with around
160 stores across the country giving you a guarantee of mega brands and
mega savings. Megamart operates in 2 formats – Megamart stores that
occupy around 2000 – 4000 sq. ft. and BIG Megamart stores that occupy
30,000 – 60,000 sq. ft. Megamart store network is growing at a rapid
pace by adding 5000 Sq. ft. every week.

Ownership Pattern
Public limited- under the subsidiary of Arvind group ltd company.

Competitors Information
C1-Brand Factory is a chain of stores operated by Pantaloon Retail India. Launched in
September 2006, it currently has eight outlets in India. The outlets are between 60,000 to
100,000 square feet (9,300 m2) in size and offer around 120 brands such as Esprit, Van Heusen
and Levis. The chain offers a minimum discount of 20% for its merchandise and targets
customers in the 20-35 age group. The chain had more than a million customers within its first
year of operation and witness a footfall between 2000-5000 customers per day.

It has stores in Ahmedabad, Bangalore, Kolkata, Ghaziabad, Hyderabad, Pune, Chennai,

Mumbai and Tiruchirapalli.Ten more outlets are proposed to be built soon in the country.

C2-MAX the largest value fashion retailer in the Middle East offers fashion clothing, footwear,
accessories and household products at amazing value, all under one roof.

Launched in UAE in May 2004, Max is today the largest value fashion retail chain in the Middle
East. Max caters to the mid market section of the population. With 114 stores across UAE, KSA,
Jordan, Kuwait, Bahrain, Qatar, Oman, Turkey, Egypt, Yemen & India, MAX plans to expand its
network in more potential markets within the Middle East & beyond. With stores that typically
measures between 18,000 to 30,000 sq. ft., Max retails private label clothing for men, women
and children as well as footwear and home. ( http://www.maxfashionretail.com/ )

C3-WESTSIDE the Westside stores have numerous departments to meet the varied shopping
needs of customers. These include Menswear, Women’s wear, Kid’s wear, Footwear, Cosmetics,
Perfumes and Handbags, Household Accessories, lingerie, and Gifts. The company has already
established 49 Westside departmental stores (measuring 15,000 - 30,000 square feet each) in
Ahmedabad, Bengaluru, Chandigarh, Chennai, Delhi, Gurgaon, Ghaziabad & Noida (to be
considered as 1 city), Hubli, Hyderabad, Indore, Jabalpur, Jaipur, Kanpur, Kolkata, Ludhiana,
Lucknow, Mangalore, Mumbai, Mysore, Nagpur, Nashik, Pune, Raipur, Rajkot, Surat, Vadodara
and Jammu. The company hopes to expand rapidly with similar format stores that offer a fine
balance between style and price retailing.( http://www.mywestside.com/ )
C4-PROMART

C5-GRAB STORE

C5-THE LOOT

Infrastructural Facilities
 Megamart has selected Oracle® Retail merchandising, planning, supply chain and
stores applications to support its aggressive growth plans as it seeks to achieve
leadership in fashion and value retailing in India.
 Oracle Retail will help support these plans by providing Arvind with an integrated,
scalable platform to manage its retail processes from supply chain to stores.
 Oracle Retail and other business applications will be deployed through Arvind’s
network of a centralized distribution center and other regional distribution centers across
India
 With this deployment, Arvind expects to increase its inventory turns, improve its
forecast accuracy, enable shorter replenishment lead times and overall improve its
service levels to the current 93 Megamart stores and Outlet Centres. This will ultimately
help ensure that customers at Megamart stores will find the brands, styles and sizes
they are looking for.
 The Indian retail market, which is the fifth largest retail destination globally according
to industry estimates, is expected to grow from US$ 330 billion in 2007 to US$ 427
billion by 2010 and US$ 637 billion by 2015. Simultaneously, organised retail, which
presently accounts for 4 per cent of the total market, is likely to increase its share to 22
percent by 2010.

2) Mega Mart offers a unique retail experience,

combining a premium ambience with amazingly low prices. A pioneer in
this category, Mega Mart has penetrated into tier 2 & 3 cities & has opened

Megamart engaged the services of reputed design house JHP - London; an award
over 200 stores.
winning design consultancy firm to design their stores. JHP has designed and executed several
retail projects throughout the world. JHP are the designers behind Selfridges, ASDA and many
of the other leading retail destinations across the world, including the retail space of the
upcoming Heathrow Terminals.

To provide best service to the customers, Megamart is investing heavily on training the Fashion
Assistants who will man the Outlet Centres. The company is also making sizeable investments to
support these plans in information technology

Work flow model (End to End)

Vendors outsource 
SWOT (Strengths and Weaknesses and its
External Opportunities and Threats)
Strength
1) Skills or Important expertise
• low-cost manufacturing capabilities
• excellent mass merchandising skills

2) Valuable Physical Assets

• State of the art plants and equipment
• Attractive store locations

3) Valuable Human Assets

• Experienced and capable workforce
• Talented employees in key areas

Weakness
1)Not fully present in north India

2)Behind rivals in e-commerce capabilities

3)Weaker dealer network than key rivals and lack of global

distribution capability

OPPORTUNITIES
1. Increasing urban population-more participants in retail revolution.

2. Increase in consuming middle class population.

3. Social factors like dual household income has enhanced spending

power.
4. Spends moving towards lifestyle products and esteem enhancing
products.

6. Average grocery spends at 42% of monthly spends-presents a huge

opportunity.

7. Increase in use of credit cards.

8. Increase in FDI.

THREATS
1) Increase in number of e-commerce websites due to easy
access of internet and shortage of time for customers.
2) FDI restrictions in the retail sector
3) Cheaper imports
4) Increase in domestic competition.
5) To make balance between price and quality

Mckensy’s 7S frame work with special reference to

organization under study
Strategy
1. Value-for-money by giving customers 365days
discount offer.
2. Economic customer focus.
3. Focus on apparel value retail segment format.
4. Megamart boasts of providing an excellent shopping
experience by offering great ambience, customer-
friendly store layouts and well designed interior.

Style