RETAIL STORES: UPS AND DOWNS .

NTRODUCTION: Retail today has changed from selling a product or a service to selling a hope, an aspiration and above all an experience that a consumer would like to repeat. The revolution in retailing industry has brought many changes and also opened door for many Indian as well as foreign players. The India Retail Industry is gradually inching its way towards becoming the next boom industry. This paper provides detailed information about the growth and challenges facing the retailing industry in India. It explores the role of the Government of India in the retailing industry and the need for further reforms. In India the vast middle class and its almost untapped retail industry are the key attractive forces for global retail giants wanting to enter into newer markets, which in turn will help the India Retail Industry to grow faster. In a market like India there is a constant clash between challenges and opportunities but chances favor those companies that are trying to establish themselves. So to sustain in a market like India companies have to bring innovative solutions. Indian market has potential to accommodate many retail players, because still a small proportion of the pie is organized. The paper includes growth of retail sector in India, strategies, strength and opportunities of retail stores, retail format in India, recent trends, and opportunities and challenges, lifecycle of retail industry. It also highlights the challenges faced by the industry in near future The Retail Industry in India has come forth as one of the most dynamic and fast paced industries with several players entering the market. Retail consists of the sale of goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing workingwomen population and emerging opportunities in the services sector are going to be the key factors in the growth of the organized Retail sector in India. The growth pattern in organized retailing and in the consumption made by the Indian population will follow a rising graph helping the newer businessmen to enter the India Retail Industry But all the retailers have not yet tasted success because of the heavy initial investments that

are required to break even with other companies and compete with them. The India Retail Industry is gradually inching its way towards becoming the next boom industry. Modern retailing has entered into the Retail market in India as is observed in the form of bustling shopping centers, multi-storied malls and the huge complexes that offer shopping, entertainment and food all under one roof. In India the vast middle class and its almost untapped retail industry are the key attractive forces for global retail giants wanting to enter into newer markets, which in turn will help the India Retail Industry to grow faster. The future of the India Retail Industry looks promising with the growing of the market, with the government policies becoming more favorable and the emerging technologies facilitating operations. COUNTDOWN TO INDIAS RETAIL REVOLUTION According to a study by Deloitte Haskin and Sells, organized retail has increased its share from 5 percent of total retail stores in 2006 to 8 percent in 2007.The fastest growing segment have been the wholesale cash and carry stores (150 percent) followed by supermarkets (100 percent) and hypermarkets (75-80 percent). Further, it is estimated that the organized segment will account for 25 percent of the total sales by 2011. Retail industry is the largest industry in India, with an employment of 8 % and contributing to over 10% of the countrys GDP. Retail industry is expected to rise 25% yearly, being driven by strong income growth, changing lifestyles, and favorable demographic patterns. It is expected that by 2016, modern retail industry in India will be worth US $175-200 billion

THE INDIAN RETAIL SCENE The Indian retail industry is divided into organized and unorganized sectors: Organized retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses.

Unorganized retailing refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc Though the retail sector in India does not enjoy the industry status or support of government, it is growing on its own, tapping the renewed aspiration levels of burgeoning middle class and the new earning generation. In India the Retail Sector is mainly affected by these forces: Median age, rising disposable income, Urbanization shopping convenience etc and it is shown in below mentioned graphs. (Showing change in growth with year)

GRAPH 1: On the basis of Age

GRAPH 2: On the basis of

Disposable Income

Source: equitymaster.com /outlook arena/2008

LIFE CYCLE OF RETAIL INDUSTRY INTRODUCTION: An introduction is the opening phase of a market. Innovation and improved management methods to promote the new generation format, at this stage, the operating characteristics of the new format has not been understood by consumers and industry, market share is very low. In addition, the development cost of the new formats, higher investment costs, is often difficult to obtain profits.

Retail firms in introductory stage:

The first few companies to come up with retail chains were in textile sector, for example, Bombay Dyeing (1879), S Kumar's (1990), Raymonds (1925), etc. Later Titan launched retail showrooms in the organized retail sector

Strategy suggested:

A rapid penetration strategy is suggested at this stage i.e. low price and high promotion. Like Titan invested significantly in advertising to spread awareness, its main focus was on quality, providing world class services, time to time they introduce different type of brand and watches, it introduced distinct music etc.

GROWTH: In growth stage, the market develops quickly and also ready for modern retailing. The new format is accepted by consumers, and also the understanding of the trade, market share rapidly gets increased, but the imitators also get significantly increased, Wal-Mart success in china in the late 1990's and early 2000's gives us the importance of committing to a promising high-growth market at right time.

Retail firms in growth stage:

Future group-Big bazaar, food bazaar, pantaloons, brand factory, e zone, central mall, furniture bazaar, etc., Reliance industry ltd.- reliance fresh, reliance trend, reliance footprint, reliance mart, reliance jewels etc. , Tata group- croma, Westside, tanishq stores, titan stores, star India bazaar, landmark, Aditya Birla group-Peter England people stores, more, Videocon group-Next, Bolld, planet M, Raymond stores

Strategy suggested:

The strategy of adopting quality and styled products with new models and shift of advertising from product awareness to product preference. Like Reliance group has a core growth strategy of backward integration, which is helpful in its rapid progress towards building an entire value chain starting from the farmers to the end consumers. It continued to fulfill its commitment of enriching Indian consumers shopping experience and providing quality merchandise at an attractive value proposition MATURITY:

In this stage the market is still big and growing, but the space for new entrants will become tighter and retailers should act quickly at this stage because retailers at this stage have limited time to explore, and also their margin for error is thin. This stage generally lasts longer than the previous two stages

Retail firms in maturity stage

Vishal Stores is also looking for a prospective buyer. Reportedly, Chennai based Shri Ram group is in sights with a couple of investors. With Vishal retail looking for such means, the haunting memory of the collapse of Subhiksha comes to mind. Marks and Spencer India, Reliance Fresh, Bharti Wal- Mart etc are also examples of the same.

Strategy suggested:

Enter new market segments that is either enter new geographic areas e.g vishal mega mart has opened stores in smaller cities tier II and III cities and promises its consumers the lowest available price, introduced more product range, opened more than 180 stores in pan India, for promotion purpose they have chosen print media like newspapers, Television with Tina Parekh as there in advertisement, and sometime road-side bill-boards etc to build good and strong brand building. DECLINE: The retail organization loses its competitive edge and there is a decline. In this stage, the organization needs to decide if it is still going to continue in the market. The rate of growth is negative, profitability declines further and overheads are high. Retail firms in decline stage Subhiksha in hopes of a high return on investment, but the retail chain crumbled under its own weight. 6 ten, Spencers etc are also suffering from tough phase.

Strategy suggested:

Identifying weak segments and maintaining investment level selectively. Like in Subhiksha, they are not able to manage their stores and customers; it had to close down all of its 1600 stores. The retail chain suffered largely due to severe cash crunch and is believed to owe Rs 35 crore against goods, Rs 18 crore against wages, and Rs 20 crore against lease rents. Now they are making effort in reestablishment of Subhiksha with new vision and strategy but time period is not clear.

FUTURISTIC APPROACH The Indian retail sector is now worth about $250bn (140bn) a year, but it is heavily underdeveloped. Well over 95% of the market is made up of small, uncomputerised family-run stores. Now there are finally signs that the Indian government is dropping its traditionally protectionist stance and opening up its retail market to greater overseas investment as there is a great potential in Indian market. Thus every marketer has to study the following points very minutely for the long term stability.

INDIAN RETAIL MARKET: CURSE OR BLESSING Demographic factors, Rising disposable income, Increase in number of people in earner category, Urbanization, Shopping convenience, Changing consumer habits and lifestyles, Plastic card revolution, Greater availability of quality retail space, Potential for investment, Rural retail etc have proved blessing for retail groups. On the other hand political issues, Social issues, Inflation, Lack of differentiation among the malls coming, Limited consumer insight, Taxation hurdle, underdeveloped supply chain become curse for retail group. Now they have to formulate strategies to overcome these curse.

CHALLENGES FACED BY RETAIL SECTOR Stiff competition from the unorganized sector, Shortage of quality real estate and infrastructure requirements in our country, Global economic slowdown, Opposition to Foreign Direct Investment from small traders affects retail industry, Shortage of retail space in central and downtown locations,

Presence of strong Pro-tenancy laws makes it difficult to evict tenants, Landuse conversion is time consuming and becoming complex, Challenges with respect to human resources, Rigid building laws makes procurement of retail space difficult, Non residents are not allowed to own property except they are of Indian origin, Prohibition of Foreign investment in real estate business, Customs duties are levied on import of goods in India, Very high stamp duties on transfer of property affect the industry etc are the challenges

GROWTH OF RETAIL SECTOR IN INDIA Total retail sales in India will grow from US$ 395.96 billion in 2011 to US$ 785.12 billion by 2015, according to the Business Monitor International (BMI) India Retail Report for the second-quarter of 2011. Strong underlying economic growth, population expansion, the increasing wealth of individuals and the rapid construction of organized retail infrastructure are key factors behind the forecast growth. With the expanding middle and upper class consumer base, there will also be opportunities in India's tier II and III cities

SOME GLIMPSES OF GROWTH IN RETAIL GROUPS:

Carrefour, the worlds second-largest retailer, has opened its first cash-andcarry store in India in New Delhi. Germany-based wholesale company Metro Cash & Carry (MCC) opened its second wholesale centre at Uppal in Hyderabad, taking to its number to six in the country. RPG-owned Spencer's Retail plans to set up 15-20 new stores in the country in 2011-12. Spar Hypermarkets, the global food retailing chain of the Dubai-based Landmark Group, expects to start funding its India expansion beyond 2013 out of its local cash flow in the country. So far, the Landmark Group has invested US$ 51.31 million in setting up five hypermarkets and plans to pump in another US$ 51.31 million into the next phase of expansion. Bharti Retail, owner of Easy Day storesupermarkets and hyper marts 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.

 The country's largest consumer products company Hindustan Unilever is testing waters in the coffee shop market even as US giants Starbucks and Dunkin' Donuts finalize plans to tap into increasing out-of-home consumption of coffee in the country. Hindustan Unilever has opened a 'Bru World Cafe' outlet on a pilot basis at Juhu, an upmarket western suburb of Mumbai. Jewellery retail store chain Tanishq plans to open 15 new retail stores in various parts of the country in the 2011-12 fiscal

The Consumer Affairs Ministry has given the green signal to allow 49 per cent FDI in multi-brand retail. A significant chunk of investments should be spent on back-end infrastructure, besides logistics and agro-processing," the Consumer Affairs Ministry had said in response to the discussion paper floated by the Department of Industrial Policy and Promotion (DIPP) in June 2010 on allowing 100 per cent FDI in multi-brand retail.

The Securities and Exchange Board of India (SEBI) has notified the increase in the retail investment limit to US$ 4,423 in initial public offers (IPOs).s

Organized retail in India is expected to increase to 14-18 per cent and reach

US$ 450 billion by 2015, according to a McKinsey & Company report titled 'The Great Indian Bazaar: Organized Retail Comes of Age in India' Driven by the growth of organized retail coupled with changing consumer habits, food retail sector in India is set to be more than double to US$ 150 billion by 2025, according to a report by KPMG According to the report Strong and Steady 2011 released by global consultancy and research firm PricewaterhouseCoopers (PwC), India's retail sector, which is currently estimated at about US$ 500 billion, is expected to grow to about US$ 900 billion by 2014 India has also been ranked as the third most attractive nation for retail investment among 30 emerging markets by the US-based global management consulting firm, A T Kearney in its 9th annual Global Retail Development Index (GRDI) 2010.

 Within Asia, India is expected to account for the third largest share at US$ 2.7 billion in 2015, according to a report released by research firm Ovum on January 12, 2011. The organized modern retail segment in India will grow by over three times during the next five years (from 2010), to reach a figure of US$ 80 billion, as per consultancy firm, Technopak. India's modern consumption level will double within five years to an annual figure of US$ 1.5 trillion from the present level (taking 2010 as the reference year) of US$ 750 billion, according to Raghav Gupta, President, Technopak.

ROAD AHEAD

The retail sector has played a phenomenal role throughout the world in increasing productivity of consumer goods and services. The Retail Industry in India has come forth as one of the most dynamic and fast paced industries with several players entering the market. The growth factors in Indian organized sector are various but it is mainly due to the fact that rise in the working population which is young, pay- packets which are hefty, more nuclear families in urban areas, rise in the number of women working, more disposable income and customer aspiration, western influences and growth in expenditure for luxury items. But all of them have not yet tasted success because of the heavy initial investments that are required to break even with other companies and compete with them. Government has to formulate separate policy for the retail industry and should recognized it as a separate industry and to be given fair treatment by all.