Retailing A study

RETAILING A STUDY

Retailing A study

Retailing A study

A PROJECT REPORT ON

RETAILING A STUDY

SUBMITTED BY

SHER MOHD CHOWDHARI

FOR THE DEGREE OF THE BACHELOR OF MANAGEMENT STUDIES

UNDER THE GUIDANCE OF MISS SUSAN ALEX SHOBHA JAYARAM SHETTY COLLEGE FOR BMS. BHANTARA BHAWAN MARG, KURLA (E) MUMBAI 4000 70. ACADEMIC YEAR 2010 - 2011

Retailing A study

DECLARATION

I ,SHER MOHD CHOWDHARI, OF THE HABIB COLLEGE 0F COMMERCE & ECONOMICS FOR BMS,PRINCIPAL SHAIK HASAN MARG,KESAR BAUG, DONGRI, MUMBAI 400009. HEREBY DECLARE THAT I HAVE COMPLETED THE PROJECT ENTITLED RETAILING A STUDY IN PARTIAL

FULFILLMENT OF THE REQUIREMENT FOR THE THIRD YEAR OF THE BACHELOR OF MANAGEMENT STUDIES COURSE FOR THE ACADEMIC YEAR 2010-2011 I FURTHER DECLARE THAT INFORMATION SUBMITTED BY ME IS TRUE AND ORIGINAL TO THE BEST OF MY KNOWLEDGE.

DATED:

SHER MOHD CHOWDHARI

Name of the student

Retailing A study

CERTIFICATE
I MISS SUSAN ALEX HEREBY CERTIFY THAT KHAN IMRANSTUDYING IN TYBMS AT SHOBHA JAYARAM SHETTY COLLEGE FOR BMS,BHANTARA BHAWAN MARG,KURLA (E), HAS COMPLETED A PROJECT ON RETAILING A STUDY IN THE ACADEMIC YEAR 2010-2011 UNDER MY GUIDANCE.

I FURTHER CERTIFY THAT THE INFORMATION SUBMITTED IS TRUE AND ORIGINAL TO THE BEST OF MY KNOWLEDGE.

DATED: Place:

Name of the guide Examiners Sign &Date PROJECT GUIDE

College Seal

PRINCIPAL

Retailing A study

ACKNOWLEDEGEMENT

I EXPRESS MY SINCERE THANKS TO MISS SUSAN ALEX FOR her VALUABLE GUIDANCE IN DOING THIS PROJECT. I WISH TO TAKE THE OPPORTUNITY TO EXPRESS MY DEEP SENCE OF GRATITUDE TO PRINCIPAL Dr.CHEEMA SIR and PROF. SUSAN ALEX FOR THEIR INVALUABLE GUIDANCE AND SUPPORT IN THIS ENDEAVOUR. THEY HAVE BEEN A CONSTANT SOURCE OF INSPIRATION. FINALLY IT IS THE FOREMOST DUTY TO THANK ALL MY RESPONDENTS, FAMILY & FRIENDS WHO HAVE HELPED ME DIRECTLY OR INDIRECTLY IN COMPLETING MY FIELD WORK, WITHOUT WHICH THIS PROJECT WOULD NOT HAVE BEEN SUCCESSFUL.

Name of the student

Sr.no

Contents
6

Page. No

Retailing A study

PREFACE
Departmental stores may be a comparatively recent phenomenon in India, with a specially created ambience making shopping an experimental affair. Indeed, we are even beginning to demand places where we can avail the luxuries of spending the whole day in one place, taking advantage of a

Retailing A study

bouquet of services in which shopping is only a part. So you can browse, window shop, make purchases, break off for a meal, take in some entertainment, and listen to music. This concept of organized retail marketing, which has caught on like lightning, is really just the creation of a distribution network that cuts out various intermediary costs and creates a much smoother interface between manufacturer and customer. This organized network which bridges the distance between the manufacturer and the consumer has seen many of the world's leading entrepreneurs successfully walk down a particularly profitable road. With total sales going up to $6.6 trillion, the industry today is the world's largest private industry and accounts for over 8 per cent of the GDP in western countries. And now, it's India's turn. Today, we stand at the crossroads of a retail revolution. After 50 years of unorganized retailing and fragmented kirana stores with very basic offerings, fixed prices, zero usage of technology and little or no ambience the industry have finally begun to move towards modernization, systematization and consolidation.

Retailing has now become a key growth area. There has been an attitude change in the way the Indian consumer thinks about shopping. What, were and how they buy is now the big question. Over the last decade, there has been a significant evolution in his psyche, a change that has been carefully recorded and documented by behavioral pundits. Although it is most noticeable in large metros, its impact is also seen in small towns. The change was kicked off by the economic liberalization of the 1900's and accelerated by the media (cable) boom following the Gulf War, when the radical explosion in media images exposed the Indian consumer to the lifestyle enjoyed in more affluent countries. And even within his own country. Earlier, it was the lack of consumer culture along with low incomes that

Retailing A study

prevented the development of such formats. But economic growth has now triggered off a spending spree, with India's middle and high-in-come population suddenly realizing that they have enough disposable income to go for the good times. As the low-income base shrinks, there is an everincreasing expansion of the higher income groups, with a corresponding demand for consumer goods that allows the deeper penetration of high quality and higher priced products. The early indicators of this revolution are the mushrooming of better quality retail outlets, a profusion of brands and various product options. The Indian consumer who can discern a clear value propositions and unbeatable ranges at unbeatable prices served to him on a platter. The retail industry is now beginning to evolve. Traditionally, most retailers have very localized operations but this nature of the industry is fast changing with the awareness that sources must be developed and a proper merchandising system put in place. The pace of transformation has accelerated and today India has over 12 million retail outlets. As a phenomenon, retail marketing has a radical impact and can bring in new technologies, systems and mindsets. It can improve overall labour, productivity and employment, all in the name of providing the consumer with a better range of products at better prices in a better ambience.

Retail, India's largest industry is driven by the markets' ability to provide better products in a comfortable ambience at affordable prices. The growth of large multi-brand apparel outlets is one result. These outlets are usually 20,000-50,000 sq ft in size, have their own parking space, and separate counters for perfumes, accessories, men's wear, women's clothing and children's clothing. Some stores also have toys, books, home wear, footwear and music. Some of these retailers have begun to develop a private label brand, to supplement their range and improve their margins. These have

Retailing A study

become significant brands in their own right. Similar departmental stores/multi brand outlets are likely to develop into a significant format in the Indian market over the next decade. The players who can make organized retailing an integral part of India will be the ones who reap the benefits at the end of the change process. The industry however will have to work in tandem with the government and manufactures to build a more positive environment for retail and cater to the demand for better products and retailing from India's first generation of demanding cash rich consumer.

Introduction
Retailing is the final step in the distribution of merchandise - the last link in the Supply Chain - connecting the bulk producers of commodities to the final consumers. Retailing covers diverse products such as foot apparels, consumer goods, financial services and leisure. A retailer, typically, is someone who does not effect any significant change in the product execs breaking the bulk. He/ She is also the final stock point who makes products or services available to the consumer whenever require. Hence, the value proposition a retailer offers to a consumer is easy availabilities of the desired product in the desired sizes at the desired times. In the developed countries, the retail industry has developed into a fullfledged industry where more than three-fourths of the total retail trade is done by the organized sector. Huge retail chains like Wal-Mart, Carr four

10

Retailing A study

Group, Sears, K-Mart, McDonalds, etc. have now replaced the individual small stores. Large retail formats, with high quality ambiance and courteous, and well-trained sales staff are regular features of these retailers.

Top Ten Retailers Worldwide

Rank Retailer 1 2 3 4 5 6 7 8 9 10 Wall-Mart Stores Inc. (USA) Carrefour Group (France) The Kroger Co. (USA) The Home Depot, Inc. (USA) Royal Ahold (Netherlands) Metro AG (Germany) Kmart Corporation (USA) Sears, Roebuck and Co. (USA) Albertson's, Inc. (USA) Target Corporation (USA) No owned 4178 8130 3445 1134 7150 2169 2105 2231 2512 1307 of stores Sales Millions $180,787 $61,047 $49,000 $45,738 $45,729 $44,189 $37,028 $36,823 $36,726 $36,362 US$

Overview of Indian retail sector

The retail sector in India is witnessing a huge revamping exercise as traditional markets make way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Western-style malls have begun appearing in metros and second-rung cities alike introducing the Indian consumer to a shopping experience like never before. Rated the fifth

11

Retailing A study

most attractive emerging retail market, India is being seen as a potential goldmine. It has been ranked 2nd in a Global Retail Development Index of 30 developing countries drawn up by A T Kearney. The list was developed as a response to requests from retail chains facing saturated demand in most western markets.

Evolution of Indian retail

Historic/Rural Reach Traditional/Perva sive Reach Government Supported

Modern Formats/ International

Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls

PDS Outlets Khadi Stores Cooperatives Convenience Stores Mom and Pop/Kiranas

Weekly Markets Village Fairs Melas

Source of Entertainmen t

Neighborhood Stores/Convenie nce

Availability/ Low Costs / Distribution

Shopping Experience/Efficie ncy

India's vast middle class and its almost untapped retail industry are key attractions for global retail giants wanting to enter newer markets. A.T. Kearney has estimated India's total retail market at $202.6 billion which is expected to grow at a compounded 30 per cent over the next five years. . Indian retail market is growing at a very aggressive rate today, which contributes to some 14% of the countrys GDP. Experts feel that the organized retailing sector is going to emerge as the biggest source of employment in coming days. Several reasons and trends have lead to rise of this industry such as rising income levels, growing literacy, increase in

12

Retailing A study

media penetration, etc. In overall the retail sector has immense potential and the sector is eyeing new heights with high growth rate with opening up of new avenues by tapping new markets. Retailing in India is thoroughly unorganized. There is no supply chain management perspective. According to a survey b y AT Kearney, an overwhelming proportion of the Rs.400,000 crore retail market is UNORGANISED. In fact, only an Rs.20,000 crore segment of the market is organized. The Indian retail sector is worth roughly $292 Billion, and roughly 2% of this is classified as organized retail. Of the 12 million stores in India almost 95% are less than 500 sq. ft in area. The retailing sector in India is expected to grow at roughly 8.3% during the next 5 years, with organized retailing growing at rates anywhere between 24 to 49%. From supermarkets such as Big Bazaar or Food world, which are large selfservice stores selling a variety of products at discounted prices to malls and department stores such as Crossroads, Lifestyle and Westside, the Indian consumer is fast catching up with his / her global counterpart. New retail stores have traditionally started operations in cities like Mumbai and Delhi where there has been an existing base of metropolitan consumers with ready cash and global tastes. The new perspective to this trend is that new entrants to the retail scenario should first enter smaller cities rather than focusing entirely on the metros. Spending power in India is not concentrated any more in just the 4 metros (Delhi, Mumbai, Chennai, Kolkata ). Smaller but upcoming cities like Chandigarh, Coimbatore, Pune, Ahmedabad, Baroda, Trivandrum, Cochin, Ludhiana, Simla etc will fast be catching up to the metros in their spending capacity.

13

Retailing A study

Cities in south India have taken to the supermarket style of shopping very eagerly and so far the maximum number of organized grocery and department stores are in Chennai, Bangalore and Hyderabad. The north has a long way to go to come up to par. International stores now prefer to gauge the reaction of the public in these cities before investing heavily in a nationwide expansion. Milou, the Swiss childrens wear retailer, recently opened up its first store in Chennai, bypassing Delhi and Mumbai. Besides the urban market, Indias rural market has just started to be seen as a viable option and companies who understand what the rural consumer wants will grow to incredible heights. The bulk of Indias population still live in rural areas and to be able to cater specifically to them will mean generating tremendous amounts of business. Business, specifically retail business must focus on the most important factor in the Indian mind-set----Value for Money. Indian consumers are ready to pay almost any amount of money for a product or service as long as they feel they are getting good Value for Money. This is often misconstrued as being tight fisted or interested in lower priced and/or lower quality products.

14

Retailing A study

E-retailing in India
Want to kiss goodbye to the jostling crowds at your favorite shopping mall? How about buying online?
The internet revolution has brought a big change in the country. Information from across the world is available on your fingertips, and communicating with anybody across the globe has become cheap and easy. Along with this, there is another big transformation happening in the retail sector. People are shopping online, the phenomenon being named as online retailing or B2C (Business-to-Consumer) or e-tailing. There are players providing online products, services and/or information.

The trends and the future

The online retailing market in India, currently pegged around Rs 255 crore, is expected to grow to 4,000 crore by 2006-2007. According to the Internet and Online Association, while railway, airline and bus ticketing comprises almost 63 per cent of the market, the remaining 37 per cent comprises categories such as books, music, DVDs and festival shopping. Going by

15

Retailing A study

these statistics, the online retail industry definitely seems to be on an upswing.

Means of payment during online retailing

Credit card All kinds of Electronic money, Ecash (or digital money) Pay by mobile phone Cash on delivery (C.O.D.) Cheque Money transfer / delivery on payment

Has online retailing actually taken off?

"Certainly not," says a leading Chennai-based retail expert. "Retail itself has just evolved in India. Online retail has a long way to go," he says. At the same, this retail expert also says that online retailing does have potential in India, "The online players should concentrate more on frequently used categories such as grocery items for which one doesn't necessarily want to touch and feel the product. Even internationally, online retailing first took off in the grocery segment." "Online retailers could also look at selling basic fashion items such as a white t-shirt, hankies or socks which are quite commoditized. But we haven't reached a stage where real fashion can be sold online," he adds "The online players should concentrate more on their logistics and distribution, instead of just expanding their catalogues. The Indians will definitely take some time to buy fashion or white goods on the Net," says the spokesperson of a large format retail store in Chennai.

16

Retailing A study

Foreign Direct Investment in Retail

India with a population of more than one billion has become a magnet for many international industries that found their growth to be stagnating due to a saturated domestic market in their countries. With the government showing inclination in allowing FDI for high end and grocery retailing, the idea of permitting FDI in the Indian retail sector is slowly gaining momentum. The Government may initially allow overseas retailers to set up shops only in major cities. Again, there will be limits on the number of outlets for each company, the size and nature of the outlets. Besides, FDI will be allowed in phases and in select areas only, something that China did when it allowd FDI in its retail sector back in 1992. An analysis on the various aspects of permitting FDI in the Indian retail sector is presented below.

FDI in Indian retailing:

Advantages
There definitely is a strong case for permitting FDI in retailing in India. At present, industry players as well as the government is in sync to take this crucial and vital step, which would pave way to a structured retail industry in India. A critical analysis of allowing FDI in the Indian retailing industry is as follows: Change in competitive landscape: A study by AT Kearney on global retailing trends reports that India is least competitive and least saturated of all major global markets. One definite advantage of FDI inflow in retailing would be an increase in competition. FDI can be a powerful catalyst to spur competition.
17

Retailing A study

Competition is the key to diffusing FDI-introduced innovation across Indian retailing. India can become a giant in a short time span in food processing and textiles. Supply chain improvement: Retailing is a front-end industry. Therefore, FDI investment would drive the growth in the entire supply chain. For example, McDonalds and Metro set up their own supply chain when they entered India by adopting international standards for their Indian supply chain. Investment in technology: Technology in Indian retailing is still at a nascent stage. Widespread use of barcode readers and computerization of records at retail outlets is the only visible barometer of advancement in technology. Foreign retailers currently own most cold-chains in the retailing industry. The allowing of FDI in the retail would help in introducing state-of-the-art retail technologies such as an advanced inventory management systems into the market. Manpower and skill development: Currently, for retail is a non-glamour industry in India. Also, there are no specific curriculum available training people in retailing skills. Recently Pantaloons India has tied up with Wekingkars Management Institute to offer a programme on retailing skills. Allowing foreign invst. would therefore ensure a greater flow of retailing talent into the retailing industry in India. Tourism development:

18

Retailing A study

One lesson that has been observed from the growth of Dubai and Singapore has been that a strong retailing sector can prove to be major boost to the tourism industry. The consumer electronics retailing in Singapore and gold retailing in Dubai are extremely popular in the international shopping community and have acted as major drivers of growth in these cities. Greater sourcing from India: Once foreign players setup their base in India, they would also start increasing the levels of their sourcing from India. A point in case of Wal-Marts sourcing from China grew by almost five times after FDI was allowed in China and Wal-Mart was permitted to setup its base. A similar trend can happen here too. Up-gradation in agriculture: A long term benefit of FDI in food retailing would be the transfer of global best practices to the Indian farmer. McDonalds and Metro already have agronomists in their team who work with the farmers and educate them on modern practices. In India too, ITC has been working on a similar initiative. In fact, ITC has gone a step ahead and set-up Chaupals, where villagers can pick up grocery as well as other household items in a more organized manner. Efficient small and medium scale industries: A huge part of retailing comes from small and medium scale industries, especially in the food processing sector. Permitting FDI in retail would create a drive towards efficiency in the related back end small and medium scale industries.

19

Retailing A study

Growth in market size: Introduction of foreign investment is likely to be accompanied by a huge explosion in the whole sector due to the greater spending power and better shopping experience. Greater productivity: A combination of competition, industry status, better skills, greater scale, modern technology and better upstream processes, would result in a huge productivity growth. Benefits to government: There are several benefits to the government. They can be broadly classified into three categories. o Greater GDP: Retailing currently contributes to almost 10 percent in the Indian GDP and is the largest private industry. India is targeting for its GDP to grow by 8 to 10 % per year. This requires raising the rate of invst. as well as generating demand for increased goods & services produced. o Greater tax income: Tax collection from modern format stores is much easier from organized retail sector. Also, the implementation of Vat would be much easier. Modern retailing formats would also create a new set of income tax paying population, in the form of the

20

Retailing A study

skilled labour force that would be employed in the modern format stores. o Huge employment generation: Retailing generates almost eight percent of the total employment in this country. But this is still less than the 12 percent figure seen in the US and other countries where retail is sufficiently modernized. o Easy to buy Modern retailing is designed not only to provide consumers with a wide variety of products under one roof, but also of assured home delivery and information feedback between consumers and producers. A modern retail outlet will also make it easy to buy on credit.

Disadvantages
There are some strong arguments against opening up the Indian retail sector. Some of the specific reasons against permitting Foreign Direct Investment (FDI) in this sector are as follows: Competition for Indian retailers: The Indian retailing market is in a state of inefficiency due to the entry of foreign retailers. Their main fear is that the entry of MNC giants like Wal-Mart, Tesco and Carrefour will throw the thousands of the kirana store owners out of business, leading to millions of job losses. High cost of capital for Indian retailers:

21

Retailing A study

The cost of capital incurred by an Indian retailer, especially the smaller players, is significantly higher than that of foreign players. In case of the mom and pop stores in India, availability of capital from the formal lending sources is pretty difficult. Such a situation would lead to a huge price disparity between the foreign owned retail chains and local Indian retailers. Devising alternate credit delivery mechanism in the markets can provide loans to smaller retailers at lower rates which will reduce the cost of capital to the domestic retailers making them more competitive

Evolvement of Franchising in India & the Road Ahead

The retail sector in India has seen immense activity in the last couple of years. This can largely be attributed to the availability of better infrastructure, improved technology support and an increase in purchasing

22

Retailing A study

power among consumers. This has further led to a need for retailers to spread beyond geographical boundaries and extend their reach to every conceivable corner of the nation. In fact, the goal of retailers has shifted from just capitalising on the available demand in the area that they exist, to creating demand in new regions. In addition to this change in attitude, franchising as a concept has also taken root and is getting stronger with time, because it provides the ideal way to tap potential markets that might be out of reach of a retailer. In US, almost a third of the retail sales come from franchised business. Globally, there are over a nine hundred thousand franchised outlets with sales exceeding a couple of trillion of dollars. In India, the industry is a little over ten million dollars. What is franchising? The dictionary meaning of a 'Franchise' is the license to sell a company's goods or services in a certain area supported by a pre-defined business model which has been successful over a period of time across locations. Franchising is a business model that basically implies replicating a successful business format across a number of locations through a network of entrepreneurs. It allows a businessman to expand his enterprise to different markets by making use of entrepreneurial talents of people, who, so far had not been associated with the enterprise. Indian Scenario India being a geographically diverse country, poses numerous problems for retailers considering expansion. This is where franchising steps in. In fact, with time franchising has forayed into all industries from food, apparel, fuel and education to hospitality, lodging and childcare. The concept initially started emerging in India in the 1990s, was pioneered by the IT education
23

Retailing A study

sector. In spite of its presence in the nation for over two decades, franchising is still at a very nascent stage. However, reportedly, this industry has clocked the growth rate of 25-30 per cent and is the second fastest growing industry. Also, according to research studies, 45 per cent of the sales come from franchised business. At the same time, India has the largest density of retail outlets in the world. The ideal way of expanding the reach of these outlets is through franchising. These facts clearly indicate the scope available for franchising in the country. A number of international companies have forayed into the country. Though the concept of franchising has been existing in India for some time now but after the arrival of the MNC's like McDonald's, Nike, Levi's, Domino's, Indian entrepreneurs and companies have woken up to explore the franchising route. Despite this, one can safely say that Franchising in Retail has just taken off in India. Currently, franchise businesses in India contribute a very small percentage to the country's GDP. It all started off with the apparel and footwear segment where we saw the entry of international brands like Nike, Adidas, Reebok and then the other sectors took off. Namely, IT Education, Preparatory Education, F&B and more recently the Entertainment industry Today, even with over 1000 odd franchisors in the country, both domestic and international, the industry has yet to take off in a big way. In addition to the market phenomenon, the government hasn't been able to recognize franchising as an industry. It is still governed by the age old contract act

24

Retailing A study

unlike other countries where one can get to see a full fledged franchise governing body supporting both the franchisors and franchisors equally. Over the last decade, it has been noticed that a number of operators who have joined the franchise bandwagon have started evaluating franchising as a growth option. The industry estimates a turnover of Rs.10,000-plus crore from the Franchise sector itself, so the scope is humungous but there are areas where we need to be geared up keeping in mind the growth potential. In fact, the franchise route has pushed several Indian firms like Tropical Clothing Co., JD Institute of Fashion Technology, Amoretto's Retail and others to eye the international market in a big way. A lot amongst our home grown brands are looking at multiple arrangements through Master Licensing, Joint Ventures both in the domestic markets and internationally, which goes to prove that the franchise industry is here to stay. The Deal is very simple - For the Franchisor; it is the fastest and cheapest method to put his product to millions of people wherein otherwise he would have to invest huge time, capital, resources etc. on a daily basis. For the Franchisee; he gets a business system which is proven to be successful over a period of time across locations, gets a bigger share of profits rather than sitting on his rental income and of course social recognition.

Sector analysis
Apparel & Footwear: The more popular and one of the first few sectors to adopt the franchising route, has multiplied since it first came into existence. Initially, it had the likes of the Batas and the Raymonds, who experimented the franchise route but now you see a large number of brands like Lee, Wrangler, Allen Solly, Nike, Reebok, Zodiac, Wills, Tommy Hilfiger, Arrow, Khadder, entering the retail market in India through the franchise route. Jewellery & Watches: 25

Retailing A study Apart from the apparel retail, the specialty retail segment has seen a major boom recently. It began with Titan and Tanishq to start off with. After a fair amount of success, a large number of brands like Oyzterbay, Carbon, Orra, Ethos have come into existence and have adopted the franchise route for a faster market penetration. In addition to the franchise format, lots of these brands have taken to the companyowned-and-operated format or hybrid formats since the business involves large inventories resulting in huge capital investments, especially in the premium and metropolis locations. Home: Another sector is the Home Furnishings sector which has seen a huge growth in the past five years, with brands like Style Spa, Durian, Kitchen By Design, the Welspun Group's Spaces retail brand, and others venturing into the retail segment. The formats on which this sector operates, is basically Product Distribution and have adopted pure franchise models with the franchisee involvement as the prime objective, since the business is more personalised and the response to the customer demands / requirements are the key factors for the success / failure of this business. Telecom: The Telecom or the Communications industry is one which has seen humungous growth in the past decade. From Rs. 32 to 50 Paisa a minute of call rates, the telecom industry has come a long way. With players like Idea, Airtel, Hutch, Reliance, TATA Indicom in the foray, the telecom industry has become going strong with each year passing. All the players have taken to the franchise route to service their customer base, with maximum support to the franchise partners. Education: In India, the education sector actually pioneered the concept of franchising, with the initial outburst of the IT Training center. Typically, in the education sector franchise model the franchisee makes all the investments as well as the day-to-day operations of the business. An average franchise requires an investment to the tune of Rs.15-16 lakh, depending on the location and category of education. Operationally, the franchisor provides support like site selection, 26

Retailing A study layout designing, staff recruitment & training, course material, advertising & marketing, certifications etc and the franchisee is responsible for all day-to-day activities of the center, local marketing, financial administration etc The desired franchisee profile is someone from the education background so that the franchisee understands the system in a better way and can double up as the faculty also. The education franchise sector was sub-divided into the following categories: IT Training including Software & Hardware (Aptech, NIIT, Jetking, and IIHT), Vocational Education (JD Institute, NIFD, and Pearl School of Fashion), Preparatory Training (Brilliant Tutorials, IMS, Aakash Institute etc.), Kids Education (Mother's Pride, Euro Kids, Shemrock. Health & Beauty The Healthcare Services sector is

witnessing rapid growth across the world reaching the $8 trillion market. The Indian market is estimated to be around Rs.8,000 crore annually and growing at a rate of 10 per cent per annum, with the entry of several private players in the healthcare business in the last decade, things seem to be improving shifting from the age-old state run clinics/ hospitals to state of the art health clinics/ hospitals / pharmacies. Some of the names include Apollo Healthcare, Escorts, Ranbaxy Laboratories, Max Healthcare others Besides these players in the healthcare services sector, there are several else who have come up in allied services like diagnostic centers, pharmacies, etc. A brief analysis of the various sub-sectors & opportunities within healthcare is provided below: Healthcare Services Healthcare services are divided into three sub-categories primary, secondary and tertiary. Currently, there is a fair amount of activity happening in the primary 27

Retailing A study category. Apollo Health & Lifestyle Limited is rolling out its franchised Apollo Clinics across the country. These clinics provide primary healthcare services, diagnostic facilities and a pharmacy under one roof. They follow a pure franchise model whereby the franchisee has to invest in the clinic as well as manage the day-to-day operations of the same. As far as secondary & tertiary sectors are concerned, most of the activity is limited to management contracts, whereby the franchisee / investors are required to set up the facility as per the specifications of the healthcare service provider. The service provider provides its brand name and expertise and is also responsible for the day-to-day operations of the same. Some of the players taking this route are Apollo Hospitals and Max Healthcare. Diagnostic Services Diagnostic services is another area where a number of players have entered in the last few years. These include Dr. Lal Path Labs, Dr. Batra's Homeopathy Clinics. Typically the business model followed by most of these players is a hub and spoke operation. In almost all cases, the collection centers are franchised out. In some cases, even basic diagnostic tests are also handed over to the franchisees. However, in all the cases, the companies themselves control the critical diagnostic facilities. Retail Pharmacies At the retail level, it is the pharmacy chains that have started emerging now. Major players include 98.4, Guardian Pharmacy, CRS Health, Health & Glow, the Trust Chemists & Druggists stores etc. All these companies are trying to fill the gap of reliable pharmacies with a focus to be much more than a normal neighbourhood chemist through the wider selection of products and services they offer. Their franchise models are working in the typical specialty retail franchise style, which means that the franchisee invests in premises, interiors & stocks and manages the show on a day-to-day basis. The franchisor supports by way of advertising, sourcing and other corporate functions. Beauty & Slimming Some of the major brands within this sector include Kaya Skin Clinics, VLCC, Personal Point and Lakme Salons. Reasons are quite obvious the need to look

28

Retailing A study and feel good!! And, the rapid growth of various national and regional beauty brands bears testimony to the fact that both consumers and franchisees are lapping up this sector. The services offered by most of these brands include slimming, beauty services, hair care, skin care, and fitnessThe typical franchise formats within this sector vary from management contracts to joint ventures to pure franchises. Catering Services The Indian scenario: Explosion of coffee shops; the growing numbers of pubs & bars; the success of the South Indian cuisine restaurants; and the crowds at the local dhabas prove the fact that the Indian consumer is willing to spend money on eating out. The increased acceptability of eating out even within conservative families is demonstrative of the changes in our socio-cultural behavioral patterns. Gradually, the Indian consumer is also becoming adventurous and is trying out a variety of cuisines. The growth whatever has been seen has been restricted to A / B Category towns and haven't taken a pan India presence. The growth in the F&B industry in India till date has been through company-owned-and-operated outlets which involves a huge amount of capital investment. Companies like Barista Coffee Co. have preferred to retain control over the standardisation of their format, in the absence of assured logistical support and human resource skills. Arguably, franchising in the Catering Services has never been able to take off in India because of a variety of factors. These include: Logistics & supply chain mechanisms in India are still developing Lack of skills & the attitude to manage a food business F&B business involves fairly high investments Despite the above-mentioned issues, several companies have already started to experiment the franchise route to grow aggressively in the Indian market. Additionally, the interest from overseas F&B franchisors to enter the Indian market through the Master Franchise route is a positive sign for the F&B industry graph. 29

Retailing A study

Convenience Stores Recently, we have seen a growth in the Convenience store business but in spite of the positive signs, franchising is way too far for the sector. Right now the convenience store business is at the experimental stage the seven Dollar stores operating in India are representative of the early days of convenience discount formats. in India what is needed is a business model that takes into account the nuances of the Indian market and be localised. Food, Grocery & Discount Retailing South India has led the way in Food & Grocery retailing with retailers like Nilgiri's and Subhiksha expanding through franchise formats across states. Discounting is one feature in India which cannot be ignored. We have seen all major brands go into the discounting mode almost twice a year some even more often, which gets absorbed in the system. Recently, we all have witnessed the sudden growth of Second's outlets or Factory Outlets(e.g. The Loot Store outlets) where the discounts go on all the year around. Typically, the Factory Outlet business is majorly a franchised business where all companies have started exploring.

In Conclusion
The Franchising Industry received a fillip in during the 1990s due to the opening up of the economy. Since, then, sales from franchised business have grown at an average rate of 20 30 per cent compared to an economic growth rate of 6-8 per cent. The Franchising Association of India (FAI) predicts that the introduction and penetration of new technology will create new opportunities for franchises. Mergers and Acquisitions will increase as larger franchisers take over smaller ones. These factors combined with the low rate of franchise failure and considerable return on everybodys investment, have made franchising a major force in the Indian economy at this point.

FRANCHISING MARKET
30

Retailing A study

According to recent studies, India is the worlds second largest franchise market and is growing at the rate of 25-30 %

Get the IT power in RETAIL

Technology is the backbone of any successful business. The proper implementation of technology can work wonders for retail revolution. In India, probably the retail industry is the recent to be bitten by the IT bug is retail and the bite seems to be a hard one too. Anyone who is playing some role in the retailing show, even a cameo, seems to be honing their IT prowess. And why not, as usage of IT not only makes operations easier, but also makes it cheaper in the long run. Result: a winwin solution for everyone including the consumer. Surely it's a great idea to go techsavvy for all - something, someone, somewhere in retailing. But what is debatable is the scope of IT and to what extent does it make an impact? Aspects such as the length, width and depth of IT and its role are often unclear as is its role today and tomorrow. The answer lies in the very word IT...Information Technology.

31

Retailing A study Information rules and the technology that brings it to notice with efficacy, decides the rulers. Organized retailing is not just selling various goods under a roof displayed in an organized fashion. It is a whole new paradigm adopted to facilitate an enriching experience for the entire activity of goods exchange between a producer and consumer in an efficient manner. It optimally uses the entire supply chain, the benefits of economies of scale and scope and passes them judiciously to the customer. Due to the volumes involved, one often finds by activity-based costing that even at regular store prices, these retail chains can maintain a healthy margin despite the costs of establishing and maintaining such elegant looking retail outlets at various places. Therein lies the crux of the business of organized retailing. But the margins are thin and rope tight. And with increased competition, the margins are likely to be even thinner. Thus, technology often provides the crucial lead. The entire supply chain, right from the supplier via distribution centers to the customers, involves a whole lot of activities, which affect the final product and its cost in a large way. IT helps synchronizing these activities. The purpose of any IT implementation is to make the whole process 'SMART' (a leaf plucked from our Indian Governance philosophy): Simple, Moral, Accountable, Reliable and Tenable. The same can said about the purpose of IT in Retailing. Over the years as the consumer demand increased and the retailers geared up to meet this increase, technology evolved rapidly to support this growth. The hardware and software tools that have now become almost essential for retailing can be into 3 broad categories.

Customer interfacing systems

Bar coding and scanners Point of sale systems use scanners and bar coding to identify an item, use pre-stored data to calculate the cost and generate the total bill for a client. Tunnel Scanning is a new concept where the consumer pushes the full shopping cart through an electronic gate to the point of sale. In a matter of seconds, the items in the cart are hit with laser beams and scanned. Payment through credit cards has become quite widespread and this enables a fast and easy payment process. Electronic cheque conversion, processes a cheque

32

Retailing A study electronically by transmitting transaction information to the retailer and consumer's bank.

Operation support systems

ERP System Various ERP vendors have developed retail-specific systems which help in integrating all the functions from warehousing to distribution, front and back office store systems and merchandising. An integrated supply chain helps the retailer in maintaining his stocks, getting his supplies on time, preventing stock-outs and thus reducing his costs, while servicing the customer better. CRM Systems - The rise of loyalty programs, mail order and the Internet has provided retailers with real access to consumer data. Data warehousing & mining technologies offers retailers the tools they need to make sense of their consumer data and apply it to business. CRM (Customer Relationship Management) Systems allows the retailers to study the purchase behavior of consumers in detail and grow the value of individual consumers to their businesses. Advanced Planning and Scheduling Systems - APS systems can provide improved control across the supply chain, all the way from raw material suppliers right through to the retail shelf. These APS packages complement existing (but often limited) ERP packages. They enable consolidation of activities such as long term budgeting, monthly forecasting, weekly factory scheduling and daily distribution scheduling into one overall planning process using a single set of data.

Strategic decision support systems

Store Site Location 33

Retailing A study Demographics and buying patterns of residents of an area can be used to compare various possible sites for opening new stores. Today, software packages are helping retailers not only in their locational decisions but in decisions regarding store sizing and floor-spaces as well. Visual Merchandising - The decision on how to place & stack items in a store is no more taken on the gut feel of the store manager. A larger number of visual merchandising tools are available to him to evaluate the impact of his stacking options. The SPACEMAN Store Suit from AC Neilsen and ModaCAD are example of products helping in modeling a retail store design. INFORMATION REQUIRED!! We hit upon the first real incentive for retailing people to have a upon IT system in place. the need for collaboration. Integration of information from the point of sale (POS) system at an outlet to the desktop of a vendor supplying the good, real-time is something that only a highly evolved ERP system can provide. Thats the first role of IT. Also, in an organized retail store there a large number of goods or articles available for sales. Every mid-sized to large retail outlets deals with 30000-75000 different types of products or Stock-Keeping Units(SKUs). Keeping a track of which SKU is getting sold where and how much of them are getting sold and how soon would we need refilling of stocks, is something almost impossible to handle manually. So we hit upon the second incentive- the need for dynamic replenishment. But all said and done, we need a sound and in-depth comprehension of the information received to predict the future. This brings us to incentive 3: Forecasting. And finally, we need assistance to perform the most basic management function: Planning. All these four functions: Collaboration, Planning, Forecasting and Replenishment or the CPFR, forms the backdrop for a technology splurge in retailing. The in-vogue concept of Efficient Customer Response (ECR) also originates from this philosophy. Indian retailers, in reality are far from implementing this in its true avatar. Most retailers percent of their system, thus often reducing a full blown Management Information 34

Retailing A study System (MIS) to a mere Merchandise Management system. Organized retailing in India is still very young. Most players are realizing the fact that if supply chain is the backbone, then Information Technology serves as the nervous system. The ultimate beneficiary has to be the customer. This is often quoted in the MasterCard way: There are some things in business which cannot change, for everything else there is IT.

Sectoral Analysis Of the Retailing

Organized Food Retailing
In a country where there are grocery shops at every street corner and a vegetable & fruit vendor near each bus stop, how can organized retail of food become feasible? To counter the unbeatable advantages of convenience of a hop, skip and a jump access and home delivery, organized retailers seem to have just one option - offer attractive prices to the consumer. A successful retailer's winning edge will therefore come from sourcing - how best it can leverage its scale to drive merchandise costs down, increase stock turns and get better credit terms from its vendors. There are obvious and hidden areas where costs can pruned and the benefits of this lower cost of retailing can be passed on to customers as lower prices,

35

Retailing A study which in turn should fuel demand. One way of trimming costs is if the pressure points in the long, often unnecessary, supply chain for produce and staples can be identified and suitably dealt with. This is easier said than done. The food supply chain in India is full of inefficiencies - a result of inadequate infrastructure, too many middlemen, complicated laws and an indifferent attitude.

Digest this
India is one of the largest producers of milk, fruits and vegetables in the world. Yet, the organized food retail business in the country is among the least developed. The irony is not so difficult to comprehend if one looks at the Indian food chain. From the farm to the store, the links are too many and full of problems. A large chunk of fresh fruits and vegetables is lost due to lack of post-harvest handling, storage and processing facilities. Tones of grains are wasted due to improper handling and storage, pest infestation and poor logistics management. Intermediaries or 'middlemen' gobble up a large portion of the earnings which should go to the farmer. Not only that, these middlemen caused delays which in a business of perishable goods can be lethal. The result is a chain stuffed with inefficiencies. For organized retail of food to be successful, it is important to get rid of these inadequacies so that costs are pruned and, more important, the benefits of the gains are passed on to the consumer. India has seen rapid developments in several areas, most notably in incomes, demographic shifts to younger populations and reach and exposure to media and different cultures. Indians shell out up to 53 per cent of their incomes on food. Food consumption has been rising at an average annual rate of about 10 per cent in nominal terms. However, the retailing of food and staples has remained largely unchanged. Over 90 per cent of all produce is sold via the wet markets with organized business accounting for just 2 per cent of food and staples retailing. Although the organized players, which emerged in the late 1990s, have established themselves quite firmly in the local markets, they have yet to make an impact on a national level. Subhiksha is large in Chennai and has just started working its way through Tamil Nadu whereas Margin Free operates in Kerala. FoodWorld has been the most

36

Retailing A study adventurous of the three - having ventured into more than one state - but is concentrated in the south. While most observers have accepted the role of large format organized retail in clothing and lifestyle markets, there are still some lingering doubts on how organized retail will perform in the foods and grocery segment in India. The underlying issue is - can organized retail in food and grocery compete with the 'mom-and-pop' stores, which offer the unbeatable advantages of convenience of access - you are sure to find one less than half a km from your house - and home delivery. Subhiksha, for example, works on a formula of one store every 1.5 km (although it started off with one store every 2 km). So these stores expect the customer to travel a bit or plan their shopping in advance. What will make the customer do that? Organized retail essentially can look to offer one or more of the following - better range of merchandise, better ambience or lower prices working on economies of scale. Of these, the last is what the large chains have focused on since it is something that a one-store operation cannot match. Subhiksha started off as a discounter - even its stores are designed to keep overheads low. Food World and Nilgiris seem to be treading a middle path - some amount of discounting combined with some effort at ambience. Looking at the trends in the last 2-3 years, discounting appears to be the direction where food retail seems to be heading and we believe that a successful national chain will be a discounter. While a discounter needs to keep store overheads low, its winning edge comes from sourcing - how best it can leverage its scale to drive merchandise costs down, increase stock turns and get better credit terms from its vendors. According to a study on food and grocery retail market by KSA Technopak, food retail sales make up for close to 63 per cent of total retail sales. In absolute terms, food retail sales had grown from Rs 3,81,000 crore to Rs 7,03,900 crore when the non-food retail sales grew from Rs 2,22,400 crore to Rs 4,19,000 crore. Also, the food and grocery sector now accounts for 14 per cent of total organized retail, after clothing and textiles (at 36 per cent) and watches and jewellery (at 17 per cent). 37

Retailing A study

Industry experts, however, say that soon food retailing will overtake both the categories since food accounts for around 50 per cent of a typical households income. Also Indian consumer are increasingly spending more on eating out as compared to 5 years ago which clearly indicates that there is high potential for food service players. The organized retail food and grocery sector constitutes the largest opportunity for growth and account for 2% of total sales at present. Urbanization, working spouses, increasing household disposable incomes and convenience of one stop shop with good ambience drive growth of retailing in India.

Growth of retail outlets in India

Number of retail businesses grew by 26% in past 5 years

Food & food services outlets grew by 33%

Non food outlets grew by less than 30%

Source: McKinsey

Indias Food Retailers

The major formats being followed for organized food retailing in India are supermarkets, discount stores, fresh product outlets, specialty stores, convenience stores and off price retailers.

A. Super Markets Food World

Food World is one of the biggest retail chains in India. The RPG group opened the first Food World outlet on May 9 1996 at Chennai, which was a 2400 square feet store. It is 38

Retailing A study the only national chain, having Foreign Direct Investment to the extent of 49% that is permitted in India. Now Food World, operates as a 51:49 joint venture with Dairy Farm International of the Jardine Matheson Group, a US $ 4.5 billion retail giant operating in the Asia-Pacific markets with the requisite experience. Food World has decided to concentrate more on local areas rather than to go for a nationwide presence in its expansion plans at the beginning. South India was chosen, with focus on Bangalore and Chennai and later in Hyderabad. With total 89 stores, in Chennai (30 stores), Bangalore (27 stores), Hyderabad (17 stores) and Pune (7 stores), two stand alone stores in Coimbatore and Mysore. A typical store is between 3000-3500 sq. ft. in size and carries about 5500 items. Foodworld handles on average 600 customers per day per store, which translates to 1.5 million transactions per month. It is estimated that the chain serves more than three lakh families. Food worlds merchandise is divided into six categories, fresh food, dry groceries, processed and canned foods, household cleaning, health and beauty and general merchandising. Food Worlds share of the organized retail market in the cities in which it operates is 62%, clearly a dominant share. The firm expects the number of Food World stores to increase to 125 by 2005. A smaller version, Food World Express is also planned to be launched in future.

Nilgiris
Nilgiris took birth as a small dairy farm in Ooty in Tamil Nadu in 1905. The present Chairman of Nilgiris, Mr. Chenniappan, understood the opportunities before him and started the Bangalore operation in 1939 as a small trader selling butter to the army people. Then he expanded the business in a large scale by establishing a huge dairy farm at Erode in Tamil Nadu in 1962, which was the major step in our growth.

39

Retailing A study Nilgiris grew gradually and presently handles 1-lakh liters of milk, 30,000 to 40,000 lobes of bread. In total we sell around 15000 products, out of which 90% are food products. We have 26 super markets spread over different states. Bangalore, Chennai, Coimbatore, Pondicherry, Guntur, Vishakapatnam, Vijayawada and Pune are our major centers of operation. The companys annual turnover at present is around Rs 220 crores.

Food Bazaar
FOOD BAZAAR' a division of Pantaloon Retail India Ltd is a chain of large supermarkets with a difference. It was flagged off in April'02. With store sizes ranging from 8,000 sq ft to 15,000 sq. ft. in Mumbai (two stores), Kolkata, Bangalore & Hyderabad, it is opening more stores at Gurgaon (Delhi), New Bombay & Nagpur. Food Bazaars core concept is to create a blend of a typical Indian Bazaar and International supermarket atmosphere with the objective of giving the customer all the advantages of Quality, Range and Price associated with large format stores and also the comfort to See, Touch and Feel the products are offered through the Mandi atmosphere created by displaying staples out in the open, all at very economical and affordable prices without any compromise on quality. This satisfies the Indian consumer and comforts her before making her final buying decision. Food Bazaar offers the Indian consumer the best of Western and Indian values This positioning platform of Food Bazaar is evident from the higher discounts and the wholesale price-points which is below MRP. Truly the Indian consumer now agrees with Food Bazaar: "Ab Ghar Chalaana kitna Aasaan.

B. Discount Stores Margin Free Markets

40

Retailing A study

Margin Free Markets is the largest retail chain in the state of Kerala and one of the leading retail chains in India. The first outlet of this chain started functioning on 26th January 1994 at Thiruvananthapuram. There are currently more than 275 franchisees of Margin Free Markets spread all over south India. The outlets are franchises and are not actually owned by the chain. Consumers are assured of quality, quantity and the fair price of the goods sold through the Margin Free Markets. Any retailer can upgrade his shop into a Margin Free outlet, by sending in an application to this society. If his application is accepted, he has to make the necessary investment required. These shops deal in the entire gamut of goods required by a home for its monthly consumption, viz., grocery, food and non-food FMCG items, fruits and vegetables, consumer goods & house hold articles. Margin Free outlets are typical discount stores, offering one-stop-shop convenience and self service facility at significant discount to its customers. Most of these customers, in time turnout to be its permanent customers, by taking discount cards, which permit them to obtain larger discounts than the non-card holders. The necessity to offer protection against the rising prices gave birth to the idea of Margin Free Markets. The idea turned out to be an instant success in Kerala especially because it is more of consumer state than a producing state. Grocery and FMCG goods are brought directly from the production units of the neighboring states. In the process of direct purchase from farmers and manufactures, the intermediaries are removed and apart of the margin or profits earned is disbursed among the consumers. The distribution to the different outlets under the chain is taken as a collective responsibility and is done with the objective to reduce the total transportation costs. 41

Retailing A study

Subhiksha

Chennai-based Subhiksha started its service in 1997. Beginning its journey from a single departmental store, at present this retail chain has 143 stores spread across length and breadth of the Tamil Nadu and Pondicherry, and has earned a total turnover of Rs 235 crore in 2002-03. Subhiksha expects to close the current fiscal with a total turnover of Rs 290 crore. According to Mr. R. Subramanian, the Managing Director of Subhiksha Supermarket and Pharmacy, the chain expects to earn a total turnover of about Rs1200 crore in 2008-09 as it plans to expand to other larger metros like Bangalore, Delhi, Bombay and Ahmedabad. The retail food and pharmacy chain plans to have 550 stores in the next five years with an anticipated investment of about Rs 145 crore for the expansion plan. The aim of Subhiksha is to setup an outlet every 2 km in residential areas, where the average monthly income is more than Rs 4000. The retail outlets under this chain are mainly organized on the concept of a discount store that meets all the monthly household needs of a family. Subhiksha not only serves its customers through its outlets alone but also meets their demands through the home delivery concept and currently, the company makes around 16,000 deliveries every month. Subhiksha controls price by direct sourcing from manufacturer and farmers, tight inventory control and logistics through the use of information technology. It has a centralized purchasing system. This eliminates multiplicity of billings, which would occur if the stores were to make independent purchases. It buys directly from distributors who sell at only a small margin above the mill prices and from 150 odd manufacturing companies. 42

Retailing A study

C. Fresh Food Outlets Namdharis Fresh

Namdharis Fresh, a subsidiary of Namdhari seeds is involved in the production, distribution and export of fresh vegetables and fruits. It is growing gradually to become the leader in organized retailing of fresh vegetables and fruits. Namdharis fresh, grows vegetables and fruits in its own fields and green houses. To meet the growing demand for fresh vegetables it also out sources produce from over 2000 growers. Procured vegetables are transported in refrigerated trucks to the air conditioned grading halls where they are graded hygienically and packed in bulk and consumer packs and distributed through its own outlets spread all over the city of Bangalore.. Thus by amalgamating both self growing activities and outsourcing from large number of farmers Namdharis Fresh aspires to become a successful organized food retailer.

Safal
The Fruit and Vegetables unit of the National Dairy Development Board (NDDB) was set up in 1988 with the objective of ensuring a direct link between the farmers and the consumers. The aim is to ensure that the customer gets the highest quality produce. The processed products of the unit are marketed with the brand name SAFAL. The Safal Group acts as the link between the farmer and the consumer in a procurement process that benefits both. The farmers get the most remunerative price and the consumers get the best produce at a reasonable price. A large and ultramodern central distribution facility was set up to handle fresh and frozen fruits and vegetables. Initial cleaning, grading, sorting is done followed by cooling to ensure the freshness till the product reaches the consumers.. 279 specially designed modern retail outlets have been set up in and around Delhi to market fresh and frozen fruit and vegetables, directly to the consumers. Each shop caters to large number of customers, with a capacity to sell

43

Retailing A study 1,600 kilos of fruit and vegetables a day. The shops are equipped with electronic machines that automatically weigh the produce and print item wise bills.

HOPCOMS
The city of Bangalore has a population of over 6 million. During the last four decades the population of the city grew by 600%. To cater the needs of the people in Bangalore, Department of Horticulture of the Government of Karnataka took an initiative in 1959 and formed The Horticulture Producer and Cooperative Marketing Society (HOPCOMS) with farmers as members. The prime objective of HOPCOMS is to promote and encourage the development of horticultural produce. This is achieved by selling horticultural produce through retailing and by providing cold storage and marketing assistance to its members. The Cooperative also provides training, technical advice and agricultural inputs to its members (farmers). The society has gradually grown big and presently it has 11,680 member farmers. HOPCOMS has set up retail outlets throughout Bangalore, Bangalore Rural, Mysore, Mangalore, Tumkur, Hassan and Kolar districts. There are around 239 outlets in Bangalore. HOPCOMS collects the horticultural produces directly from its member farmers as per the prefixed quota and sells them in these outlets. The selling price to the consumers too is also estimated to be about 10% less than the prevalent retailers price. Sales have steadily increased from around Rs 10 million to reach above Rs 400 million.

Rythu bazaar
Farmers in India realize less profit due to middlemen intervention. To free the farmers from the clutches of middlemen, the Government of Andhra Pradesh had came out with a new concept of establishing farmers markets called Rythu bazaar. The concept of Rythu bazaar benefits both the producer and the consumer. Farmer brings the produce and sells directly to the consumers and realizes better profits. On the other hand consumers get fresh vegetables and other produces at reasonable prices as the market operations are free from middlemen who increase the prices to many folds.

44

Retailing A study Rythu bazaar was first established in 1999. Presently there are 97 Rythu bazaars spread all over the state of Andhra Pradesh. The Government officials guide the farmers in forming the proposed bazaar. After studying the need of setting up a Rythu bazaar the State Government allots money to the Agricultural Produce Market. As per Andhra Pradesh State Department of Marketing estimation, over 6,000 farmers avail the benefits of this direct marketing facility. The total turnover from vegetables and other essential commodities in these middlemen free markets is about Rs 7.5 crores per week.

D. Speciality Stores MTR

It was way back in 1976 that MTR (Mavalli Tiffin Room) ventured into the business of retailing of groceries and other household general items by opening a Departmental store. Because of the popularity gained by the company by this period of times, the MTR Group did not face many problems in making the consumers to readily accept the products sold by its Departmental Store. Taking this lead now it has grown leaps and bounds. They have HACCP certificate and it is an ISO 9002 company. The firm now has 3 stores in Bangalore, that solely deals in its products. Officials at MTR say, with a view to make the products available, products are designed in all sizes small, medium and big according to the needs of end users. Target customers of the group are mainly the working women. MTR has opened its exclusive retail outlet in Bangalore in

45

Retailing A study 2001 and currently has three outlets. The company plans to open one unit in Chennai. With the basic strategy of making the product available to the target customers, MTR also distributes its products through various departmental stores and convenience stores. With a wide range of product categories and with a consistency in good quality products, MTR has made its successful presence in the South India and also in countries like U.S.A, U.K., Gulf, Far East (Singapore, Malaysia, Australia etc. MTR brands in some categories hold market leadership in the South of India. After being highly successful in South India, MTR decided to tap the Western and Northern markets of India.

Indias fast food restaurants Mc Donalds

Mc Donalds was founded by Ray Krok in 1954. Its the largest and best-known global foodservice retailer with more than 30,000 restaurants in 120 countries serving 46 million customers everyday. They plan to preserve their leadership position through great tasting food, superior service, everyday value and convenience. Their vision is to be the worlds best quick service restaurant experience. Theyre focused on three world-wide strategies. The most important is "Be the best employer for our people in each community around the world. 46

Retailing A study McDonald's opened its doors in India in October 1996. McDonalds in India is a 50-50 joint venture partnership between McDonalds Corporation [USA] and two Indian businessmen. Whether it be a Burger or a tikki the key is to provide customers with affordable, good quality product, whenever and wherever he wants it. McDonald's India has developed a special menu with vegetarian selections to suit Indian tastes and preferences. McDonald's does not offer any beef or pork items in India. In addition, they have re-formulated some of the products using spices favoured by Indians. Among these are McVeggie burger, McAloo Tikki burger, Veg. Pizza McPuff and Chicken McGrill burger. The Videshi McDonalds is gradually getting more and more Desi to woo the Indian consumers. Heres kudos to someone who seems to be playing the Think Global, Act local game just right.

Dominos Pizza

Domino's knows the rules of the pizza delivery game. Across the world, Domino's has earned the reputation of being a home delivery specialist. Thomas Monaghan founded Domino's with his brother James in 1960. More than 90% of its locations are franchised. Bain Capital controls 45% of Domino's. The company is the world's #2 pizza chain (behind YUM! Brands division), with more than 7,400 locations in more than 50 countries. It features several different styles of pizza with a wide array of topping options, as well as additional items such as bread sticks, cheese bread, and chicken wings. Domino's stores are principally delivery locations and generally do not have any dine-in seating.

47

Retailing A study Dominos Pizza India Limited spreads across India across 85 Locations in 22 Cities. In India, Domino's has made ordering pizzas a lot more simpler by introducing a single number across the country (dial 1600-111-123 and the call would automatically be transferred to the nearest Domino's store). Their Sales Model is Take away and deliveries, deliveries accounting for about 70% of their business.

Caf Coffee Day

CCD is Indias largest and premier retail chain of cafes with 250 cafes in 58 cities around the country. It operates in Mumbai, Delhi, Bangalore, Hyderabad, Chennai, Pune , Mangalore, Chikmagalur etc. It is not just a chain of caf but it is part of India's largest coffee conglomerate Amalgamated Bean Coffee Trading Company Limited. (ABCTCL),a Rs.300 crore ISO 9002 certified company. ABCTCL's most unique aspect is that it grows the coffee it serves in its cafs. It also invests in coffee research and contributes 15% to India's total coffee exports. It is one of Indias leading coffee exporters with clients across USA, Europe & Japan. The group is poised to operate 250 caf's, 400 coffee retail stores and 3000 coffee vending machines and post a turnover of Rs. 650 crores. 48

Retailing A study Recognizing the potential that lay ahead on the horizon, Caf Coffee Day embarked on a dynamic journey to become a large organized retail caf chain with a distinct brand identity of its own. Enthused by the success of offering a world-class coffee experience, CCD also plans to open a chain of 50 cafes overseas in 10 cities of Middle East, Eastern Europe, Eurasia, Egypt and South East Asia by the end of 2005.

SUBWAY
SUBWAY restaurant was founded in 1965 in Bridgeport, Conn. It was the brainchild of 17-year old Fred DeLuca and his family friend Dr. Peter Buck. Currently there are more than 20,000 locations in 71 countries, making it the second largest fast-food franchise in the world. Approximately 3,500 of these locations are non-traditional units such as convenience stores, truck stops, colleges/universities, hospitals, military bases, arenas, shopping malls, and more. In December 2001, the first Subway restaurant in India was opened in the Saket area of New Delhi. Due to cultural and religious preferences, some of the ingredients used by Subway restaurants in India have been changed, but they still have a bahut swaad (delicious) Subway sandwich made by a Sandwichwala (Sandwich Artist). The goal is to be the largest fast-food franchise in every market just as we have in the US and Canada and to have locations in every country of the world. Specifically, SUBWAY Restaurants plans to open 1000 additional locations in North America each year through 2005 and projects to have a total of 2,000 international locations

Pizza Hut
Its the largest pizza restaurant company in the world. It has 12,000 outlets in 86 countries and more than 300,000 employees. Their history began with one small restaurant and two young brothers, Dan and Frank Carney. In 1958 they were struck by inspiration and opened the first Pizza Hut in Wichita, Kansas, USA.

49

Retailing A study When they were setting up, they only had room for 25 seats and the restaurant sign only had space for nine letters. They wanted Pizza in the name, which left space for just 3 more letters. Because the building looked like a hut Pizza Hut was born.

Retail tourism
Over the past years, shopping has been a significant source of inbound tourism across the globe, particularly in South-East Asia and the Middle East. The retail tourism promotions further benefit the overall economy of the host countries, as it aggressively captures the tourist dollar, enhances shopping center infrastructure and gives desired impetus to the retail sector. The present boom in the retail and leisure sector, has paves a success way for the countrys retail tourism sector. With close to 300 shopping centers being developed and conceived throughout India, the economy is fast opening up and is all set to welcome the FDI. If the Indian retail industry develops along projected lines, the countrys economy would not only gain from certain obvious benefits of developed retail tourism, but would also enjoy some unique advantages. Functioning on the lines similar to the retail tourism in Dubai and Singapore, India would witness increased inbound tourist traffic, thereby boosting domestic tourism and the performance of shopping centers. Also, a developed retail led tourism effort in India would also promote indigenous brands and products worldwide. Moreover, with India being the home to numerous traditional crafts, there is a possibility of these skills receiving a boost with the proliferation of international retail tourism. However, to turn this dream of retail tourism in India into a reality, several immediate and complementing measures need to be carried out. Firstly, assurance of an active 50

Retailing A study Governmental support and partnership to conceive and promote shopping related events in the country is a must. Next comes the quantum leap, which ought to be taken to improve the existing infrastructure to promote international retail. Furthermore, it is equally necessary to develop world class shopping destinations in the country that are at par with international standards and paradigms. While laying a foundation of retail tourism in India, established locations an differentiators are the two extremely crucial factors that need to be considered. While the former refers to the cities, which are going to lead retail tourism, the latter talks about the USP of our retail tourism, as against the existing and future destinations. In terms of physically locating the prime shopping destinations in the country, it is certain that the spearheads need to be well connected and established urban metropolis, wherein the existing facilities and infrastructure could be enhanced without much effort. Specifically, one can narrow down the possibilities to Delhi and Mumbai.

51

Retailing A study

Health Retailing
Today when health and personal care have become commodities to be sold and promoted en masse, a significant rise is being witnessed in entrepreneurship through health retailing. Health centers are proliferating across India with the common aim of increasing their client base. Hot niches like weight reduction, weight gain and general fitness are targeted through concrete retailing strategy and a standardized model. Organized retail is at a lamentable 2 % in India compared to a whopping 85% in USA, 45% in Thailand, 55 percent in Malaysia and 20 % in China. Out of total retail market in India, health care occupies a meager 2% of the market share. Since players dealing with new niches like fitness, personality grooming, weight reduction and weight gain primarily operate in an organized retail format; their share in the retail market is abysmally low. However, a sudden spurt in consumer sending will certainly trigger a growth in this sector.

Health retail in vogue.

The growth in organized retail is largely driven by a young working population with a average age of 24 years. This class likes spending money not only on its personal grooming but fitness too. Commenting on the emerging pattern of consumer spending in this area. New inches like personality grooming and personal care are blooming today as a result of a growing health consciousness in the society. This trend is becoming a non

52

Retailing A study metro, non class and non-sex phenomenon and therefore it can be said that retail is here to stay and grow.

Market movers
Although, health retailing has made a humble beginning in India, there are some big payers in the market too. Prominent names like VLCC, Vandana Luthras Curls and Curves, Talwakers Fitness Cenre, Ramma Bans, Weight-and-Watch health club, Anjali Mukerjees Health Total and Dr. Nigams are considered to be precursors in his field. In the fragmented health centre market, fitness and diet industry are two industries that have branched out of the weight loss industry. Counter medicines like multivitamins, healthy oils and gels have a lot of scope to grow. Therefore many players are also going for the low fat, low carbohydrate food market. A comparative analysis would aptly show as to where they stand vis--vis each other indicating the kind of service and product range they offer. Most health retailers share common traits like defined sales territories, outstanding customer service, innovative and protected products and have almost done away with middlemen. They have also introduced a range of private label products to capitalize on an already existing customer base. Most of them have also initiated a concrete retail strategy in place fro smart entrepreneurship.

Retail Strategy
Studying consumer behavior and chalking out a retail strategy accordingly is the basic modus operandi in use. While VLCC focuses on a common retail identity program Talwarkars concentrates on providing high end solutions through world class equipment and premium services. The very raison detre for offering individualized care is defeated if health services are retailed. Dr. Nigams positioning strategy is changing from the clinic to mall format. It is all set to open a chain of slim restaurants and 100 retail counters across different malls in India. These counters will deal with weight loss meals, packages, machines and equipments where personal consultation and products will be offered.

53

Retailing A study For the first time in the world, Dr Nigams had opened a call center which handles 70008000 customers per month with doctors, dieticians, chefs and counselors to offer personal advice. All customers are routed to a centralized one-point center ensuring a standardized service. The retailing strategy is to go global while focusing on a core. Malls are the future but health and beauty malls are going to succeed only if they are situated within a hyper mall like apparel, shoe or food sections.

Bottlenecks
The industry has to address certain challenges before it can move ahead. Currently it is plagued by perception, credibility and differentiation problems. Overpricing of services and products is one consumer concern that needs to be addressed. While VLCC accepts that it charges more than its counterparts in the industry, it also adds that it offers value for money with extensive research and intensive expertise to bank on. Services is one area which comes with a blank price tag where each one can quote his or her own price the top notch services would have high end cost. With no fixed regulatory standards, this industry is also plagued by credibility problems. The drug and cosmetic Act, 1940 has no provision for nutraceuticals. Obesity and fever related products cannot be directly advertised. The only way the law will allow to advertise is through a loop hole where in an ayurvedi c registration can be claimed by putting any ayruvedic ingredient in the product. There are also no patent laws to protect the research done. Currently, health retailing is operating within a very loose legal framework in India. This government does not have fixed regulatory standards fro this industry. With lack of specified quality benchmarks, consumers may stand to loose in the long run.

Destination India
As Indian consumers have started spending more on health and beauty products, this sector is going to burgeon in the future. At present initial players account for a tiny share in health care and operate through small single outlet retails. These players will undoubtedly grow, but the future belongs to big players with a large retail set up and standardized retail model.

54

Retailing A study The overall size of the retail market in India is projected to grow at the rate of 36.05% by the year 2008, out of which the organized sector in retail marketing is expected to increase from 5000 crore to 160000 crore. According to a study conducted by The Associated Chambers of Commerce and Industry (Assocham), India. The study also points out that franchising will emerge as a poplar mode of retailing and will lead to proliferation in brands with foreign and Indian companies, acquiring strong brand equity for their products. This proliferation would definitely reflect in health retail. Also, with foreign direct investment (FDI) poised to come into retailing, technical know-how, availability of free money in the market and increase in quality benchmarks will boost health retail. As is rightly observed, new entrants will find ample room in this market for growth and expansion with this niche is yet to reach saturation point

Overview of major retailers in India

ENTERTAINMENT FUN REPUBLIC: What is FUN REPUBLIC?
Fun Republic is the name of the Young Adult Entertainment Entertainment Centers coming all across India. It is a destination to an integrated entertainment complex, where one can have fun in many a ways - movies, food or shopping. Fun Republic redefines fun. It's a place where young adults and families can experience entertainment like they've never experienced before. Every Fun Republic provides variety of choices for each age-group to thoroughly enjoy their visit to the center.

The Goal
The idea is to brand and standardize the entire leisure package so that when one can walk into any Fun Republic in any part of the country, and know what to expect and more importantly, be assured of a quality service and facilities.

55

Retailing A study The aim is to harness technological developments, which play a crucial role in the leisure industry, partly by increasing the sophistication & intensity of the leisure experience, and partly by making the leisure experience available to a wider market.

What's in it for us?

Each Fun Republic Family Entertainment Center encompasses a gamut of entertainment related activities. Some of the facilities that feature are: Cinema Shopping Books and Music Store Restaurants Food Court Cinema Snack Counter Games Fun Republic is currently operational in Ahmedabad, Chandigarh and Mumbai.

FAME ADLABS:

Inaugurated in April 2002, Fame Adlabs is spread over 50,000 sq ft of area and has since strived to bring in the highest quality of entertainment to Mumbais film going audiences.

The Fame Experience gives us:

1. Pin-drop acoustics with contemporary dcor 2. State-of-the-art projection technology 3. Computerized ticketing, in line with International norms of cinema ticketing 56

Retailing A study 4. The largest concessions area in the city with a 5000 sq. ft. lobby 5. On a regular basis, soups, sandwiches, samosas, rolls and pop corns are served. Specialty chaat counter on the premise satiates the desi taste buds as well 6. Weekend specialty food counters serve delicacies that are a blend of Indian and Western snacks and mini-meals 7. Discounts at various restaurants with unique promotional offers are constantly made available The theatre screens a vide variety of films ranging from Bollywood Blockbusters, Hollywood Hits, Indian Art Movies, Indian Regional Language Movies and the best of International Film Festivals. On an average the multiplex provides a choice of over 10 movies per day.

INOX:

Inox Leisure Limited is the diversification venture of the Inox group into entertainment and is a wholly owned subsidiary of Gujarat Flurochemicals Ltd. The other companies in the Inox Group are Inox Leasing and Finance Limited, Inox Air Products, and Gujarat Fluorochemicals Ltd. The combined turnover of the INOX Group is approximately Rs.750 crores. Inox Leisure Ltd. has committed itself to managing or constructing approximately 15 complexes across India. Inox Leisure's mission is to be the leader in the cinema exhibition industry, in every aspect right from the quality and choice of cinema to the varied services offered and eventually the highest market share. Despite no prior background in the Indian film industry, INOX has so far traversed its own path by bringing in a professional and service oriented approach to the cinema exhibition sector. With strong financial backing, impeccable track record and strong

57

Retailing A study corporate ethos, INOX has established a strong presence in the cinema exhibition industry in the short span of three years. Initial investment of Rs. 175 crores is spread across nine properties slated to launch between 2002 - 2004. INOX is already successfully running its multiplexes at Pune (Bund Garden Road), Vadodara (Racecourse Circuit Road), Kolkata (FORUM, Elgin Road and at City Centre- Salt Lake City), Mumbai (CR2, Nariman Point) and Goa (Panjim). With a further investment of Rs. 150 crores, INOX will continue its expansion into Chennai, Hyderabad, Bangalore and Noida, thus establishing a national presence.

All INOX complexes offer an option of 3-5 auditoriums, state of the art facilities in terms of modern projection and acoustic systems, THX certified or compliant auditoriums, stadium style high back seating with cup holder arm-rests, internationally designed interiors, high levels of hygiene, varied theatre food, selection of Hindi, English and regional movies, computerized ticketing and most importantly high service standards upheld by a young and vibrant team.

DEPARTMENT STORE: PANTALOONS:

Incorporated in October 1987,Pantaloons ranks amongst the top five retailers in India.... Pantaloon Retail (India) Limited (PRIL) was incorporated on October 12, 1987 as Manz Wear Private Limited under the stewardship of Mr. Kishore Biyani. The Company was converted into a public limited company on September 20, 1991 and on September 25, 1992 the name was changed to Pantaloon Fashions (India) Limited and the same time it went public and today it has approximately 14,000 shareholders. The company started distributing its garments through multi-brand retail outlets across the country and inaugurated the Pantaloon Shoppe, an exclusive menswear store. By 1995, there were over 70 such stores, most of them franchised.

58

Retailing A study In August 1997, the first department store of the company, Pantaloons, opened in Kolkata. In 1999 the company took on its present name, Pantaloon Retail (India) Ltd. Pantaloon today is ubiquitous in the countrys retail landscape with its two major retail formats: lifestyle retailing and value retailing. Lifestyle retailing comprises 13 Pantaloons (department stores) and 1 Central, a mall located in Bangalore. In the value retailing category, there are 10 Big Bazaars (discount hypermarkets) and 17 Food Bazaars, selling food and household goods. Variations on the Big Bazaar format include Gold Bazaar (10 at present) and Footwear Bazaar (10). All stores today are companyowned. Pantaloon has also recently introduced Food Bazaar on Call, a telephone-based food-and-grocery home-delivery service From a humble beginning in 1987, Pantaloon as today evolved as a leading manufacturerretailer in the country with 16 Pantaloon stores and 21 hypermarkets(Big Bazaar), 33 Food Bazaars, 3 central, 2 Fashion Station, 2 aLL and 1 MeLa store operational across the country. It has been a remarkable journey for PRIL as its evolved from a manufacturing to a completely integrated player controlling the entire value chain.

SHOPPERS STOP
Snapshot 2003-2004 Annual Turnover Rs 404 cr. Retail Space 680,000 sq. Ft. Number of Stores 15 Customer Care Associates 1610 Year Founded 1991

Pioneered revolution. From 2,800 sq. ft. to over 680,000 sq. ft. From 1 store to 15 international class stores. From One company to Group companies.

59

Retailing A study

SHOPPERS STOPS SUCCESSFUL RETAILING MODELS The Eight Ways to Win In Retailing The Customer Objectives
Customer choice Merchandise is always presentable and ready before customer entry Customer easily locates price tags and product information. Price on the price tag and Point of Sale System always match Timely replenishment of fast moving merchandise always gets the merchandise of his / her size and

Merchandise Management System

An end to end solution for managing merchandise throughout the chain Right from purchase orders, to sales, to replenishment, to markdown and inventory management A integrated online system connected with the back end, front end (stores) and the distribution centers.

New Initiatives
Intake Consolidation Also known as the Milk Run Currently for Own Brand Partners Delivery Authorization indicating quantity to be received for the week National Transporter to follow up with vendors for merchandise One truck to visit and collect goods from the vendors Distribution center is informed of the ETA 60

Retailing A study Delivery status monitored and tracked through website Reduction in turnaround time to 24 hrs Savings of Rs 1 Lac per month

TIDBITS! Shoppers Stop is the only retailer from India to become a member of the prestigious Intercontinental Group of Departmental Stores. The IGDS consists of 30 experienced retailers from all over the world.

HYPERMARKET: BIG BAZAAR

Big bazaar is indias largest hypermarket that guarantees bigger value for your money. Big bazaar promises more for less addressing a wider range of product lines, which are of interest to mass market. The high service levels, good ambience and implicit guarantees makes shopping at big bazaar a worry free experience Big Bazaar offers a wide range of apparel and accessories, baby accessories, cosmetics, grocery and vegetables, crockery, dress material, suiting and shirting, electronics, footwear, toys, house hold appliances, home textiles, luggage, linens, sarees and much more and all these at a discount.. truly Is Se Sasta Aur Accha Kahin Nahin !!

SHOPRITE

61

Retailing A study

Shoprite, the South African food retail major, has leased prime property in Mumbai from the Godrej group to start a cash & carry wholesale business in India. Shoprite is currently in the process of setting up a distribution centre on the property, which belongs to the Godrej group in Santacruz. Shoprite also has approval to carry on business under the franchisee route. To operationalise this, it has also entered into an agreement with the Nirmal Lifestyle Mall for setting up a 70,000 sq ft hypermarket mall at Mulund. Shoprite, which is headquarted in the Western cape province of South Africa , and has a revenue of 25bn rand, is expected to run the proposed hypermarket chain in Mumbai.

Wal-Mart

The secret of successful retailing is to give customers what they want - Sam Walton. History
Sam Walton the founder of Wal-Mart was born in Kingfisher , Oklahoma in 1918. After graduating from the University of Missouri in 1940, Walton worked for the famous retailer, J C Penny at a salary of $75 a month. In his very first job, Walton displayed the qualities of a good salesman. He understood the importance of building loyalty and in both customers and employees.

Many trace the birth of discount retailing to 1962, the first year of operation for Kmart, Target and Wal-Mart. But by that time, Sam Walton's tiny chain of variety stores in

62

Retailing A study Arkansas and Kansas was already facing competition from regional discount chains. Sam traveled the country to study this radical, new retailing concept and was convinced it was the wave of the future. On July 2, 1962 Sam along with his brother Bud Walton opened the first Wal-Mart discount store in Rogers, Arkansas and then there was no looking back.

In 1970, Wal-Mart floated its first public issue. Wal-Mart continued to grow in the 1970s mainly due to two factors, its highly automated distribution centers, which cut shipping costs and time, and its computerized inventory system, which speeded up checkout and recording. In 1980s, Wal-Mart continued to grow rapidly and became one of the most successful retailers in America. Sales grew to $26 billion by 1989, compared to $1 billion in 1980. In 1983 Wal-Mart opened the Sams Club. In 1990, Wal-Mart acquired McLane Company, a grocer and retail distributor, and launched a new retail format, Buds Discount City. The company suffered a set back when Sam Walton died in 1992 after a prolonged illness. Under Glass, however, Wal-Marts impressive growth never stopped. And now the "most admired retailer" according to FORTUNE magazine has just completed one of the best years in its history Units and Divisions Wal-Mart has divided its main operations into four divisions Discount Stores Super centers Sams Club Wal-Mart International

Discount Stores The Wal-Mart discount stores are the flagship retail division of Wal-Mart Stores, Inc. They are a national discount retailer offering a wide variety of general merchandise. Wal-

63

Retailing A study Mart stores offer pleasant and convenient shopping in 36 departments including family apparel, health & beauty aids, household needs, electronics, toys, fabrics & crafts, lawn & garden, jewelry and shoes. In addition, some Wal-Mart stores offer a Pharmacy Department, Tire & Lube Express, garden center, snack bar or restaurant, Vision Center and One-Hour Photo Processing for customer convenience. Wal-Mart stores operate on an "Every Day Low Price" philosophy and are able to maintain their low price structure through conscientious expense control. While other major competitors typically run 50 to 100 advertised circulars per year, Wal-Mart produces only 12-13 major annual circulars. The cost savings associated with fewer circulars are passed on to the customer through lower shelf prices every day. Wal-Mart Associates strive to provide exceptional customer service, a characteristic unique to our chain. Everything possible is done to make shopping at Wal-Mart a friendly experience. Super Centers The super Centers were, essentially, a logical extension of the discount stores. Recognizing the shoppers time was limited, Wal-Mart combined full grocery lines and general merchandise under one roof, a retail outlet in a one-stop family shopping experience. The first Wal-Mart Supercenter opened in Washington, Missouri, on March 1, 1988. Supercenters feature 36 general merchandise departments including a complete apparel department. Supercenters average between 100,000 and 220,000 square feet of retail space. Designed to provide a pleasant and hassle-free shopping experience, WalMart Supercenters are enhanced with wide aisles, helpful signing throughout the store, departmental directories. For greater customer convenience and trouble free shopping, all the stores are open 24 hours a day. Sams Club Sams Club is the country's largest membership warehouse club. The first Sams Club was opened in the year 1983. SAM'S CLUB is a $31 billion company. With more than 530 Clubs in the United States serving 46 million members, SAM'S CLUB is a vital partner to many small businesses in America.

64

Retailing A study The warehouse giant follows a 1-2-3 business philosophy to serve specific business segments, including convenience stores and retail stores, restaurants/foodservice, offices, contractors/maintenance companies. The philosophy is as simple as 1-2-3: In business to serve small business - Business needs In business to serve small business - Personal needs Advantage members for a membership fee get to benefit from #1 and #2 and repair, daycare/schools, churches and religious organizations, beauty salons and barber shops, motels/bed and breakfast, and vending

Survey
OBJECTIVE
To study consumer perception about the retail outlets in Mumbai

METHDOLOGY
Type of Research: It is an exploratory research, which aims to provide insights about the consumer perception of Retail outlets

Source of information: The information was collected from secondary as well as primary source.
Identification of the Sample:

65

Retailing A study The primary data was collected by identifying the sample. Performed field survey at various outlets in Mumbai. Sample size 42 1. Shopperstop Kandivali 2. Pantaloons-Lower Parel 3. Big Bazaar-Lower Parel 4. Life style- In-orbit mall Malad link road, 5. Globus- Bandra 6. Provogue- Lower parel.

Location covered: Mumbai Region Western Suburbs. Data collection: Data was collected by formulating questionnaire.

IMPORTANCE OF THE STUDY

From the surveys not only the retailers could be the direct beneficiaries by getting an insight into their market positioning but also the brands can find information vital to plan their future sales strategies. Based on the findings, the retailers can take appropriate amendments to live up to the expectations of their potential customers. The survey can also guide the fashion and lifestyle companies/stores to focus on consumer segments demanding greater attention. According to the consumers' verdict, the fashion and lifestyle companies/stores can position themselves in the market. The brands can use the research findings in formulating their future marketing strategies with the retailers and vice versa.

LIMITATIONS:

66

Retailing A study

This being a convenience sample, the analysis may not be the true picture of the target population. Prejudice of some of the respondents.

SEX

male 16 26 female

How do you generally shop for your garments always planned 6 sometimes planned instore decision 11 9 never plan

16

67

Retailing A study

Shopping for clothes remains a favorite pastime of most consumers. The above results show that 6 people never plan. This fact that the consumers often purchase the brands different from or in addition to those planned has led to an interest in impulse purchases. Around 11 of sample said that they sometimes plan.

PERCEPTION ABOUT RETAIL OUTLETS

GLOBUS
Globus Stores Pvt Ltd, the retail division of the Rajan Raheja Group of company.
variety location

Consumer Perception for Globus

10% 2% 5% 12% 16% 17% 5% 12% 21%

service price size store atmosph ere reputation customer satisfacti on Discount

68

Retailing A study

ANALYSIS
This is study reveals 21% of sample liked the variety available at Globus, only 5% liked the price; they found the price as comparatively high. As far as location is concerned 16% found its location Good. People liked to shop around at linking road. Customer satisfaction was only 2%, as few customers revealed there was no buy back if they didnt like the collection later.10% of sample liked the Discount schemes.

PROVOGUE
Provogue has rolled out its first of a chain of retail outlets that transforms into a lounge bar by evening. Called Provogue Lounge, the outlet went operational recently at Phoenix Mills compound, Lower Parel (central Mumbai).

Consumer Perception for PROVOGUE

variety location

0% 12% 12%

16%

20%

service price size store atmosphere

20% 8% 4% 8%

reputation customer satisfaction Discount

69

Retailing A study

ANALYSIS
One needs to note here is provogue lounge is location driven. With 20% people liking its location. Provogue lounge as an outlet didnt had much Reputation, but Provogue garments enjoyed Brand identity. Some customers at other outlets at phoenix mill compound infact didnt know where the Provogue Lounge is. So no doubt it is located at very prominent place, but still the stores looks Vis a Vis other outlets in compound didnt attract the customer.

SHOPPERSTOP KANDIVALI
Shoppers' Stop, India's premier shopping destination, launched its 4th outlet in Mumbai at Kandivili recently. The 10th in the series of Shoppers' Stop outlets in India. Consumer Perception for Shopperstop variety location service

6% 4% 25% 20%

19% 4% 9% 4% 9%

price size store atmosphere reputation customer satisfaction Discount

ANALYSIS
Shopperstop enjoyed the highest Reputation with 25%, followed by store atmosphere with 20%. Only 4% liked the Price. But when asked what attracted them most to store

70

Retailing A study was its Reputation & the Snob Appeal, which the store carries, was converted into Purchase. People didnt liked the location as they found just coming for shopperstop, they commented if the market around it develops it would be more attractive shopping destination. The close competitor it faced was INDRAPRASTH a established mall since years. Others included THE MALL Malad, Natraj Market Malad.

LIFESTLYE - IN-ORBIT MALL

The Mindspace mall at Malad-Goregaon Link Road has the retail store Lifestyle being anchored. The 50,000 sq ft department store promoted by a Dubai-based NRI, is the second Lifestyle outlet in Mumbai, the first being at Runwal Arcade in Mulund.

Consumer Perception for LifeStyle

variety location service

19%

8% 2%

17% 9% 6%

price size store atmosphere reputation customer satisfaction Discount

24%

2% 13%

ANALYSIS
LIFESTYLE enjoyed the best store atmosphere. One of the respondent Commented my eyes is brightened being in the store. Price is still seems to a hindrance.

71

Retailing A study Lifestyle at in-orbit Mall seems the sturdy competitor to Shopperstop. Today a consumer is not very much attracted to single outlet. In-Orbit Mall BIG Giants, Shoppers, Lifestyle other outlets opening up seems to have increased Walk-ins.

PANTALOONS
Spread over 50,000 sq ft, with 3 floors, it is Mumbai's most stylish retail store at lower Parel. In true Pantaloon style, the store has an international look with an Indian feel. It is one stop family store for all the well known brands. Kishore Biyani (Managing Director, Pantaloon Retail) received the Visionary of the Year honours from Gregory Van Nunes, Business Director- Lycra Operations (Asia)

Consumer Perception for Pantaloons

variety location service

8% 14% 14% 8%

3%

price

23%

size store atmosphere reputation

14% 5% 11%

customer satisfaction Discount

72

Retailing A study

ANLAYSIS
23% of respondents liked the Variety. Store Reputation & Store Atmosphere was at 14%. Customer satisfaction was the highest with 8% Vis--Vis other outlets where the customer satisfaction was around 2% to 5%. Customers at this outlet were found to be more Brands conscious.

BIG BAZAAR
variety location service

Consumer Perception about Big Bazaar

12% 9%

7%

5%

20%

price size store atmosphere reputation

14% 14% 12% 7%

customer satisfaction Discount

ANALYSIS
20% of respondents said they like the Variety of Big Bazaar. 14% they liked the Location & Size. 12% said they like the Price. The point to be noted here is that only in case big Bazaar 12% respondents liked the price. So one can say there Positioning of Bada size Chota Price had right impact. 73

Retailing A study

Fresh Vegetables & Crockery were most soughted out items in Big Bazaar, rather then apparels. When asked what they would like to see more in Big Bazaar Responses were Multiplex theatre Beauty Parlour, Non-Veg foodstuff.

Future of the Retail Industry

The past 2-3 years have seen a number of developments in the retailing business in India. The entries of corporate houses like RPG, Tatas and Piramals have increased the capital availability in the market. Bigger players like Shoppers Stop are in a position to take advantage of their sizes in dealing with the manufacturers. Despite a slowdown in the economy, customer queues at the stores are not decreasing. Retail sector is bound to grow in the coming years. But how much and in what direction are the questions that need to be evaluated. Based on our analysis of present trends, and development of retailing elsewhere, we present our perspectives and snapshots of organized retailing, as it would exit in 2010.

Investment will increase

Retail sector will see huge investments in the next 4-5 years. Newer chains will come in and the present players will increase their penetration. By 2005, the established players would have reached saturation levels in metropolitans and will shift the focus of their investments to other Class 1 cities. By 2010, there will be little difference between the metros and the next 20 cities (the present million plus cities).

Demographics

74

Retailing A study In the next 10 years, india population is expected to grow by about 14 per cent. But this increase will not be even. Important trends tha will effect retailers are lised below. The number of children (0-15 years) will remain stable at 30 million: This will mean a lesser growth for toys, games and some apparel segments.But given the current nascent stage of the growth, these sectors will still offer high grwoh rates. The number of people in 40-60 years of age will go up by 30%: Sales of cosmetics, skin care, hair dyes, and other youth inducing products will rise. More consumer resources would be spent on retirement planning and saving for retirement. Home improvement and financial services firms would benefit from this trend. The number of households will increase by 25%: This would lead to a higher growth in the household-decor items vis-a-vis personal items as apparel and fashion accessories.

Regional differences will stay

Although a few players will be able to form pan-Indian retail supply chains, the retail market is unlikely to be a single entity. For example, food retailing in Chennai, Kolkata and Chandigarh is vastly different in terms f shopping habits and consumer tastes. Many such differences will remain. Though a few national retail chains will develop, they would have to coexist with strong regional players, who would excel in their understanding of the customers and strong brand names. The key to success for national players will to maintain the efficiencies that come from their large-scale operations while retaining the ability and the flexibility to salisfy different needs of different consumers.

Retailers would adapt more than one format.

Today, internationally all top-retailers (axcept Kamrt and Aldi) operate 3-4different formats, with companies like Metro AG operating 13 formats. This diversity of formats allows the company to utilise its brand value across different segments and categories of customers. Signs of such a development are visible in India as well. A movement towards Class-I cities necessitates modification of operating format5s to suit different needs. By 2010, top retailers would be operating at least 3-4 formats.

Dual focus on costs and time

75

Retailing A study With more dual income families consumer ability to spend will increase, but the time available for shopping will go down. Customers will become more demanding in terms of rapid and friendly service. Retailers would develop shopping as an entertaining experience, but the more successful ones will be the ones who provide faster service. On the other hand, increasing competition would push the prices down.

24 hours retailing
Time stressed consumers will also ask for round the clock retailing. As these consumers will be ready to pay a premium for service at odd hours, the timings of shopping will have to adapt to needs of these consumers. A number of 24 hours retail stores would emerge to cater to this need. (Provided regulations are eased)

Small retailer will coexist

Within a decade, large organised retailers would be controlling a substantial portion of the retail trade. Yet, it is not to say that small, independent and unorganised retailers will disappear in large numbers. They will survive on their core strengths of personal relations with customers and closeness to residences. However, to compete with the big retailers on price, small retailers will form cooperatives for purchasing. This trend has also started in Delhi.

Supply chain dynamics

The balance of power between retailers and manufacturers will shift towards the retailers. The bigger retailers would be able to seek the lowest prices. Scale economics would help in operating optimized supply chains and logistics network with investments in information technology enabling process efficiencies and effectiveness.

Internet
Internet retailing will thrive in the coming decade. It may not be apparent now because internet access is far behind the US and west, and high usage charges represent a serious impediment to frequent consumer usage. The Government has already shown intent to

76

Retailing A study deregulate the telecommunications sector. Deregulation would increase Internet usage in the country and also the trading on the net.

Twenty emerging retail trends

1. Discounters will steal a march over the food retailers. Wal Mart has already become one of the leading food retailers and the trend of every-day-low-pricers entering into food retail arena has now become a major threat to the supermarkets. 2. The responsibility of managing inventory will shift up the value chain towards the manufacturers. 3. Assembly of the final product will move down the supply chain and as close to the customer as possible (owing to the increased need of mass-customization). 4. Preponderance of web driven sourcing. Retailers will use Systematic and Spot sourcing from the many B2B sites to meet their requirements of core merchandise as well as peripherals. 5. Grocery e-tail will be dominated by physical retailers who will extend their offering by having a web presence. The primary source of fulfilment of a web order will be the store rather than a dedicated warehouse (like Tescos model). 6. High use of W-LANs in store. Wireless LANs will be the predominant media of information/data exchange in a store. This in turn, would enable things like: Mobile POS terminals

77

Retailing A study Mobile information kiosks Better store space management

7. Aisle checkouts. Checking out will not be restricted to long queues at POS. Each SKU will be checkout-enabled and it would be possible to scan it at the aisle/rack where it is stored. This will immensely reduce the check out time at cash counters. 8. High use of advanced communications technology like ATM, Frame Relay by retailers. This would be necessitated as the retailers would need to exchange huge volumes of data/information with their suppliers and service providers so as to ensure better customer service levels. 9. Supermarkets and discounters will rely on thin client technology whereas specialty retailers who need a higher level of customer interaction and information sharing would continue to rely on fat clients. 10. Resurgence of Mom & Pop stores. The friendly neighbourhood mom & pop stores are going to come back to the fore as the customer is going to become increasingly time starved. 11. The wave of globalisation will be led by mergers and acquisitions as the fast changing retail landscape will not give time to any retailer to establish an independent presence in uncharted territory. 12. Emergence of value-adding intermediaries who will act as a single point of contact between the consumers and sellers. They will be privy to the complete customer profile and will not only aid the consumer in making an informed decision but would act proactively to suggest the latent needs which are pending fulfilment. Hypermediation is the next wave. 13. Digital music is going to become the predominant form of music distribution as it allows for mass customisation and guarantees immediate fulfilment of need. Initiatives like SDMI will be hard pressed to come up with a secure mechanism for file transfers.

78

Retailing A study

14. Hand held devices like mobile phones and PDAs would become a predominant media for net access and transactions as they would bridge the gap between desire and action (accessible anywhere, unlike now when one has to go to a PC for fulfilment). 15. Banner ads will not ensure click-throughs, and will eventually be overtaken by affiliate programs. 16. Syndication will rule the roost. Shopping malls on the net will abound giving shoppers the same virtual experience that they have in a physical mall. As a corollary, shopping malls are going to install (on-site and off-site) dedicated Internet kiosks offering consumers a virtual tour of their mall and allowing transactions. 17. E-books will be limited in scope and will be soon be pass. Physical books will retain their place. 18. Selling games on the net will be the opportunity of the future. With multi-mode net access becoming a reality, gaming will transcend the eponymous game parlors and PCs and would become a do-anywhere activity. 19. Increasing returns hypothesis. The customer reward for shopping on a site/store would keep on increasing with the frequency of shopping on that site/store. With customer acquisition costs ten times as much as customer retention costs retailers will go all out to increase the stickiness factor. 20. Time from net to the door will keep on shrinking thanks to the continual increase in efficiency of delivery service providers. The recent distribution success of Amazon FedEx in distributing Harry Potters Goblet of Fire in three hours is the shape of the things to come.

79

Retailing A study

Conclusion
The past 4-5 years has seen increasing activity in retailing. Various business houses have already planned for few investments in the coming 2-3 years. Though the retailers will have to face increasingly demanding customers and intensely competitive rivals, more investments will keep flowing in and the share of organised sector will grow rapidly. Organised retailing in India is surely poised for a takeoff and will provide many opportunities both to existing players as well as new entrants

80

Retailing A study

Bibliography
Books
1. ART OF RETAILING 2. Consumer Behaviour 3. Marketing Research 4. Retailing Management Lamba Hawkins. Rajendra Nargundkar Verdhani

Magazines
1. Indian Management 2. Retail Biz

Websites
1. Retailbiz Magazine 2. retailbiz.com 3. retailyatra.com 4. imagesretail.com

Places Visited
1. IMC Library Churchgate 2. British council Library Nariman point 81

Retailing A study

82