Indian Retail Scenario

The retail scenario is one of the fastest growing industries in India over the last couple of years. India retail sector comprises of organized retail and unorganized retail sector. Traditionally the retail market in India was largely unorganized; however with changing consumer preferences, organized retail is gradually becoming popular. Unorganized retailing consists of small and medium grocery store, medicine stores, subzi mandi, kirana stores, paan shops etc. More than 90% of retailing in India fall into the unorganized sector, the organized sector is largely concentrated in big cities. Organized retail in India is expected to grow 25-30 per cent yearly and is expected to increase from Rs35, 000 crore in 2004-05 to Rs109, 000 crore ($24 billion) by 2010.

Quick facts on Indian Retail sector

* Indian Retail sector is the fifth largest global retail destination.

* India retail market is dominated by the unorganized sector.

* The top five companies in retail hold a combined market share of less than 2%.

* The Indian retail market has been ranked by AT Kearney's eighth annual Global Retail Development Index (GRDI), in 2009 as the most attractive emerging market for investment in the retail sector.

* Currently the share of retail trade in India's GDP is around 12 per cent, and is estimated to reach 22 per cent by 2010.

* According to Government of India estimate the retail sector is likely to grow to a value of Rs. 2,00,000 crore (US$45 billion) and could yield 10 to 15 million retail jobs in the coming five years; currently this industry employs 8% of the working population.

* India continues to be among the most attractive countries for global retailers. According to the Department of Industrial Policy and Promotion, approximately US$ 47.43 million was the amount of Foreign Direct Investment (FDI) inflow as on September 2009, in single-brand retail trading.

More than 80% of the retail sector in the country is concentrated in the large cities. A study reveals that among the more than 20 locations, for organized retail in India, Mumbai was found to be the most preferred location followed closely by Bengaluru in the second position.

Key Players in Indian Retail Sector

* AV Birla Group has a strong presence in apparel retail and owns renowned brands like Allen Solly, Louis Phillipe, Trouser Town, Van Heusen and Peter England. The company has investment plans to the tune of Rs 8000 – 9000 crores till 2010.

* Trent is a subsidiary of the Tata group; it operates lifestyle retail chain, book and music retail chain, consumer electronic chain etc. Westside, the lifestyle retail chain registered a turnover of Rs 3.58 mn in 2006

* Landmark Group invested Rs. 300 crores to expand Max chain, and Rs 100 crores on Citymax 3 star hotel chain. Lifestyle International is their international brand business.

* K Raheja Corp Group has a turnover of Rs 6.75 billion which is expected to cross US$100 million mark by 2010. Segments include books, music and gifts, apparel, entertainment etc.

* Reliance has more than 300 Reliance Fresh stores; they have multiple formats and their sale is expected to be Rs 90,000 crores ($20 billion) by 2009-10.

* Pantaloon Retail has 450 stores across the country and revenue of over Rs. 20 billion and is expected to touch 30 million by 2010. Segments include Food & grocery, e-tailing, home solutions, consumer electronics, entertainment, shoes, books, music & gifts, health & beauty care services.

Retail and recession

The global economic slump has had its impact on the India retail sector. One of the earliest players in the Indian retail scenario Subhiksha's operations came to a near standstill and required liquidity injection. Vishal Retail secured corporate debt restructuring (CDR) plan from its lenders while other players like the Reliance Retail run by Mukesh Ambani and Pantaloon led Kishore Biyani by went slow on expansion plans and even scaled down operations. However, during the last quarter a bit of confidence was restored as the economy showed signs of growth.

Future Trends

* Lifestyle International, a division of Landmark Group, plans to have more than 50 stores across India by 2012–13.

* Shoppers Stop has plans to invest Rs250 crore to open 15 new supermarkets in the coming three years.

* Pantaloon Retail India (PRIL) plans to invest US$ 77.88 million this fiscal to add up to existing 2.4 million sq ft retail space. PRIL intends to set up 155 Big Bazaar stores by 2014, raising its total network to 275 stores.

* Timex India will open another 52 stores by March 2011 at an investment of US$ 1.3 million taking its total store count to 120. In the first six months of the current fiscal ending September 30, 2009, the company has recorded a net profit of US$ 1.2 million.

* Australia's Retail Food Group is planning to enter the Indian market in 2010. It has plans to clock US$ 87 million revenue in five years. In 20 years they expect the India operations to be larger than the Australia operations.

The Road Ahead

Industry experts predict that the next phase of growth in the retail sector will emerge from the rural markets. By 2012 the rural retail market is projected to have a total of more than 50 per cent market share. The total number of shopping malls is expected to expand at a compound annual growth rate of over 18.9 per cent by 2015. According to market research report by RNCOS the Indian organized retail market is estimated to reach US$ 50 billion by 2011.

India Industry

* Hotel Industry in India * Retail Industry * Software Industry * Indian Manufacturing * Confederation of Indian Industry * India Industry Sector * IT Industry * Banking Industry * Indian pharmaceutical industry * Indian Telecom Industry * Industries in India

* Reliance Industries India

* Basic Metals Industry * Biscuits Industry * Bus Industry * Fertilizer Industry * Handicraft Industry * Heavy Chemical Industry * Machinery Industry * Metallurgical Industry * Steel Industry * Textile Industry * Truck Industry

Retailing in India

Retailing is one of the pillars of the economy in India and accounts for 35% of GDP.[1]

The retail industry is divided into organised and unorganised sectors. Over 12 million outlets operate in the country and only 4% of them being larger than 500 sq ft (46 m2) in size. Organised retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses. Unorganised retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc.[2] In India, a shopkeeper of such kind of shops is usually known as a dukandar.

Most Indian shopping takes place in open markets and millions of independent grocery shops called kirana. Organized retail such supermarkets accounts for just 4% of the market as of 2008.[3] Regulations prevent most foreign investment in retailing. Moreover, over thirty regulations such as "signboard licences" and "anti-hoarding measures" may have to be complied before a store can open doors. There are taxes for moving goods to states, from states, and even within states.[3]

Growth

An increasing number of people in India are turning to the services sector for employment due to the relative low compensation offered by the traditional agriculture and manufacturing sectors. The organized retail market is growing at 35 percent annually while growth of unorganized retail sector is pegged at 6 percent.[4]

The Retail Business in India is currently at the point of inflection. Rapid change with investments to the tune of US $ 25 billion is being planned by several Indian and multinational companies in the next 5 years. It is a huge industry in terms of size and according to management consulting firm Technopak Advisors Pvt. Ltd., it is valued at about US $ 350 billion. Organised retail is expected to garner about 16-18 percent of the total retail market (US $ 65-75 billion) in the next 5 years.

India has topped the A.T. Kearney’s annual Global Retail Development Index (GRDI) for the third consecutive year, maintaining its position as the most attractive market for retail investment. The Indian economy has registered a growth of 8% for 2007. The predictions for 2008 is 7.9%.[5] The enormous growth of the retail industry has created a huge demand for real estate. Property developers are creating retail real estate at an aggressive pace and by 2010, 300 malls are estimated to be operational in the country.[6]

With over 1,000 hypermarkets and 3,000 supermarkets projected to come up by 2011, India will need additional retail space of 700,000,000 sq ft (65,000,000 m2) as compared to today. Current projections on construction point to a supply of just 200,000,000 sq ft (19,000,000 m2), leaving a gap of 500,000,000 sq ft (46,000,000 m2) that needs to be filled, at a cost of US$15–18 billion.[7]

According to the Icrier report, the retail business in India is estimated to grow at 13% from $322 billion in 2006-07 to $590 billion in 2011-12. The unorganized retail sector is expected to grow at about 10% per annum with sales expected to rise from $ 309 billion in 2006-07 to $ 496 billion in 2011-12.[8]

[edit] The Indian Retail Market

Indian market has high complexities in terms of a wide geographic spread and distinct consumer preferences varying by each region necessitating a need for localization even within the geographic zones. India has highest number of outlets per person (7 per thousand) Indian retail space per capita at 2 sq ft (0.19 m2)/ person is lowest in the world Indian retail density of 6 percent is highest in the world.[9] 1.8 million households in India have an annual income of over 45 lakh (US$ 102,150)[10].

Delving further into consumer buying habits, purchase decisions can be separated into two categories: status-oriented and indulgence-oriented. CTVs/LCDs, refrigerators, washing machines, dishwashers, microwave ovens and DVD players fall in the status category. Indulgence-oriented products include plasma TVs, state-of-the-art home theatre systems, iPods, high-end digital cameras, camcorders, and gaming consoles. Consumers

in the status category buy because they need to maintain a position in their social group. Indulgence-oriented buying happens with those who want to enjoy life better with products that meet their requirements. When it comes to the festival shopping season, it is primarily the status-oriented segment that contributes largely to the retailer’s cash register.[11]

While India presents a large market opportunity given the number and increasing purchasing power of consumers, there are significant challenges as well given that over 90% of trade is conducted through independent local stores. Challenges include: Geographically dispersed population, small ticket sizes, complex distribution network, little use of IT systems, limitations of mass media and existence of counterfeit goods.[12]

[edit] Major Indian Retailers

Indian apparel retailers are increasing their brand presence overseas, particularly in developed markets. While most have identified a gap in countries in West Asia and Africa, some majors are also looking at the US and Europe. Arvind Brands, Madura Garments, Spykar Lifestyle and Royal Classic Polo are busy chalking out foreign expansion plans through the distribution route and standalone stores as well. Another denim wear brand, Spykar, which is now moving towards becoming a casualwear lifestyle brand, has launched its store in Melbourne recently. It plans to open three stores in London by 2008-end.[13]

The low-intensity entry of the diversified Mahindra Group into retail is unique because it plans to focus on lifestyle products. The Mahindra Group is the fourth large Indian business group to enter the business of retail after Reliance Industries Ltd, the Aditya Birla Group, and Bharti Enterprises Ltd. The other three groups are focusing either on perishables and groceries, or a range of products, or both.

Next retail India Ltd (Consumer Electronics)(www.next.co.in) Vivek Limited Retail Formats: Viveks, Jainsons, Viveks Service Centre, Viveks

Safe Deposit Lockers PGC Retail -T-Mart India[1], Switcher , Respect India , Grand India Bazaar ,etc., REI AGRO LTD Retail-Formats:6TEN Hyper & 6TEN Super RPG Retail-Formats: Music World, Books & Beyond, Spencer’s Hyper,

Spencer’s Super, Daily & Fresh Pantaloon Retail-Formats: Big Bazaar, Food Bazaar, Pantaloons, Central, Fashion

Station, Brand Factory, Depot, aLL, E-Zone etc. The Tata Group-Formats: Westside, Star India Bazaar, Steeljunction, Landmark,

Titan Industries with World of Titans showrooms, Tanishq outlets, Chroma. K Raheja Corp Group-Formats: Shoppers Stop, Crossword, Hyper City, Inorbit

Mall Lifestyle International-Lifestyle, Home Centre, Max, Fun City and International

Franchise brand stores. Pyramid Retail-Formats: Pyramid Megastore, TruMart Nilgiri’s-Formats: Nilgiris’ supermarket chain

Subhiksha-Formats: Subhiksha supermarket pharmacy and telecom discount chain.

Trinethra- Formats: Fabmall supermarket chain and Fabcity hypermarket chain Vishal Retail Group-Formats: Vishal Mega Mart BPCL-Formats: In & Out Reliance Retail-Formats: Reliance Fresh Reliance ADAG Retail-Format: Reliance World German Metro Cash & Carry Shoprite Holdings-Formats: Shoprite Hyper Paritala stores bazar: honey shine stores Aditya Birla Group - more Outlets Kapas- Cotton garment outlets

[edit] Entry of MNCs

The world's largest retailer by sales, Wal-Mart Stores Inc and Sunil Mittal's Bharti Enterprises have entered into a joint venture agreement and they are planning to open 10 to 15 cash-and-carry facilities over seven years. The first of the stores, which will sell groceries, consumer appliances and fruits and vegetables to retailers and small businesses, is slated to open in north India by the end of 2008.[14]

Carrefour, the world’s second largest retailer by sales, is planning to setup two business entities in the country one for its cash-and-carry business and the other a master franchisee which will lend its banner, technical services and know how to an Indian company for direct-to-consumer retail.[15]

The world’s fifth largest retailer by sales, Costco Wholesale Corp (Costco) known for its warehouse club model is also interested in coming to India and waiting for the right opportunity.[16]

Opposition to the retailers' plans have argued that livelihoods of small scale and rural vendors would be threatened. However, studies have found that only a limited number of small vendors will be affected and that the benefits of market expansion far outweigh the impact of the new stores.[17]

Tesco Plc., plans to set up shop in India with a wholesale cash-and-carry business and will help Indian conglomerate Tata group to grow its hypermarket business.(19)

[edit] Challenges

To become a truly flourishing industry, retailing needs to cross the following hurdles:[18]

Automatic approval is not allowed for foreign investment in retail. Regulations restricting real estate purchases, and cumbersome local laws. Taxation, which favours small retail businesses. Absence of developed supply chain and integrated IT management.

Lack of trained work force. Low skill level for retailing management. Lack of Retailing Courses and study options Intrinsic complexity of retailing – rapid price changes, constant threat of product

obsolescence and low margins.

To overcome some of the challenges faced by modern retail, the country is developing a support infrastructure in form of specialised retail schools. One such skill development initiative has been taken by TKWs Group. Its TKWs Retail School has already training over a thousand students and retail professionals for different retail skills. TKWs Retail School is also associated with government projects like enhancing retail experience of foreign tourists, improving retail of handicraft and local produce, skill development of village youth.

Evolution of the Indian Retail SectorThe origins of retailing in India can be traced back to the emergence of Kirana stores and mom-and-pop stores. These stores used to cater to the local people. Eventually the government supported the rural retail and many indigenous franchise stores came up with the help of Khadi & Village Industries Commission. The economy began to open up in the 1980s resulting in the change of retailing. The first few companies to come up with retail chains were in textile sector, for example, Bombay Dyeing, S Kumar's, Raymonds, etc. Later Titan launched retail showrooms in the organized retail sector. With the passage of time new entrants moved on from manufacturing to pure retailing.

Retail outlets such as Foodworld in FMCG, Planet M and Musicworld in Music, Crossword in books entered the market before 1995. Shopping malls emerged in the urban areas giving a world-class experience to the customers. Eventually hypermarkets and supermarkets emerged. The evolution of the sector includes the continuous improvement in the supply chain management, distribution channels, technology, back-end operations, etc. this would finally lead to more of consolidation, mergers and acquisitions and huge investments.

Phases in the evolution of retail sector

Weekly Markets, Village and Rural Melas

Source of entertainment and commercial exchange

Convenience stores, Mom-and-pop / Kirana shops Neighborhood stores/convenience Traditional and pervasive reach

PDS outlets, Khadi stores, Cooperatives Government supported Availability/low costs/distribution

Exclusive brand outlets, hypermarkets and supermarkets, department stores and shopping malls

Shopping experience/ efficiency Modern formats/ international

Percentage of Organised Retail across the world

Retail FormatsThe following kinds of retail formats are found in India:

Mom-and-pop stores: These are generally family-owned businesses catering to small sections of society. They are small, individually run and handled retail outlets.

Category killers: Small specialty stores have expanded to offer a range of categories. They have widened their vision in terms of the number of categories. They are called category killers as they specialize in their fields, such as electronics (Best Buy) and sporting goods (Sport Authority).

Department stores: These are the general merchandise retailers offering various kinds of quality products and services.

These do not offer full service category products and some carry a selective product line. K Raheja's Shoppers Stop is a good example of department stores. Other examples are Lifestyle and Westside. These stores have further categories, such as home and décor, clothing, groceries, toys, etc.

Malls: These are the largest form of retail formats. They provide an ideal shopping experience by providing a mix of all kinds of products and services, food and entertainment under one roof. Examples are Sahara Mall, TDI Mall in Delhi.

Specialty Stores: The retail chains, which deal in specific categories and provide deep assortment in them are specialty stores. Examples are RPG's Music World, Mumbai's bookstore Crossword, etc.

Discount stores: These are the stores or factory outlets that provide discount on the MRP items. They focus on mass selling and reaching economies of scale or selling the stock left after the season is over.

Hypermarkets/ Supermarkets: These are generally large self-service outlets, offering a variety of categories with deep assortments. These stores contribute 30% of all food and grocery organized retail sales. Example: Big Bazaar.

Convenience stores: They are comparatively smaller stores located near residential areas. They are open for an extended period of the day and have a limited variety of stock and convenience products. Prices are slightly higher due to the convenience given to the customers.

E-tailers: These are retailers that provide online facility of buying and selling products and services via Internet. They provide a picture and description of the product. A lot of such retailers are booming in the industry, as this method provides convenience and a wide variety for customer. But it does not provide a feel of the product and is sometimes not authentic. Examples are Amazon.com, Ebay.com, etc.

Vending: This kind of retailing is making incursions into the industry. Smaller products such as beverages, snacks are some the items that can be bought through vending machines. At present, it is not very common in India.

Challenges facing the Indian Organized Retail sector

The challenges facing the Indian organized retail sector are various and these are stopping the Indian retail industry from reaching its full potential. The behavior pattern of the Indian consumer have undergone a major change. This have happened for the Indian consumer is earning more now, western influences, women working force is increasing, desire for luxury items and better quality. He now wants to eat, shop, and get entertained under the same roof. All these have lead the Indian organized retail sector to give more in order to satisfy the Indian customer.

The biggest challenge facing the Indian organized retail sector is the lack of retail space. With real estate prices escalating due to increase in demand from

the Indian organized retail sector, it is posing a challenge to its growth. With Indian retailers having to shell out more for retail space it is effecting there overall profitability in retail.

Trained manpower shortage is a challenge facing the organized retail sector in India. The Indian retailers have difficultly in finding trained person and also have to pay more in order to retain them. This again brings down the Indian retailers profit levels.

The Indian government have allowed 51% foreign direct investment (FDI) in the India retail sector to one brand shops only. This have made the entry of global retail giants to organized retail sector in India difficult. This is a challenge being faced by the Indian organized retail sector. But the global retail giants like Tesco, Wal-Mart, and Metro AG are entering the organized retail sector in India indirectly through franchisee agreement and cash and carry wholesale trading. Many Indian companies are also entering the Indian organized retail sector like Reliance Industries Limited, Pantaloons, and Bharti Telecoms. But they are facing stiff competition from these global retail giants. As a result discounting is becoming an accepted practice. This too bring down the profit of the Indian retailers. All these are posing as challenges facing the Indian organized retail sector.

The challenges facing the Indian organized retail sector are there but it will have to be dealt with and only then this sector can prosper.

Retail Industry in India:challenges Opportunties and Strategies

Introduction Retailing involves all activities incidental to selling to ultimate consumer for their personnel family and household use. It does this by organizing their availability on a relatively large scale and supplying them to a customers on arelatively smallscale. Retailer is any person/organization instrumental in reaching the goods or merchandise oer services to the end users.Retailer is a must and cannot be eliminated.The Indian retailing industry is becoming intensely competitive, as more and more payers are Vying for the same set of customers. The major retail players are Pantaloon Retail, Shoppers Stop, Reliance,etc.., Retailing is one of the biggest sectors and it is witnessing revolution in India. The new entrant in retailing in India signifies the beginning of retail revolution. India's retail market is expected to grow tremendously in next few years. According to AT Kearney, The Windows of Opportunity shows that Retailing in India was at opening stage in 1995 and now it is in peaking stage in 2006. India's retail market is expected to grow tremendously in next few years. India shows US$330 billion retail market that is expected to grow 10% a year, with modern retailing just beginning. India ranks first in 2005. In fact, in 2005 and 2006, India is the most compelling opportunity for retailers, because now India is in peaking stage. This window of opportunity is useful for executives who plan their market-specific strategies; the four stages or the lifecycle of this industry is as as follows: Introduction: An introduction is the opening phase of a market and is one that is just entering the GRDI, Global Retail Development Index This index is based on more than 25 macro-economic and retail –specific variables.for instance ,the country risk includes parameters like political risk,economic performance,debt indicators,credit ratings,access bank finance and business risk.The market attractiveness covers reail sales per capita ,urban population ,laws and regulations and business efficiency.Iin this stage all, which are outside the top 30 markets, falls in this stage. At this stage, retailers should monitor and performing high-level assessments, they should plan for their entry strategies. India in the late 1990's is a good example in the opening stage, while in 2006, Kazakhstan is the country in introduction stage.Stategy suggested:A rapid penetration strategy is suggested at this stage i>e low price and high promotion.Growth: In growth stage, the market is developing quickly and also ready for modern retailing. Countries, which are in Peaking stage, are India, Ukraine and Vietnam. Retailers entering this stage have the best chance for long-term success. Retailers at this stage should enter

through local representations, sourcing offices and new stores. Wal-Mart success in china in the late 1990's and early 2000's gives us the importance of committing to a promising high-growth market at right time.Strategy suggested: The strategy of adopting quality and styled products with new models and shift of advertising from product awareness to product preference Eg the big bazaar advt says surf exel is cheaper than the market price.The idea behind adopting strategy is to strengthen against competitors.

Maturity: In this stage the market is still big and growing, but the space for new entrants will become tighter and retailers should act quickly at this stage because retailers at this stage have limited time to explore, and also their margin for error is thin. In general , they should act according to the established rules and should be open to face the competition from international retailers. This stage generally lasts longer than the previous two stages.Strategy suggested: Enter new market segments that is either enter new geographic areas eg vishal megha mart has opened stores in smaller cities tier II and III cities

Decline: The window of opportunity is closing fast and modern retail share is reaching 40 to 60 percent. Though the opportunity is closing the existing retailers can enter with new formats such as discount models or non-food formats such as consumer electronics and apparel. Window of opportunity ends for about 5 to 10years before a market enters the closing phase and reaches saturation level. India for example, was in the opening stage in 1995 and entered peaking stage in the year 2003 and reached number 1 rank in2005. Strategy suggested: Identifying weak segments, maintaining investment level selectively.Unorganized retailing in India In India, the most of the retail sector is unorganized. In India, the retail business contributes around 11 percent of GDP. Of this, the organized retail sector accounts only for about 3 percent share, and the remaining share is contributed by the unorganized sector. The main challenge facing the organized sector is the competition from unorganized sector. Unorganized retailing has been there in India for centuries, theses are named as mom-pop stores. The main advantage in unorganized retailing is consumer familiarity that runs from generation to generation. It is a low cost structure, they are mostly operated by owners, has very low real estate and labor costs and has low taxes to pay. Organized retailing in India In late 1990's the retail sector has witnessed a level of transformation. Retailing is being perceived as a beginner and as an attractive commercial business for organized business i.e. the pure retailer is starting to emerge now. Organized retail business in India is very small but has tremendous scope. The total in 2005 stood at $225 billion, accounting for about 11% of GDP. In this total market, the organized retail accounts for only $8 billion of total revenue. According to A T Kearney, the organized retailing is expected to be more than $23 billion revenue by 2010. In organized retailing will grow faster than unorganized sector and the growth speed will be responsible for its high market share, which is expected to be $ 17 billion by 2010-11.

Retailing will show good prospects in cities like Mumbai, Delhi, Chennai, kolkata, Banglore and Kanpur. After Dubai, Singapore and Hong Kong, In India Delhi will be the next big retail destination, According to Confederation of Indian Industries whose findings have shown that Delhi has the good resources and good conditions for the retail sector. Out of the total earnings of the Government of Delhi Rs 11,000 crore, Rs 6,500 crore is achieved from the retail sector.- Share of Organised Retail

1999 2002 2005 Total Retail (in billion INR) 7000 8250 10000 Organized Retail (in billion INR) 50 150 350 % Share of Organized Retail 0.70% 1.80% 3.5%

The organized sector is expected to grow faster than GDP growth in next few years driven by favorable demographic patterns, changing lifestyles, and strong income growth. This organized retail sector mix includes supermarkets, hypermarkets discounted stores and specialty stores, departmental stores. For example, Spencer network has 69 stores, which includes seven Spencer hypermarkets, three Spencer super markets and 49 Spencer Dailys. Now the company is planning to open 20 stores in 10 cities in six months. The top 10 retailers account only for 2% of total market, today modern retailing is expected to enter a boom phase, which has major players and these players might capture 10% of total market, within next five years. The retail sales in India for future are shown below (data from 2005-2008 is based on estimates): PRESENT INDIAN SCENARIO

* Unorganized market: Rs. 583,000 crores* Organized market: Rs.5, 000 crores* 5X growth in organized retailing between 2000-2005 * Over 4,000 new modern Outlets in the last 3 years* Over 5,000,000 sq. ft. of mall space under development* The top 3 modern retailers control over 750,000 sq. ft. of retail space * Over 400,000 shoppers walk through their doors every week

Growth drivers in India for retail sector • Rising incomes and improvements in infrastructure are enlarging consumer markets and accelerating the convergence of consumer tastes. • Liberalization of the Indian economy • Increase in spending Percapita Income. • Advent of dual income families also helps in the growth of retail sector. • Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc. • Consumer preference for shopping in new environs • The Internet revolution is making the Indian consumer more accessible to the growing influences of domestic and foreign retail chains. Reach of satellite T.V. channels is helping in creating awareness about global products for local markets. • About 47% of India's population is under the age of 20; and this will increase to 55% by 2015. This young population, which is technology-savvy, watch more than 50 TV

satellite channels, and display the highest propensity to spend, will immensely contribute to the growth of the retail sector in the country. • Availability of quality real estate and mall management practices • Foreign companies' attraction to India is the billion-plus population. Employment opportunities in retail sector in India India's retail industry is the second largest sector, after agriculture, which provides employment. According to Associated Chambers of Commerce and Industry of India (ASSOCHAM), the retail sector will create 50,000 jobs in next few years. Retail companies are starting retail manamgent courses in partnership with management institutes, roping in talent from other sectors and developing comprehensive career growth and loyalty plans for existing employees. Top players like Pantaloon Retail India Limited, Trent, Shopper's Stop, RPG Group and ebony are virtually on their toes. Consider the plans of largest player, The Pantaloon Retail India Ltd, the company has developed a comprehensive strategy, where in it expects that in 2years, it will not recruit any new managers from outside. "The estimated need is 1 lakh of employees till 2011", said Mr. Sanjoy Jog, HR Head at Pantaloon Retail India Ltd. Pantaloon has the concept of partnership with educational Institute to run retail courses across the entire chain. The company has tied up with 11-B schools including K J Somaiya , Welinkars, Narsee Monjre and IISWBM. "The students joins the course and they are given an appointment letter by Pantaloon to become employees" said Mr. Jog, Pantaloon. Pantaloon is also planning to tie up with Ahmedabad-based National Institute of Design to start a course in visual merchandising. "The apex body of Indian organized retailers, Retailers Association of India( RAI) is also lending help hand to tide over the shortage of employees in organized retail sector. Trent has also started in-house learning programmes and now goes to under graduate colleges to recruit students. Since, the job market is hugely receptive to this with more and more business schools focusing on the sector and large retailers setting up retail academics. Challenges of Retailing in India In India the Retailing industry has a long way to go,and to become a truly flourishing industry, retailing needs to cross the following hurdles:

* The first challenge facing the organized retail sector is the competition from unorganized sector.* In retail sector, Automatic approval is not allowed for foreign investment.* Taxation, which favors small retail businesses.* Developed supply chain and integrated IT management is absent in retail sector.* Lack of trained work force.* Low skill level for retailing management.* Intrinsic complexity of retailing- rapid price changes, threat of product obsolescence and low margins.* Organized retail sector has to pay huge taxes, which is negligible for small retail business.*Cost of business operations is very high in India.

Conclusion

Many agencies have estimated differently about the size of organized retail market in 2010. The one thing that is common amongst these estimates is that Indian organized retail market will be very big in 2010. The status of the retail industry will depend mostly on external factors like Government regulations and policies and real estate prices, besides the activities of retailers and demands of the customers also show impact on retail industry.As the retail market place changes shape and competition increases, the potential for improving retail productivity and cutting costs is likely to decrease. Therefore it is important for retailers to secure a distinctive position in the market place based on values relationships or experience.Finally it is important to note that these strategies are not strictly independent of each other; value is function of not just price quality and service but can also be enhanced by personalization and offering a memorable experience

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INTRODUCTION:

This research is basically done to find out the training needs of the sales people in the retail industry and how they are being fulfilled. The retail industry in our country is at boom and getting organized day by day, the demands of customers are not just great products but also great shopping experience and to make this possible a retail outlet should have well trained sales people. This study is made to know how well the sales people of retail industry in INDIA are trained to meet the customer expectations and global standards.

The retail industry in INDIA has changed its face and approach. Sales people working in this industry play major role in handling the customers effectively. This study is done to evaluate the training system used by the retail industry in INDIA and also to understand training aspects which keeps the sales force of retain industry fit and ready to face any kind of challenges, particularly due to increasing domestic and international competition.

INDIAN RETAIL SCENARIO

The word retail is derived from the French word ‘retailer’, meaning ‘to cut a piece off’ or ‘to break bulk’. Retailing involves a direct interface with the customers and the coordination of business activities from end to end. The retail scenario in India is unique. Much of it is in the unorganized sector. With over 12 million retail outlets of various sizes and formats. Almost 96% of these retail outlets are less than 500sq.ft. In the size

and the percapita retail space in India being 2 sq.ft compared to the U.S. figure of 16sq.ft. India’s percapita retailing space is the lowest in the world. With more than 9 outlets per 1000 people, India has the largest number in the world. Most of them are independent and contribute as much as 96% to total retail sales. There is an incredible amount of activity in terms of creation of retail-oriented space across India. As per some estimates, there are over 200 retail mall projects under construction or under active planning stage spanning over 25 cities. This may translate into over 25 million sq. f t. of new retail space in the market within next 24 months.

PRESENT INDIAN SCENARIO

• Unorganized market: Rs. 583,000 crores

• Organized market: Rs.5, 000 crores

• 5X growth in organized retailing between 2000-2005

• Over 4,000 new modern retail outlets in the last 3 years

• Over 5,000,000 sq. ft. of mall space under development

• The top 3 modern retailers control over 750,000 sq. ft. of retail space

• Over 400,000 shoppers walk through their doors every week

• Growth in organized retail on par with expectations and projections of the last 5 Years on course to touch Rs. 35,000 crores (US$ 7 Billion) or more by 2005-06

GROWTH OF RETAIL SECTOR

Retail and real estate are the two booming sectors of India in the present times. And if industry experts are to be believed, the prospects of both the sectors are mutually dependent on each other. Retail, one of India’s largest industries, has presently emerged as one of the most dynamic and fast paced industries of our times with several players entering the market. Accounting for over 10 per cent of the country’s GDP and around eight per cent of the employment retailing in India is gradually inching its way toward becoming the next boom industry. As the contemporary retail sector in India is reflected in sprawling shopping centers, multiplex- malls and huge complexes offer shopping, entertainment and food all under one roof, the concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. This has also contributed to large scale investments in the real estate sector with major national and global players investing in developing the infrastructure and construction of the retailing business. The trends that are driving the growth of the retail sector in India are

· Low share of organized retailing

· Falling real estate prices

· Increase in disposable income and customer aspiration

· Increase in expenditure for luxury items

CONCLUSION

The government is now set to initiate a second wave of reforms in the segment by liberalizing investment norms further. This will not only favor the retail sector develop in terms of design concept, construction quality and providing modern amenities but will also help in creating a consumer-friendly environment. Retail industry in India is at the crossroads but the future of the consumer markets is promising as the market is growing, government policies are becoming more favorable and emerging technologies are facilitating operations in India. And this upsurge in the retail industry has made India a promising destination for retail investors and at the same time has impelled investments in the real estate sector. As foreign investors cautiously test the Indian Markets for investments in the retail sector, local companies and joint ventures are expected to be more advantageously positioned than the purely foreign ones in the evolving India's organized retailing industry

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Retail industry: Changing scenario

LARGE RETAILERS, BE they domestic players like Reliance Retail or MNCs like Wal-Mart (of course in conjunction with the Bharti group), it is feared, will spell doom for the traditional mom-and-pop stores before long. This will lead to job losses since mom-and-pop stores provide job opportunities to semi-skilled and unskilled people. One of the small retailers I interviewed went as far as to claim, “it hardly matters whether I am deprived of my livelihood by Reliance Retail or Wal-Mart or Subhiksha; the fact is I’ll lose my livelihood”. Is this an overreaction or the truth? Remarks Shailendra Prasad, a Senior Executive with an IT company in Bangalore whom I interviewed when he emerged out of a Subhiksha outlet in Milk Colony, Bangalore: “where else do you get vegetables and grocery under one roof at reasonable prices? The range of products organised retail offers is something that you do not find in a mom-and-pop store”. But small retailers create job opportunities for semi-skilled and unskilled people, don’t they? If small retailers wind up business, what happens to the livelihood of these people? Prasad begs to differ. “Large retailers create jobs too”, he says. “They employ semi-skilled and unskilled people too. Job losses, if any, in the unorganised small retail trade cannot be as high as projected. Many small retailers run sweatshops and either underpay their employees or do not pay them at all. A job loss there is made good by a job creation here. The vegetables you get to buy from the traditional mandi are, for example, inconsistent in terms of quality and price. You walk away with a very good bargain sometimes and you are practically robbed sometimes. Thank God, I don’t have to encounter such uncertainty here” he says pointing at Subhiksha.  Suraksha and Shruti, college students, maintain that they are spoilt for choice when they shop at a large retailer. But things are different with a Kiranawallah.  “You ask for a Kilogram of rice and I bet the Kiranawallah will weigh out only 950 gm although you do not get to notice it. Additionally, they do not mind dumping stale and adulterated stuff on you”, they assert. Since everything is available under one roof, bulk purchases can be made at monthly intervals. Rajiv and Harpreet, a working couple (both are from the advertising industry) prefer organised retail for the sheer range of products they can access there. All the same, the Kiranawallah will continue to be patronised, opines Rajiv. According to him the Kiranawallah can offer customised services which the large retailers cannot. The mushrooming of organised retailers need not sound the death knell for small retailers. There is space for both in a country like India. “One complements the other”, maintains his wife Harpreet.  What does the beleaguered Kiranawallah say? Ashwath, who has been running a grocery store hardly 100 feet away from the Subhiksha outlet, asserts that small retailers sell items like pulse, rice, sugar and edible oil much cheaper. It is only in respect of established brands which are popular at the national level that large retailers are price-competitive, thanks to almost total disintermediation.   In respect of regional brands or local brands, the large retailers get the suppliers to mark up the price significantly on which the large retailer offers a huge discount subsequently. But in net terms, the price turns out to be the same as the small retailers quote. He feels that by encouraging the

growth of large retail trade, the government is administering ‘slow poison’ to the extant small retailers. The job losses that will arise when the small retailers wind up business will be on the high side. The jobs that the so-called organised trade will create will be abysmally few. Fortunately for large retailers, these days, the affluent younger generation which puts in 12 hours of work per day does not like to be ‘weighed down’ by ‘shopping responsibility’.  As long as parking lot is available for the car and all household items are available under one roof on the premises of the large retailer, the younger generation will not complain. Factors like quality, price, and personalised service take a back seat. “We fought not long ago to drive foreigners out of our land. Today, we are welcoming them back so they can usurp our economy. Small retailers empathise with what the customer is going through because of the personal touch; if the customer cannot settle the monthly bill owing to a strike in his factory, we bear with him and still keep the credit line open so he need not starve.  What do present-day economists and institutions do? They persuade him to take a loan or opt for a credit card and apply usurious rate of interest; they employ ruffians to collect the money if the customer cannot pay the monthly instalment even for reasons beyond his control. This is because with the credit card, the customer sometimes buys things he does not need with money he does not have.” 

Scope of the Retail SectorRetail is clearly the sector that is poised to show the highest growth in the next five years. The sector is set for a revolution, as both the present players and new entrants are gearing up to explore the market. This sector contributes 10% of India's GDP and the current growth rate is 8.5%. The present size of the organized retailing sector is approximately 3% and is expected to grow to 25-30% by the year 2010. There are about 300 new malls, 1500 supermarkets and 325 departmental stores currently under construction. Many players are coming up with huge investments, due to which the present 12 million mom-and-pop shops and kirana stores fear losing their business. Most predictions say that the sector might reach to US$ 400-600 billion by the year 2010.

Global retail giants such as Wal-Mart, Tesco, Germany's Metro AG and many others are ready to enter the retail markets. The rising demand of branded products and increase in purchasing power have lured these companies to enter the market.

Retail Landscape

Modern retail development in India is focused on the following cities:

West

Mumbai

Pune Ahmedabad

North

Delhi and the National Capital Region

South

Chennai Banglore Hyderabad

East

Kolkata

Leading Indian Retailers

Bata India Ltd, Big Bazaar, Crossword, Ebony Retail Holdings Ltd., Food Bazaar, Globus Stores Pvt. Ltd., Liberty shoes Ltd., Music World Entertainment Ltd., Pantaloon Retail India Ltd., Shoppers Stop, Subhiksha, Titan Industries, Trent and the new entrants penetrating the market soon will include Reliance Retail Ltd, Wal-Mart Stores, Carrefour, Tesco, Boots Group, etc.

Current Scenario

A glimpse of the International Retail

One of the world's largest industries exceeding US$ 9 trillion 47 global fortune companies & 25 of Asia's top 200 companies are retailers Dominated by developed countries US, EU & Japan constitute 80% of world retail sales. Biggest player in India is Pantaloon Retail India Limited.

Percentage of Organized Retail

USA - 85%Taiwan - 81%Malaysia - 55%Thailand - 40%Brazil - 36%Indonesia - 30%Poland - 20%China - 20%India - 3%

Key Trends

The existing players like Big Bazaar, Shoppers' Stop, Piramyd are expanding to smaller towns and cities. Many other business houses are planning to enter the retail sector either on their own or through partnerships. New entrants like Reliance Retail Ltd and Wal-Mart are going to enter the market soon. Even rural areas will provide a huge opportunity to be explored.

Estimates and Predictions

The industry is estimated to be more than US$ 400 billion by a study of McKinsey. The Economist Intelligence Unit (EIU) estimates the retail market in India to increase to US$608.9 billion in 2009 from US$394 billion in2005. A KPMG report says that the organized retail would grow at a higher rate than GDP in the next five years. The retail sector would generate employment for more than 2.5 million people by the year 2010, says an analysis by Ma Foi Management Consultants Ltd.

Benefits of FDI in Retail Sector

Higher competition would lead to higher quality in products and services. Better lifestyle as better products would be introduced. Exports would increase due to greater sourcing of major players. Investment in whole supply chain would increase. Technology would be upgraded in terms of logistics, production, and distribution channels. The markets of the sector would flourish and develop. Employment would increase and skills & manpower will develop. A strong retailing sector would promote tourism. Economies of scale would help lower consumer prices and increase the purchasing power of the consumer. In the long term it will be beneficial in the up-gradation of agriculture and small scale & medium scale industries.

Indian ConsumerismThe Indian consumer behaviour is rapidly changing with a shift in new generation's preference towards luxury commodities

Retail Space: A Scope for Real Estate SectorWith new boom in the retail industry, the country has identified new scope for real estate development. The already revolutionizing urbanization and growing demand for finished products has necessitated development of new space for retail outlets.

Retail Future in India

The Indian retail sector is ready to take on challenges from global retail players such as Wal-mart and Carrefour because unlike them, they have a better understanding of the Indian consumer’s psyche. Ultimately, a successful retailer is one who understands his customer.The Indian customer is looking for an emotional connection, a sense of belonging. Hence, to be successful any retail outlet has to be localised. The customer should feel that it is a part of his culture, his perceived values, and does not try to impose alien values or concepts on him. Indian customer is not keen to buy something just because it is sold by an international company. Ultimately, it boils down to how much localisation and adaptation the company is willing to do for India. Other than tremendous money power, global companies have nothing extra or special that the Indian retail business does not have.We live in exciting times. Only two percent of India’s retail market is organised. The future shows tremendous potential for growth in the retail sector. Almost all large companies worldwide are looking to establish a base or stake in the Indian market. In this scenario, the Indian retail sector itself must seize the initiative to realise the dreams of contributing to a prosperous and booming economy. The focus should be on the Indian horizon before looking for retail opportunities in other countries because India itself is a big retail market.In the near future India will see a phenomenal growth of shopping malls and speciality retail stores. The speciality stores will cater for home, electronics, furniture, watches, sunglasses and assorted items. There will be more fashion stores for youth. Speciality retail stores and malls are the future of Indian retail market.

 

The Indian retail sector is ready to take on challenges from global retail players such as Wal-mart and Carrefour because unlike them, they have a better understanding of the Indian consumer’s psyche. Ultimately, a successful retailer is one who understands his customer.The Indian customer is looking for an emotional connection, a sense of belonging. Hence, to be successful any retail outlet has to be localised. The customer should feel that it is a part of his culture, his perceived values, and does not try to impose alien values or concepts on him. Indian customer is not keen to buy something just because it is sold by an international company. Ultimately, it boils down to how much localisation and adaptation the company is willing to do for India. Other than tremendous money power, global companies have nothing extra or special that the Indian retail business does not have.We live in exciting times. Only two percent of India’s retail

market is organised. The future shows tremendous potential for growth in the retail sector. Almost all large companies worldwide are looking to establish a base or stake in the Indian market. In this scenario, the Indian retail sector itself must seize the initiative to realise the dreams of contributing to a prosperous and booming economy. The focus should be on the Indian horizon before looking for retail opportunities in other countries because India itself is a big retail market.In the near future India will see a phenomenal growth of shopping malls and speciality retail stores. The speciality stores will cater for home, electronics, furniture, watches, sunglasses and assorted items. There will be more fashion stores for youth. Speciality retail stores and malls are the future of Indian retail market.