Retailing Formats in India

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RETAIL INDUSTRY According to AMERICAN MARKETING ASSOCIATION “Marketing can be defined as the performance of business activities that directs the flow of goods and services from producer to consumer or user” RETAILING is the most important operation in marketing chain, where the customer comes with an intention to buy; he gets an opportunity to touch and feel the product and looks for good delivery service. Retail Sector is the most booming sector in the Indian economy. Some of the biggest playe
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  RETAIL INDUSTRY According to AMERICAN MARKETING ASSOCIATION “Marketing can be defined as the performance of business activities that directs the flow of goods and services from producer toconsumer or user” RETAILING   is the most important operation in marketing chain, where the customer comes withan intention to buy; he gets an opportunity to touch and feel the product and looks for gooddelivery service. Retail Sector is the most booming sector in the Indian economy. Some of the biggest players of the world are going to enter the industry soon. It is on the threshold of bringing the next bigrevolution after the IT sector. Although organized retail market is not so strong as of now, it isexpected to grow manifolds by the year 2010. The sector contributes 10% of the GDP, and isestimated to show 20% annual growth rate by the end of the decade as against the current growthrate of 8.5%. A CRISIL report says that the Indian retail market is the most fragmented in theworld and that only 2% of the entire retailing business is in the organized sector. This suggeststhat the potential for growth is immense. There are about 300 new malls, 1500 supermarkets and325 departmental stores currently being built in the cities across India.Estimates and predictions for retail sector: ã At present, the industry is estimated to be at more than US$ 400 billion by a study of McKinsey. ã The Economist Intelligence Unit (EIU) estimates the retail market in India will increaseto US$608.9 billion in 2009 from US$394 billion in 2005. ã KPMG Report says that the organized retail would grow at a higher rate than the GDP inthe next five years. ã The retail sector would generate employment for more than 2.5 million people by theyear 2010, predicts an analysis by Ma Foi Management Consultants Ltd. EMERGING TRENDS Indian scene has gone through various style of retailing.Small traders, petty shops, cart vendors, vegetables, platform vendors General merchants, grocershops where they measure, pack and deliver ( to prepackedmerchandise)newspaper distribution, milk vending, flower sellers special in India due to poojaculture and women wearing in their hair. After 1990. the retailing trend changed to super markets and specialty stores due toForeign brands and players entry ( liberalization,privitisation, globalization) Like ambani created revolution in size of industry KISHORE BIYANI created revolution inretailing. Pantaloon to big bazaar his philosophy was affordable prices for common man by buying in large volume. In big bazaar customers were able to get bargain deals.  Modern Format retailers SupermarketsHypermarketsDepartment StoresSpecialty ChainsCompany Owned Company Operated Tradiitonal Format Retailers Kiranas: Traditional Mom and Pop StoresKiosksStreet MarketsExclusive/ Multiple Brand Outlets RETAILING FORMATS IN INDIA: ã Malls: These are the largest form of retail formats. They provide an ideal shoppingexperience by providing a mix of all kinds of products and services, food andentertainment under one roof. Examples are Sahara Mall, TDI Mall in Delhi. ã Specialty Stores: The retail chains, which deal in specific categories and provide deepassortment in them are specialty stores. Examples are RPG's Music World, Mumbai's bookstore Crossword, etc. ã Discount stores: These are the stores or factory outlets that provide discount on theMRP items. They focus on mass selling and reaching economies of scale or selling thestock left after the season is over. ã Hypermarkets/ Supermarkets: These are generally large self-service outlets,offering a variety of categories with deep assortments. These stores contribute 30% of allfood and grocery organized retail sales. Example: Big Bazaar. ã Convenience stores: They are comparatively smaller stores located near residentialareas. 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 thecustomers. ã E-tailers: These are retailers that provide online facility of buying and selling productsand 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 awide variety for customer. But it does not provide a feel of the product and is sometimesnot authentic. Examples are Amazon.com, Ebay.com, etc. ã Vending: This kind of retailing is making incursions into the industry. Smaller productssuch as beverages, snacks are some the items that can be bought through vendingmachines. At present, it is not very common in IndiaInnovation and creativity is the order of the day. Business houses, especially in the retailindustry, have to be on their toes, keeping their eyes and ears open for any slight development inthe market, to be in the reckoning.  As competition hots up in different domains and verticals of the organized retail game, with theentry of leading international brands and many Indian retail giants consolidating and expandingwith a vengeance, the Indian retail market is definitely not for the fainthearted. Retail companieshave to start looking for innovative formats that can make them distinctive and unique - a cutabove the rest.One of the latest retail formats making a grand entry in this game of guts and guile is ‘WeddingMalls’. An unheard of entity in the advanced globalretailmarkets like the United States andEurope; it has become a big hit in India. These wedding malls stock a whole list of items and products that goes into any big fat Indian wedding, ranging from jewellery to apparels. Retailersare astutely combining the best of the global retail trends with the local flavors, keeping in mindthe needs and preferences of the target consumers. Such customization and blending of ideas tocome up with innovative formats is not only a welcome change, but a necessary requirement to be a step ahead of competitors in this rather crowded market.Then there are ‘Khadi Plazas’, a successful retailproject rolled out by the Khadi and Village Industries Commission, under the government of India. These swish and ritzy outlets showcasethe exquisite designs and patterns of the traditional handloom and handicraft products,manufactured in the Indian villages, in a trendy and chic package to catch the attention of theyoung Indians with changing lifestyles and attitudes.Another addition to the list of extraordinary retail formats is the ‘Village Malls’. These malls arethe archetype of shopping malls that dot the urban landscape, providing multiple services and outlets in a single location. Villagemalls are an extension of the fair price shops that have been revamped to cater to the larger needs of the local population. Many states have introduced thisretail format spearheaded by the Gujarat government, where it has been successfully running for the last two three years.In fact, only innovation can save the day; and players in theorganizedIndia retail sector  have to start thinking out-of-the-box to initiate inimitable retail formats that can take them forward in the game Why Global Retailers are Interested in India? More specifically the global players are interested in India due to following reasons: I) Strategic Location & Geography : India enjoys unique geographicaladvantage. It is strategically located in Asia with access to all leading markets of the World.With total area of 32, 87,590 Sq. Km, Coastline of 7000 Km and borders with six countriesIndia becomes most promising destination for the foreign direct investment. II) Versatile Demographics: Demographically with a population of more than1.1 billion and diverse culture, India is a land of all seasons. India presents a realcosmopolitan population with diverse religions and culture. Hinduism, Buddhism, Jainism,Sikhism, Christianity and Islam are the main religions of India. This variety of religions provides India with a diverse culture. Besides, India has versatile population of urban andrural nature. This versatility of population makes India a ready made market for foreignretailers.  III) Vast growing Economy: On economic front, India the largest democracy of the world, have a stable Govt. with robust programme of economic reforms. India with aforeign exchange reserve of more than US $120 billion, FDI of more than US $9.9 billion,average GDP growth of more than 7% per annum, rupee appreciation Vs U.S dollar of morethan 2% in last two years and with a rapidly growing investment in infrastructure has all theingredients of a emerging economic super power. India is tipped to be third largest economy interms of GDP by the year 2050 (Table 1) Forecast of GDP ($ Trillion) Country20102050 China3.044.5USA13.335.2India0.927.8Japan4.66.7Brazil0.76.1Russia0.85.9UK1.93.8Germany2.23.6Italy1.32.1In such a scenario every multinational aims to set up a base in India, not to participate in Indian growth story, rather to build their own future. IV) Retailing: The Emerging Revolution: Retailing is the largest privateindustry in India and second largest employer after agriculture. The sector contributes toaround 10 percent of GDP. With over 12 million retail outlets, India has the highest retailoutlets density in the world. This sector witnessed significant development in the past 10years from small unorganized family owned retail formats to organized retailing.Liberalization of the economy, rise in per capita income and growing consumerism hasencouraged large business and venture capitalist in investing in retail infrastructure. Theimportance of retail sector in India can be judged from following facts (a) Retail sector is thelargest contributor to the Indian GDP (b) The retail Sector provides 15% employment (c)India has world largest retail network with 12 million outlets (d) Total market size of retailing in India Is U.S $ 180 billion (e) Current Share of Organized Retailing is just 2%which comes around to $3.6 trillion (f) Organized retail sector is growing @ 28% per annum. V) Indian Retailing: Opportunities Unexplored : India is sometimes referred toas the nation of shopkeepers. This is because the country has the highest density of retailoutlets - over 12 million. However, unlike most developed and developing countries, Indianretail sector is highly fragmented and bulk of the business is in the unorganized sector. Ascompared to China (Table 2) the presence of global players in India is very less.
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