Retail Market in India Draft

Retail Market in India
Case Study of Planet M Retail Ltd., India
Fontys International Business School
Module:
MBA Master Thesis
Assignment:
No. 1
Course Instructor:
Prof. Dr. Leif Erik Wollenweber
Author(s):
Amit Singh (2675994)
Semester:
4th Academic Semester 2016
Dsseldorf, 30th November 2016
Appendix A: ITM Checklist 360 degree analysis
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Page 1
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Acknowledgment
This is a platform for me to convey my sincere regards for all those people who enabled
me to accomplish my Master thesis successfully.
I would like to thank my wife, Anamika for standing beside me throughout my career
and writing my Master thesis. She has been my inspiration and motivation for
continuing to improve my knowledge and move my career forward. She is my rock, and
I dedicate this work to her. I also thank my wonderful Angels - Anika and Anya, for
always making me smile and for understanding on those weekends when I was busy
writing this thesis instead of playing games. I hope that one day they understand why I
spent so much time in front of my Laptop. Id like to thank my parents and grandparents
for allowing me to follow my ambitions throughout my childhood. My family, including
my in-laws, have always supported me throughout and writing this thesis and I really
appreciate it.
It is also my privilege to express my sincere gratitude to all the faculty members of

Fontys International Business School, Venlo for the real guidance, encouragement and
valuable advice. It is through their confidence imbibing attitude and splendid
discussions and endless endeavours through which I have gained valuable knowledge
and significant experience.
My sincere thanks to Mr. Sumit Manocha, Regional Head (Operation), Planet M Retail
Limited, for his immense support and valuable guidance in addition to providing the
necessary time and sharing the resources throughout the research and as part of data
gathering work.
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In the end, I am thankful to the Almighty for blessing me to complete this thesis
successfully.
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Executive Summary
The retail landscape in India is changing rapidly and is being scrutinized by large scale
investments by foreign and domestic players. The Indian Retail market is also the fifth
largest in the World. Market liberalization and changing consumer behaviour have sown
the seeds of a retail transformation. Indian retailing is growing fast and imparting the
consumer preferences across the country. Today retailing is largest contributing sector to
country's GDP i.e. 22 per cent as compared to 8 per cent in China, 6 per cent in Brazil.
Modern retailing generated employment opportunities for 2.5 million people by 2010 in
various retail operations and over 10 million additional workforces in retail support
activities. Organised retail which presently account for only 8 percent of the total
market is likely to increase its share to over 20 per cent by 2020. It offers huge potential
for growth in coming years. India is becoming the most growth oriented retail
destination in the world with the retail sector projected to grow at a CAGR of over 9 per
cent by 2020.
India is rapidly involving into a competitive market place with potential target
consumers in the niche middle class segments. The market trend indicates tremendous
growth opportunities. The buying behaviour and lifestyle in India too are changing and
the concept of value for money is fast catching on in Indian retailing. This growth in
retail sector is making the retailers powerful intermediates in the marketing channel,
bridging the gap between manufactures and consumers.
Keeping in mind the rapid growth of Indian retail industry and its bright future, this has
always been an area of interest for me. That is why it influenced me to write my master
thesis on the retail company, Planet M Retail Ltd., India.
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Keywords: Retail Sector, Revolution, Market Liberalization, Modern Retailing

Techniques, Consumerism, Challenges & Opportunities.
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List of Figures
Figure 1: Retail Industry 2020 Growth in India.............................................6
Figure 2: Worlds fastest growing economies 2016........................................7
Figure 3: India: Age distribution from 2004 to 2014.......................................8
Figure 4: Operational Malls as on 31st May, 2004..........................................9
Figure 5: Increase in number of Malls in India, 2014....................................10
Figure 6: Percentage of Population aged between 25 and 65.......................13
Figure 7: Spending Habits of the Indian consumer.......................................14
Figure 8: Retail market size, 2015................................................................21
Figure 9: Margin Turnover Model..................................................................25
Figure 10: Planet M Retail Store, Kalkaji, Delhi.............................................37
Figure 11: Planet M Retail Store - typical store layout..................................40
Figure 12: In-Store Music launch with celebrities.........................................43
Figure 13: Sale & Discount offer...................................................................45
Figure 14: Indian retail sector size and growth..........................................51
Figure 15: Organized Retail share.................................................................52
Figure 16: Organized Retail penetration.......................................................53
Figure 17: Organized Retail formats.............................................................53
Figure 18: Organized Retail segmentation....................................................54
Figure 19: Demand Factor............................................................................ 55
Figure 20: Supply Factor............................................................................... 57
Figure 21: FDI inflows to India and China.....................................................59
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List of Tables
Table 1: Indian Income Classification............................................................12
Page 8
List of Abbreviations
ATM
BCCL
BMG
CAGR
CD
CD-ROM
CEO
DJ
DVD
EIU
EMI
et al.
FDI
FM
FMCG
GDP
GIRT
HMV
HNI
IBEF
IMF
INR
IT
MP3
MSF
MTV
NCAER
OECD
PPP
PS
RPG
SKU
SQF
URL
USA
USD
Automated Teller Machine

Bennett, Coleman & Co Ltd
Bertelsmann Music Group
Compound Annual Growth Rate
Compact Disc
Compact Disk - Read Only Memory
Chief Executive Officer
Disc Jockey
Digital Video Disc
Economist Intelligence Unit
Equated Monthly Instalment
et alii / and others
Foreign Direct Investment
Frequency Modulation
Fast-Moving Consumer Goods
Gross Domestic Product
German-Indian Round Table
His Master's Voice
High Networth Individual
India Brand Equity Foundation
International Monetary Fund
Indian rupee
Information technology
Moving Picture Experts Group layer 3
Million Square Feet
Music Television
National Council of Applied Economic Research
Organisation for Economic Co-operation and Development
Purchasing Power Parity
Play Station
Rama Prasad Goenka
Stock Keeping Units
Square Feet
Uniform Resource Locator
United States of America
United States of America Dollars
VCD
Video Compact Disc
WEF
World Economic Forum
Page 9
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Table of Contents
Declaration in lieu of oath....................................................................................... I
Acknowledgment................................................................................................ III
Executive Summary............................................................................................ IV
List of Figures.................................................................................................... V
List of Tables..................................................................................................... VI
List of Abbreviations.......................................................................................... VII
1
Introduction................................................................................................ 1
Literature Review......................................................................................... 5
2.1
Evolution of Indian Retail.........................................................................5
2.2
Indian Economy and Growth......................................................................6
2.3
The Indian Consumer............................................................................. 11
2.3.1
3
Areas of Growth............................................................................. 14
Research Methodology................................................................................. 17
3.1
Research Strategy.................................................................................. 17
3.2
Research Design................................................................................... 17
3.3
Data Collection.................................................................................... 18
3.4
Validity and Reliability...........................................................................19
3.5
Statistical Tools.................................................................................... 19
3.6
Hypothesis.......................................................................................... 19
3.7
Data Analysis....................................................................................... 20
Situation Analysis of Indian Retail...................................................................21

4.1
Description of Retail.............................................................................. 23
4.2
Retail Strategy and Structure....................................................................24
4.3
Retailing Formats.................................................................................. 27
4.3.1
Form of Ownership.........................................................................27
4.3.2
Store Strategy Mix..........................................................................28
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4.3.3
Non Store Retailing.........................................................................30
4.3.4
Retail Operation Size.......................................................................31
4.4
5
Indian Retail Companies.........................................................................32
Case Study - Planet M Retail Ltd., India...........................................................35

5.1
Music Retail Market.............................................................................. 35
5.2
Company Profile................................................................................... 36
5.3
Product Line........................................................................................ 38
5.4
Operations.......................................................................................... 41
5.5
Marketing Strategy................................................................................ 43
5.6
Business Strategy & Future Expansion Plans................................................46
5.7
Major Competitors of Planet M.................................................................47
5.7.1
Crossword Bookstores.....................................................................47
5.7.2
Landmark..................................................................................... 48
5.7.3
Music World India..........................................................................49
5.7.4
Odyssey....................................................................................... 49
Analysis of Indian Retail Market.....................................................................51

6.1
Growth & Development..........................................................................51
6.2
Drivers of Growth................................................................................. 56
6.3
Challenges.......................................................................................... 60
6.4
Opportunities....................................................................................... 62
6.5
Suggestions......................................................................................... 64
Conclusions.............................................................................................. 67
Bibliography............................................................................................. 68
Appendix A: ITM Checklist 360 degree analysis...............................................72
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1 Introduction
In a growing market, the local culture plays a huge role in defining business strategy in
that country. Germany, for e.g. has persevered in a time of economic recovery after the
great financial recession of 2008-09 while in USA businesses are known for taking risks
and making decisions quickly which saw them jumping back to their feet quickly. The
Japanese like to see that those looking to conduct business are respectful of cultural
traditions while the business leaders in Mexico focus on building personal relationships
before making business decisions. India, too, has its own business culture that is not
quite as recognizable as the others.
Retail comes from the French word retaille, which means "to cut off, clip, pare,
divide" in terms of tailoring. It was first recorded as a noun with the meaning of a "sale
in small quantities" in 1433 (from the Middle French retail, "piece cut off, shred, scrap,
paring") (Harper, 2016). Like in French, the word retail in both Dutch and German also
refers to the sale of small quantities of items. Retailing is a direct interface with the
consumer and expands to the coordination of business activities from end to end;
beginning from the concept or design stage of product or offering, till its delivery and
post delivery service to customer (Berman & Evans, 2004).
Retailers initiate by participating in the sorting process by collecting an assortment of
goods and services from different suppliers and then in turn offering them for sale. The
width and depth of assortments depend upon the individual retailer's strategy.
Thereafter, they trigger the purchasing cycle by provide information to consumers
through advertising, displays and signs and sales personnel. Marketing research support
is given to other channels, members. Afterwards, they store merchandise, mark prices
on it, place items on the shelves and handle products; usually they pay suppliers for
items before selling them to final customers. They complete transactions by using
appropriate locations, and timings, credit policies, and other services e.g. delivery
(Levy, et al., 2013).
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Retailers provide the vital link between producers and ultimate consumers, who
patronize stores. This makes the choice of store location, product assortments, store
timings, store fixtures, knowledge of sales personnel, delivery and other factors, very
critical in drawing customers to the store. A majority of customers make very often
unplanned purchases or impulse purchase. This is in contrast to those who buy for resale or use in then as input or raw material in manufacturing as they are more systematic
and planned in their purchasing. Therefore, retailers need to place items in shelves such
as impulse items in high traffic locations, organize, store layout and place related items
next to each other, to stimulate purchase (Kotler & Armstrong, 2010). Retailing in a way
is the final stage in marketing channels for consumer products.
The Retailing Industry includes the following:
Auto Retailers
Clothing Stores
Convenience Stores
Department Stores
Direct Sales Catalogue and mail order companies
Discount Stores
Drug Stores
e-commerce portals
Grocery Stores
Home furnishing retailers
Specialty retailers
<World Retail market>

A Brief Overview of Global Retail Industry
Moreover, retail organizations are no longer small-scale family-run concerns but

powerful multinational corporations. Wal-Mart is the largest corporation in the world,
employing nearly 1 million associates; Tesco, the largest UK company, employs 260
000 people. These corporations have global aspirations and have come a long way in a
relatively short period of time. The vision of entrepreneurs such as Sam Walton (WalMart) and Jack Cohen (Tesco) have transformed retail markets. Their stores are not
unique, however, with Benetton, IKEA and Zara to name but a few successful
companies which have benefited from strong entrepreneurial leadership. In 2002, for
example, Stanley Kalms retired as chairman of Dixons, a company which has grown
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from a single photography shop in 1937 to Europes leading electrical retailer. At the
same time Ken Morrison, at the tender age of 71, continues to run one of the most
successful grocery retail chains in the UK, Wm. Morrison, from a mere 114 stores.
While illustrious corporations such as British Airways exit the prestigious FTSE 100,
Wm. Morrison entered the top league table in 2001 and was ranked 65 in September
2002.
<World Retail market>
Retailing impacts upon our lives. We all shop, albeit with different levels of enthusiasm!
In terms of economic significance, the sector makes a major contribution to the Gross
Domestic Product (GDP) of countries and employs a large number of people (Fernie, et
al., 2015). This industry has contributed immensely to the economic growth of many
countries and continuously does so even more today in this age of consumption of all
kinds of goods and services. Retail is undoubtedly one of the fastest changing and
dynamic industries in the world today.
The main objectives of the research are the following:
What are the current trends in the Indian organized retail industry?
Economy growth and higher income levels of middle class people - a trigger for
a higher growth in retail business?
What are the Strategies adopted to "grow" customers?
Does the product placement affect the buyers' decision?
How does consumers behaviour on buying preference influence the Retailing
formats?
How important are the customer feedback for the Retail operators?
Are the promotional activities able to convert into actual revenues?
Is the Indian retail industry moving in right direction or need further changes?
As a matter of fact, retail is the buzz word of the Indian economy today. Indian retail
industry is growing at a significant pace even when the growth indicators are not
favourable. Hence I wanted to have an overview of the opportunities in the market and
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in turn apprise myself to this challenging but growing industry. I have chosen Planet M
Retail Ltd. as the case study for my master thesis to understand their marketing and
store operation functions. During my subject research and data gathering phase, I
personally visited the store outlet in Kalkaji, Delhi. The hour long discussions and
interaction with the Store Manager, staff personnel and customers cleared many core
aspects when it came to practical applications.
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2 Literature Review
One of the most important parts of this research paper is the literature review. Before
jumping to Indian retail market investigation and data analysis it is important to
examine literature that is relevant to this research. For instance: different authors
opinions, scientific articles and etc. Literature needs to be analyzed and taken into
further consideration.
Information has been sourced from various books, trade journals, government
publications, newspapers etc. and research is descriptive in nature. Data presented in the
form of tables and analyzed in form of percent trends and chart.
2.1
Evolution of Indian Retail
The retail sector has played a phenomenal role throughout the world in increasing
productivity of consumer goods and services. It is also the second largest industry in US
in terms of numbers of employees and establishments. There is no denying the fact that
most of the developed economies are very much relying on their retail sector as a
locomotive of growth.
India has rightly been called a nation of shopkeepers. Presumably the reason for this is
because of the sheer large number of retail enterprises that exists in India. The retail
industry in India is largely unorganized & predominantly consists of small, independent,
owner-managed shops the so called Mama-Papa stores. In 2014, there were 12 million
such units of which 92 per cent are small family businesses, utilizing only household
labour. These businesses fall under the unorganized Retail sector, while the other 8 per
cent forms the organized centre.
The India Retail Industry is the largest among all the industries, accounting for over 10
per cent of the countrys GDP and around 8 per cent of the employment. The Retail
Industry in India has come forth as one of the most dynamic and fast paced industries
with several players entering the market. But all of them have not yet tasted success
because of the heavy initial investments that are required to break even with other
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companies and compete with them. The India Retail Industry is gradually inching its
way towards becoming the next boom industry (Dhanabhakyam, 2008).
Organised retail which presently account for only 8 percent of the total market is likely
to increase its share to over 20% by 2020. It offers huge potential for growth in coming
years. India is becoming the most growth oriented retail destination in the world with
the retail sector projected to grow at a CAGR of over 9% by 2020.
Figure 1: Retail Industry 2020 Growth in India
Source: (Boston Consulting Group, 2015)
2.2
Indian Economy and Growth
In the preceding two decades, India as a developing country has continued to emerge as
an important powerhouse of economic growth with far-reaching global ramifications. A
vast pool of young and educated workforce together with an emerging and aspiring
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middle class is the corner-stone of this wave. (GIRT, 2013). However, the opportunities
in the long-term of engaging and doing business in a complicated environment like
India would seem to be too daunting for many such enterprises owing to both real and
perceived challenges in overcoming bureaucratic and market hurdles. At the same time
and despite mediocre macro-economic performance of the Indian economy, Indian
companies are successful players in global trade (OECD, 2014).
As per the IMF, Indian economy is predicted to be the fourth fastest growing economies
of world in terms of real GDP growth for the year 2016. The cost of living here is less
as compared to the other developed countries of the world and it has the vast human and
natural resources. The dominance of India in IT industry is known world-wide and it is
quickly becoming the base for many global companies.
Figure 2: Worlds fastest growing economies 2016
Source: (WEF, 2016)
India is developing both socially and economically and the growth rate of the Indian
economy in the last five years has been consistently more than 7%. Comparing India
and the other big economies of world, it is slated to be the third largest economy of the
world; according to the latest Goldman Sachs report. Indias economic growth with a
Gross Domestic Product of USD 2.2 trillion has already surpassed that of the United
States in terms of GDP growth rate, as per IMF.
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With this rapid growth, the buying power of the consumers in the country is also rising
upwards. Indias consumer product market grew to USD 1.1 trillion in 2013 thereby
making it in the top 10 largest markets in the world with India being at the ninth place.
One big reason for this growth lies in its working age population, which is increasing at
a rapid pace than other economies. As per Statista, from a total population of 1.3 billion
people in India, more than 65 per cent of the population falls in the age group of 15-64
years and about 30 per cent falls in the age group of under 15 years, which provides it
with the strong foundation of young population.
Figure 3: India: Age distribution from 2004 to 2014
0-14 years
0.0%
10.0%
20.0%
30.0%
40.0%
15-64 years
50.0%
65 years +
60.0%
70.0%
80.0%
90.0%
100.0%
2014
29.21%
65.3%5.49%
2013
29.65%
64.97%5.38%
2012
30.08%
64.63%5.29%
2011
30.5%
64.3% 5.2%
2010
30.89%
63.99%5.11%
2009
31.3%
63.65%
5.05%
2008
31.69%
63.32%
4.99%
2007
32.06%
63.01%
4.92%
2006
32.43%
62.72%
4.85%
2005
32.78%
62.44%
4.78%
2004
33.19%
62.09%
4.72%
Share of the population
Source: (Statista, 2014)
Rising incomes with young population makes an amazing recipe for growth. According
to the National Council for Applied Economic Research (NCAER), India estimates,
there are more than 50 million people in households earning USD 4,400 - 21,800 a year,
which it defines as middle-class (NCAER, 2010). This class forms the backbone of
the India market story. For this group, easy finance options have also given pace to their
already increasing shopping habits. It can be said that the Indian economy is seeing new
heights while riding on its young population with enough disposable income. This also
creates a change in the consumer buying behaviour in India. People who have more &
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more disposable income in their hands have the desire to shop and to show-off in the
society (Sujatha, 2015).
On the other hand, the upper middle and high-income urban households are estimated to
grow to more than 40 million. Besides the middle class and the upper middle class,
there is another class of consumers in India that is on the rise, the high networth
individuals (HNI). Over half of the rich population lives in Delhi, Mumbai, Bangalore
and nearly 62 per cent of the market for the premium products in India is also
concentrated in these cities. Also 85 per cent of the Indian retail market exists in the 8
largest cities of the country (NCAER, 2010).
The prospects of the rural areas cannot be left unnoticed. There has been a tremendous
increase in the buying potential of the rural areas. Rapid growth in the mall culture has
also contributed a lot to the changing face of Indian retail scenario.
Consumer spending is on the rise backed by easy availability of credit and the low
interest rate regime. This has been reinforced by the proliferation of shopping centres in
all major urban agglomerations offering the consumer a great deal of choice at locations
not too far away from home. Large format malls replete with Entertainment, Retail and
Leisure components have sprung up in all major cities in India.
Figure 4: Operational Malls as on 31st May, 2004
Source: (yourarticlelibrary.com, 2005)
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A study done by Knight Frank India indicates that by 2020, approximately 230 million
SQF of mall space would be available in India. Within this, Mumbai, Pune, Delhi-NCR
(including Gurgaon, Noida, Greater Noida, Faridabad & Ghaziabad), Bangalore &
Hyderabad will have a 74 per cent share. The balance 26 per cent will be made up by
the Tier II cities like Kolkata, Chennai, Ahmedabad, Jaipur, Nagpur, Lucknow, Indore,
Ludhiana & Chandigarh.
Figure 5: Increase in number of Malls in India, 2014
Increase in number of Malls in India

600
500
400
300
200
100
0
2004
2007
2010
2013
Source: (Aggregated from different sources, 2016)
As shown in the Figure 5 above, the number of malls has grown from meagre 148 in
2004 to about 600 malls by 2013 and the number is expected to further increase by
2020. The increase in the number of malls is important because more malls are going to
cover more & more space. Demand for this quality space is already increasing at a fast
rate. This is evident from the fact that half of the retail space that became operational in
the year 2012 was pre-leased and the space which is going to be operational in 2016 is
pre-leased to the extent of 70 per cent till now.
Tier I cities are currently facing this boom situation for retail and the dog fight for the
retail space as they are already the home for 60 per cent of the malls in the country. The
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intensity of competition is heightening due to the availability of space and the real estate
sector is getting more and more hype due to this.
Tier II cities are also showing greater growth aspects than tier I cities. Indian giants in
the field of retail like Reliance, The Future Group are eying these areas for their future
growth as establishments in these areas will cost them less.
The popular modes of building shopping malls in the cities will be based on build,
operate, lease and sell basis. Due to this activity there will be a closer establishment of
linkages between real estate developers, state governments, financial institutions, and
retail industry. With easing of the FDI policy, international retailers coming to India are
expected to occupy larger spaces thereby increasing revenues. The real estate sector is
also seeing an unprecedented growth in the retail sector.
2.3
The Indian Consumer
The term "consumer behaviour" refers to actions and decisions that factor into a
customer's purchase. Researchers, businesses and marketers study consumer behaviour
to understand what influences a consumer's shopping preferences and selection of
products and services (Jennifer, 2015).
According to (Kotler & Armstrong, 2008), consumer behaviour refers to the buying
behaviour of final consumers - individuals and households who buy goods and services
for personal consumption. However, one official definition of consumer behaviour is the
study of individuals, groups or organisations and the processes they use to select,
secure, use, and dispose of products, services, experiences or ideas to satisfy needs and
the impacts that these processes have on the consumer and the society (Jansson-Boyd,
2010). Customer buys goods and services to satisfy needs and wants. However each
individual is different in terms of age, gender, occupations and taste. This is why
consumer behaviour is so difficult to understand and to study (Kotler & Armstrong,
2010).
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Findings on consumer behaviour are used to develop methods and products that will
boost company performance and sales. As (Schiffman & Kanuk, 2009) explains,
consumer behaviour involves the use and disposal of products as well as the study of
how they are purchased. This means understanding that consumer's behaviour process is
the perspective from the what, when, where, how, from whom and how often to
purchase goods and services.
Customers nowadays are more empowered, more knowledgeable and more
sophisticated, and research into modern consumer behaviour is increasingly important
for businesses. The study of consumer behaviour is how consumer makes decisions to
spend its resources (time, money and effort) in various consumption places (Khan,
2007).
Taking into consideration of the above, the Indian consumers lifestyle is also evolving
rapidly. India has one of the youngest populations of world with 54 per cent of the total
population now under the age of 25 years. Among other countries, India has the lowest
percentage of total population in the form of old people i.e. in the age group of 65 and
above. As predicted by the World Bank in the survey conducted by them even after
2025 or 2050, India will still be the country with youngest population, as presented in
Figure 6.
Figure 6: Percentage of Population aged between 25 and 65
100.0
90.0
80.0
70.0
60.0
2000
50.0
2025
40.0
2050
30.0
20.0
10.0
0.0
India
China
Korea
Page 12
Europe
USA

Source: (World Bank, 2016)
A growing labour force both enables higher growth rates and creates an urgent political
need for growth: according to the OECD, India will need to achieve around 7.5 per cent
average annual growth over the next two decades to create employment for all new
entrants to the workforce (OECD, 2016). It is most of this labour force, the consumers
within the income group of USD 1000 to 4700, who are real drivers of the organized
retail in India, not the Super rich.
Table 1: Indian Income Classification
Indian Income Classification
Division
RICH (Annual Income >USD 4700)
Household in millions
1994-95
1999-00
2005-06
1.0
3.0
6.0
CONSUMING (USD 1000-4700)
29.0
55.0
75.0
CLIMBERS (USD 500-1000)
48.0
66.0
78.0
ASPIRANTS (USD 350-500)
48.0
32.0
33.0
DESTITUTES (Less than USD 350)
35.0
24.0
17.0
Source: (NCAER, 2013)
Table 1 above depicts the division of Indian income class. It has been divided into five
categories i.e. Rich with an Annual Income of more than USD 4700, consuming class
who are the cost benefit optimizers and are the major contributor towards the growth of
retail in India and the Climbers the new generation of workforce who have joined the
job market in the last three decades and have been the growth drivers. The Rich or the
HNI population, till a few years ago spent outside the country. But nowadays, it prefers
spending within the country and also in part because lately the Global major brands
have been setting up shop in India. With its burgeoning HNI, the Indian market for
luxury goods is estimated to touch USD 2 billion in coming years.
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2.3.1
Areas of Growth
Figure 7: Spending Habits of the Indian consumer
Source: (Euromonitor, 2010)
The above Figure 7 depicts the spending habits of Indian consumer. According to a
survey conducted 31 per cent of the people replied that they want to spend, in the next
years, a major portion of their disposable income on food and grocery, while almost 21
per cent of the respondents said that they want to spend their money on vacations. The
next big area where people want to spend their money is personal care. Almost 8 per
cent of the respondents showed their interest in spending their money on personal care.
Again almost 5 per cent of the respondents said that they want to spend their disposable
income on footwear.
It is worth noting that despite of using their money in a calculated manner the Indian
consumers spends or likes to spend mostly on the areas related to direct retail or where
the products can be consumed directly. Almost 78 per cent of the people replied that
they want to spend their money not on their vacations or movies but on food items,
books, footwear, personal care etc. The utility level of people in India is largely leaned
towards the basic necessities of life.
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In India, if the consumers have some extra money to save most of them will likely to
spend them on the items on which they are not able to spend their money on. A large
proportion of people going for spending their money on food show the opportunity that
the players can harness in this area.
Food & Grocery sectors are the largest contributor to the retail sector in India, but the
drawback is that almost 95 per cent of food & grocery retailing is done in unorganized
way. The major contributor in the Indian retail is not able to contribute to its fullest only
due to the fact that the major portion of the sector is unorganized. Most of the growth
came from packaged basics like cooking oil, wheat flour, rice, and ghee, indicating an
overall upswing in the commodity branding movement.
Spending on personal care has increased and therefore its the second major contributor
of the total retail sales. There is great aspiration among people to see themselves in good
shape and in order to maintain themselves for that levels the use of healthcare products
has increased at a rapid pace. Shampoos; Skin care products; Herbal medicines are
selling like hot cakes in the market and are driving the retail especially organized as
most of the firms belonging to this industry are operating in an organized manner.
Apparel industry is also seeing a boom situation due to the same reasons. Desire to look
good has forced people to buy more and more clothes for different occasion or for daily
use. In order to show the status in the society consumer is now ready to spend on the
clothing. The penetration of organized retail is highest in clothing industry after the
footwear. Almost 12 per cent of the organized retail business is in apparel industry.
The consideration of Indian consumer has shifted from price consideration to design and
quality of the product. The consumer today is more sensitive to the brand value of the
product; they are ready to try the product even if it is launched newly in the market.
Price consideration is getting less day by day because the level of disposable income
with people is increasing day by day.
Page 15
The factor of disposable income is crucial in determining the role of consumer in the
current boom of Indian Retail industry. Disposable income is the income left after
paying the income tax and other taxes. The level of this income is on the rise for the
past few years. According to a study done by the World Bank, Indians tend to save only
28 per cent of their total disposable income.
According to the survey conducted by World Bank in 2015, in the preceding last five
year there has been a compound annual growth rate of 20.9 per cent in the disposable
income of the people in India. Today the disposable income in India is more than USD
5600 in terms of purchasing power parity (PPP) (WorldBank, 2015).
The rise in the disposable income establishes a direct relation with the increase in retail
sales. As the consumers are saving less than before then they are clearly going to spend
more money on consumables in the market.
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3 Research Methodology
In this chapter the coverage is on the research design and methodology, including
sampling, population, establishing rigour during and after data collection, ethical
considerations and data analysis.
3.1
Research Strategy
This study used quantitative research strategy. According to Newman et al, quantitative
research goes from reviewing and defining directly to developing hypotheses and
collecting data. In quantitative analysis, this is called the derivation of hypotheses. The
researcher examines the literature and, based upon this process, he or she derives
theoretical expectations, which become the derived hypotheses (Newman, Ridenour, &
Ridenour, 1998).
This research examines the following hypotheses:
1. What are the current trends in the Indian organized retail industry?
2. How does consumers behaviour on buying preference influence the Retailing
formats?
3. Are the promotional activities able to convert into actual revenues?
3.2
Research Design
The term research design is sometimes defined as a blueprint for conducting a study
with maximum control over factors that may interfere with the validity of the findings
(Burns & Grove, 2011). While Parahoo describes, a research design as a plan that
describes how, when and where data are to be collected and analysed (Parahoo, 1997).
Others also confirm that the research design is descriptive in nature. A research design
can also be defined as the researchers overall for answering the research question or
testing the research hypothesis (Polit & Hungler, 2013).
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This study used descriptive research. Descriptive research involves gathering data that
describe events and then organizes, tabulates, depicts, and describes the data collection
(Glass & Hopkins, 1984).
3.3
Data Collection
Primary data is the foundation on which analysis of the present study is based. It is
proposed to collect primary data by adopting the method of observations and
questionnaire. The interviews will be conducted of the people who engaged in
unorganized and organized sector as well as different type of consumer which will help
in collecting the information regarding growth and challenges of Retail Industry in
India, changing behaviour pattern of consumer.
Surveys and Interviews will be conducted with the help of which the data may be
collected. Statistical tools such as central tendency, correlation etc. will be used to
analyse the data. Analysis will help in interpretation of the problem and drawing
conclusions.
Secondary data will be another important source of data on which the present
dissertation is based. The researcher has collected the secondary data from various
published and unpublished sources. The researcher used following sources for
collection of secondary data:
a)
b)
c)
d)
Reports and Publications of National and International Institutes.

Reports of Government and NGOs.
Various Research Journals, Periodicals and Newspapers.
Internet Browsing.
The secondary data was also analyzed and used for drawing conclusion.
3.4
Validity and Reliability
Page 18
Content validity refers to how accurately an assessment or measurement tool taps into
the various aspects of the specific construct in question (Study.com, 2015). To achieve
content validity, survey questionnaire included a variety of questions on the level of
knowledge of participants on product brands and their purchasing behaviour.
Questionnaire was posted on internet for the respondents to answer. This was needed to
preserve the identity with regards to the answers.
Accurate data collection is essential to maintaining the integrity of research (Wikipedia,
2015). Error in data collection was minimized by the researchers by standardizing
conditions of validation and by conducting Pilot testing. Pilot testing was carried out by
the researcher with employees of the stores to identify any flaws on the questionnaire to
reduce errors of measurement and test for consistency.
3.5
Statistical Tools
The data will be collected through primary and secondary sources as described above
and will be property classified, tabulated and presented in graphical form wherever
necessary. The statistical tools such as percentages, averages, comparative analysis,
correctional etc. will be used for analysis.
3.6
Hypothesis
The hypothesis of the present research work is as follows:

I.
There is positive correlation between growth of retail industry and Indian
II.
III.
economy.
Organized Retail Industry created ample job opportunities in India.
The increase in the purchasing power of the Indian middle classes and the heavy
influx of FDI in the retail sectors in India.
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3.7
Data Analysis
The research measured a range of factors to establish the effectiveness of Gluten-free

product awareness versus consumer behaviour by using the both nominal and ordinal
scales. It also measured the relationship between Gluten-free products versus consumer
behaviour by using an interval scale
The answers and tabular data received were analyzed by using the Descriptive statistics
method. The collected data was compiled and validated to check for any inconsistency.
Using Microsoft Excel 2007 software features of tables and graphs, the relationships
between responses was assessed and presented. Relationships among different variables
in the findings was analysed through correlation and regression, from the data gathered.
Page 20
4 Situation Analysis of Indian Retail

Retailing has a tremendous impact on the economy, growing at the rate of 8.5 per cent
per annum. It involves high annual sales and employment, accounting for over 10
percent of the countrys GDP and around eight percent of employment. As a major
source of employment retailing offers a wide range of career opportunities including;
store management, merchandising and owning a retail business. Organized retailing in
India hit Rs.560 million in 2012-2015, growing at about 40 per cent over 3 years (IBEF,
2016).
Figure 8: Retail market size, 2015
Source: (IBEF, 2016)
The scene of retailing in India, as seen in Figure 8, is different from the rest of the
world. As stated before, comparing with the high level percentage of organized retail in
other countries India has only 8 per cent of it. Adding to it is that almost 95 per cent of
these outlets are run in an area of less than 500 SQF in size. The per capita retail space
in India is only 2 SQF as compared to the US figure of 16 SQF Although India has the
Page 21
lowest retail space in the world, it also has the highest number of retail outlets (9) per
thousand people in the world.
There are a lot of activities happening today in the field of retail; new players are
entering the market and the initiators are expanding at a rapid pace. With their growth
the organized retail is also growing at about 8-9 per cent per annum. According to the
estimates of Economist Intelligence Unit (EIU) if this trends goes on then the
contribution of organized sector would have increased to 20-25 per cent by 2020. The
presence of organized retailing is increasing not only in the metros but also in tier II
cities and in smaller towns.
Even with this growth, retail in India is at the crossroads. It has emerged as one of the
most dynamic and fast paced industries with several players entering the market. Still,
the heavy initial investments required make breaking even hard to achieve and many
players have not tasted success to date. However, the future is promising; the market is
growing, government policies are becoming more favourable and emerging
technologies are facilitating operations.
The whole concept of shopping has altered in terms of format and consumer buying
behaviour, ushering in a revolution in shopping. Modern retail has entered India as seen
in sprawling shopping centres, multi-storeyed malls and huge complexes offer
shopping, entertainment and food all under one roof. Some of the big names in the
Indian retail industry include: The Future Group (formerly the Pantaloon Retail India
Ltd.), RPG Group, Shoppers Stop, Archies, Caf Coffee Day, Landmark (Trent Ltd.),
Swarovski, Westside, Wills Lifestyle, McDonalds, Pizza Hut. They are spreading from
anywhere to everywhere; from food retailing to apparels, furniture to decorative, books
to music. You name any area & they will already be there making huge profits. There
are more than 700 malls in India and the number is increasing at a fast rate.
Consumers benefits from retailing in that, retailers perform marketing functions that
makes it possible for customers to have access to a broad variety of products and
services. Retailing also helps to create place, time and possession utilities. A retailer's
Page 22
service also helps to enhance a product's image.

4.1
Description of Retail
Retailing is the combination of activities involved in selling or renting consumer goods

and services directly to ultimate consumers for their personal or household use. In
addition to selling, retailing includes such diverse activities as, buying, advertising, data
processing and maintaining inventory.
First, retailers participate in the sorting process by collecting an assortment of goods and
services from a wide variety of suppliers and offering them for sale. The width and
depth of assortment depend upon the individual retailer's strategy.
They then provide information to consumers through advertising, displays and signs and
sales personnel. Marketing research support is given to other channels, members.
Afterwards, they store merchandise, mark prices on it, place items on the selling floor
and otherwise handle products; usually they pay suppliers for items before selling
,,them to final customers. They complete transactions by using appropriate locations,
and timings, credit policies, and other services e.g. delivery.
Retailing in a way, is the final stage in marketing channels for consumer products.
Retailers provide the vital link between producers and ultimate consumers, who
patronize stores. This makes store location, product assortment, timings, store fixtures,
sales personnel, delivery and other factors, very critical in drawing customers to the
store.
Final customers make many unplanned purchases. In contrast those who buy for resale
or use in manufacturing are more systematic in their purchasing. Therefore, retailers
need to place impulse items in high traffic locations, organize, store layout, trains sales
people in suggestion, and place related items next to each other, to stimulate purchase.
The Retailing Industry includes the following:
Auto Retailers
Page 23
4.2
Clothing Stores
Convenience Stores
Department Stores
Direct Sales Catalogue and mail order companies
Discount Stores
Drug Stores
Grocery Stores
Home furnishing retailers
Some e-commerce businesses
Specialty retailers
Retail Strategy and Structure
Successful retail operations depend largely on two main dimensions: margin and
turnover. How far a retail enterprise can reach in margin and turnover depends
essentially on the type of business (product lines) and the style and scale of the
operations. In addition the turnover also depends upon the professional competence of
the enterprise.
In a given business two retail companies may choose two different margin levels, and
yet both may be successful, provided the strategy and style of management are
appropriate.
Margin Turnover Model
Margin is defined as the percentage mark tip at which the inventory in the store is sold
and turnover is the number of times the average inventory is sold in a year. This is a
diagrammatic representation of the frame work and can be applied to almost any type of
retail business. It is suggested that a conceptual frame work, using margin and turnover,
is needed for understanding the retail structure and evolving retail strategy (Gist, 1971).
Page 24
Depending upon the, combination of the two parameters, a retail business will fall into
one of the four quadrants. For instance L-L signifies a position which is low on both
margin and turnover; whereas, H-L indicates high margin and low turnover.
Figure 9: Margin Turnover Model
Source: http://www.jagsheth.com
Low Margin High Turnover (L-H) Stores

Such an operation assumes that low price is the most significant determinant of
customer patronage. The stores in this category price their products below the
market level. Marketing communication focuses mainly on price. They provide
very few services; if any, and they normally entail an extra charge whenever
they do. The merchandise in these stores are generally pre-sold or self-sold. This
means that the customers buy the product, rather than the store selling them.
These stores are typically located in isolated locations and usually stock a wide
range of fast moving goods in several merchandise lines. The inventory consists
of well-known brands for which a consumer pull is created by the manufacturer
through national advertising. Local promotion focuses on low price. Wall-mart
Page 25
in the United States is an example and Pantaloon Chain or Subhiksha are Indian
examples of such stores.
High Margin Low Turnover (H-L) Stores

This operation is based on the premise that distinctive merchandise, service and
sales approach are the most important factors for attracting customers. Stores in
this category price their products higher than those in the market, but not
necessarily higher than those in similar outlets. The focus in marketing
communication is on product quality and uniqueness.
Merchandise is primarily sold in store and not pre-sold. These stores provide a
large number of services and sell select, categories of products. They do not
stock national brands which are nationally advertised. Typically, a store in this
category is located in a down town area or a major shopping centre. Sales
depend largely on salesmanship and image of the outlet.
High Margin High Turnover (H-H) Stores

These stores generally stock a narrow line of products with turnover of
reasonably high frequency. They could be situated in a non-commercial area but
not too far from a major thoroughfare. Their location advantage allows them to
charge a higher price. High overhead costs and, low volumes also necessitate a
higher price.
Low Margin Low Turnover (L-L) Stores

Retail enterprises in this category are pushed to maintain low margins because of
price wars. Compounding this problem is the low volume of sales, which is
probably a result of poor management, unsuitable location etc. such businesses,
normally get wiped out over a period of time.
4.3
Retailing Formats
Page 26
Regardless of the particular type of retailer (such as a supermarket or a department

store), retailers can be categorized by:
1.
2.
3.
4.
4.3.1
Ownership
Store Strategy Mix
Non Store Retailing
Retail Operation Size
Form of Ownership
A retail business like any other type of business can be owned by a sole proprietor,
partners or a corporation. A majority of retail business in India are sole proprietorships
and partnerships.
Independent Retailer
Generally operates one outlet and offers personalized service, a convenient
location and close customer contact. Roughly 98 per cent of all the retail
businesses in India are managed and run by independents, including barber
shops, drycleaners, furniture stores, bookshops, LPG Gas Agencies and
neighbourhood stores. This is due to the fact that into retailing is easy and it
requires low investment and little technical knowledge. This obviously results in
a high degree of competition. Most independent retailers fail because of the ease
of entry, poor management skills and inadequate resources.
Retail Chain
It involves common ownership of multiple units. In such units, the purchasing
and decision-making are centralized. Chains often rely on, specialization,
standardization and elaborate control- systems. Consequently chains are able to
serve a large dispersed target market and maintain a well-known company name.
Chain stores have been successful, mainly because they have the opportunity to
take advantage of "economies of scale" in buying and selling goods. They can
maintain their prices, thus increasing their margins, or they can cut prices and
attract greater sales volume. Unlike smaller, independent retailers with lesser
financial means, they can also take advantage of such tools as computers and
Page 27
information technology. Examples of retail chains in India are Shoppers stop;

West side and IOC, convenience stores at select petrol filling stations.
Retail Franchising
It is a contractual arrangement between a "franchiser" (which may be a
manufacturer, wholesaler, or a service sponsor) and a "franchisee" or
Franchisees, which allow the latter to conduct a certain form of business under
an established name and according to a specific set of rules. The franchise
agreement gives the franchiser much discretion in controlling the operations of
small retailers. In exchange for fees, royalties and a share of the profits, the
franchiser offers assistance and very often supplies as well. Classic examples of
franchising are: McDonalds, Pizza Hut and Nirulas.
Cooperatives
A retail cooperative is a group of independent retailers that have combined their
financial resources and their expertise in order to effectively control their
wholesaling needs. They share purchases, storage, shopping facilities,
advertising planning and other functions. The individual retailers retain their
independence, but agree on broad common policies. Amul is a typical example
of a cooperative in India.
4.3.2
Store Strategy Mix
Retailers can be classified by retail store strategy mix, which is an integrated

combination of hours, location, assortment, service, advertising, and prices etc. The
various categories are:
Convenience Store
This is generally a well situated, food oriented store with long operating house
and a limited number of items. Consumers use a convenience store; for fill in
items such as bread, milk, eggs, chocolates and candy, etc.
Page 28
Super markets
This is a diversified store which sells a broad range of food and non-food items.
A supermarket typically carries small house hold appliances, some apparel
items, bakery, film developing, jams, pickles, books, audio/video CD's etc. The
Govt. run Super bazaar and Kendriya Bhandar in Delhi are good examples of a
super market. Similarly in Mumbai, we have Apna Bazaar and Sahakari
Bhandar.
Department Stores
A department store usually sells a general line of apparel for the family,
household linens, home furnishings and appliances. Large format apparel
department stores include Pantaloon, Ebony and Pyramid. Others in this
category are: Shoppers Stop and Westside.
Specialty Store
This format typically concentrates on the sale of a single line of products or
services, such as Audio equipment, Jewellery, Beauty and Health Care, etc.
Consumers are not confronted with racks of unrelated merchandise. Successful
specialty stores in India include, Music World for audio needs, Tanishq for
jewellery and McDonalds, Pizza Hut and Nirula's for food services.
Hyper Markets
It is a special kind of combination store which integrates an economy super
market with a discount department store. A hyper market generally has an
ambience which attracts the family as whole. Pantaloon Retail India Ltd. (PRIL)
through its hypermarket "Big Bazaar" offers products at prices which are 25 per
cent - 30 per cent lower than the market price.
4.3.3
Non Store Retailing
Page 29
In non-store retailing, customers do not go to a store to buy. This type of retailing is

growing very fast. Among the reasons are; the ability to buy merchandise not available
in local stores, the increasing number of women workers, and the presence of unskilled
retail sales persons who cannot provide information to help shoppers make buying
decisions . The major types of non-store retailing are:
In Home Retailing
Where, a sales transaction takes place in a home setting - including door-door
selling. It gives the sales person an opportunity to demonstrate products in a
very personal manner. She/he has the prospect's attention and there are fewer
distractions as compared to a store setting. Examples of in home retailing
include Eureka Forbes vacuum cleaners and water filters.
Telesales/Telephone Retailing
This involves contact between the prospect and the retailer over the phone, for
the purpose of making a sale or purchase. A large number of mobile phone
service providers use this method. Other examples are private insurance
companies, and credit companies etc.
Catalogue Retailing
This is a type of non-store retailing in which the retailers offers the merchandise
in a catalogue, which includes ordering instructions and customer orders by
mail. The basic attraction for shoppers is convenience. The advantages to the
retailers include lover operating costs, lower rents, smaller sales staff and
absence of shop lifting. This trend is catching up fast in India. Burlington's
catalogue shopping was quite popular in recent times. Some multi-level
marketing companies like Oriflame also resort to catalogue retailing.
Direct Response Retailing

Here the marketers advertise these products/ services in magazines, newspapers,
radio and/or television offering an address or telephone number so that
consumers can write or call to place an order. It is also sometimes referred to as
Page 30
"Direct response advertising." The availability of credit cards and toll free
numbers stimulate direct response by telephone. The goal is to induce the
customer to make an immediate and direct response to the advertisement to
"order now." Telebrands is a classic example of direct response retailing. Times
shopping India is another example.
Automatic Vending
Although in a very nascent stage in India, is the ultimate in non-personal, nonstore retailing. Products are sold directly to customers/buyers from machines.
These machines dispense products which enable customers to buy after closing
hours. ATM's dispensing cash at odd hours represent this form of non-store
retailing. Apart from all the multinational banks, a large number of Indian banks
also provide ATM services, countrywide.
Electronic Retailing/E-Tailing
It is a retail format in which retailers communicate with customers and offer
products and services for sale, over the internet. The rapid diffusion of internet
access and usage, and the perceived low cost of entry have stimulated the
creation of thousands of entrepreneurial electronic retailing ventures during the
last 10 years or so. Amazon.com, E-bay and Bazee.com, HDFCSec.com are
some of the many e-tailers operating.
4.3.4
Retail Operation Size

Super Store
It is a single level large store usually having a size of 5000 SQF selling food and
non-food goods. Such types of stores are generally twice size of a supermarket
which offers non-traditional goods and services like a pharmacy, flower shop,
bookstore, salad bar, bakery etc. under one roof.
Shopping Mall
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A shopping mall is an arrangement of retail stores and places for leisure

activities such as dining, entertainment, etc. selected according to their
contribution to an overall merchandising plan. A mall is spread over a large area
of more than 200000 SQF and it runs as an integrated business by an individual
or an organization, to which independent retailers pay for opportunities to
participate.
Shopping Centre
It is an arrangement of five or more tenant spaces of approximately 1000 SQF
each used for retailing and developed under one building plan such that it has a
integrated character.
Hypermarket
A hypermarket is a retail outlet spread over an area of approximately more than
100000 SQF and more. It has outlets selling groceries and general merchandise
goods, medicines having flower shops, photo shops, etc. It has a wide variety of
merchandise offerings in large quantities in each category selling huge volumes
at low margins, for example Giant in Hyderabad.
4.4
Indian Retail Companies
The key players currently operating in the Indian retail industry includes Future Group,
Trent Ltd, RPG Enterprise, Vishal Retail Ltd, Shoppers Stop Ltd, Bata India Ltd,
Provogue India Ltd, Videocon Appliances Ltd, ITC Ltd, Godrej Agrovert Ltd, and
DCM-Hariyah Kissan Bazaar.
Pantaloon
Pantaloon is one of the biggest retailers in India with more than 450 stores
across the country. Headquartered in Mumbai, it has more than 5 MSF retail
space located across the country.
It's growing at an enviable pace and is
Page 32
expected to reach 30 MSF by the year 2010. In 2001, Pantaloon launched

country's first hypermarket Big Bazaar. It has the following retail segments:
a)
b)
c)
d)
e)
f)
g)
h)
Food & Grocery: Big Bazaar, Food Bazaar

Home Solutions: Hometown, Furniture Bazaar, Collection-I
Consumer Electronics: e-zone
Shoes: Shoe Factory
Books, Music & Gifts: Depot
Health & Beauty Care: Star, Sitara
E-tailing: Futurebazaar.com
Entertainment: Bowling Co.
Tata Group
Tata Group is another major player in Indian retail industry with its
subsidiary Trent, which operates Westside
and
Star
India
Bazaar.
Established in 1998, it also acquired the largest book and music retailer in India
Landmark in 2005. Trent owns over 4 lake sq. ft retail space across the
country.
RPG Group
RPG Group is one of the earlier entrants in the Indian retail market, when it
came into food & grocery retailing in 1996 with its retail Food world stores.
Later it also opened the pharmacy and beauty care outlets Health & Glow.
Reliance
Reliance is one of the biggest players in Indian retail industry. More than 300
Reliance Fresh stores and Reliance Mart are quite popular in the Indian retail
market.
AV Birla Group
AV Birla Group has a strong presence in Indian apparel retailing. The brands
like Louis Philippe, Allen Solly, Van Heusen, and Peter England are quite
popular. It's also investing in other segments of retail.
Bharti Group
Page 33
Another big player in the segment will be the Bharti group. Wal-Mart, the
worlds largest retailer, and Bharti Enterprises have signed a Memorandum of
Understanding (MoU) to explore business opportunities in the Indian retail
industry. This joint venture will mark the entry of Wal-Mart into the Indian
retailing industry.
A retail chain like Future Groups Big Bazaar may be clocking heady sales (growing at
100 per cent year- on- year), but the dozen odd shops operating in its proximity wear a
deserted look, giving a somewhat hollow ring to the much- talked- about retail boom in
the country.
Page 34
5 Case Study - Planet M Retail Ltd., India

5.1
Music Retail Market
The music industry in the world is one of the fastest growing segments of the world
economy. The total revenue from the music and movies and the related products have
crossed theUSD 350 billion in the year 2008 with a very impressive growth. With such a
vast and fast growing industry, all the major player like Apple with iTunes, Amazon,
HMV have entered the retail music industry.
In India the organized music industry began to flourish in the mid-90s with the entry of
many big business houses. In fact in the last couple of years the industry has seen an
impressive growth in the terms of the revenue and the customer base. In India, prior to
the entry of the organized music retailers, the music and the related products were sold
through the unorganized small shops and the distribution channels of the production
houses.
But the scene has changed drastically with the entry of these new players into the
market. The music industry across the globe can broadly be divided into three segments:
creation, marketing and distribution. Music artists create music, which is marketed and
distributed by a network of record labels, distributors, retailers, broadcasters and
DJs/clubs. Labels (record companies) play an important role in all three stages by
providing capital and the marketing know-how to create, promote and distribute music.
Music marketing takes place through branding, community building and information
dissemination. Music is sold in 'containers' like compact discs (CDs) and audio cassettes
through distribution channels. Another form of music distribution is conducting public
and private music shows. The business of music involves many intermediaries between
artists (creators) and customers (end users). Each intermediary adds to the final cost of
the product. Therefore, some record companies like Bertelsmann combine the roles of
multiple intermediaries to reduce overall costs by selling music directly to their club
members at low prices. Another way to reduce the cost of promotion and distribution
Page 35
was to sell music in the form of albums containing many solos. Companies such as
EMI, Warner and BMG have been doing this for a long time in the international market.
In the domestic market the emergence of many organized music retailers like Music
World, Planet M, Crossword, Odyssey and the online retailers have increased the
competition in the fast growing Indian market with a host of products and services.
5.2
Company Profile
Vision
To bring Affordable Feel Good & Indulgence into every neighbourhood of leading
Indian Cities and Towns
Mission
To mirror the convergence of Music & Movies around the mobile phones in the
retail space in a manner that makes us the most preferred Retail Brand for
purchase of these products.
Planet M Retail Ltd. (also known as Planet M) is an Indian music retail store founded
by The Times Group (Bennett, Coleman & Co Ltd or BCCL). It was launched in 1999,
with its first store inaugurated in Mumbai. It has over 5.5 million annual walk-ins across
its stores spanning 42 cities.
The brand was positioned purely as a Music Store with a brand statement Music Store
of the Universe.In the year 2003, the Brand position was altered to Music Movies &
Beyond to reflect introduction of Home entertainment, Gaming & Digital Hardware.
In May 2006 the Mobile segment was introduced into Planet M with creation of ShopIn-Shop in selected Planet M stores.
It was sold to Next Retail India Ltd. of Mumbai, the retail arm of Videocon, in
November 2007. The sale is the outcome of periodic strategic reviews undertaken by the
Page 36
Times Group in the context of its growth plans as well as the emerging business
landscape, a release said. The Videocon group is a USD 5.0 Billion-worth Fortune 500
Company. The current CEO is Sanjay Karwa.
It is present in many cities (140-plus locations) all over India. Planet M has 146 outlets
across the country with 74 own stores and 72 satellite outlets. These stores are mainly
known for selling music and movies and related accessories. It also sells gaming
consoles and handhelds like PlayStation Portable, PS2, PS3 and Xbox 360. Planet M is
also a new entrant in the mobile retail business. It offers a wide range of mobile
handsets with lucrative schemes (Official Website, 2016).
Celebrating 17 years and positioned as one of the premium retail outlets in
Entertainment, Mobile, and Lifestyle & Leisure Space, Planet M today has come a long
way.
Figure 10: Planet M Retail Store, Kalkaji, Delhi
Source: www.planetm.in
Planet M brand currently operates in 4 verticals mainly in Entertainment (Music &

Movies), lifestyle, Mobiles and Gaming. The Brand was repositioned as Mobile, Music,
Page 37
Movies and Mauj to reflect the convergence of Music & Movies around Mobile phones.
It also highlighted the essence of the business i.e. Feel Good & Indulgence which could
be Indianised as MAUJ. The Brand positioning also took into account the fact that
HINGLISH is the most preferred language of Urbanites.
Post-acquisition, small & medium sized stores were introduced. Currently about 30-35
stores are being introduced every month.Planet M currently runs 3 Formats namely:
Mega Stores (2500 SQF and above)
Superstores (1000 SQF and above)
Neighbourhood Stores (300 to 600 SQF and above)
The retail chain has a conversion rate of close to 40 per cent and has been experiencing
a compounded annual growth rate of 33 per cent over the past four years, a company
release said. Other achievements of Planet M include:
opening around 207 stores in a span of two years
recognized as the most admired retailer of the year for Leisure in the years 2004,
2006 and 2008.
won awards for Retail Excellence - Retailer of the year (Organization) Leisure
and Specialty - 2006 and 2009
recognized as the most Popular Music destination amongst Youth - 2010 (Global
Youth marketing awards)
initiated the Connoisseur's Club - Planet M association with MTV for Shop
Lifter property
5.3
Product Line
The retail chain Planet M is basically engaged in four different types of product line.
Their core business was basically the music retailing as an organized player but with the
new opportunities coming out, they have diversified into the following:
Music retailing
Planet M product portfolio comprises audio CDs and cassettes, VCDs and DVDs, CDROMs and other music accessories. The company is an important player in the home
video market.
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Planet M has successfully forayed into high end personal audio gadgets like Apple
iPods, NeoPods and MP3 players. The company also offers home theatre systems,
speakers and headphones. The company provides World Space receivers and
subscription packs, and is now also offering the Tata Sky consoles and subscriptions.
The core business of the Planet M was basically the music retailing. In that segment
they offer a host of options to the customers.
The major products and services covered in the outlets are: CD albums, Music
Videos/DVDs, CD singles, DVD Albums, Vinyl and Cassettes, and online music and
video contents. In addition to the Hindi and English songs that are offered at the outlets,
the retail chain also offers songs in 17 other regional languages in India depending upon
the location of the retail shop.
The retail chain has a collection of 4.5 million songs in different formats of different
artists. In fact it holds a music library of 20000 albums of different genres. In the Hindi
or regional language music, the library is arranged according to the years and the genres
of the music. The customer can find the preferred music on the specific locations of the
outlet. The English or the foreign language music is arranged according to the genre like
pop, jazz, Latino, county, disco, party, folk and so on. The retail shop also provides the
customization of the music to the customers. Now the customers can select the songs of
different artist or of different genre and upload the preferred songs into a CD or a DVD,
giving them options on the quality of the songs through choosing the bitrate of the
songs, for example.
These outlets also offer the video songs and DVD and CDs of the movies of different
languages and era. In fact some of the stores have a collection of more than 5000
movies. So the customers are provided with a large pool of movies to choose from. In
addition to the physical store across India, Planet M has also launched online music
stores under the brand. The customers can download the preferred songs by paying the
amount through the online transaction process.
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Figure 11: Planet M Retail Store - typical store layout
Mobile and accessories retailing
The Indian telecom sector is the fastest growing telecom sector in the world. The annual
mobile sales in India are highest in the world. India has passed the Chinese market as
the biggest mobile handset market in the world in terms of the volume. In 2010 about
150 million mobile handsets were sold in India with 10000 handsets are being sold
every hour. With such a huge and fast-growing market, Planet M has also ventured into
the mobile retailing segment in India. Currently its product offering in mobile includes
all the major brands like Samsung, LG, Spice, Apple etc. Its product line is divide into
basically the following segments: Low end cheap mobiles, Low and High end
multimedia phones, Smartphones, Mp3 music players and FM radio, Gaming device,
Accessories like headphones, Storage device, DVD players, and Cordless phones.
Gaming and gaming products and accessories
The Planet M retail shops are also engaged in the sale of the gaming and gaming
products. In their retail outlets they have a wide variety of the gaming consoles to offer.
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They have a vast collection of different popular game consoles in their gallery. In
addition to the premium games in their retail outlets, they also offer customers online
games. The customers have the option of downloading the selected games (like action
games, puzzles, board games, racing games, shooting games) at their website. The retail
outlets also sell the other gaming products like the gaming device and the gaming CDs.
In the outlets many popular gaming devices are on offer like the Sony play stations,
Nintendo gaming console, iPod touch, Microsoft Xbox.
The company site also provides online real time gaming facilities, for which the
customers have to log into the site and pay a specific amount to use.
Gift, greeting items and apparels
The Planet M stores also stocks and sells other gift items like cards, statues, and dolls.
There are also apparel products and life style products available, like t-shirts and other
body accessories. They have also launched products like eye gears, wristwatches etc.
5.4
Operations
The Planet M is founded as a music retail outlet, and basically engaged in the music
retailing and movie retailing in the physical stores. After the takeover by Videocon, the
company is still maintained as an independent entity sticking to the core business of
music retailing.
Over the years, the retail chain has enlarged the span of its operations and now it has
also ventured in to the other retail sectors like the mobile phone, games and other gift
and apparel item retailers. In addition to the physical shops in all the metros and the Tier
II cities, they have also launched the online retail shop under the same brand name. The
customers can download music, games, movies or they can purchase the products on
display through the e-payment system.
Planet M is basically a multi brand retail chain displaying products of different brands.
In the music segment it offers music from all the leading music producing houses in
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India as well as the western music companies. They also offer the same when it comes
to movies. The mobile phone retail business is another important part of the retail
business of the Planet M brand. In this segment all the major mobile phone brands are
sold in the retail outlets. Moreover the other mobile accessories and the gaming devices
are also available in the retail shops.
The other part of their business is the gift items and apparels. In this case they source
the products from the contract manufacturers and sell them under their brand name. The
games or the mobile content available in their online and retail store are mostly third
party applications and Planet M is basically engaged in the marketing of these
applications.
Planet M is now a wholly owned company of the Videocon group. It is positioned as a
retail chain to leverage the gap between the parent groupss other electronic retail shop
Next and other appliance retail brands. It is planned to introduce the electronic items in
the product line of the Planet M outlets also. For that Videocon has an agreement with
the Japanese electronics giants Hitachi for supplies and outlet setting and layouts. It also
plans to introduce more brands under their retail outlets.
Planet M has a very good presence in all the metros and the important cities through
their retail chains. It operates both the wholly owned retail shops as well as the
franchises in the market. In the big cities and the metros they have their wholly owned
retail outlets called Planet M music stores with the floor area of 1500-2000 SQF. These
are manned by employees of Planet M. But in other tier II and tier III cities, they have
franchises outlets. These are called the music outlets of the Planet M. The product range
depends upon the location as well as the demand of the products in particular outlets.
5.5
Marketing Strategy
In terms of the marketing products and the services the brand Planet M is very
successful in the Indian context. As per the latest data concern, the company registered
an annual footfall of more than 8.5 million people in their retail stores across India with
a conversion rate of more than 40%. In fact it is one of the highest in the Indian retail
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sector. For the expansion of the retail market in India and the growth of the market share
of the company, they have adopted many marketing strategies, which can be highlighted
as:
Celebrity endorsement is one of the main strategies in the Planet M retail shops.
The retail brands hosts many celebrities in the media campaign. Music releases
of many of the newly released movies are organized at the selective Planet M
retail shops. Shahid Kapoor, Hrithik Roshan, Abhishek Bachchan are the regular
visitors at the retail outlets of Planet M. By this type of marketing, the company
is also gaining the media focus and the market exposure.
Figure 12: In-Store Music launch with celebrities
The locations of the stores are in such places where there are more crowds of the
young people and teenagers. By this way Planet M is able to attract more
customers to its stores. In fact the customer base has increased by almost 35 per
cent in the last three years.
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The ambience and the interior of the retail shops are also organized in such a
manner to attract the youth and the teens. The stores display the product in a
very organized way. Moreover there are music playing ports where the
customers can listen to the music prior to the purchase. They are offering a host
of products of different brands under the same roof to the customers resulting in
better conversion rate.
Another very popular marketing strategy adopted by Planet M in all the retail shops is
the discounts and sales. They offer discounts and sales in their product to attract the
customers. Moreover there are always surprise gifts and goodies with the purchase to
encourage the customers.
Figure 13: Sale & Discount offer
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The wide range of the product offerings available in the retail outlets is another
strategy to attract more and more customers. For example, in the music segment
they have a collection of more than 4.5 million songs of different language and
20000 albums. They provide options to the customers in 17 different Indian
languages to cater to all cultures of the Indian society.
Most of the products at the retail shops are focused at the youth population of
the population. They offer products ranging from the music, mobile and
accessories, games and other apparels like the eye gears and T-shirts, offering
the youth with a complete shopping experience.
The pricing of the products in the Planet M retail shops are very competitive
compare to the others. Along with the discounts and the value added services,
this combination offers the customer a very good shopping option.
5.6
Business Strategy & Future Expansion Plans
With the fast growing retail sector in India, the music and mobile retailing sector is
witnessing an explosive growth. To keep up with the expanding market the consumer
base, Planet M has also taken some future expansion plans and future strategies for
growth:
The company plans to increase the total number of its Planet M retail stores to
1500 in the coming years.
The Videocon group plans to infuse an investment of Rs 180 Million into the
Planet M business
The company has tied up with many of the film producing houses in Bollywood
as well as the western music houses to market their products. The company also
plans to gain the exclusive marketing rights of many upcoming Hindi movies in
the coming years.
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The company has also tied up with the Japanese electronic major Hitachi for the
marketing of its products under the retail chain.
The company plans to introduce more product lines under the brand name,
working with the other retail chains of the Videocon group.
The company also plans to introduce itself to the in the small cities with market
opportunity. For that it has identified about 100 new tier II and tier III cities to
set up the retail outlets.
5.7
Major Competitors of Planet M
Planet Ms major competitors are other retailers of music, gifts, books, toys, etc. and
they can be compared and evaluation using parameters such as setting benchmarks in
leisure retailing, and expanding the market and consumer base.
5.7.1
Crossword Bookstores
Crossword Bookstores is a chain of largest bookstores in India. Shoppers Stop acquired

the 100 per cent stake in bookstore chain Crossword. Crossword is positioned as a
lifestyle bookstore with their spacious, well laid out stores, which provide customers
ease in browsing through the merchandise.
The name Crossword was selected to reflect the dual fun and learning experience of a
visit to Crossword similar to playing the puzzle. Crossword brand has 50 stores across
the country. Recently Crossword launched its youngest store at a newly inaugurated
mall at the GVK Onemall in Banjara Hills, Hyderabad. Spread over 1500 SQF, the store
featured reader staples, clubbed under fiction, non-fiction, classics, children's books,
management and IT among other categories.
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Crossword also addresses a wider audience than existing stores with its unique product
mix. There is of course, the widest range of books for the young and old alike, along
with magazines, CD-ROMs, music, stationery and toys. With its large children's section
and its focus on making the store a friendly, safe, fun-filled place, Crossword attracts
many families who normally don't think of visiting bookstores.
Services like Dial-a-book, Fax-a-book and Email-a-book enable customers to shop from
their homes; and when they come to the store, the unobtrusively helpful staffs assists
them in finding the right book, the right CD or the right gift for the right occasion.
Facilities like the Crossword Gift Vouchers, the friendly 'Return, Exchange & Refunds'
policy, the Cafes within the stores and the unique store experience make it easy and
enjoyable for customers to shop at Crossword. Over 100,000 loyal customers are
rewarded through the Crossword Book Rewards Program with points, discounts,
promotional offers and more. eWords, a monthly e-newsletter with reviews of new
books, news about in-store events and bestseller lists, is currently mailed to these
Members.
5.7.2
Landmark
Landmark commenced its operations in 1987 with its first store in Chennai with a floor
space of 5500 SQF Landmark is the first large format book retailer in India. They
currently have 10 stores, ranging in size from 12000 SQF to 45000 sq. ft.:
3 in Chennai
1 in Bangalore
1 in Mumbai
1 in Vadodara
1 in Gurgaon
1 in Pune
1 in Lucknow
1 in Ahmedabad
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Until 1996, Landmark was focused on books, stationery and greeting cards and then
added music to its product portfolio and also started the trend of stocking curios, toys,
music, CDs and other gift items.
Landmark currently deals with the following product lines that cater to the needs of all
age groups: Books, Music, Stationery, Magazines, Home Store, Gifts, and Toys.
Landmark sponsors a number of programs related to products and services within the
periphery of Landmark's business. A number of book launch events and music
performance events are organized and hosted by Landmark.
5.7.3
Music World India
Music World India is a major source of digital music entertainment and provides a
music platform to all music lovers. It offers a vast collection of songs where one can
search songs of any genre. Music World India is an mp3 search engine for music audio
files. Their website crawler searches through the Internet indexes and provides new
brand or popular songs with fast search services. Music World India offers songs of
world-class bands, genres, artists to download. They also provide all genres and grooves
of cutting edge music and innovative independent labels.
Music World is Indias largest chain of music stores retailing the widest range of
international and Indian music. Music World operates different store formats to service
different consumer groups. Music World's product portfolio comprises audio CDs and
cassettes, VCDs and DVDs, CD-ROMs and other music accessories.
The company is an important player in the home video market. Music World has
successfully forayed into high end personal audio gadgets like Apple iPods, Neo Pods
and MP3 players. The company also offers home theatre systems, speakers and
headphones. The company provides World Space receivers and subscription packs, and
is now also offering the Tata Sky consoles and subscriptions.
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5.7.4
Odyssey
Odyssey is a 100 per cent subsidiary of Deccan Chronicle Holdings Limited, publishers
of newspapers, Deccan Chronicle and Financial Chronicle. In 1995, Odyssey opened its
flagship store in the southern suburbs of Chennai in Adyyar. The idea was to make
people lose themselves doing the good things in life, in a world that would make the
experience as rich as their varied interests and forget the time.
Today Odyssey operates through 40 stores in 13 cities with about 260,000 sq.ft of retail
space under its operations. Recognized predominantly as a book store, Odyssey has
genres ranging from popular fiction, non-fiction, computing, self-help, health,
management, food and drink, travel, art and architecture, children's books and so on,
giving its customers a relatively wide range to choose from.
Apart from books, the store has a wide range of music, movies, multimedia, stationery,
toys and gifts. Odyssey maintains a good mix of products to suit customer's
requirements and endeavours to keep abreast with the market dynamics and latest
trends. The chain receives over 4 million walk-ins every year.
Odyssey India Ltd recently forayed into the optical eyewear category with the launch of
The Eyewear Store, a high-fashion destination for international designer sunglasses &
prescription frames.
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6 Analysis of Indian Retail Market

6.1
Growth & Development
Before the FDI reforms in 2011, India had prevented innovation and organised
competition in its consumer retail industry fearing the onslaught of the big
multinationals and to protect the small but the crucial unorganised retail. One report
estimates that the 2011 Indian retail market was generating sales of about USD 470
billion a year, of which a minuscule USD 27 billion came from organised retail such as
supermarkets, chain stores with centralised operations and shops in malls (Grover &
Gupta, 2014).
Others believe the growth of Indian retail industry will take time, with organised retail
possibly needing a decade to grow to a 25 per cent share. A 25 per cent market share,
given the expected growth of Indian retail industry through 2021, is estimated to be over
USD 1.4 trillion a year (see ); revenue equal to the 2009 revenue share from Japan for
the world's 250 largest retailers. (Bajpai & Sachs, 2006)
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Figure 14: Indian retail sector size and growth
Source: http://www.indianexpress.com/
Still, during the past five years there has been tremendous growth in the organized retail
sector. Though the share of organized retailing has been low in India as compared to
other countries i.e. 8 per cent in 2015 (see Figure 15). In India, the organized retail in
the year 2012 was to the tune of USD 490 billion and it is estimated to reach USD 948
billion by the year 2018-2019, with the Compound Annual Growth Rate (CAGR) of 1213 per cent (Technopak, 2015).
Figure 15: Organized Retail share
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Source: (IBEF, 2016)
Organized retailing in India is now no more restricted to the metros and major cities.
There has been successful development of value based concepts in the smaller towns as
well. This development of retail space in smaller cities and towns is now driving the
organized retail into the next levels of cities. In 2015 alone 45 per cent of organized
retail can be found in Tier 2 Cities alone (Technopak, 2015).
Figure 16: Organized Retail penetration
Source: (Technopak, 2015)
The structure of retailing is also developing rapidly. Shopping malls are becoming
increasingly common in large cities, but other kinds of organized retail have also
registered a lot of growth over the years including the period 2010-2011 (Technopak,
2015).
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Figure 17: Organized Retail formats
The growth in the four largest sectors of Indian retail industry has been overwhelming
over the years. The organized retailing depends mainly on the clothing sector for most
of its revenue as there are large number of players in the retail industry that are engaged
mainly in the business of Apparels like Lifestyle, Shoppers Stop, Crocodile, Raimonds,
etc. but in the past few years there has been rapid growth in the revenues earned from
the sectors like Food, Books & music (Technopak, 2015).
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Figure 18: Organized Retail segmentation
In 2014, food accounted for 60 per cent of Indian retail, but was under-represented by
organised retail. Deloitte estimates India's organised retail had a 33 per cent share in
clothing and apparel, while the food only has 11 per cent (Technopak, 2015).
As per KPMG India (KPMG, 2014), the following can be regarded as potential areas of
growth:
Rural markets constitutes more than 70 per cent of the total population base, but
currently account for a little over 40 per cent of the total consumption in India,
due to minimal penetration of organised retailing. Several players have been
planning to explore these untapped growth market and are localising their
products for the Indian market with regard to price points, packaging, stockkeeping units (SKU) size, promotions, etc.
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Figure 19: Demand Factor
Source: (KPMG, 2014)
Working population is the largest spender on retail especially in the working age
group of 15 to 54 years. As per the census of 2011, more than 64 per cent of
Indias total population falls under this group, indicating the significant
influence wielded by this segment on consumer spending.
Young Indians are the cause behind the boon in purchases in categories such as
mobile phones, fashion, accessories, food and beverages, quick service
restaurants, etc., as this group of young people are willing to experiment and
change habits. As per the census of 2011, India also has about 450 million
Indians under the age of 25. These Young Indians have access to more money
than before resulting in greater independence in selections thus stoking
aspirations and demand for products (Wright, 2006).
Middle-income households form a large and aspirational group comprising of
110 million households or 380 million individuals in India. Over the years, the
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disposable income of middle-class Indian consumers has increased significantly,

which is leading to a substantial change in their spending habits.
Growing number of millionaires in India, especially in the last 3 decades, is
driving indulgence in luxury products, such as fine wines, Scotch whiskies,
expensive handbags and branded jewellery and accessories. According to the
World Wealth Report 2015, the total number of millionaires in India (with
investible assets, excluding main residence and consumer durables, of more than
USD 1.0 million) grew by approximately 51 per cent, the second fastest in the
Asia-Pacific region (Capgemini, 2015).
6.2
Drivers of Growth
There are various drivers of growth which is turning out to be very favourable for the
boom in the Retail market in India by feeding into the supply and demand cycles.
Some of these are
Rapid Infrastructure development

Access to Credit
Supply Chain
Research and Development
Growing Markets
Regulatory Environment
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Figure 20: Supply Factor
Source: (KPMG, 2014)
Rapid Infrastructure development - A major driver of the Indian retail growth is the
surge in mall culture. The number of malls increased from 158 in 2005 to more than
3400 in 2014. The Indian government is also expected to invest USD 375.0 billion over
the next few years to develop world-class infrastructure. Retail Space is no more a
constraint for growth.
Access to Credit - Credit is available nowadays at easier terms and conditions than ever
before. This is prompting customers to buy luxury and expensive goods using credit
cards and even by taking loans. Loans are also readily available to the retailers, who
then in turn can provide better facilities to the customers. In 2012-2015, retail loans
have reached USD 38.7 billion and are growing at 11 per cent per annum.
Supply Chain - Supply chain infrastructure will facilitate faster, multimodal and better
operations. Introduction of the Dedicated Freight Corridor could see rail speeds rise to
as much as 100 kilometres per hour. Road speeds will increase too, thanks to
infrastructure investment through public-private partnerships and technology advances
such as electronic toll collection, and fleet modernization (Kearney, 2014).
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Presently, road is the dominant transport mode, and rail has lost significant share over
the past two decades. The Dedicated Freight Corridor will enable modal shift to rail,
along with increased levels of containerization. Connectivity will improve further, with
strong growth among third-party logistics providers and the emergence of multimodal
logistics parks - 11 of which Indian Railways intends to develop along the DelhiMumbai corridor. Additionally, the last mile connectivity is expected to improve with
the introduction of more efficient small vehicles.
With rising need for consolidation, distribution and logistics will be more efficient
through standardization of pallets and trucks, higher containerization, use of semiautomated material handling, improved storage facilities, and other modernization
techniques. Further, the reliability of service providers is expected to improve
significantly.
Research and Development - With the governments support, the R&D in Retail sector
in India is all set to witness some robust growth in the coming years. According to a
study by India Brand Equity Foundation, Retail R&D market in India is estimated to
grow at a CAGR of 14 per cent to reach USD 22 billion by 2020 (IBEF, 2016).
India is also expected to witness strong growth in its retail auxiliary sectors like
transportation and storage where the government is investing large sums to set up
dedicated research centres for R&D in these sectors. The evergreen Indian IT industry is
also expected to add to the development of the R&D in Retail sector.
Growing Markets - India is also coming on the radar of Global Retailers and suppliers.
Major brands around the world are willing to partner with retailers here. Large Indian
corporate groups like Tata, Reliance, Raheja, ITC, Bombay Dyeing, etc. and also
foreign investors and private equity players are firming up plans to identify investment
opportunities in the Indian retail sector. The quantity of investments is likely to rise high
as the inherent attractiveness of the segment continues to lure more and more investors
to earn large profits. Some foreign giants are already present in India and are working
on cash & carry model and are soon hopeful of entering India with full control over
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their operations. Retailers like Wal-Mart, Tesco, JC Penney, etc. are stepping up their
sourcing requirements in India. This will help them establishing their roots well in India
and know how things work in the local environment.
Regulatory environment - According to International Monetary Fund, FDI is defined as
investment that is made to acquire a lasting interest in an enterprise operating in an
economy other than that of the investor. The investors only purpose is to have effective
say in the management of the enterprise (IMF, 2004). FDI refers to capital inflows
from abroad that is invested in or to enhance the production capacity of the economy.
The FDI Policy is governed by the Government of India and with the provision of
Foreign Exchange Management Act (FEMA) (RBI, 1999).
Growing liberalization of the FDI policy in the past 2 decades has been one of the key
factors for transforming India from a closed economy into one of the favoured
destinations for foreign investments. The FDI policy governs and regulates the entire
inflow of foreign investments into the country. Still, India attracts a lot less FDI
compared to China (UNCTAD, 2016).
Figure 21: FDI inflows to India and China
Source: (UNCTAD, 2016)
The FDI Policy continues up to this date to be developed under the government of
current Prime Minister, with the latest being making India a manufacturing hub of the
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world and eradicating the hurdles to facilitate the ease of business for foreign and
multinational companies.
On the other hand, the government is considering in allowing foreign direct investment
in multi brand retailing as a measure to make India more attractive to overseas
investors. Liberalization of FDI in multi brand retail is getting closer to reality. After
almost a year of deliberation, the white paper published by the DIPP\ Ministry of
Commerce and Industry, a retail FDI draft document has been submitted to the Union
Cabinet for approval. This is the final hurdle that needs to be surpassed. One aspect
seems to be clear that will be no one shot, big-bang kind of approach toward
introducing FDI in multi brand retail. Instead, we could expect a phased liberalization
approach with a number of conditions laid down, at least initially, for foreign retailers to
enter India. The conditions would be intended to assure the opposition parties, the local
retailer lobbies, the farmer and trade union etc. that the government has adopted a
balanced midway kind of approach after due consideration of the views of all
stakeholders involved.
Prime Minister's Economic Advisory Council has stated that FDI in retail is good for the
country in the long run. It will streamline the distribution mechanism, but it should
ensure that small retailers are not affected, he added.
The opening up of multi-brand retail to foreign chains will be beneficial for Indian
retailers especially the home grown retailers such as Future Group, Reliance, Trent and
Shoppers Stop, who are now able to raise long-term capital for expansion and
development.
6.3
Challenges
The challenges facing the Indian organized retail sector are various and these are
holding back the Indian retail industry to some extent, from reaching its full potential.
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International Standards - India has well over 5 million retail outlets of different sizes
and styles but it still has a long way to go before it can truly have a retail industry at par
with International standards. This is where Indian companies and International brands
have a huge role to play.
Inefficient supply chain management Vast majority of Indian retailing is still
dominated by the unorganized sector or the so called Mom & Pop stores and there is
still a lack of efficient supply chain management. India has to concentrate on improving
the supply chain management and the logistics backbone, which in turn would bring
down inventory cost, which can then be passed on to the end consumers in the form of
low prices.
Lack of Retail space Average size of the retail outlets in India are less than 500 SQF
in area. This is very small going by the International Standards. In big cities, the land
for setting up of Retail malls and outlets have sky-rocketed. This also needs to be
tackled.
Cultural Diversity - India's huge size and socio economic and cultural diversity means
there is no established consumption pattern or model which can be applied throughout
the country. Manufacturers and retailers will have to devise strategies for different
sectors and segments which in itself would be a challenging task to achieve.
Real estate issues - 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. Currently, with over 4,000 hypermarkets and additional 5,000
supermarkets projected to come up by 20201, India will need additional retail space of
800 million SQF or 75 million MSF as compared to today (Kearney, 2014).
Human resource problems - Trained manpower shortage is a challenge facing the
organized retail sector in India. The Indian retailers have difficulty in finding trained
person and also have to pay more in order to retain them. This again brings down the
Indian retailers profit levels.
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Frauds in Retail - It is one of the primary challenges the companies would have to face.
Frauds, including vendor frauds, thefts, shoplifting and inaccuracy in supervision and
administration are the challenges that are difficult to handle. This is so even after the use
of security techniques, such as CCTVs and POS systems. As the size of the sector
would increase, this would increase the number of thefts, frauds and discrepancies in the
system.
Challenges with Infrastructure and Logistics - The lack of poor infrastructure and
robust distribution channels in the country often results in inefficient processes. This is a
major hindrance for retailers as a non-efficient distribution channel is very difficult to
handle and can result in huge losses. Infrastructure does not have a strong base in India.
Urbanization and globalization are compelling companies to develop infrastructure
facilities. Transportation, including railway systems, has to be more efficient. Highways
have to meet global standards. Airport capacities and power supply have to be
enhanced. Warehouse facilities and timely distribution are other areas of challenge. To
fully utilize India's potential in retail sector, these major obstacles have to be removed.
Changing Consumer behaviour - The behaviour pattern of the Indian consumer has
undergone a major change. This has happened for the Indian consumer is earning more
now, western influences, female workforce are 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 (Anusuya & Chinnadorai, 2014).
Other regulatory problems - Beside the restrictions in FDI that still exists, the tax
structure in India is also very complex and also favours small businesses, to a great
extent, which may limit the growth of organized retail.
Page 62
6.4
Opportunities
Growth in the organized retail industry in India also brings about the following
opportunities.
Employment - 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 sector is the second largest employer after
agriculture, employing more than 35 million people with wholesale trade generating an
additional employment to 5.5 million.
Real Estate - The enormous growth of retail industry has created a huge demand for
real estate. Property developers are creating retail real estate at an aggressive pace.
According to report titled India Organized Retail Market 2010, published by Knight
Frank, during 2010- 12,around 55 million SQF of retail space will be ready in Mumbai,
NCR, Bangalore, Kolkata, Chennai, Hyderabad and Pune. The total no. of shopping
mall is expected to expand at CAGR of 18.9 per cent by 2015. Hypermarket, currently
accounting for 14 per cent of mall space is expected to witness high growth. Industry
experts predict that the next phase of growth in the retail sector will emerge from the
rural market.
Contribution to GDP - India's retail market is expected to be worth about USD 410.0
billion, with 5 per cent of sales through organised retail, meaning that the opportunity in
India remains immense. Retail should continue to grow rapidly, with 10 per cent coming
from organised retail, reflecting a fast-growing middle class, demanding higher quality
shopping environments and stronger brands, according to the report Expanding
Opportunities for Global Retailers, released by A T Kearney. This growth is reflected
by the increasing share of retail trade in GDP.
Increasing efficiency in Agriculture - The concept of middleman in food supply chain
is matter of yesterday. Farmers are cultivating crops as per the demand of retailers.
Customers are getting benefits of reduced pricing while the farmers are receiving higher
Page 63
returns for their produce. Only organized retail provides mass marketing of processed
and package foods.
Enhanced shopping experience for consumers - Trends of shopping with
entertainment is gaining momentum because of time and traffic congestion. An
organised retail offers one stop shopping with many product baskets at single location.
These formats add experience of large scale purchase, consumer preference, excellent
ambience and choice of merchandising.
Creating Positive Social Change - Retailing leads to improvement in local
infrastructure by provisioning for adequate parking facilities, cash withdrawals via
ATM, convenience stores, a hygienic ambience to the consumer and on top by
facilitating a safe and secure environment which encourages the setting up of round-theclock shopping. This is enabling positive social change in the industry.
6.5
Suggestions
Many agencies have estimated differently about the size of organized retail market in
the coming years. The one thing that is common amongst these estimates is that Indian
organized retail market will experience big growth. 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.
Page 64
Here are some suggestions for reforms in the Retail sector:
Accord Industry Status to Retail - Industry status should be given to improve

retail development, to facilitate organised financing and to establish insurance
norms.
Incentives for Investments - Tax holidays norms for cold storage chains,
infrastructure and investments in supply chain should be enacted.

Comprehensive Legislation - Comprehensive legislation should be drafted and
enacted with futuristic approach.

Eliminating Archaic Laws - Laws, Essential Commodities Act, APMC Acts,
Licensing restriction, differential taxes, stamp duties, should be simplified and
put in proper place so that it would not hinder growth of retail sector. This will
help in creating "Commodities Futures Markets".

Full FDI in phased manner - Allow 100 per cent foreign direct investment in
the Retail sector according to financial planning.

Rationalise the tax structure - The current multipoint taxation should be
rationalised. Government should introduce a uniform taxation system across the
country to relax the law that hinder interstate flow of goods.

Streamline the process of clearance
Encourage PPP model for infrastructural development
Amend labour laws - The existing labour laws needs to be amended on an
urgent basis in order to support the growth the growth of organised retailing and
to develop India as a sourcing hub.

National policy for retail - The Government should announce a National Retail
Policy that allows the coexistence of both organised and unorganised retail and
address issues such as sourcing, contract farming, movement of goods across
India and also defines clear cut guidelines for the functioning of retail sector in
India.
Establishment of National Commission on Retail - The national commission on
retail must be established. The function of commission should be:
To set clear target for giant retailers for procurement.
To formulate rules on entry of foreign players and compliance with social
safeguards.
To develop cooperative stores for eradicating the problems of limited
marketing and promotions.
Page 65
To facilitate the way of setting up Agricultural Perishable Produce

Commission
for
ensuring
the
procurement
prices
for
perishable
commodities.
Reduce impediments to interstate movement of goods
Enforce uniform quality standards
Setup a regulatory body for the governing the operations of retail sector.
Page 66
7 Conclusions
In India, many retailers are looking beyond the metro and top Tier-I/II/III Indian cities,
pro-actively exploring the online space and closely following mall developments across
the country. The recent clarification on the FDI relaxation in multi-brand retailing
provides an interesting dynamic to the Indian landscape. Several large international
retailers are contemplating to invest in India to leverage the strong demand potential of
the worlds fifth-largest consumer market. Currently, a host of large retail chains are
undergoing market assessment studies to set-up their operations in India.
Irrespective of any of the prevailing teething issues related to regulatory and operating
environment it is foreseen that in the coming years Indian retail is likely to evolve as a
mature and larger market.
Several large international retailers are already established and are further
contemplating to expand with investments in India to leverage the strong demand
potential of the worlds fifth-largest consumer market. A host of large retail chains are
undergoing market assessment studies to set-up their operations in India. However, due
to teething issues in the regulatory guidelines and operating environment, companies
looking at investments in India should understand the need to conduct detailed
opportunity assessments and tailor their business models and strategies accordingly.
Page 67
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Page 72
9 Appendix A: ITM Checklist 360 degree analysis

A.1 Student: Amit Singh / Student number: 2675994
Complex of topics
General Economics
Strategic Mgt.
Marketing
Financial Mgt.
Human Resources
Mgt.
Business Law
Research Methods
Management
Decision Making
Comments/ Suggestions
Evaluating the investment plausibility of AB-InBev buying out
SABMiller by analyzing the market share and historical
evidence of internationalization strategy of both companies to
help understand the economic benefits for an investment
decision.
Review and analysis the current annual report and available
ratios to prepare a proposal paper to justify the merger as a
profitable and high value investment with sustained incremental
long term investment returns.
The merger of the companies have been evaluated on economic
terms but it needs to be further analyzed along with other
marketing analysis tools like Porters 5-Forces, SWOT and
DESTEP. Utilize the geographical distribution network and
leverage local produce and technological power from
developing and growing markets to create a more diverse
product range suitable for the regional consumers.
Financing is dependent on the Foreign currency exchange rates
for working capital requirements and Geo-political effect in the
market the merged company will produce and operate. Capital
needs will be met with Debt which impacts the EBITDA
reflects in the ROE and DER along with the gearing ratios. Any
adverse event which impacts these conditions will have severe
implications on the merged entity.
Both AB-InBev & SABMiller have strength in local
manufacturing close to the growing consumer market of its
produce and this can be leveraged to cater to the changing
demands of its customer base and combat the rise of the Craft
beers.
Geo-political effect in terms of new rules of operations and
retail in the market, where both AB-InBev & SABMiller
operates, can have adverse implications.
Company Annual Reports, Books, Business journal and
Websites of newspapers were primary means but a lot of
information was also found on Fontys FIBS sources like trends
and annual industry growth figures.
AB InBev is the market leader in beer industry and lead the
negotiation and made offers to SABMiller to make it accept the
same. Analysis of financial parameters like income, cash flow
Page 73
Soft Skills /
Leadership
and balance sheet together with operations indicators will help

in valuing the returns on investments.
The launch of new products with focus on increasing market
share by leveraging the brand together with the strong
knowledge of the local market. The vision and core values
of company are strongly communicated to its employees along
with the current head-winds faced by both AB-InBev &
SABMiller.
Page 74

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Retail Market in India

Case Study of Planet M Retail Ltd., India

Fontys International Business School

MBA Master Thesis

Prof. Dr. Leif Erik Wollenweber

Amit Singh (2675994)

4th Academic Semester 2016

Dsseldorf, 30th November 2016

Appendix A: ITM Checklist 360 degree analysis

Declaration in lieu of oath

I herewith agree that this thesis may be published.

Dsseldorf, 30th November 2016

Appendix A: ITM Checklist 360 degree analysis