Service Marketing Project

Project Title Past, Present and futures of Retail Industry

(Service Industry) in India

By

Shubhomoy Khan, EIILM/PG_S/JULY10-JUNE12/ST5 047 Surya Banerjee, EIILM/PG_S/JULY10-JUNE12/ST5 060 Aditya Basak, EIILM/PG_S/JULY10-JUNE12/ST5 005 Subhendu Hazra, EIILM/PG_S/JULY10-JUNE12/ST1 056 Soumya Kanti Sarkar, EIILM/PG_S/JULY10-JUNE12/ST5 - 050

EASTERN INSTITUTE FOR INTEGRATED LEARNING IN MANAGEMENT 6, WATERLOO STREET, KOLKATA 700069

Introduction Retailing is the interface between the producer and the individual consumer buying for personal consumption. This excludes direct interface between the manufacturer and institutional buyers such as the government and other bulk customers. A retailer is one who stocks the producers goods and is involved in the act of selling it to the individual consumer, at a margin of profit. Indian retail Industry divided into organized and unorganized sectors. Organized retailing refers to licensed retailers, registered for sales tax, income tax and backed corporate hyper markets and retail chains or privately owned large retail businesses, e.g. Big Bazaar while on the other hand unorganized retailing means traditional formats of low cost retail shops, e.g. the local kirana shops. Indias retail sector is getting new highlights. Since from last 4-5 years annual growth is about 47% and retail is the fastest growing sector in Indian economy. Traditional markets making new formats to survive against retail chains, such as departmental stores, hypermarkets, supermarkets and speciality stores. Western styled malls have begins appear in metro and 2nd class cities to create unparalleled shopping experience for Indian consumers. Some examples of new format of retail stores are: Retailer Shoppers Stop Crossword Pantaloon Subhiksha Food Bazaar Metro Current Format Departmental Stores Large Bookstore Own Brand Store Super Market Food Supermarket Whole seller/retailer New Format, try to switch Quasi-mall Corner Shops Hypermarket Moving to self-services Hypermarket Cash and Carry

Various types of Retail Formats in India: The Indian retail sector is highly fragmented with 85% of its business run by the unorganized retailers like as the traditional family run and corner stores. Various types of Indian retailers are Food & grocery retail Gems & jewellery retail Pharmaceutical retail Available Retail Formats in India: Music retail Book retail Consumer durable retail

Retail Formats Available in India

Exclusive branded retail

Multi-branded retail shops

Convergence retail Outlets

Exclusive Showrooms either owned or franchised outlet by a manufacturer

Focus on particular product categories and carry most of the brands available.

Usually have on display most of the convergence as well as consumer /electronic products including communication and IT products

Complete range available for a given brand, certified product quality

Customers get to have more choices as many brands are on display

One stop shop for customers, many product lines of different brands on display

Retail in India Past In the early 80s, India with hundreds of towns and cities was a nation striving for development. The evolution was being witnessed the people of the nation were learning to play different roles as businessman and consumers. The foundation for a strong economy were being laid, youth were Attract the

attention of new awareness in all ways. That brought in an opportunity for retail industry to flourish. First in the metros and major cities later to impact, sub urban and rural market as well. Retailing in India at this stage was completely unorganized and it thrived as separate entities operated by small and medium entrepreneurs in their own territories. There was lack of international exposure and only a few Indian companies explored the retail platform on a larger scale. From overseas only companies like Levi's, Spencer etc. had entered and targeting upper middle and rich classes of Indian Consumers. But more than 50 % population was formed by lower and lower middle class people and this market was not completely captured. This was later realized by brands like Big Bazaar and Pantaloons who made their products and services accessible to all classes of people and today the success of these brands proves the potential of Indian retail market. In the Indian Retail Revolution was the eruption of Malls across all regional markets. The mall culture actually brought in the organized format for Retailing in India, which was absent earlier. Though malls were also initially planned for the higher classes of society, they successfully adapted to cater to the larger population of India. And no wonder, today Malls are changing the way of common Indians have their shopping experience. However there is still great scope for enhancing Indian mall culture as other than ambience and branding many other aspects of Retail Service remains to be developed as like international standards. Surprisingly there was not a single mall in India a decade before and just a few years ago only a handful of them were striving, today there are n number of malls across the country. Indeed this shows a very promising trend ahead. Retail in India Present At present the Retail industry in India is accelerating. Though India is still not at an equal with other developing countries. The fact that most of the developed nations are saturated and the developing ones still not prepared, India secures a great position in the international market. Also with a highly diverse demography, India provides immense scope for companies brining in different products targeting different consumers. Large section of Indian population is in the age group of 20-34 with a considerably high purchasing power; this has caused the increase in the demand in the urban market resulting in consistent growth in the Retail business. In metros continue to sustain Retail growth; the buzz has now shifted from these great cities to lesser-known ones. As Indian consumers are very curious and have a broad perspective, they respond well to new product/services and there are very fair chances of a brand surviving but

every Indian consumer needs a feeling of value for money. Indian consumers are great spenders once they realize that they are getting value for their money. Also new product /service concepts from the western world are better adopted first by the urban Indians. As the Indian retailing is getting more and more organized various retail formats are emerging to capture the potentials of the markets. Examples are Mega Malls, Multiplexes, Large and small supermarkets, Hypermarkets, Departmental stores are a few formats which flourishing in the both big and small regional markets As the major cities have made the present retail scenario pleasant, the future of the Indian Retailing industry lies in the rural regions. Catering to these consumers will bring tremendous business to brands from every sector. However as the market expands companies entering India will have to be more cautious with their strategic plans. In this regard focusing on developing each market separately can save a brand from many troubles. Retail in India - The Future As the market becomes more and more organized the Indian retail industry will gain greater worth. The Retail sector in the small towns and cities will increase by 50 to 60 % pertaining to easy and inexpensive availability of land and demand among consumers. Growth in India Real estate sector is also complementing the Retail sector and thus it becomes a strong feature for the future trend. Over a period of next 5 years there will be a retail space demand of 40 million sq. ft. With growing real estate sector space constraint will not be there to meet this demand. The growth in the retail sector is also caused by the development of retail specific properties like malls and multiplexes. According to a report, from the year 2003 to 2008 the retail sales are growing at a rate of 8.5% per annum. With this the organized retail which currently has only 15% of the total market share will acquire 30-35 % of the market share by the year 2020. Factors that are playing a role in fuelling the bright future of the Indian Retail are as follows:

The income of an average Indian is increasing and thus there is a proportional increase in the purchasing power. The infrastructure is improving greatly in all regions is benefiting the market. Indian economy and its policies are also becoming more and more liberal making way for a wide range of companies to enter Indian market.

Indian population has learnt to become a good consumer and all national and international brands are benefiting with this new awareness. Another great factor is the internet revolution, which is allowing foreign brands to understand Indian consumers and influence them before entering the market. Due to the reach of media in the remotest of the markets, consumers are now aware of the global products and it helps brands to build themselves faster in a new region

However despite these factors contributing to the growth of Indian retail Industry, there are a few challenges that the industry faces which need to be dealt with in order to realize the complete scope of growth in Indian market... Foreign direct investment is not allowed in retail sector, which can be a concern for many brands. Franchise agreements circumvent this problem. Along with this regulation, local laws, and real estate purchase restrictions bring up challenges. FDI in Retail is also now a great factor for Indian retail revolution. Lack of integrated supply chain, management, and lack of trained workforce. Despite these challenges many international brands are thriving in the Indian market by finding solutions around these challenges. With Good Planning, Timely Implementation and a media campaign entry of new retail chains touches Indian consumers any brand can go far ahead in the Indian Retail Revolution. CONCLUSION The retail sector has played a phenomenal role throughout the world in increasing productivity of consumer goods and services. 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. 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 companies and compete with them. The India Retail Industry is gradually reaching its way towards becoming the next boom industry.