PRANVEER SINGH ACADEMY OF TECHNOLOGY A Research Project ON IMPACT OF ORGANIZED RETAI SECTOR ON UNORGANIGED RETAIL SECTOR IN INDIA

SUBMITTED FOR THE PARTIAL FULFILLMENT TOWARDS THE AWARD OF THE DEGREE IN MASTER OF BUSINESS ADMINISTRATION 2010-2012 G B TECHNICAL UNIVERSITY, LUCKNOW

SUBMITTED TO: MR.DURGESH AGNIHOTRI SINGH FALCULTY OF (MBA)

SUBMITTED BY: NITIN KUMAR ROLL NO: 1034870019 SESSION -2010-2012

PRANVEER SINGH ACADEMY OF TECHNOLOGY

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PREFACE

In spite of the theoretical knowledge gained through classroom study, a person is uncompleted if not subject to practical exposure of real corporate world and many have to face hurdles, which will be difficult to overcome without any firsthand experience of business. In this context research program has been design to make the person aware of happening of the real business world. the report, entitled impact of organized retail sector on the unorganized retail sector in India has been done by me at different locations, in Kanpur. . The data which is taken in this report shows th awareness of customer who are living in the Kanpur so it is very helpful for unorganized retailers by understanding the customer needs and wants and problems faced by them. it is specially design on the basis of secondary data as well as primary data collected through questionnaire, book, internet, business magazine etc. i hope my research report will be fruitful for retail sector and it will helpful in different ways.

ACKNOWLEDGEMENT We think if any of us honestly reflects on who we are, how we got here, what we think we might do well, and so forth, we discover a debt to others that spans written history. The work of some unknown person makes our lives easier every day. We believe it's appropriate to acknowledge all of these unknown persons; but it is also necessary to acknowledge those people we know have directly shaped our lives and our work. First of all we would like to thank our faculty Mr.Durgesh Agnihotri and my head of department (HOD) Dr. C.K. Tiwari during my Dissertation Project Report on IMPACT OF ORGANIZED RETAI SECTOR ON UNORGANIGED RETAIL SECTOR IN INDIA r their guidance through out the semester. Then we would like to thank our friend and brother for providing us the information that was required for completion of this project.I would like to thank my guide.

DECLARATION

I hereby declare that the project report entitled Impact of organized retail sector on the unorganized retail sector in India is the produce of my sincere effort. This Winter Training Project report is being submitted by me, at the Pranveer singh Academy of Technology, Kanpur for the partial fulfilment of the course MBA, and the report has not been submitted to any other educational institutions for any other purpose.

Date: -

Signature:NITIN KUMAR SINGH ROLL NO.1034870019

TABLE OF CONTENTS

Chapter No. Ch.1.0 Ch. 2.0

Subject No. Executive Summary Research Methodology Primary Objective Research Design Sample Design. Scope of the Study Limitations

Page 6-7 8-9

Ch. 3.0

Industry Profile Review of literature on the industry Major Companies Data Collection Primary Data Secondary Data Data analysis Findings Suggestion & Recommendations Conclusion Bibliography Annexure

10-50

Ch. 4.0

51-64

Ch. 5.0 Ch. 6.0 Ch. 6.0 Ch.7.0 Ch.8.0

65 66 67 68 69-71

EXECUTIVE SUMMARY
The real GDP is expected to grow at 8-10 per cent per annum in the next five years. As a result, the consuming class with annual household incomes above Rs. 90,000 is expected to rise from about 370 million in 2006-07 to 620 million in 2011-12. Consequently, the retail business in India is estimated to grow at 13 per cent annually from US$ 322 billion in 200607 to US$ 590 billion in 2011-12. The study shows:
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The unorganized retail sector is expected to grow at about 10 per cent per Annum with sales rising from US$ 309 billion in 2006-07 to US$ 496 billion in 2011-12. Given the relatively weak financial state of unorganized retailers, and the Physical space constraints on their expansion prospects, this sector alone will Not be able to meet the growing demand for retail. Hence, organized retail which now constitutes a small four per cent of total retail sector is likely to grow at a much faster pace of 45-50 per cent per annum and quadruple its share in total retail trade to 16 per cent by 2011-12. This represents a positive sum game in which both unorganized and organized retail not only coexist but also grow substantially in size. The majority of unorganized retailers surveyed in this study, indicated their preference to continue in the business and compete rather than exit. The Empirical Basis The study comprises the largest ever survey of all segments of the economy that could be affected by the entry of large corporates in the retail business. The findings are based on a survey of 2020 unorganized small retailers across 10 major cities; 1318 consumers shopping at both organized and unorganized retail outlets; 100 intermediaries; and 197 farmers. In addition, a control sample survey was done of 805 unorganized retailers who are not in the vicinity of organized retail outlets in four metro cities. Detailed interviews were also carried out for 12 large manufacturers, 20 small manufacturers and six established modern retailers. The study contains an extensive review of international retail experience, particularly from the major emerging market economies. Unorganized retailers in the vicinity of organized retailers experienced a decline in their volume of business and profit in the initial years after the entry of large organized retailers. There was no evidence of a decline in overall employment in the unorganized sector as a result of the entry of organized retailers. There is some decline in employment in the North and West regions which, however, also weakens over time. The rate of closure of unorganized retail shops in gross terms is found to be 4.2 per cent per annum which is much lower than the international rate of closure of small businesses. The rate of closure on account of competition from organized retail is lower still at 1.7 per cent per annum. There is competitive response from traditional retailers through improved business practices and technology upgradation. A majority of unorganized retailers is keen to stay in the business and Compete, while also wanting the next generation to continue likewise. Small retailers have been extending more credit to attract and retain customers. However, only 12 per cent of unorganized retailers have access to institutional credit and 37 per cent felt the need for better access to commercial bank credit. Most unorganized retailers are committed to remaining independent and barely 10 per cent preferred to become franchisees of organized retailers. Impact on Consumers Consumers have definitely gained from organized retail on multiple counts. Overall consumer spending has increased with the entry of the organized Retail. While all income groups saved through organized retail purchases, the survey revealed that lower income
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consumers saved more. Thus, organized retail is relatively more beneficial to the less welloff consumers. Proximity is a major comparative advantage of unorganized outlets. Unorganized retailers have significant competitive strengths that include Consumer goodwill, credit sales, amenability to bargaining, ability to sell loose items, convenient timings, and home delivery. Impact on Intermediaries The study did not find any evidence so far of adverse impact of organized retail on intermediaries. There is, however, some adverse impact on turnover and profit of intermediaries dealing in products such as, fruit, vegetables, and apparel. Over two-thirds of the intermediaries plan to expand their businesses in response to increased business opportunities opened by the expansion of retail. Only 22 per cent do not want the next generation to enter the same business. Impact on Farmers Farmers benefit significantly from the option of direct sales to organized Retailers.

RESARCH METHODOLOGY RESEARCH OBJECTIVE The objective of my research report The Impact of Organized Retail Sector on the Traditional Kiranas Business is categorized into following part.
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 The primary objective of my research is to know that why the business of kiranas affecting due to the organized retail outlets and also to find that why those consumers who were purchasing their daily used products from these kiranas store and Why their preferences have been changed towards the kiranas store and now they are purchasing daily using products from the organized retail outlets The secondary objective of my research is to know that what impact or affects comes on the manufacturers business, retailers and intermediaries business due to the organized retail sector.

TYPE OF RESEARCH: Research type is descriptive cum exploratory research designee was chosen for my research project. SAMPLE SIZE: In order to understand the actual impact of the growing organized retail, the study carried out surveys in the city and interview 100 people including hawkers, kiranas store shopkeepers, consumers and people who visited directly to the outlets.

SAMPLE SELECTION: The sample was selected through convenience and random sampling
SCOPE OF STUDY This study will be helpful for student to know in depth about the impact of organized retail sector on the traditional kiranas business. This report would do well to the entire person interested in learning about organized retail sector and kiranas business. 9

 The organized retail sector & kiranas would find useful to look in to the viability of the implementation of the recommendation ,once implemented and are expected to fetch immense benefits to the organized retail sector & kiranas business.

LIMITATION OF STUDY
People still consider surveys and interview as a worthless matter to them and do not show interest and neither responds. I was able to cover malls in Kanpur only due time restrictions and wide area. The shopkeepers of kiranas responses are biased (at time) More than part 5 year data are not included in the report. The some retailers of the organized outlets are biased in providing the data.

INTRODUCTION OF RETAIL INDUSTERY

The retail industry is focused on the sale of goods or merchandise from a specific location for direct consumption by the purchaser. North America is the home of most of the worlds largest retailers, since the U.S. dominates the global retailing industry. Not only is the retail industry responsible for two-thirds of the U.S.s GDP, U.S. retail companies have also

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established a presence on every continent. The largest retail giants globally are Wal-Mart (USA), Metro AG (Germany), Carrefour (France) and Tesco (UK). The industry employs a staggering number of people, and given its rapid proliferation, this number is always on the rise. The backbone of the sector are the operations and supply chain management jobs but there are various other options as well, from sales executives and store managers to merchandise planners and buyers. Performance In todays dynamic and shaky business world, the retail industry is constantly upgrading itself. With an endless array of customer choices, fierce competitors, pervasive use of the internet, and a complex global economy, retailers need to focus on finding ways to sustain and grow their businesses. Traditional growth models that focused on rolling out more stores and adding more product lines, no longer enjoy the return on investment they once did. Successful retailers are those who are able to adapt and change to the environment and develop new way1s of serving customers, respecting the dynamics of current trends and adapting accordingly. The retail industry in India is hailed as a sunrise sector, and is estimated to double in value from US$ 330 billion in 2007 to $640 billion by 2015. In fact, India has topped AT Kearney's annual Global Retail Development Index (GRDI) for the third year in a row as the most attractive market for retail investment. The bad news is, despite the fact that India has one of the largest number of retail outlets in the World, organized retail accounts for only 4% of the total market. This makes it especially difficult to apply sophisticated merchandising and sales tools, enhance consumer interaction and also, make very accurate analysis. That said, analysts believe the sector is likely to show significant growth of over 9 % p.a over the next 10 years and also see rapid development in organized retail formats, with the proportion likely to reach a more respectable 25% by 2018. Growth Potential The key growth areas include the urban, luxury segment on one end of the spectrum and serving the rural sector on the other. In addition, government policy encouraging FDI in the segment has resulted in a plethora of international retailers keen on entering the market; American retail giant Wal-Mart has tied-up with Bharti Enterprises and global coffee giant Starbucks' has tied up with PVR Limited. In addition, Carrefour, Boots and others are also expected to come in.
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With so much action, it is natural that there is a huge scope for employment opportunities, and experts estimate that the sector will generate employment for ~ 2.5 million people in 2010. The top retail companies in India include the Raheja Group, Reliance Retail, Tata Trent, Future Group, RPG Retail, and Ebony Retail Holdings. Future Prospects There are many opportunities for those seeking to enter this sector, and entry level positions such as sales executives dont even require a degree. Naturally, the higher order jobs for graduates with relevant degrees and work experience, involve more responsibility, challenges and remuneration. MBAs are increasingly being recruited, which marks a change of HR policy, from the traditional preference to hire those from the FMCG and hospitality sectors. In fact, senior executives in retail such as operations heads are extremely well looked after, and HR consultants believe they are paid in excess of Rs. 60 lakhs. The good news for graduates is that since the sector is so young and vibrant, career growth happens very rapidly, and these positions are very achievable in a compressed time period. Successful candidates across all levels are those who are dynamic, able to multi-task and are equipped with great communication skills.

Formats In Indian Organized Retail Sector

Formats in Indian Organized Retail Sector and its subsequent successful operation are credited to India Economic System reform earnest in July 1991. Formats in Indian Organized Retail Sector are at its nascent stage. The Central Government have ultimately
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realized the need to remove the insulation out of the Indian retail sector. Sceptics opines opening up Indian retail industry would jeopardize way of income for the poor small retailers. In fact, the actual story is quite heartening for the small time retailer and its vendors. It is the second fastest growing economy of the world Potential to be the third largest economy in terms of GDP in next few years It ranks high amongst the top 10 FDI destinations of the world Fastest growing tourist market in Asia World Bank states, India to be worlds second largest economy after China by the year 2050 Stable and investor friendly Central Government at the helm of affairs Introduction of Value Added Tax or VAT and tax reforms High degree of professionalism and corporate ethics Excellent Investment opportunities in Indian retail sector and in allied sectors; sure and high returns on investments To invest US $130 billion for the development of infrastructure, by year 2010 To attract US $ 10 billion FDI for infrastructure development by the end of year 2008 Bullish stock markets Hordes of foreign investors are thronging in to invest in Indian retail markets Highly educated English speaking young workforce Vibrant and multi cultured cities Huge opportunity exists, especially in semi-rural and rural areas Till date the second largest employer after agriculture sector, for the huge semi-skilled Indian population Offers highest shop density in the whole world Having almost 1,20,000 shops, across the length and breadth of the country In a nascent stage of development as an organized industry Formats in Indian Organized Retail Sector Supermarkets Hypermarkets Department Stores Modern format individual retailers
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Shopping malls Specialty Chains

1. High Street Shops

High Street Shops of India are predominantly unorganized. Indian high street shops are varied and scattered. High Street Shops of India generally occurs in small tufts and sells products that are very relevant to economic needs of that particular area. For example, the High Street Shops in villages offer groceries and daily use commodities that are generally unbranded and cheaper in price and quality. High Street Shops in towns and cities are more organized and sells daily use commodities along with luxury items. Generally, these High Street Shops of India sells branded products from Indian and foreign manufacturers respectively. Although, the consumerism is showing a rising trend in India, but the majority of the semi-rural and rural market is untapped. Huge opportunity exists in organized retailing in India. High Street Shops of India and its stupendous growth is credited to India Economic System reform earnest in July 1991. The important parameters of Indian Economic System showed prominent increase. The economic liberalization of Indian economy resulted from enactment of liberal financial and economic policy. This in fact, has removed the insulation from the Indian market. Foreign Direct Investments started to flow into the Indian domestic markets. The Indian retail market is at its nascent stage. The Central Government has ultimately realized the need to remove the insulation out of the Indian retail sector. Sceptics opines that opening up the Indian retail industry would jeopardize the way of income for the poor small retailers. In fact, the actual story is quite heartening for the small time retailer and its vendors. High Street Shops of India - opportunities galore - the key attractive points are It is the second fastest growing economy of the world Potential to be the third largest economy in terms of GDP in next few years It ranks high amongst the top 10 FDI destinations of the world Fastest growing tourist market in Asia World Bank states, India to be worlds second largest economy after China by the year 2050 Stable and investor friendly Central Government at the helm of affairs
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Introduction of Value Added Tax or VAT and tax reforms High degree of professionalism and corporate ethics Excellent Investment opportunities in Indian retail sector and in allied sectors; sure and high returns on investments To invest US $130 billion for the development of infrastructure, by year 2010 To attract US $ 10 billion FDI for infrastructure development by the end of year 2008 Bullish stock markets Hordes of foreign investors are thronging in to invest in Indian retail markets Highly educated English speaking young workforce Vibrant and multi cultured cities Huge opportunity exists, especially in semi-rural and rural areas Till date the second largest employer after agriculture sector, for the huge segment of semiskilled Indian population Offers highest shop density in the whole world Having almost 1,20,000 shops across the length and breadth of the country In a nascent stage of development as an organized industry

2. Cvenience Storeson
This site provides detailed information on convenience stores of India. The site also focuses on the current status of convenience stores operating in India. The successful launch and operations of convenience stores in India is credited to the Indian economic reforms in July, 1991. Convenience stores in India are still at a nascent stage but are headed for stupendous growth in the near future. The central government has ultimately realized the need to open up the Indian retail sector. The key advantages of convenience stores in India are: India ranks 5th on global retail development index India is the 2nd fastest growing economy of the world India is poised to become the 3rd largest economy in terms of GDP in next few years India ranks high among the top 10 FDI destinations of the world India is the fastest growing tourist market in Asia

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World Bank states that India will become the world's 2nd largest economy after China by 2050 India has a stable and investor-friendly central government at the helm of affairs It has introduced Value Added Tax (VAT) and tax reforms It has a high degree of professionalism and corporate ethics It has excellent investment opportunities in the retail sector and allied markets India is to invest US$ 130 billion for the development of infrastructure by 2010 India will attract US$ 10 billion FDI for infrastructure development by 2008 It has bullish stock markets Hordes of foreign investors are thronging in to invest in Indian retail markets Highly educated, English speaking, young workforce Vibrant and multi-cultured cities Huge opportunity exists in semi-rural and rural areas Till date, India is the 2nd largest employer for the huge semi-skilled Indian population Offers highest shop density in the whole world - has almost 1,20,000 shops across the length and breadth of the country In a nascent stage of development as an organized industry. Types of convenience stores found in India are: Specialty Stores Supermarkets Franchisee Outlets Hypermarkets Sceptics opine that liberalizing the Indian retail industry would jeopardize the income of small retailers. However, small-time retailers and vendors also stand to gain from the launch of convenience stores in India. Indian and international market leaders are flocking to the Indian market to cash in on the specialty stores retail boom. Some industry leaders operating in other sectors are also diversifying into the specialty stores sector.

3. Specialty Stores
Specialty Stores of India and its subsequent successful operation is credited to India Economic System reform earnest in July 1991. Specialty Stores of India is at its nascent stage and heading for a stupendous growth in the near future. The Central Government has ultimately realized the need to remove the insulation out of the Indian retail sector. Sceptics
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opine that opening up of the Indian retail industry would jeopardize the way of income for the poor small retailers. In fact, the actual story is quite heartening for the small time retailer and its vendors. Both, Indian and international market leaders are pouring into the Indian market to encase on the specialty stores retail boom. In fact, some industry leaders operating in other sectors are also diversifying into specialty stores sector. Specialty Stores of India - the key advantages are: Ranks 5th on global retail development index It is the second fastest growing economy of the world to be the third largest economy in terms of GDP in next few years It ranks high amongst the top 10 FDI destinations of the world Fastest growing tourist market in Asia World Bank states, India to be world's second largest economy after China by the year 2050 Stable and investor friendly Central Government at the helm of affairs Introduction of Value Added Tax or VAT and tax reforms High degree of professionalism and corporate ethics Excellent Investment opportunities in Indian retail sector and in allied sectors; sure and high returns on investments To invest US $130 billion for the development of infrastructure, by year 2010 To attract US $ 10 billion FDI for infrastructure development by the end of year 2008 Bullish stock markets Hordes of foreign investors are thronging in to invest in Indian retail markets Highly educated English speaking young workforce Vibrant and multi cultured cities Huge opportunity exists, especially in semi-rural and rural areas Till date the second largest employer after agriculture sector, for the huge semi-skilled segment of the Indian population Offers highest shop density in the whole world Having almost 1,20,000 shops across the length and breadth of the country In a nascent stage of development as an organized industry Specialty Stores of India like Pantaloons
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Steel junction Metal junction Food bazar Haldiram bhujiawala Music world Nokia world Sony world Khadims Adidas Bata Raymonds Ganguram KC Das Bausch and Lomb Apollo pharmacy Sify-i way are doing good business and the profit margin of these Specialty Stores of India are rising every year.

4. Hypermarkets
The concept of Hypermarkets is new to Indian consumers. Actually, the British colonial government introduced the idea of Supermarkets to facilitate its officers with access of all household goods under one roof. This led to the development of super-supermarket or modern supermarket or Hypermarket. Hypermarkets in India houses varied shops selling different types of essential commodities along with luxury items. These Hypermarkets are mainly concentrated in urban areas only. Hypermarkets operating in India typically have a heterogeneous mixture of large and small individual retailers. Most of these Hypermarkets sell branded products of both, domestic and international manufacturers. Hypermarkets of India offer products with different price bands for each and every sections of urban society. Hypermarkets - the India advantages are: Ranks 5th on global retail development index In a nascent stage of development as an organized industry
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It is the second fastest growing economy of the world Going to be the third largest economy in terms of GDP in next few years It ranks high amongst the top 10 FDI destinations of the world Fastest growing tourist market in Asia World Bank states, India to be world's second largest economy after China by the year 2050 Stable and investor friendly Central Government at the helm of affairs Introduction of Value Added Tax or VAT and tax reforms High degree of professionalism and corporate ethics Excellent Investment opportunities in Indian retail sector and in allied sectors; sure and high returns on investments To invest US $130 billion for the development of infrastructure, by year 2010 To attract US $ 10 billion FDI for infrastructure development by the end of year 2008 Bullish stock markets Hordes of foreign investors are thronging in to invest in Indian retail markets Highly educated English speaking young workforce Huge opportunity exists, especially in urban and semi-rural areas Till date the second largest employer after agriculture sector for the huge semi-skilled segment of the Indian population These Hypermarkets in India sells products like Electronic goods Groceries Vegetables and fruits House hold items Stationaries Pharmaceuticals and health care products Consumer durables Vegetables Dress materials Furniture Furnishings etc. Hypermarkets in India - the first choice places Delhi
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Noida Gurgaon Hyderabad Bangalore Ahmedabad Chandigarh Hypermarkets in India - the operators Reliance retail Bhakti-Wal-Mart retail

5. Supermarkets
The concept of Supermarkets is not new to Indian consumers. Actually, the British colonial government introduced the idea of Supermarkets to facilitate its officers with access of all household goods under one roof. Supermarkets in India houses varied shops selling different types of essential commodities along with luxury items. These Supermarkets are mainly concentrated in urban areas or semi-urban areas. Supermarkets operating in India typically have a heterogeneous mixture of large and small individual retailers. Most of these Supermarkets sell branded products of both, domestic and international manufacturers. Supermarkets of India offer products with different price bands for each and every sections of urban society. Supermarkets - the advantages of doing business in India are Ranks 5th on global retail development index It is the second fastest growing economy of the world Going to be the third largest economy in terms of GDP in next few years It ranks high amongst the top 10 FDI destinations of the world Fastest growing tourist market in Asia World Bank states, India to be world's second largest economy after China by the year 2050 Stable and investor friendly Central Government at the helm of affairs Introduction of Value Added Tax or VAT and tax reforms High degree of professionalism and corporate ethics

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Excellent Investment opportunities in Indian retail sector and in allied sectors; sure and high returns on investments To invest US $130 billion for the development of infrastructure, by year 2010 To attract US $ 10 billion FDI for infrastructure development by the end of year 2008 Bullish stock markets Hordes of foreign investors are thronging in to invest in Indian retail markets Highly educated English speaking young workforce Vibrant and multi cultured cities Huge opportunity exists, especially in semi-rural and rural areas Till date the second largest employer after agriculture sector, for the huge semi-skilled Indian population Offers highest shop density in the whole world Having almost 1,20,000 shops, across the length and breadth of the country In a nascent stage of development as an organized industry With increased consumerism post India Economic System reform earnest in July 1991, the Supermarkets in India are regaining their lost importance. Moreover, this consumerism has spread its tentacles to semi-rural areas also, leaving tremendous scope of growth in semirural and rural areas also. The Central Government has ultimately realized the need to remove the insulation out of the Indian retail sector. Sceptics opine that opening up the retail sector in India would jeopardize the way of income for the poor small retailers. In fact, the actual story is quite heartening for the small time retailer and its vendors. Both, Indian and international market leaders are pouring into the Indian market to encash on the Supermarkets boom.

6. Shopping Malls
The latest trend in the corporate universe is of the emergence of the shopping malls. Shopping malls are an emerging trend in the global arena. The first thing that comes in our mind about the shopping malls is that it is a big enclosed building housing a variety of shops or products. According to historical evidences shopping malls came into existence in the Middle Ages, though it was not called so. The concept of departmental stores came up in the 19th century with the Industrial Revolution. Consumers wanted a better shopping experience and this demand gave rise to the emergence of shopping malls in India.

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Originally the first of the shopping malls was opened in Paris. Then the trend followed in the other metros over the world, and there was a spree of shopping malls coming up at various places. In this age of mass production and mass consumption, the concept of shopping malls is most modern method of attracting consumers. The concept of shopping was altered completely with the emergence of these shopping malls. Shopping was no longer limited to a mere buying activity - it has become synonymous with splurging time and money. People simply go about roaming through the shopping mall in order to peep through the window of the shop and often ending up buying something they like. The consumers desire a combination of comfort and suitability which the shopping malls cater to, and so this format of shopping has become so popular all over the world, and especially so in India. The inclusion of amenities like restaurants, multiplexes, and car parks attract more and more crowds to shopping malls, that are considered family hangout zones. Advantages of shopping malls Increase in the growth of the organized retail sector Monumental increment in economic growth Employment generation by the organized retail sector Good competition means better products & services Disadvantages of shopping malls The companies with superior resources would muscle out the ones inferior to them. Monopolization of the organized retail sector In India, the emergence of shopping malls has mostly altered the lifestyle of the consumers. With the growth in income, changing attitudes, and also the demographic patterns favour the emergence of shopping malls. The trends to follow in the future The shopping malls favour a growth in the Indian organized retail sector by 10% within 2010 There would be different formats of shopping malls depending on the region.

7. Franchisee Outlets

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Franchisee outlets in India are predominantly unorganized and considerably new in concept. For an international company with a famous product or service to sell, Franchisee outlets can provide huge opportunity for fast expansion and deep market penetration. Opening up of Franchisee Outlets saves initial capital investment. Franchisee outlets in India can effectively help in the distribution process of goods and services in lesser time but creating similar effects on balance sheet. The greatest advantage of opening Franchisee outlets in India is that it offers full commitment from franchisees. And as a matter of fact the franchisees are more committed than employers or staff since they own a share of the main business and are accountable for losses. Franchisee outlets in India - its benefits are: Franchisee enjoys liberty of self-employment The most successful way of starting a new business Franchising opportunities exists in every area of business and trade Low or no initial capital investment for the franchiser Quality and reputation of the parent company is maintained The license for franchise is renewable after or before the expiry of the term of contracts Liabilities of parent companies are less The Franchisee outlets have better commitments and responsibilities to discharge Huge income opportunity for the franchiser and franchisee No introductory advertisement is needed for the Franchisee outlets for the establishment of the brand Franchisee outlets in India - some well-known outlets are: Mc. Donald's Kentucky Fried Chicken Subway Monginis Sugar and spice Coca cola Pepsi Frito lays Perfetti Franchisee outlets in India - opportunities galore; the key attractive points are:
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Ranks 5th on global retail development index It is the second fastest growing economy of the world Going to be the third largest economy in terms of GDP in next few years It ranks high amongst the top 10 FDI destinations of the world Fastest growing tourist market in Asia Stable and investor friendly Central Government at the helm of affairs High degree of professionalism and corporate ethics Excellent Investment opportunities in Indian retail sector and in allied sectors; sure and high returns on investments To invest US $130 billion for the development of infrastructure, by year 2010 Retail industry to attract US $ 10 billion FDI for infrastructure development by the end of year 2008 Hordes of foreign investors are thronging in to invest in Indian retail markets Huge opportunity exists, especially in semi-rural and rural areas Huge employment scope for the semi-skilled segment of the Indian population In a nascent stage of development as an organized industry

Indian Unorganized Retail Sector & Its Challenge

India is the only one country having the highest shop density in the world, with 11 outlets per 1000 people (12 million retail shops for about 209 million households). Rather we can see the democratic scenario in Indian Retail (because of low level of centralization, low capital input and due to a good number of self-organized retail). India started its Retail Journey since ancient time. In Ancient India there was a concept of weekly HAAT, where all the buyers & sellers gather in a big market for bartering. It takes a pretty long times to & step to shape the modern retail. In between these two concepts (i.e. between ancient retail concept & the modern one there exist modern kirana/ mom and pop shops or Baniya ki Dukan. Still it is predominating in India
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Unorganized retailing refers to the traditional formats of low-cost retailing, for example, hand cart and pavement vendors, & mobile vendors, the local kirana shops, owner manned general stores, paan/beedi shops, convenience stores, hardware shop at the corner of your street selling everything from bathroom fittings to paints and small construction tools; or the slightly more organized medical store and a host of other small retail businesses in apparel, electronics, food etc

Characteristics of unorganized retail

Small-store (kirana) retailing has been one of the easiest ways to generate self-employment, as it requires limited investment in land, capital and labour. It is generally family run business, lack of standardization and the retailers who are running this store they are lacking of education, experience and exposure. This is one of the reason why productivity of this sector is approximately 4% that of the U.S. retail industry. Unorganized retail sector is still predominating over organized sector in India, unorganized retail sector constituting 98% (twelve million) of total trade, while organized trade accounts only for 2%. The reasons might be1. In smaller towns and urban areas, there are many families who are traditionally using these kirana shops/ 'mom and pop' stores offering a wide range of merchandise mix. Generally these kirana shops are the family business of these small retailers which they are running for more than one generation. 2. These kiran shops are having their own efficient management system and with this they are efficiently fulfilling the needs of the customer. This is one of the good reasons why the customer doesn't want to change their old loyal kirana shop. 3. A large number of working class in India is working as daily wage basis, at the end of the day when they get their wage, they come to this small retail shop to purchase wheat flour, rice etc for their supper. For them this the only place to have those food items because purchase quantity is so small that no big retail store would entertain this. 4. Similarly there is another consumer class who are the seasonal worker. During their unemployment period they use to purchase from this kirana store in credit and when they get
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their salary they clear their dues. Now this type of credit facility is not available in corporate retail store, so this kirana stores are the only place for them to fulfill their needs. 5. Another reason might be the proximity of the store. It is the convenience store for the customer. In every corner the street an unorganized retail shop can be found that is hardly a walking distance from the customer's house. Many times customers prefer to shop from the nearby kirana shop rather than to drive a long distance organized retail stores. 6. This unorganized stores are having n number of options to cut their costs. They incur little to no real-estate costs because they generally operate from their residences. Their labour cost is also low because the family members work in the store. Also they use cheap child labour at very low rates. As they are operating from their home so they can pay for their utilities at residential rates. Even they cannot pay their tax properly. Currently the value of the retail market is estimated at around $ 270 billion with a growth rate of 5.7 per cent per annum according to the Indian retail report which creates a big threat for the small unorganized retailers. Over 20,000 new retail outlets are expected to open within this segment. Major corporate retail like Wal-Mart and have started to try and take over the Indian retail sector. But in India the unorganized retail is a source foods and other necessities of millions of Indians , major link between rural and urban societies. Not only that it is also act like a convenience store for the customer offering right product at right time at right place. In a country with large numbers of people, and high levels of poverty, this model of retail democracy is the most appropriate So these unorganized retail sector need to be promoted so that they can organize & supply food to Indian consumer. Now the question is how to promote this sectorThe suggestions might be(a) Establishment of Retailer co-operatives among retailers which is highly required for the sustenance of the unorganized retail sector (b) Merger and buy-out of weak retailers by a stronger one that would give a new horizon to the small retailer (c) Setting up of franchisee organization may also help in strengthening the position of the retailers. The franchiser can exert a tremendous control over the way retailing is done.

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(d) There must be good network connection between retail organizations, the suppliers and other channel members to use compatible technology so that they can build strong distribution set-up to satisfy the customers. (e) Setting up of more and more non-store retailing centres would also ensure a strong retailing organization. Non-store retailing makes implementation of modern principles easier and less costly. (d) Moreover there must be a change in the mind-set of the unorganized retailer. They have to understand the pulse of the trend. They have to understand, come forward & lead this change management then only this sector not only can exist but flourish. Employment Impact The sampled unorganized retail outlets employ more family labour than hired labour; on an average they employ 1.5 persons per shop from the family, and hired employees of 1.1 persons. The survey finds a marginal increase in overall employment for these outlets over the period of existence of the sampled organized retail outlets which averaged 21 months. However, there has been a general increase in employment in the South and East but a decline in the West and virtually no employment change in the North. There appears to be a relation between the employment effect on unorganized retail
and the period of existence of organized outlets; the adverse effect, if at all there is any, wears off with time. Interestingly, in the South and East, where the sampled organized retailers have been in operation for some time, there has been an increase in employment . The survey has brought out that there has been an adverse impact on turnover and profit of the unorganized retail sector after the opening of organized outlets. The overall impact has been a decline in turnover of about 14 per cent and in profit of about 15 per cent over the period, which is an average of 21 months. Therefore, the annual decline in turnover and profit is in the range of 8-9 per cent. The negative impact has been felt most in the West with an annual fall in turnover and profit of 19 per cent followed by the North and East in the range of 10-16 per cent whereas the effect has been virtually insignificant in South

Closure of Unorganized Outlets

It is interesting to know whether the presence of organized retail has led to the closure of traditional outlets. The survey asked the respondent retailers whether they are
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aware of any closing down of small shops in their neighborhood after the opening of Organized outlets. A total of 151 such outlets were reported to have been closed down over an average period of 21 months, which constituted about 4.2 per cent annualized closure of retailers. This ratio is somewhat higher in the West at 6.8 per cent, about 4.5 per cent in the North, 3.5 per cent in the South and least at 2.1 per cent in the East. These rates of closure are very low by international standards. The US data show a 50 per cent closure of small businesses within four years of operation (Headd, 2003). However, only 41 per cent of the retailers attributed these closures directly to competition from organized retail. This means that the closure of unorganized retail outlets has been about 1.7 per cent a year on account of competition from organized outlets. This varied between a high of 3.2 per cent in the West to a low of 0.4 per cent in the East and 1.5 per cent in the South and 1.6 per cent in the North.
Response to Competition

According to the survey, unorganized retailers have indicated a number of steps taken in response to competition from organized retail, such as adding new product lines and brands, better display, renovation of the store, introduction of self service, enhanced home delivery, more credit sales, acceptance of credit cards, etc

Retailers reporting Home Delivery The results of the survey suggest that over a third of the retailers (35 per cent) currently provide cash credit to their customers and the proportion is highest at 44 per cent in the East and least in the South at 32 per cent and in between at 36-37 per cent in the West and North. The average share of credit sales to total sales has been 21 per cent, up from 13 per cent before the opening of organized outlets a number of modern technological facilities and this section is going to widen in the future (Table 4.10). For example, acceptance of credit cards by small retailers is a new phenomenon resulting from the presence of organized retailers. Currently 7 per cent of the sampled unorganized retailers have installed credit card machines and the survey showed that Another interesting finding is that a section of traditional retailers are currently using a huge additional 24 per cent plan to use a credit card machine in
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the future. Computerized billing is done by 10 per cent of these retailers and an additional 27 per cent is planning to use it in the future. Scanning and bar coding is done currently by 4 per cent and an additional 17 per cent plan to use it in the future. Computerized accounting and inventory control is practiced by 5 per cent now and 19 Per cent more want to do it in the future. Refrigerant, freezer, and hot case facilities Are already being used by 36 per cent and in addition 14 per cent wish to utilize it in The future. About 10 per cent of the traditional outlets are air-conditioned and another 21 per cent will opt for it in the future. Surprisingly, about 45 per cent of these Retailers have an electronic weighing machine, and an additional 15 per cent want to1. Introduction An important aspect of the current economic scenario in India is the emergence of Organized retail. There has been considerable growth in organized retailing business In recent years and it is poised for much faster growth in the future. Major industrial Houses have entered this area and have announced very ambitious future expansion
Plans. Transnational corporations are also seeking to come to India and set up retail

chains in collaboration with big Indian companies. However, opinions are divided on the impact of the growth of organized retail in the country. Concerns have been raised that the growth of organized retailing may have an adverse impact on retailers in the unorganized sector. It has also been argued that growth of organized retailing will yield efficiencies in the supply chain, enabling better access to markets to producers (including farmers and small producers) and enabling higher prices, on the one hand and, lower prices to consumers, on the other. In the context of divergent views on the impact of organized retail, it is essential that an in-depth analytical study on the possible effects of organized retailing in India is conducted. In order to assess the impact of growing organized retail on different aspects of the Economy, the Indian Council for Research on International Economic Relations (ICRIER) was appointed by the Ministry of Commerce and Industry, Government of India to carry out a study on organized retail focusing on the following issues: Effect on small retailers and vendors in the unorganized sector keeping in mind the likely growth in the overall market. Effect on employment. Impact on consumers. Impact on farmers and manufacturers.
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 Impact on prices. Overall impact on economic growth. ICRIER has been asked by the Ministry to analyze the above issues in the context of a growth scenario of 7-10 per cent per annum in the next five years and in the light of Practice in other fast- growing emerging market economies. 1.2 Partners in the Study In this study, ICRIER sought and received assistance from three important groups: (a) Development & Research Services Private Limited (DRS) for conducting all-India Surveys; (b) Technopak Advisers Pvt. Ltd., a leading management consultancy firm on retailing; and (c) Dr. Thomas Reardon and Dr. Ashok Gulati as Co-Directors of the International Food Policy Research Institute (IFPRI)-Michigan State University (MSU) Joint Programme of Markets in Asia. After a study framework was prepared, it was discussed in a brainstorming session organized by ICRIER on April 9, 2007 in which industry representatives, government officials, and senior academics Participated. Questionnaire-based survey of unorganized retailers including fixed fruit and vegetable vendors and push-cart hawkers; Questionnaire-based exit survey of consumers shopping at organized retail outlets and also consumers shopping at unorganized outlets; and Questionnaire-based survey of farmers who are selling their produce directly to organized retailers and also farmers who are selling through the traditional mandi route. 1.4 Organization of the Report The report has been organized into eight chapters as follows: 1. Introduction 2. Current Retail Scene: An Overview International Retail Indian Retail 3. Evolution of International Retail: Implications for India 4. Indian Organized Retailers: Case Studies Subhiksha Trent Limited
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 Pantaloon Retail ITC Choupal Sagar and Choupal Fresh RPG Spencers Mother Dairy 5. Impact of Organized Retailing Advantages to the Indian Economy Unorganized Retail Sector: Survey Results Consumers: Survey Results Intermediaries: Survey Results 6. Impact of Organized Retailing on Producers Farmers : Value Chain and Survey Results Manufacturers : Interview Report 7. Future Scenario in Retailing Growth of Retail: Organized vs. Unorganized Investment and Employment Projections 8. Policy Recommendations

International Retail
Global retail sales are estimated to cross US$12 trillion in 2007.1 almost reflecting The growth in the world economy, global retail sales grew strongly in the last five Years (2001-06) at an average nominal growth of about 8 per cent per annum in dollar Terms (Table 2.1). This is in contrast to near stagnant global retail sales during the previous five years, 1996-01. Grocery dominates retail sales with a share of approximately 40 per cent which varies from about 30 per cent in rich Japan to an average of 60 per cent in poor Africa. Retail sales through modern formats have been rising faster than total retail sales; the share of modern retail has risen from about 45 Per cent in 1996 to over 52 per cent in 2006.

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SWOT ANALYSIS
Strengths: Low operational costs Presence of established distribution networks in both urban and rural areas Presence of well-known brands in FMCG sectors Weaknesses: Lower scope of investing in technology and achieving economies of scale, especially in small sectors Low exports levels "Me-too products, which illegally mimic the labels of the established brands. These products narrow the scope of FMCG products in rural and semi-urban market. Opportunities: Untapped rural market Rising income levels, i.e. increase in purchasing power of consumers Large domestic market- a population of over one billion. Export potential High consumer goods spending Threats: Removal of import restrictions resulting in replacing of domestic brands Slowdown in rural demand Tax and regulatory structure

Industry Category and Products Household Care

Personal Wash:32

REASONS FOR RETAIL SECTOR BOOM IN INDIA

It has been a decade-and-a-half since India embarked on an ambitious economic liberalization programmer. Over the last five years, many of its benefits have manifested themselves and one of the areas where growth is clearly reflected is retailing. The latest pronouncements of Finance Minister P Chidambaram about the sector have fuelled interest in stocks from the segment. Let's turn the spotlight on the factors that triggered the exponential growth in the sector. Primary reasons The prime reasons that fuelled this boom include favorable demographics, rising consumer incomes, real estate developments, especially the emergence of new shopping malls, availability of better sourcing options - both from within India and overseas - and changing lifestyle. These factors have transformed hitherto savings-oriented and conservative Indian consumers and made them akin to those in developed markets.

Organised versus unorganised

In a sharp contrast to the retail sector in developed economies, retailing in India - though large in terms of size - is highly fragmented and unorganised. With close to 12 million retail outlets the country has one of the highest retail densities worldwide. Retailers include street vendors, supermarkets, department stores, restaurants, hotels and even two-wheeler and car showrooms. Counter stores, kiosks, street markets and vendors, where the ownership and management rest with one person, are classified as traditional or unorganised retail outlets. These formats typically require employees with low skills and account for around two-thirds of the sector's output. These are highly competitive outlets, with minimal rental costs
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(unregistered kiosks or traditional property), cheap labour (work is shared by family members) and negligible overheads and taxes. However, unorganised retailers suffer due to poor shopping experience and inability to offer a wide range of products and value-addition due to lack of sourcing capabilities. The modern Indian consumer is seeking more value in terms of improved availability and quality, pleasant shopping environment, financing options, trial rooms for clothing products, return and exchange policies and competitive prices. This has created a rapidly growing opportunity for organized, modern retail formats to emerge in recent years and grow at a fast pace. Inefficiency in the existing supply chains presents further opportunity for organized players to draw on this large market even as lack of consumer culture and low purchasing power restricted the development of modern formats. Migration from unorganized to organized retail
has been visible with economic development in most countries.

Changing age profile and disintegration of joint family India is witnessing a change in the age and income profiles of its over 1 billion population, which is likely to fuel accelerated consumption in the years to come. The country is believed to have an average age of 24 years for its population as against 36 years for the USA and 30 years for China. A younger population tends to have higher aspirations and spends more as it enters the earning phase. Besides, the gradual disintegration of the traditional Indian joint family system has led to nuclearisation of families, which in turn has led to enhanced demand. Add to this an increasing population of working women and new job opportunities in emerging service sectors such as IT-enabled services, retail, food services, entertainment and financial services. With declining interest rates, the aversion of domestic consumers to taking loans is also fast disappearing. Growing media penetration is leading to a convergence of aspirations of various classes of consumers, bridging the rural-urban divide.

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Growing disposable income More Indian households are getting added to the consuming class with the growth in income levels. The number of households with income of over Rs 45,000 per annum is expected to grow from 58 million in 1999-2000 to 81 million by 2005-06. This large base of households with growing disposable income is expected to drive demand for organized retail. Of this, 56 per cent (44. 8 million households) are expected to be concentrated in urban India. Changing income demographics, age profile and macro environment are visible in the growth in consumption of durables. To cite live examples, the installed base of cars, cable TV subscribers and cellular subscribers has increased significantly over the last five years.

CHALLENGE FACING THE INDIAN RETAIL SECTORE

India is the fifth largest retail destination globally from among thirty emergent markets, with a size of US$500bn., and has been growing at 7% per annum with a contribution of 14% to the national GDP and employing 7% of the total workforce (only agriculture employs more) in the country. Retail is the India's industry of the future. It can also be a big source of employment, more so for unskilled labor. Organized retail accounts for just 5% of total retail sales and has been growing at 35% CAGR.The sector is expected to grow up to US$ 535 bn by 2013, with 10% coming from the organized retail sector. Modern retail has entered India as seen in sprawling shopping centers, multi-storeyed malls and huge complexes offer shopping, entertainment and food all under one roof. The Indian retailing sector is at an inflexion point where the growth of organized retailing and growth in the consumption by the Indian population is going to take a higher growth trajectory. The Indian population is witnessing a significant change in its demographics. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing working-women population and emerging opportunities in the services sector are going to be the key growth drivers of the organized retail sector in India. The present paper aims to discuss the opportunities and challenge for retail industry and different retail formats that are prevailing in India. KEYWORDS: Organized retailing; Consumption spending; emerging retail formats; Trends in Indian retailing; Retail Players; Challenging Faces retailing in India.
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INTRODUCTION

INDIAN

RETAIL MARKET: OPPORTUNITIES

AND CHALLENGES PRESENT SENERIO

Retail in India changed radically to become one of the sunrise sectors in the economy. It gained importance in terms of employment generation and business opportunity. The waves of globalization, liberalization and privatization have been responsible for this change. But the retail industry has been hard-hit by the economic downturn, with many retailers putting a brake on their expansion plans. In this scenario, the kirana stores Retail in India changed radically to become one of the sunrise sectors in the economy. It gained importance in terms of employment generation and business opportunity. The waves of globalization, liberalization and privatization have been responsible for this change. But the retail industry has been hard-hit by the economic downturn, with many retailers putting a brake on their expansion plans. In this scenario, the kirana stores are flourishing again. India is the fifth largest retail destination globally from among thirty emergent markets, with a size of US$500bn., and is expected to grow at 7% over the next 10 years, reaching a size of US$ 850 billion by 2020. Traditional retail is expected to grow at 5% and reach a size of US$ 650 billion (76%), while organized retail is expected to grow at 25% and reach a size of US$ 200 billion by 2020.

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The growth of organized retail also helps reduce the inefficiencies in trade a win-win situation for farmers and consumers. It can also be a big source of employment, more so for unskilled labor. Organized retail accounts for just 5% of total retail sales and has been growing at 35% CAGR. The retail industry is definitely one of the pillars of the Indian. Going forward, with the competition intensifying and the costs scaling up, the players who are able to cater to the needs of the consumers and grow volumes by ensuring footfalls, while being able to reduce costs, withstand downturns, and face competition will have a competitive advantage. Since 2010 was a tough year for the retail sector, India fell slightly in the rankings of the US-based global management consulting firm, A T Kearney, in its Global Retail Development Index (GRDI) 2011, has ranked India as the fourth most attractive nation for retail investment, among 30 emerging markets. However, India ranks higher compared to other emerging markets like Brazil and Russia. Compared to other emerging markets, India a more stable and stronger economy and penetration levels are low, while domestic consumption is high. Due to these reasons, India is still one of the most attractive destinations for international retailers looking at expanding into emerging markets. Retailing in India is gradually inching its way toward becoming the next boom industry. The whole concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. Modern retail has entered India as seen in sprawling shopping centers, multi-storied malls and huge complexes offer shopping, entertainment and food all under one roof. The Indian retailing sector is at an inflexion point where the growth of organized retailing and growth in the consumption by the Indian population is going to take a higher growth trajectory. The Indian population is witnessing a significant change in its demographics. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing working-women population and emerging opportunities in the services sector are going to be the key growth drivers of the organized retail sector in India.

37

EVOLUTION OF INDIAN RETAILING

Retailing in India has a long history. Early retailing in India can be traced back to the weekly hats where vendors used to put their offerings on sale. Kirana stores have traditionally dominated the Indian retail market for a long time. Most of the retail stores in India are small family run businesses utilizing predominantly household labor. Organized retail began to make its mark in India in the 1970s when shops like Raymonds, Nallis did not visit large retail stores to buy ready- to- wear clothing. wave of liberalization, privatization and Pantaloons (1997) formats , modern techniques and exclusive retail years of 21st century, and Bata were in the s Indian people new retailing Stop(1991), early

market through their exclusive stores or franchisees. Till the early 1980 globalization ushered in

During the 1990 s , the

outlets like Shoppers

and others. Further transformation was

witnessed during the

with the opening of the numerous supermarkets, departmental upper middle class enjoyed shopping at these retail they offered such as shopping ambience , a wide variety of goods. Organized

stores, chain stores and malls across the country, and emergence of hypermarkets and big discount stores. The affluent and the stores, given the friendly layout and a single Retail in India refers to the improved facilities that

point- of purchase for

modern retail formats like supermarkets and hypermarkets retail, absence of product variety and a the market coupled with atmosphere for the

prevalent in most developed countries. Organized retail remained a dormant sector largely due to the lack of infrastructure for large-scale conservative Indian consumer. a wealthier, more informed entry of organized retail product at Indian Today the flood of products in in India Today

consumer have created the

people look for better quality

cheap rate, better service, better ambience for shopping and

better shopping experience. Organized retail promises to provide all these. The various formats of organized retail are: HYPERMARKETS: They store products of multiple brands comprising food items and non-food items. Supermarkets: These are self service stores selling food and personal care products. e.g.: Subhiksha. Departmental stores: Retails branded goods in non-food

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categories. e.g.: Shoppers Stop. Specialty Chains: These stores focus on a branded product or a product category. e.g.: Bata CONVENIENCE STORES: These are small self service outlet located in crowded urban area. MALLS: A huge enclosures which has different retail formats. e.g.: Nucleus Key players in organized retail are: Pantaloon Retail.

GLOBAL RETAILING INDUSTRY

The latter half of the 20th Century, in both Europe and North America, has seen the emergence of the supermarket as the dominant grocery retail form. The reasons why supermarkets have come to dominate food retailing are not hard to find. The search for convenience in food shopping and consumption, coupled to car ownership, led to the birth of the supermarket. As incomes rose and shoppers sought both convenience and new tastes and stimulation, supermarkets were able to expand the products offered. The invention of the bar code allowed a store to manage thousands of items and their prices and led to 'just-in-time' store replenishment and the ability to carry tens of thousands of individual items. Computeroperated depots and logistical systems integrated store replenishment with consumer demand in a single electronic system. The superstore was born. On the Global Retail Stage, little has remained the same over the last decade. One of the few similarities with today is that Wal-Mart was ranked the top retailer in the world then and it still holds that distinction. Other than Wal-Marts dominance, theres little about todays environment that looks like the mid-1990s. The global economy has changed, consumer demand has shifted, and retailers operating systems today are infused with far more technology than was the case six years ago. Saturated home markets, fierce competition and restrictive legislation have relentlessly pushed major food retailers into the globalization mode. Since the mid-1990s, numerous governments have opened up their economies as well, to the free markets and foreign investment that has been a plus for many a retailer. However, a more near-term concern, has been the global economic slowdown that has resulted from dramatic cutback in corporate IT

39

and other types of capital spending. Consumers themselves have become much more price sensitive and conservative in their buying, particularly in the more advanced economies. From an operational point of view, active practitioners have voiced their opinion that retailer concerns in 2003 have turned to deflation, lack of pricing power, global over-capacity, low interest rates, economic stagnation, slump in world tourism and declining consumer confidence. But, even before the global economic slowdown that forced retailers into monitoring costs more effectively, technological advances were a way of life in retail organizations. Technology has become the real enabler for retailers over the last six years. Supply chain innovations for retailers were particularly strong in the second half of the 1990s and have continued into today. With all the emphasis on technology and cost-cutting, a major thrust The Far East Experience: The Food Retail Industry in the Far East has evolved into what could be called the breeding ground for emerging models with countries like Singapore being the home to some of the big players in the industry in these parts of the world. The presence of all the major players of the retailing industry is found in Singapore. Singapore has 2 hypermarkets, one run by Carrefour and the other by Giant Hypermarket, part of Dairy Farm International. According to the government, there are slightly more than 11,000 market stalls operating in 150 markets located all across Singapore Island. The markets further spread to China, Thailand, and Malaysia thanks to the major support that the local governments provided in creating the necessary regulatory framework in establishing their presence. Singapore, Malaysia and Thailand not only fueled the retail industry within the country, but also attracted hordes of tourists to experience the shopping experiences that they created in these islands. The markets are now saturated with no additional space for a new entrant and are expected to consolidate within the next few years. Apart from Singapore, which is a more recent development, Japan enjoys an active spot on the retailers map. The retail industry is as huge as US$ 1088 Billion, with a split of US$ 594.8 Billion in the non-food segment and US$ 493.2 Billion in the food-retailing sector. The leaders in sales are Ito-Yokado, Aeon, Daiei, Takashimaya, and Uny, in that order. Several retailers, however, have made recent improvements in their warehousing and distribution technologies to make their presence felt in the Japanese market. Convenience stores, which are small and suitable in a country where land is very expensive, continue to
40

do well. Food, in fact, has been one of the few sectors that have experienced growth over the last several years. A period of shake up in the industry is likely now that Wal-Mart has entered Japan. Numerous smaller, less efficient retailers may become takeover targets. The entire Japanese retail sector will likely undergo some form of restructuring over the next decade as a result of overcapacity, dismal profits and the Wal-Mart factor. In Mainland China, the retail markets have mushroomed over the years of intense economic development to a very considerable size. The total volume of retail sales for consumer goods and food increased by 10.6 percent in China over the last couple of years which shows tremendous growth. Consumer spending has held strong. A decade ago, the top five retail enterprises in China were all traditional merchandise companies, but now the top five are mainly supermarkets and chain stores. The world is enamored with Chinas potential and opportunities. But in medium-sized and small cities and rural areas, traditional retailing methods, such as department stores and local

41

retailing networks, will be sufficient, as consumption is lower. In Indonesia, Wet markets and supermarkets remained the major distribution channels for food products. Although these retail sub-sectors also offered non-food products, such as household goods, food products remained dominant in terms of the number of items. Wet markets distribution of food products tended to be much greater than non-food as these retail channels mainly provided fresh produce. Conversely, supermarkets had an almost equal distribution, with food taking up the greater proportion. On the other hand, the distribution of non-food products benefited from both food and non-food retailers. For example, some food retail formats offered non-food items, such as supermarkets, hypermarkets, and convenience stores. These retail outlets provided some basic non-food products, such as toothpaste, soap, or detergent. However, non-food retail outlets rarely provided food items, except certain department stores or druggists. In Malaysia, a majority of food retailer outlets offer food and non-food items, with at least a 70:30 distribution. The traditional food distribution system in Thailand is through so-called 'wet markets' which sell fruits, vegetables, meat and fish, together with small 'mom and pop' food stores which distribute dry goods. However, the rapid growth of the economy, particularly during the decade before the financial crisis began, has led to dramatic changes in the structure of the food-retailing sector. Modern supermarkets, superstores, hypermarkets and convenience stores developed at breakneck pace to service the growing middle class with their demand for more sophisticated food stores and a greater variety of products many of which were imported.

FOOD RETAIL IN INDIA Though with a population of a billion and a middle class population of over 300 millions organized retailing (in the form of food retail chains) is still in its infancy in the Country. India has been rather slow in joining the Organized Retail Revolution that was rapidly transforming the economies in the other Asian Tigers. This was largely due to the excellent food retailing system that was established by the kirana (mom-and-pop) stores that continue meet with all the requirements of retail requirements albeit without the convenience of the shopping as provided by the retail chains; and also due to the highly fragmented food supply chain that is cloaked with several intermediaries (from farm-processor-distributor-retailer) resulting in huge value loss and high costs. This supplemented with lack of developed food
42

processing industry kept the organized chains out of the market place. The correction process is underway and the systems are being established for effective Business-to-Business (farmer-processor, processor-retailer) solutions thereby leveraging the core competence of each player in the supply chain.

43

Spread of Organized Retailing in India

Organized retailing is spreading and making its presence felt in different parts of the country. The trend in grocery retailing, however, has been slightly different with a growth concentration in the South. Though there were traditional family owned retail chains in South India such as Nilgiris as early as 1904, the retail revolution happened with various major business houses foraying into the starting of chains of food retail outlets in South India with focus on Chennai, Hyderabad and Bangalore markets, preliminarily. In the Indian context, a countrywide chain in food retailing is yet to be established as lots of Supply Chain issues need to be answered due to the vast expanse of the country and also diverse cultures that are present. Retail Models in India: Current & Emerging The Indian food retail market is characterized by several co-existing types and formats. These are: 1. The road side hawkers and the mobile (pushcart variety) retailers. 2. The kirana stores (the Indian equivalent of the mom-and-pop stores of the US), within which are: a. Open format more organized outlets b. Small to medium food retail outlets.

Modern trade the organized retailers Within modern trade, we have: 1. The discounter (Subhiksha, Apna Bazaar, Margin Free) 2. The value-for-money store (Nilgiris) 3. The experience shop (Food world, Trinethra) 4. The home delivery (Fabmart) While the focus of this note is on modern organized retail trade, we hereunder present insights into the smaller, semi and unorganized retailers.

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Hawkers mobile supermarkets The unorganized sector is characterized by the lari-galla vendors (also known as mobile supermarket) seen in every Indian byline and is, therefore, difficult to track, measure and analyses. But they do know their business these lowest cost retailers can be found wherever more than 10 Indians collect a rural post office, a dusty roadside bus stop or a village square. As far as location is concerned, these retailers have succeeded beyond all doubt. They have neither village nor city-wide ambitions nor plans their aim is simply a long walk down the end of the next lane. This mode of mobile retailers is neither scalable nor viable over the longer term, but is certainly replicable all over India. Most retailing of fresh foods in India occurs in Mandis and roadside hawker parks, which are usually illegal and entrenched. These are highly organized in their own way. Hawking of food products, cooked food and FMCG products is a very interesting model of retailing. Much has been written about these roadside malls from social security issues to their nuisance value. However, if you put these hawkers together, they are akin to a large supermarket with little or no overheads and high degree of flexibility in merchandise, display, prices and turnover. While shopping ambience and the trust factor maybe missing, these hawkers sure have INTEGRATION OF FOOD INDUSTRY THE KEY DRIVER OF FOOD RETAIL IN INDIA India is worlds second largest grower of fruits and vegetables after Brazil and China. While the agriculture sector has witnessed several leaps of innovation and technological advancements, the processing sector is still in its infancy. Even with less than 4% processing of fruits and vegetables, the Food Processing Industry sector in India is one of the largest in terms of production, consumption within India, export and growth prospects. The government has accorded it a high priority, with a number of fiscal reliefs and incentives, to encourage commercialization and value addition to agricultural produce; for minimizing pre/post harvest wastage, generating employment and export growth. As a result of several policy initiatives undertaken since liberalization in early 90s, the industry has witnessed fast growth in most of the segments. In the following few paragraphs, it can be noted that the processed food market for India is vast and the amount of scope that retail chains would be exposed to is phenomenal taking into consideration the demographics and raise in standards of living. Retailers could throng the market with all these processed and packaged foods with their private labels.
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46

With the emergence of the big private corporates, NGOs (Non-Government Organizations) and Government organizations into the food processing scene, India is making big in-roads into the Food Processing Industry. These corporates and NGOs have reached out to the farmers and provided them with timely advice and help in the up gradation of farm practices with valuable inputs on various areas of farming from sowing to harvesting which includes quality seed procurement, manures, fertilizers and pesticides etc. Some of the successful models are that of ITCs e-choupal a model that helps the soybean farmers in contract producing for ITC for its commodity trading business. The PEPSI experimenting with Punjab farmers in growing the right quality tomato for its tomato purees and pastes. Some of the leading food retail chains working with farmers for contract growing greens for supply to their retail outlets etc etc. These successful models are being replicated with required changes all over the country and the food industry is getting integrated more strongly. India has also seen a flurry of food chain majors like McDonalds, Pizza Hut and Kentucky Fried Chicken finding their place among the Indian consumers. The trend still follows for food chains in India to spread to almost all cities and towns. These advancements have revolutionized the integration of the Indian Food Industry and has played a vital role in solving, to a large extent, major supply chain issues that prevailed. The trend is that these successful institutional intervention models be replicated and spread in all segments of the food industry far and wide through the country that benefit all the incumbents of the chain evolve. This finally helps the retailer as his supply chain becomes much leaner and vertically integrated. He is in a position to offer a wide variety and highest degree of convenience to his customer.

ECONOMY Economic growth at over 5.5% over the last eight years, forex reserves of over $100 billions and a stable government has helped India to look more progressively towards future. The economic development was largely attributed to its dominance in the Information Technology Sector in the global market place and its large English speaking population that made it the ideal choice for back office operations for MNCs world over. The manufacturing sector also provided its might to the economic development by going global hitherto restricting to export of raw materials or intermediaries that has not graduated to supply of end product be it Pharmaceuticals or Consumer Vehicles. All this has translated in
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higher income levels and more surpluses for the middle class segment that is getting ploughed into the retail sector; again fueling the economy to higher levels. The last five years have seen the PPP of average Indian middle class (over 300 millions) go up several times unleashing the power of purchasing. The retail sector was the greatest beneficiary. The need for a shopping experience combined with the convenience of shopping for the upwardly mobile middle class has been on the major factors for retail boom in India.

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THE INFORMED CONSUMER Over the years, the increasing literacy in the Country and the exposure to developed nations via satellite television or by way of the overseas work experiences, the consumer awareness has increased on the quality and the price of the products/services that is expected. Today more and more consumers are vocal on the quality of the products/services that they expect from the market. This awareness has made the consumer seek more and more reliable sources for purchases and hence the logical shift to purchases from the organized retail chains that has a corporate background and where the accountability is more pronounced. The consumer also seeks to purchase from a place where his/her feedback is more valued. EVOLUTION OF ORGANIZED RETAILING Retailing, one of the largest sectors in the global economy, is going through a transition phase in India. For a long time, the corner grocery store was the only choice available to the consumer, especially in the urban areas. This is slowly giving way to international formats of retailing. The traditional food and grocery segment has seen the emergence of supermarkets/grocery chains, convenience stores and fast-food chains. The traditional grocers, by introducing self-service formats as well as value-added services such as credit and home delivery, have tried to redefine themselves. However, the boom in retailing has been confined primarily to the urban markets in the country. Even there, large chunks are yet to feel the impact of organized retailing. There are two primary reasons for this. First, the modern retailer is yet to feel the saturation' effect in the urban market and has, therefore, probably not looked at the other markets as seriously. Second, the modern retailing trend, despite its cost-effectiveness, has come to be identified with lifestyles. In order to appeal to all classes of the society, retail stores would have to identify with different lifestyles. In a sense, this trend is already visible with the emergence of stores with an essentially `value for money' image. The attractiveness of the other stores actually appeals to the existing affluent class as well as those who aspire to be part of this class. Hence, one can assume that the retailing revolution is emerging along the lines of the economic evolution of society. It was only in the year 2000 that the economists put a figure to it: Rs. 400,000 crore (1 crore = 10 million) which is expected to develop to around Rs. 800,000 crore by the year 2005 an annual increase of 20 per cent. Retailing in India is unorganized with poor supply chain management perspective. According to a recent survey by some of the retail consulting
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bodies, an overwhelming proportion of the Rs. 400,000 crore retail market is UNORGANISED. In fact, only a Rs. 20,000 crore segment of the market is organized. As much as 96 per cent of the 5 million-plus outlets are smaller than 500 square feet area. This means that India per capita retailing space is about 2 square feet (compared to 16 square feet in the United States). India's per capita retailing space is thus the lowest in the world (source: KSA Technopak (I) Pvt Ltd, the India operation of the US-based Kurt Salmon Associates). 9 Currently the retail landscape is filled with Supermarket chains with over 1000 outlets all over the country to increase to around 5000 by the 2005. The success of a couple of Hypermarts indicate the evolution of hypermarkets in the country prominent among them are Giant, Metro, Big Bazaar models. While the average bill value at a supermarket is in the range of Rs.300 per bill, the average bill amount at a Hypermarket is in the range of Rs.7501000, indicating that the model is in tune with the global models where the average spend is increasing with the shopping experience.

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METHODE OF DATA COLLECTION QUESTIONNAIRE METHODE A Questionnaire consist of a number questions printed or typed in a definite order on a form or set of forms . the respondents have to answer the question on there own . quit often the questionnaire is considered as the the heart of a survey operation . hence, it should be very carefully cons traced . if it is not properly setup, then the the survey is bound of fail. This fact requires us to study the aspects of a questionnaire viz, the general form, question sequence and question formation and wording. CLOSED- ENDED QUESTIONS such question are also called fixed alternative question . they refer to those question in which the respndend are given alimited number of alternative respondends for which she or he has to selected the on that most closlly matches his opinion or attitude. OPEN -ENDED QUESTONS Sometime these questions are called free answer question . as the name implies, this refer to a question that has no fixed alternative to which the the answer must conform . the responders answers in his/ her own words.

SPOURCE OF DATA COLLECTION PRIMARY DATA ; the primary required data was collected from interviewing the hawkers , kiranas shopkeeper and to the consumer and customer both. Thus for collecting the information for my study I also got field the questionnaire from them and approaches directly to the outlets. Interviewing the customers
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Interviewing the kiranas shopkeepers SECONDERY DETA;- Secondary data means data that are already available I.e. it refers to the data which have already being closed and analysed by someone else . the secondary data collection for my research report I collected the information form the trade journals , newspaper , magazines and books.

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DATA ANALYSIS

DATA COLLECTION FROM CONSUMERS 1. Awareness level of the consumers A. YES - 75% B. NO - 25%

Interpretation: Out of 100 respondents, 75% of consumers said that they are aware about the organized retail outlets and around 25% of consumers said that they dont know about the organized retail outlets.

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2- SOURCE OF INFORMATION FOR THE ORGANIGED RETAIL OUTLETS. A- Through friends 46% B- Newspaper 19% C- TV adds 28% D- Others 7%

Interpretation: Out of 100 respondents, 46% of consumers said that they came to know about organized retail outlets from the friends, 19% consumers said from newspaper, 28% of consumers said from TV ads and 7% other.

3- CONSUMER VISIT TO THE ORGANIZED RETAIL SHOPPING MALLS

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A YES 78% B - NO 22%

Interpretation: Out of 100 respondents, 78% of consumers said that they visit the organized retail outlets and 22% of consumers said they dont.

4- CONSUMER FREQUENCY TO VISIT ORGANIZED RETAIL OUTLETS

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A- DAILY 8% B- WEEKLY15% C- MONTHELY 30% D- OFENLEY 45% E- NEVER 2%

Interpretation: Out of 100 respondents, 8% of consumers said that they visit the organized retail outlets, 15% said weekly , 30% of consumers said monthly, 45% consumers said they often visit and 2% of consumers said they never visit.

5- REASONS TO VISIT ORGANIZED RETAIL OUTLET A- QALITY PRODUCTS 15%

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B- RESANABLE PRICE 22% C- OFFES & DISCOUNTS 13% D- VAIRITY OF PRODUCTS 10% E- ENVIRONMENTS 5% F- ABOVE ALL 35%

Interpretation: Out of 100 respondents, 15% of consumers said that they visit the organized retail outlets for quality products, 22% of consumers said for reasonable prise, 13% said offer and discounts, 10% of consumers said variety of products, 5% said because of environment and 35% of consumers said above all.

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6- INTERST OF THE CONSUMERS TO PURCHAS FROM RETAIL

OUTLET
A- YES 75% B- NO -25%

Interpretation: Out of 100 respondts, 75% of consumers said that they shop from the organized retail outlets and around 25% of consumers said they dont shop from organized retail outlet.

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7- RESAONS FOR PURCHASING FMCG GOODS FORM RETAIL

OUTLET
A- QUALITY PRODUCTS 13% B- VARITIY OF PRODUCTS 17% C- DISCOUNTS & OFFERS 20% D- BETTER SERVICES 10% E- ABOVE ALL 40%

Interpretation: Out of 100 respondents, 13% of consumer said that they purchase from organized retail outlet because of quality of products, 17% of consumers said because of variety if products, 20% said because discount ant offers, 10% of consumers said better service and 40% of consumers said all above.

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8- CONSUMERS PREFERANCES TO PURCHSAE FMCG PRODUCTS FOR OTHER RETAIL OUTLET A- YES 78% B- NO 22%

Interpretation: Out of 100 respondents, 78% of consumers said that they share their experience with other retail outlets i.e. they have a good experience of purchasing from retail outlets and 22% of consumers said that they dont.

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DATA COLLECTION FROM KIRANAS RETAILRS

1-PURCHASING AT ORGANIZED RETAIL STORE FROM LAST THREE YEARS A- YES 65% B- NO 25% C- CANT SAY 10%

Interpretation: Out of 100 respondents, 65% of kirana retailer say that last three year consumer visit organized retail,25% say that no & 10% cant say.

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2-REMARKABLE CHANGE NOTISED CHANGE IN THE ATTIUDE A- YES 60% B- NO 30% C- CANT SAY 10%

INTERPRETATION: 60% of retailer say that consumer attitude have

change,30% say that no & 10% cant say about change of attitude.

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3-CHAGE NOTICED IN HOME DILIVERY OF PRODUCT AND SERVICES A- YES 67% B- NO 23% C- CANT SAY 10%

Interpretation: unorganized retailer says that customer demand of home delivery has increase. But some of them say that it not increase.

4-REMARKABLE DIFFERENTS NOTICED IN PAYMENTS SYSTEM

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A- YES 80% B- NO 12% C- CANT SAY 8%

Interpretation: On 100 respondent ,80%say that payments system is differ of organized & unorganized,10% say that no big difference and 8% cant say.

5-CHANGE NOTICED IN VAIRITY AND BRANDS OF PRODUCT

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A- YES 70% B- NO 22% C- CANT SAY 8%

Interpretation: 70% of kirana business man say that various change in verity and brand of product in organized and unorganized retail, 22% no variation & 8% cant say.

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6- COMPARISION OF KIRANA BUSINESS AND ORGANIGED RETAIL BUSINESS A-MAJOR DIFFERENCE 45% B DIFFEERENCE 30% C SAME 15% D -NO DIFFERENCE 10%

Interpretation: On 100 respondent, 45% of unorganized retailer say that there are major difference between both, 30% some difference,15% says same & 10% no difference.

FINDINGS
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 Maximum Indian customers are aware about organized retail sector. Consumers share there experience with other retail outlet. Due to boom of organized retail sector Indian consumer buying behaviour have change.

Organized retail sector dominate the unorganized retail sector very fast.

Organized retail sector using various promotional strategies where un organized retail sector have lack.

Due to better atmosphere of organized retail people are prefer to go there.

Organized retail sector follow the better merchandise whether unorganized retail sector have lack of better merchandise

Reason to visit organized retail is quality of product, reasonable price, offer & discounts, variety of product.

Day by day the area of unorganized retail sector is increasing and area of unorganized retail sector is digressing

Unorganized retailer accepts that there are major differences between org & un organized retail sector. Like as environments, size, technology etc.

Suggestion & Recommendations

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1. Unorganized retailer need to think about retail outlets not just about a format as understanding the retail outlets dynamics hold the key to such a business. 2. Retailors would have to create new delivery formats that can cater to the huge mass of consumers. 3. It is also observed that in the changing retailing environment, understanding the needs of customer is critical to success in retailing. 4. Aggregate level picture may be misleading, as it averages the beats and the valleys. 5. Hence, retailors have to change their strategy for increasing their business. 6. Retailer of unorganized FMCG retail should create that kind of ambiance which customer wants. 7. Retailers must understand what value shopper is looking for and how the retailers can deliver that desired value to the customer.

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CONCLUSION

Impact on Unorganized Retailers

Unorganized retailers in the respect of organized retailers experienced a decline in their volume of business and profit in the initial year after the entry of large organized retailers. Small retailers have been extending more credit to attract and retain customers. Most unorganized retailers are committed to remaning independent and barely 10% preference to become franchises of organized retailers. However, only 12% of organized retailers have access to institutional credit and 37% felt the need for better need access to commercial bank credit. There is competitive response from traditional retailors through improved business practices and technology up gradation.

Impact on Consumers
Consumers have definitely gained from organized retail on multiple counts. Overall consumer spending has increased with the entry of the organized retail. While all income groups saved through organized retail purchases, the survey lower income revealed that lower income consumer saved more. Thus, organized retail is relatively more beneficial to the less well- off consumers. Proximity is a major comparative advantage of unorganized outlets.

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Bibliography BOOKS
Shanghai N (2007), I have seen the future and it works, The Economic Times, Kolkata Edition, May 1,pp4.

Kakkar S.(2008),The future of Kirana store and implication for national Brands ,9th

Marketing and retail Conclave.

Vijayraghavan K.Ramasurya M.V.(2007),Mom $ pop happy letting a rich tenant take over.The Economic Time, February 5,pp4.

INTERNET
http://retailindustry.about.com/od/abouttheretailindustry/p/retail_industry.htm

http://www.plunkettresearch.com/Industries/Retailing/RetailingTrends/tabid/269/Def ault.aspx

PROWESS DATABASE (CMIE)

http://retailindustry.about.com/gi/dynamic/offsite.htm?zi=

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ANNEXURE-1 (Filled by consumers for organized retail outlets)

NAME AGE:
18-30, 30-40 , Male 40-50 ,

OCCUPTION.
50&Above Female

GENDER:

Q1: Are you aware about the organized retail outlet (shopping malls)? (a) YES (b) NO

Q2: How do you come to know about the organized retail outlets? (a) Friends (c) TV adds Q3: Have you ever visit the retail shop? (a) YES Q4: When do you visit the shopping malls? (a) Daily ( c) Monthly (e) Never Q5: Do you shop from the retail outlets? (a) YES (a) Quality ( c) Discount (e ) Above al Q7: Would you like to share your retail shop experiences with other retail shops?
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(b) Newspaper (d) other

(b) NO

(b)Weekly (d) Oftenly

(b) No (b) Variety (d) Better services

Q6: Why do you go for purchasing the daily use products (FMCG) from mall?

(a) YES

(b) NO

ANNEXURE-2 (Filled by consumers of unorganized retail outlet)

NAME. AGE: 18-30 , 30-40 , 40-50 , GENDER:

Male

OCCUPTION.
50 & Above Female

Q1: How long you are purchasing from the traditional unorganized outlets ( kirana store)? (a) Less than 3 years (b) Less than 4 years (c) Less than 5 years (d) More than 6 years Q2: How many times do you visit to make purchasing at unorganized outlets? (a) Quarterly ( c) Once in a week Q3: Have you seen the change in the unorganized retail? (a) Yes (b) No (c) Cant say (b) Monthly (d) Cant say

Q4: Have you saw the remarkable change notice in display of products from last three years? (a) Wider (b) Bigger (c) Small

Q5: Have you saw the remarkable change noticed in relationship management by consumer from last three years? (a) Yes (b) No (c) Cant say

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Q6: Have you saw the change noticed in home delivery of product and services from last three years? (a)Yes (b) No (c) Cant say

Q7: Have you saw the remarkable change noticed change in the attitude of the organized retailers from last three years? (a) Behaviour change ( c) After sales services (b) Greeting (d) Manner of explaining

THANK YOU..

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