Retail Sector

What is Retailing?

Retail means sale of goods in small quantities directly to consumers.

In other words “Retailing consists of the sale of goods or merchandise from a fixed
location, such as a department store, boutique or kiosk, or by post, in small or individual
lots for direct consumption by the purchaser.”

Industry overview

Retail Sector is the most booming sector in the Indian economy. Some of the biggest
players of the world such as Wal-mart are going to enter the industry soon. This sector
is more active and attractive from the last few years. Trade and retailing contribution to
GDP is about 10%. Modern form of retailing is also entered in India in the form of malls
and big shopping complexes. Also multiplex complexes have arrived which offers
shopping, entertainment and variety of other things at one place.

The Indian retail sector is now worth about $250bn (£140bn) a year, but it is heavily
underdeveloped. Well over 95% of the market is made up of small, uncomputerised
family-run stores. New opportunities are arising in the retail sector in India. Also new
emerging technologies are changing the old methods of retailing. The emergence of
retailing in India has more to do with the increased purchasing power of buyers,
especially post-liberalization, increase in product variety, and increase in economies of
scale, with the aid of modern supply and distributions solution.

In India retail sector is divided into two forms:

Organized sectors: Organized retailers are those who have the license to trade and
have been registered with sales tax, income tax, etc. and follow all the rules legally. For
example hypermarkets, big retail shops, etc. Its share in the market is about 8%.
Unorganized sectors: Unorganized retailers refer to the traditional system of retailing.
For example kirana-shops, hand cart, local general stores, etc
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Top players in Indian retail industry

• Pantaloon Retail (Big Bazaar)

• Shoppers' Stop
• Lifestyle
• Crossword
• Globus
• Piramals ( Pyramid & Crosswords)
• Ebony Retail Holdings Ltd.
• Reliance Retail
• Aditya Birla Retail
• Bharti Retail

Retailing formats in India

Malls : These are the largest form of organized retailing. It is being built in cities with a
huge space of about 60000 sq ft to 700000 sq ft and above. Different items shops are
opened so we can buy from a single roof.

Discount Stores: As the name suggests, discount stores or factory outlets, offer
discounts on the MRP through selling in bulk reaching economies of scale or excess
stock left over at the season. The product category can range from a variety of
perishable/ non perishable goods.

Departmental stores: These types of stores are big in size and you can buy everything
from one store. For example toys, cloth, groceries, electronics, etc

Specialty stores: Specialty stores sell one specific category of items. Within a specialty
store, there may be more specialized departments. For example, in an electronics store,
you may find departments for televisions, cameras, music, etc.

Supermarkets/hypermarkets: Large self service built with a space of 1000 sq ft to

5000 sq ft .these stores located near the residential area. These stores generally
focused on food items and grocery.
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Present Indian scenario in retail sector.

 India is the country having the most unorganized retail market.

 Unorganized market: Rs. 583,000 crores
 Organized market: Rs.5, 000 crores.
 Over 4,000 new modern Outlets in the last 3 years
 Over 5,000,000 sq. ft. of mall space under development.
 The top 3 modern retailers control over 750,000 sq. ft. of retail space.
 Over 400,000 shoppers walk through their doors every week.
 Around 12 millions small or big shops around the country employing 3.95 mn.
 Biggest player in India is Pantaloon Retail India Limited.

Wal- Mart in India

The world’s largest retailer Wal-Mart has entered India in partnership with Bharti airtel.
Bharti Wal-Mart Private, except to say that each company holds a 50% stake. The entry
of Wal-Mart in India is good because it will lessen 2%-3% prices of the branded goods
because of its large network. But on the other hand it sometimes may cause harm to the
profits of Indian unorganized sector in retailing. Wal-Mart is opening some 15-18 cash
and carry stores in India in 3 years. It’s opened its first cash and carry store in Amritsar
in India where products are sold to shopkeepers not directly to consumer.

Subhiksha closure:

Subhiksha one of the big giant in the Indian retail industry which has grown at a
breakneck speed. But because it has difficulty in maintaining the day to day expenses
its closing its store all over India. Also one of the reasons behind closure is that its 3
directors have resigned recently makes a large impact. The chairman said that the
closure of Subhiksha is because of economic recession but its not true many other
problems also arises such as non-payment of salaries to staff.
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Drivers of Retail Industry

 The Demography Dynamics: Approximately 60 per cent of Indian population

below 30 years of age.
 Double Incomes: Increasing instances of Double Incomes in most families
coupled with the rise in spending power.
 Plastic Revolution: Increasing use of credit cards for categories relating to
Apparel, Consumer Durable Goods, Food and Grocery etc.
 Increased urbanization has led to higher customer density areas thus enabling
retailers to use lesser number of stores to target the same number of customers.

Future Indian scenario in retail sector:

 The retail sector is expected to grow 40% to $427 billion by 2011.

 A KPMG report says that the organized retail would grow at a higher rate than
GDP in the next five years.
 By 2017, organized retail will be 15-20% of the total retail market.
 Total retail market $ 800-billion by 2017.
 At least 2.5 millions jobs are created in the next 5 years because of retail
industry.
 Big retail giants enter the market like Wal-mart, etc which explores the retail
sector.
 Property prices are going too high because of seeing boom in organized retail
sector.
 Wal-Mart with huge plans for India. Moving a senior official from its headquarters
in Bentonville, Arkansas, to head its market research and business development
functions pertaining to its retail plans in India
 New York-based high-end fashion retailer Saks Fifth Avenue has tied up with
realty major DLF Properties to set up shop in a mall in New Delhi.
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Conclusion:

If the retail sector maintains its growth in the same way than this sector plays an
important role in removing the unemployment problem of our country. As big players
such as Wal-Mart is entering in India it’s just like a boon for the Indian people who will
benefit from these giant stores. Its growth may lead the development of others sector as
well. Management colleges granting a specialize degree in retail business have come
up by seeing the growth of this sector.