INDIAN RETAIL INDUSTRY ­ insights 

INDIA – A Vibrant Economy & Resplendent Market

· 4 th Largest economy in PPP terms after USA, China & Japan

· To be the 3 rd largest economy in terms of GDP in next 5 years.
· 2 nd fastest growing economy in the world.
· The US $ 580 billion economy grew 8.2 percent in the year 03-04
· Among top 10 FDI destinations
· Stable Government with 2 nd stage reforms in place
· Growing Corporate Ethics (Labour laws, Child Labour regulations,
environmental protection lobby, intellectual and property rights, social
responsibility).
· Major tax reforms including implementation of VAT.
· US $ 130 billion investment plans in infrastructure in next 5 years
· 2 nd Second most attractive developing market, ahead of China
· 5th among the 30 emerging markets for new retailers to enter

A country with the largest young population in the world- over 867 million people
below 45 years of age!
More English speaking people in India than of in the whole of Europe
300 million odd middle class - the Real consumers - is catching the attention of
the world
With over 600 million effective consumers by 2010 India to emerge as one of the
largest consumer markets of the world by 2010.

Retailing in India

Total Consumer Spend in the Year 03-04 – INR 9300 billion ( USD 375 billion)
growing over 5% annually
Retail sales – 55% at INR 280 billion (USD 205 billion)
Organised Retail – Only 3% but growing at 30%
Organised retail to cross INR 1000 billion mark by 2010
INR 200 billion investment in the pipeline
Top 6 cities account for 66% of total organized retailing.
Overwhelming acceptance of modern retail formats.

Fashion drives organized retail.

2004 figures :

Organised retail : Rs. 280 billion

Clothing, Textiles & Fashion accessories: 39%
Footwear 9%
Jwellery & watches 7%
Mobile hand sets & accessories 3%
Health & Beauty (including services) 2%
Food & Grocery 18%
Durables 13%
Books, Music & Gifts 3%
Home 3%
Pharma 2%
Entertainment 1%

2005 Projection for Organised Retail – Rs. 350 billion

Indian Retail – Where it stands

Five Reasons why Indian Organized Retail is at the brink of Revolution :

> Scalable and Profitable Retail Models are well established for most of the
categories
> Rapid Evolution of New-age Young Indian Consumers
> Retail Space is no more a constraint for growth
> Partnering among Brands, retailers, franchisees, investors and malls
> India is on the radar of Global Retailers Suppliers

Looking Ahead
Many strong regional and national players emerging across formats and product
categories Most of these players are now geared to expand far more rapidly than
the initial years of starting up Most have regained / improved profitability after
going through their respective learning curves

Malls in India
· A decade ago – not a single mall
· A year ago – less than half a dozen
· Today – 40 malls
· 2 years from now – 300 malls

INDIA RETAIL BY 2006-07

50 million sq ft of quality space under development

7 major cities to account for 41 million sq ft development
300 malls, shopping centres and multiplexes under construction
To open 35 hypermarkets, 325 large department stores, 1500 supermarkets and
over 10,000 new outlets
posted by Shailesh Naik @ 9:26 PM     
1 Comments:

• At 6:09 PM, Kannan K said…
 The article is very informative.Thanks. It would be higly appreciated if 
articles on apparel ­brandwise sales,segmentwise, yearwise, is given 
later.

thanks,

with regards,

Kannan K 
kannanpran@yahoo.co.in

  

SATURDAY, FEBRUARY 25, 2006

5 Principles to Cement Customer Trust 

Have you ever second­guessed yourself, on purpose? I imagine all of us have 
from time to time. Sometimes it is about a decision we have made or those we 
fail to make. Frequently, in our minds, we hold ourselves accountable. There are 
times, I am sure, that every single one of us have said, "If I only had it to do all 
over again", I would have done such and such differently. 

But life does not allow us that option. I believe that everything happens for a 
reason to allow us to grow and become the person we are to be, with our faults 
and assets, failures as well as accomplishments. We are here "on purpose!" 

My purpose in my business is to encourage organizations and people to  
find a way to trust again. "Trust is probably the most basic human value," says 
Fred Rogers,

Nothing is harder to regain, than lost trust. 

I believe people do business with people they trust. I believe people do business 
with people who are knowledgeable, efficient and will deliver what they promise. 
As the holiday season approaches, I am already hearing retailers questioning 
what type of season it will be. The downfall of large corporations looms large and 
the stock market is the fastest roller coaster ride I have ever seen. And even 
Martha Stewart is starting to look a little tarnished. So the question is, who will 
the consumer plan to spend their carefully allocated holiday dollars with this year. 

I believe it will be with those businesses that have earned the customers trust. 

How did those companies develop and cement that trust? They promised and  
delivered the following principles of building and maintaining trust. 

T ­ Truth

Trust and solid relationships are built on telling the truth. Companies must 
maintain this principle both with internal and external customers. It is imperative 
that this value is represented in everything a company does. We have seen how 
the lack of solid ethics can crumble even the largest of companies. 

R ­ Responsibility

Trust is built when everyone within an organization realizes what their 
responsibilities are and that they are held accountable for them. Choose to 
schedule reviews quarterly for every member of the company to make sure they 
are aware of their responsibilities. Take ownership of mistakes and be diligent to 
find ways to make corrections. 

U ­ Unselfishness

Trust is built when employees give of their time and talent in the workplace and 
do it, unselfishly. Customers appreciate the employee who goes out of their way 
to satisfy the customer. Customers don't appreciate hearing how badly the 
employee wants to go home, or how they didn't get a break, or how awful their 
schedule is. 

S ­ Security

Trust is built on a feeling of security. Good lighting in the parking lot and store 
entrance, fitting rooms with doors that lock, employees that handle ringing up a 
sale with accuracy, and alarm systems that are visible are all ways to make the 
customer feel safe in your place of business. Employees want to feel a sense of 
job security and that they are appreciated for the job they do. 

T ­ Teamwork

Trust is built when everyone within the organization feels a sense of ownership. 
How well do your employees work together? Are they willing to go out of their 
way to help each other out? Do the managers roll up their sleeves to help when 
the workload is overwhelming? Is there a reward system in place that encourages 
employees to want to excel? Most importantly, are there cheerleaders within the 
organization to keep the momentum going when times are tough? 

We are at a time when gaining a customers' trust is critical. It is a daily process, 
on purpose. It is a time to maximize potential, ethically and to deal with conflict 
and problems, with credibility. 

It is a time not to look back but look forward. It is a time not to say, "if only", but to 
daily say, "I am proud of what we did". And we achieved it, on purpose! 

About the Author
Anne M. Obarski is the "Eye on Retail Performance". She is an author, 
professional speaker, retail consultant and Executive Director of Merchandise 
Concepts. Anne works with companies who are performance, profit and people 
focused and she helps leaders see their businesses through their customers’ 
eyes. Anne’s mystery shoppers have secretly "snooped" over 2000 stores 
searching for excellence in customer service. To reach Anne or learn more, visit 
www.merchandiseconcepts.com. 
 AN IMAGES SPECIAL REPORT

"The success of a retail chain begins & ends with

quality committed people, both at the back & front
office, and not just with the commonly used terms of
'Location Product Pricing-Promotion'. In fact, the last
three terms solely depend on People, while Location is
a one-time decision."
Rakesh Biyani, Director, Pantaloon Retail India Ltd.

WARNING - SPEEDBREAKER AHEAD!

The first potholes are already up in retailing's action-packed landscape
and subtle caution signs against mindless expansion are in evidence.
The catch? Workforce is in terribly short supply and one of the most
labour-intensive industries in the world is being told that personnel-
supply in India doesn't look like getting close to matching demand in
the immediate future. Hold your horses, while we locate the
classrooms...

Retailing - the most promoted and hyped industrial revolution since

the Information Technology hysteria, and the second largest employer
in India after agriculture. By no means is it a new profession; in fact,
its genesis can be traced back to the time man invented money and
financial transactions replaced the barter system of purchase. Now,
what was earlier unorganised and simple in logistics is extremely
organised, highly automated and a complex network of entities within
a logistical framework.

There is of course no contesting that retailing is one

of the fastest growing industries in the world - it's the
second largest industry in the US both in number of
establishments and number of employees; more than
22 million Americans and over $3 trillion in annual
retail sales make it a highly opportunity-ridden sector.
Indian retailing, though still in early days, already
displays an interesting blend of promoters. From
corporate giants like the RPG group (Foodworld,
Health & Glow, Music World), the Rahejas (Shoppers Stop and Globus),
the Tatas (Westside chain of stores), the Piramals (Crossroads) in the
big box formats to long standing operators in the South (Viveks,
Nilgiris, Saravanna, Subhiksha, Margin Free Markets, the interest
groups are as diverse as the retail categories themselves.

PROJECTIONS

It is estimated that six to eight per cent of the Indian work force is
currently employed in retailing. If and when Retailing is opened up to
FDI, recruitment is expected to gather momentum - employment in
the sector to go up to as high as 20 per cent of the work force.

Market gurus across organisations agree on one thing; in the next five
years, Retailing will be unmatched in terms of its potential for
employment generation, both in numbers and quality of
professionalism. As organised retailing develops into a full-fledged
industry, it will require a more sophisticated set of store staff and new,
mature managerial level requirements.

Going by KSA Technopak's guesstimate of the organised retail sector

employing in excess of 250,000 individuals directly and perhaps 8-10
times as many indirectly in the supply chain by the year 2005, this
sector promises to be hiring professionals by truckloads in the near
future.

In the course of ascertaining authoritative figures on employment

projections, IMAGES discovered that the figure could lie anywhere
between 50,000 in organised formats a year to as many as a million
jobs in the industry over the next five years, including those in the
unorganised sector. Jobs in the organised sector include those at Malls,
Discount Formats, Stop-Over Formats such as those within petrol
bunks, departmental stores, brand retail chains, specialty retailers,
hypermarkets, supermarkets in a cross section of products and
services - fashion, food, grocery, consumer durables, FMCG, lifestyle
goods etc. Newer formats like the cellular/mobile shops, Retailing by IT
voice and video applications, etc. will be dominant in offering jobs in
retail - especially front-end sales and customer service jobs.

Assuming that for every Rs.10 crore turnover, there would be about
75-100 jobs created, and going by the projection of Rs.35,000 crore
retail turnover by the year 2005, about three lakh professionals will
step into the industry. While jobs at the shop floor level will be pretty
much evenly distributed across product categories, the majority of
managerial jobs - about 60 per cent -are expected to be in the area of
Fashion/ Lifestyle, followed by food/ groceries at 20-25 per cent
followed by Consumer Durable Retail and others.

CURRENT SCENARIO

As for now, managerial positions are being taken up by MBAs. A food

supermart like FoodWorld prefers graduates from the Institute of Rural
Management at Anand. A marketing MBA from a reputed institute is
the next best choice. As of now, designers are also doubling up as
visual merchandisers but a specialisation comes handy. "Shoppers'
 Stop recruits fashion designers who are inclined to get into retail,"
says Brigitta George, customer care associate and general
manager, human resources, at the group.

While at an executive level, larger retailers like Westside and

Shoppers' Stop have been recruiting MBAs from top management
institutes, at the shop floor level, they have been forced to
institute in-house training programmes. Stumped by scarce human
resource, others like the RPG Group, Ebony and The Home Stores have
turned academicians and commenced with their own retail institutes
to develop professionals, primarily for their individual requirements.

In an overall context, fashion has driven the retail boom in India,

except in the South where organised formats have come up mainly in
the food & grocery category.Explaining why fashion institutes such as
NIFT and the Pearl Academy of Fashion have been inspired to develop
retail-based curriculae in their course offering.Happy projections aside,
as it stands now, Human Resource availability is fast replacing Real
Estate as the biggest deterrent facing Indian retailers, and the larger
retailers are finding out that real crunch is in finding the right people
to run the show.

This article is aimed at gauging the level of professional competence

in the industry, while also putting a benchmark on the employment
prospects and academic developments to further retail education. In
the course of discussions with leading retailers, academicians and
independent consultants, IMAGES also identified how the retail sector,
which effectively started evolving since the late 80's, has begun to
spawn a generation of dynamic professionals. On the one hand, it has
created an environment that provides an alternative mode of
employment that is challenging as well as paying, but on the other,
retail promoters have failed to participate in the development of
specialised human resource, except for themselves. The emerging
demand-supply gap best exemplifies this - India Retail Inc. is sitting on
a HR Pandora's Box waiting to explode. The quality of workforce is
today considered the top determinant of retail success, but the
relatively low attention to people skills is already evident amongst the
organised retail companies. At two per cent share of retailing in India,
organised retail is way below 80 per cent in USA, 40 per cent in
Thailand and 20 per cent in China. But, already organised Indian
retailing sector is facing a crunch for skilled manpower. Prompting
retail pundits to assert that in the present situation, the best education
can be had on-the job, for one to begin as a shop floor assistant and
work up the ladder.

"The generation of sufficient knowledgeable manpower is a challenge

facing most Indian retailers today," nods Raghu Pillai, President &
Chief Executive, Retail Sector - RPG Enterprises.At other retailers like
Arcus, since no readymade retail professionals are available, people
with a service mindset are being recruited and then trained in-house
to be consumer focussed."While brand-led chains, department stores
and malls have emerged over the last five years, services such as
providing quality manpower, specialised staff for setting up new stores
and changes in retailing and building retail in a larger way, has not
kept pace," admits Bijou Kurien, COO, Titan Industries Ltd.

SKILL SETS: BUYING & MERCHANDSING

Merchandise Management is one of the most important functions in
Retail. While the buying function includes interaction with vendors,
creating promotion and store display plans, Merchandisers are
responsible for developing plans plus inventory management.
SKILL SET REQUIRED
Product exploration through catalogues, periodicals, directories etc.,
Trends analysis, Inventory Analysis, Quality analysis, Range Planning,
Assortment Planning, Stock Planning etc.
EXISTING GAP
The existing gap is to a great extent because of the circumstance in
which buyers and merchandisers work. Constraints include :
Information Systems: Merchandise management is an information
intensive job. Skills such as Trends analysis, Assortment Analysis,
Inventory analysis can only be practiced if only the pool of data is
available to the Merchandiser. Such is not the case. While India might
be emerging as a leader in providing IT services, it is still far behind the
International Retailers in utilising IT services.
Communication Medium: Quick and efficient communication is
imperative for effectiveness in the highly dynamic Retail environment.
Once again coordination skills are lacking in Indian Managers, due to
lack of communication infrastructure. Information Sources:
Merchandisers and Managers do not have access to enough
information resources, which in turn affects their skill of identifying
vendors and suppliers.
SOLUTION
Training / Workshops for Statistical analysis skills, Trend Analysis,
Planning Techniques, Assortment, Range and Inventory, Negotiation
skills, Coordination Skills, Infrastructure Development, IT systems,
Information Sources, Communication Networks

Sanjiv Goenka, Vice Chairman, RPG Enterprises hammers in the point,

"The success of India's retail revolution will depend largely on skilled
people with specialised training. Only they can provide the much-
needed competitive advantage & bring about professionalism to
retailing,".

PROBLEMS - MINDSETS

Human Resource in Retail is in shape of a vicious cycle. And it begins

with mindsets. Typically, Indians look down upon jobs in retailing as
menial and low-paid, and meant for those with no particular skills or
education. This mindblock puts a damper even before one can begin.
And there is a reason for this - retailing cuts across products, income
groups and regions. A miniscule cigarette vendor is also a retailer as is
Shoppers' Stop in Mumbai. And unlike engineering, law or medicine,
getting into retail doesn't warrant a degree or institutional recognition.

"Yes, as of now retailing is considered a low end, low skilled and low
paid job," says M P Chandran, CEO of The Retail Academy in
Ahmedabad. "But, once the awareness on the potential for both
wealth and employment generation of this industry spreads, there
would be a clamour among the better talents to join the industry. This
would also help in changing the power equation between the
manufacturer and the retailer."

With the prevailing focus on retail hard-sell to consumers, the entire

exercise of selling the Retail proposition to those who are to finally do
the selling has been on a back seat. Ideally, the proposition should
have been simultaneously promoted on both sides of the counter.

"For India Plc to be competitive on the global scale, old

misconceptions will have to be eradicated. Once the industry starts to
make positive statements about the profession of retailing and seek to
recruit, train and reward good quality staff, the old attitudes will be
removed," asserts Patrick Casey, Regional Marketing & Business
Development Manager (South Asia and the Gulf) of the UK-based City
& Guilds International.

FACULTY

Hard as well-equipped retail professionals are to find, academicians

are apparently even harder to locate.
"Education is a distant dream. Where is the faculty?" asks Arif Sheikh,
President of THS which in April launched the Indian Institute of Retail
(IIR) in New Delhi. The company's failure to put together a qualified
and knowledgeable faculty in fact contributed to the IIR launch being
put off several times over the past 18 months. "Even if one talks of
retail practitioners in teaching mode, most have come up the
corporate ladder and may not be technically qualified and conversant
with modern retail systems and terminology to educate freshers," he
points out.

Gauri Kumar, Director General of NIFT, agrees, "In today's cut throat
competition, a strong teaching crew is hard to source. The reason
being, in financial benefits and exposure, most see greater advantages
in being part of operations rather than academics." This then means a
classic Catch 22 - the absence of faculty retarding the transmission of
education and skills, which then restricts retailers' sources of
professionals for the business. This is directly responsible for the high
turnover rates in Indian retailing - and poaching on each other's staff is
rampant. Sheikh paints a grim picture, "The real crunch will be when
the foreign retailers come in. The Walmarts and Carrefours will not
compromise on HR. Either they will import manpower or poach senior
people from local retailers, with superior pay packets and rewards.
What then?"

At it stands now, if a retailer were to recruit personnel from non-retail

backgrounds, the qualifications being asked for are:
Entry Level: Standard XII/ Graduate. Good communication skills.
Excellent Customer orientation a must. A Diploma in retail
management is an added advantage. Remuneration range: Rs.30,000
to Rs.1,00,000 p.a.
Mid Level: MBA or Graduates with 5-8 years in sales/marketing in
retail/FMCG/Consumer Durables/Hospitality. Good communication
skills. Excellent Customer orientation a must. Remuneration range:
Rs.2,00,000 to Rs.4,00,000 p.a.
Senior Level: MBA with 8-12 years of retail experience of which 4-5
years would have been in charge of 5-6 stores or as Regional Manager
managing regional profit centres. Remuneration range : Rs 5,00,000
p.a. and upwards

THE HEADHUNTERS INC.

Currently, most recruitment is based either on an applicant's

experience and area of expertise or graduates and postgraduates with
specialisations in business administration/ management are also
considered. However, key players in the retail industry hint at an
increasing need to employ those with a specialisation degree in the
subject.

SKILL SETS: CUSTOMER SERVICE

Indian culture promotes hospitality and service. Customer Service is an
area which can emerge as a significant area of specialisation for the
Indian Market.

SKILL SET REQUIRED

Customer Service is an area which essentially requires a few basic
skills such as Cash Management, Product Handling, Product Knowledge
and Communication Skills.
EXISTING GAP
The biggest gap that exists today in Customer Service is professional
Communication Skills.
SOLUTION
Training on the Steps of Selling, Communication Skills Development,
Handling Customer Complaints, On the job training for Product
Knowledge.

SKILL SETS: STORE MANAGEMENT

Store managers look into the working of the various staff within the
store. This includes Customer Service Associates, Housekeeping,
Cashiers, Stock Inventory associates and floor managers. Depending
on the size of the store specialisation is undertaken. For eg. For a
single large store, there may be floor managers or department
managers who work under the store manager.

SKILL SET REQUIRED

The primary role of store managers is of a supervisory nature. Thus
People handling skills, administrative qualities and stock management
skills are the most important skills required by a store manager.
EXISTING GAP
Most store managers begin their careers as Sales Clerks or customer
service professionals. Since, typically there has been no professional
training given to these individuals, most managers are equipped only
with 'on the job' learning and therefore lack the broader understanding
of modern management principles.
SOLUTION
Classroom Training on issues like Inventory Management, Customer
Service and Administration can be of great use to these individuals.

"The understanding of retail management - what format to employ,

how to structure the chain, building brand personalities, setting up
back end logistics, manpower support, display and merchandising,
sophisticated retail tracking systems and building vendor relationships
are issues which are learnt over time rather than taught. There
certainly is an opportunity to set up a dedicated Retail management
programme or an Institute to cater to these needs," says Kurien.
SKILL SETS: INFORMATION TECHNOLOGY
Information Technology is an emerging area for the Retailers in India. It
is also one area where there are many existent lacunae. Effective
Supply Chain Management, Merchandise Planning and Analysis, Space
Planning are all dependent on Proper IT base, for their effectiveness.
SKILL SET REQUIRED
Supply Chain Management Techniques, Customer Relationship
Management Techniques, E- Commerce Transaction, In-depth
understanding of Business Process.
EXISTING GAP
The biggest gap in the IT department lies in their limited understanding
of business process and ineffective coordination with relevant
departments such as Logistics and Merchandising.
SOLUTION
Since every retailer's operations are distinct, therefore Customised
software training alongside extensive information on backroom
operations is a must.

Adds Chandran, "Even the self-help formats need to train their

personnel not only to ensure non-manipulative selling, but also
provide the right amount of guidance to the customer to buy
according to his needs."

In recent years, dedicated institutes offering professional certificates,

diplomas and degrees in retailing have been structured by NIFT, Pearl
Academy of Fashion, RPG Institute of Retail Management, The Retail
Academy in Ahmedabad, the Ebony Retail Academy, Amity Business
School, The CRM Foundation, Indian Institute of Retail in New Delhi and
the Welingkars School of Retail Management. MBA-territory manager,
Indian Institute of Management now sees the benefits of devising
customised education for retailing and the Lucknow centre is shortly to
roll out a Retail Management course for interested aspirants.

"Retail education is starting to become structured in India. The training

schools with the entrepreneurial spirit have already identified the need
for international benchmark standards for the industry. It will be
essential that the training and its delivery is based on Competence
Based systems of Education and Training (CBET), as opposed to more
academic forms of learning," says Casey at City & Guilds.

One of the first-movers in retail education is the RPG Institute of Retail

Management (RIRM), which draws its synergy from the four retail
formats of the RPG Group namely Foodworld, Music World, Health &
Glow and Giant. Started in July 1996 in Chennai, the Institute is
managed by the National Retail Education Trust, which functions as a
social entity. With its base in Chennai and extended to Bangalore,
Hyderabad and Pune, plans are underway to extend RIRM education to
others parts of the country. The Institure offers three kinds of
programmes to cater to different levels of retail competence.

SKILL SETS: SUPPLY CHAIN MANAGEMENT

Supply chain and Logistics is another area of extreme importance.
Supply Chain/ Logistics / distribution Managers are responsible for
ensuring that the right product reaches the right place at the right
time. They work in close coordination with the Merchandise
Department.
SKILL SET REQUIRED
Coordination with stores, warehouses and transportation companies.
EXISTING GAP
Proper Logistics models Ineffective coordination and scheduling skills
for managers.
SOLUTION
Developing Communication Infrastructure Training on International
Models of Logistics Management.

Tailored for frontline professionals is the Certificate of Retail

Education operations (CORE). This 3-month programme
provides training in customer service, merchandising and store
display, in-store management and product knowledge. On
successful completion, the candidates are awarded a Certificate and
could be absorbed in the RPG Group's retail stores. Foundation In
Retail Management (FIRM) covers operational areas at the supervisory
level. The curriculum encompasses all Retail Management Concepts
and is conducted in affiliation with Loyola Institute of Vocational
Education (LIVE), Chennai. This course prepares one to take on
supervisory and store level responsibilities. The 6-month programme is
backed by placement assistance to qualifying students.
RIRM also offers training solutions for corporates under Specialized
Training for the Accomplished Retailer (STAR). These are customised
programmes for individual retail business segments and are
characterised by substantial experiential learning on the job.
NIFT Delhi is now a forerunner in imparting professional knowledge for
retailing. In 1999, it commenced with one-year diploma in Fashion
Retail Management & Technology (FRMT). Freshers as well as 10 + 2
with a minimum of three-year experience in Apparel industry were
selected on the basis of personal interviews. With its course content of
Fashion marketing, Product knowledge, Developing retail mixes, Brand
management, Retailing distribution & organisation, Retail
advertisement & promotions, Visual merchandising, Retail service mix
& salesmanship, Retail technology & automation, Retail logistics &
supply chain management, etc., FRMT is aimed at covering the
complete service chain in a retail set-up.

Says D K Batra, Chairperson of the FMS department at NIFT Delhi,

"FRMT takes students through shop floor to back-end management.
Typically, most applicants want to get a degree and enter into backend
offices; we make sure even those destined to reach the managerial
positions, know what shop floor is all about." Currently, the course is
offered at Delhi, but as Batra says, it will reach other centres in the
near future. Meanwhile, New Delhi's Pearl Academy of Fashion (PAF) is
exploring avenues to spin-off its Retail Studies Department into a full-
fledged retail institute. A K G Nair, Executive Director, PAF says the
institute is seriously exploring avenues for establishing a retail
academy, which may have over 200 students in its various retail
management programmes by 2003. PAF is already offering two
prgrammes in Retail management - a 36 month undergraduate
programme in Fashion Retail Marketing Management (FRMM) and an
18-month post-graduate programme- Fashion Retail Management
(FRM) in association with LDT Nagold German Retail Institute.

SKILL SETS: VISUAL MERCHANDISING

Visual Merchandising is a highly creative and aesthetic field. For
effectiveness in Visual Merchandising, the employee requires an
aesthetic inclination and at the same time an eye for cost control.

SKILL SET REQUIRED

Key skills include window display techniques, product display
techniques, understanding of color harmony and various lighting
techniques.
EXISTING GAP
In all the above components, there is a huge gap in the skill set.
SOLUTION
Persistent Training in the areas of Store Design, Window Displays,
Space Productivity
 IMAGES RETAIL REPORT 2002
In April 2002, the Indian Institute of Retail
commenced with a Certificate in Retail
Management (CRM) programme with the aim
of "turning sellers into retailers". The institute
aim to provide theoretical and practical
training at retail stores and training on retail
management.

Says Arif Sheikh, "IIR is an initiative to create

awareness about the potential of retail
employment in India. We would like to
promote retailing as a science rather than an
act of selling." The sole purpose behind the institute is to create main
resource centre for all kinds of retail manpower for the industry. The
training programme involves a three-tier structure, which include a
three week intensive orientation programme, a three months
certificate in retail management and a one year retail training
programme. However, most of the students are expected to be
absorbed at the various THS retail ventures, including the flagship
home chain, Sabka Bazar and Super Sabka Bazar hypermarkets. Retail
chain Ebony academic venture had it genesis in a supply crunch. Over
the course of next two years, Ebony was to roll out stores across India
and it was already envisaging an HR crunch. An alliance with NIS
Sparta helped to structure a 3-month certificate course in retail sales
at the Ebony Retail Academy in the year 2000. With about 100 people
required for front office and back end management at each of the
Ebony stores, this course was aimed to prepare executive skills, floor
management and customer relationship pros. The 3-month module in
front office management spans areas such as economic and social
behavior, communication skills, retail selling, consumer behavior,
customer relations, personal development, sales promotional
activities, merchandising/ window display, retail marketing, planning
and time management.

On course completion, candidates are placed usually in front office

positions at the various Ebony outlets. So far, four certificate courses
have been run in Delhi and one in Ludhiana. The 125 'graduates' have
been absorbed in the various Ebony stores across the country, informs
H S Kohli, COO, Ebony Retail Holdings.

Leading business schools like the Indian Institute of Management are

also realising the need to develop retail specialisation courses with
their central theme of Marketing. For instance, the two-year Post
Graduate Diploma in Marketing programme at the Amity Business
School in NOIDA is now offering three specialisation streams under
Marketing Marketing & Sales, Customer Relationship Management and
Retail & Supply Chain Management. In the first semester of the second
year, a set of four traditional courses - Consumer Behavior, Product &
Brand Management, Services Marketing & Management, and
Advertising & Sales Promotion is offered to all the Marketing students
to choose any three from.

In the second semester, a package of four specialisation courses is

offered under each stream; under Marketing & Sales Management,
there are Sales Management, Distribution & Logistics Management,
Industrial & Rural Marketing, and Global Marketing; under Retail &
Supply Chain Management, there are Retail Marketing & Management,
Supply Chain Management, Industrial & Rural Marketing, and
Distribution & Logistics Management; and, under Customer
Relationship Management, there are CRM technology, Direct Marketing
and Call Centre Management.

CONCLUSION

Moral of the story - Retailing is not up there with Engineering,

Medicine, Law, IT and other exalted professions, and it needs to get
there real quick. A few years back, NASSCOM's unprecedented
campaign to position IT as a highly desirable career option, literally
spawned the genesis of a huge pool of skilled professionals, to fit into
every rung of a software organisation and firmly placed IT-based
options in every educated Indian's job map. The beneficiaries of this
phemonenal marketing drive ranged from students to firms to
academia, including the thousands of cybercafes and training schools
set up over the last decade.

If the 90s was the decade of IT in India, the 21st century promises to
open with a mega celebration of consumerism, in the shape of a
comprehensive retail boom. With over 50,000 job slots to be filled
every year in organised retail alone, and only a handful with any kind
of theoretical or practical knowledge, an employment gap seems
almost certain. A proactive move could be the formation of a kind of
industry Professional Forum, comprising practitioners, to stem the
yawning chasm. Of course, development of education is not possible
overnight - the industry needs educationists, to start with. Case
studies (plenty of those around) can play the role of course material.
Students are ready and waiting. May we begin the class, teacher?
Forthcoming IMAGES issues will feature international academic
instances, with the aim to provide role models to the domestic
fraternity.
 Indian Retail: An Overview

As organised retailers carve out a bigger piece of the retail pie for
themselves it’s an exciting time for the retail sector. By Dominic K

Emerging markets such as India and China are the final frontier for
retail taking the focus away from saturated Western markets. Since
2001, 49 global retailers entered 90 new markets, but at the same
time, 17 retailers left markets in 2005.

The Indian retail industry in valued at about $300 billion and is

expected to grow to $427 billion in 2010 and $637 billion in 2015. Only
three percent of Indian retail is organised. Retailers of multiple brands
can operate through a franchise or a cash-and-carry wholesale model.

Retail is India’s largest industry, accounting for over 10 percent of the

country’s GDP and around eight percent of employment. Retail in India
is at the crossroads. It has emerged as one of the most dynamic and
fast paced industries with several players entering the market. That
said, the heavy initial investments required make break even hard to
achieve and many players have not tasted success to date. However,
the future is promising; the market is growing, government policies
are becoming more favourable and emerging technologies are
facilitating operations.

Retailing in India is gradually inching its way to 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. Modern retail has entered India as seen in sprawling
shopping centres, multi-storeyed malls and huge complexes offer
shopping, entertainment and food all under one roof.

The Indian retailing sector is at an inflexion point where the growth of

organised retail and growth in the consumption by Indians is going to
adopt 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 organised retail sector.
Initially, this was about Indian corporate houses rolling out malls and
supermarkets, but with Wal-Mart coming into the Indian market, the
era of the superstore is dawning. Unlike the kirana stores that served
us for decades, this new breed of retail chains is heavily dependent on
IT.

Wal-Mart, the world’s largest retailer, and Bharti Enterprises have

signed a Memorandum of Understanding (MoU) to explore business
opportunities in the Indian retail industry. This joint venture will mark
the entry of Wal-Mart into the Indian retailing industry.

The biggest competitor for Bharti-Wal-Mart is likely to be Reliance

Retail, the retail wing of Reliance, which had planned to establish
10,000 stores by 2010. It had already opened 11 pilot stores under
the “Reliance Fresh” format in Hyderabad.

All these trends and developments present a great business

opportunity for software and hardware vendors from across the globe.
Indian solution providers are targeting this segment have reason to
rejoice. For while organised retail occupies a miniscule two to three
percent of the overall Indian retailing industry, that is poised to
change.

In spite of the prospects being good things aren’t quite as rosy when it
comes to awareness of IT systems. In most cases, organised retailers
in India have installed solutions that help them automate transactional
systems.

With the retail sector in India undergoing a transformation due to the

entry of large corporate houses, IT managers and CIOs are now
looking forward to know how IT can help them achieve the business
goals of their organisations.

Standards-based architecture and software support all kinds of

mission-critical IT applications for enabling greater efficiency,
significant cost savings, and new business value. The critical activities
that can be handled by IT are finance and accounting, business
intelligence, vendor development and management, supply chain
management, merchandising and inventory management, facilities
management, stores management, customer relationship
management, branding, marketing, sales promotion and HR.

Like any other vertical, retail also stands to benefit from elaborate IT
set-ups. However, this is subject to the scale and size of the
organisation, as well as an objective assessment of its requirements.
Key common challenges that can be tackled through IT
implementations include accurate merchandising, improved planning,
increasing profitability, enhancing customer experience, strengthening
store operations, improved workforce management, and improving the
supply chain. This is in fact one of the key imperatives facing retailers
in India, to have a robust and scalable supply chain that will facilitate
rapid growth.

Since a basic objective is to make data available to users and

customers, proper IT implementation and superior IT infrastructure
ensure that in spite of getting minimal details, the retailer captures the
right information, which flows to everyone from the back office staff to
the head office managers. The entire information flow must be
seamless. A retail business works on a network environment because
the stores connect to one another as well as to supplier sites. This is
because in the retail business quick response is the key to success.
Proper IT implementation also ensures that investment in retail
reduces substantially.

Retailing in India: Trends and opportunities

Priya Chandrasekhar

Business Line: Catalyst Thursday, February 15, 2001

Retailing - no marks for guessing this is the most active and attractive sector of
the last decade. While the retailing industry itself has been present through
history in our country, it is only the recent past that has witnessed so much
dynamism. It's the latest bandwagon that has witnessed hordes of players
leaping onto it. While international retail store chains have caught the fancy of
many travelers abroad, the action was missing from the Indian business scene,
at least till recently.

The emergence of retailing in India has more to do with the increasing

purchasing power of buyers, specially post- liberalisation, increase in product
variety, and the increasing economies of scale, with the aid of modern supply and
distribution management solutions.

A definition of retailing is essential in order to be in a position to assess the

impact of retailing and its future potential. The current retailing revolution has
been provided an impetus from multiple sources. These `revolutionaries' include
many conventional stores upgrading themselves to modern retailing, companies
in competitive environments entering the market directly to ensure exclusive
visibility for their products and professional chain stores coming up to meet the
need of the manufacturers who do not fall into either of the above categories.
Attractiveness, accessibility and affordability seem to be the key offerings of the
retailing chain

The emerging sectors

Retailing, one of the largest sectors in the global economy, is going through a
transition phase not only in India but the world over. 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 (Food World, Nilgiris, Apna Bazaar), convenience
stores (ConveniO, HP Speedmart) and fast-food chains (McDonalds, Dominos).

It is the non-food segment, however that foray has been made into a variety of
new sectors. These include lifestyle/fashion segments (Shoppers' Stop, Globus,
LifeStyle, Westside), apparel/accessories (Pantaloon, Levis, Reebok),
books/music/gifts (Archies, MusicWorld, Crosswords, Landmark), appliances and
consumer durables (Viveks, Jainsons, Vasant & Co.), drugs and pharmacy
(Health and Glow, Apollo).

The emergence of new sectors has been accompanied by changes in existing

formats as well as the beginning of new formats:

o Hypermarts:
o Large supermarkets, typically 3,500-5,000 sq. ft.
o Mini supermarkets, typically 1,000-2,000 sq. ft.
o Convenience stores, typically 750-1,000sq. ft.

o Discount/shopping list grocer

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 organised 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 for 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.

Spread of organised retailing:

Organised 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.

However, the Mecca of retailing is undoubtedly Chennai. What was considered a

`traditional', conservative' and `cost-conscious' market, proved to be the home
ground for most of the successful retail names - FoodWorld, Music World, Health
and Glow, Vitan, Subhiksha and Viveks -to name a few.

The choice of Chennai as the `retail capital' has surprised many, but a variety of
factors acted in its favour. Chennai, in spite of being a rapidly growing metropolis
offers reasonable real estate prices, one of the most critical elements for the
industry. Chennai has been witnessing a high industrial growth and increasing
presence of the MNCs, both in the IT sector as well as outside it. The industrial
boom has led to the emergence of new residential areas with aggregation of
professionals as well as a rapid increase in the number of `double-income'
households and growth of the nouveau riche/upper middle class with increased
purchasing power. This has been combined with the increasing need for touch
and feel shopping (especially for the large migrant population). All the factors
have acted favourably in nurturing the industry.

Consumer- the prime mover

A variety of factors seem to influence the growth in the retailing industry.

`Consumer Pull', however, seems to be the most important driving factor behind
the sustenance of the industry.

In this context, A. F. Ferguson & Co. had carried out a brief survey among
consumers across income segments to understand their spending pattern. An
analysis of the `monthly purchase basket of the consumers surveyed indicated
that the average monthly household spend on food and grocery related items
varied across income segments. For instance, in the case of upper income
households, the average spend was around Rs 4,200 per month. As against this,
the average spend in the case of a middle income household was around Rs.
2,850 and lower income households Rs. 1,250 per month. (This is computed
from a sample of 100 customers having an average family size of four.)
Based on the distribution of the more than 15 lakh households in Chennai across
income segments and the average spend, a conservative estimate of the grocery
retailing potential at Chennai will be around Rs. 300 crores.

Besides increasing purchasing power, a variety of other factors also seem to fuel
the retailing boom. With increase in double-income households and working
women, there is an increasing pressure on time with very little time being
available for leisure. In this scenario, consumers are seeking the convenience of
one-stop shopping, whereby they could have better utility of time. They are also
seeking speed and efficiency in processing, as a result. Being more aware,
consumers are on the look-out for more information, better quality and hygiene
as well as increased customer service. These changes in consumer behaviour
also augur well for the retailing industry.

However, in India there are no uniform trends with respect to consumer buying
behaviour. There are visible differences in the shopping pattern of consumers
across income segments as shown in the table.

Organised retailing has definitely made headway in the upper class. However,
even in this segment, items such as milk, fruits, vegetables and a significant
portion of `through-the-month' purchases seem to be done at traditional outlets.
The middle income class prefer shopping for processed food and personal care
in supermarkets and fall back on traditional outlets for bulk shopping. Organised
retail outlets seem to be associated with branded items/special purchases.
Organised retailing does not seem to have made an impact on the lower class,
except for `curiosity' shopping.

The biggest question before organised retailers therefore, is whether this really
means a huge untapped potential for the organised retailers and whether the

conversion in mindset going to be easy.

Emerging trends

The single most important evolution that took place along with the retailing
revolution was the rise and fall of the dotcom companies. A sudden concept of
`non-store' shopping emerged, which threatened to take away the potential of the
store. More importantly, the very nature of the customer segment being
addressed was almost the same. The computer-savvy individual was also a sub-
segment of the `store' frequenting traffic.

Internationally, the concept of Net shopping is yet to be proven. And the poor
financial performance of most of the companies offering virtual shopping has
resulted in store-based retailing regaining the upper hand. Other forms of non-
store shopping including various formats such as catalogue/mail order shopping,
direct selling, and so on are growing rapidly. However, the size of the direct
market industry is too limited to deter the retailers. For all the convenience that it
offers, electronic retailing does not suit products where `look and see' attributes
are of importance, as in apparel, or where the value is very high, such as
jewellery, or where the performance has to be tested, as of consumer durables.
The most critical issue in electronic retailing, especially in a country such as ours,
relates to payments and the various security issues involved.

Retail management skills

It is a fact that the retailing industry is in its starting phase in our country. The
benefits of organised retailing will only be felt once an equitable scale is
achieved. This to a large extent depends on the store size, the walkthroughs,
bills per customer per year, average bill size and the revenue earned per sq. ft.
But besides resources and bottomline, a variety of other aspects need to be in
place for tasting success. The need for qualified and trained manpower is of
utmost importance. The need for specialised skills is increasingly felt in the areas
of:

• Strategic management - strategising, targeting and positioning, marketing

and site selection, among others

• Merchandise management - Vendor selection, inventory management,

pricing and so on

• Store management - Layout, display, customer relationship, inventory

management, etc.

• Administrative Management - Human resources, finance, marketing and

so on

With the need for specialised skill set, retailing has become a specialised area of
knowledge and training. The RPG School of Retailing and the introduction of
specialised retailing courses at various business schools, including the IIMs,
stand testimony to this.

Technology impact

The other important aspect of retailing relates to technology. It is widely felt that
the key differentiator between the successful and not so successful retailers is
primarily in the area of technology. Simultaneously, it will be technology that will
help the organised retailer score over the unorganised players, giving both cost
and service advantages.
Retailing is a `technology-intensive' industry. It is quoted that everyday at least
500 gigabytes of data are transmitted via satellite from the 1,200 point-of-sales
counters of JC Penney to its corporate headquarters. Successful retailers today
work closely with their vendors to predict consumer demand, shorten lead times,
reduce inventory holding and thereby, save cost. Wal-Mart pioneered the concept
of building a competitive advantage through distribution and information systems
in the retailing industry. They introduced two innovative logistics techniques -
cross-docking and electronic data interchange.

Today, online systems link point-of-sales terminals to the main office where
detailed analyses on sales by item, classification, stores or vendor are carried out
online. Besides vendors, the focus of the retailing sector is to develop the link
with the consumer. `Data Warehousing' is an established concept in the
advanced nations. With the help of `database retailing', information on existing
and potential customers is tracked. Besides knowing what was purchased and by
whom, information on softer issues such as demographics and psychographics is
captured.

Retailing, as discussed before, is at a nascent stage in our country. Most

organised players have managed to put the front ends in place, but these are
relatively easy to copy. The relatively complicated information systems and
underlying technologies are in the process of being established. Most grocery
retailers such as FoodWorld have started tracking consumer purchases through
CRM. The lifestyle retailers through their `affinity clubs' and `reward clubs' are
establishing their processes. The traditional retailers will always continue to exist
but organised retailers are working towards revamping their business to obtain
strategic advantages at various levels - market, cost, knowledge and customer.

With differentiating strategies - value for money, shopping experience, variety,

quality, discounts and advanced systems and technology in the back-end,
change in the equilibrium with manufacturers and a thorough understanding of
the consumer behaviour, the ground is all set for the organised retailers. The
bottomline could look brighter, after all!

It would be important to note, however, that the retailing industry in India is still a
`protected industry'. It is one of the few sectors which still has restrictions on FDI.
Given the current trend in liberalisation, it will not be long before the retailing
sector is also thrown open to international competition. This will see a further
segregation of the international retailing brands and the domestic retailers,
thereby injecting much greater dynamism into the market. That will be when the
real action will begin. In the second article on retailing, we uncover a model for
retailers to handle the emerging scenario.

(To be concluded)
 (The author is a senior consultant at A. F. Ferguson & Co, Chennai.
Feedback can be mailed to bleditor@thehindu.co.in)

<--Previous

Next-->

Back to Bulletin Board

Getting closer to the customer

Organised retailers are employing IT to know their customers better.

This was the case when CRM was implemented at Raymond. By
Kushal Shah

One of India’s oldest textile manufacturers and retailers, Raymond

India operates across cities and deals with different cultures and
people. Knowing all these customers and doing business accordingly is
not a cakewalk. To deal with this scenario Raymond India decided to
implement CRM (customer relationship management) across most of
its retail outlets.

Know thy customer

Retail is all about knowing your customers thoroughly in

order to serve them better. It is an age old philosophy of
Indian businessmen that if you know your customers
better, you can enjoy a better competitive position in the
market. Before making extensive use of IT at its outlets,
Anil Arora Raymond’s business used to run on a manual basis. In
order to know its customers better, a team was formed to
survey prospective buyers as well as existing customers. After
surveying them they would know the pattern of their purchases, their
likes and dislikes etc.
This process was cumbersome for the surveying team and at times
people were apprehensive about replying to questions related to their
personal choices. With the growing use of IT in the retail segment,
Raymond decided to implement CRM to know its customers better and
in a more sophisticated way. “The need was to understand the
customers and provide services suitable to them,” says Anil Arora, Sr.
Manager – Information Technology, Raymond Limited.

The Solution

Customer Relationship Management was implemented by Raymond to

solve the problems of knowing the customers better. CRM helps the
company understand the colour and design preferred by a particular
age group or why a particular group or individual did not buy or did
buy a particular product. As a result of the implementation, regular
customers get a premium card which has all the details of a particular
customer and the purchase patterns of that person can be studied
efficiently.

The CRM implementation is named ‘Premium Circle’. Customers using

it are known as premium users and are given a premium card. This is
offered to Raymond customers at 265 out of 365 Raymond Shops in
India. With the help of this solution, a central repository of information
is created about premium customers whose details are accessible at
any retail outlet where this system has been implemented.

In a Nutshell

Project : Customer Relationship

Management (CRM)
implementation
Aim : To understand customers better
and provide services suitable to
them.
Vendor : Proximity
Time : About three months
taken
Scale : Implemented across 265 retail
shops

The implementation
The technology part of the CRM implementation was outsourced to
Proximity which owns the infrastructure that provides touch points to
the customer through the Web site.

Raymond’s in-house team was responsible for devising the schemes

and plans. Since only the technology part was given to a third party to
manage, cost and quality of service provided by the vendor were
considered while short listing a vendor.

The Retail head from the business side was the champion of the
project and he was assisted by the IT department to provide the
technological expertise that was required.

About the Company

Raymond India's retail face is The Raymond

Shop, a chain of retail stores offering wardrobe
solutions for men. This includes brands like
Raymond, Park Avenue, Parx, Manzoni and now
ColourPlus. Started about five decades ago,
Raymond has been one of the pioneers of Indian
retail. The Raymond Shop network started with
a small corner shop in Ballard Estate, Mumbai.
It has grown multi-fold with a dedicated team
making it the largest retail store chain in the
country with over 300 stores in prime locations
in 150 Indian cities. They have also extended
their network overseas with around 25 shops in
15 plus cities of the Middle East, Sri Lanka,
Bangladesh and Nepal. The Raymond Shop retail
chain occupies a space of 1 million square feet
built-up area. The Raymond Shop offers over
3,000 qualities, shades and designs of Raymond
fabric.

Three principles

“The aim of this implementation was to ensure three principles—

availability, reliability and scalability of the solution,” says Arora.
Concentrating on availability meant that the solution had to be
available at all times and that downtime had to be negligible. Failsafe
software would ensure the reliability aspect of the solution. Lastly
scalability ensured that the system would work efficiently irrespective
of the number of locations at which it was rolled out. With organised
retail in the midst of a boom, it is natural that the number of outlets
will grow rapidly putting more pressure on ensuring scalability
acrossthe chain.

Phases

The time line for the entire project was close to three months and it
was completed in three phases. The first phase consisted of the Proof
of concept. In this phase the project was cleared through internal
research to prove that the core ideas were workable before going any
further. This use of proof of concept helps establish viability, technical
issues are uncovered, and overall direction is set. It also helps in
providing feedback for budgeting and other forms of commercial
discussion and control.

The second phase involved running a pilot model created by the

project team. This was to ensure that the core solution has been
developed satisfactorily and was running as per the requirements.

In the final phase, the entire Web based project went live across 265
shops. Initially only 10 shops went live but soon 265 shops were on
the network.

Hardware

The entire solution runs on HP servers on Windows Server with the

SQL Server database. The database for the CRM is located on a web
database server hosted by the vendor at an ISP IDC.

The servers are in high availability mode with redundancy at the server
link level. In case of a breakdown of the link, the recovery time is
approximately an hour.

Customer Response

Since this project was Web based, many customers are using it across
India. This project helped evaluate customer choices to a large extent.
With the use of this software, the product lines kept changing
according to the customer needs and patterns and the end result has
been satisfied customers.

The repeat visits made by each customer increased with the help of
CRM solution. The only time customers were left a bit dissatisfied was
when the database of that customer was not updated properly during
the initial days after going live. The overall happiness of the customer
has boosted business by a substantial margin.

Enhancements

Looking at the success of this CRM implementation Raymond decided

to extend the similar exercise to its other product lines and brands
such as kids wear. This implementation is going to be implemented
across 1,000 shops whenever Raymond decides to reach that figure.

ORGANIZED RETAIL IN INDIA POISED TO REACH Rs.2000 BILLION MARK. EMPLOYMENT

GENERATION FOR 12 MILLION PEOPLE

COMMERCE & INDUSTRY MINSITER KAMAL NATH RELEASES INDIA RETAIL REPORT 2007;
LAUNCHES INDIARETAILING.COM

New Delhi, 9 th January 2007, Organised retail in India has the potential to add over Rs 2,00,000
crore ($45 billion) business by the Year 2010 generating employment for some 2.5 million people in
various retail operations and over 10 million additional workforce in retail support activities including
contract production & processing, supply chain & logistics, retail real estate development &
management etc., said Mr. Kamal Nath, Commerce & Industry Minister releasing the IMAGES
India Retail Report 2007 at a high powered industry and media meet at Udyog Bhawan today

After leading the IT bandwagon, India is poised to grow as a Retail hub. It is imperative to sustain the
modernization of the retail sector and dispel the myth that the game is big Vs small or traditional Vs
modern or organized Vs unorganized or local Vs foreign . What is needed is to create an appropriate
environment to propel retail where all benefit, he said.

India's huge population, he said, has the potential for mammoth consumption if given the power of
spending and that is only possible through large scale development generating employment which is
already happening with retail as the driving force.
Talking about the key challenge areas for the retail growth Mr. Nath expressed concern over
escalating real estate cost, scarcity of skilled workforce and structured supply of merchandise which
he assured would be tacked in co-operation with the retail industry and the support organizations.

Revealing key figures from the India Retail Report 2007, Amitabh Taneja, Chief Convenor of
India Retail Forum said that the organised sector accounted for Rs. 55,000 crore ($12.4 billion)
business at current prices in the calendar year 2006 increasing its share to 4.6% of the total Indian
Retail Value that stood at Rs. 12,00,000 crore ($270 billion). Moving forward, organized retailing is
projected to grow at the rate of about 37 per cent in 2007 and 42 per cent in 2008.

“Going by the current growth trend and considering the fact that existing prominent players in
organised retail have stepped up their expansion drive with Reliance announcing big plans and other
Indian corporate houses too evincing keenness on investing heavily in this sector as also the inking
of the joint-venture between the world's largest retailer Wal-Mart and Bharti – The organised retail in
India has indeed gained top speed and is now on the verge of take-off, Taneja added.

According to IMAGES India Retail Report 2007, of the Rs.12,00,000 crore retail market, food &
grocery retail is by far the single largest block estimated to be worth a whopping Rs.7,43,900 crore,
but more than 99 per cent of this market is dominated by the neighbourhood kirana stores.

Deliberating on the advantages of the organized retail, Mr Nath talked about the increasing
efficiencies in the agricultural sector by removing intermediaries in the food supply chain. While
urban customers benefit from reduced prices of farm sector goods, rural farmers benefit by way of
higher returns for their produce.

With several States allowing retailers direct access to farm produce, there is a new revolution taking
shape in rural India. Farmers are cultivating crops as per specifications and requirements of retail
companies such as Reliance, ITC, Godrej and many others. More than 2,000 small farmers, for
instance, are benefiting from such arrangements in Andhra Pradesh, he said.

Talking about the global perception about India, about its economic might and potential in terms of
market size, Mr. Kamal Nath said that there had been a drastic change over the last few years. While
the buoyant manufacturing and services sectors had contributed in fuelling consumption demand in
urban as well as rural areas, the government on its part remained committed to improving
infrastructure and providing a congenial environment for indigenous business modules to blossom
and harness domestic as well as foreign investment to optimum levels. Economic prosperity also
meant higher standards of living and higher consumption levels, and only an efficient and organised
Retail sector could ensure and sustain this growing demand of the evolved consumer.

“But unlike the experiences in most other countries, growth of Indian retail is not going to be a
staggered and time-taking process: India has already shown the world how quick it can adapt to hi-
tech products and services and will again set a record of sorts in setting up world class retail formats
across the country in record time. In the next five years India should have retail entities strong
enough to compete with the best in the world”, added Mr. Nath.

At present, he said, India's retail sector is largely unorganized, with about 15 million tiny outlets
catering to consumer needs across the country – it employs the second-largest number of people
after agriculture. Organised retail is now focused primarily on the 300 million urban "middle classes''
and an additional 200 million rural rich, who form a consumer market worth more than US$100
billion. So, there is enough ground for the modern and the traditional formats to co-exist.

Narrating India's economic growth story Mr. Nath highlighted three important things:

One - that here is a society in which the fruits of development are more evenly spread, in
which democracy is more real and palpable to the mass of the population, which makes
for a stable social environment that is attractive and reassuring;

Two - that India is an enormous market, of which you are seeing only the tip of the
iceberg;

And Three - the tremendous resilience of India: we survived the zooming oil prices, the
fluctuating dollar and global recession, with barely a hiccup.

The Indian economy is integrating with the world, and yet it simultaneously has its own dynamics,
which cushion global shocks as in no other country. India had kept the retail sector largely closed to
outsiders to safeguard the livelihood of nearly 15 million small storeowners and only allows 51 per
cent foreign investment in single-brand retail with prior government permission. FDI is also allowed
in the wholesale business. Single-brand retailers such as Louis Vuitton, Fendi, LLadro, Nike and
Toyota can operate now on their own. Metro is already operating through the cash-and-carry
wholesale mode.

The issue of Foreign Direct Investment (FDI) has been debated time and again as the Indian
Government has been under pressure to open up further. The policy makers continue to explore
areas where FDI can be invited without hurting the interest of local retail community. Mr. Kamal Nath
confirmed that the Government is considering opening up of the retail trading for select sectors such
as electronic goods, stationery, sports goods, and building equipment.

“To understand the reasoning and implications of such moves it was vital to size up the entire retail
market in various segments and consumption levels across product categories with share of the
organized segment and it was just the right time for India Retail Forum to take the initiative of
researching the scope of retail businesses in India”, said R S Roy, Editorial Director, Images India
Retail report 2007.

Mr. Nath commended the pioneering efforts of the Images Group and India Retail Forum in compiling
and pooling together relevant yet highly scattered and difficult to get information on this vital sector,
which helps investors get a better understanding of the unfolding scenario. India Retail Report 2007
will set benchmark figures on consumer spend, retail market size across key categories and
segments with scope and also performance of key players and their expansion plans.

In his address Dr. Ajay K Dua, Secretary, Department of Industrial Policy & promotion,
Ministry of Commerce & Industry said, “The growth of the Indian economy is now manifesting
itself in the growing purchasing power of its citizens. A ten to twelve per cent increase in the
economy's disposable income and a much higher one in urban areas is also reflecting itself in the
way goods and services are bought and sold”.

“There would be a real revolution in the Indian retail industry, if the changes being witnessed in the
metropolitan and other tier-one towns percolates to all the 784 urban settlements, with populations
above 50,000 persons. This is likely to happen as the real estate prices in the large metropolitan
towns are increasingly becoming prohibitive and consequently giving distinct advantage to those
who are already in the business of retailing, viz., the traditional mom & pop stores. Rural and semi-
urban incomes are also expectedly to grow much faster in future, once the agriculture growth rate
pushes up. Our civic laws concerning construction and property development also need to be re-
looked, as the earlier convenience-stores get replaced by shopping malls and other formats of
organized retail trade”, he added.

Expressing concern over the consumption and mall development trend, Editorial Director of this
mega research of India retail research, R S Roy called upon the entire retail fraternity, concerned
Govt. departments and the supporting organizations to work towards giving Indian retail - a face of
India. “ India Brand Story can travel across the globe with 'Delhi Hat' type shopping cum
entertainment centres opening not only across India but all over the world. Public private
partnership can revitalise the formats like Khadi Bhawans that runs one of the largest retail networks
in the world, and also govt. state run emporia,” he said.

As India emerges as one of the most potential markets for global brands and retailers and retail
reinvents the way modern Indians celebrate their spending power, India that takes pride in its rich
culture, heritage, art, craft and variety of wares must capitalize on this ever escalating consumerism
and channelise the spending towards healthy consumption for overall development of the country.

Initiated by India Retail Forum and Images F&R Research, world's some of the top global research &
consulting firms like AT Kearney, Ernst & Young, PWC, Technopak, KPMG, ICICI, AC Nielsen-ORG Marg,
Synovate, Cushman & Wakefield etc. contributed for the India Retail Report 2007 research.

IMAGES India Retail report 2007 sizes up the entire retail market in various segments and
consumption levels across product categories with share of the organized segment . Profiling
formats and retailers therein, the study, full of facts and figures, is expected to reveal many
interesting facets of the Indian retail industry that could open up newer avenues of business both for
the established players and the new comers as well.

A truly international presentation in a coffee table format, the IMAGES India Retail Report 2007 also
carries visionary thoughts of Shri Kamal Nath, Dr. Ajay K Dua, and over 40 thought leaders from the
retail industry covering almost every aspect of retail business.

The occasion also saw the launch of a path breaking retail information interface portal
Indiaretailing.com by Mr. Kamal Nath.

“Indiaretailing.com has an ambitious philosophy personified by these words: “The Home Page
of the Indian Retailing Industry”. Indiaretailing.com is being designed to be just that – with a
24/7 update and news feed team that gets you the retail intelligence that affects your business in
every way,” said Pallav Moitra, Head of this revolutionary concept.

“In the evolution of Indian retail in-time information will be vital to keep the industry and all its
stakeholders abreast of the developments across. This exceptional portal is also aimed at the
retailing community around the globe, giving a wide angle view and analysis of the business of
Retail in India. Alongside interactive features such as interviews, chats and business development
tools, it will also contain exclusive and investigative editorial content that we can promise, no other
media has access to”, he added.

Besides retail news feeds, indiaretailing.com will boast an exclusive database of retailers, retail real
estate developers, retail technology and systems firms, retail finance outfits, store design and
shopfit pros, human resource sourcing and jobsite management, exclusive video interviews, live
coverage of retail events and many more.

The portal is expected to have around 200000 page views in the very first month of operation and is
strongly geared up to enjoy a very high and filtered subscriber number. To begin with the
subscription number for daily News Letters is expected to reach over 25000 key people in the retail
industry.

For details contact :

R S Roy
India Retail Forum
IMAGES Secretariat
S 21 Okhla Industrial Area Phase II
New Delhi - 110 020 India
Direct Ph : 011-40525027
Board : 011-40525000 Extn. 303
Fax : 011-40525001
Cell : +91 9811070053
URL : http://www.imagesfashion.com/; http://www.imagesretail.com/

To order copies of the India Retail Report pl send payment (Delivery within India - Rs. 2,500/-
Delivery outside India US$ 100/- Cost includes courier charges) in favour of Images Multimedia Pvt.
Ltd. payable at Delhi at the address above. Copies of the Report will also be available with leading
book stores like Crossword, Landmark, Odyssey, Oxford etc. from 25th January 2007.

To subscribe for http://www.indiaretailing.com/pl respond with complete contact details.

To ensure your copies contact

IMAGES MULTIMEDIA PVT. LTD.
S- 21 Okhla Industrial Area Phase II, New Delhi 110020, India
Ph: +91-11-40525000, Fax: +91-11-40525001,
email: anjali@imagesfashion.com / info@imagesfashion.com

Payment by crossed Cheque/Bank Draft in favour of Images Multimedia Pvt. Ltd. payable at:
New Delhi, India, or
SWIFT (TT) to Current Account No: 52805035830 of Images Multimedia Pvt. Ltd. with Standard Chartered Bank,
South Extension Part-I New Delhi 110 049, INDIA. Ph: +91-11-4625032.
The SWIFT Code is SCBLINBBDEL