The New Era of Retailing in India

Transcription

1 The New Era of Retailing in India A. Mayur K.S.R.M college of Management studies In this new age of retailing is evolving in to global, high-tech business. Almost all retailing business is experiencing this change where mass produced products are being served to mass consumers through retail platform, allowing the customer to choose from wider assortment. The retail market is expected to reach a whooping Rs. 47 lakh crore by , as it expands at a compounded annual growth rate of 15 per cent, according to the 'Yes Bank - Assocham' study. The retail market, (including organised and unorganized retail), was at Rs. 23 lakh crore in Retailing in India is most aggressive in Asia in expanding their business. Retailing in India is gradually inching its way toward becoming the boom industry. Retailing has entered India as seen in sprawling shopping centers, multi-storeyed malls and huge complexes offer shopping, entertainment and food all under one roof. Presently, India is seeing big retail boom with number of big bazaars and stores, retail malls coming up everywhere in all parts of India. Moreover it will not be wrong to say that time for big retail store has arrived in a India.people are also diverting towards these big stores because they are finding these big stores attractive and full of varieties. The prime reasons that fuelled this boom include favorable demographics, rising consumer income, real-estate development, especially the emergence of new shopping malls, availability of better services option both from within India and overseas and changing lifestyle. Expect the India retail brand to reach foreign shores soon. 1. Introduction Retailing in India s for big buzzs fast growing industry, most aggressive in Asia in expanding their business, thus creating very huge demand for real estate. Retailing is a great arrival in India to build brand loyalty in every mind of customers. According for over lo percent of the country GDP and round 10 percent of employment developed in India. Retailing in India is gradually inching its way to becoming the next boom industry. Modern retail accounts for about 4 percent of the total retail market in India. This share is expected to increase to about ISBN

2 15 20 percent with the entry of a number of corporate in to the segment. Modern retail formats have grown by percent in India in year and could be worth US $ billion by Retailing means it s carried out by retailers who try to satisfy consumer needs by providing the link between them and the wholesalers. They help manufactures to sell their merchandise by providing the right market and ensuring that the right merchandise is available at the right price and at the right place to satisfy the needs and want of the consumers. Retailing is not only an important aspect of the economic structure but very much a part of our lives- so, today retailing is evolving in to a global, high tech business. The world s largest retailer wal-mart is seeing, recently wal-mart and Bharth Enterprises have signed joint venture called Bharti wal-mart private limited. The Joint venture is soon to come up with its first store which will sell groceries, consumer appliances, and fruits and vegetables to retailers and small business by 2008 end; big competitor Reliance Industries. Retail has entered India as seen in sprawling shopping centre, multi storied malls and huge complexes offer shopping, entertainment and food all under one roof. An in recent time, however, more and more big retail out lets are coming up in the metros and cities of the country. Many business houses now are thinking of opening up a retail chain of their own. Spencer and co, Limited (Retailing arm of the RPG group), vitan industries Limited, big bazzer, pantaloon, shoppers stop, to name a few, have already in the business with a big bang. All of them have got very ambitious plans to get in to the new millennium. Pantaloon, for example has got 40 storng chain of franchisee and 12 stores owned directly by them. RPG groupu plans to increase their outlet, to 50 food world, 18 Helth &grow, 8 music world. To gether, china and India or chinadia as they are how termed are estimated to see their GDP rise to $ 6 trillion by year The Indian population is witnessing a significant change in its demographics a large young working population with median age of 24 years, nuclear of a milies in urban areas, along with increasing working women population and emergiy opportunities in the retail sectors are going to be the key growth drives of the organized retail sector. The Retailing they organize their merchandise, display new products, run local iced promotions, offer loyalty bonus to frequent shoppers, even take orders on phone and deliver at the customer s home at no additional cost. They have also adopted new technologies. Some of them use bar codes, accept credit card or debit card for payments and maintain computerized stock registers which help them monitor product category and brand movement. Organized pet ail has today entered rural India also ITC a to bacco giant, is revol ISBN

3 otioniziy shopping experience in rural India through its e chaupals. Thus, Retailing is today heading for a boom. Reasons why Retail is Booming in India India s retail market is expected to grow at a Compound Annual Growth Rate (CAGR) of 10 per cent to US$ 1.6 trillion by 2026 from US$ 641 billion in While the overall retail market is expected to grow at 12 per cent per annum, modern trade would expand twice as fast at 20 per cent per annum and traditional trade at 10 percent. The prime reasons that fuelling this boom include favorable demographics, rising consumer incomes, real estate development, especially the emergence of new shopping malls, availability of better sourcing option also change customer life style. Rapidly growing middle class consumers. Increase in per capita spending consumers. Growth in the number of double income house hold. Through media and other communication net work exposure to world class taste and preferences of product & branch. Rising work force with global travails. Increasing usage of credit / debit cards. Growing youth population with the ability to study and work simultaneously. Less time at the disposal of double income families. 2. Retailing Growth in India The Indian Retail market, which is the fifth largest retail destination globally, according to industry estimates is estimated to grow from the US $ 330 billion in 2007 to US $ 427 billion by 2010 and $ 637 billion by The Indian retail trading has received Foreign Direct Investment (FDI) equity inflows totaling US$ million during April 2000 December 2016, according to the Department of Industrial Policies and Promotion (DIPP). Simultaneously, modern retail which presently accounts for 4 percent of the total market is likely to increase its share to 22 percent by Driven by changing lifestyles, string income growth and favorable demographic patterns; Indian retail is expanding at a rapid space. Mall space, from a meager one million square feet in 2002, is expected to touch 40 million square feet by end 2007 and an estimated 60 million square feet by end The ISBN

4 Indian luxury retail market is estimated to leap frog from around US $3.5 billion to US $ 30 billion by Leading the kids retail revolution the apparel business, which accounts for almost 80 percent of the revenue, with kids clothing in India following international fashing trends. Continuing the robust growth of the organized retail in India, according to the credit Rating and information services of India, the industry ranked in US $ billion turnover in as against US $ billion in , a whopping growth rate of --- percent. India has one of the largest numbers of retail outlets in the world of the 12 million retail outlets present the country nearly 5 million sell food and related products.even with this large number of outlets, organized retail accounts for only 4 percent of the total markets. Opening huge growth potential in this segment.rural retail market is estimated to cross US $ billion mark by 2010 and US $ billion by 2015 says a study by cll and yes bank. E tailing The increase in the PC and Internet Penetration along with the growing Preference of Indian consumers to shop on-line has given a tremendous boost to e-tailing 10% of the total e-commerce market is accounted by e-tailing. According Indian marketing research bureau IMRB and internet and mobile association of India (IAMAI) the e-tail market is estimated to grow by 30 percent to US$ million in from US$ million in Organized Retail in India The retailing industry in India estimated at Rs. $ 300 billion ( ) is expected to grow at 5 % p. a. and the organized retailing is well on its way to become a Rs. 350 billion market by 2005 according to India Retail Report According to a study conducted by CRISIL Research and information services, the organized retail industry in India is expected to grow percent annually and would triple in size from Rs. 35,000 Crore in to Rs. 109,000 Crore ($ 24 billion) by Today the market sees more of organized mainly due to the following reasons. Increase in per capita spending consumers. Rapidly growing middle class and double income house hold Rising work force with by global travel Exposure of international tastes and lifestyle trough media. The key factors have been the growth drivers of the organized retail sector in India which now boast of ratability almost all the references of life Apparels Accessories, Appliances, ISBN

5 Electronics cosmetics and toiletries, homes office products, travels Leisure and many more with this the retail sectors in India is witlessly a rejuvenation formats such as traditional markets make way for new formats department stores, hypermarkets, supermarkets and specials stores. The retailing configuration in India is fast developing as shopping malls and increasingly becoming familiar in large cities. When it comes to development of retail space specially the malls, the tier II cities are no longer behind in the race. If development plans till 2007 is studies its shows the projection of 220 shopping malls, with 139 malls in metros and remaining 81 in the tier II cities. The government of states like Delhi and nation al capital Region (NCR) is very up beat about permit tin the use of land for commercial development thus increasing the availability of land for retail space, thus NCR render to 50 % the malls in India. Detailing reasons why India organized retail is at the brink to revolution the IMAGES KSA report says that the last few years have seen rapid transformation in many areas and setting scalable and profitable retail models across categories. So by above all this condition the retail sector in India was more of unorganized one with petty vendors dominating the chunk of the industry but now the scenario has fast been changing. Finally, the sector is converting in to which we call as organized retailing. ISBN

6 Table 1 Top 10 Organized Retail Sector in India 1. shopper stop 2. west side (Trent) 3. pantaloon (Big) 4. Life style H/M 5. RPG Retail H/M 6. Cross word S/S 7. wills Life style 8. Globes 9. plramals 10. Ebony Retail Holding Ltd Table 2 Key Sectors in Indian Retailing Non Food Foods Grocery Groceries Food world Reliance fresh Nilgiris Subhiksha Food Bazaar Restaurants Fast foods Mc,Donalds Pizza Hut Domion s Coffee day Apparel Arrow, Lee, Levis Benetton, willsports, Marks, spencer, Mango, Provogue, Raymonds etc Book & Music, Stationery Mobile Crossword, Planet, Archies, Music world Mobile stores, LandMark, Departmental stores Shopper s stop,westside, Globus Pyramid etc.itc. Hypermarkets: Barista big bazaar, Goants, Sanka Bazaar, metros. Watches: Titan, HMT, omega, Fossil etc. Beauty: Lakme, shahnaz Herbaly Challenges of Indian retailing Careers in India Retailing The industry is facing a shortage of middle management level professionals. Major are hiring aggressively from the similar and smaller organizations by offering better packages. They are creating various levels of management and hiring on a spree. Some of the areas such as technology, supply chain, distribution, logistics, marketing, product development and research are becoming very critical for the success of the organizations. All of these would lead to the recruitment of highly professional people who specialize in these fields. There is also a trend for hiring hotel management graduates, though now many retail schools are coming up, and pantaloon has set up link with major business schools from where it would be selecting the right candidates.information technology with about 5million jobs and retail ISBN

7 sector with about 2.5 million in the next five years have the potential to be two major job creators in the country. Retail technology conclave here. The said that it sector now employs about 2 million people directly and another 8 million indirectly and is projected to creat about 5 million jobs over next five years. Technology is set to play a significant role as a predominantly unorganized retail seek way to be part of organized business. The sector is likely to produce 2 million jobs in the coming 3 years. There also exists a possibility that the retail sector would become a poaching ground once a number of domestic and international players enter the industry FDI in Retailing Retailing is the largest private sector industry in the world economy with the global industry size exceeding $ 6.6 trillion and a latest survey has projected India as the top destination for retail investors. So, in retail sector Government of opened UP $ 51% FDI in single brand retail outlets. FDI influence on the Indian retail sector sets in, the total size of the retail trade is expected to grow extensively in the coming years and the consumer segments patronizing the big malls, will create frenzy for organized retailing predicting a growth percent annum over the next decade, move over, Indian retail chairs world get in targeted with global supply chairs since FDI will bring technology, quality standards and marketing there by leading to now economic opportunities and creating more employment generation. Industry treands for retail sector indicate that organized retailing has major impact in controlling inflation because large organized retail on are able to buy directly from produces at more competitive process. World bank attributes the opening of the retail sector to FDI to be beneficial for India in terms of price and availability of products as it would give a boost to food products textiles and garmets, leather products, etc to benefit from large scale procurement by international chairs in turn creation jobs opportunity at viros levels. FDI in retail was necessary to sustain the investment linked growth but felt that the approval of FDI from the authorities would come by the end of 2006 as in the mealtimes this would allow domestic players to improve their position in terms of business expansion and financial growth. The Indian government allows 51 percent FDI in single brand retailing owing to which foreign multinational like Reebok and Louis vaitton can how operate directly in the Indian markets. ISBN

8 4. Supply Chain Management The retail scenario is characterized by logistical challenges, constant changes in consumer preferences and evolution of new retail formats. All this increases the challenges faced by the industry. Various strategies are to be implemented to improve core business processes, such as logistics, innovation, transparency, distribution and inventory, management of point sale (POS) data. Retail major are under serious pressure to improve their supply chain systems and distribution channels and reach the levels of quality and service desired by the consumers. Frauds in Retail It is one of the primary challenges the companies would have to face. Frauds, including vendor frauds, thefts, shoplifting and inaccuracy in supervision and administration are the challenges that are difficult to handle. This is so even after the use of security techniques, such as CCTV s and POS systems. As the size of the sector would increase, this would increase the number of thefts, frauds and discrepancies in the system. Infrastructure facilities The lack of proper infrastructure and distribution channels in the country results in inefficient processes. This is a major hindrance for retailers as a non efficient distribution channel is very difficult to handle and can result in huge losses. Infrastructure does not have a strong base in India. Urbanization and globalization are compelling companies to develop infrastructure facilities. Transportation, including railway systems, has to be more efficient. Highways have to meet global standards. Airport capacities and power supply have to be enhanced. Warehouse facilities and timely distribution are other areas of challenge. To fully utilize India s potential in retail sector, these major obstacles have to be removed. Organized Retail Sector The challenges facing the Indian organized retail sector are these are stopping the Indian retail industry from reaching its full potential. The behavior pattern of the Indian consumer have undergone a major change. This have happened for the Indian consumer is earning more now, western influences, women working force is increasing, desire for luxury items and better quality. He now wants to eat, shop, and get entertained under the same roof. All these ISBN

9 have lead the Indian organized retail sector to give more in order to satisfy the Indian customer. The biggest challenge facing the Indian organized retail sector is the lack of retail space. With real estate prices escalating due to increase in demand from the Indian organized retail sector, it is posing a challenge to its growth. With Indian retailers having to shell out more for retail space it is effecting there profitability in retail. Trained manpower shortage is a challenge facing the organized retail sector in India. The Indian retailers have difficulty in finding trained person and also have to pay more in order to retain them. This again brings down the Indian retailers profit levels. The Indian government have allowed 51% foreign direct investment (FDI) in the India retail sector to one brand shops only. This have made the entry of global giants to organized retail sector in India difficult. This is a challenge being faces by the Indian organized retail sector. But the global retail giants like Tesco, wal Mart, and Metro AG are entering the organized retail sector in India indirectly through franchisee agreement and cash and carry wholesale trading. Many Indian companies are also entering the Indian organized retail sector like Reliance Industries Limited, pantaloons, and Bharti Telecoms. But they are facing stiff competition from these global retail giants. As result discounting is becoming an accepted practice. These too bring down the profit of the Indian retailers. All these are posing as challenges facing the Indian organized retail sector. 5. Conclusion Retail and real estate are the two booming sectors of India in the present times. And if industry sectors of experts are to be believed, the prospects of both the sectors are mutually dependent on each other. Retail one of India s largest industries, has presently emerged as one of the most dynamic and fast paced industries of our times with several players entering the market. India 15 how on the radar of global retailers. Accelerated development of retailing industry in the country and building brand value of domestic products essential not only for marketing our consumer products more efficiently also for the development of our own retailing industry. India is being seen as a potential goldmine for retail investors from over the world and largest research has rated India as the top destination for retailers for an attractive emerging retail market. Retailing by very nature is a dynamic industry. Retailing is not only an important aspect of the economic structure by very much a part of our lives. ISBN

10 6. References 1. Ahmad Jamal, Fiona Davies, Farooq Chudry, and Mohamed Al-Marri,(2006), Profiling consumers: A study of Qatari consumers: shopping motivations, Journal of Retailing and Consumer Services vol.13 pp B.B. Goyal, Meghna Aggarwal(2009) organized retailing in India an empirical study of appropriate formats and expected trends global journal of business research vol,3,no,3 pp, Dr. M. N. Malliswari Emerging trends and strategies in Indian retailing Indian journal of Marketing Sujanair Retail Management Himalaya Publishing house, Mumbai, pp Michael Levy & Barton A. Weitz Retaining Management, 5 th Edition, Tata McGraw Hill, Philip Kotlers Kevin Lanekeller Marketing Management 12 th Edition, Prentice Hall of India, New Delhi, micropresentation.com Bw.com ISBN