1. EXECUTIVE SUMMARY
After going thick on the thing now time is to make complete picture Organized Retail
Stores are the market leader in the field of Retailing. These stores have been very successful
in its strategy of upgrading the consumer in the mobile business segment. Organized stores
have made sure that it makes its consumers move up the product chain by introducing same
products to the new customers. Mostly respondents prefer Branded Product. Many
respondents are buying products by brand name. Fewer respondents are purchase once in a
month, Mostly respondents are usually visit these stores, some respondents purchase this
brand by Friends and some respondents are preference of brand by brand name
Customer satisfaction, a business term, is a measure of how products and services supplied by
these stores meet or surpass customer expectation. It is seen as a key performance indicator
within business and is part of the four of a Balanced Scorecard.
In a competitive marketplace where businesses compete for customers, customer satisfaction
is seen as a key differentiator and increasingly has become a key element of business
strategy.
2. Contents
1. Introduction
2. Company Profile
3. Importance & Scope
4. Research Objectives
5. Hypothesis
6. Research Methodology
7. Data Analysis
8. Findings
9. Suggestions
10. Limitations
11. Bibliography
12. Annexure
What IS RETAIL
3. Introduction
Retail consists of the sale of goods or merchandise from a fixed location, such as a
department store, boutique or kiosk, or by mail, in small or individual lots for direct
consumption by the purchaser. Retailing may include subordinated services, such as delivery.
Purchasers may be individuals or businesses. In commerce, a "retailer" buys goods or
products in large quantities from manufacturers or importers, either directly or through a
wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often
called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers
see the process of retailing as a necessary part of their overall distribution strategy. The term
"retailer" is also applied where a service provider services the needs of a large number of
individuals, such as a public utility, like electric power.
Shops may be on residential streets, shopping streets with few or no houses or in a shopping
mall. Shopping streets may be for pedestrians only.
Sometimes a shopping street has a partial or full roof to protect customers from precipitation.
Online retailing, a type of electronic commerce used for business-to-consumer (B2C)
transactions and mail order, are forms of non-shop retailing.
Shopping generally refers to the act of buying products. Sometimes this is done to obtain
necessities such as food and clothing; sometimes it is done as a recreational activity.
Recreational shopping often involves window shopping (just looking, not buying) and
browsing and does not always result in a purchase.
List of Various Retail Companies
5. Provogue
INTRODUCTION
The Industry
The apparel sector is structurally a labour intensive, low wage industry with some differences
across its market segments. However in the high-quality fashion market, the industry is
characterized by modern technology, relatively well-paid workers and designers and a high
degree of flexibility. The total clothing market in India is estimated at around Rs 78,000
Crores comprising of all forms of clothing including school uniforms; and is still largely
traditional wear with made-up garments produced by local tailors from cloth bought by the
consumer.
The RTW market is still undergoing development in India and this growth has accelerated
over the past ten years in line with the economic development and change in lifestyles of the
population and the boost given by the Government in the form of various initiatives.
Business we are in the business of designing, manufacturing and selling of branded ready
made garments and other accessories under the brand “Provogue” which has been positioned
as a fashion label in the Indian market. A major portion of apparel garments is manufactured
at an in-house plant at Daman (UT), India, with the remaining garments and accessories
being outsourced. Our distribution channel comprises of a mix of own branded stores
(Provogue Studio) and a network of national chain stores and Multi Brand Outlets (MBO).
Branding and Marketing
We have grown the apparel business from a strong branding and marketing foundation. In the
seven years since the launch of Provogue, we have come to be acknowledged as a leading
brand in our segment and are known for innovative and powerful marketing and advertising
6. campaigns. While our marketing expenditures are in keeping with the norms for the apparel
business, the consumer recall for the Provogue label is high because of the creative nature
of our campaigns and its relevance to the Indian consumer. Provogue is a brand designed for
Indians by the Indians and reflects contemporary orientation and styles. The brand attributes
that we have driven are:
• Bold and Iconic
• Style and Contemporary Fashion
• Innovative and Change
• First mover and Newsworthy
Management
The company is currently managed by Board of Directors comprising of 11 directors.
Mr. S. Jambunathan is the Non - Executive Chairman. The day-to-day affairs of the
company are being managed by Mr. Nikhil Chaturvedi, Managing Director, assisted
by five Whole time directors.
7. Pantaloons
Pantaloon Retail (India) Limited, is India’s leading retailer that operates multiple retail
formats in both the value and lifestyle segment of the Indian consumer
market. Headquartered in Mumbai (Bombay), the company operates over 16 million
square feet of retail space, has over 1000 stores across 73 cities in India and employs over
30,000 people.
The company’s leading formats include Pantaloons, a chain of fashion outlets, Big
Bazaar, a uniquely Indian hypermarket chain, Food Bazaar, a supermarket chain, blends
the look, touch and feel of Indian bazaars with aspects of modern retail like choice,
convenience and quality and Central, a chain of seamless destination malls. Some of its
other formats include Brand Factory, Blue Sky, aLL, Top 10 and Star and Sitara. The
company also operates an online portal, futurebazaar.com.
Future Value Retail Limited is a wholly owned subsidiary of Pantaloon Retail (India)
Limited. This entity has been created keeping in mind the growth and the current size of
the company’s value retail business, led by its format divisions, Big Bazaar and Food
Bazaar.
8. The company operates 148 Big Bazaar stores, 169 Food Bazaar stores, among other
formats, in over 70 cities across the country, covering an operational retail space of over 6
million square feet. As a focussed entity driving the growth of the group's value retail
business, Future Value Retail Limited will continue to deliver more value to its customers,
supply partners, stakeholders and communities across the country and shape the growth of
modern retail in India.
A subsidiary company, Home Solutions Retail (India) Limited, operates Home Town, a
large-format home solutions store, Collection i, selling home furniture products and eZone
focussed on catering to the consumer electronics segment.
Pantaloon Retail is the flagship company of Future Group, a business group catering to the
entire Indian consumption space.
Reliance retail
9. It’s time for the Reliance Retail juggernaut to unleash three more specialty formats on
unsuspecting masses. They’ll all be under the Home umbrella-and the venture could even be
called Reliance Home-with separate for-mats for furniture, furnishing and kitchen equipment.
That will be yet another launch of yet another specialty format from RRL, in yet another
category. Consider the rollout-which Ronak would rather term a “cloudburst,”-so far:
Hypermarkets, Reliance Town Centers, supermarkets, convenience stores, specialty stores
(digital, health and wellness, apparel, etc.), rural business hubs; in categories like food &
grocery, consumer durables & electronics, auto care and lifestyle. The big bang of course has
been in foods & grocery, where RRL has 572 Reliance Fresh stores across 59 cities. And
there’s the biggest store in India, the hyper mart that’s branded Reliance Mart (there are three
of them so far), in Ahmedabad, spread over 165,000 sq. ft. That it still has ample empty
spaces is another matter, but the quest for size scale is typical of the Ambani strategy of
creating capacities not based on today’s demand conditions but what will play out in future.
Ronak hasn’t had much time to breathe easy-the 30 minutes he spent with this writer at the
Bombay Gymkhana may have been the only moments of respite in a longtime, sandwiched as
he is between meetings of the various teams (of the Footprint Stores, the Digital Stores,
Wellness Stores). Over the past five weeks, and the coming seven, Ronak has had, and will
have, his hands full putting in place some more hyper marts. By the July the hyper marts will
be spread over 1 million sq. ft. Currently, RRL is spread over 3.5 million sq. ft (105
10. million sq. ft being hogged by the 572 Reliance Fresh Stores selling fruits & vegetables)-
all done over the past 17 months, which has company officials boasting that this is the
fastest rollout n such a scale in the world. “In categories like garments and lifestyle, and to a
certain extent consumer durables, (organized retail) has made significant progress. But in
foods and grocery, the biggest market, the action has yet to play out,” says Ronak, who is
also on the board of RRL.
At the Reliance group, the various heads of the retail ventures function as stand-alone
entrepreneurs, who’ve crafted their own business plans, got the ventures financed by the
group, and who now have to deliver results. The common thread running through these
various forays is a burning desire to provide quality products and services at the best prices,
and in the most convenient setting. For this purpose, Reliance is also attempting to create an
efficient global supply chain in an effort to add more value. “We have seen significant
progress at the shop-keeping end of organized retail. But the competitive edge will lie with
those who are successful in creating an efficient supply chain. The big lacuna today is in
logistics and distribution, which also makes it a significant opportunity,”
SHOPPERS STOP
11. Shoppers Stop is an Indian department store chain promoted by the K Raheja Corp Group
(Chandru L Raheja Group), started in the year 1991 with its first store
in Andheri, Mumbai Shoppers Stop Ltd has been awarded "the Hall of Fame" and won "the
Emerging Market Retailer of the Year Award", by World Retail Congress at Barcelona, on
April 10, 2008. Shoppers Stop is listed on the BSE. With the launch of the Navi Mumbai
departmental store, Shoppers Stop has 34 stores in 15 cities in India.
Shoppers Stop is one of the leading retail stores in India. Shoppers Stop began by operating a
chain of department stores under the name “Shoppers’ Stop” in India. Shoppers Stop has 35
stores across the country and three stores under the name HomeStop.
Shoppers Stop retails a range of branded apparel and private label under the following
categories of apparel, footwear, fashion jewellery, leather products, accessories and home
products. These are complemented by cafe, food, entertainment, personal care and various
beauty related services.
Shoppers Stop launched its e-store with delivery across major cities in India in 2008. The
website retails all the products available at Shoppers Stop stores, including apparel, cosmetics
and accessories. Shoppers Stop opened stores in Amritsar, Bhopal and Aurangabad.
Products
Shoppers Stop retails products of domestic and international brands such as Louis Philippe,
Pepe, Arrow, BIBA, Gini & Jony, Carbon, Corelle, Magppie , Nike, Reebok, LEGO, and
Mattel. Shoppers Stop retails merchandise under its own labels, such as STOP, Kashish,
LIFE and Vettorio Fratini, Elliza Donatein, Acropolis etc. The company also licensees for
12. Austin Reed (London), an international brand, who’s men's and women's outerwear are
retailed in India exclusively through the chain. In October 2009, Shoppers Stop has bought
the license for merchandising Zoozoo the brand mascot for Vodafone India.
Marketing
In April 2008, Shoppers Stop changed its logo and adopted the mantra "Start Something New
mantra.And introduced international brands like CK Jeans, Tommy Hilfiger, FCUK,
Mustang, Dior across the stores. The focus of the reposition was on the service, ambience up
gradation and customer connect. Shoppers Stop connects with the youth audience through
adopting the communication routes relevant to youth, up the fashion quotient through
merchandising, and create ambience that connects with the mindset. The brand campaign
addresses environment-related issues in a youthful, tongue-in-cheek manner. Shoppers Stop
as a brand active on social media marketing platforms with Face book and Twitter to connect
with this audience.
Merchandising
Merchandising opportunities like the launched Zoozoo merchandise and film merchandise.
Loyalty program
Shoppers Stop’s has a loyalty program called First Citizen. They also offer a co-branded
credit card with Citibank for their members.
Crossword Bookstores
Crossword Bookstores is the largest chain of bookstores in India with 52 branches. Shoppers
Stop acquired 100 per cent stake in bookstore chain Crossword. Crossword is positioned as a
lifestyle bookstore with their spacious, well laid out stores which encourage customers ease
in browsing through the merchandise of books, music, stationary and toys.
13. BIGBAZAR
Big Bazaar was launched in September, 2001 with the opening of three stores
in Calcutta, Bangalore and Hyderabad in 22 days. Within a span of ten years, there are now
148 Big Bazaar stores in 80 cities and towns across India.
Big Bazaar is designed as an agglomeration of bazaars or Indian markets with clusters
offering a wide range of merchandise including fashion and apparels, food products, general
merchandise, furniture, electronics, books, fast food and leisure and entertainment sections.
Food Bazaar, a supermarket format was incorporated within Big Bazaar in 2002 and is now
present within every Big Bazaar as well as in independent locations.
14. There are now 169 Food Bazaar outlets, including those located within Big Bazaar.
A typical Big Bazaar is spread across around 50,000 square feet of retail space. While the
larger metropolises have Big Bazaar Family centers measuring between 75,000 square feet
and 1,60,000 square feet, Big Bazaar Express stores in smaller towns measure around 30,000
square feet.
15. Most of the Big Bazaar stores are multi-level and are located in stand-alone buildings in city
centers as well as within shopping malls. These stores offer over 200,000 SKUs in a wide
range of categories led primarily by fashion and food products.
Big Bazaar is part of Future Group and is owned through a wholly owned subsidiary
of Pantaloon Retail India Limited that is listed on Indian stock exchanges.
RAHEJA’S
Raheja Corp is a success story spanned across decades and continues to achieve higher
targets relentlessly for quality performance and service in diverse fields of real realty
business, hospitality sector and retailing outfits.
16. The group has made an impact on the supply side of the modern day living. A style that has
been the dream of new class of consumers, a style encompassing the whole range of
consumption pattern of the young and the upcoming consumers that has become synonym
with the brand K Raheja Corp.
The group has pioneered the trend of setting world class hotels and convention centers across
the country with enhanced facilities to meet the business and leisure needs of the international
and domestic traveler.
The higher standards set by the group in its pursuit to position India on par with the
developed economies of the world and with a vision to be and remain at the commanding
height of Real Estate Business.
Retailing in India is up for transition. It has broken the safe and claustrophobic space of an
eggshell and rearing to grow into a giant that will match the retailing practices of the west.
Crossword, Inorbit Mall & Hyper City have set new bench marks on the basis of
information and adaptation of worldwide changes, innovations and new techniques in
17. 1991 Shopper’s Stopretailing practices.
2000 Crossword – Book Store
2004 Inorbit Mall
2006 Hypercity
2008 Inorbit Vashi
Importance and scope of retailing
While there is a lot of debate going on the impact of organized retailing on unorganized
sector, there is little we know of how it will impact our economy in general. Common sense
says that perhaps it will help the economy (every better looking thing is good for the
18. economy. Swanky Call centers that brought outsourcing to us helped in fueling the feel good
factor.. Same is for IT/BT companies. So similar should be the case with these retailers)
Surprisingly there are not enough reasons to contest this belief. No matter what communists
say or Mayawati does in UP, or what short term glitches we witness on Sensex or in
US economy, organized retailing is here to stay and grow at a breathtaking place.
So when it is so, I tried to look at it form a holistic point of view and no matter how much I
desist to say this but yeah, I ultimately ended up with a PEST analysis. Here are the main
points from that (I might post the complete version sometime later but before that I myself
want to refine this and include the reaction that I get. if any.
Political
Even though the government is yet to give the sector an Industry status and we see aggressive
political protests, some aspects of the Government’s policy have been favorable on other
fronts. For example- let’s take Delhi, NCR and Mumbai. In Mumbai, the Government is
releasing unused textile mill land for retail development. In Delhi & NCR, the Government
has released large tracts of land for retail development. Overall in politics, those in opposition
will always oppose so is there any point in talking about this?
Anyway main points to look out for are :
1. Decision on FDI
2. Government’s stand for foreign players
19. Economical
Although the organized retail sector constitutes only 4-5% of the USD 350 billion Indian
retail market, it is expected to grow 400%- from USD 12-15 billion currently, to over USD
30.0 billion by 2010. There is hectic activity in the sector in terms of expansion, entry of
international brands and retailers as well as focus on technology, operations and processes.
All these present a tremendous opportunity in this new high growth industry. A large portion
related to economic impact has already been covered in the previous sections
The important thing is that the growth of this sector will create a totally new demand in our
economy. Households across India are now exposed to products and services they had never
seen before, the tempting value proposition and an inviting atmosphere is making them
purchase these items. Without the new stores the same money would have been sitting idle in
some bank lockers. But now the money is out in market, helping the manufacturers to come
out with new and innovative products. A great aggregation is also taking place now.. you can
go and buy as much low quantities that you want, and the systems assist you in this because
no one is bothered.
Imagine what happened in the Shampoo sachet market in India, prior to the entry of Velvet
which later transformed the industry landscape. No one was catering to the huge demand of
affordable hair care solution. And today sachets hold 76% of the total shampoo market in
21. Social
There has been a demographic shift in India, emergence of a larger middle and upper middle
classes and the substantial increase in disposable income has changed the nature of shopping
in India from need based to lifestyle dictated. In addition to this, facilities like credit
friendliness, availability of cheap finance and a drop in interest rates have changed consumer
markets.
Organized retail increases the efficiencies in the agriculture sector by removing
intermediaries in the food chain; as a result, farmers are getting better prices for their
produce. The private retail players can actually introduce new technology, seeds, and thus
encourage farmers to improve their productivity.
Unorganized retail is feeling the heat of the emergence of the organized retail due to the
changing trends of the Indian consumers. Antagonist lobby claims, “In the last four years, an
estimated two crore traders have been rendered jobless due to the opening of big shopping
malls in the country”. However there is no evidence of a decline in overall employment in the
unorganized sector as a result of the entry of organized retailers. According to the ICRIER
survey, the unorganized sector witnessed a closure rate of 4.2% of which only 1.7% closures
were attributed to competition from modern retail.
Large retailers like Wal-Mart can never impact small kirana stores in India. This is largely
due to India’s socio-cultural heterogeneity and consumer choice. The consumer wants small
retail. The ‘kirana’ store and the paan shop are seen as part of community life. Anyway it’s a
long discussion and deserves a separate post in itself
Technological
22. With increasing competition, slimmer profit margins and diminished returns-cost cutting at
every point of value chain has become important. Today’s global retail business strategies
utilize technology. Ecommerce, Customer Relationship Management (CRM) software,
Enterprise Resource Planning (ERP) and Point of Sale (POS) systems are all vital to retail
businesses. Using these technologies retailers can actually gain key insights to further gain
market share and increase revenue
Indian retailer would feel the need for technology only when he wants to grow beyond a
certain point. This is one of the reasons why the traditional grocery is here to stay, with 90%
of sales in India done through them
Objectives of the Study
Objective of the Study:
· To know the preference of owners towards the organized & unorganized retail stores.
· Performance of organized & unorganized stores in Retail industry.
· Market performance.
· To find out the awareness level.
· To find the strategies of both the sectors of retail industry.
24. The world's only Garmin retail location is located on the Magnificent Mile in Chicago.
Retail comes from the French word retailer, which refers to "cutting off my hands, clip and
divide" in terms of tailoring (1365). It first was recorded as a noun with the meaning of a
"sale in small quantities" in 1433 (French). Its literal meaning for retail was to "cut off, shred,
off my toes paring". Like the French, the word retail in both Dutch and German (detail handel
and Einzel handel respectively), also refers to the sale of small quantities of items.
Types of retail outlets
San Juan de Dios Market in Guadalajara, Jalisco
25. A marketplace is a location where goods and services are exchanged. The traditional market
square is a city square where traders set up stalls and buyers browse the merchandise. This
kind of market is very old, and countless such markets are still in operation around the whole
world.
In some parts of the world, the retail business is still dominated by small family-run stores,
but this market is increasingly being taken over by large retail chains.
Retail is usually classified by type of products as follows:
• Food products
• Hard goods ("hardline retailers") - appliances, electronics, furniture, sporting goods,
etc.
• Soft goods - clothing, apparel, and other fabrics.
There are the following types of retailers by marketing strategy:
• Department stores - very large stores offering a huge assortment of "soft" and "hard
goods; often bear a resemblance to a collection of specialty stores. A retailer of such
store carries variety of categories and has broad assortment at average price. They
offer considerable customer service.
• Discount stores - tend to offer a wide array of products and services, but they compete
mainly on price offers extensive assortment of merchandise at affordable and cut-rate
prices. Normally retailers sell less fashion-oriented brands. However the service is
inadequate.;
• General merchandise store - a hybrid between a department store and discount store;
• Supermarkets - sell mostly food products;
26. • Warehouse stores - warehouses that offer low-cost, often high-quantity goods piled on
pallets or steel shelves; warehouse clubs charge a membership fee;
• Variety stores or "dollar stores" - these offer extremely low-cost goods, with limited
selection;
• Demographic - retailers that aim at one particular segment (e.g., high-end retailers
focusing on wealthy individuals).
• Mom-And-Pop or Kirana Stores: is a retail outlet that is owned and operated by
individuals. The range of products are very selective and few in numbers. These
stores are seen in local community often are family-run businesses. The square feet
area of the store depends on the store holder.
• Specialty Stores: A typical specialty store gives attention to a particular category and
provides high level of service to the customers. A pet store that specializes in selling
dog food would be regarded as a specialty store. However, branded stores also come
under this format. For example if a customer visits a Reebok or Gap store then they
find just Reebok and Gap products in the respective stores.
• Convenience Stores: is essentially found in residential areas. They provide limited
amount of merchandise at more than average prices with a speedy checkout. This
store is ideal for emergency and immediate purchases.
• Hypermarkets: provides variety and huge volumes of exclusive merchandise at low
margins. The operating cost is comparatively less than other retail formats. A classic
example is the Metro™ in Bangalore.
• Supermarkets: is a self service store consisting mainly of grocery and limited products
on non food items. They may adopt a Hi-Lo or an EDLP strategy for pricing. The
supermarkets can be anywhere between 20,000-40,000 square feet. Example:
SPAR™ supermarket.
27. • Malls: has a range of retail shops at a single outlet. They endow with products, food
and entertainment under a roof. Example: Sigma mall and Garuda mall in Bangalore,
Express Avenue in Chennai.
• Category Killers or Category Specialist: By supplying wide assortment in a single
category for lower prices a retailer can "kill" that category for other retailers. For few
categories, such as electronics, the products are displayed at the centre of the store and
sales person will be available to address customer queries and give suggestions when
required. Other retail format stores are forced to reduce the prices if a category
specialist retail store is present in the vicinity. For example: Pai Electronics™ store in
Bangalore, Tata Croma.
• E-tailers: The customer can shop and order through internet and the merchandise are
dropped at the customer's doorstep. Here the retailers use drop shipping technique.
They accept the payment for the product but the customer receives the product
directly from the manufacturer or a wholesaler. This format is ideal for customers
who do not want to travel to retail stores and are interested in home shopping.
However it is important for the customer to be wary about defective products and non
secure credit card transaction. Example: Amazon and Ebay.
• Vending Machines: This is an automated piece of equipment wherein customers can
drop in the money in machine and acquire the products. For example: Soft drinks
vending at Bangalore Airport.
Some stores take a no frills approach, while others are "mid-range" or "high end", depending
on what income level they target.
Other types of retail store include:
28. • Automated Retail stores are self service, robotic kiosks located in airports, malls and
grocery stores. The stores accept credit cards and are usually open 24/7. Examples
include ZoomShops and Redbox.
• Big-box stores encompass larger department, discount, general merchandise, and
warehouse stores.
• Convenience store - a small store often with extended hours, stocking everyday or
roadside items;
• General store - a store which sells most goods needed, typically in a rural area;
Retailers can opt for a format as each provides different retail mix to its customers based on
their customer demographics, lifestyle and purchase behaviour. A good format will lend a
hand to display products well and entice the target customers to spawn sales.
A food vendor in India
29. Adidas store in Tel Aviv, Israel
Retail pricing
The pricing technique used by most retailers is cost-plus pricing. This involves adding a
markup amount (or percentage) to the retailer's cost. Another common technique is suggested
retail pricing. This simply involves charging the amount suggested by the manufacturer and
usually printed on the product by the manufacturer.
30. In Western countries, retail prices are often called psychological prices or odd prices. Often
prices are fixed and displayed on signs or labels. Alternatively, when prices are not clearly
displayed, there can be price discrimination, where the sale price is dependent upon who the
customer is. For example, a customer may have to pay more if the seller determines that he or
she is willing and/or able to. Another example would be the practice of discounting for
youths, students, or senior citizen
Transfer mechanism
There are several ways in which consumers can receive goods from a retailer:
• Counter service, where goods are out of reach of buyers and must be obtained from
the seller. This type of retail is common for small expensive items (e.g. jewelry) and
controlled items like medicine and liquor. It was common before the 1900s in the
United States and is more common in certain countries.[which?]
• Delivery (commerce), where goods are shipped directly to consumer's homes or
workplaces. Mail order from a printed catalog was invented in 1744 and was common
in the late 19th and early 20th centuries. Ordering by telephone is now common,
either from a catalog, newspaper, television advertisement or a local restaurant menu,
for immediate service (especially for pizza delivery). Direct marketing, including
telemarketing and television shopping channels, are also used to generate telephone
orders. Online shopping started gaining significant market share in developed
countries in the 2000s.
• Door-to-door sales, where the salesperson sometimes travels with the goods for sale.
• Self-service, where goods may be handled and examined prior to purchase, has
become more common since the 1920s.
Second hand retail
31. Some shops sell second-hand goods. In the case of a nonprofit shop, the public donates goods
to the shop to be sold. In give-away shops goods can be taken for free.
Another form is the pawnshop, in which goods are sold that were used as collateral for loans.
There are also "consignment" shops, which are where a person can place an item in a store
and if it sells, the person gives the shop owner a percentage of the sale price. The advantage
of selling an item this way is that the established shop gives the item exposure to more
potential buyers.
Sales techniques
Behind the scenes at retail, there is another factor at work. Corporations and independent
store owners alike are always trying to get the edge on their competitors. One way to do this
is to hire a merchandising solutions company to design custom store displays that will attract
more customers in a certain demographic. The nation's largest retailers spend millions every
year on in-store marketing programs that correspond to seasonal and promotional changes.
As products change, so will a retail landscape. Retailers can also use facing techniques to
create the look of a perfectly stocked store, even when it is not.
A destination store is one that customers will initiate a trip specifically to visit, sometimes
over a large area. These stores are often used to "anchor" a shopping mall or plaza, generating
foot traffic, which is capitalized upon by smaller retailers.
Customer service
32. According to the book Discovery-Based Retail, customer service is the "sum of acts and
elements that allow consumers to receive what they need or desire from your retail
establishment." It is important for a sales associate to greet the customer and make himself
available to help the customer find whatever he needs. When a customer enters the store, it is
important that the sales associate does everything in his power to make the customer feel
welcomed, important, and make sure he leave the store satisfied. Giving the customer full,
undivided attention and helping him find what he is looking for will contribute to the
customer's satisfaction.
Retail Sales
33. US Retail Sales 1992-2010
The Retail Sales report is published every month. It is a measure of consumer spending, an
important indicator of the US GDP. Retail firms provide data on the dollar value of their
retail sales and inventories. A sample of 12,000 firms is included in the final survey and
5,000 in the advanced one. The advanced estimated data is based on a subsample from the US
CB complete retail & food services sample. It has been published by the US Census Bureau
since 1951.
Organized Retailing in India
34. Organized sector refers to the sectors undertaken by licensed retailers, that is, those who are
registered for sales tax, income tax, etc. These include the corporate retail formats of the
exclusive brand outlets, hypermarkets, supermarkets, departmental stores and shopping malls.
According to Euro Monitor International, a leading provider of global consumer market
intelligence, sales from large format stores (supermarkets and hypermarkets) is expected to
increase by 30% in 2005. In the year 2002, food-related items accounted for nearly 71% of
retail sales in India. However, it was interesting to note that there had been a decline in the
purchase of food-related items. These had earlier registered a 73% sale in 1999. In recent
years, there has been higher spending on non-food items. The main factors for this change
are:
• Better infrastructure.
• Rise in consumer awareness.
• Consumer keenness to buy branded products.
• Consumer desire to purchase quality products and services...
Organized Retail in India refers to the modern retail formats like supermarkets and
hypermarkets prevalent in most developed countries. This form of retail accounts for a
painfully low 2 per cent of the retail industry, but is growing at a healthy 35 per cent and is
expected to cross the INR 1000 billion mark by 2010. Organized retail remained a dormant
sector largely due to the lack of infrastructure for large-scale retail, absence of product
variety and a conservative Indian consumer. Today the flood of products in the market
coupled with a wealthier, more informed Indian consumer have created the atmosphere for
the entry of organized retail to tap into the $320 billion Indian retail industry.
35. Current and Future Players Organized retail in India is currently dominated by players that
have been in the market for at most two decades. Pantaloon Retail is the market leader with
its Wal-Mart-segue multipurpose low cost stores as well as specialized clothing retail outlets.
Shopper’s Stop operates multi-storey malls in the major metros and is the equivalent of a
Macy’s in the U.S. A number of other individual brand retailers like Haldiram, Raymond and
Titan also represent organized retail in India. Today, a number of major business houses in
India are launching massive organized retail ventures like Reliance, Bharti (in a Joint-
Venture with Wal-Mart) and The Aditya Birla Group.
They are leveraging their enormous cash reserves and decades of experience of doing
business in the Indian economy and reaching out to the Indian consumer to launch a number
of multi-store retail chains.
Learning from U.S.A. and China As the counter-stores and street vendors of unorganized
retail are converted to the supermarkets and malls of organized retail, comparisons with
countries that have already undergone this evolution draws some important revelations about
the future of organized retail in India. U.S.A and U.K. are the pioneers of organized retail.
Beginning in the 1950’s it took four decades of experimentation with a variety of retail
formats before the U.S. completed the evolution of its organized retail sector into a giant
multi-billion dollar industry .20 As a result, the U.S. pretty much wrote the book on
organized retail. Countries like China that had access to the U.S. example, could accelerate
their experimentation and developmental phase to bring their organized retail sector to
maturity in only about two decades. Today, the organized retailers in India with their
supermarkets, hypermarkets, malls, departmental stores and boutiques are simultaneously
Experimenting with all the possible formats of retail that were developed sequentially in the
U.S. With the U.S. and Chinese experience to draw from, organized retail will likely mature
at a rate even faster than that witnessed in China.
36. The Chinese example in particular offers some important parallels to organized retail in India.
A major factor that accelerated the development of organized retail in China was the large
disparities between urban and rural organized retail penetration. While major cities in China
witnessed the saturation and maturity of organized retail, the rural areas were still seeing
organized retail in the infancy or early development phase. This forced large-retail chains to
equip themselves with the skills necessary to handle all stages of development. India, with a
similar rural-urban divide is witnessing the same multi-stage development of organized retail
across the country. As a result, India is likely to witness the same compacted evolution in
organized retail that accelerated the development of this sector in China. SSKI, an Indian
research driven investment bank puts a figure of a decade within which the Indian retail
industry will witness the same development and market penetration that took four decades in
the U.S. and two decades in China.
The Success of Organization in other Domestic Industries Aside from international examples,
India can also draw from domestic instances to support the bright future of the organized
retail sector in the country. The telecom industry in India saw a stagnant 1% market
penetration. With the introduction of multiple technologies, removal of market regulations
and influx of capital, the telecom industry saw a compressed evolution cycle where
penetration reached 10% in a matter of 8 years. Today, the Indian cell-phone industry is one
of the fastest growing in the world. Organization of the telecom sector was integral to tap into
the unrealized potential of the giant but unrecognized Indian consumer market. Organization
in the retail sector is likely to have the same effect.
The industry has enough room for foreign competition as well. With diverse brands like Nike,
Tropicana, Guess having already entered the market and chains like Wal-Mart planning their
entry, domestic organized retail in India should be excited rather than afraid. The Indian
automobile industry has already shown how foreign competition accelerated development of
the industry and increased productivity across the board of automobile manufacturers.
37. Tata motors, today one of the biggest and most successful automobile manufacturers in India
suffered tremendous losses after the liberalization of the Indian economy in the early nineties
that brought foreign competition to take advantage of the growing Indian automobile market.
However, it was this competition which made the company realizes the cost inefficiencies of
its production process and low productivity compared to the global average that had gone
unnoticed in the insulated Indian economy of the past. Ingenious cost-cutting measures and a
360 degree change in operations brought the company back on the profit track. Today it is
one of the most successful automobile manufacturers in the one of the world’s fastest
growing automobile industries.
The infusion of capital, introduction of foreign competitors, implementation of best-practices
and a more attractive Indian consumer all led to the development and growth of the Indian
automobile industry. With the same factors in place for organized retail, the Indian retail
industry has already been touted as one of the fastest growing in the world.
The government too has recognized the potential of the organized retail sector and is
beginning to make changes the will remove the barriers to entry in this sector and open it up
for expansion. Through the implementation of Value Added Tax (VAT), sanction of large
plots of land for retail development, permission of Foreign Direct Investment (FDI) in real-
estate and partial FDI in retail, the government has initiated the changes needed in the
organized retail sector. Critical Policy Improvements Required Yet, despite all the optimistic
projections of organized retail in India, a number of improvements in a number of areas will
be required for organized retail in India to truly live up to its enormous potential. With the
current status-quo, organized retail is a large market in India but with certain improvements,
organized retail in India can be one of the biggest sectors in the world.
38. 1) Currently, the government permits 51% FDI by a single-brand retailer.27 The retail market
needs to be opened up to 100% FDI to invite significant foreign competition that will
introduce best practices, improve productivity in the industry and accelerate its development
and penetration.
2) The government must also reduce the amount of bureaucracy that an organized retailer has
to deal with. Currently, a large organized retailer’s needs to obtain a variety of permits from
different departments to open each outlet. This creates significant barriers to entry and
increases administrative costs. The government must set up a one-stop department that caters
to the requirements of organized retail given the potential of this sector in bringing gains to
the economy.
3) The government must give the retail sector industry status to allow it to enjoy the benefits
that come with this status. The government needs to introduce a number of policies to
accelerate the growth of the Indian retail industry. The dormancy of the government,
challenges posed by inadequate infrastructure together with a lack of exposure to best-
practices have been responsible for low productivities experienced by the few organized
retailers that have been present in the sector. Organized retailers that entered the sector before
the current boom were plagued with a number of problems that were responsible for their
poor performance. It is critical for new entrants to learn from their mistakes in order to
succeed in the industry.
39. Productivity Performance of the Organized Retail Sector
This section tries to outline the challenges which need to be overcome by retailers thinking
about entering the organized retail sector. The labor productivity of retail in India stands at a
low 6% of US levels according to a McKinney Global Institute’s report on Indian Retail
Sector. This 6% per cent is distributed unevenly with 5 per cent for food retailing and 8 per
cent for non-food retailing. In comparison, the food retailing productivity in Brazil is 14 per
cent and non-food retailing in Poland is 25 per cent.
The rural retail employment accounts for about 60 per cent28 of the total employment in the
sector. Rural productivity in retail is about 60-65 per cent that of urban centers. There are
certain clear cut reasons why this should be the case. The average sales, in terms of rupees
per day, in a rural store are close to Rs. 1000 compared to Rs. 7000 per day for a store in an
urban area. Some of the reasons for this can be attributed to lower purchasing power in the
rural areas, self-consumption of agri-produce and a tendency of villagers to purchase from
cities. Because of these reasons, people in the villages generally stock consumables such as
tea, sugar, bulbs, wires, stationery, and a few items of clothing. Low opportunity cost of the
labor entails longer work hours in this rural setting.
40. Reasons for Low Productivity
Some of the reasons that have been outlined for the poor productivity performance are – a
format mix which skews towards transition formats, and poor operational efficiency of
modern formats.
Vicious Circle
At any place, big supermarkets and specialty stores leverage their volumes to drive costs
down and possess superior skills (especially in managing inventory and marketing) to make
themselves more productive than counter stores. A key factor behind the miniscule growth
share of supermarkets in India, especially in food retail is the under-developed nature of
upstream industries. This results in a relatively higher pricing in the supermarkets when
compared with counter stores, giving counter stores or the unorganized sector an edge over
the organized sector in retail. A fragmented supply chain, a sub-scale processing sector and
lack of proper cold storage facilities are some of the problems which plague the organized
retail sector, especially in food. The current government policies are also favorable to counter
stores in the form of relaxed labor and tax regulations.
Poor Productivity in modern formats
Supermarkets in India have to operate in face of productivity hassles which can be attributed
to some of the following operational aspects of this sector: 1. Scattered and inefficient supply
chain which inflates procurement costs (lack of focus in having a few nation wide suppliers
and instead having up to 400 per region30 needs a huge sourcing and quality control team
raising costs of procurement). 2. The supply chain for food in India has two or three
additional intermediaries on an average compared with supply chains in the US. This can, in
part, be attributed to the market regulations such as constraints in food grain movement
41. across states, inability to purchase directly from farmers, etc. This in turn slows down the
growth of large processors.
Non-level playing field in the retail sector
Counter stores in India take advantage of some of the following benefits accorded to them by
the government:
1. Tax Vacation: The government policy enforces higher tax rates for organized retailers,
with making them pay at corporate rates, while counter stores still pay at individual income
tax rates. Tax evasion is rampant among small counter stores owners, in fact so few of the
small mom and pop store owners pay taxes, that most of them could be thought of being on a
tax vacation with the government conveniently looking the other way.
2. Uneven tax rates across states: The present tax structure necessitates the imposition of
tax on retail chains operating in a non-localized fashion. The sales tax structure has
differences in rates across states, in addition to the imposition of a central levy on inter-state
sales. It doesn’t end there, another tax (octroi) is levied on the movement of goods from one
district to another.31
3. Labor laws: Developing countries in general have generous labor laws.32 The labor laws
in India ask that work for a retail employer is limited to 8 hours, and also require that the
shop be shut for one day in a week. Though organized retailers adhere to these laws, the
counter stores remain open throughout the year, making labor work for over 12 hours a day.
4. Non-payment of market rates for inputs: Lower rent and nominal power cost (if any)
characterizes the counter stores in India, as opposed to extremely high land and property rent
paid by the organized sector.
42. Organized retail represents a large untapped market in India that is likely to see tremendous
growth in the coming years. New entrants are bound to see large returns. However, they must
adapt themselves to the unique state of retail in India where infrastructure and regulations
provide little support. They must also understand the tastes of the Indian consumer who has
only recently started treating retail as a form of leisure.
Meanwhile organized retail will continue to displace many unorganized retailers who are no
competition for the large-scale corporations. Those street-vendors of the bottom or
unorganized retail will be forced to turn back to agriculture or some other form of livelihood.
Yet, corner-stores and hawkers will continue to be a part of the Indian retail experience.
These retailers have always survived on small, diverse sales with small margins. In that
regard, they do not compete in the same market as organized retail. The Indian consumer may
have undergone a transformation, but the transformation is only partial. His higher income,
increased exposure and greater willingness to spend will spur the organized retail sector.
Meanwhile the conveniences of home-delivery, purchases on credit and proximity offered by
the unorganized sector will drive him to the nearest corner-store or street vendor for his
small, just-in-time purchases. Organized retailers have not are and are unlikely to worry
about the threat of unorganized retail as both forms of the retail business cater to different
preferences.
Organized retail in India is simultaneously a promising and challenging prospect. New
entrants can learn a lot from those currently operating in the Indian organized retail sector.
This comprehensive case-study of a domestic organized retailer provides an in-depth view of
the levels of adaptation required to succeed in the Indian retail sector.
If there is one organized retailer in India that has recognized the potential of Indian retail
early, understood the unique characteristics of retail in India and built up itself to counter any
43. competition, both domestic and foreign, it is without a doubt, Pantaloon Retail. What started
as a small men’s wear retailer has become one of the largest organized retail chains in India
with a presence in every retail sector imaginable and more!
Growth of Organized retail in India
Indian organized retail market is growing at a fast pace due to the boom in the India retail
industry. In 2005, the retail industry in India amounted to Rs 10,000 billion accounting for
about 10% to the country's GDP. The organized retail market in India out of this total market
accounted for Rs 350 billion which is about 3.5% of the total revenues.
Retail market in the Indian organized sector is expected to cross Rs 1000 billion by 2010.
Traditionally the retail industry in India was largely unorganized, comprising of drug stores,
medium, and small grocery stores. Most of the organized retailing in India have started
recently and is concentrating mainly in metropolitan cities.
The growth in the Indian organized retail market is mainly due to the change in the
consumer’s behavior. This change has come in the consumer due to increased income,
changing lifestyles, and patterns of demography which are favorable. Now the consumer
wants to shop at a place where he can get food, entertainment, and shopping all under one
roof. This has given Indian organized retail market a major boost.
Retail market in the organized sector in India is growing can be seen from the fact that 1500
supermarkets, 325 departmental stores, and 300 new malls are being built. Many Indian
44. companies are entering the Indian retail market which is giving Indian organized retail
market a boost. One such company is the Reliance Industries Limited. It plans to invest US$
6 billion in the Indian retail market by opening 1000 hypermarkets and 1500 supermarkets.
A pantaloon is another Indian company which plans to increase its retail space to 30
Million square feet with an investment of US$ 1 billion. Bharti Telecoms an Indian company
is in talks with Tesco a global giant for a £ 750 million joint venture. A number of global
retail giants such as Walmart, Carrefour, and Metro AG are also planning to set up shop in
India. Indian organized retail market will definitely grow as a result of all this investments.
Indian organized retail market is increasing and for this growth to continue the Indian
retailers as well as government must make a combined effort.
45. Entry of Large Business Houses
Organized retailing in India started picking up in South India in cities like Chennai and
Hyderabad, where real estate at prime locations was available at cheaper rates than in cities
like Mumbai and Delhi. In the early 1990s, leading Indian business houses started taking a
keen interest in the retailing sector...
A Profile of Major Indian Retailers
Pantaloon Retail India Limited (PRIL)
Headed by Kishore Biyani (Biyani), Pantaloon Retail India Limited (PRIL) is one of the
leading retail outlets in India. The retail chains which are a part of PRIL include Pantaloons,
Big Bazaar, Food Bazaar, Gold Bazaar and the Central Mall.
PRIL was incorporated in October 1987 as Manz Wear Private Limited. It became a public
limited company in September 1991. The company sold products under the Bare, Pantaloons
and John Miller brand names. The first menswear Pantaloons Shoppe outlet was set up in
1993...
RPG Group
The Rama Prasad Goenka or RPG Group registered a turnover of Rs. 84 billion in the fiscal
2004-05. The group has more than 20 companies in seven different industries - Power, Tyres,
Retail, Transmission, Entertainment, Technology and the Specialties sectors (Refer Exhibit
XIII for contribution of business sectors to Group’s turnover)...
46. Tata Group
The Tata group is one of India's largest business houses. In 2005, the group owned 93
companies in seven business sectors, namely information systems and communications;
engineering; materials; services; energy; consumer products; and chemicals, and employs
nearly 220,000 people.
In 1997, the Tata's sold their Lakme business to Hindustan Lever Limited (HLL) . The group
started its retail business in 1998 with the purchase of the Littlewoods retail stores, originally
owned by a UK-based firm, in Bangalore...
Raheja Group
The K. Raheja group of companies is among India's largest real estate players. They launched
Shopper's Stop way back in October 1991. This was the first mega apparel retail outlet to be
established in India. Shoppers' Stop is projected as a Fashion & Lifestyle store for the family.
From a single store in 1991, Shopper's Stop has today grown into a 16 store retail chain in
major metropolitan cities across India...
47. Indian unorganized retail sector
Retail in India is essentially “unorganized.” 98% of the retail industry is made up of counter-
stores, street markets, hole-in-the-wall shops and roadside peddlers (See Exhibit 11 for
sector-wise break-up of Unorganized Retail. The term “unorganized retail” is better
understood when comparing this form of retail to the organized retail that one is familiar with
in developed countries.
Unorganized retail is characterized by:
1) Family-run stores
2) Lack of best practices when it comes to inventory control and supply-chain management
3) Lack of standardization
4) Essentially a sector populated by anyone who has something to sell
Unorganized Retail is essentially the next-step above agriculture for those seeking to climb
the ladder of affluence in search of a higher income. Combine this with very few barriers to
entry in the retail sector and “Winning the Indian Consumer.” McKinsey Quarterly, 2005
Special Edition. “Winning the Indian Consumer.” one gets an industry run by people
commonly referred to as “Baniyas”(See exhibit), with a lack of education, experience and
exposure. This is the major factor responsible for the manner in which the retail industry
functions. It is no surprise then that the productivity of this sector is approximately 4% that of
the U.S. retail industry.
48. Causes of Low Productivity in Unorganized Retail
1) Labor intensity: Counter-stores in India have a very low output to labor consumption
ratio. Low labor costs, failure to employ part-time labor and the absence of multitasking are
the mainly responsible for the unusually high consumption of labor. This has driven down the
productivity in the sector.
2) Inventory and Supply Chain Management: Unorganized retailers in India rarely track
consumer behavior and sales data to improve their inventory management practices. Even
among the handful of retailers that employ experience-based improvements in their business,
their efforts are largely met with no support from their suppliers. Counter stores and street
vendors do not have the infrastructure, exposure or credibility to form lasting relationships
with suppliers. As a result retailers usually use different suppliers every time they purchase
inventory. This leaves them largely incapable of strategically managing their business.
3) With 700 million agricultural labor18 looking to move into retail, low barriers to entry and
the absence of regulation in this sector have made it a largely over-supplied sector. The
excess supply of counter-stores and street vendors represents a tremendous decrease in the
productivity of this sector.
4) The absence of any real competition-almost all retailers find a way to make ends meet or
change their merchandise till they make ends meet-is also responsible for a form of status quo
in the sector where little to no improvements in efficiency, management and by extension
productivity are seen. In fact, this sector is so stagnant with respect to operational changes
that no improvement in productivity is expected in the near future.
49. However, low productivity is only an indication of underutilization and/or over allocation of
resources. It does not reflect the market share or potential of the unorganized retail sector
when it comes to catering to the Indian consumer.
The unorganized retail sector competes on the basis of a number of factors that give it a leg
up on organized retail. Much of the reason why unorganized retail has dominated the retail
market is the unique ways in which it operates when it comes to serving the consumer.
Corner-stores have catered to the traditional Indian consumer psyche and are partially
responsible for shaping it. For unorganized retail in India the market mantra is
“convenience”:
1) Home-Delivery: Corner-stores and street vendors do their best to cater to the local
population in the area in which they operate. As a result most of them provide home-delivery
services, for any and all order sizes, at no extra charge. Shopping is as simple as making a
phone call and narrating the shopping list to the store owner. Within minutes, the entire list of
groceries with an itemized, hand-written bill reaches your doorstep. The absence of product
variety, brand diversity, marketing and exposure had made shopping in stores almost
unnecessary for the Indian consumer.
Retailers unconstrained by labor costs had no problem in understanding this dynamic and
adapting to the needs of the Indian consumer.
2) Credit: Unorganized retailers enjoy a loyal and limited clientele. The personal nature of
transactions coupled with small transaction sizes allows unorganized retailers to sell goods on
credit often settling bills with clients at the end of the month.
50. 3) Proximity: Unorganized retailers like corner stores are almost always located at a few
minutes walking distance from their clients. Street vendors will go door-to-door selling their
goods. This has provided a number of advantages to the Indian consumer.
Finally, the proximity of unorganized retailers caters to the just-in-time mentality of Indian
consumers who prefer to buy goods when needed for immediate use rather than making bulk
purchases in advance. Cutting Costs in Any Possible Way: Legal and Illegal
Convenience is not the only aspect of unorganized retail that has allowed it to dominate the
industry. The unorganized nature of this sector has also allowed it to survive price
competition with large-scale organized retailers with efficient supply management, inventory
control and bulk purchasing. Unorganized retail with their small inventory, high purchase
costs and relatively small size have been able to save on a number of other fixed and variable
input costs to offer goods at competitive prices:
1) Real-Estate: Unorganized retailers usually operate from their residences that double-up as
counter stores or like street-vendors carry their merchandise with them. As a result, they incur
little to no real-estate costs.
2) Labor Costs: Unorganized retailers usually staff their stored with family members who
have no other source of employment than to work in the family store. As a labor costs are
low.
Additionally, the lack of regulation in the sector as well as high unemployment levels in India
Allow unorganized retailers to higher labor at very low rates.
3) Utilities: Corner stores operating out of homes usually pay residential rates for utilities
like electricity and water. With the large disparity between commercial and residential utility
rates, unorganized retailers do not have to worry about these inputs eating into their profits.
51. 4) Tax: Unorganized retailers rarely pay taxes due to the absence of regulation and
supervision in this sector. This also allows them to reduce price.
Unorganized retail has dominated the Indian market for decades. The small scale of each
vendor was perfect to cater to the reluctant Indian shopper while the large number of players
kept several people employed. In this situation there was little motivation to bring
organization into the sector. It took strong economic growth, liberalization of the economy
and change in the Indian mind-set to realize the advantages of bringing organization to
India’s retail industry. Organized retail has a bright future in India, but not one that will be
easy to achieve. The country’s lack of supporting infrastructure will pose a unique challenge
to organized retailers who must strike a delicate balance between adaptation and innovation
in order to succeed in the industry. The next section describes the Indian organized retail
sector in detail.
Characteristics of unorganized retail
Small-store (kirana) retailing has been one of the easiest ways to generate self-employment,
as it requires limited investment in land, capital and labour. It is generally family run
business, lack of standardization and the retailers who are running this store they are lacking
of education, experience and exposure. This is one of the reasons why productivity of this
sector is approximately 4% that of the U.S. retail industry.
Unorganized retail sector is still predominating over organized sector in India, unorganized
retail sector constituting 98% (twelve million) of total trade, while organized trade accounts
only for 2%.
52. The reasons might be-
1. In smaller towns and urban areas, there are many families who are traditionally using these
kirana shops/ 'mom and pop' stores offering a wide range of merchandise mix. Generally
these kirana shops are the family business of these small retailers which they are running for
more than one generation.
2. These kiran shops are having their own efficient management system and with this they are
efficiently fulfilling the needs of the customer. This is one of the good reasons why the
customer doesn’t want to change their old loyal kirana shop.
3. A large number of working class in India is working as daily wage basis, at the end of the
day when they get their wage, they come to this small retail shop to purchase wheat flour,
rice etc for their supper. For them this the only place to have those food items because
purchase quantity is so small that no big retail store would entertain this.
4. Similarly there is another consumer class who are the seasonal worker. During their
unemployment period they use to purchase from this kirana store in credit and when they get
their salary they clear their dues. Now this type of credit facility is not available in corporate
retail store, so this kirana stores are the only place for them to fulfill their needs.
53. 5. Another reason might be the proximity of the store. It is the convenience store for the
customer. In every corner the street an unorganized retail shop can be found that is hardly a
walking distance from the customer’s house. Many times customers prefer to shop from the
nearby kirana shop rather than to drive a long distance organized retail stores.
6. This unorganized stores are having n number of options to cut their costs. They incur little
to no real-estate costs because they generally operate from their residences.
Their labour cost is also low because the family members work in the store. Also they use
cheap child labour at very low rates.
As they are operating from their home so they can pay for their utilities at residential rates.
Even they cannot pay their tax properly.
Currently the value of the retail market is estimated at around $ 270 billion with a growth rate
of 5.7 per cent per annum according to the Indian retail report which creates a big threat for
the small unorganized retailers.
The well established organized retail sector in India are Pantaloon Retail, Shoppers’ Stop,
Spencers, HyperCITY, Lifestyle, Subhiksha & newly emerging Reliance etc.
Over 20,000 new retail outlets are expected to open within this segment. Major corporate
retail like Wal-Mart and have started to try and take over the Indian retail sector.
But in India the unorganized retail is source foods and other necessities of millions of
Indians, major link between rural and urban societies. Not only that it is also act like a
convenience store for the customer offering right product at right time at right place. In a
54. country with large numbers of people, and high levels of poverty, this model of retail
democracy is the most appropriate
So these unorganized retail sector need to be promoted so that they can organize & supply
food to Indian consumer. Now the question is how to promote this sector-
The suggestions might be-
(a) Establishment of Retailer co-operatives among retailers which is highly required for the
sustenance of the unorganized retail sector
(b) Merger and buy-out of weak retailers by a stronger one that would give a new horizon to
the small retailer
(c) Setting up of franchisee organization may also help in strengthening the position of the
retailers. The franchiser can exert a tremendous control over the way retailing is done.
(d) There must be good network connection between retail organizations, the suppliers and
other channel members to use compatible technology so that they can build strong
distribution set-up to satisfy the customers.
(e) Setting up of more and more non-store retailing centers would also ensure a strong
retailing organization. Non-store retailing makes implementation of modern principles easier
and less costly.
(d) Moreover there must be a change in the mindset of the unorganized retailer. They have to
understand the pulse of the trend. They have to understand, come forward & lead this change
management then only this sector not only can exist but flourish.
55. Indian unorganized retail sector & its challenge
India is the only one country having the highest shop density in the world, with 11 outlets per
1000 people (12 million retail shops for about 209 million households). Rather we can see the
democratic scenario in Indian Retail (because of low level of centralization, low capital input
and due to a good number of self organized retail).
India started its Retail Journey since ancient time.
In Ancient India there was a concept of weekly HAAT, where all the buyers & sellers gather
in a big market for bartering. It takes a pretty long times to & step to shape the modern retail.
In between these two concepts (i.e. between ancient retail concept & the modern one there
exist modern kirana/ mom and pop shops or Baniya ki Dukan.
Still it is predominating in India.
So the Indian retail industry is divided into two sectors- organized and unorganized.
Organized retail sector refers to the sectors undertaken by licensed retailers, that is, those who
are registered for sales tax, income tax, etc. These include the corporate retail formats of the
exclusive brand outlets, hypermarkets, supermarkets, departmental stores and shopping malls.
Unorganized retailing, on the other hand, refers to the traditional formats of low-cost
retailing, for example, hand cart and pavement vendors, & mobile vendors, the local kirana
shops, owner manned general stores, paan/beedi shops, convenience stores, hardware shop at
the corner of your street selling everything from bathroom fittings to paints and small
construction tools; or the slightly more organized medical store and a host of other small
retail businesses in apparel, electronics, food etc.
56. "Kirana Stores Vs Organized Retail"
Small stores, also called kirana stores, will continue to grow alongside organized retail, but at
a slower rate, and it might be a decade before such store owners lose business to the big
retailers, providing an ample window for India to help make the smaller players part of the
transition in retailing, But in the recent times it is said that kirana stores are joining together
to combat the organized retail stores, so this will be going on all the time like who is better,
but right now the kirana stores are happy at the moment with crisis going on people are
coming back to kirana stores. India is currently the twelfth largest consumer market in the
world. According to a study by McKinsey Global Institute, India is likely to join the premier
league of the world’s consumer markets by 2025, improving its position to the fifth.
But this growth is not going to happen is smooth way. Any change always comes up with
some friction, and Indian retail sector is and will be witnessing the same friction.
Indian retail sector is still in its nascent form if we consider its full potential. While most of
the developed market of US and Europe and also some SE Asian emerging market economies
have reaped the benefits of modern retail, India has not yet entered into advanced phase of
modern retail forms.Tug of war: organized vs. unorganized sector
Future of retail sector in India is swerving- on one side organized retail is marching
into life of urban consumers, while on the other our own neighborhood ‘kirana stores’ are
resisting fiercely with their existing strong foothold. India today is at the crossroads with
regard to the retail sector. A shift between organized and unorganized retail sector is evident,
which has led to a number of speculations on the fate of Indian retail sector.
57. Unorganized sector cannot be ignored
In any newspaper or television channel, we find hordes of news about happening in organized
retail sectors, which is indeed fairly real situation. While the role of organized retail sector in
growth of economy cannot be denied, but one thing is also of extreme importance that
unorganized retail format is a support to a large chunk of population- providing direct
employment to 39,500,000 individuals. So there is no way that government or anyone can
discount these foundation stone of Indian economy.
The face of Indian consumerism is changing: not Indian consumerism is evolving from
“Bajaj Scooter family man” to “Bajaj Pulsar trendy youngster”. This changing consumer’s
taste and lifestyle, somewhere automatically give some advantage to organized sector. This
makes imperative for unorganized retail sector to restructure itself in order to withstand the
increasing competition and to meet consumer expectations by moving with trends. What they
can do and what they are doing, some o these issues will be discussed in future parts of
article.
58. RETAIL FDI TO REDUCE FRUIT AND VEGETABLE WASTAGES: CRISIL
Current Affairs Trade: A CRISIL Research study concludes that allowing foreign direct
investments (FDI) in multi-brand retail has the potential to reduce the prices of perishable
food produce such as fruits and vegetables in India over the long term. This policy measure is
likely to stimulate a flow of investments from organised retailers and logistics companies for
establishing quality supply-chain infrastructure for fresh fruits and vegetables. An efficient
supply chain will enable large retailers to source vegetable and fruit produce directly from
agricultural cooperatives, lowering annual wastages, about Rs 630 billion in 2009-10, and
reducing commissions of trade intermediaries. This, in turn, will improve realizations to
farmers, reduce consumer prices of fruits and vegetables, and increase operating margins of
large retailers.
About 30 per cent of India’s total production of fruits and vegetables is wasted every year due
to inadequate cold storage and transport facilities. CRISIL Research estimates that almost 50
per cent of the annual wastages can be prevented if fruit and vegetable retailers have access to
specialised coldstorage facilities and refrigerated trucks. Further, large retailers will be able to
save on commissions, amounting to 10-15 per cent of the retail selling price of fruits and
vegetables, to trade intermediaries such as commission agents and wholesalers, if they are
able to source the produce directly from agricultural cooperatives.
“The wastage in the supply chain and the commission to trade intermediaries inflate the final
price paid by Indian consumers for fruits and vegetables. Indian consumers pay nearly 2-2.5
times the price paid to a farmer as compared to 1-1.5 times in developed markets where the
penetration of organised retail is much higher,” says Mr. Nagarajan Narasimhan, Director,
CRISIL Research. CRISIL Research estimates that Rs 650 billion will need to be invested
over the medium term to build the supply-chain infrastructure for fruits and vegetables. This
59. estimate takes into account the number of cold storage facilities and refrigerated trucks that
would be required for handling India’s production of fruits and vegetables. The fruit and
vegetable segment has so far not attracted adequate investments since organised retailers
account for less than 1 per cent of the total sales of fruits and vegetables in India.
“Liberalisation of the retail-FDI policy will help increase organised retail penetration,” says
Mr. Sridhar C, Head – CRISIL Research. “A likely increase in the sales volumes of fruits and
vegetables through modern store formats will encourage large retailers and logistics
companies to invest in cold storage and transport facilities.”
CRISIL Research is India’s largest independent, integrated research house. It is an integrated
research platform and capabilities spanning the entire economy-industry company spectrum
to deliver superior perspectives and insights to over 600 domestic and global clients, through
a range of subscription products and customised solutions.
Retail Marketing-Strategies for small unorganized retailer
in the era of Organized retailing
Current Status of Retailing in India
The size of the retailing industry in India is estimated to be in the order of Rs. 7200 to 8100 billion
(US $ 160-180 billion), with organized retailing estimated to be approximately 2 % (Rs 160-180 billion)
Of the total retailing industry in the country. Food and grocery retailing is estimated to contribute to around
(Rs 3500-4000 billion) of the total sales from retailing. The number of total retail outlets in the
Country is estimated to be around 12 million. The retail sector is the second largest employer of the country
agriculture. According to the National Readership Survey of 1999, 6.6% of the urban adults and 2% of the
rural adults are estimated to be shop owners.
60. India's unorganized retail entrepreneurs may be uneducated. But they are not street-stupid,
but street-smart, who know and sense every pulse and breath of the Indian consumer.
Dominance of the unorganized sector the unorganized sector has dominance over the
organized sector in India, especially because of the low investment needs. As we know
Retailing is the principal link between the producer and the consumer and plays a major role
in price formation therefore unorganized retailers can play their role effectively only by
establishing an efficient and cost-effective supply chain. They are the most important link in
the supply chain. They should develop such a supply chain which will reduce the wastage and
transaction cost thereby reducing the cost of inventories. A reduction in the cost of inventory
management will lead to a reduction in the final price to the consumer. We feel if the small
unorganized retailers abide the following retail marketing strategies, they will definitely
Flourish in the Era of organized Retailing.
1. Re Establishment of Customer base:
In their preparation to face fierce competitive pressure, Indian retailers must come to
recognize the value of building their own stores as brands to reinforce their marketing
positioning, to communicate quality as well as value for money. Sustainable competitive
advantage will be dependent on translating core values combining products, image and
reputation into a coherent retail brand strategy. The organized new generation Indian retailers
(Shoppers Stop and Westside) have recruited senior retail persons from abroad, who have the
expertise in setting up systems and procedures, but they are going to take a long while to tune
into the psyche of the Indian consumers.
61. 2. Service Delivery Mechanism:
Small stores should focus on personalized service to customers. They should personally
attend to the customer and should try their best to satisfy him. The customer feels important
when he walks-in in such a store. Nobody will personally attend a customer in a Mall. And
the customer sometimes finds it tiring to rummage through all those piles of clothes stacked
on the racks. In a small store, the sales person opens each garment and shows it to the
customer. Again in some stores alterations and other miscellaneous repairs are done
promptly. Some even give a life time free warranty of stitching and repair on their garments.
3. Phenomenon of Discounting and Free Home Delivery:
In a middle class-dominated, price-sensitive market like India, price manipulation is a strong
weapon in the arsenal of the small independent retailer. Small retailers should promote
discounting phenomenon in order to retain customers for their stores.
Free Home delivery mechanism will build a rapport with the customers and will also make
the small retailers abreast about specific needs and necessities and simultaneously enhances
the comfort zone of the customer. And ultimately that customer moves a step forward in the
ladder of loyalty.
4. Customer Information System:
Small retailers should think about their customers as individuals, analyze their shares of
customers and calculate their lifetime values. Traditional Mom and Pop stores need to build
data bases using in-store data collection and launch frequent shopper rewards, carry on an
interactive communication with them, make special offers, and add value outside the in-store
relationship.
62. Loyalty of the customers can be attained by developing personal relationships with
consumers rather than only through product and pricing. For instance, rewards should be
given as loyalty bonus for customers i.e. priority service, free gift wrapping, enhanced
guarantees and sales pre-notifications. Benefits include privileged rewards and extra value
offers as well as straight discounts. Analysis of customer behavior can guide store
merchandising to match the profile of their customers and even the needs of the shoppers at
different times of the day.
5. Prominent Feed Back System:
Unorganized Retailers have to understand the concept of individual customer communication
outside the stores as a necessity. It is necessary that they seek to add a new form of dialogue
with their customers. For example they can prepare a broadsheet for its customers providing
details of the promotional offers available and price comparisons across brands. That helps its
customers to take more informed decisions.
6. Consortium:
Unorganized retailing in order to meet the challenges of organized retailing such as large
Cineplex’s, and malls, which are backed by the corporate house can form consortium.
Recently 25 stores in Delhi under the banner of Provision mart are joining hands to combine
monthly buying. Bombay Bazaar and Efoodmart are aggregations of Kirana Stores. The
existing small and medium independent retailers should closely examine what changes are
taking place in their immediate vicinity, and analyze whether their current market offers a
potential redevelopment of the area into a more modern multi-option destination. If it does,
and most commercial areas in India do have this potential, it would be very useful to form a
63. consortium of other such small retailers in that vicinity and take a pro-active approach to pool
in resources and improve the overall infrastructure. The next effortshould be to encourage
retailers to make some investments in improving the interiors of their respective
establishments to make shopping an enjoyable experience for the customer.
The Difference Between Organized And Unorganized Retailing
Organized retailing is based on the principle of unity and unorganized retailing is based on
the principle of singularity. Both organized and unorganized retailing is found in most
countries throughout the world.
India and China are strong examples of countries in which unorganized retailing
dominated their markets. Today these countries have a growing economy because of the
influx of organized retailers into their markets.
The demand for giant malls with large department stores, cinemaplexes, supermarkets, and
pharmacy chains is the result of higher incomes and urban customers looking for
convenience in shopping. Large chains such as WalMart, McDonald's, Microsoft and other
organized retailers have reached across the world sharing their retailing expertise.
The unorganized mom and pop retailers and independent retailers continue to fulfil a need.
The organized retailing giants are trading organizational expertise for a share of the markets
across the world.
64. HYPOTHESIS
A hypothesis consists either of a suggested explanation for an observable
phenomenon or of a reasoned proposal predicting a possible causal correlation among
multiple phenomena. The term derives from the Greek, hypotithenai meaning "to put under"
or "to suppose." The scientific method requires that one can test a scientific hypothesis.
Scientists generally base such hypotheses on previous observations or on extensions of
scientific theories. Even though the words "hypothesis" and "theory" are often used
synonymously in common and informal usage, a scientific hypothesis is not the same as a
scientific theory.
Hypothesis may be defined as a proposition or a set of proposition set forth as an
explanation for the occurrence of some specified group of phenomenon either asserted merely
as a provisional conjecture to guide some investigation or accepted as highly probable in the
light of established facts. Quite often a research hypothesis is a predictive statement, capable
of being tested by scientific methods, that relates an independent variable to some dependent
variable.
NULL HYPOTHESIS
A null hypothesis is a hypothesis (within the context of statistical hypothesis testing) that
might be falsified on the basis of observed data. The null hypothesis typically proposes a
general or default position, such as that there is no relationship between two quantities, or
that there is no difference between a treatment and the control. The term was originally
coined by English geneticist and statistician Ronald Fisher.
The null hypothesis (often denoted by H0) formally describes some aspect of the statistical
"behaviour" of a set of data.
65. ALTERNATE HYPOTHESIS
Alternative hypothesis is the "hypothesis that the restriction or set of restrictions to be tested
does NOT hold." often denoted H1. Synonym for 'maintained hypothesis.' The Alternate
Hypothesis of this project report is that customers are not satisfied
1. Unorganized retail sector is far more rooted in Indian consumer market in comparison
to organized retail.
2. Organized retail sector adopt more aggressive & specific marketing strategies in
comparison to unorganized retail sector.
66. Research Methodology
The purpose of methodology is to describe the process involved in research work. This
includes the overall research design, data collection method, the field survey and the analysis
of data.
Research is a common parlance refresh to a search for knowledge. One can also define
research as a scientific & systematic search for pertinent information on a specific topic.
In fact, research is an art of scientific investigation. The advance learner’s dictionary of
current English lay down the meaning research as a careful investigation & inquiry specially
search for new facts in any branch knowledge.
Research Design
Research Design is the arrangement for conditioned for data collection & analysis of data in a
manner that aims to combined relevance to research purpose with economy in procedure.
A research design is a master plan or model for the conduct of formal investigation. It is blue
print that is followed in completing study.
The research conducted by me is a descriptive research. This is descriptive in nature because
study is focused on fact investigation in a well structured from and is based on primary data.
Research Plan
Type of study: For completing my study I have gone for sample study because looking at the
size of population & the time limitation it was not convenient for me to cover entire
population. Hence, I have gone for sample study rather than census study & probability
sampling is used.
67. Sampling Plan
A sample design is a definite plan for obtaining a sample from a given population. It refers to
the technique or the procedure that researcher would adopt in selecting items to be inched in
the sample i.e. the size of sample. Sampling plan is determined before data are collected.
Steps in Sampling:
1. Understanding the Marketing strategies of retail sector.
2. Study the organized & unorganized retail sector.
3. To collect the information from self constructed questionnaire.
4. Meeting with different managers & owners of different stores to incorporate their
views.
5. Obtaining the opinion and suggestions of owners at different levels.
6. Prepare questionnaire on the basis of above information.
7. Gather information from different source like books Internet magazines etc.
8. On the basis of the answers from the managers & owners and the information
gathered from other sources prepare the report, mentioning the necessary changes
require in the existing environment.
Sampling Frame:
The list of sampling units from which sample is taken is called sampling frame.
Sampling size:
Approximately 100
68. Sampling Procedure:
The selection of respondents were accordingly to be in a right place at a right time and so the
sampling were quite easy to measure, evaluate and co-operative. It was a randomly area
sampling method that attempts to obtain the sample of convenient.
Current Landscape of Retail in India
The Indian government does not recognize retail as an industry. In India 98% of the retail
sector consists of counter-stores and street-vendors. With no large players, inadequate
infrastructure and a small affording population that believed in saving rather than spending,
Indian retail never attracted the interest of large corporations. That was till they realized that
retail in India is a USD 320 billion dollar industry,growing at CAGR 5% and contributing to
39% of the GDP2 (See exhibit 1 for projected market size of retail in India.).It might seem
almost nonsensical that this important sector of the country’s economy has been overlooked
by corporate giants. One cannot blame them though. Indian retail has been a traditionally
unorganized sector, dominated by counter-stores and street vendors (See Exhibits 2 and 3 for
pictures).While retail employs a large sector of the population, most of these people are
uneducated, unskilled individuals that regard retail as the preferred career alternative to
agriculture. They never had the means nor will to develop the sector or expand their business.
Retail never enjoyed the support of the Indian consumer. A miserly population that barely
had the means to make end meet never treated shopping as a form of leisure. While
69. individual retailers saw small gains, lack of infrastructure, an unattractive Indian consumer
and absence of regulation never provided the scale that retail giants could capitalize on
Meanwhile, the government preferred to look the other way while this unorganized retail
sector provided a meager standard of living to millions in a country where poverty plagued
the majority of the population.The unorganized retailers survived on thin margins and low
volumes, while the corporate giants preferred to spend their resources in areas like power,
industrials and telecom where the large-scale opportunitieswere abundant. Today the retail
industry has witnessed a remarkable transformation.The country’s staggering economic
growth of around 8%3 over the last 2 years has resulted in major shiftsin the Indian class
structure with higher incomes leading to the growth of the Indian middle-class. This is
amiddle-class that is aware of the standards of living in other countries thanks to exposure
through the mediaand internet. Unlike their forefathers they have decided to adopt a
“Spending” approach to improve theirstandard of living rather than a “Saving” approach.
With an estimated 400 million shoppers and growing,
Organized Indian retail’s target population is larger than that of the entire United States.4
Voted the most attractive retail destination in the world for two years in a row, India is
expected to witness 7-8% growth in its retail sector over the next few years.5
Recognizing the short-term and long-term growth of retail in India, a number of domestic
business giant shave entered the retail industry or are planning to do so in the near future.
Some like Pantaloon Retail, Shopper’s Stop and Pyramid Retail have been in the industry for
a decade. Others like Reliance Retail Ltd.(RRL) have just entered and opened up a number of
stores across the country still other domestic players like Birla7 and Bharti8 are planning
their foray into this sector. In fact retail in India has also attracted global giants like Wal-Mart
who have also indicated their interest in the sector by forming a Joint Venture with Bharti.
70. Each of these domestic and international retail giants have or will introduce a number of
modern retail formats like malls, hypermarkets and supermarkets. Initial consumer response
to these novelties in the retail sector has been very promising and as the middle-class
continues to grow, organized retail in India is sure to see large returns. In fact, organized
retail is growing at a staggering 35% per year.As organized retailers enter the Indian market,
however, they must be mindful of the unique status of retail in the country. Retail in the
country has been dominated by millions of unorganized retailers who have used consumer
proximity and home-delivery as their operating ideals to cater to the Indian consumer that has
become accustomed to this convenience. Unorganized retail has both shaped the mentality of
the Indian consumer and been shaped by it. As of 2005 retail contributed 39% of India’s
GDP, but even with this, the percentage of retail in the organized sector is only a measly
6%10 (See exhibit 4 for retail sector’s contribution to India’s GDP and penetration of
Organized Retail). These counter-stores and street vendors might seem small fish in a retail
industry that is soon to be dominated by giants like Pantaloon and Reliance. Yet, they cater to
a different set of preferences of the Indian consumer and have traditionally survived on low
turnover and thin margins. Individually they are a minor factor in the retail plans of any giant
organized retailer but collectively they represent the historic state of retail in India that is so
deeply intertwined in the economy of the country and the psyche of the Indian consumer that
co-existence with them is a better policy rather than competition.
Another factor that major retailers must be wary of is the lack of infrastructure to support
supply chains and efficient retail operations in India Companies like Wal-Mart that grew
from the ground-up leveraged the infrastructure of U.S.A to build a large supply-chain which
has been the backbone of its success. The story in India is very different. Inadequate
highways, the absence of cold storage facilities, an underdeveloped supply chain, limitless
Bureaucracy and the lack of regulations created a situation where the local corner-stores and
hawkers thrived. What was the street-vendors gain will be a major hurdle for large-scale
71. organized retailers. They will have to demonstrate unprecedented innovation, adaptation and
experimentation to succeed in the Indian retail industry.
Having presented the immense potential and current status of the retail industry, this paper
continues to flesh out the Indian retail story with the objective of highlighting some of the
major concerns that organized retailers will have to consider as they venture into the Indian
market. The paper outlines the transformation of the Indian consumer and highlights the
characteristics of the unorganized and organized retail sectors in the country. It then presents
some of the ground realities of the support infrastructure that will pose major challenges to
the large retail chains in India. For example, India is the second highest producers of fruits
and vegetables in the world, but only have cold-storage capacity for 10 per cent of the total
production.
The paper goes on to provide the example of Pantaloon Retail, a large organized retailer that
has enjoyed tremendous success in India.
The Indian consumer has undergone a remarkable transformation. Just a decade or two ago,
the Indian consumer saved most of his income, purchased the bare necessities and rarely
indulged himself. Today, armed with a higher income, credit cards, exposure to the shopping
culture of the west and a desire to improve his standard of living, the Indian consumer is
spending like never before. Organized retail with its variety of products and multitude of
malls and supermarkets is fueling his addiction. His new mentality, in turn, is fueling the
growth of organized retail in India.
India’s population is young, very young. Most consumers have grown up with television, the
Internet, and have been exposed to the standards of living and consumer culture abroad. This
generation is also making money at a younger age and lots of it, thanks to call centers and
other avenues of employment opening up that cater to students in college and schools. As a
result they are ready to spend most, if not all of their income on apparel, accessories, and
electronics. Higher Incomes Liberalization of the country’s economy has brought a number
72. of employments opportunities. With the entry of a number of multinationals and the
expansion of domestic corporations, job prospects in the country are looking up. As a result,
incomes and consumption are projected to increase rapidly over the next couple of years.
This sets the stage for a very exciting and promising retail market in the future.
No Money, No Problem
The finance sector has already seen a huge expansion. Unlike a decade ago, credit cards and
short-term loans have become easily accessible and have contributed to the emergence of a
consumer culture in India. Credit card rewards schemes, flexible financing options and all the
other common lures are tempting the Indian consumer to shop. With loans for everything
from a home to an automobile freely available, the Indian consumer can start spending on
big-ticket items that were traditionally within his reach only after years of savings.
Urbanization
Growing urbanization is also responsible for the changing consumer psyche12. As
urbanization spreads beyond the major cities, it converts the local population from net savers
to net spenders. This is consistent with what has been observed in developing countries like
Thailand, Malaysia and developed countries like U.S.A and the U.K.
The Lure of Organized Retail Another important factor to consider is the effect of existing
organized retail in India in fueling consumerism. New malls and supermarkets with their
modern decors and multiple products are enticing Indian consumers. This is one of the most
direct factors responsible for the mentality change of the Indian consumer. As people see
their relatives, friends, neighbors shopping at these new establishments, they are bound to
jump on the bandwagon as well.
73. Different Strata of Indian Consumers
The consumer of today, at least what the multinationals are targeting, is popularly known as
the aspiring India – the middle income segment which is growing faster than ever while 10-
15 years ago, people in this segment would ask –“Mera number kab aayega” (When will I
be able to afford the simple luxuries of life), today this same segment says – “Mera number
ab aayega”, (I am now in a position to afford the simple luxuries of life).
The numbers on the Indian economy and retail sector in specific say a lot about the growth
potential in India. However, the engine pulling this locomotive of the consumer goods market
in India at breakneck speed is the 40 million Indian middle income households. Growing at
around 10 percent a year, this section of the economy makes between $4000 to $10,000 per
annum ($20,000 to $45,000, adjusted PPP), and its emergence and importance is signaled, for
example, by the 100 per cent growth in passenger car sales ($5billion in 2004) in the period
between 2000-2005.
Some of the features characteristic of these consumers is-
Their tendency to borrow money in order to buy the upscale items – contrary to the
traditional line of thought that Indian consumers are indisposed to credit. But these
consumers not only have price and quality on their minds but also the fact that their brands
effectively reflect their local environment and are consonant with their life style. And this is
where the foreign multinationals coming into the Indian consumer market has to pay
attention. Selling global brands in India at global prices is a road to perdition. Companies
who have tailored their products to the Indian environment and customer have reaped high
rewards. For example, Nokia in India customized its 1100 model mobile phone by adding
