EMERGING RETAIL TRENDS IN

INDIA - INDIAN JOURNAL OF

MARKETING, DECEMBER, 2007, PAGE
NO. 23-27,
G. LAXMI PRABHA, AMATUL BASEER.
BY:
FARAH.S.CHOUDHARY
10-MBA-08
1
INTRODUCTION
The term retail comes from the French word retailer
which refers to cutting off, 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).
The term Retailing refers to any activity that involves a
sale to an individual customer.
2
OBJECTIVES
To understand the retail customer in India.
To study the emerging retail trends in India.
To study the retail formats in India.
3
RETAIL TYPES
There are 3 major types of retailing:
Market
Store trading or Shop
Virtual Retail
4
MARKET
A physical location where the buyers & seller
coverage.
Usually this is done on town squares, sidewalks or
designated streets & may involve the construction of
temporary structures (market stalls).
5
SHOP OR STORE TRADING
It is where shops use counter service, where the goods
are out of reach of buyers and must be obtained from
the seller.
This type of retail is common for small expensive
items (such as jewellery) and controlled items like
medicine and liquor.
6
VIRTUAL RETAIL
It is where products are ordered via mail,
telephone or online without having been
examined physically but instead in a catalog, on
television or on a website.
Sometimes this type of retailing replicates
existing retail types such as online shops or
virtual marketplaces such as eBay.
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EXAMPLE
8
CHANGE IN RETAIL OVER TIME
Market halls
(Middle Ages)
1
st
Shop that dealt
with one type of
article (banker,
tailor, cobbler)
Arcades were invented
(19
th
Century in
France)
Large Store of one
ownership with many
counters(Department
Store)
1
st
Supermarket & 1
st
Shopping Mall (1920,
U.S.A)
Superstore,
Strip Mall
9
OTHER DIFFERENT TYPE OF SHOPS
PAWN SHOP- Shops that sell second hand
goods.
GIVE-AWAY SHOP- A non-profit shop, the
public donates goods to be sold. Goods can be
taken for free.
CONSIGNMENT SHOP- 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.
10
RETAIL PRICING
The most popular technique employed by the
retailers is the cost plus pricing. This involves
adding a markup amount to the retailers cost.
Another one is charging the amount suggested by
the manufacturer and usually printed by the
manufacturer on the product. This is called Retail
Pricing
Most of the times, the prices are fixed and displayed
on signs and labels otherwise there will be price
discrimination.
Retailers may also resort to sales when overstocked, or
need to raise cash to renew stocks.
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PURPOSE OF THE STUDY
Modern retailing is fiercely competitive &
innovatively oriented.
It is populated by an ever-going variety of
institutions & constantly buffeted by a highly
fluid environment.
The purpose of this study is to describe some of
the more significant competitive developments
that have made retailing so volatile & to
illustrate how some of these developments have
affected the marketing channels in which
retailers participate.
12
SOME RECENT HAPPENINGS IN RETAIL
SECTOR
Sunil Mittals Bharti signed a pact with Wal-Mart.
One of Asias top retailers and the worlds largest in
the health and beauty segment- AS Watson Ltd. part
of Hutchison Whampoa has zeroed in on Dubai-based
Landmark for an Indian entry.
Reliances Mukesh Ambani also has set investment of
Rs. 25000-crore in retail sector.
Birla also has a plan of investing Rs. 15000-crore in
retailing.
Trent, the Tata groups retail venture, is negotiating
with international biggies for a tie-up in its
hypermarket format.
13
CONTD
Star Bazaar India which is currently present only in
Ahmadabad has booked 15 lakh sq foot of space
across the country, mostly with real estate developer
DLF.
The Tatas are separately using another group
company to talk with Woolworth for entering the
grocery segment. Tata sons has a tie-up with
Australia-based Woolworth under the Infiniti brand
for setting up a chain of retail consumer electronics
stores.
New York-based high-end fashion retailer Saks Fifth
Avenue has tied up with DLF Properties to set up
shop mall in New Delhi.
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THE INDIAN STORY
10
th
largest economy in the world
based on GDP.
Real estate sector is growing at 30% per annum
& is one of the largest employer.
Residential market is 80% of the total real estate
market.
India is ranked the 5
th
largest retail destination
across the globe.
Globalization of Indian economy.
The total retail stock in India at the end-1Q09
stands at 34.8 million sq ft (3.2 million sq m). 15
INDIAN RETAIL SCENARIO
Total private consumption
expenditure in India-
375 billion USD.
Retail sale
205 billion USD (55%).
Organised retail-
8 billion USD (4%).
Retailing 35% of GDP.
Outlet estimates over 12 million.
Formats only 4% larger than 500 sq ft.
Second largest employer after Agriculture.
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EMERGING RETAIL TRENDS:
o Discounters will steal a march over the food
retailers
o Preponderance of web driven sourcing
o High use of W-LAN in store
Mobile POS terminals.
Mobile information Kiosks.
Better store space management.
o Aisle checkouts
o High use of advanced communications technology like
ATM, Frame Relay by retailers
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INDIA VS. WORLD
Indian retail is fragmented with over 12 million outlets
operating in the country. This is in comparison to 0.9
million outlets in USA, catering to more than 13 times of
the total retail market size as compared to India
India has the highest number of outlets per capita in the
world - widely spread retail network but with the lowest
per capita retail space (@ 2 sq. ft. per person)
Annual turnover of Wal-Mart (Sales in 2001 were $219
billion) is higher than the size of Indian retail industry.
Almost 100 times more than the turnover of HUL (India's
largest FMCG company).
18
CONTD
One-day sales record at Wal-Mart (11/23/01) $1.25 billion -
roughly two third of HUL's annual turnover.
60% of retailers in India feel that the multiple format
approach will be successful here whereas in US 34 of the
fastest-growing 50 retailers have just one format
Wal-Mart - over 4,800 stores (over 47 million square
meters) where as none of India's large format store
(Shoppers' Stop, Westside, Lifestyle) can compare.
The sales per hour of $22 million are incomparable to any
retailer in the world. Number of employees in Wal-Mart are
about 1.3 million where as the entire Indian retail industry
employs about three million people.
19
FUTURE CONCERNS
68 million square feet of mall space is expected to be
available by end of 2007, which might lead to over-
capacity of malls
Lack of differentiation among the malls that are
coming up. One option may be to look at
specialization.
Poor inventory turns and stock availability measures
- retailers clearly need to augment their operations.
Operations of retailers and suppliers are not
integrated. Efficient replenishment practices
practiced in the Indian auto and auto-component
industry can be leveraged to implement efficient
supply chain management techniques. 20
CONTD
Supplier maturity, in terms of adherence to
delivery schedules and delivering the quantity
ordered, is an issue
Sales tax laws - lead to retailers having state-
level procurement and storage leads to Indian
retailers having higher inventories. VAT has
helped alleviate this a bit.
Increased adoption of IT and shrinkage
management will be a critical area.
Supply chain and customer relations followed by
merchandising, facilities management and
vendor development are areas which have
significant gaps and proactive training is a key
imperative for overcoming these.
21
CONCLUSION
The Retail Industry in India has come out as one of
the most dynamic and fast paced industries with
several players entering the market.
But all of them have not yet tasted success because of
the heavy initial investments that are required to
break even with other companies and compete with
them.
The India Retail Industry is gradually inching its way
towards becoming the next boom industry.
Favourable government policies and continued
growth will mean that the future belongs to the most
aggressive players.
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