RETAIL MARKETING IN INDIA

A
RESEARCH REPORT

Submitted in fulfillment of the requirements for the post
Graduate Diploma in Management (PGDM)

By:
Neha Upadhyay
PGDM- 2012-2014

Under The Guidance Of:
Bidisha Bhattacharya
Submitted To:
Department OF Thesis
IIPM






S SY YN NO OP PS SI IS S

Thesis Title: Retail Marketing in India

Introduction: The Indian retail industry is now beginning and growing day by
day.The concept of retail which includes the shopkeeper to customer interaction, has
taken many forms and dimensions, from the traditional retail outlet and street local
market shops to upscale multi brand outlets, especially stores or departmental stores.

In this thesis, I had focusing on two aspects of retail marketing i.e. Store Retailing and
Non store Retailing.

Store Retailing: Store Retailing includes departmental store, which is a store or multi
brand outlet, offering an Varity of products in various categories under one roof,
trying to cater to not one or two but many segments of the society

Non store Retailing. : Non store Retailing Includes direct selling, direct marketing,
automatic vending.

Therefore, this concept of retail marketing through departmental stores, which is coming
up in a big way in India was decided to be studied in detail, through an exploratory and
conclusive research.

Objective:-
The over all objective of the thesis is to study the concept of Retail Marketing in India

OBJECTIVE :


Retailing in India Past, present and future



Future growth potential of Retail Marketing in India.

How do Indian retailers sell their product?

Which International retailers eyeing Indian market..






OBJECTIVE


The over all objective of the thesis is to throw light on Retail Marketing in India

SUB OBJECTIVE :



Retailing in India Past, present and future

Future growth potential of Retail Marketing in India.

How do Indian retailers sell their product?

Which International retailers eyeing Indian market..



RESEARCH METHODOLOGYT


The methods adopted to fulfill the objective of the study that included collecting
primary and secondary data. I conducted the survey in order to gather the
informations from the knowledgeable person of retail stores on the isssue
reverent to my thesis topic.

The secondary data collected from :

Magazines The Franchising World.
Journals Indian Management.
Web sited : www.franchiseindia.com
www.ksatechnopak.com








INTRODUCTION


Any business that directs its marketing efforts towards satisfying the final
consumer based upon the organization of selling goods and services as a means of
distribution



A retailer or retail store is any business enterprise whose sales volume comes
primarily from retailing. Retail organizations exhibit great variety and new forms keep
emerging. There are store retailers, non store retailers, and retail organizations.
Consumers today can shop for goods and services in a wide variety of stores. The best-
known type of retailer is the department store. Japanese department stores such as
Takashimaya and Mitsukoshi attract millions of shoppers each year. These stores feature
art galleries, cooking classes, and childrens playgrounds.

A retailer is at the end of the distributive channel. He provides goods and service
to the ultimate consumers. This he does through his small organization, with the help of a
few personnel. In an individual retail store there is not much scope for organization
except in the sense that the shopkeeper has to organize o apportions his time and
resources. The need for organization becomes essential as soon as he hires people o
enters into partnership or takes the help of members of his family in running his store. A
retailer deals in an assortment of goods to cater to the needs of consumers. His objective
is to make maximum profit out of his enterprise. With that end in view he has to pursue a
policy to achieve his objective. This policy is called retailing mix. A retailing mix is the
package of goods and services that store offers to the customers for sale. It is the
combination of all efforts planned by the retailer and embodies the adjustment of the
retail store to the market environment. Retailing mix, a communication mix and a
distribution mix. The maximum satisfaction to the customers is achieved by a proper
blend of all three.
The success of the retail stores, therefore, depends on customers reaction to the
retailing mix which influences the profits of the store, its volume of turnover, its share of
the market, its image and status and finally its survival.
There are three main phases in the life of a retailing institution. These are: -
Innovation ( Entry )
Trading Up
Vulnerability.
In the entry stage, a new retailer enters with new price appeal, limiting



In the entry stage, a new retailer enters with new price appeal, limiting product
offerings, Sparton Stores & Limited services. Its monopoly power over the others is its
price advantage, which means that it offers products at low prices so as to get a
competitive edge over its competitors.







Indian Retail: The Road Ahead

With around 13% contribution to the GDP and 7% employment of the national
workforce, retailing no doubt is a strong pillar of the Indian economy. What it requires is
more corporate backed retail operations that have started to emerge over the past couple
of years.
Year 2001 has been an important year in the history of retailing when Wal-Mart emerged
as # 1 company in the Fortune 500 list. This has never happened before when a retailer
was at the top of the list. Over 50 of the Fortune 500 companies are retailers and 25 of the
Asian Top 200 companies are retailers. Also, in terms of shareholders value it has
performed considerably better than the banking, insurance and consumer industries
yielding a return on investment of 18%. However, when we look at Indian retail in the
global context it bears no water.
Instead of comparing total global retail industry with Indian retail industry, lets compare
Wal-Mart alone with Indian retailers. Here are ten interesting facts:


1. The annual turnover of Wal-Mart (Sales in 2001 were $219 billion) is higher than the
size of Indian retail industry (estimated at about $180 billion) and almost 100 times more
than the turnover of HLL (India's largest FMCG company).
2. The size of any Wal-Mart store is much higher than the size of any existing shopping
mall in India.
3. Wal-Mart has over 4,800 stores (over 47 million square meters) where as none of
India's large format store (Shoppers' Stop, Westside, Lifestyle) have more than 10 stores.
4. New stores opened annually by Wal-Mart are about 420, much higher than all
organized Indian retailers put together.
5. 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 (one of the most fragmented in the world) employs about three million people.
6. Wal-Mart has around 30,000 suppliers throughout the world and more than 600,000
SKU's on its web site, a number that cannot be compared.
7. Daily customers are about 15.7 million (almost equivalent to Mumbai's entire
population).
8. Time between each Barbie Sale at Wal-Mart is just two seconds (same rate at which
babies are produced in India!)
9. One-day sales record at Wal-Mart (11/23/01) $1.25 billion (roughly two third of HLL's
annual turnover).
10. None of the Indian organized retailer has ventured overseas where as Wal-Mart is
now in 10 countries and will expand to 21 countries in two years.

Retail: A strong pillar of Indian economy


Retailing is the last mile infrastructure to access and deliver goods to consumers. Retail
forms the backbone of the nation's delivery system and its importance can be exemplified
by the network of 15,000 KVIC outlets which support 4 lakh plus small and medium
handicraft manufacturers across the country.
It also serves as the last mile infrastructure to the manufacturers as well as the
government for tax collection. For instance, the success of the VAT proposal depends on
its being able to be implemented at the retailer level, but nobody has consulted with them
as a body yet on this issue. Furthermore, retailing is also an important and large
contributor to the GDP and a major employment generator. In India, for the last four
years its contribution to the GDP was around 13%. The sector gainfully employs 6-7%
of the total workforce in India.


Changing Retail Landscape
Indian retail is fragmented with over 12 million outlets operating in the country and only
4% of them being larger than 500 square feet in size. 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. Thus India has the highest number of outlets per capita in the world with a
widely spread retail network but with the lowest per capita retail space (@ 2 sq. ft. per
person).
Recently, majority of store formats have hit India. Yet traditional format stores namely
the kirana shops, pan/bidi shop, hardware shops, weekly haats and bazaars form the bulk.
Formats like department stores, malls, speciality stores as well as discounters are shaping
the burgeoning organized sector in India.
Though still in its infancy with less than 2% share of the retail sector, organized retail has
definitely struck its roots in India. What we are looking now are more corporate backed
organised retail operations. Till seven years back organized retail was largely restricted to


the southern India, barring the Bata chain. Organized retail has now shifted gears and is
moving ahead with accelerated speed throughout the country, without any direct
incentive provided by the government. Organised retail is growing at a rate of about 40%
per annum over the last three years.
With a size of Rs. 15,000 crore (USD 3 billion), organized retail is very much on track
according to KSA Technopak's projections made in 1999 based on in-house research.
The projections claimed that organized retail would grow to be a Rs. 35,000 crore (USD
7.1 billion) by 2005.










Retailing in India Past, present and future



Executive summary

Retailing, considered a sunrise industry today after infotech, is the most happening
industry with almost all the big players vying for a share of the coveted pie. Buoyed by a
strong increase in private consumption (see raph), retailing is one industry that is waiting
to explode.



Today however, organised retailing is less than 2 per cent of the retailing industry in
India, that is, about Rs 5,000 crore.(see table) Therefore, there is no real retail revolution
in India; the industry is still in the stages of infancy.

Share of Organised Retail
1999 2002 2005
Total Retail (US $ Billion) 150 180 225
Organised Retail (US $ Billion) 1.1 3.3 7
% Share of organised Retail. 0.7 1.8 3.2

Source: KSA Technopack

Organized retailing is bound to grow tremendously provided the right mark-eting
strategies are adopted. Retail businesses have broken rank and seem poised to surge
ahead with renewed vigour, optimism, confidence and cap-ability.

There is an incredible amount of activity in terms of creation of retail-riented space
across India. As per some estimates, there are over 200 retail mall projects under
construction or under active planning stage spanning over 25 cities. This may translate
into over 25 million sq. ft. of new retail space in the market within next 24 months.

Huge retail formats, with high quality ambience and very courteous and ambivalent sales
staff, are the regular features of retail formats in most Asian countries. However, in India
except for a few big towns where modern retailing formats abound, these features are
grossly missing. ETIG expects organised retailing to slowly penetrate the second rung
and smaller towns which will catapult the growth rate for the sector.

Even though the big retail chains are concentrating on the upper segment and selling
products at higher prices like Crossroads, Akbarally's and Shopper's Stop, retail stores are
sprouting that cater to the needs of middle class. With a huge middle class population, the
retailers like RPG's



Foodworld are tapping this market. The market is flooded with products branded
and unbranded. The customers are in a dilemma as to pick which one. Simon Bell of AT
Kearney says "There is a close relation between the growth of brands and the growth of
the organized retailing.Companies selling branded products prefer to have big and
organized retail outlets such as supermarkets where they can be differentiated from
unbranded products"

Though doubts have been cast on the future of Indian retailing it is our belief that the
retail boom is yet to happen. While the industry is in the introduct-ion stage in most
geographies, it has just entered the growth region in the metro cities. Today, the right
product mix, right sourcing strategy, and the right communications are the mantras for
success.

This paper begins by analyzing the retail formats in the present Indian scenario and
proceeds to outline the key strategic factors in retailing. In the last part the paper shows
the challenges facing retail and our recomme-ndations for making organized retailing a
success.







Organized retail formats in India


Each of the retail stars has identified and settled into a feasible and sustainable
business model of its own.




Shoppers' Stop - department store format

Westside - emulated the Marks & Spencer model of 100 per cent private label,
verygood value for money merchandise for the entire family

Giant and Big Bazaar - hypermarket/cash & carry store

Food World and Nilgiris supermarket format

Pantaloons and The Home Store - speciality retailing

Tanishq has very successfully pioneered a very high quality organized retail business
in fine jewellery








Structure of the retailing industry according to ownership patterns:

An unaffiliated or independent retailer

A chain retailer or corporate retail chain

A franchise system



A Leased Department (LD)

Vertical Marketing System (VMS)

Consumer Co-operatives

A new entrant in the retail environment is the 'discounter' format. It is also is known as
cash-and-carry or hypermarket. These formats usually work on bulk buying and bulk
selling. Shopping experience in terms of ambience or the service is not the mainstay here.
RPG group has set up the first 'dis-counter' in Hyderabad called the Giant. Now
Pantaloon is following suit.

Two categories of customers visit these retail outlets.

1. The small retailer. For example, a customer of Giant could be a dhabawala who needs
to buy edible oil in bulk.

2. The regular consumer who spends on big volumes (large pack sizes) because of a
price advantage per unit.




Key Strategic Factors in Retailing

The key to success is identifying a superior value-promise and who is in a better
position to do it than retailers? Retailers are the closest to the point of purchase and have
access to a wealth of information on consumer shopping behaviour. Retailers have some
unique advantages for managing brands such as continuous and actionable dialogue with
consumers, control over brand


presentation at point-of-sale, control over shopping environment, display
location/adjacencies, and signage. And they have used this advantage with tremendous
success.


The 3 stages of evolution of the trade channel are shown in the exhibit below:


EXTENDED LIMITED DIRECT






















MANUFACTURER
DEPO/CNF
DISTRIBUTOR
RETAILER
SHOPPER
MANUFACTURER
DEPO/CNF
RETAILER
SHOPPER
MANUFACTURER
SHOPPER



As seen, the role of the intermediary is being diminished gradually, which has
obvious implication of backlash of the trade channel upwards towards the suppliers. This
is more severe in countries such as India, where the channel economics in favour of the
middlemen is still strong enough given the fragmentation of the retail sector. Therefore
when FoodWorld, the
largest grocer in India has a direct supply contract with over 20% of its key suppliers, it
gives rise to conflict of interest with the distribution infrastructure that suppliers have
painstakingly built over the years. Thus companies like HLL have evolved a distinct
distribution channel altogether (called Modern Trade) to service the needs of such large
grocers. Even the mom and pop stores (known as kirana shops) are affected due to this
unfair back-end advantage extended by the supplier to its leading accounts (the
emerging supermarket chains).

The strategies adopted by the retailer to compete with branded goods are illustrated by
the following diagram. Branding the store and following a private label strategy is the
key strategy which helps the retailer to compete with branded roducts.















Leverage Brands
Brand the
Store
Strong
Private
Level
Stratergy
Maximize customer
traffic &
Profitability.
Keep Formats
Constsnt.
Develop
New
Formats.
Reinvigor
ate
Existing
For Optimize
Assortment
Loyalty Cards.










Challenges Ahead For Retailing

The unorganised nature of retailing has stunted its growth over several years. "Lack of
industry status affects financing prospects and stunts growth of the industry", says
Kishore Biyani, managing director, Pantaloon Retail India. In the current scenario, only
players with deep pockets have been able to make it big. In addition to the advent of
Internet, there are many other challenges which retailers have to address.

Human Resources

Availability of trained personnel and retaining the human resources is a major challenge
for these big retailers. The bigwigs like Crossroads offer high compensation and create a
cohesive environment that makes an employee proud to be a part of such big retail
chains.

Space and Infrastructure

To establish a retail shop / mall, the real estate and the infrastructure are very vital. The
expenditure and availability on both the accounts do hinder the growth of the retail chain.
The lack of secondary infrastructure also affects the logistics and supply chain
management for retail companies.

Absence of retailer friendly laws
Pricing &
Promotion
Strategry.
Online
shopping.



India still does not have retail-friendly laws especially relating to the movement of
goods from one state to another. Retailers need to put in a whole lot of products from
different parts of the country - at times from outside the country - on the shelf. But
question of multiple tax levels is an issue. Then there are laws like shops cannot be open
for all seven days, shops have to be open after or close before a certain time which affects
operations.


Lack of technical know-how

The Indian government does not encourage any foreign direct investment (FDI) in the
retail industry. FDI is normally one of the ways of getting technical inputs. And because
of this dearth of FDI in this sector, develop-ment in terms of people, skills etc is
happening the hard way.

Future perspective

We should see fundamental shifts in the way Indians shop in the very near future. The
Year 2003 could well be a landmark year for organised Indian retailing. According to a
recent study done by ETIG the organized retail industry is expected to grow by 30 per
cent in the next five years and is expected to touch Rs. 45,000 crore. Thus, the growth
potential for the organised retailer is enormous. In the next 2-3 years, India will finally
see operations of a number of very serious international players- notwithstandi-ng the
current restrictions on FDI in retail. Metro from Germany is a very successful and
resourceful retailer and their cash & carry format should offer
a good run for money to others. Some others will also find perfectly legitim-ate ways to
operate in India, for example, Marks & Spencer, Mango and Shoprite.

Change Accelerators



The following factors will be significant in driving growth in the retail sector:

Consumer factors

Increase in income

Working women

Changes in lifestyle demand for global trends

Supply side factors

Growing importance of retailing in political and economic agenda

Real estate reforms to be undertaken in the next 24 months

Major restructuring of the manufacturing sector easing product
supply constraints for efficient retailing

Reduction in import duties-offering more global sourcing options

Which categories will grow?

The single biggest opportunity in India in organised retailing is bound to be food and
groceries; it is in this sector that the largest amount of consumer spends is concentrated.
This sector has maximum opportunity for investm-ents and entrepreneurs to come in and
try to make the supply chain a little more efficient.


Consumer durables is another promising sector because, with increasing purchasing
power, consumers tend to spend the most on this category. Also, there is nothing to


prevent a company from putting up shops outside the city limits, because consumer
durables are a premeditated purchase. Further-more, availability of finance options has
increased spending in this sector.
Third are home products - with increasing private ownership of homes by relatively
young couples, across most major cities in India, national retail chains offering home
furniture (and accessories) have great potential.

Finally, personal care products, pharmaceutical products, and healthcare services have
tremendous growth potential. Recently, we have seen some interest from organised
healthcare players like Max, Fortis, Birlas and the Reliance group

Where is this growth going to happen?

The top 15 cities in India cater to 33 per cent of total urban population, but as high as 38
per cent of Sec A and B (the top two socio-economic consumer strata) urban population.
The next 15 cities only add to another 7 per cent of Sec A and B population. So logically
the focus will be restricted only to the top 15 cities. Research conducted by KSA
Technopak, shows that today 96
per cent of total organised retail is in the top 10 cities, of which the top six cater to 82 per
cent. However, the rate of growth will be higher in the bottom four of the top 10, which
will have a 20 per cent share by 2005 against the present share of 15 per cent.


Which formats will grow?

KSA Technopak's research suggests the top four formats to emerge in the next five years
are:

* Shopping Malls
* Specialty Stores (in new categories such as office products, specialty food, optical and
travel)


* Departmental Stores
* Supermarkets






Recipe for Success

Focus on the consumer: It is clear that consumers have changed and they are looking for
something different. Understanding their evolving needs, aspirations and lifestyles is the
underlying key to success for any retailer. The primary emphasis should be on access,
experience and service and the secondary emphasis on product and price. There should be
an effort to improve service by having better trained sales staff, better availability of
products, and minor but important conveniences, e.g. delivery of goods either to the car
or even home. Collaborative advertising and promotion can then round off this effort

Brand the store: branding the store will increase volume and enhance customer
loyalty.Branding is critical to maintaining competitive diff-erentiation in an increasingly
challenging retail environment. However, the brand needs to be clearly communicated to
the customer.

Develop private label brand: Private labels act as margin generators, increasing sales
volume by positioning the label as providing higher perceived value to consumers. In the
long run, they also increase the retailers bargaining power with national brand suppliers.
Private labels generate customer loyalty by providing exclusive products, which works
towards differentiation strategy, much sought after by the retailers.

In terms of geography some entrepreneurs should put efforts in creating custom-
developed solutions for tapping the rural and semi-urban spending potential. Even in


non-metro urban centres, there are very good oppo-rtunities in looking at starting or
expanding operations. Some cities that should see greater organised retail action in the
future would be Ludhiana, Chandigarh, Lucknow, Nagpur, Ahmedabad, Surat, Pune,
Kochi, Thiruvananthapuram, Guwahati and Bhubaneshwar.



In terms of format malls have a sustainable competitive advantage over other formats.
Consumer preferences are shifting towards malls from traditional markets. As a result of
consumer shifts, retailers also prefer to be located in malls in anticipation of higher
footfall. KSA Consumer Outlook 2000SM shows that increasingly consumers prefer "All
Under One Roof

destination for shopping as well as eating out and entertainment. These findings together
indicate an excellent potential for a mall with the following features:

a superior well-managed leisure experience

targeted at all members of the household

comprising of shopping, dining and entertainment, all under one roof

a wide range of products and services

proximity to homes



















THE STRIKING NEW FACE OF RETAIL IN INDIA.
Who says great retail is only for the metros? Check out Surat where
residents are shopping like never before.
This city in Gujarat has the state's largest textile market and is India's centre for the
diamond trade. It also holds the distinction of being one of India's cleanest cities. It is
Gujarat's second largest city with a population nudging 30 lakh as of 2001 and is home to
some of industry's giants -- Reliance being the most prominent among them. This is
Surat, which is now experiencing a retail revolution of sorts.
Surat belies the general feeling that the retail revolution as we know occurs only in the
metros. A walk along the main Ghoddod or Athwa Lines areas - akin to Mumbai's
Bandra or Colaba - is like walking through a large shopping mall. Here, you'll find every
brand, all kinds of products in every shape, shade and size and all types of food! You'll
also find four of Surat's supermarkets here -- from the cosy Mother's Inn to the 3-storied
Dhirajsons. All these are changing the way Surat shops.



Two of the largest supermarkets in Surat are Dhirajsons, run by the Modi family and
Sahaj Superstore owned by the Patel family. Both offer valuable lessons in how
organised retail in smaller towns can succeed. Despite dramatic changes in the retail
scene, Surats retailers feel the need for a shift in mindset, habits, more modern
restaurants and theatres to drive lifestyle changes. And this is already happening. Here we
profile three leading retailers from Surat.








Dhirajsons

Theirs is a rags to riches story. Started as a small 400 sq. ft. general store in Surat's
Chowpatty-Athwa Lines area, Dhiraj Modi and his sons built a retail chain of four stores,
a total of 56,000 square feet in Surat's prime retail area and are today considered the
pioneers of organised retail in Gujarat. The Dhirajsons Megastore is the flagship of the
chain. At 15,000 sq. ft. spread over three stories, it stocks 38,000 active SKUs and
employs 200 staff directly. Consumer spending has reduced slightly, agrees Rajnikant
Modi, but he says, "We still average Rs 400 a bill and around 800 bills a day." Going by
his figures, Dhirajsons sales are around Rs 20 crore a year, just from Dhirajsons
Megastore. This makes the store the largest in Surat in terms of sales. The Megastore has
around 3,000 footfalls a day, of which Modi estimates 50 per cent are buyers. There are 9
cash counters, each linked to a LAN and an automated inventory system which can be
tracked everyday. The whole system cost him Rs 5 lakh. Every SKU is bar coded with
the entire bar coding system costing Rs 2.5 lakh (each machine bought at Rs 50,000-
70,000 five years ago) but it has been worth it according to Modi. The Megastore has a
4,000 sq. ft. parking facility which accommodates 14-15 cars and 25-30 two-wheelers
free of cost. Modi estimates his investment in all this at around Rs 15 crore over the past
two years.
Expansion is on the cards. Says Modi, "We target a growth of at least 10-15 per cent a
year from now on." He understands very clearly that to finance expansions in Surat itself
he will need to maintain that rate. The Megastore yields gross margins of between 15-20
per cent and net of 4-5 per cent, which has to grow to aid expansion. Although there have
been several proposals from surrounding cities like Bharuch, Navsari and Billimora,


Modi wants to consolidate in Surat first before stepping foot elsewhere. Acquisitions and
mergers are one way of consolidating which fulfils a part of their vision statement - that
of creating a chain of retail stores for total dominance in Surat.
From one store in 1992, Dhirajsons now has a conglomerate of outlets for all kinds of
products along with a supermarket of 10,000 sq. ft. - all totalling 10,800 sq. ft. all within
2 km of the Megastore. Excess stock is kept at a warehouse 4 km away. Earlier in 2002,
the Modis bought over Kutchhi's Supermarket in the upmarket Parle point area. Rajnikant
Modi intends to convert this into a successful supermarket, offering FMCG and kirana at
competitive prices.
Dhirajsons' latest expansion is into lifestyle retailing with the acquisition of Rita
Supermarket, located about 1 km from the Megastore, for a reported sum of around Rs 6
crore. With 26,000 sq. ft. carpet area, the new store, christened Dhirajsons Lifestyles, will
have 4 levels, stocking garments and accessories for men, women and children. Says
Modi, "We believe there's scope for such a store in Surat. With our brand name which
stands for trust and quality in Surat, we can make headway into this segment." The
lifestyle store is slated to open by Diwali 2002. Prices will be reasonable, says Modi.
According to him, "here, you may find some prices even lower than those in Mumbai.
This we can do by sourcing it right -- driving bargains with vendors and passing on the
difference to customers."
Certainly all the best sourcing practices and pricing policies will have to be used if
Dhirajsons is to gross the targeted break-even sales of Rs 35 crore from Dhiraj Lifestyles
in the first full year, 2003. Going one step further, Modi is in advanced talks with
Mumbai-based bookstore Crossword, to become part of Dhiraj Lifestyle. And there's an
added bonus -- Barista - which may slip in with Crossword. If he pulls it off, it'll be
another feather in his cap. In fact, he is confident of bringing in music chains like Planet
M to Surat. Talking like any other professional large-scale retailer, he says Dhirajsons is
all about providing the right retail experience and attractive environment to drive sales.
The Modis certainly do have a lot of retail experience to make it all work -- with 80 years
of retailing behind them and a name that stands for trust, quality and personal touch.


"That's our strong point", smiles Modi. "My father and indeed almost every member of
the family even today know most of our regular customers by name. We maintain these
relations religiously and believe this touch will make us successful, more than any shop,
store or product." Travel adds to thinking and experience, continues Modi. The Modi
family has seen every supermarket and store in India and overseas. They have visited
Hong Kong, Dubai, Singapore, UK and USA over the past 8 years to understand retailing
better and develop vendors. Today, all the display equipment is imported from Italy.
UAE based vendors supply crockery and other goods via Mumbai to Surat. Regular
customers at Dhirajsons, however, feel that imported goods are priced very high. Does
this restrict his sales? Says Modi, "Far from it. Surat is not as price sensitive as Mumbai
is. Here people would pay even disproportionately for imported goods." This seems a
legacy of Surat's dominance in the gems and textiles industries, where more often than
not, generation of unaccounted money had to be balanced by spending it -- thereby
creating price insensitivity.
Education forms a continuous process for the Modis. They have sent people to the
Landmark course, Arun Virani's retail course and even checked out the retail courses at
Manipal and Nirma Institute in Ahmedabad. "It is a never ending course -- we have to
stay ahead of the others", affirms Modi.
This year Dhirajsons became a private limited company and as expansion and growth
targets become ambitious, Modi is not averse to listing his company on the Ahmedabad
stock exchange too. Currently, finance is from internal accruals and banks. Modi says
banks have been very visionary in their belief in retailing and Dhirajsons, backing him all
the way. Local government is a major issue. "Give me some government support and
retailers can do just as well as any overseas chain," he affirms.
Rajnibhai Modi takes a walk every half an hour around his Megastore. He meets old
friends and regular customers, talking to them, addressing them personally. The Modis
have a vision statement, which they call the six steps to success -- prominent amongst
them is 'personalised public relations' which Modi does every day. Surveying his shop, he
says, without a hint of pretension and with a gleam in his eyes, "I want to be known as
the Dhirubhai of retailing in Gujarat."







SahajSuperstore

Sahaj, just under 2 years old, is the youngest of the new format retailers in Surat. At
30,000 sq ft, it is the largest single store in Surat, possibly in Gujarat, says its young
Chairman Mahesh Patel. It certainly has the largest number of SKUs in Surat - 100,000
spread over 3 floors in the Adajan area of Surat, not exactly as upmarket as Athwa Lines
or Chowpatty, where its largest competitor Dhirajsons is located. In a way, Sahaj defies
the prime rule of retailing: location, location and location.
"When we started in 2000," remembers Patel, "this location was somewhere out of the
town. Every one said it's a risk and to be honest, I myself wasn't sure we would succeed.
But then, business is a risk, and we took it." He had some experience in retailing, having
spent 13 years in his chemist shop. "We visited all the shops and stores in India and
found that, unlike overseas, there existed no real departmental stores, at least in Gujarat. I
believe in a real departmental store, you should get 90-95 per cent of all your
requirements under one roof. That's exactly what Sahaj Superstore offers." Patel says in
spite of misgivings, Sahaj was constructed in 11 months flat with a Rs 2-3 crore
investment. He is very appreciative of banks, local financiers and his own family, all of
whom trusted his instinct. "We have met all the projections that we forecast when we
approached them for financing," he says proudly.
Today, Patel says his store has an average bill value of Rs 400 and more than 800-900
bills a day, from footfalls of around 2,000 a day. By these figures, that's Rs 3.2 lakh a
day, Rs 100 lakh a month and Rs 12 crore a year. He has an ambitious target to touch Rs


100 crore by 2006 - 8 times current sales. He says high targets are a must to inspire his
staff which number 150 currently.
Sahaj is spread over 3 floors, with split levelling and no elevators. Says Patel, "Every
floor can be reached by walking not more than 10 steps before reaching a sales floor.
This ensures the customer doesn't get tired and goes through a larger array of goods than
in an elevator." It also keeps costs of electricity and maintenance low. Sahaj has sections
for white goods, garments, processed foods, toys and provisions. Credit cards are
accepted preferably for purchases above Rs 100 per bill. FMCG goods are priced below
MRP - a result of hard negotiations with 1,000 plus suppliers for discounts and passing
on the reduced prices to the customers. This puts margins under pressure but increases
turnover. Patel is clear, "Right now we are driving turnover. We have to develop a
clientele. Two years from the time we started, we are still in the investment mode."
Sahaj pays serious attention to consumer feedback. For example, customers were getting
tired of the same arrangement of a few counters. He got them rearranged last month.
Sahaj has parking for 75 cars, has 1 ATM of the Surat Textile Bank and runs privilege
schemes to retain customers.
Sahaj has its own LAN system with 20 computers which update stocks and sales every
day. Each section has its own CEO who handles day-to-day work and customer care. Its 8
cash counters and scanners update stock every day. Says Patel, "We have to computerise
keeping in mind today as well as the near future. When we bought bar code scanners,
they cost us Rs 30,000. Such changes will be helpful in our expansion plans." Patel has 3
bar code machines. He also has 50 cameras, which represent Rs 5-6 lakh of investment.
Nearly 90 per cent of his wares are branded in FMCG, RMG and processed foods. Just
over 5 per cent are private labels, mainly in pulses, grocery and rice. Grocery of all kinds
accounts for 40 per cent of total sales and 60 per cent of his goods are priced below MRP.
He has 3 chillers and a host of vending machines for ice cream and soft drinks where he
stocks dahi, milk and other chilled products. His staff handles all display, activity and
sales on its own. There is no vendor-managed inventory yet. "We can display and run
schemes and promos as per our requirement and feel, rather than be bound by companies


requirements," explains Patel. Which is why he is not looking at food courts, food
services or events to drive growth.
There are 1,000 vendors with 10 per cent of them supplying 65 per cent of all goods. "But
if customers want even one product, then I have to get a vendor. I may not buy regularly,
but I need him on the rolls." All vendor data is online, with reports on outstanding and on
time delivery sent to Patel every morning. Local vendors deliver almost every hour, but
even the national ones deliver on fixed days. When he expands, then his bargaining
power will increase. Currently, he has no warehouse, what he can stock in the store limits
inventory.

What about the future? Patel says his catchment extends as far as Valsad and Vapi to the
south and Bharuch to the north. People have approached him to start off Sahaj in their
towns, but as of now, he has his hands full in Surat. "We will expand in Surat city, which
I believe has enough potential to take in many more stores. We will look at rentals or
ownership, as the case may be, but expansion within Surat will definitely be required to
meet our self set targets." Patel intends to expand directly into Athwa Lines area which is
where ownership rates can be as high as Rs 10, 000- 40,000 a yard depending on location
and space. Sahaj is a privately held company and Patel has no immediate plans to go
public.

Unlike Dhirajsons who have 85 years of retail experience, Patel is new to the field. But
the ideas are there already, the options being explored. His son is being groomed for
higher studies, possibly an MBA later on. "I myself am not even a graduate," muses Patel
in his third floor expansive office, "But I want my next generation to be up to date. They
will develop this shopkeeping into a full scale business - and lead the way in retailing in
Gujarat."








A V Sons

Started in 1992, New AV Sons is managed by Raju Modi, and is located at Parle Point,
the centre of Surat's happening retail scene. At 4,000 square feet, he stocks 15,000 SKUs
and is one of the larger supermarkets. Today, there are two AV Sons within 3 km of each
other. New AV Sons clocks up 250 bills a day from its 5 cash counters, each bill of Rs
250-400 - that's nearly Rs 60,000 a day - or Rs 18 lakh a month, which suggests annual
sales at Rs 3 crore or so. He delivers home free of cost with no minimum level of
purchases. Although he does not have credit card payment facility as yet, Rajubhai says
he is in discussions with HDFC Bank for the credit card machine linkup. New AV Sons
has 45 salesmen and encounters nearly 1-2 per cent shrinkage. Though his store had a
computer since 1992, he went in for the automated inventory management on computer
only in 1999-00. He also has a bar coding machine which cost him Rs 2.5 lakh and Rs
15,000 a year for AMC. All the 15,000 SKUs are now bar coded. All his 5 POS are
linked to the LAN and hence to the accounts, all of which cost him Rs 1.5 lakh.

What has been the effect of these stores on other kirana/grocery/general stores? Says
Patel, "We found that three kirana stores in our immediate neighbourhood have shut
down, but beyond our area, we find not much change. Sales have fallen, we hear, but
since these shops are still on, obviously, things aren't very bad." He has schemes, promos
and freebies and offers home delievery but does not have loyalty cards.



Another interesting story is of Harisons departmental store located right next to
Dhirajsons Megastore on Athwa Gate. At less than 1,000 sq. ft., it is no match for the
15,000 sq. ft. megastore, but is definitely trying. His people accost you outside the steps
of Dhirajsons with a pamphlet extolling the virtues of Harisons. Innovation is the name of
the game. For example, Harisons delivers your purchases made between the 5th and 15th
of every month, of over Rs 1,500- 2,000 free of charge anywhere in Surat. He also lists
products which he sells 10-15 per cent lower than Dhirajsons, which is in any case lower
than the MRP.

Harisons realised that none of the major supermarkets want to deliver home and that's the
segment he's pitching for. However, not all have been so lucky. Some smaller kirana
stores have lost clientele.

Surat is a city that cares for its money differently. Its citizens don't mind paying for
quality, time and ambience. Retailers here are armed with selling acumen and a will to
experiment.

Already retailers are reaching out to companies and other institutions to allow employees
to buy at discounted prices at their stores. For example, Reliance gives employees Rs
1,300 as vouchers to spend in select retail stores. You could shop at a supermarket and
get discounted theatre tickets or vice-versa. None of this is out of bounds in a city that
can change its lifestyle, driven by increasing incomes, greater awareness and ability to
spend.











Conclusion - How can it be done?

For a start, these retailers need to invest much more in capturing more specific market
intelligence as well as almost real-time customer purchase behaviour information. The
retailers also need to make substantial investments in understanding/acquiring some
advanced expertise in deve-loping more accurate and scientific demand forecasting
models. Reengin-eering of product-sourcing philosophies - aligned more towards
collabo-rative planning and replenishment should then be next on their agenda. The
message, therefore, for the existing small and medium independent retailers is to closely
examine what changes are taking place in their immediate

vicinity, and analyse whether their current market offers a potential redev-elopment of
the area into a more modern mult i-option destination. If it does, and most commercial
areas in India do have this potential, it would be very useful to form a 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 effort should be to encourage retailers to make some investment
in improving the interiors of their respective establishments to make shopping an
enjoyable experience for the customer.


















Appendix : Present Indian Scenario



Retail Realities:

Unorganized market: Rs. 583,000 crores

Organized market: Rs.5,000 crores

5X growth in organised retailing between 2000-2005

Over 4,000 new modern retail outlets in the last 3 years



Over 5,000,000 sq. ft. of mall space under development

The top 3 modern retailers control over 750,000 sq. ft. of retail space

Over 400,000 shoppers walk through their doors every week

Growth in organized retail on par with expectations and projections of the last 5
years: on course to touch Rs. 35,000 crores (US$ 7 Billion) or more by 2005-06

Major players:

FOOD AND GROCERY FASHION OTHERS
Foodworld Shoppers Stop Viveks
Subhiksha Westside Planet M
Nilgris Lifestyle Music World
Adani- Rajivs Piramyd Crossword
Nirma-Radhey Globus Lifespring
Ebony Gautier
Pantaloon











Key Categories:







Source: KSA Technopack





12%
9%
52%
3%
2%
11%
4%
7%
Transport Housing
Food beverage and tobacco Entertainment
Healthcare Clothing/Footwear
Miscl Furniture/Home






FUTURE GROWTH POTENTIAL
OF
RETAIL MARKETING IN INDIA.



The overall retail market in India is likely to grow by 36% to touch Rs 8,00,000 crore by
2008 from the current level of Rs 5,88,000 crore, according to an Associated Chambers
of Commerce and Industry of India (Assocham) study

The study points out that of the overall retail market, the organised sector in retail
marketing is expected to touch Rs 16,000 crore by 2008 from the present size of Rs 5,000
crore. The retail market at Rs 5,000 crore, includes the organised food and grocery (Rs
600 crore). Assocham president Mahendra K Sanghi said that initiatives from all the state
governments, and the Centre are prime factors that will encourage the entry of the
organised sector into retailing in the next few years.

These initiatives include allocation of land at concessional rates, grants of loans at
liberalised interest rates to promoters of shopping malls, and rationalisation of state
levies.

He pointed out that the expansion and diversification of the organised sector in retail
marketing is currently under way because of the demand factor.
The other reason which substantiates major foray of the organised sector into retail
marketing is the availability of real estate and infrastructure facilities in most of the states
for setting up retail stores.



Such laws will no longer be there in the near future as liberalisation has already reached
its advanced stage and states are competing with one and another for attracting
investment. This will motivate and encourage the foray of organised sector into retailing,
particularly when the entry of FDIs into retailing is being strongly opposed by a section
of society and polity as well, according to the release.

According to Assocham estimates, the retail sector will create 50,000 jobs annually in the
coming five years.

The retail sector is the second largest source of employment and job market is receptive
to retailing experience, with business schools focussing on the sector and large retailers
setting up retail academies.



FOCUS ON GROWTH

Two years ago, in the context of changing markets, we outlined a strategy for Hindustan
Lever to deliver sustainable profitable growth. This strategy builds on the past and resha-
pes for the future. I would like to update you on the progress made in executing this
strategy and also outline our future approach.


GROWTH POTENTIAL

Our published results for 2002 show a sales decline of 6.7% on account of Discontin-
uation of non value adding businesses and divestments. Our domestic FMCG business
was flat with the growth in Home & Personal Care being offset by a decline in Foods.
This may lead to a question on our growth potential. Indeed, there is a common misco-


nception that our categories are mature with little scope for growth. In fact, the very
opposite is true. Several of our categories still have low usership levels. In addition,
the actual amount used per capita is far lower in India as compared to other countries, as
shown below:




Per Capital Consumpation (Kgs)

Fabric Wash Personal Wash Toothpaste Shampoo Tea
India 2.63 0.50 0.07 0.04 0.64
Thailand 4.71 0.87 0.40 0.38 -
Brazil 9.03 1.46 0.61 0.72 -
UK 13.90 1.31 0.23 0.40 2.28



Also, the GDP growth of about 5% is driving up discretionary income of our
consumers by about 8% per annum. Literacy levels are rising, creating higher aspirations
further fuelled by the world they see on television. There is no doubt that today's
consumer wants a better quality of life which is what our brands help realise.


However, HLL is faced with the challenge that FMCG markets, after growing in strong
double-digits throughout the nineties are now declining in value for the last couple of
years. Why is this happening? In urban India, consumers are now being exposed to and
are trying several new categories, such as mobile phones, leisure, durables etc, and are,
therefore, down-trading their FMCG purchases. Rural demand has been dampened by
three unusually poor monsoons in the last four years. We believe that both these factors
are transitory in nature and FMCG markets will surely find a new growth equilibrium. Be


that as it may, we are leaders in many FMCG categories, and are taking active steps to re-
attract consumer spending to our brands. We are doing this by providing exciting, new
and differentiated benefits as well as greater value, thereby leading growth. We have
every confidence in the validity of this approach given our experience in recent
years, whereby several of our biggest brands, supported by such innovation, have
grown strongly, even in this very challenging context.


FOCUSSING THE COMPANY

With increased competition for the consumers wallet in todays market environment,
driving growth requires a much higher level of resource in all areas, be it technology,
media spend or people talent. Consumer brands in everyday life is our area of core
competence both in India and globally with Unilever and thus our area of focus. Two
years ago, the FMCG business accounted for 85% of HLL. Today, 95% of HLL is its
FMCG business, of which 86% is domestic, with 9% being exports of consumer brands.

Over the years, we had entered several non-FMCG businesses in line with national
priorities. These businesses were successful and created good value. However, with the
opening up of India, staying in these businesses would have required us to invest heavily
in accessing technology and achieving world-class competitiveness. In line with our
strategy, we have exited non-FMCG businesses like Animal Feeds, Seeds, Flavours &
Fragrances, Nickel Catalyst and Adhesives with total sales of over Rs.600 crores. In
doing so, we have secured good value realising in all Rs.430 crores with a profit on
disposal of over Rs.260 crores.

We also had a very broad export portfolio covering several areas which also has
been restructured and focussed. Going forward, the major thrust is on driving exports of
our consumer brands primarily to other Unilever companies from whom we receive
considerable support. This is an area where we see enormous potential for growth, given
our clear competitive advantage. Indeed we are already supplying Tea bags to Singapore,


Australia, Japan and the USA, Personal Products to the Middle East, Far East and African
countries and are marketing Pears globally. In all, such exports already constitute over
40% of our total exports of US $ 300 million. We are also driving exports in other chosen
areas where India has a competitive advantage, like Rice, Castor and Marine products.
Marine products, for example, have huge potential given Indias long coastline and Sust-
ainable fishing capability. We are the largest exporters of Marine products from India and
have already built up a leading position in shrimp exports to the demanding markets of
the USA and Europe. We also acquired Amalgam, a leader in value-added Marine
products, to drive further growth in this area. At the same time, we have discontinued a
number of non value-adding exports. Our continuing exports are now growing by about
15%.


FOCUS ON POWER BRANDS

In the FMCG business, we had developed a portfolio of over 110 brands organically and
through acquisitions. Several of these had overlapping benefits and competed directly
with each other, while others were simply too small. Growing brands in today's market
requires scale. We, therefore, decided to focus all our resources on thirty Power Brands.
These were identified for their size, brand strength, uniqueness and growth potential. In
addition, they span all the relevant benefit and price positions in our market. For
example, in Laundry, we chose three brands: Surf - providing the very best stain removal,
Rin - making clothes look very good, and Wheel-offering great cleaning and value. These
three brands also cover the entire price spectrum for every class of consumer.


We have migrated several of our other brands to converge with these Power Brands and
harvested others. Now, Power Brands account for over 93% of our domestic consumer
business. Indeed, through this approach, we are achieving big scale with several brands
being individually as big as our competitor companies. The top five brands together
account for sales of over Rs.3000 crores, and last year, grew by over 10%. We see each


of these mega brands achieving a potential scale of Rs.1000 crores in the foreseeable
future.





GROWING THE POWER BRANDS

How will we grow the Power Brands? Firstly, by leveraging their scale -- this is
crucial in a crowded market where 3000 advertisements are seen on television every
month and where the number of SKUs stocked by retailers has gone up by about 40% in
last three years. Brand scale enables us to get a larger share of the consumer's mind as
well as a larger share of the retail shelf. For instance five of our Power Brands are among
the top ten most heavily advertised brands in India. We derive scale competitive
advantage from our combined media spends.

Redefining Categories

We are redefining the way we look at our categories. For example, we have
traditionally measured our presence in shampoos by our market share of more than 50%.
Our real opportunity, however, is to view this as the hair wash market -- indeed
consumers often use soap, natural products or just water to wash their hair, apart from
shampoos. Seen this way, our share of hair wash is only 7%, providing enormous space
for growth. Similarly, the launch of Lipton Ice Tea is attracting younger consumers and
also re- defining the role of tea in a consumers life. The thrust in placing Tea, Coffee and
Ice-cream vending machines in offices, factories and places of public congregation is
creating new opportunities to consume our brands out of home. Extension of the Lakme
brand beyond cosmetics to Salons is another example.





Liberating Brands

In addition, we are liberating brands from their existing category mindset.
Historically,brands originated and stayed within a category product format. We, however,
see ourPower Brands as being able to occupy a unique osition in the consumers mind
andtherefore being able to stretch into other product formats or categories. The launch of
Fair & Lovely Soap, Lifebuoy Talc, taking the Max Ice-cream brand to Confectionery are
all examples of extending brands into new categories. All these extensions have had a
promising start and there are more to come.

Exciting Innovations

A key driver of growth is innovation that surprises and delights consumers with new,
differentiated and relevant benefits. We identify these benefits by placing the consumer at
the very heart of our business. Traditionally, the consumer has been brought into the
business through the lens of the arketing department, using market research tools and
techniques. This is valuable and necessary. However, much deeper insight is needed in
today's competit-ive environment. We need to go well beyond listening to what the
consumer tells us. Indeed we need to develop a degree of intimacy and understand what
is deep in her sub-conscious mind -- and seldom or never articulated. We are doing this
by having cross-functional teams interface continuously with the consumer at her home,
in the shops, sharing her life, thereby buildi-ng a deep and shared understanding. This
will help deepen our collective intuition and enable us to deliver better products as well
as superior dvertis-ing.


Leveraging Technology for Innovation

We continue to invest in technology, both to make our products better as well as
to secure cost advantage. Over the years, we have built several global technology centres


in India with about 200 R&D people. This, coupled with access to over 5000 R&D
personnel in the global Unilever network, with a total budget of US$ 1.3 billion, gives us
enormous advantage. There is often a misconception that everyday products like ours do
not need high technolo-gy. This is totally untrue -- in fact, we need technology of a very
high order to offer superior benefits at an affordable price. For instance, the recently
relaunched Surf Excel is based on proprietary technology developed after extensive
research. It ensures that rinsing is much easier and quicker. This new Surf Excel reduces
the time taken for rinsing by as much as 50%, thereby providing huge convenience. Most
importantly, it reduces the amount of water used by 50%, which is a significant benefit,
given the acute scarcity of water in most of India. Given that laundry consumes upto 20%
of household water, this technology will indeed make a big impact. Similarly, we have
recently launched Knorr Annapurna Salt with the benefit of providing intact iodine to
the consumer. Iodine added to salt is lost in transport, storage as well as in the process of
cooking. We have developed a proprietary patented technology that encapsulates iodine,
protecting its bio-availability. This is a very key benefit, given the importance of iodine,
especially for the mental development of young children.



TACKLING COMPETITIVE CHALLENGES

In pursuit of growth, we are acutely conscious of the challenge posed by
competition, especially the low price players. This phenomenon is not new to us in India
or indeed to other developed markets where low price local players and trade brands co-
exist with large branded players like ourselves. We are quite clear that we will be able to
sustain growth in the face of such competition as we have done in the past. In the
Laundry market where there are over a thousand local players, our brand Wheel is now
the clear market leader and the largest brand in HLL. What is more, this has not come at a
cost to our bottomline as it is strongly profitable. In Personal Wash also, we grew our
business by double-digits last year in the face of very aggressive low price competition.
We will compete with low price competitors by playing to our strengths -- using our


strongest brands backed by superior technology and the lowest cost supply chain. We will
succeed in this by leveraging our unique combination of local and global scale.





NEW GROWTH ACORNS

Three years ago, we had identified several new opportunities for growth as an
outcome of Project Millennium. We have made very good progress in nurturing these
growth acorns for the future. Specifically, we are driving nascent categories in our
current businesses such as Deodorants and Processed Foods. In addition, we have entered
new adjacent categories like Confectionery and Ayurvedic Health Care. We are also
pioneering a retaili-ng business called Sangam and building a direct-to-consumer
business called HLL Network. Taken together, all these new initiatives increase the size
of our market opportunity by about 40%.


LEVERAGING HLL SCALE FOR GROWTH

The power of HLLs scale is derived from its combined volume of about 4 million
tonnes, sales of Rs.10,000 crores and its presence across more than 20 distinct consumer
categories. HLL's brands are available in 3 million outlets and touch the lives of two out
of three Indians. We are leveraging this scale to derive competitive advantage and
sustainable growth.



Building Supply Chain Competitiveness



We are making a quantum change in our supply chain, both in terms of enhanced
customer service as well as increased efficiency. Our supply chain is complex, with over
2000 suppliers, 100+ manufacturing locations, 7000 stockists and about one million retail
outlets. Significant investment in Information Technology has provided connectivity
across the supply chain, from the supplier to the stockist, thereby enhancing customer
service while bringing down working capital. Today, we know what our stockists have
sold every day, to almost a million outlets. This has brought us much closer to the market
place and significantly enhanced our speed of response.HLL's scale of operations gives a
distinct cost benefit. Buying raw and packing materials for HLL as a whole, rather than
separately for categories, gives us economies of scale. For example, inputs for packaging,
like paper, board and polymers, are bought centrally for all divisions generating big savings.
Similarly, in the areas of logistics and portation, scale enables greater efficiency. We are
also exploiting our scale in optimising sourcing of our products. All this gives us a
competitive advantage in our cost structure.



Deeper Commitment to Rural India

Our scale also gives us the opportunity to build the deepest possible direct distribution
reach into rural India, where over 70% of our population live. Interior villages are
difficult to access because of weak infrastructure. In addition, a large proportion is media
dark with no awareness of any brands. By consolidating our categories we are
establishing a single distribution channel for rural India. We have already appointed 6000
sub-stockists for rural markets, and are now covering approximately 50,000 villages,
reaching about 250 million consumers. In addition, we have also embarked upon an
ambitious direct distribution programme called Project Shakti to reach the smallest of
villages. Our vision is to reach over 100,000 villages, thereby touching about 100 million
rural consumers. We have already piloted
this initiative in 5000 villages and are now extending this rapidly. Project Shakti provides
a unique micro-enterprise opportunity for under-privileged rural women. Armed with


micro-credit from banks, they become direct-to-home distributors in these small villages,
providing relevant products as well as improving the overall awareness of nutrition and
hygiene. In turn, they benefit through sustainable income, thereby creating a virtuous
cycle of growth. Project Shakti uniquely combines our business interest with our ongoing
commitment to the development of rural India and women.


Partnering Modern Trade

In addition to our ongoing commitment to the traditional grocery trade, we are
building a special relationship with the small but fast emerging modern trade. Our scale
enables us to provide superior customer service including daily servicing, improving their
range availability whilst reducing inventor-ies. We are using the opportunity of
interfacing more directly with our consumers in this retail environment through specially
designed commun-ication and promotions. This is building traffic into the stores while
yielding high growth for our business.

























BUILDING PROCESSED FOODS

There is a big opportunity to grow Processed Foods, which are still a very small
proportion of the overall largely commoditised foods market.


Foods Market Structure

Processed 6%

Semi Processed 16%

Unprocessed 78%


How-ever, developing this market will require relevant and differentiated products which
cater to Indian tastes and habits as well as sustained and considerable investment and
time for market development. Over the years, we had grown our Foods and Beverages
business, organically and through acquisition to significant scale. However, it was
necessary for us to increase the inherent profitability profile in several areas in order to
generate the capacity to invest in market development. Over the last couple of years, our
gross margins have improved by 9%, albeit at the cost of some topline, thereby providing
the fuel to invest in both innovation and differentiation. We have reduced our losses in


Ice-cream significantly, and considerably improved the performance of the recently
acquired Modern Foods. Going forward, our priority is to lead growth of this market
through innovation. We have recently launched Kissan Bistix, Kissan Mr.Fruit, Lipton
Ice, Modern Atta Bread and the Knorr Annapurna Culinary range, all of which have met
with an encouraging response.



TALENT FOR GROWTH

Finally, the most important determinant of our growth is the quality of our people.
We are deeply privileged to continue to attract the very best talent as the number one
preferred employer at leading campuses. We are also encouraging diversity in our talent
skills, especially for our newer business-es, and are also bringing in a large number of
talented women. Our training programmes have been revamped to expose entrants to
local and global business -- they spend time in Indian villages and international cities --
all within a 12-month training programme. HLL's wide variety of categories and
Unilever's global operations provide enormous development opportunit-ies through
organised career planning. A lot of emphasis has always been placed on skill
development -- today we are also concentrating on building
individual and leadership capabilities. We offer an energising and empower-ing
environment enabled by creating small teams focussed on key initiatives. We have found
this the best way of combining both scale and speed. Deeper in the company, in factories
and offices, we are unleashing the talent and creative potential of all employees through
initiatives such as TPM.

In conclusion, let me say that HLL's most valuable assets are its brands and people.
Today's market is very dynamic and increasingly competitive. We have confidence in our
strategy and are learning to grow even in declining markets. We are putting in place key
enablers to build our capability for sustained high performance. We have brands with rich
heritage and strong consumer equity. We have people who bring the power of their ideas


and execution to exploit the full potential of our brands towards delivering continued
profitable growth for Hindustan Lever.





Contents
RETAIL SCENARIO IN INDIA
Unlimited Opportunity



The Global Retail Industry: An Overview

Retail Scene in India: Touching Meteoric Scales

Different Forms of Retailing

Malls in India

Challenges of Retailing in India

Retail as an Employment Generator



Retail Industry in the East: Current Scenario, Growth Prospects and

Upcoming

Projects

Retail Education in the East

Factors needed to promote the Industry in West Bengal

Conclusion











The Global Retail Industry : An Overview

Retail has played a major role world over in increasing productivity across a wide range
of consumer goods and services .The impact can be best seen in ountries like U.S.A.,
U.K.,Mexico, Thailand and more recently China. Economies of countries like Singapore,
Malaysia, Hong Kong, Sri Lanka and Dubai are also heavily assisted by the retail sector.



Retail is the second-largest industry in the United States both in number of
establishments and number of employees. It is also one of the largest world wide. The
retail industry employs more than 22 million Americans and generates more than $3
trillion in retail sale annually. Retailing is a U.S. $7 trillion sector.

Wal-Mart is the worlds largest retailer. Already the worlds largest employer with
over 1million associates, Wal-Mart displaced oil giant Exxon Mobil as the worlds
largest company when it posted $219 billion in sales for fiscal 2001. Wal-Mart has
become the most successful retail brand in the world due its ability to leverage size,
market clout, and efficiency to create market dominance. Wal-Mart heads Fortune
magazine list of top 500 companies in the world. Forbes Annual List of Billionaires has
the largest number (45/497) from the retail business.

GLOBAL RETAIL (Source : CSO ,MGI Study)

1999 2002 2005
Total Retail (US $
Billion)
150 180 225
Organised Retail
(US $ Billion)
1.1 3.3 7
% Share of
organised Retail.
0.7 1.8 3.2








Top Retailers Worldwide



Rank Retailer Country
1 Wal-Mart Stores, Inc. U.S.A.
2 Carrefour Group France
3 The Kroger Co. U.S.A.
4 The Home Depot, Inc. U.S.A.
5 Metro Germany

(Source: STORES / Deloitte Touche Tomahatsu)

Retail Scenario in India : Touching Meteoric Scales

As the corporates the Piramals, the Tatas, the Rahejas, ITC, S.Kumars, RPG Enterprises,
and mega retailers- Crosswords, Shoppers Stop, and Pantaloons race to revolutionize the
retailing sector, retail as an industry in India is coming alive.

Retail sales in India amounted to about Rs.7400 billion in 2002, expanded at an average
annual rate of 7% during 1999-2002. With the upturn in economic growth during 2003,
retail sales are also expected to expand at a higher pace of nearly 10%. Across the
country, retail sales in real terms are predicted to rise more rapidly than consumer
expenditure during 2003-08. The forecast growth in real retail sales during 2003- 2008 is
8.3% per year, compared with 7.1% for consumer expenditure. Modernization of the
Indian retail sector will be reflected in rapid growth in sales of supermarkets,
departmental stores and hypermarts.

Sales from these large-format stores are to expand at growth rates ranging from 24% to
49% per year during 2003-2008, according to a latest report by Euromonitor
International, a leading provider of global consumer-market intelligence.



A. T. Kearney Inc. places India 6th on a global retail development index. The country has
the highest per capita outlets in the world - 5.5 outlets per 1000 population. Around 7%
of the population in India is engaged in retailing, as compared to 20% in the USA.

In a developing country like India, a large chunk of consumer expenditure is on basic
necessities, especially food-related items. Hence, it is not surprising that food, beverages
and tobacco accounted for as much as 71% of retail sales in 2002. The share of food-
related items had, however, declined over the review period, down from 73% in 1999.
This is not unexpected, because with income growth, Indians, like consumers elsewhere,
have started spending more on non-food items compared with food products. Sales
through supermarkets and department stores are small compared with overall retail sales.
Nevertheless, their sales have grown much more rapidly, at almost a triple rate (about
30%per year during the review period). This high acceleration in sales through modern
retail formats is expected to continue during the next few years, with the rapid growth in
numbers of such outlets due to consumer demand and business potential.

The factors responsible for the development of the retail sector in India can be broadly
summarized as follows:

Rising incomes and improvements in infrastructure are enlarging consumer markets and
accelerating the convergence of consumer tastes. Looking at income classification, the
National Council of Applied Economic Research
(NCAER) classified approximately 50% of the Indian population as low income in 1994-
95; this is expected to decline to 17.8% by 2006-07.

Liberalization of the Indian economy which has led to the opening up of the market for
consumer goods has helped the MNC brands like Kellogs, Unilever, Nestle, etc. to make
significant inroads into the vast consumer market by offering a wide range of choices to
the Indian consumers.

Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc.



The internet revolution is making the Indian consumer more accessible to the growing
influences of domestic and foreign retail chains. Reach of satellite T.V. channels is
helping in creating awareness about global products for local markets. About 47% of
Indias population is under the age of 20; and this will increase to 55% by 2015. This
young population, which is technology-savvy, watch more than 50 TV satellite channels,
and display the highest propensity to spend, will immensely contribute to the growth of
the retail sector in the country. As India continues to get strongly integrated with the
world economy riding the waves of globalization, the retail sector is bound to take big
leaps in the years to come.

The Indian retail sector is estimated to have a market size of about $ 180 billion; but the
organised sector represents only 2% share of this market. Most of the organised retailing
in the country has just started recently, and has been concentrated mainly in the metro
cities.India is the last large Asian economy to liberalize its retail sector. In Thailand,
more than 40% of all consumer goods are sold through the super markets and
departmental stores. A similar phenomenon has swept through all other Asian countries.
Organised retailing in India has a huge scope because of the vast market and the growing
consciousness of the consumer about product quality and services.

A study conducted by Fitch, expects the organized retail industry to continue to grow
rapidly, especially through increased levels of penetration in larger towns and metros and
also as it begins to spread to smaller cities and B class towns. Fuelling this growth is the
growth in development of the retail-specific properties and malls. According to the
estimates available with Fitch, close to 25mn sq. ft. of retail space is being developed and
will be available for occupation over the next 36-48 months. Fitch expects organized
retail to capture 15%-20% market share by 2010.


A McKinsey report on India says organised retailing would increase the efficiency and
productivity of entire gamut of economic activities, and would help in achieving higher


GDP growth. At 6%, the share of employment of retail in India is low, even when
compared to Brazil (14%), and Poland (12%).



Different Forms of Retailing : Emergence of new formats of
retailing in India


Popular Formats



Hypermarts


Large supermarkets, typically (3,500 - 5,000 sq. ft)


Mini supermarkets, typically (1,000 - 2,000 sq. ft)


Convenience store, typically (7,50 - 1,000 sq. ft)


Discount/shopping list grocer


Traditional retailers trying to reinvent by introducing self-service formats as well
as value-added services such as credit, free home delivery etc.
























The Indian retail sector can be broadly classified into:


a) FOOD RETAILERS

There are large number and variety of retailers in the food-retailing sector.Traditional
types of retailers, who operate small single-outlet businesses mainly using family labour,
dominate this sector .In comparison, super markets account for a small proportion of food
sales in India. However the growth rate of super market sales has being significant in


recent years because greater numbers of higher-income Indians prefer to shop at super
markets due to higher standards of hygiene and attractive ambience.


b) HEALTH & BEAUTY PRODUCTS

With growth in income levels, Indians have started spending more on health and beauty
products .Here also small, single-outlet retailers dominate the market .However in recent
years, a few retail chains specializing in these products have come into the market.
Although these retail chains account for only a small share of the total market , their
business is expected to grow significantly in the future due to the growing quality
consciousness of buyers for these products .


c) CLOTHING & FOOTWEAR

Numerous clothing and footwear shops in shopping centers and markets operate all
over India. Traditional outlets stock a limited range of cheap and popular items; in
contrast, modern clothing and footwear stores have modern products and attractive
displays to lure customers. However, with rapid urbanization, and changing patterns of
consumer tastes and preferences, it is unlikely that the traditional outlets will survive the
test of time.

d) HOME FURNITURE & HOUSEHOLD GOODS

Small retailers again dominate this sector. Despite the large size of this market, very few
large and modern retailers have established specialized stores for these products.
However there is considerable potential for the entry or expansion of specialized retail
chains in the country.




e) DURABLE GOODS

The Indian durable goods sector has seen the entry of a large number of foreign
companies during the post liberalization period. A greater variety of consumer electronic
items and household appliances became available to the Indian customer. Intense
competition among companies to sell their brands provided a strong impetus to the
growth for retailers doing business in this sector.


f) LEISURE & PERSONAL GOODS

Increasing household incomes due to better economic opportunities have encouraged
consumer expenditure on leisure and personal goods in the country. There are specialized
retailers for each category of products (books, music products, etc.) in this sector.
Another prominent feature of this sector is popularity of franchising agreements between
established manufacturers and retailers.







Malls In India

Over the last 2-3 years, the Indian consumer market has seen a significant growth in the
number of modern-day shopping centers, popularly known as malls. There is an
increased demand for quality retail space from a varied segment of large-format retailers
and brands, which include food and apparel chains, consumer durables and multiplex


operators. Shopping-centre development has attracted real-estate developers and
corporate houses
across cities in India. As a result, from just 3 malls in 2000, India is all set to have over
220 malls by 2005. Today, the expected demand for quality retail space in 2006 is
estimated to be around 40 million square feet. While previously it was the large,
organised retailers with their modern, up-market outlets, and direct consumer interface-
who had been a key factor driving the growth of organised retail in the country, now it is
the malls which are playing the role.
Factors such as availability of physical space, population densities, city planning, and
socio-economic parameters have driven the Indian market to evolve, to a certain extent,
its own definition of a mall. For example, while a mall in USA is 400,000 to 1 million
sq.ft. in size, an Indian version can be anywhere between 80,000 sq.ft. and 500,000 sq.ft.
By 2005, total mall space in the 6 cities of Mumbai, Bangalore, Hyderabad, Chennai,
Kolkata, and National Capital Region (Delhi, Noida, Gurgaon) is expected to increase to
over 21.1 million sq. ft. Compared to other big cities, Kolkata and Hyderabad are
relatively new entrants in the mall segment, but are witnessing quick growth. Smaller
cities like Pune, Ahmedabad, Lucknow, Ludhiana, Jaipur, Chandigarh and Indore, are
also expected to see a formidable growth in the growth of malls in the near future. But
malls in India need to have a clear positioning through the development of differential
product assortment and differential pricing, in order to compete effectively in a growing
mall market. Segmentation in malls, like up-market malls, mid-market malls, etc. , proper
planning, correct identification of needs, quality products at lower prices, the right store
mix, and the right timing, would ensure the success of the mall revolution in India.



Challenges of Retailing in India




Retailing as an industry in India has still a long way to go. To become a truly
flourishingindustry, retailing needs to cross the following hurdles:

Automatic approval is not allowed for foreign investment in retail.

Regulations restricting real estate purchases, and cumbersome local laws.

Taxation, which favours small retail businesses.

Absence of developed supply chain and integrated IT management.

Lack of trained work force.

Low skill level for retailing management.

Intrinsic complexity of retailing rapid price changes, constant threat of product
obsolescence and low margins.


The retailers in India have to learn both the art and science of retailing by closely
following how retailers in other parts of the world are organizing, managing, and coping
up with new challenges in an ever-changing marketplace. Indian retailers must use
innovative retail formats to enhance shopping experience, and try to understand the
regional variations in consumer attitudes to retailing. Retail marketing efforts have to
improve in the country - advertising, promotions, and campaigns to attract customers;
building loyalty by identifying regular shoppers and offering benefits to them; efficiently
managing high-value customers; and monitoring customer needs constantly, are some of
the aspects which Indian retailers need to focus upon on a more pro-active basis.

Despite the presence of the basic ingredients required for growth of the retail industry in
India, it still faces substantial hurdles that will retard and inhibit its growth in the future.


One of the key impediments is the lack of FDI status. This has largely limited capital
investments in supply chain infrastructure, which is a key for development and growth of
food retailing and has also constrained access to world-class retail practices. Multiplicity
and complexity of taxes, lack of proper infrastructure and relatively high cost of real
estate are the other impediments to the growth of retailing. While the industry and the
government are trying to remove many of these hurdles, some of the roadblocks will
remain and will continue to affect the smooth growth of this industry. Fitch believes that
while the market share of organised retail will grow and become significant in the next
decade, this growth would, however, not be at the same rapid pace as in other emerging
markets. Organised retailing in India is gaining wider acceptance. The development of
the organised retail sector, during the last decade, has begun to change the face of
retailing, especially, in the major metros of the country. Experiences in the developed and
developing countries prove that performance of organised retail is strongly linked to the
performance of the economy as a whole. This is mainly on account of the reach and
penetration of this business and its scientific approach in dealing with customers and their
needs. In spite of the positive prospects of this industry, Indian retailing faces some major
hurdles (see Table 1), which have stymied its growth. Early signs of organized retail were
visible even in the 1970s when Nilgiris (food), Viveks (consumer durables) and Nallis
(sarees) started their operations. However, as a result of the roadblocks (mentioned in
Table 1), the industry remained in a rudimentary stage. While these retailers gave the
necessary ambience to customers, little effort was made to introduce world-class
customer care practices and improve operating efficiencies. Moreover, most of these
modern developments were restricted to south India, which is still regarded as a Mecca
of Indian Retail.





Retail as an Employment Generator




The retail sector can generate huge employment opportunities, and can lead to job-led
economic growth. In most major economies, services form the largest sector for
creating employment. US alone have over 12% of its employable workforce engaged in
the retail sector. The retail sector in India employs nearly 21 million people, accounting
for roughly 6.7% of the total employment. However, employment in organised retailing
is still very low, because of the small share of organised retail business in the total Indian
retail trade. The share of organised retailing in India, at around 2%, is abysmally low,
compared to 80% in the USA, 40% in Thailand, or 20% in China, thus leaving the huge
market potential largely untapped. A modern retail/retail services sector has the potential
of creating over 2 million new (direct) jobs within the next 6 years in the country
(assuming only 8-10% share of organised retailing), according to Arvind Singhal, CMD,
KSA Technopak. Retail can create as many new jobs as the BPO/ITeS sector in India. A
strong retail front-end can also provide the necessary fillip to agriculture & food
processing, handicrafts, and small & medium manufacturing enterprises, creating
millions of new jobs indirectly. Through its strong linkages with sectors like tourism and
hospitality, retail has the potential of creating jobs in these sectors also. Though the
Planning Commission has identified retail as a prospective employment generator, in
order to strengthen the multiplier effect of the growth in organised retailing upon the
overall employment situation, a pro-active governmental support mechanism needs to
evolve for nurturing the sector. Issues like FDI in retail, allocation of government-
controlled land on more favorable terms, strong political and bureaucratic leadership,
etc., need to be addressed adequately.










Retail Sector in the East : Current Scenario, Growth Prospects
and Upcoming Projects


The retail sector in Eastern India is largely Kolkata-centric. The city of Kolkata has come
a long way in terms of retail maturity with a proliferation of brands and organised retail
chains. Shopping trends in the city have witnessed a radical shift over the recent years;
from the conventional trader run stand alone shops to more organized & large retail
formats. Evidently, the future of retailing in the city lies in new-age shopping malls,
which provide variety, value and convenience in a more comfortable environment. This is
also evident by a surge in the consumer spending on branded goods in the recent times;
for example the city's Music World outlet has recorded the highest earnings per square
feet amongst all its outlets in the country. The city has also welcomed the other retail
chains such as Pantaloons, Westside and Shoppers Stop.

Though Kolkata has been a bit late in catching up with the retail revolution in the
country, the city has great potential to become a retail hub in the near future. Going by
the 1991 census, the city qualifies as the second largest metro market in India; nearly one
out of every six shops located in the countrys top 25 cities, can be traced to Kolkata. To
a market strategist, Kolkata undoubtedly is an ideal location for the growth of the retail
industry.Besides being the principal retail-and-services market to a vast hinterland
comprising of the eastern and northeastern states of the country, the city also serves as a
center of trade and commerce for the region. Its proximity to Bangladesh, a country of 13
crore consumers, and to the South-East Asian markets, is another factor for which the city
is fast merging as a vibrant business center. The Kolkata Port and the Haldia Port are also
instrumental in acting as gateways to landlocked countries like Nepal and Bhutan. The
disposable incomes of Kolkatans have also been on the rise according to a report by the
National Council of Applied Economic Research (NCAER), about 62% of the
households in Kolkata had annual incomes of up to Rs.18, 000 in 1985-86; while just a
decade later, the figure had touched Rs.25,000-77,000 for some 61% of the households.


The city truly represents an amalgamation of the advantages of a metro city, and the
comparatively modest living costs of a non-metro town
.
Lately, Kolkata has emerged as a strong prospective destination in the expansion plans of
retailers and is now perceived as a latent but highly potential market. Prominent retail
chains like Music World, Westside, Dominos, Pizza Hut, Shoppers Stop, WillsSport,
Barista, and Pantaloons have already established their presence in the market. Apart from
these new-age, large retail chains which have started operating successfully in the city,
there are a large number of traditional, specialized markets like the Bowbazar market,
Bagri market, China bazaar, Lake market, Burrabazar market, Chandni market, etc., and
high-street markets at Park Street, Esplanade area, Camac Street, Shakespeare Sarani,
Gariahat, which offer a wide variety of items like stationary items, dairy products,
electronic goods and appliances, glassware, crockery, wooden furniture, jewellery,
musical instruments, fruits, flowers, vegetables, fish, flesh meat, textiles, spices, dry
fruits, sugar, salt, groceries, paints, hardware items, etc. Besides these markets, there are
small-format, non-branded shopping complexes/malls like the A/C Market, Vardaan
Market, New Market, and the Shreeram Arcade, which offer a wide variety of items,
from garments, watches, and footwear, to consumer durables like household electronic
gadgets.

The local retail chains which have become household names in Bengal include
Arambagh Hatcheries Ltd., Khadims, and Sree Leathers.

Operational since 1998, Arambagh Hatcheries Ltd. is today one of the foremost
companies in the marketing of poultry products Encouraged by the success of its
chicken brand , and the realization that there was a void in the Kolkata market for
quality food stuff sold under a single roof , the company took the initiative in starting
convenience stores named Arambaghs Food Mart in 2000. An aggressive expansion
strategy has seen the companys physical strength grow to 14 outlets in Kolkata, with
another 5-6 outlets being in the pipeline. Each of these stores are between 500 & 800 sq.
ft. in dimension , and packed with at least 4000-4500 food and other FMCG items . Good


quality , the right quantity, use of correct weights, and a low MRP are the main factors
which have contributed to an impressive growth of this chain . Arambagh has tie ups with
Nicco Park, Kwality Walls,Kellogs India and Frito Lays, among others. These tie ups
help the chain in product and services promotion.

Both Khadims and Sree Leathers are local footwear companies which have been
tremendously successful, and have now reached out to international markets. Khadims
has exclusive showrooms not only in West Bengal, but also in states like Bihar,
Jharkhand, Tripura, Orissa, Madhya Pradesh, Andhra Pradesh, Karnataka, Gujarat, and
Tamil Nadu.The company offers products like Premium shoes, Gents shoes, Ladies
shoes, Kidsshoes, and Leather Accessories. Khadims has become the destination for
people from all walks of life, with a great range of footwear to choose from. The motto of
the company is to provide good quality fashionable shoes at affordable prices.

Sree Leathers entered the Kolkata market in 1987 with its first outlet in the city at
Lindsay Street, which became hugely successful. The companys second mega outlet at
Free School Street, which has a floor area of more than 7500 sq. ft., provides a great
shopping experience to its customers. Today the company has a number of outlets
scattered over West Bengal, Orissa and Bihar, and has ventured into the international
markets of the Middle East, Singapore, Maldives, USA, Denmark, Greece, Germany,
Netharlands and Austria. Sree Leathers has started a new R&D section under the
guidance of Italian and German experts, to enhance the comfort level of its products, and
has plans of setting up a modern footwear factory at Kasba Industrial area in Kolkata.

The two prominent fun-entertainment/amusement parks in Kolkata which have gained
immense popularity among the masses, particularly children, are Nicco Park, and
Aquatica.

Situated in Salt Lake, and spread over an area of 40 acres, Nicco Park, promoted by the
Nicco Group, can be termed as the Disneyland of West Bengal, with a variety of
unusual and exciting games and rides like the Toy Train, Cable Car, Tilt-a-Whirl, Water


Chute, Water Coaster, Flying Saucer, Pirate Ship, and Moonraker. The Cave Ride is the
latest addition, and is perhaps the only of its kind in this part of the world.

Aquatica, an 8-acre water park, is situated at Rajarhat in Kolkata, which came up in
2000. This Theme Park offers visitors a cool respite from the heat and grime of city life.
The park, which can accommodate around 5000 people, has an artificial river meandering
through it. Visitors can swim and wade in the river water, which is recycled every hour
for maintaining the cleanliness. Aquatica has breathtaking rides such as the Black Hole,
Tornado and Wave Pool. The Aqua Dance Floor, where visitors can sway to non-stop
music, has water-spraying nozzles on the roof which fill the surrounding air with water.
Aquatica also hosts big events and programmes like fashion shows which are great
crowd-pullers.The medium and large-format, branded and non-branded shopping
complexes-malls which have come up in Kolkata, and are operating successfully, are :

Forum: It is a two lakh square feet mall, situated on Elgin Road , in South Kolkata with
Shoppers Stop as anchor .This shopping mall established by Sunsam properties within
the Saraf Group was opened to the public in March 2003 , with the launch of Shoppers
Stop. Along with the retail brands having their outlets, the Forum also houses, a 300
capacity food court and a 4-auditorium multiplex called INOX. The multiplex, INOX has
been the first of its kind in the city, having a sitting capacity for over 1000 viewers, and
situated over 30000 square feet. Hence it can be really a great experience of shopping
and movie-going for the Kolkatans, who do not want to compromise on the quality
aspect. The retail outlets at Forum have witnessed almost 30-35 % increase in sales after
the opening up of the multiplex in 2003. Most retailers are extremely happy with the
growth rate and expect their sales to increase further in the coming months .At INOX ,
ticket sales have been averaging at almost 90% of the theatre capacity the highest box
office sales amongst all the multiplexes in the country . Forum has truly changed the
experience of Kolkatans with regard to shopping and entertainment in the city .





22 Camac Street: This large format-shopping complex is located on Camac Street .The
retail brands like Pantaloons ,Westside , Pizza Hut , Planet M, Grain of Salt and Add Life
, have already set up their outlets in the complex. It has 4 distinct blocks with a common
atrium. The most advantageous aspect here is its huge parking space in the basement. It
also houses smaller multi-branded outlets. The footfalls stay steady throughout the week
and gets to an uncontrollable high over the weekend .Some of the outlets rank among the
leading individual retail outlets of the country . The total floor area of the complex is
380,000 square feet , and has 4 restaurants and 3 banquet halls
.
Metro Plaza: Situated on Ho Chi Minh Sarani , this is basically a large scale retail cum
office development area . The lower three floors with an area of 50,000-60,000 square
feet is meant for retail business. Along with the retail units there is also a space for
Bowling which is frequented by younger people.

Emami No. 1: This mall is located on Lord Sinha Road . Its close proximity to the
Chowringhee-Park Street belt helps it to cater to a large section of quality conscious
consumers. The usual facilities of power backup, vertical transportation and parking are
available over here. The biggest disadvantage that it faces is its car parking area, which
has a meagre capacity of just 70 cars at a time. The biggest attraction here is its
Landmark bookstore on the third floor, which has a wide range of books, music and
stationary items.

City Centre: The recently inaugurated City Centre project adds another feather to the
already vibrant retail business in the city. The project, promoted by industrialist
Harshvardhan Neotia, and located at Salt Lake, has been designed by one of Indias best
known architects, Charles Correa. City Centre is a dynamic mix of shopping mall,
Cineplex (INOX), entertainment area, food court, offices, and residences- nestling amidst
open spaces, lush greens, and the contours of an ideal cityscape. Big brands like
Shoppers Stop and Adidas have set up their shops in the complex. There are several
aspects to City Centre ; with no boundaries to separate it from the street, it is open to
everyone- all income and age groups. The Complex has a parking space for as many as


800 cars, 14 entry and exit points, and large spaces to amble around. The City Centre,
which is the single-largest architectural endeavour in Kolkata in recent times, has truly
changed the way the city looks, and complements the citys artistic heritage. The location
of the project makes Salt Lake the epicenter of not just its immediate population (nearly
half a million), but also of the upcoming, adjoining township of Rajarhat (with an
expected population of about 750,000).

Enclave: Spread over 36,000 sq. ft., the Enclave, has come up at up-market Alipore, and
has five shopping levels, and an open-to-sky atrium. The complex, promoted by the
Calcutta Metropolitan Group, has fine restaurants including Food Bar, Red Bar, Cookee
Bar, coffee shops, a childrens entertainment zone named Kool Kids, among other
facilities. Another prominent supermarket which offers a wide range of products, and
provides customers with a great shopping experience, is C3- The Market Place. The
shop commands over 6100 sq.ft. in the heart of Kolkata, at Lee Residency, 26, Lee Road.
The approximately 25,000-strong product menu includes a wide range of products like
fresh fruits and vegetables, rare herbs, groceries, ready-to-eat food, personal-care items,
confectionaries, chocolates, home-care products, newspapers, magazines, and so on.

Though the retail business mainly revolves around Kolkata, towns like Durgapur, Siliguri
and Haldia also have the potential of becoming busy retail addresses. Already, the
Durgapur City Centre project, promoted by Bengal Shristi Infrastru-cture Development
Ltd., has come up in Durgapur, in Burdwan district. The project, which was inaugurated
on the 10 th of August, 2003, is a modern, multi-facility, multi-utility, urban plaza, spread
over a sprawling 370,000 sq.ft. It is a confluence of shopping, commerce, entertainment,
education, recreation, health, hospitality, medical amenities, and premium residential
accommodation. Lush green open spaces, an integrated entertainment multiplex, and
various other urban amenities, provide a fascinating experience. Durgapur is well-
connected by both rail and road, and the project location is easily accessible from the
bordering towns of Asansol, Ranigunj, Santiniketan, and Burnpur.



A number of prominent projects in the retail sector are coming up in Kolkata. Some of
these are:

South City: The upcoming, 31-acre South City project promises of a lifestyle of int-
ernational standards. The project will have four 35-storey residential towers, a sprawling
club, a shopping mall with entertainment zones, and a multiplex. Moderntechnology will
ensure earthquake resistance, high-speed elevators, adequate fire-fighting and protection
systems, internal security and traffic management, and all conceivable civic comforts.
The in-complex South City Academy, spread over 3.5 acres, will be equipped with a
learning resource center, gym, cafeteria, an auditorium for extra-curricular activities like
debates, dramatics, and sports, and a soccer field. The South City Club will have an air-
conditioned sports center, guest rooms, banquet facilities, swimming pools, a dining
restaurant, a pub lounge, a business center, and a health club, among other things. The
mega complex will also have Indias largest shopping mall- the Junction, spread across
an area of 700,000 sq.ft., which will have large anchor stores, a multiplex, a food court, a
six-screen Cineplex, an entertainment zone, and parking space for nearly 800 cars.

The team behind this big venture comprises a host of experienced architects and Dev-
elopers. Among them are : Dulal Mukherjee & Associates (the principal
architects);Smallwood Reynolds Stewart Stewart & Associates Inc., the Atlanta-based
international design consultants; Peridian Asia PTE Ltd., Singapore-based landscape
architects; Meinhardt (Singapore) PTE Ltd., structural consultants; and MN Consultant,
structural engineers.

Mani Square: Mani Square, a proposed project on a 4-acre plot next to Apollo Gle-
neagles Hospital on E.M.Bypass, will have a 500,000 sq ft. space, which will include a
technology park, a 6-screen multiplex , a food court , business club , a multilevel 1000-
car parking area , a 40,000 sq ft. hypermart ( Giant ), as well as other direct retail stores
.Designed and engineered by SAA Architects of Singapore and Meinhardt of Australia ,
and promoted by the Mani Group, Mani Square will be the single stop solution to all
requirements of modern-day professionals and customers . The project will have ready-


to-use centrally air-conditioned offices with 100% power back-up ,lease-lines and round-
the-clock support services , which will be extremely attractive for IT and ITeS companies
.Retail giants like Lifestyle , Westside , Shoppers Stop and Cineplex majors like
Shringar and PVR have already shown interest to set up units in the complex .

Fort Knox: Fort Knox, a mega jewellery mall, owned and promoted by the Fort Group,
is scheduled for a September, 2004 inauguration. The project, a 9-storied complex, on an
area of approximately 80,000 sq.ft., will have an estimated 37 showrooms, 40 offices,
backed by 4 lifts, 8 escalators. The Fort Group is confident about eliciting a positive
consumer response, and providing the customer with a comfortable, secure, and
refreshing shopping experience, by creating access to the best products, from the best
jewellers, at the best prices. The project, which is coming up at Camac Street, will have a
formidable line-up of security measures including alarm system with instant links to the
police headquarters and fire services, 24-hour armed security guards, etc.

Gariahat Mall: Gariahat Mall, which is coming up at an area between the Gariahat
crossing, and the Rashbehari- EM Bypass Connector, will approximately be of 80,000
sq.ft., and will be accessible from every point in the southern belt of the city. The 5-floor
structure will boast of world-class facilities and ambience, an expansive atrium, high
ceilings, capsule lifts, and multi-level access up to the top floor. The scientific fusion of
lofty ceilings, flat slabs, and a central atrium illuminated by natural light, is intended to
evoke a sense of space, height, and depth. While an entire block has been earmarked for
the anchor shop, the 3 rd and the 4 th floors are entirely reserved for jewellery outlets, and
the 5 th floor will house restaurants and eating places. Toplight Commercials Ltd. (TCL),
one of the prominent real-estate developers in Kolkata, and the promoter of the mall,
expects to complete the project by December, 2004.

Metropolis: The 1,41,000 sq.ft. Metropolis will be one of Kolkatas newest retail-
cum-entertainment addresses. The complex will have a 4-screen, 1000-seater Cineplex, a
6- outlet food court, a sports bar, a restaurant, and a 350-capacity car park. Being
developed by the Calcutta Metropolitan Group (CMG), the Metropolis is designed by


the reputed architectural firm, Peddle Thorp International of Hong Kong, and will come
up at an area adjacent to CMGs prestigious existing residential complex, Hiland Park,
which has about 900 apartments and 35 penthouses. Metropolis will have the Hyatt
Regency, ITC Sonar Bangla, Peerless Hospital, and Udayan Condoville among its
distingui-shed neighbours.

Pam Shopping Centre: The marvellous Pam Shopping Centre, promoted jointly by
Pam Developers, and the Kolkata Municipal Corporation, is scheduled for an end-August
(2004) inauguration. This 60,000 sq. ft. eye-catcher at Rashbehari Avenue, will boast of a
unique reflective glass curtain, and an artistically landscaped entrance ramp, besides
having five levels of shopping. The Complex will have shops selling a wide range of
products including garments, and jewellery.

Homeland: Homeland, a 1,00,000 sq. ft. exclusive shopping mall, promoted by the
Merlin Group, is coming up in the heart of Central Kolkata, close to Chowringhee and
Elgin Road crossing. The five-storied, centrally air-conditioned shopping center will have
stylish spaces ranging from 300 sq. ft. to 2000 sq. ft., and spacious exhibition and product
launch area. The mall will also have ATM centers at convenient points, internationally
styled caf and food stops, 24-hour power backup facility, and adequate car parking
facilities.

Silver Springs: Silver Springs, a prestigious joint venture project between Bengal
Silver Springs Projects Ltd. and the Kolkata Municipal Corporation, is due for a
December, 2005 completion. Shapoorji Pallonji has done the piling of Silver Springs,
and renowned architect J.P.Agarwal has designed the project. The project will have
around 500 residential flats, 10 high-rises of 18 and 14 stories, a magnificent shopping
mall named Silver Arcade, of 70,000 sq.ft. area, and a Spring Club of an area of
70,000 sq.ft. The vendors at the shopping mall include Mainland China and a Hyundai
dealer- showroom. Silver Arcade will be a G+3 mall, with the 3 rd floor being taken up
by Mainland China for 3 speciality restaurants; while the 2 nd floor will have a Food
Court with 17 multi-cuisine food counters. The mall will be backed by a large parking


space for 150 cars. Silver Springs will boast of a modern, up-market residential
complex, the shopping mall, Silver Arcade, a Montessori School, an AC Community
Hall, among other new-age facilities.

Bhubaneshwar is another city, which has the potential of becoming a retail hotspot in
the East. The city is fast developing into a bustling center for economic activity, with
software giants like Infosys and Satyam have already set up their offices. This is giving
rise to a new breed of consumers with high disposable incomes; thereby creating lifestyle
and aspiration levels at par with other fast-moving metropolitan cities. Bhubaneshwar
represents two faces of retailing - one, a traditional store evolving with time, and another,
a recently inaugurated mall from a group that is credited with having revolutionized the
retail scenario in Kolkata.

Satyam Shivam Sundaram: This 25 year old multi-brand department store is famous
for its offerings in textiles and ready-to-wear garments. The uniqueness of the store lies
in its ability to inculcate the latest retail concepts in terms of selection and display of
merchandise in-store ambience, and other attractive features. This 8,000 sq ft. store,
which is being upgraded to a 16,000 sq ft. one, spends a good amount of money annually
on brand-promotion exercises. At the store, half of the retail space is devoted to
menswear , 25 % to womens wear , 15% to childrens wear , and the rest 10% to
teenagers . About Rs. 25 lakh in systems, while the standing stock of merchandise is
worth about Rs. 5 crore.

Forum Mall: Bhubaneshwars Forum mall, launched on 29th of March,2004, is
expected to bring in a turning point in the citys retailing and retail real-estate
development. Located at Kharvel Nagar, Unit III, in the Central Business District, the
mall is the brainchild of Rahul Saraf, the man who masterminded the success of Forum at
Kolkata. The 4-level Forum mall has a total area of 170,000 sq.ft., with 115,000 sq.ft.
devoted to the retail and F&B. The ground, first, and second floors, is dedicated to pure
retailing, while the food court and entertainment zones are located on the third floor. The
top floor is reserved for IT and related business and trade. The prominent brands that



have taken space in the mall include Big Bazar (anchor), Pizza Hut, Moustache, Dukes,
Sree Leathers, Baskin Robins, Planet M, among others. The upcoming brands include
Benetton, Blackberrys, Chandrani Pearls, Bata, and Siyarams. The mall has received a
great response; the average footfalls being 7000 per day, with expectations of an increase
to 8000. Forum has not only become a shopping destination for the people of
Bhubaneshwar, but also for people from surrounding areas like Cuttack and other towns
in the state.

The retail revolution is slowly making changes in lifestyle in smaller towns also. This is
evident from the fact that even a small town like Bhagalpur in Bihar, today has its own
shopping mall. The already operational shopping center, named Sriyash Aap Ka Apna
Bazar, located at Jiwan Sagar Towers, D.N. Singh Road, has been promoted by the
Kishorepuria Group of Companies. The 2 floor- Rs.1.10 crore project has about 11,000
sq.ft. of total retail space, and offers a wide range of products like garments, appliances,
furniture, cosmetics, electronic items, among others. The mall, which has a parking space
for 10 cars, and 50 motorbikes, has received great response- the average footfalls being
900-950. There are plans to further improve infrastructural facilities in the complex; a
well-equipped food court is coming up, with Hindustan Lever Ltd. (HLL) as one of the
possible partners.

The East is fast emerging as a formidable retail market. The spread of retailing beyond
Kolkata would create an integrated retail zone which would change the way people in
this part of India work and live.









Retail Education in the East

The retail sector, which is poised for robust future growth, needs more and more
professionally qualified personnel, with specialized knowledge in retailing. It is thus
necessary to have more and more business schools in the country, which offer specialized
courses in retailing.

The need for providing quality retail management education has been recognized by
theICFAI Business School in Kolkata, which offers a comprehensive retail management
programme that enables the students to critically analyze the retailing process, the
environment within which it operates, and the institutions and functions that are
performed. The course aims to make students aware of the differences between retail
marketing strategy and financial strategy, and provides knowledge of merchandise
management. The programme inculcates analytical skills useful for retail decision-
making, and provides a foundation for those students who plan to make career in the field
of retailing or related disciplines. The course covers critical topics like understanding the
retail customer, and institutions; retail marketing strategies; retail organization &
management; pricing strategies; retail selling; logistics & information systems, etc.


Recently, the International School of Business & Media has, in its newly inaugurated
campus at Salt Lake, Kolkata, started offering a 2-year full-time Post Graduate
Programme in Management, with retail management as on of the specializations. The
course covers essential topics like retail organization & management; introduction to risk
management; retail location analysis; branding the retail organization; retail marketing &
sales strategy, etc. This course has been launched looking at the tremendous growth
potential of the retail sector in the coming years, and aims to gear up students to the
rapidly changing business environment.



Quality retail education is necessary to create a vast pool of qualified retail management
professionals who can tackle the challenges of this intensely competitive industry. To
cater to the increasing demand for technically efficient workforce in the retail sector,
more and more management institutions in the country should design and introduce
innovative retail management programmes.


Factors needed to promote the Sector in West Bengal

A number of important issues need to be addressed suitably to foster the further growth,
and ensure competitiveness of the retail sector in West Bengal/Kolkata. These can be
summarized as follows :

The principal issue with the development of retail in Kolkata is the acquisition of appr-
opriate spaces for retail, and the cost thereof in the city. One of the main components of
the cost of such spaces is the incidence of tax in terms of Kolkata Municipal Corporation
Act, 1980. The KMC Act stipulates that an amount of 40% of the annual value as
determined u/s 174 of the Act will be the amount of tax, in addition to which the premises
that are used for non-residential purposes (which includes all retail and commercial
establishments), there will be an additional levy of surcharge of 50% of the above tax.
This effectively translates into a tax of 60% on the annual value (being the gross annual
rental reduced by 10% for mainten-ance ) of a property, which is an extremely high tax
threshold. Formatted retail, which is a developing industry, cannot afford such high rates
of tax which it must effectively bear to transparently acquire property for the conduct of
its business in Kolkata. These rates are amongst the highest in the world, and discourage
the growth of the retail business. The municipal tax in Kolkata is so high, that the total
expense on commercial, rental premises becomes much more expensive than in other fast
growing cities like Bangalore, Hyderabad, Chennai, etc.





Property Tax rates for commercial, tenanted premises in different cities:

Kolkata Banglore Chennai Delhi Gurgaon Navi Mumbai
(KMC)
18.90 5.58 7.75 5.76 3.21 3.00

(All Figures are Property Tax in Rs./sq.ft./month)


It is thus absolutely necessary for the concerned authorities to take necessary steps for
rationalization of the municipal tax rates in Kolkata to prevent loss of business,
employment, and development opportunities.

The relevant provisions of the Shops & Establishment Act stipulate that a commercial
establishment of any kind (which includes a retail operation) must allow its employees
one and a half day of leave for every week of work. It also stipulates the total number of
hours that any establishment can remain open for business on any working day. In this
competitive environment virtually every retail, entertainment and food business requires
to conduct its business every day of the week and provisions like this severely inhibit
their profitability.

A number of retail environments have been asked to pay an entertainment tax for the
music that they play in their stores. In fact it has also been reported that such taxes also
demanded if a television is used inside such an establishment. This is our view in punitive
since such music or television is not intended to provide any formal entertainment.

There is confusion about the size, number and nature of the signage that a commercial
establishment is allowed to display outside its premises. The KMC has of late begun to
demand tax on such signage at the same rates as are applicable to hoardings. A standard
needs to be instituted proportionate to the area occupied by a commercial establishment


indicating dimensions of the free signage permitted by the establishmentso that there is
no confusion that is allowed to persist in this connection.

The issue of fixing of Maximum Retail Price (MRP) by manufacturers, which is making
retailers uncompetitive, needs to be addressed urgently.

The rigidity of the Weights & Measures Act, which empowers the arrests of members
from the Board of Directors of a company, is another issue, which demands immediate
attention.

Kolkata is an ideal location for the growth of the retail industry. The inherent advantages
of West Bengal/Kolkata need to be exploited fully by strengthening the
governmental/administrative support mechanism. A comprehensive, rational retail
support policy can go a long way in making the sector act as an engine of growth for the
state economy.





















Conclusion

In India the retail sector is the second largest employer after agriculture, although it is
highly fragmented and predominantly consists of small independent, owner managed
shops .There are over 12 million retail outlets in India , and organised retail trade is worth
about Rs.12,90,000 crore (September,2003). The country is witnessing a period of boom
in retail trade, mainly on account of a gradual increase in the disposable incomes of the
middle and upper-middle class households. More and more corporate houses including
large real estate companies are coming into the retail business, directly or indirectly, in
the form of mall and shopping center builders and managers. New formats like super
markets and large discount and department stores have started influencing the traditional
looks of bookstores, furnishing stores and chemist shops. The retail revolution, apart
from bringing in sweeping, positive changes in the quality of life in the metros and bigger
towns, is also bringing in slow changes in lifestyle in the smaller towns of India. Increase
in literacy,exposure to media, greater availability and penetration of a variety of
consumer goods into the interiors of the country, have all resulted in narrowing down the
spending differences between the consumers of larger metros and those of smaller towns.

However, the supply of quality real estate space would be instrumental in propelling
the future growth momentum of the retail sector in India. The addition of better and
affordable retail space would enable retailers to deliver more better-quality products and
services to the consumers, resulting in increase in operational efficiencies and decline in
costs for the supply chain. India is one of the complex real estate markets in the world
due to the large degree of variation and inconsistence in the market practice and
regulatory norms. A combined effort by both central and state governments in terms of
appropriate zoning laws, transparency in ownership, and availability of loans for retail
land, is very much necessaryfor reducing existing bottlenecks.



Accordance of industry status to retail in India is an issue that needs to be addressed
soon. Recognition would ease financing prospects, as well as standardize and unify taxes
for the industry. An alignment of the retail sector with the tourism sector could also
promote India as a global shopping hub.

For the retail sector to achieve further growth, the spread of organised retailing has to
become a national phenomenon. According to KSA Technopak, a leading consulting
firm, the organised sector will grow to almost Rs.30, 000 crores by 2005, representing
6% of the total retail market. The top 6 cities will account for 66% of total organised
retailing. Although many international retailers and brands still regard India as too
difficult, they would welcome the opportunity to create an appropriate joint venture, if
they felt India was changing. The growth of the organised retail industry in the country
will mean thousands of new jobs, increasing income levels and living standards, better
products, and services, a better shopping experience, and more social activities.
==============================o==============================

































HOW DO INDIAN RETAILERS SELL THEIR PRODUCT?


This brings to broadly identify and categorize the types of retail marketing, which
are defined as follows:
1 1. . S St to or re e R Re et ta ai il li in ng g
2 2. . N No on ns st to or re e R Re et ta ai il li in ng g



Store Retailing

D De ep pa ar rt tm me en nt ta al l S St to or re e
Convenience Stores

S Sp pe ec ci ia al lt ty y S St to or re es s

D Di is sc co ou un nt t S St to or re e



C Ca at ta al lo og g S Sh ho ow wr ro oo om m



N No on n S St to or re e R Re et ta ai il ll li in ng g. .
D Di ir re ec ct t M Ma ar rk ke et ti in ng g
A Au ut to om ma at ti ic c V Ve en nd di in ng g
D Di ir re ec ct t S Se el ll li in ng g




Store Retailing
Store retailing provides consumers to shop for goods and services in a
wide variety of stores and it also helps the Consumers to get all the needed goods and
services from one shop only. The different types of store retailing are given below:

D De ep pa ar rt tm me en nt ta al l S St to or re e

These stores are usually build in large area and keep variety of goods under one
shed. It is usually divided into different sections like clothing, kids section, home
furnishings, electronic appliances and other household goods. In a departmental store a
consumer can buy variety of goods under one shed.

Convenience Stores

These are relatively small stores located near residential area, open for long hours
seven days a week, and carrying a limited line of high turnover convenience products at
slightly higher prices than departmental stores. Many such stores also have added takeout
sandwiches, coffee and pastries.
O Of ff f - - P Pr ri ic ce e R Re et ta ai il le er r


These stores sell goods at low price with lower margins & higher volumes. These
stores sell goods with deteriorated quality. The defects are normally minor. This target at
the persons belonging to the lower income group, though some have a collection of
imported goods aimed to target the younger generation. The company owned showroom
selling the seconds products is a typical example of off - price retailer.

S Sp pe ec ci ia al lt ty y S St to or re es s
These stores focus on leisure tastes of different individuals. They have a narrow
product line with deep assortment such as apparel stores, sporting goods stores, furniture
stores, florists and bookstores. These stores are usually expensive and satisfy the needs of
selected consumers who have liking or preference for exclusive things.

Supermarket

These stores are relatively large, low cost, low margin, high volume, self service
operations designed to serve total needs for food, laundry and household maintenance
products. Supermarkets earn an operating profit of only 1 % on sales and 10% on net
worth.

D Di is sc co ou un nt t S St to or re e
These stores sell standard merchandise at lower prices by accepting lower
margins and selling higher volumes. The use of occasional discounts or specials does not
make a discount store. A true discount store regularly sells its merchandise at lower
prices, offering mostly national brands, not inferior goods.

In recent years, many discount retailers have traded up. They have improved
decor, added new lines and services, and opened suburban branchesall of which has led
to higher costs and prices. And as some department stores have cut their prices to
compete with discounters.


Not only that, discount stores have moved beyond general merchandise into
specialty merchandise stores, such as discount sporting goods stores, electronics stores,
and bookstores.

C Ca at ta al lo og g S Sh ho ow wr ro oo om m
Catalog showrooms generally sell a broad selection of high-markup, fast-moving,
brand-name goods at discount prices. These include jewelry, power tools, cameras,
luggage small appliances, toys, and sporting goods. Catalog showrooms make their
money by cutting costs and margins to provide low prices that will attract a higher
volume of sales. Catalog showrooms have been struggling in recent years to hold their
share of the retail market.































N No on n S St to or re e R Re et ta ai il ll li in ng g. .

It is another type of retail marketing. Different types of nonstore retailing are
given below:


D Di ir re ec ct t M Ma ar rk ke et ti in ng g
Direct marketing has its roots in mail-order marketing but today includes reaching
people in other ways than visiting their homes or offices, including telemarketing,
television direct response marketing, and electronic shopping.

A Au ut to om ma at ti ic c V Ve en nd di in ng g
Automatic vending has been applied to a considerable variety of merchandise,
including impulse goods with high convenience value (cigarettes, soft drinks, candy,
newspaper, hot beverages) and other products (hosiery, cosmetics, food snacks, hot soups
and food, paperbacks, record albums, film, T-shirts, insurance policies, and even fishing
worms).


D Di ir re ec ct t S Se el ll li in ng g
Direct selling which started centuries ago with itinerant peddlers has burgeoned
into a $9 billion industry, with over 600 companies selling door to door, office to office,
or at home sales parties. A variant of direct selling is called multilevel marketing,
whereby companies such as Amway recruit independent businesspeople who act as
distributors for their products, who in turn recruit and sell to sub distributors, who
eventually recruit others to sell their products, usually in customer homes.


S Sh ho op pp pe er rs s S St to op p

Pioneers in organized retailing in India, Shoppers' Stop Ltd., was started by the
Rahejas, with the very first outlet being in Mumbai ( a retail area of 4500 sq. ft.) in 1991.
It now holds around 1,95,000 sq. ft. of retail space from Shoppers' Stop alone. It also
has chain of stores in other formats, with Cross words and Shoppersstop.Com under its
wings.

Shoppers' Stop, is a specialty chain of garment and accessory retail stores with
outlets in Mumbai, Bangalore, Hyderabad, Jaipur, and New Delhi.

Crosswords is a specialty chain of books, music and gifts retail stores with outlets in
Mumbai, Bangalore, Ahmedabad, Delhi, Pune, Nasik, Goa and Vadodara.

Shoppersstop.Com (India) Pvt. Ltd, is 100% subsidiary of Shoppers' Stop Ltd. It
has been floated with the intention of breaking down location barriers and helping
customers from around the world to "Feel the Shoppers' Stop shopping experience",
online.



M MA AR RK KE ET TI IN NG G M MI IX X O OF F S SH HO OP PP PE ER RS S S ST TO OP P

Product
Shoppers Stop offers their customers a range of the finest national and
international brands, and a quality and price assurance that is backed by their guarantee,
stamped on every bill: "We are responsible for the goods we sell."


With the increasing number of nuclear families, working women, greater work
pressure and increased commuting time, consumers are looking for convenience. And,
convenience is defined as having everything under one roof, longer hours and
multiplicity of choice. Shoppers Stop has gauged the changing trends and in response to
this it houses a variety of products under one roof thus providing the customers with
value for time in addition to value for money.
The product range includes the following items:
Cosmetics
Jewellery
Perfumes
Watches
Sun glasses
Bags
Apparels for men, women and children
Sports equipment
Home furnishings
Price
Pricing is not as important as convenience, todays consumer is more upbeat
about `money spending' and more conscious about `time spending', and the consumer
prefers shopping for most of their requirements from a single store.
Most of the products at Shoppers Stop are branded. One of the prominent
features of branded products is the fact that they are available at the same prices within a
particular geographical region. Therefore, in terms of pricing its products Shoppers Stop
can exercise only a limited amount of control.

Place
Shoppers' Stop's first outlet in Delhi opened in December last year that took the
total number of stores to seven. The company has two stores in Mumbai and one each in
Bangalore, Hyderabad, Jaipur and Chennai. The company is planning to open a store in
Kolkata.
Massive expansions have been planned for Delhi by opening four new centers.


The objective is to make state-of-the-art malls to "make shopping comfortable.
Another place where the company intends to sell its products in a big way is the internet.

Promotion
Shoppers' Stop has been positioned as a store that offers its customers an
international shopping experience. In their efforts to provide this experience, they have
held, numerous path breaking events and promotions, which have got them both national
and international accolades besides the appreciation of their customers.

As already taken up earlier some of the hugely popular promotional schemes
taken by the company are:

o The Festival of Britain
o Parikrama
o The Disney Carnival
o DOTY - The Designer Of The Year
o Valentines Day

Here we should remember that the four Ps of marketing mix represents the
sellers view of the marketing tools available for influencing buyers. From a buyers
point of view, each marketing tool is designed to deliver a customer benefit. The sellers
four Ps correspond to the customers four Cs.
Winning companies are those who can meet customer needs economically and
conveniently and effective communication.


S SW WO OT T A AN NA AL LY YS SI IS S O OF F S SH HO OP PP PE ER RS S S ST TO OP P

Strengths
Prime location
Experienced and competent management
Highly trained and motivated sales force
Brand equity
Large scale operations in various cities throughout the country allows them to reap
the benefits of economies of scale
Large floor space allowing for better visual merchandising
Large area also allows to stock a large variety of products under one roof
Financial backing by the Raheja Group

Weaknesses
A large organization structure leads to delayed decisions. This can prove fatal for a
business in the dynamic fashion industry. Shoppers Stop has a centralised purchasing
department in Mumbai, this fact sometimes results in delayed decisions in adapting to
changing market trends
Large scale of operations sometimes acts as a barrier to personalized customer
relations
Large scale operations lead to reduced flexibility by increasing the amount of
overheads and a huge commitment in terms of fixed costs

Opportunities
According to the Consumer Outlook study, consumers are generally satisfied with the
service that organized retailers extend to them. More importantly, they are
increasingly regarding these organized retailers as providing `value-for-money.
These findings indicate that large retailers will capture most of the higher consumer
spending
Apart from the metros, cities like Ahmedabad, Pune, Lucknow, Indore and
Coimbatore have shown substantial retail presence. Most sport modern retail formats


like supermarkets, department stores and specialty chains. These markets are
expected to show exponential growth in the next few years. Thus Shoppers Stop has
the opportunity to explore new markets

Threats
The time when retailers had to worry about competition only from their peers
down the street has come to an end. Shoppers Stop is now facing increased competition
in the form of international retail chains that are making a beeline towards the highly
potential Indian markets. Moreover many big Indian business houses are also vying a
space in the Indian retail scene





R RE ET TA AI IL L M MA AR RK KE ET TI IN NG G P PR RO OM MO OT TI IO ON N I IN N I IN ND DI IA A
R RO OL LE E O OF F A AD DV VE ER RT TI IS SI IN NG G A AN ND D D DI IF FF FE ER RE EN NT T M ME ED DI IA A

. The most efficient method of reaching method of reaching these potential
customers for most retail is the marketing tool known as advertising. For purposes of
definition:
Advertising is any paid form of non personal presentation and promotion of ideas,
goods, or services by an identified sponsor. The definition points out the true role of
advertising in the promotional mix of a store.
A Ad dv ve er rt ti is si in ng g i id d n no on n p pe er rs so on na al l: : The retailer cannot expect advertising to do all the
selling. It will not replace personal selling effort where it is needed. Advertising and
personal selling must complement one another.
A Ad dv ve er rt ti is si in ng g c ca an n s se el ll l s so om me et th hi in ng g b be es si id de es s a a p pr ro od du uc ct t: : The retailer should use
advertising to sell the service of the store. For many retailers, services are their only
differential advantage. For some retailers, selling ideas as also significant. If a retailer is


trying to promote a civic cause o a unique or different retailing image, this idea may be
presented through the stores advertising.
A Ad dv ve er rt ti is si in ng g i is s a a p pa ai id d f fo or rm m o of f p pr ro om mo ot ti io on n: : The retailer can control the placement
and content of the advertising for the store.

A Ad dv ve er rt ti is si in ng g r re eq qu ui ir re es s a an n i id de en nt ti if fi ie ed d s sp po on ns so or r: : The retailer wants to be sure the
store is identified. A retailer should take extra care to insure that a potential customer has
no doubt as to the name of the store and where the store is located.
As a retailer studied the stores advertising program, factors to be considered
include.
Advertisings effect on the retail image
Characteristics of available media
Advertising schedule
Advertising budget
Cumulative effect of advertising
Objective of advertising
Coordination of advertising with the other parts of the
marketing program.

By examining these key factors, a retailer can improve his understanding of the
role and capabilities of advertising. This understanding should in turn results in a more
effective and more efficient advertising campaign. Each of these factors for effective
advertising are equally important to well-planned advertising. Although advertisings
effect on the retail image will be discussed first, non of the seven advertising areas in
many stronger than any other in the chain of advertising success.


V VA AR RI IO OU US S M MO OD DE ES S O OF F A AD DV VE ER RT TI IS SI IN NG G . .

For an advertisement to be effective it must be noticed, read, comprehended, believed,
and acted upon.
For one who has no objective, nothing is relevant.
It is very much important to set the objective of the ad to be delivered for any of the
product. The product is either of the FMCG, Consumer Durable, Service product, etc. but
even that the company is looking for the promotion activities which help them in
promoting the product. Advertising objectives, like organisational objectives, should be
operational. They should be effective criteria for decision making and should provide
standards with which results can be compared. Furthermore, they should be effective
tools, providing a line between strategic and tactical decision.

Knowledge of the various available advertising media and their
various methods of application for retail situation is a vital to a well-
planned, successful advertising program. For a given situation, there are
particular media that would be appropriate for a retailer to use.
Outdoor Advertising
Transit Advertising
Special Advertising
Direct Mail Advertising
Donation Advertising
Newspaper Advertising
Magazine Advertising
Television Advertising
R RE ET TA AI IL L M MA AR RK KE ET TI IN NG G I IN N I IN ND DI IA A

R Retail marketing is the most important part of the entire logistics chain in a
business especially in consumer related products. Without proper retailing the companies
can't do their business. Retailing is the process of selling goods in small quantities to the


public and is not meant for resale. Retail is derived from the French word retailer,
meaning to cut a piece off or to break bulk.

There are various ways of making goods available to consumers like:
Company to distributor to wholesaler to retailer to consumer
Company to salesperson to consumer
Company to consumers (online/ phone/ catalog ordering)

These three are among the most common ways of making the goods available to
consumers. But in India the three layered system of distributor, wholesaler and retailer,
forms the backbone of the front-end logistics of most of the consumer-good companies.

In this system the company operating on all India basis appoints hundreds of
distributors across the country that supplies to various retailers and wholesalers.
Wholesalers in turn can either directly sell in the market or can supply to retailers. The
current retailing system prevalent across the country is highly fragmented and
unorganized. Anyone with some money and some real estate can open a small shop and
become a retailer catering to the locality in which he opens the shop.

There are a number of reasons behind this fragmented retail market. Some of the
major reasons being:

Poverty and lower literacy levels.
Low per capita income.
Savings focused and less indulgence mindset.
Poor infrastructure facilities like roads etc.
Restrictions on intra-state good movement.
High taxes.
No exposure to media.
High import duties on imported goods.
FDI in retailing is not allowed.


Retailing is not considered as a business or industry by the government.
Hitherto none of the business schools in India were offering specialized courses on
retailing.
Expensive supply chain.
Besides this there is other reasons too, which led to stifling of
growth of organized segment of retailing sector and which instead led to
highly fragmented market.
Today in India we have more than 12mn retail outlets and most
of then are family run and locally owned. There are very few nationally
present retail stores. In India the process of buying and selling at these
unorganized retail outlets, is highly characterized by bargaining and
negotiations. But slowly with increasing influence of media and
urbanization the market is shifting towards organized segment. Seeing
the huge market size of retail business in the country and the current
level of organized segment, many players have jumped into the fray and
many are waiting for the right opportunity to enter it.
P Pr re es se en nt t R Re et ta ai il l S Sc ce en na ar ri io o I In n I In nd di ia a
Retail experts find I ndian industry promising
Retail Sales To Touch Rs. 30,000 Cr. By 2005
Mall Mania: The Developing Mall Culture I n I ndia
The Traditional Retail Scene And The Challenge Posed By The I nternet.

Retail experts find Indian industry promising

The retail movement in India has acquired the critical mass that is required for
rapid acceleration in terms of industry growth as well as geographical spread. The Indian
retail industry can no longer be called nascent.
The spread of super stores to the northern cities such as Delhi, Chandigarh, Jaipur
and Kolkata is evidence of the fact that organized retailing in India has emerged from its
southern bastion.


The retailing boom is being driven by increased expectations as well as changing
shopping behavior of the urban Indian consumer. With the increasing number of nuclear
families, working women, greater work pressure and increased commuting
time, consumers are looking for convenience. And, convenience is defined
as having everything under one roof, longer hours and multiplicity of choice.
On the supply side, the current inefficient supply chain in India, particularly for
food items has led a few players to consolidate their operations to take advantage of
economies of scale and match consumer expectations in terms of delivery as well as
space. So, we have a situation where both demand and supply side dynamics are fuelling
the growth of organized retailing in India, although improvements in the supply chain are
yet to fully match with consumer expectations.
The future growth need not necessarily come only from the big metros, where
there already exists a good retail network. The fact that big Indian retail chains are
moving into places like Indore or Chandigarh is an important indicator of future growth.
For the Rs. 5000-crore organized retail industry it is, perhaps, time to tap the relatively
smaller cities.

Retail Sales To Touch Rs. 30,000 Cr. By 2005
Retail is exciting, and action in the sector promises to hot up. KSA a leading
international consultancy believes the organized sector will grow six folds to almost Rs
30,000 crore by 2005. The share of organized sector in total retail sales will grow from
one per cent now to six per cent by 2005.While projections can be slippery, hard facts
point to exciting growth ahead for this sector.

According to KSA, organized retailing is focusing on only SEC-A cities, Indias
23 largest cities. That is where a large portion of the country's urban population exists.
Today 82 per cent of organized retailing comes from the top six cities and 12 per cent
from the next four. KSA says the top 10 cities provide 94 per cent of organized retail
sales in India.



By 2005, KSA projects the top six cities will account for 66 per cent of total
organized retailing and the next four for 20 per cent. The top 10 cities will account for 86
per cent of organized retail sales. There could be variations in growth patterns in different
segments. The second half of the top 10 cities will provide large growth for food and
groceries, while the top six would still be the growth centers for consumer durables,
believes KSA.

The spread of organized retailing is unlikely to be a national phenomenon yet.
This appears to be the case so far. South India, particularly Chennai, Hyderabad and
Bangalore, have seen the emergence of chain stores or large format stores. While
garment stores have been around for sometime, other segments like food and groceries,
consumer durables and even books and music have witnessed the emergence of organized
players in large cities in South India. The lack of trained manpower or alternatively the
tremendous scope the sector has to provide employment is another issue.

Mall Mania: The Developing Mall Culture In India

Till late last year, there were just three international style shopping malls in India
--Spencer in Chennai, Crossroads in Mumbai, Ansal Plaza in New Delhi and Srirams
Arcade in Kolkata . By the end of 2001, that number will have jumped to at least 20.

It looks like a virtual stampede. Fifteen players with a cumulative investment of
Rs 375 crore are set to change cityscapes across India. In the next one year, close to 40-
lakh square feet of retail space will be developed. In three years, this will rise to 70-lakh
sq ft.
As the retail industry evolves, consumers want more variety before making their
purchase decision. A study on consumer outlook suggests that over 80% of consumers
want a wide range of products at hand while shopping. This signifies that people are
finally ready for multi-option complexes.



Many old-time corporates are seriously considering using their idle assets. It
makes sense for landowners to develop it and keep the returns rather than sell it outright
or even lease it, especially when there is opportunity here. It is perhaps the best way to
use an idle real estate asset.

The limited kitty of brands has yet another significant knock-on effect - the
typical size of Indian malls. In the US and South-East Asia, malls are as large as 50 lakh
sq ft. Spencer is by far the largest mall in India - it occupies 7 lakh sq ft and even that is
dwarfed by Asia's largest mall, the 4-million sq ft mega mall in Malaysia. Even the 26
malls that are being planned are likely to measure between 50,000 sq ft and 2 lakh sq ft.
The Indian mall cannot offer too many choices in terms of brands. So, developing a very
large mall can never be sustainable.

The Traditional Retail Scene And The Challenge Posed By The Internet.

The Internet is changing the structure and definition of tradable services
worldwide, according to the World Trade Organizations report on Electronic Commerce.
It predicts that the Net will profoundly transform inter-organizational commerce, retail,
and Government procurement sectors worldwide.

The ripple-effect of these changes is affecting the sale of items like books, PCs,
apparel, tickets and music in advanced Internet economies like the U.S. -- and will soon
impact India as well.

Close to $7.8 billion worth of retail goods were sold via the Net in the U.S. in
1998. Deep product selection, easy shipping, and attractive online promotions made items
like books and apparel a favourite with Net shoppers.

Leading online service America Online (AOL) reported that the majority of the
goods sold in the record-breaking Christmas '98 season (amounting to over $1 billion)
consisted of toys, apparel and books.



And it is actually in the business-to-business sector, and not the business-to-
consumer sector, that the Net is expected to have its most dramatic impacts as companies
hook up Intranets and Extranets to cut costs, improve efficiency, and create whole new
market spaces.

Such trends are becoming visible in the Asian context as well. For instance, the
site of trade information publisher AsianSources.com, a business-to-business trade
inquiry hub, is facilitating millions of dollars of international trade leads for Asian
companies in the manufacturing, pharmaceutical and apparel sectors.

From humble email messaging and real-time market research to online sourcing
and e- retailing, the Net has much to offer Indian businesses. Sectors like the apparel
industry have only recently begin to sit up and take notice of the potential of e-business
for a wide range of activities in apparel design and development, such as online brand
building, visual merchandising, and data warehousing.

Retailing will undergo tremendous change in India in the next decade, according
to Simon Bell, principal consultant for retail practice at A.T. Kearney (India).

One of the key global trends in the retail industry, is the "battle of the formats"
between different kinds of outlets: value discounters, specialty stores, small
independents, mega-stores, and non-store retailing. In addition to catalogue and Tele-
shopping, a new but fast growing segment in the non-store category of outlets is the e-
retail center, or Web-based merchandising driven by e-commerce.

Online sales for the U.S. apparel industry amounted to $157 million in 1998, but
will shoot up to at least $650 million by year 2001.

These trends will soon be replicated in India as well. According to estimates by
the year 2005, more than 20 per cent of the apparel retail turnover in India would be


accounted for by organized chains, who will use sophisticated information technology to
cut costs, improve market responsiveness and manage customer loyalty programs.

This new trend is best typified by Shoppers' Stop, which has invested heavily in
retailing technology such as an ERP system and has also launched a Web site
www.shoppersstop.com.

The company is "determining" integrated customer demographic and psycho
graphic information from multiple offline and online sources to better understand
customer buying habits, said Mr. Naveen Singh, marketing manager of Shoppers' Stop.

In fact, quite a few Indian apparel organizations are already online, with
"brochureware" Web sites providing basic information - such as the Indian Apparel
Export Promotion Council, Balaji Garments, Polo India, Meenakhi Sarees, and
www.apprelindia.com.

There are hardly any examples of third-party business-to-business sites in India,
which could serve as online hubs for strengthening cooperation and information sharing
between apparel manufacturers and retailers for mutual growth and business
opportunities.

Sites like www.clothesnet.com and www.fashionwindows.com in the U.S. are
superb examples of online business communities geared towards the apparel sector. They
feature email newsletters, searchable business inquiry message boards, and directories of
companies offering services like visual merchandising and niche garment design.

E-retailing is moving into the accelerated growth stage in the U.S., but is still at
the early development stage in India. Leveraging Net-based technologies will be key for
apparel companies and brands wishing to operate at the "warp speed" of the information-
age economy. The Web will allow apparel stores to make more products more accessible
to more consumers. E-commerce in India is very much alive, of course, with sites


offering books for sale in Bombay, vegetables in Delhi, and movie tickets in Bangalore.
IDC (India) estimates that the value of sales over the Net in India will mushroom to
Rs.1,200 crore in year 2001, if the Internet user base takes off.
Sites like Rediff-on-the-Net already have about 20,000 registered users for their e-
commerce service, which was launched in August 1998. 90 per cent of the payments
occur via credit cards, and 10 per cent via cheques. The average purchase amount is Rs.
600. Online retailers must ensure smooth logistics, encourage repeat traffic, anticipate
consumer needs, offer slick navigation, and build strong online relationships with Internet
users.
The Indian apparel sector however, faces other challenges in areas like urban land
market ceilings, lack of industry status, conservative consumer spending habits, neglect
of rural markets, lack of confidence from the financial community, and low levels of
professionalism.

Besides, the Indian fashion industry is just about a decade old, as compared to
more than a century for Western Counterparts. And as compared to other emerging
economies like Brazil and South-East Asian countries, India is 20 years behind in
adoption of large-scale retail models. However, efforts are on to clear these hurdles and
move ahead smoothly and swiftly. Some of these are as follows:

To better equip the Indian garment industry with nationwide market grasp, the
National Council of Advanced Economic Research (NCAER) will take on the apparel
industry as a major focus for a future study.
Educational institutes like NIFT are stepping up course offerings and internship
programs for students in areas like Internet marketing.
In terms of online assistance, more than a hundred Web solutions companies have
sprung up all over India, offering services ranging from basic Web page publishing to
international marketing and consulting strategies. Companies like Polaris and Net
Base Computing are already working on Web-based solutions for the retail industry.


The drivers for creating an organized, modernized retail sector for Indian apparel will
thus be factors like economies of scale, time-to-market, and the use of information
technologies like the Internet.



International Retailers eyeing Indian Market.


Retail giants heading towards Indian stores.

A plethora of International apparel brands and retail giants are waiting to capatilise on
the Indian market place in a big way. If you are thinking about the growing importance
attached to India, attribute it to the countrys rise as global business process outsourcing
(BPO) hub. Indian Gen Y, earning loads of disposable cash in the BPOs, has been
found to the single largest consumer for international apparel brands. International brands
and retailers have released that their brands have a high recall values amongst the urban
Indian youth, even when their products are not present in the world and now scouting for
opportunities. Tommy Hilfiger, the latest entrant in the market has decided to open seven
exclusive stores by October 2004 and three more by Feb 2005.




















International Retailers eyeing Indian Market.

Retailer Type Status
Wal-Mart Hypermarkets Wait & watch
Marks & Spencer Lifestyle stores Already in
7-Level Supermarkets Evaluating
Carrefour Multi-format retailer Postponed Entry
Auchan Hypermarkets Evaluating
Shoprite Supermarkets Opening in Mumbai.
Dairy Firm Multi-format retail Tied up with RPG
Metro Cash & Carry Already in
Mango Apparel retail Already in
Landmark Lifestyle stores Already in





*Source: The Franchising World.






Wal Mart plans to enter India.


The Indian Retail sector may soon see the worlds biggest retailer, Wal-Mart Stores, Inc.
on its radar. The $245billion company has reportedly initiated studies on the Indian
market and is working on a big-bang entry, once FDI norms are relaxed.The company is
interested in India as a destination for stores of there own, exploring possible
opportunities for presence. However, for business reasons, Wal-Mart does not say much
about specific investment plans. The US-based gaint operates 1,494 stores in the
international market. Wal-Mart plans to open 120 to 130 additional stores in the existing
markets in current fiscal.























Anglo-Dutch petroleum giant Shell is coming to expand its retail
marketing activities in India

Anglo-Dutch petroleum giant Shell is committing a sum of Rs 250 crore to expand its
retail marketing activities in India. Vikram Mehta, chairman of Shell group of companies
in India, said the petrol stations will be established in the South. Shell, which announced
the launch of its first petrol station in India at Bangalore after a gap of 28 years, intends
to launch these stations on its own. We are not willing to disclose how many stations
will be established for this amount. Our national roll-out will occur after the first phase is
completed, Mr Mehta said. Shell is the single largest corporate investor in India, having
invested $825m (around Rs 3,500 crore), he added. It has the permission to launch as
many as 2,000 petrol stations. The giant got the Union governments nod for the retail
foray only in September this year. The group intends to adhere to the prescribed norms of
opening petrol stations in rural centres. The government norms stipulate that 5.5% of
each players petrol station network be in rural areas. The group has a MoU with MRPL
to lift the stock for petroleum. MRPL, which is now a part of the ONGC stable, runs a
12m tonne refinery in Mangalore. Each Shell station will stock petrol and diesel, besides
having a convenience store. Mr Mehta said that Shell intended to stick to knitting and
was not looking at investing in any petro-chemical venture in India.












Conclusion
How can it be done? (Past,Present & Future)

For a start, these retailers need to invest much more in capturing more specific market
intelligence as well as almost real-time customer purchase behaviour information. The
retailers also need to make substantial investments in understanding/acquiring some
advanced expertise in deve-loping more accurate and scientific demand forecasting
models. Reengin-eering of product-sourcing philosophies - aligned more towards
collabo-rative planning and replenishment should then be next on their agenda. The
message, therefore, for the existing small and medium independent retailers is to closely
examine what changes are taking place in their immediate vicinity, and analyse whether
their current market offers a potential redev-elopment of the area into a more modern
mult i-option destination. If it does, and most commercial areas in India do have this
potential, it would be very useful to form a 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 effort should be to encourage retailers to make some investment
in improving the interiors of their respective establishments to make shopping an
enjoyable experience for the customer.















CONCLUSION FOR GROWTH

Finally, the most important determinant of our growth is the quality of our people.
We are deeply privileged to continue to attract the very best talent as the number one
preferred employer at leading campuses. We are also encouraging diversity in our talent
skills, especially for our newer business-es, and are also bringing in a large number of
talented women. Our training programmes have been revamped to expose entrants to
local and global business -- they spend time in Indian villages and international cities --
all within a 12-month training programme. HLL's wide variety of categories and
Unilever's global operations provide enormous development opportunit-ies through
organised career planning. A lot of emphasis has always been placed on skill
development -- today we are also concentrating on building
individual and leadership capabilities. We offer an energising and empower-ing
environment enabled by creating small teams focussed on key initiatives. We have found
this the best way of combining both scale and speed. Deeper in the company, in factories
and offices, we are unleashing the talent and creative potential of all employees through
initiatives such as TPM.

In conclusion, let me say that HLL's most valuable assets are its brands and people.
Today's market is very dynamic and increasingly competitive. We have confidence in our
strategy and are learning to grow even in declining markets. We are putting in place key
enablers to build our capability for sustained high performance. We have brands with rich
heritage and strong consumer equity. We have people who bring the power of their ideas


and execution to exploit the full potential of our brands towards delivering continued
profitable growth for Hindustan Lever.




C CO ON NC CL LU US SI IO ON N

How do Indian retailers sell their product?

The Indian retail industry is now beginning and growing day by day. multi brand.
Even Ebony is trying to follow the chain system and very soon they are planning to open
their outlet in Gujrat.
They are strongly tied to independent intermediaries, which they cannot easily
give up. But they must eventually realign themselves with the high-growth vertical
marketing systems on less attractive terms.
Furthermore, vertical marketing systems constantly threaten to bypass large
manufacturers and setup their own manufacturing. The new competition in retail
marketing is no longer between independent business units but between whole systems of
centrally programmed networks (corporate, administered, and contractual) competing
against one another to achieve the best cost economies and customer response.
In India the retail sector is the second largest employer after agriculture, although it is
highly fragmented and predominantly consists of small independent, owner managed
shops .There are over 12 million retail outlets in India , and organised retail trade is worth
about Rs.12,90,000 crore (September,2003). The country is witnessing a period of boom
in retail trade, mainly on account of a gradual increase in the disposable incomes of the
middle and upper-middle class households. More and more corporate houses including
large real estate companies are coming into the retail business, directly or indirectly, in
the form of mall and shopping center builders and managers. New formats like super
markets and large discount and department stores have started influencing the traditional
looks of bookstores, furnishing stores and chemist shops. The retail revolution, apart


from bringing in sweeping, positive changes in the quality of life in the metros and bigger
towns, is also bringing in slow changes in lifestyle in the smaller towns of India. Increase
in literacy,exposure to media, greater availability and penetration of a variety of
consumer goods into the interiors of the country, have all resulted in narrowing down the
spending differences between the consumers of larger metros and those of smaller towns.


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