A

Project Study Report

On

Titled

“Growth of Retail sector in India & customer Satisfaction of Hypercity ”

Submitted in partial fulfillment for the

Award of degree of

Master of Business Administration

ARYA COLLEGE OF ENG. & IT

Submitted By: - Submitted To:-Amit kaushik Anuradha sexena MBA Part II Asst. professor

2008-2010

Acknowledgement

I express my sincere thanks to my project guide, Ms. Anuradha sexena, HR Faculty , Human Resource Department for guiding me right form the inception till the successful completion of the project.

I sincerely acknowledge him for extending their valuable guidance, support for literature, critical reviews of project and the report and above all the moral support he had provided to me with all stages of this project.

She providing me good guidance & knowledge about the retail field .

AMIT KAUSHIK

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Growth of Retail Sector in India

Executive Summary

The project study is an integral part of the Post Graduate Program. I Amit Kaushik

choose the organization Hyper city Jaipur (Rajasthan) for the project study. This

organization gave me a real time exposure to know about the organizational working

process. It is doing its business by continuously delivering differentiated products and

services that provide high business value in return. I decided to research on retail

sector and making report on growth of retail sector . the staff of Hyper city given me

opportunity & sufficient time.

I have done this project under marketing, in the circle office as it is the essential part of MBA program. Growth of Retail sector in India & customer Satisfaction.Hyper city the venture of Rheja groups is also market leader in retail world.

I took key insight into the entire process of promotioning and also interacted with the

employees personally and learned about various factors and establishing new product

in the market.

3

TABLE OF CONTENTS

1. INTRODUCTION TO THE INDUSTRYOrganized Retail Sector Origin of retail Indian Retail Industry Retailing Formats in India Specialty stores Major Industry Players The growth Drivers Swot of the Market Challenges Competitor Analysis Future Outlook

Technology in retail

Government initiatives and regulation 2.INTRODUCTION TO THE ORGANISATION Hypercity VisionMission

3.INTRODUCTION TO THE PROJECTRESEARCH METHODOLOGY

i. Title of the Study

ii. Duration of the Project

iii. Objective of the study

iv. Type of Research

v. Sample Size

vi. Scope of Study

vii. Limitation of Study

4.FACTS AND FINDINGS

5.ANALYSIS AND INTERPERTATION

6.SWOT ANALYSIS

7.CONCLUSTION

8.RECOMMENDATION AND SUGGESTION

9.APPENDIX

10.BIBLIOGRAPHY

4

Growth of Retail Sector in India

Industry Overview

5

Industry analysis of the Indian retail sector:

Modern retailing has entered India in form of malls and huge complexes offering shopping, entertainment, leisure to the consumer as the retailers experiment with a variety of formats, from discount stores to supermarkets to hypermarkets to specialty chains. However, kiranas still continue to score over modern formats mostly due to the convenience factor i.e. near to their house.

This organized segment typically comprises of a large number of retailers, greater enforcement of taxation mechanisms and better labour law monitoring system. It's no longer about just stocking and selling but about efficient supply chain management, developing vendor relationship quality customer service, efficient merchandising and even the labour class is also in the working process timely promotional campaigns. The modern retail formats are encouraging development of well-established and efficient supply chains in each segment ensuring efficient movement of goods from farms to kitchens, which will result in huge savings for the farmers as well as for the nation. The government also stands to gain through more efficient collection of tax revenues. Network marketing has been growing quite fast and has a few large players today. Gas stations are seeing action in the form of convenience stores, ATMs, food courts and pharmacies appearing in many outlets.

In the coming years it can be said that the hypermarket route will emerge as the most preferred format for international retailers stepping into the country. Estimates indicate that this sector will have the potential to absorb many more hypermarkets in the next four to five years

List of retailers that have come with new formats:

Retailer Current Format New Formats

Shoppers’ Stop Department Store Quasi-mall

Crossword Large Bookstore Corner shop

Piramyd Departmental Store Quasi-mall, Food retail

Pantaloon Own brand store Hypermarket

Subhiksha Supermarket considering moving to self service

Globus Department Store Small fashion stores

Traditionally, the kirana retailing has been one of the easiest ways to generate self-employment, as it required minimum investment in terms of land, labour and capital. These store are not affected by the modern format of retailing. In order to keep pace with the modern formats, kiranas have now started providing more value-added services like stocking ready to cook vegetables and other fresh produce. They also provide services like credit, phone service, home delivery etc.

6

Growth of Retail Sector in India

The organized retailing has helped in promoting several niche categories such as packaged fruit juices, hair creams, fabric bleaches, shower gels, depilatory products and convenience and health foods, which are generally not found in the local kirana stores. Looking at the vast opportunity in this sector, big players like Reliance has announced its plans to become the country's largest modern retainers by establishing a chain of stores across all major cities.

Apart from metro cities, several small towns like Nagpur, Nasik, Ahmedabad, Aurangabad, Sholapur, Kolhapur and Amravati has seen the expansion of modern retails. Small towns in Maharashtra are emerging as retail hubs for large chain stores like Pantaloon Retail because many small cities like Nagpur have a student population, lower real estate costs, fewer power cuts and lower levels of attrition.

However, retailers need to adjust their product mix for smaller cities, as they tend to be more conservative than the metros. In order for the market to grow in modern retail, it is necessary that steps are taken for rewriting laws, restructuring the tax regime, accessing and developing new skills and investing significantly in India.

India is rated as the most attractive retail markets

2920575652Brazil

1st 7th 1st 14th 24th India’sRank

2530853551Egypt

1840584970Malaysia

1271594164Thailand

965665651Turkey

4th 90534068China

2nd 92715852Russia

 20%30%25%25%

Rank Time

Pressure Market

Saturation Market

AttractivenessCountry

Risk 

 Country

1st 80913462India

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Socio demographic factors will lead to faster growth of Organized retail in India:

8

Growth of Retail Sector in India

9

Growth of retail sector

The Indian retail market, which is the fifth largest retail destination globally, has been ranked as the most attractive emerging market for investment in the retail sector by AT Kearney's eighth annual Global Retail Development Index (GRDI), in 2009. As per a study conducted by the Indian Council for Research on International Economic Relations (ICRIER), the retail sector is expected to contribute to 22 per cent of India's GDP by 2010.

With rising consumer demand and greater disposable income, the US$ 400 billion Indian retail sector is clocking an annual growth rate of 30 per cent. It is projected to grow to US$ 700 billion by 2010, according to a report by global consultancy Northbridge Capital. The organised business is expected to be 20 per cent of the total market by then. In 2008, the share of organised retail was 7.5 per cent or US$ 300 million of the total retail market.

A McKinsey report, 'The rise of Indian Consumer Market', estimates that the Indian consumer market is likely to grow four times by 2025. Commercial real estate services company, CB Richard Ellis' findings state that India's retail market has moved up to the 39th most preferred retail destination in the world in 2009, up from 44 last year.

India continues to be among the most attractive countries for global retailers. Foreign direct investment (FDI) inflows as on September 2009, in single-brand retail trading, stood at approximately US$ 47.43 million, according to the Department of Industrial Policy and Promotion (DIPP).

India's overall retail sector is expected to rise to US$ 833 billion by 2013 and to US$ 1.3 trillion by 2018, at a compound annual growth rate (CAGR) of 10 per cent. As a democratic country with high growth rates, consumer spending has risen sharply as the youth population (more than 33 percent of the country is below the age of 15) has seen a significant increase in its disposable income. Consumer spending rose an impressive 75 per cent in the past four years alone. Also, organised retail, which is pegged at around US$ 8.14 billion, is expected to grow at a CAGR of 40 per cent to touch US$ 107 billion by 2013.

The organised retail sector, which currently accounts for around 5 per cent of the Indian retail market, is all set to witness maximum number of large format malls and branded retail stores in South India, followed by North, West and the East in the next two years. Tier II cities like Noida, Amritsar, Kochi and Gurgaon, are emerging as the favoured destinations for the retail sector with their huge growth potential.

Further, this sector is expected to invest around US$ 503.2 million in retail technology service solutions in the current financial year. This could go further up to US$ 1.26 billion in the next four to five years, at a CAGR of 40 per cent.

10

Growth of Retail Sector in India

Moreover, many new apparel brands such as Zara, the fashion label owned by Inditex SA of Spain, UK garment chain Topshop, the Marc Ecko clothing line promoted by the US entrepreneur of the same name and the Japanese casual wear brand Uniqlo are preparing t

Indian Retail Industry:-

The Indian Retail Industry is Divided in Two type :-

1. UNORGANISED RETAIL SECTOR2. ORGANISED RETAIL SECTOR

ORGANIZED RETAIL

Emerging Retail Markets:

India, Russia, China and Vietnam top the list of the most attractive emerging markets for retailers' investment in 2009, While India and Russia have held the top two spots since 2005, China's booming consumer spending, together with retailers moving into second-tier cities, helped it rise to No. 3 from its No. 5 spot last year, according to the 2009 Global Retail Development Index from management consultant firm A.T. Kearney.

The study based its results on four variables: 'country risk', measuring political risk, debt and credit ratings; 'market attractiveness', encompassing retail sales per capita, population, infrastructure and regulations; 'market saturation'; and 'time pressure'.

The higher the ranking, the more urgency for retailers to enter the market, according to the study, which ranks the top 30 emerging countries for retail development and focuses on mass-merchant and food retailers.

"If you want to be an international player in retail, these are the markets that demonstrate the characteristics (where) you can be successful," said Laura Gurski, a co-author of the study and partner in A.T. Kearney's consumer and retail practice.

India has already attracted the attention of global retailers like Wal-Mart Stores Inc., which is working with India's Bharti Enterprises to set up a joint venture for a cash-and-carry business. In India, foreign multiple-brand retailers, which sell diverse brands under one roof, are limited to cash-and-carry and franchise or license operations.

"India's window of opportunity continues to be wide for retail investment and development," the report said. "Once India's window closes for grocery retailers, there will be little opportunity for market domination in the main cities."

The country's growing population of young urban professionals with disposable incomes and the nouveau riche has also made India attractive for luxury retailers. India has attracted "the low end and the high end because of the breadth of the consumer segments that are available," said Gurski.

When variables stay constant, Gurski said, do-it-yourself, apparel and electronics retailers usually enter emerging markets some two years after international grocers establish themselves. Middle Eastern countries are also represented on the list, with Saudi Arabia ranking No. 10

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India has emerged as the world's most attractive destination for mass merchant and food retailing, maintaining its 2005 position in an annual study of retail investment attractiveness among 30 emerging markets.

India was given the top ranking in management consulting company AT Kearney's 2006 Global Retail Development Index (GRDI). "The Indian retail market is gradually but surely opening up, while China's market becomes increasingly saturated," said Fadi Farra, a principal in AT Kearney's Consumer Industries and Retail Practice and leader of the GRDI study. Much to the surprise of market observers, China was ranked fifth in this year's tally, declining one more place since 2005. While China remains very attractive, the market is becoming increasingly saturate as and United Arab Emirates No. 18. Gap Inc announced last week it had struck a deal with two franchisees to open Gap stores in Saudi Arabia starting at the end of this year. Dubai has capitalized on consumer desire for a more Western lifestyle and has established itself as a retail mecca, Gurski said. Despite its focus on luxury, Dubai is "just beginning to be populated by the bread-and-butter retailers of the United States and the Western world," she said. Retailers that have already established a presence in major Chinese cities like Shanghai and Beijing, or those that have been slow to gain a foothold there, are now looking at less developed markets in second-tier cities, the study found. "If the markets are saturated, they're looking to make profits in the second-tier cities," Gurski said.

But she cautioned that a separate strategy is needed for the smaller markets since consumer tastes, ability to spend and willingness to embrace new formats may be different than in larger urban areas.

International retailers rush to establish a presence and build market share, the study reveals. According to the study, Asia with a large 40 per cent of the top 20 markets has surpassed Eastern Europe as the 'dominant region for global retail expansion.'

"The learning is that timing is the most important source of competitive advantage for global and regional retailers in the globalization race. Knowing when to enter emerging retail markets is the key to success," said Farra. Powering Asia's charge are Vietnam, which has risen five places to third place, and countries like Thailand, South Korea and Malaysia, all of which are in the top 15, After topping the ranking for two consecutive years in 2003 and 2004, Russia slipped to second place behind India last year and remained there in 2006 too.

Origin of Retail Sector

Origins of Retail

It is likely that, as markets became more permanent fixtures they evolved into shops. Although advantageous in many respects, this removed the mobility that a peddler or traveling merchant may still have enjoyed. For some shopkeepers, it made sense to obtain extra stock and open up another shop, most probably operated by another family member. This would recover business from peddlers and create new business and the greater volume would allow the shopkeeper to strike a better deal with suppliers. Thus the retail chain would have started. Its thought that this process would have started in china over 2200 years ago with a chain of shops owned by a trader called Lo Kass.

  The First Self-Service Store:

This all changed in 1915 when Albert Gerrard opened the Groceteria in Los Angeles, the first documented self-service store. This was soon followed a year later by the Piggly Wiggly® self-service store, founded by Clarence Saunders in Tennessee in the U.S.

Growth:

12

Growth of Retail Sector in India

This new type of shopping was more efficient and many customers preferred it. Although personal service stores remain to this day, this new concept started a rapid growth of self-service stores in the United States. Other countries were slow to take up the idea, but there has been a steady rise in the global amount of self-service stores ever since.

Efficiency

These entrepreneurs noticed that their staff had to spend a great deal of time taking grocery orders from customers. The groceries were stacked on shelves allowing customers to walk around and browse, collecting their shopping in a basket that was supplied. The shopkeeper would only need to tot up the final bill at the end of the process and transfer the goods from the basket to the customer and receive payment.

From Family Business to Formal Structure:

Although retail chains would have been mostly run by families, as some chains grew, they would have needed to employ people from outside of their family. This was a limiting factor as there would have been a limit to the amount of trusted non family members available to help run the chain. Another, even more definite limiting factor was the distance the furthest shop would have been from the original shop. The greater the distance, the more time and effort would have been needed to effectively manage outpost shops and to service them with goods. There was, therefore, a natural barrier to expansion. That was the case until transport and communications became faster and more reliable. When this happened towards the end of the 19th century, chains became much bigger and more widespread. Many of these businesses became more structured and formalized, leading to the retail chain that we see today.

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14

Growth of Retail Sector in India

UNORGANISED RETAIL SECTOR:

Today, retailing doesn’t involve just dealing or marketing from shops, it includes analyzing the market in an effort to provide reasonable prices together with an array of options and experience to customers. The sole purpose of all this is retaining the brand loyalty of customers. Indian retail is currently a US$ 245 billion market and is anticipated to extend to almost US$ 385 billion mark by the next five years. The Indian retail sector is currently sporting a brand new look and together with a 46.64 per cent three-year Compounded Annual Growth Rate (CAGR), Conventional marketplaces are paving way for new shopping malls, the likes of superstores, shopping plazas, supermarkets and brand label stores. International style shopping centers have started dotting the skyline of cities and smaller towns, acquainting the Indian customer to a unique shopping experience. The retail industry in India is split up into the unorganized and organized retail segments.

The unorganized retail sector includes the big, average and modest grocery stores and the chemist shops. A changeover is taking place from the conventional retail sector to organized retailing. But the unorganized segment still dominates and leads the industry. By 2010, the Indian retailing sector is anticipated to become an Rs12.5 trillion market. The share of organized retailing is supposed to jump to about 10 per cent from the existing three per cent. The anticipated staggering growth in organized retailing provides an opportunity to expand the market for both established and new players. According to the latest report India Retail Sector Analysis (2006ñ07)I by RNCOS, the total retail market is primarily focused in rural regions, which makes up 55 per cent or US$ 165 billion of the overall retail market as opposed to urban segment, which represents 45 per cent or US$ 135 billion of the gross retail market. The rural market is spread over 627,000 villages, even though its centre of attention is focused around a core group of 100,000 villages that makes up 50 per cent of the rural population.

India represents the most compelling international investment opportunity for mass merchant and food retailers looking to expand overseas, according to management consulting firm AT Kearney's 2005 Global Retail Development Index (GRDI), an annual study of retail investment attractiveness among 30 emerging markets. India is rated as the fifth largest emerging retail market and is seen as a potential goldmine. Driving global brands into India is the greatly improved investment climate due to the recent relaxation of direct ownership restrictions on foreign retailers. The country's retail market totals $330 billion, is vastly underserved and has grown by 10 per cent on an average over the past five years. The message for retailers on India is clear – move now or forego prime locations and market positions that will soon become saturated. Global retailers that missed opportunities to capture first-mover advantage in China will make up for it in India.

Though India has more than five million retail outlets, they are greatly unorganized. There is no supply chain management perspective. In fact, out of the entire retail sector in India, the organized sector is only 25 per cent and the rest is unorganized. 96 per cent of the retail outlets are smaller in area than the standard norms. The retail industry is divided into organized and unorganized sectors. Organized retailing refers to trading activities undertaken by licensed retailers who are registered for sales tax and income tax. These include corporate backed hypermarket and retail chains and so on. Unorganized retailing is the traditional low-cost shops, handcarts and pavements and is

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by far the prevalent form of trade in India. The efficiency of organized sector in retailing is manifested in some of the newer supermarkets in urban/metropolitan India – the produce is cleaner, fresher, well packed and often cheaper than the local shopkeeper. This is possible because of the far more efficient distribution system, which organized retail chains are employing, by cutting the layers of middlemen involved. There are other benefits too, of transforming the unorganized retail sector into an organized sector. Firstly, a number of new jobs will be created, far better paid than the underage labor working in the local shops. Secondly, the benefits to the producer and consumer through better prices and lesser wastage; throwing up exportable surpluses, which will also benefit the economy as a whole. Thus one can see that allowing FDI in retailing is beneficial to all the stakeholders involved

The Big Bazaars and Spencer’s, the huge unorganized retail sector is finally beginning to see the merit of logging on, even if at a model scale.

Taxation policies also push you to automate and the push is even harder for those looking to expand beyond their single store existence.

Though it’s early days yet to measure it penetration in the unorganized retail industry, interest levels are surely raising fast. “It’s good to at least answer their questions. Though the interest is more with retailers who register good sales and volumes.

Software available to the retailers is ShawMan’s RetailMagiK, which takes care of the front-end store needs, as well as the back-end warehouse requirements. “It would surely help the unorganized sector to get into technologies like bar-coding, which will make their operations more efficient. Some other features are a user-defined billing screen and discount with control mechanism from the head-office, delivery order management, batch control and quick information search, among others. The product is a simple to use. The screen design and the functionality are designed in such a way that the user need not press too many keys to get things done,” says Khushroo Bagwadia, business development manager, Shawman Software.

To begin with, most retailers look at decent entry-level solutions starting at Rs 25,000. However, there are cheaper quick-fix solutions available too. One can even deploy a computer and start with financial accounting programmers like Microsoft Excel, FoxPro and Tally.

Small retailers seem next in line and vendors are also warming up to the opportunity. At the low-end however, smart inexpensive solutions are the need of the hour. And solutions providers like Microsoft, Polaris and Shawman are now working on developing smart tools for the retail enthusiasts. For small players with just one store, the investment on retail solutions go really low, anywhere between Rs 10,000 to Rs 25,000. Most of the time these solutions are developed by local firms, who at times compete with the big names in the industry.

According to Oberoi of Polaris, generally the mom-and-pop stores like to go for technology, which will get their work done at a reasonable cost. They avoid the high-end technology, and consider these as frills. “They are not even bothered about upgrading, so the cheap systems are more than welcome. These solutions might not work for the mid-sized retailers with five stores, as then one need to scale it up and take care of inventory and supply chain management,” he says.

Comparing the case with China, Vedamani suggests India is on the right track. “In China, we find the organized sector to be 20-23% of the total industry. Here, the technology has advanced in phases, and so is the case in India.

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Growth of Retail Sector in India

Format Description The Value Proposition

Branded Stores

Exclusive showrooms either owned or franchised out by a manufacturer.

Complete range available for a given brand, certified product quality

Specialty Stores

Focus on a specific consumer need, carry most of the brands available

Greater choice to the consumer, comparison between brands is possible

Department Stores

Large stores having a wide variety of products, organized into different departments such as clothing, house wares, furniture, appliances, toys, etc.

One stop shop catering to varied/ consumer needs.

Supermarkets

Extremely large self-service retail outletsOne stop shop catering to varied consumer needs

Discount Stores

Stores offering discounts on the retail price through selling high volumes and reaping economies of scale

Low Prices

Hyper- martLarger than a supermarket, sometimes with a warehouse appearance, generally located in quieter parts of the city

Low prices, vast choice available including services such as cafeterias.

Convenience stores

Small self-service formats located in crowded urban areas.

Convenient location and extended operating hours.

Shopping Malls

Enclosure having different formats of in-store retailers, all under one roof.

Variety of shops available to each other.

Formats adopted by the Retail Players in INDIA.

Retailer Original formats Later Formats

RPG Retail Supermarket (Foodworld)

Hypermarket (Spencer's)Specialty Store (Health and Glow)

Piramal's Department Store (Piramyd Megastore)

Discount Store (TruMart)

Pantaloon Retail

Small format outlets (Shoppe) Department Store (Pantaloon)

Supermarket(FoodBAZAR) Hypermarket (Big Bazaar) Mall (Central)

K Raheja Group

Department Store (shopper's stop)Specialty Store (Crossword)

SupermarketHypermarket (TBA)

Tata/ Trent Department Store (Westside)

Hypermarket (Star India Bazaar)

Landmark Group

Department Store (Lifestyle)

Hypermarket (TBA)

Others Discount Store (Subhiksha, Margin Free, Apna Bazaar), Supermarket (Nilgiri's),

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Specialty Electronics

Retailing formats in IndiaMalls:

The largest form of organized retailing today. Located mainly in metro cities, in proximity to urban outskirts. Ranges from 60,000 sq ft to 7,00,000 sq ft and above. They lend an ideal shopping experience with an amalgamation of product, service and entertainment, all under a common roof. Examples include Shoppers Stop, Pyramid, Pantaloon.

1. Specialty Stores:

Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer Crossword, RPG's Music World and the Times Group's music chain Planet M, are focusing on specific market segments and have established themselves strongly in their sectors.

2. Discount Stores:

As the name suggests, discount stores or factory outlets, offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left over at the season. The product category can range from a variety of perishable/ non perishable goods.

3. Department Stores:

Large stores ranging from 20000-50000 sq. ft, catering to a variety of consumer needs. Further classified into localized departments such as clothing, toys, home, groceries, etc

4. Department Stores:

Departmental Stores are expected to take over the apparel business from exclusive brand showrooms. Among these, the biggest success is K Raheja's Shoppers Stop, which started in Mumbai and now has more than seven large stores (over 30,000 sq. ft) across India and even has its own in store brand for clothes called Stop!.

5. Hypermarts/Supermarkets:

Large self service outlets, catering to varied shopper needs are termed as Supermarkets. These are located in or near residential high streets. These stores today contribute to 30% of all food & grocery organized retail sales. Super Markets can further

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Growth of Retail Sector in India

be classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets ranging from of 3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personal sales.

6. Convenience Stores:

These are relatively small stores 400-2,000 sq. feet located near residential areas. They stock a limited range of high-turnover convenience products and are usually open for extended periods during the day, seven days a week. Prices are slightly higher due to the convenience premium.

7. MBO’s :

Multi Brand outlets, also known as Category Killers, offer several brands across a single product category. These usually do well in busy market places and Metros.

SPECIALITY STORES

Food retail :

Food dominates the shopping basket in India. The US$ 6.1 billion Indian foods industry, which forms 44 per cent of the entire FMCG sales, is growing at 9 per cent and has set the growth agenda for modern trade formats. Since nearly 60 per cent of the average Indian grocery basket comprises non-branded items, the branded food industry is homing in on converting Indian consumers to branded food.

The mobile revolution:

The retail market for mobile phones -- handset, airtime and accessories -- is already a US$ 16.7 billion business, growing at over 20 per cent per year. In comparison, the consumer electronics and appliance market is worth US$ 5.6 billion, with a growth rate that is half of the mobile market.

Kids retail:

When it comes to Indian children, retailers are busy bonding--and branding: Monalisa, the Versace of kids is coming to India. Global lifestyle brand Nautica is bringing Nautica Kids. International brand Zapp tied up with Raymond to foray into kids' apparel. Disney launched exclusive chains which stock character-based stationery. Pantaloon's joint venture with Gini & Jony will set up a retail chain to market

kids' apparel. Swiss kidswear brand Milou is collaborating with Tirupur-based Sreeja

Hosieries. Turner International India Pvt Ltd. will launch Cartoon Network Townsville and

Planet POGO--two theme parks designed around its channels--in the National Capital Region.

Sahara One Television has also signed a Memorandum of Understanding to source content from Spacetoon Media Group, Middle East's largest kids' entertainment brand for animation and live action content.

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Leading the kids' retail revolution is the apparel business, which accounts for almost 80 per cent of the revenue, with kids' clothing in India following international fashion trends. According to research firm KSA Technopak, the branded segment comprises US$ 701.7 million of the total kids' apparel market-size of over US$ 3 billion.

Industry experts say kids' retailing will touch annual growth of 30-35 per cent. Toys, stationary, sportswear, outerwear, tailored clothing, eyewear, watches, fragrance, footwear, theme parks, TV channels… the segment is growing rapidly at 10 per cent per annum. Margins are in the range of 20-25 per cent (for dealers and distributors), while companies enjoy an average gross margin of about 10 per cent.

Agricultural retail:

Agriculture across India is heralding the country's second Green Revolution. 14 states, including Maharashtra, Punjab, Andhra Pradesh and Rajasthan amended the Agricultural Produce Marketing Committee (APMC) act this year, along the lines of the Model APMC Act, '02, which allows farmers to sell their produce directly to buyers offering them the best price.

Agricultural sectors such as horticulture, floriculture, development of seeds, animal husbandry, pisciculture, aqua culture, cultivation of vegetables, mushroom under cultivated conditions and services related to agro and allied sectors are open to 100 per cent FDI through the automatic route.For its e-Choupal scheme, ITC built internet kiosks in rural villages so farmers can access latest information on weather, current market prices, foods-in-demand, etc.

With a US$ 5.6 billion, multi-year investment in agriculture and retail, Reliance Retail will establish links with farms on several thousand acres in Punjab, West Bengal and Maharashtra. FieldFresh, planning to become India's first large-scale exporter of produce, will annually pay farmers over US$ 30,000 to lease land for vegetables, to hire tractors and to pay their workers.

Besides a five-year program with the Punjab government to provide several hundred farmers with four million sweet-orange trees for its Tropicana juices by 2008, PepsiCo--with agriculture exports worth US$ 40 million--also introduced farmers to high-yielding basmati rice, mangoes, potatoes, chilies, peanuts, and barley for its Frito-Lay snacks.

Export potential and a rapidly growing domestic demand for reliable produce from new supermarket chains is driving change. With 77 per cent of India's population relying on agriculture for a living, improved efficiency and new markets can benefit a large number of people.

International retailers :

The Australian government's National Food Industry Strategy and Austrade initiated a test marketing food retail in India wherein 12 major Australian food producers have tied up with India-based distributor AB Mauri to sell their products directly at retail outlets.The largest-ever 150-member British business delegation in India committed investments in the areas of food processing, agri retail and manufacturing. It is also likely to press for the liberalisation of sectors like financial & legal services and retail.US-based home delivery and logistics company, Specialised Transportation Inc, will enter the Indian market through a strategic alliance with Patel Retail, a subsidiary of Patel Integrated Logistics.Among other big international players, Wal-Mart has announced its plans for India in partnership with Bharti, Tesco is sure to try again, and Carrefour too might finally find the right partner.

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Growth of Retail Sector in India

Supermarkets:

Large self service outlets, catering to varied shopper needs are termed as Supermarkets. These are located in or near residential high streets. These stores today contribute to 30% of all food & grocery organized retail sales. Super Markets can further be classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets ranging from of 3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personal sales.

Supermarkets are relatively new entrants in the market. They are so called pioneers in organized food retailing and go by the western model in look and feel and format. This is what everybody means when they say organized food retailing.

Franchise outlets:

Like Tommy Hilfiger and Wal Mart, other US retailers are firming up their India entry strategies and if they are already in, they are undergoing rapid expansion. Fashion brands DKNY is also al set to foray into the Indian fashion Industry through a franchisee agreement with Indian company, S. Kumar Starbucks recently expressed their interest in entering Indian company

Like Tommy Hilfiger and Wal-Mart, other US retailers are firming up their India entry strategies and if they are already in, they are undergoing rapid expansion. Fashion brand DKNY is also all set to foray into the Indian fashion Industry through a franchisee agreement with Indian company, S Kumar’s.Starbucks recently expressed their interest in entering India through the franchise route, like their AmericanF&B counterparts Pizza

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Hut, Subway, and the very successful McDonald’s. McDonald’s has major expansion plans lined up; in the next 3 years, it plans to open another 100 outletsin cities across India.

Hypermarket:

A very large commercial establishment that is a combination of departmental store and a supermarket.The specific features of a hypermarket are the wide range of goods offered, quality service, quality display of goods on the shelves and complex systems providing for customers loyalty.

Hypermarket is known for a wide range of goods offered. It consist of dozens of thousands of items, while similar goods can be offered in several forms. In order to work with such an assortment it is necessary to group it into categories and sub categories that would unite goods according to this or that criteria.Shopping Malls:

The new shopping malls that have been expanding their footprint across Indian cities are well designed, built on international formats of retailing and integrated with entertainment and restaurants to provide a complete family experience. Over 300 malls are expected to be built over the next two years and most Indian cities with over a million populations will be exposed to this modern method of retailing.

Shopping malls have existed in India since several decades but were designed and built to house several shops in a single facility. These malls also known as Shopping Arcades offered only rows of shops, most of which were small stores that promised bargains for their various wares. These Shopping Arcades tried to maximize on their store space and did not offer any areas for recreation and entertainment.

The present day malls are a creation of the past few years post 2000. They are designed professionally using a lot of international experience and combine shopping with a lot of brand building, recreation, food and entertainment. Malls also have a large format store that serves as their anchor for shopping and a prominent restaurant that anchors the food needs of visitors. Most malls also feature a multiplex cinema that offers entertainment to the visitors of the mall. Finally the mall has large atria and open spaces to allow visitors and families to hang-out.

The nature of retail Marketing:

The key aspects of retail marketing is an attitude of mind.

Retail marketing decisions are driven by what the shoppers need and want.

Retail marketing is therefore a philosophy and is all about satisfying the customers

What the customers regard as value and what they buy is decisive.

What the customers buy determines the nature of the retailer's business.

Retailers must take the customers' needs into consideration in retail operation.

Retail marketing is stimulating, quick-paced, and influential.

The retail marketing concept is the acceptance by the retailer that it is the

"customer"

         and not "demand" that lie at the core of the retail organization.

Five pillars of Retailing:

22

Growth of Retail Sector in India

            Heoxard Berry describes five important actions for Retailers. These actions, demand

pillars, sound simple but are often difficult to implement.

1. Solve customer’s problems.

2. Treat customers with respect.

3. Connect with customer emotions.

4. Set the fairest (not the lowest) price.

5. Save customer’s time.

            Retailers should always keep these pillars in mind when conducting business. As the

work force becomes more diverse and the retail environment continues to changes,

consumer’s needs are rapidly changing.

Emerging Trends:

            The single most important evolution that took place along with the Retailing evolution

was the rise and fall of the dotcom companies, more importantly, the very nature of the

customer segment being addressed was almost the same. The computer – Sawy individual

was also a scale- sector of the store.

            Internationally, the concept of net shopping is yet to be proven. Now ever, the size of

the direct market industry is too limited to deter the Retailers, for all comenience that it offers,

electronic retailing does not suit products where “look” and “see” attributes are of importance.

Retail Strategy:

            According to the wheel of retailing theory, retail innovators often appear as low – price

operators with a low-most structure and low-profit margin requirements. Over time, these

innovators upgrade the products and become high price orators. This meant enlarging the

sales force, improving locations, upgrading fixtures, carrying lower thrower merchandise and

granting credit etc… These improvements lead to higher cost which tern lead to higher

prices.

Retail image:

            Image refers to how a retailer is perceived by customers and others succeed, a firm

must communicate a distinctive, clear and consistent image. Once its image is established in

consumer mind, a retailer is placed in a riche relative to competitors.

 

Future of Retail in India :

            Customers are also looking for convenience in shopping. This would continue more

strongly in the next couple of years. In future the more dual income families, the consumer’s

ability to spend will increase, but at the same time it is predicted that the time available for

shopping will go down, in such scenario, the retailers will have to take steps to develop

shopping as an experience, though the more successful retailers will be those that will

provide faster service.

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            Thereby to succeed in retailing, current and future retailers must be able to adopt a

constantly changing environment, successfully retailers are able to anticipate and adapt to

change.

            Thus retail marketing strategy would not only yield benefits for consumers.

Manufacturers and wholesalers but also creates economic utility

Global retailing:

            The world has entered the digital information age. Retailers in a variety of industries

are now using advanced computer systems to enhance their ability to understand,

communicate with and evaluate their market place and to anticipate and respond to their

customer’s needs, Retail shops are using bar code scanners at their check out point to gauge

the types of product their customers are buying.

E-tailing:

            Retailing on the net is known as E- tailing. Internet has changed the way we do

shopping. It has brought the commerce will play a crucial role in shaping the future of Indian

retailing. The real challenge for retailing would be laurching and managing a highly irnovative

click business that works along with a more stable bricks business. For shoppers and

retainers it is increasingly a hybrid world.

            Merchants that reach consumers through different sales channels, stores, websites

catalogues, find that they enjoy key advantages over competitors that operate in just one

world. E-tailing is still a nascent business model all over the world and it is to be seen how it

emerges in the future. E-tailing will also work best as an adjunct and supplement to brick and

mortar set up.

            On the flip side, retail stores can make consumers more comfortable with internet

shopping since most traditional merchants allows customers to return on-line purchase to

their offline stores.

E-commerce in Retail marketing:  

            “With Electronic – commerce, we have reached the flash point” – says Ferguson. The

internet throws many exiting trends under an are light and accelerates the transformation to

web years. There is an occupational hazard in the world of electronic commerce. There is an

existing and confusing time. In some ways electronic commerce has already had profound

impact – just the Wall Street brokers who have been watching their private clients flock to

online discount brokers.

Retailing in India – Trends and Opportunities:

            Retailing – no marks for guessing this is the most active and attractive sector of the

last decade in India. While the Retailing industry itself has been present through history in our

country, it is only the recent past that has witnessed hordes of players leaping onto it.

            The Emergence of Retailing in India has more to do with the increasing purchasing

power buyers, esplically post- liberalization increases in product variety and the increasing

economies of scale with the aid of modern supply and distribution management solutions.

24

Growth of Retail Sector in India

            The current retailing revolution has been provided an impetus from multiple sources.

The “Revolutionaries” include many commotional stores upending themselves to modern

Retailing, compainces in competitive environment entering the market directly to ensure

exclusive risibility for their products and professional chain stores coming up to meet the

need of manufacturers. Attractiveness, accessibility and absorbability seen to be the key

offering of the Retailing chain.

Estimated Growth in Organized Retail

Retail is amongst the fastest growing sectors in the country. Indiaranks First, ahead of Russia, in terms of emerging markets potential in retail and is deemed a ‘Priority’ market for International retail.

Major Industry Players

2004 2009 CAGR (%)

Large Segments 1,924 5,024 21%

Other Segments 1,315 2,645 15%

Non-store Retailing

239 422 12%

Total Organized retail

3,478 8,091 18%

The Four Large Segments:

Food -Chain Stores-Single Large Stores

39132665

1,6241,462162

33%35%20%

Clothing-Manufacturer retailers-Chain stores-Single Large Stores

1,075293315467

2,266590852824

16%15%22%12%

Consumer durables- Manufacturer retailers-Chain stores-Single Large Stores

35914198120

822284298240

18%15%25%15%

Book and Music-Chain Stores-Single Large Stores

975443

310202108

26%30%20%

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Nanz in North India, Nilgiris in the South, Pantaloon in the East and Crossroad in the West were the pioneers of the retail revolution in India. Nanz faced several obstacles in their business and had to finally down their shutters. Nilgiris, due to some strange reason, did not see any logic to expand beyond the southern frontiers. Pantaloon went to scale up and become bigger and bigger to form the Future Group, that is now omnipresent in almost all formats right from small groceries to e-tailing. Crossroads in Mumbai imparted some valuable lessons to their parent, the Piramyd Group, who has since then gone on an expansion drive with other formats of retailing in different cities.

The big players in Indian retail landscape now are the Future Group, Shoppers Stop, Westside, Subiksha and RPG Spencer. The newcomers who are knocking at the gates are Reliance Retail, Bharti Walmart and Aditya Birla Trinethra. Here, we intend to do a brief profiling of the major players in order to understand the retail business in a better manner.

1 The Future Group

The Future Group, which was earlier known as PRIL (Pantaloon Retail India Limited) began as a trouser manufacturer in the mid 1980s. The Future Group is divided into six verticals – Future Retail, Future Capital, Future Brands, Future Space, Future Media and Future Logistics. The Future Group started operations in the mid 1987s by incorporating the company as Manz Wear Private Limited. The company went on to manufacture ready made trousers under the “Pantaloons” brand name. It came out with a public issue in 1991 and later changed their name to Pantaloon Fashions (India) Limited (PFIL).

The first exclusive men’s store called Pantaloon Shoppe was inaugurated in 1992. Pantaloons went for a franchisee route to expand the number of retail outlets and by 1995, it had reached to a crucial number of 70. The first departmental store called Pantaloons was opened in Kolkata in 1997 with an investment of Rs 0.7 million. The store was a success and recorded revenues of Rs 100 million within the first year of operations. In 1999, the company’s name was changed to Pantaloon Retail (India) Limited (PRIL).

The success of Pantaloons departmental stores encouraged PRIL to come up with other retailing formats such as “Big Bazaar” to retail low cost general merchandising, and “Food Bazaar” to retail food products. As of 2005, the Future Group has 3.5 million sq ft of retail space and over 100 stores across 25 cities in India. It employs more than 12,000 people and has a customer base of more than 120 million.

Kishore Biyani, the promoter of the group who likes to address himself as “Chief Knowledge Officer” has plans to launch 18 formats and over 3,340 stores, thereby turning the Future Group into a US$7 billion company with over US$1 billion in profits by the year 2010.

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Growth of Retail Sector in India

2 Shoppers Stop

Shoppers’ Stop, promoted by the real estate group K Raheja, was one of the first movers to have set up a large retail outlet in New Delhi with international ambience. Shopper’s Stop Ltd now has a considerable presence all over the country with overr 7 lakh square feet of retail space and stocks over 200 brands of garments and accessories. The stores are spread all over India with presence in Mumbai, Delhi, Bangalore, Hyderabad, Jaipur, Pune , Kolkata, Gurgaon, Chennai & Ghaziabad.

Shoppers’ Stop is also very well known for having pioneered several quality retailing concepts in India like CROSSWORD, HyperCITY and Mothercare. They are the only retailer from India to become a member of the prestigious Intercontinental Group of Departmental Stores (IGDS).

Shoppers’ Stop is positioned as a family store delivering a complete shopping experience. With its wide range of merchandise, exclusive shop-in-shop counters of international brands and world-class customer service, Shoppers’ Stop brought international standards of shopping to the Indian consumer providing them with a world class shopping experience. Shoppers’ Stop’s core customers represent a strong SEC A skew. They fall between the age group of 16 years to 35 years, the majority of them being families and young couples with a monthly household income above Rs. 20,000/- and an annual spend of Rs.1,50,000/-. A large number of Non - Resident Indians visit the shop for ethnic clothes in the international environment they are accustomed to.

The stores offer a complete range of apparel and lifestyle accessories for the entire family. From apparel brands like Provogue, Color Plus, Arrow, Levi’s, Scullers, Zodiac to cosmetic brands like Lakme, Chambor, Le Teint Ricci etc., Shoppers’ Stop caters to almost every lifestyle need.

Shoppers' Stop also retails its own line of clothing namely Stop, Life , Kashish, Vettorio Fratini and DIY. The merchandise at Shoppers’ Stop is sold at a quality and price assurance backed by its guarantee stamp on every bill.

Shoppers’ Stop’s customer loyalty program is called “The First Citizen”. The program offers its members an opportunity to collect points and avail of innumerable special benefits. Currently, Shoppers’ Stop has a database of over 2.5 lakh members who contribute to nearly 50% of the total sales of Shoppers’ Stop.

The Organisation, in 2000, along with ICICI ventures also acquired the reputed bookstore, “Crossword”, which offers the widest range of books along with CD-ROM,

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music, stationery and toys. Services like Dial-a-book, Fax-a-book and Email-a-book enable customers to shop from their homes. Crossword currently has 18 Stores.

Realising the role of IT way back in 1991, Shoppers’ Stop was among the first few retailers to use scanners and barcodes and completely computerise its operations. Today it is one of the few stores in India to have retail ERP in place, which is now being integrated with Oracle Financials and the Arthur Planning System, the best retail planning system in the world. With the help of the ERP, they are able to replicate stores, open new stores faster and get information about merchandise and customers online, which reduces the turnaround time in taking quick decision.

Shoppers Stop has been very keen to understand the importance of distribution and logistics in ensuring that merchandise is available on the shop floors. This has led the retail chain o streamline its supply chain. The company has developed process manuals for each part of the logistics chain. These modules include vendor management, purchase order management, stock receiving systems, purchase verification and inventory build up, generation and fixing of price and store tags, dispatch of stocks to the retail floor and forwarding of bills for payment.

Shoppers’ Stop has a grand ambition to position itself as a global retailer. The company intends to bring the world’s best retail technology, retail practices and sales to India. Currently, they are adding 4 to 5 new stores every year.

3 Trent – Westside

Established in 1998, Trent operates some of the nation's largest and fastest growing retail store chains. A beginning was made in 1998 with Westside, a lifestyle retail chain, which was followed up in 2004 with Star India Bazaar, a hypermarket with a large assortment of products at the lowest prices. In 2005, it acquired Landmark, India's largest book and music retailer.

In a recently signed deal, Trent has agreed to anchor 12 malls set up by DLF Universal Ltd across the country, at its Westside, Landmark and Star India Bazaar outlets. This amounts to about 27 locations, totaling to about a million square feet of space.

Trent retails garments and household accessories for men, women and children, cosmetics and perfumes at Westside, food, beverages, health and beauty products, vegetables, fruits, dairy products, consumer electronics and household items at Star India Bazaar and books, music and stationery at Landmark.

Westside has 25 outlets across 17 cities in India offering a variety of designs and styles in garments, footwear and accessories, as table linens, artifacts, home accessories and furnishings. Well-designed interiors, sprawling space, prime locations and coffee shops enhance the customers' shopping experience.

Trent also runs another chain of retail stores called Star India Bazaar. Launched in 2004, Star India Bazaar provides a large assortment of high quality products made available at the lowest prices coupled with a unique shopping experience. Star India Bazaar is located in Ahmedabad and offers a wide choice of staple food, beverages, health and beauty products, vegetables, fruits, dairy products, consumer electronics and household items at the most affordable prices.

Trent has also recently acquired a 76 per cent stake in Landmark, one of the largest books and music retail chains in India. Landmark commenced its operations in 1987 with its first store in Chennai, and now has nine stores in the major metros of the country. Earlier Landmark was focused on books, stationery and greeting cards. In 1996 it added music to its product portfolio and also started the trend of stocking curios, toys, music, CDs and other gift items.

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Growth of Retail Sector in India

4. Piramyd

Piramyd Retail is part of the Piramal Group, which has presence in diverse sectors spanning Pharmaceuticals, Textiles, Real Estate, Engineering, Family Entertainment and Retail with manufacturing operations in 19 locations across five states and employing over 18,000 people.  

The promoters launched the apparel business in 1999 under Piramyd Retail and Merchandising Pvt. Ltd. (PRMPL) while its food; home & personal care businesses (FHPC) were housed under Crossroads Shoppertainment Pvt. Ltd. (CSPL). As the apparel and food businesses individually reached a critical mass the management merged the two companies into Piramyd Retail Ltd. due to distant synergies in two businesses in March 2005. Pyramid also has a smaller format of stores called TruMart that caters to Food and Personal Care products.  

Piramyd Retail currently has 5 Mega stores and 8 TruMart stores mainly in Maharashtra . The company plans to increase these numbers to 17 Mega stores and 69 TruMarts by 2008. The floor space is expected to be 5 times on successful expansion.

The FHPC (Food & Personal Care) business is volume driven while the Lifestyle store is a margin driven business. Piramyd Retail plans to increase the contribution of private labels from existing 7% to 18-20% of the revenues by 2010. Gross margins from private labels are over 40% and hence the company is planning to increase this business. Most of the stores are on the lease format and the company is prone to higher lease rentals due to the overall increase in real estate prices. This may bring the profit levels down substantially.  

Piramyd Retail did have a first mover advantage in many locations but it has actually failed to capitalise over this advantage. Its competitors like Pantaloon, Shoppers Stop and Trent gained larger benefits of their far more aggressive business & marketing strategy in the retail space.

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5. Subiksha

The Chennai based Subiksha grocery chain runs around 200 outlets all over the country and it’s current turnover stands at Rs 224 crores. Their target customer is the middle income value conscious buyers. The main aim of Subiksha is to offer a functional and transactional shopping experience. This retail chain has no qualms and spends almost no money on creating a pleasant shopping experience, and all stores are non-air conditioned. There is no false roofing or sparkling vitrified tiles on the floor.

A few years ago, Subiksha did not even offer shoppers self service. The customer had to place an order at a computerized teller and the goods were billed and delivered after cash is collected. Customers had to bring their own carrybags or pay to buy them from the store. Subiksha even attempted to charge the customers for home delivery.

However, now Subiksha has slightly tweaked their business model in order to create a better appeal to customers who were defecting to the competitors. The store formats are still small and non-airconditioned. But customers have the option to pick from shelf spaces. They also get shopping bags and free home delivery. But the selling USP(unique selling proposition) remains the same --- Subiksha tries to be as close to the customer as possible and offers the lowest price and huge savings in comparison to competitors. It’s slogan happens to be --- bachat mera adhikar hain (saving is my fundamental right).

6. RPG Spencer

RPG’s Spencer presently has 125 stores across 25 cities covering a retail trading area of half a million square feet and with a clientele of 3 million customers a month. Spencer's has a national footprint with seven hypermarkets, three supermarkets and 70 daily use outlets, called Dailies.

30

Growth of Retail Sector in India

All the newly opened Spencer's stores stock every conceivable product that is required by a household on a daily basis. At Spencer's Daily shoppers can get fresh fruits, vegetables, fast-moving consumer goods, household items, groceries, with regular offers and discounts.

Spencer's outlets are divided in to three retail formats. These are, Spencer's Hyper, the over 25,000-sq ft hypermarkets stocking over 25,000 items. The 8,000sq ft to 15,000-sq ft mini hyper stores, http://www.domain-b.com/scripts/recommend/recommend.aspbranded as Spencer's Super and the daily purchase 4,000-sq ft to 7,000-sq ft Spencer's Daily for groceries, fresh food, chilled and frozen products, bakery and weekly top up shopping.

7. Reliance Retail

On June 26, 2006, Mukesh Ambani, Chairman and Managing Director, Reliance Industries Limited, announced a Rs 25,000-crore investment in the retail sector. Reliance Retail started it’s retail operation with “Reliance Fresh”, a grocery store that sells vegetables, fruits, personal care items and other food products. Soon, these retail outlets will also be selling apparel and footwear, lifestyle and home improvement products, electronic goods and farm implements and inputs. They will also offer products and services in energy, travel, health and entertainment. In addition to this, partnerships would be developed to bring the best of global luxury brands to India as well. Reliance Retail plans to extend it’s footprint to cover 1,500 Indian cities and towns with outlets of a varied format, a mix of neighborhood convenience stores, supermarkets, specialty stores and hypermarkets. Reliance also plans to open restaurant outlets, financial services marts and tourism counters within it’s stores.

Mukesh Ambani’s ultimate ambition seems to be to create the Indian equivalent of Wal-Mart by scaling up the business to unprecedented heights to reach every nook and corner of the country. With it’s retailing venture, Reliance expected a revenue target of US $20 billion through it’s retail operations by 2010. Over a span of five years, RRL expects a 20% return-on-investment.

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The first store christened “Reliance Fresh” opened in November 2006 at Hyderabad. Within a few months they have now opened stores in Mumbai, Pune and Ahmedabad and plans foray into other cities on a rapid scale.

8. Bharti Wal-Mart

Bharti Retail (Pvt.) Ltd. unveiled the roadmap for its retail venture on 19th February, 2007 envisaging an investment of $2.5 billion with expectation of revenue of $4.5 billion (about Rs. 20,000 crore) from this business by 2015. The first retail outlet is expected to open somewhere in the month of August .

Bharti’s plan is to invest $2.5 billion by 2015 and open stores across all major cities. This investment would be only for setting up front-end stores. The modalities for its back-end linkage, including its joint venture with the world's largest retailer Wal-Mart, are in the process of being worked out.

A high-level team from Wal-Mart was visited India in the later part of February to work out the details of the back-end chain. While Bharti would manage front-end of the retail venture, Wal-Mart would be involved in the back-end, including logistics, supply chain and cash-and-carry, he added.

The JV was presently scouting for 10 million sq. ft. of retail space, which would include hypermarkets, supermarkets and convenience stores and would provide employment to about 60,000 people. The company would open multi-format retail outlets in all cities with a population of about one million. Bharti is now conducting a massive consumer survey to take a final decision on branding and promotional campaign.

However, Bharti and Wal-Mart have been facing stiff opposition from the left parties and other political outfits who fear that the entry of the Bentonville giant will make life difficult for the small grocers and create massive unemployment. They also expect Wal-Mart to

32

Growth of Retail Sector in India

take a tough stance on lowering prices and force farmers to sell their produce at lower rates. A lurking fear of monopolistic regime in the retail sector is also enhancing their fears. Both Bharti and Walmart are presently having a tough time in convincing the ministers, politicians, agriculturists, the NGOs and other pressure groups that their business model would serve to work in the best interests of all the stakeholders.

9. Aditya Birla – MORE

The Aditya Birla Group is India's first truly multinational corporation. Global in vision, rooted in values, the Group is driven by a performance ethic pegged on value creation for its multiple stakeholders. A US$ 24 billion conglomerate, with a market capitalization of US$ 23 billion and in the League of Fortune 500, it is anchored by an extraordinary force of 100,000 employees belonging to over 25 different nationalities. Over 50 per cent of its revenues flow from its operations across the world.” Our mission is to change the way people shop. We will give them more.” says Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group. The more. for you advantage: more. promises a world-class pleasurable shopping experience to Indian consumers in their very own neighborhood. more. Quality, more. variety, more. convenience and more. value are the four delivery cornerstones of the more. chain of supermarket stores. more.

MORE. Value MORE. promises best in market pricing. Linking up directly with farmers to source fresh fruits, vegetables and staples ensure great quality as well as great price. Add to this, the membership program Club more. which provides convenience, customized shopping solutions and savings, and the more. value promise becomes all the more evident.

More. Is an inspirational brand for an inspirational country. We have a bright and committed, enthusiastic team that represents the best experience from India and globally. MORE. also has a range of products from its own stable available across value, premium and select ranges. The products have been quality-checked and are available in attractive packaging at competitive prices. To avail additional benefits, at no extra charge, customers can also enroll for the membership program Club more.

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10. VISHAL RETAIL :

Vishal is one of fastest growing retailing groups in India. Its outlets cater to almost all price ranges. The showrooms have over 70,00 products range which fulfills all your household needs, and can be catered to under one roof. It is covering about 1282000 sq. ft. in 18 state across India. Each store gives you international quality goods and prices hard to match. The cost benefits that is derived from the large central purchase of goods and services is passed on to the consumer. What started as a humble one store enterprise in 1986 in Kolkata(erstwhile, Calcutta) is today a conglomerate encompassing 51 showrooms in 39 cities. India’s first hyper-market has also been opened for the Indian consumer by Vishal. Situated in the national capital Delhi this store boasts of the singe largest collection of goods and commodities sold under one roof in India. The group’s prime focus is on retailing.

The Vishal stores offer affordable family fashion at prices to suit every pocket. The group’s philosophy is integration and towards this end has initiated backward integration in the field of high fashion by setting up a state of the art manufacturing facility to support its retail endeavors. Company has already tied up for 5-lakh sq ft space and is looking for more. Company will come up with 32 new stores this year. Company is doing research on more formats. Company is looking for opportunities of expansion in the South. Contribution of apparels business at 53% may slightly come down to 50%. India is a big country and there is huge space for four-five big retail players. Vishal can always sustain growth in this big market. Company can sustain margins as it is going for backward integration. Currently manufacturing contributes 10% of the business, which in the next two to three years, will go up to 25%. Company is increasing its focus on the non-apparel and FMCG segment. The current share of FMCG at 15% could go up to 20-25%. Apparel sales currently at 63% in the next 2-3 years should come down to 50% as the company is now also focusing on different segments. With growth in volumes, the cost of sourcing will come down in the near future. Company will venture wherever it gets real estate space. Currently, it has very little space in the south India. Eventually, it will have a pan-India set up.

11.METRO – CASH & CARRY INDIA

34

Growth of Retail Sector in India

METRO Group today, is the third largest trading and retailing group in the world. The company employs over 2,50,000 staff in 30 countries. In the year 2005 METRO Group had generated sales of over €55.7 billion; 53% of total sales came from outside Germany. METRO Cash & Carry started operations in India in 2003 with two Distribution Centres in Bangalore. With this METRO introduced the concept of Cash & Carry to India. These Centres offer the benefit of quality products at the best wholesale price to over 150,000 businesses in Bangalore. METRO offers assortment of over 18000 articles across food and non food at the best wholesale prices to business customers such as Hotels, Restaurants, Caterers, Food and Non-food Traders, Institutional buyers and professionals. METRO's Cash & Carry business model is based on a Business to Business (B2B) concept and focuses on meeting all the needs and requirements of business customers. It is a modern format of wholesale trading, catering only to business customers.

12.Viveks- The Unlimited Shop

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Vivek Limited is a professionally managed public limited company carrying three retail brands - Viveks, Jainsons, Premier and continuously adding to the formidable strength of 1000 employees. Vivek Ltd is the largest consumer electronics & home appliances retail chain in India. Viveks popularized several brands by creating visibility and have the distinction of being market leaders and trendsetters with continuous support from the principal companies. Viveks evolved its strategies to suit the larger scene where there was a stigma attached to borrowing. Very few hire purchase options were available and hence Viveks started Vivek Hire Purchase and Leasing Ltd to finance consumer durables, which enhanced the core retailing business also.Viveks grew from 3 stores to more than 52 stores and turnover increased to over Rs. 350 crores (USD 80 million) and also become a public limited company from a family run enterprise. In this process, 14 store Jainsons was bought over in 1999, 2 store Premier in 2001 and Spencers in 2002 and have recently absorbed Spencers into the Premier brand. With the liberalization of economy and other changes in the global scene, Viveks streamlined the marketing and advertising activities and shopping ambience was improved.

THE GROWTH DRIVERS

Drivers of Retail Industry

The Demography Dynamics: Approximately 60 per cent of Indian population

below 30 years of age.

Double Incomes: Increasing instances of Double Incomes in most families

coupled with the rise in spending power.

Plastic Revolution: Increasing use of credit cards for categories relating to

Apparel, Consumer Durable Goods, Food and Grocery etc.

Urbanization: increased urbanization has led to higher customer density areas

thus enabling retailers to use lesser number of stores to target the same

number of customers. Aggregation of demand that occurs due to urbanization

helps a retailer in reaping the economies of scale.

Covering distances has become easier: with increased automobile penetration

and an overall improvement in the transportation infrastructure, covering

distances has become easier than before. Now a customer can travel miles to

reach a particular shop, if he or she sees value in shopping from a particular location.

DRIVERS FOR GROWTH:

Indian consumers are rapidly evolving and accepting modern formats overwhelmingly. Retail Space is no more a constraint for growth. India is on the radar of Global Retailers and suppliers / brands world-wide are willing to partner with retailers here. Further, large Indian corporate groups like Tata, Reliance, Raheja, ITC, Bombay Dyeing, Murugappa & Piramal Groups etc and also foreign investors and private equity players are firming up plans to identify investment opportunities in the Indian retail sector. The quantum of investments is likely to sky-rocket as the inherent attractiveness of the segment lures more and more investors to earn large profits. Investments into the sector are estimated at INR 20 – 25 billion in the next 2-3 years, and over INR 200 billion by end of 2010.

36

Growth of Retail Sector in India

Stocks in the retail sector are also becoming increasingly attractive from an investor's point of view. Successful development of value based concepts as well as development of retail space in smaller cities and towns shall drive the organized retail into the next levels of cities. Retailers have responded to this phenomenon by introducing contemporary retail formats such as hypermarkets and supermarkets in the new pockets of growth. Prominent ‘tier-II' cities and towns which are witnessing a pick-up in activity include Surat, Lucknow, Dehra Dun, Vijaywada, Bhopal, Indore, Vadodara, Coimbatore, Nasik, Bhubaneswar, Varanasi and Ludhiana among others.

With consumption in metros already being exploited, manufacturers and retailers of products such as personal computers, mobile phones, automobiles, consumer durables, financial services etc are increasingly targeting consumers in tier II cities and towns. In addition, petro-retailing efforts of petroleum giants scattered through out the country's landscape have also ensured that smaller towns are also exposed to modern retailing formats.

On the supply side, mall development activity in the small towns is also picking up at a rapid pace, thereby, creating quality space for retailers to fulfill their aggressive expansion plans. Thus, the ‘retail boom', 85% of which has so far been concentrated in the metros is beginning to percolate down to smaller cities and towns. The contribution of these tier-II cities to total organized retailing sales is expected to grow to 20-25%.

GROWING CONSUMER CLASS:

Favorable demographic and psychographic changes relating to India's consumer class, international exposure, availability of increasing quality retail space, wider availability of products and brand communication are some of the factors that are driving the retail in India.  Over the last few years, many international retailers have entered the Indian market on the strength of rising affluence levels of the young Indian population along with the heightened awareness of global brands and international shopping experiences and the increased availability of retail real estate pace. Development of India as a sourcing hub shall further make India as an attractive retail opportunity for the global retailers. Retailers like Wal-Mart, GAP, Tesco, JC Penney, H&M, Karstadt-Quelle etc stepping  up their sourcing requirements from India and moving  from third-party buying offices to establishing their own wholly owned / wholly managed sourcing & buying offices shall further make India as an attractive retail opportunity for the global players.

Manufacturers in industries such as FMCG, consumer durables, paints etc are waking up to the growing clout of the retailers as a shift in bargaining power from the former to the latter becomes more discernible. Already, a number of manufacturers in India, in line with trends in developed markets, have set up dedicated units to service the retail channel. Also, instead of viewing retailers with suspicion, or as a ‘necessary evil' as was the case earlier, manufacturers are beginning to acknowledge them as channel members to be partnered with for providing solutions to the end-consumer more effectively.

The next level of opportunities in terms product retail expansion lies in categories such as apparel, jewellery and accessories, consumer durables, catering services and home improvement. These sectors have already witnessed the emergence of organized formats though more players are expected to join the bandwagon. Some of the niche categories like Books, Music  and Gifts offer interesting opportunities for the retail players.

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Indian consumer goods market is expected to reach $400 billion by 2010. India has the youngest population amongst the major countries. There are a lot of young people in India in different income categories.

In India they do not have to face this dilemma largely because rapid urbanization, increase in demand, presence of large number of young population, any number of opportunities are available . The bottom line is that Indian market is changing rapidly and is showing unprecedented consumer business opportunity.

Indian consumer class can be classified according to the following criteria:

1. Income

2. Socio-Economic status

3. Age demographics

4. Geographical dispersion

1. Income Classification

Consumer Classes Annual Income in Rs.

1999 2004 2009 Change

The Rich Rs. 215,000 and more

1.2 2.0 6.2 416%

The Consuming Class

Rs 45- 215,000 32.5 54.6 90.9 179%

The Climbers Rs. 22-45,000 54.1 71.6 74.1 37%

The Aspirants Rs. 16-22,000 44 28.1 15.3 -65%

The Destitute Below Rs. 16,000 33 23.4 12.8 -61%

Total   164.8 180.7 199.2 21%

Source: NCAER

2. Socio-Economic Classification:

In addition to income classification and consumer classification, Indian households can also be segmented according to the occupation and education levels of the chief earner of the household (the person who contributes most to the household expenses). This is called as Socio-Economic Classification (SEC), which is mainly used by market planners to target market before launching their new products. SEC is made to understand the purchase behavior and the consumption pattern of the households

38

Growth of Retail Sector in India

3. Age Demographics:India is a very young nation, if compared with some advanced and developed countries. Nearly two- thirds of its population is below the age of 35, and nearly 50 % is below 25.

Age distribution if Indian population (In Millions)

Year/ Age

2006 2001 1996

Below 4 yrs 113.5 108.5 119.5

5-14 yrs 221.2 239.1 233.2

15-19 yrs 122.4 109.0 90.7

20-34 yrs 279.1 246.8 224

35-54 yrs 239.2 207.3 178.1

55 & above 118.7 101.7 88.7

Total 1094.1 1012.4 934.2

Marketers explain that the boom in the consumption level and leisure related expenditure is because of this young population. It will have a significant impact over the consumer goods market. In addition to that, it is expected that this will generate trade opportunities and continuous investment in the economy.

There is huge potential for further consumption of goods and services due to the increased level of disposable income. The expenditure on essential goods and services has a higher share in developing countries as compared with that of developed countries.

Consumption Trends

Food Essentials 45.68%

Essential Services (water, power, rent, and fuels)

10.1%

Clothing 4.9%

Footwear 0.63%

Medicare 4.25%

Transport & Communication 14.51%

Recreation, Education, and Culture Less than 4%

Home Goods 3.25%

4. Geographical Dispersion of market potential

There is large difference in economic prosperity levels among several states in India, linked to the wealth creation from trade, industrial, and agricultural development. There are poor districts in many states, classified according to their market potential. India has 500 districts, out of which 150 districts (category A) and next 150 districts (category B) account for 78% and 15% of the national market potential respectively. Remaining 200

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districts (category C) are backward and account for only 7% of national market potential. Category C districts have 40% of the geographical share.

GROWING ECONOMY

Potential for all Formats to Thrive :

Most of the global powerhouses in the retailing sector such as Wal-Mart, Carrefour, Tesco etc have adopted multi-format and multi-product strategies in order to customize their product offering for distinct target segments. Similar trends

Identifying the future

The important thing is to identify the 'future that has already happened' - Peter Drucker

The important and distinctive are always the result of changes in values, perceptions and goals of people. Identify the changes that have already happened, exploit the changes that have already occurred and use them as opportunities. Dr William T Wilson, Chief Economist for Keystone India ñ a Chicago-based firm providing cross-border trade facilitation and asset management services in US are likely to be exhibited in India as all formats present prospects for growth, the Report says.

Further, with the emergence of larger store formats like superstores and hypermarkets in countries like UK, France, Germany, Spain since the 1980s and Eastern Europe more recently, traditional food retailers have been able to stock more extensive non-food ranges. In fact, Tesco, UK's leading grocer, has become the number one apparel retailer in the Czech Republic and also a major player in Hungary apart from being one of the fastest growing clothing retailers in the UK. Together with its rival, Wal-Mart-owned ASDA, Tesco is one of the food sector's most successful exponents of clothing in Europe

DISPOSABLE INCOME

There is no point complaining, accusing or justifying that retailing business is only for larger players and multinational retailing companies. That's total rubbish and rather an assumed limitation. Recent research finding is that by the year 2010, India will have at least three million people with an annual income of over Rs 4,000,000. Mind you, this is the official, declared and straight income meaning there will be a considerable number of consumers with other sources of income! (I suppose). One could comfortably presume that one fourth of the three millions would reside in Bangalore. Considering the third successive year with great economic growth in India, it is obvious that we shall have more people with higher disposable income. With higher disposable income, the discerning Indian consumers are not going to be conscious about price alone. This emerging consumers would want something special, unique, different, better, customized and more. Find the synonyms and transliterate these into value offerings in your field of business and you have a gold mine, especially when you manage to connect with the customers' value and perception and India, said that after significant accelerations in economic growth recently, India's economy is expected to equal or surpass Japan as the world's third largest sometime in the year 2006. Dr Wilson also added that India's economy measured in PPP (purchasing power parity) terms will eclipse the US$ four trillion mark in 2006, making it equal to or greater than Japan's. Indian consumers are getting richer noticeably leading to higher disposable money.

RISING INCOMES

Over the past deacde , India’s middle and High Income group has grown at a rapid pace of over 10% per annum . Though this growth is most evident in urban areas, it has also

40

Growth of Retail Sector in India

taken place in rural markets. Further, the number of house holds earning above Rs.150,000 per annum is about 30 million today and is expected to grow to 80 million by 2007. This growing high-income population is triggering the demand for consumer goods, leading to the proliferation of Higher quality/higher priced products.

EXPLOSION OF MEDIA

There has been an explosion in media as well during the past decade . Kick-started by the cable-explosion during the gulf war, television has accelerated to a pint where there are more cable connections than telephones in Indian homes and more than 100 channels are being aired at all times .This media bombardment has exposed the Indian consumer to the lifestyles of more affluent countries and raised their aspirations from the shopping experience – they want more choice , value , experience and convenience.

Private Labels

Brands, store labels, private label brands, store brands. These terms may seem to be synonyms of each other. However, when it comes to retailing, each of these terms has a different meaning. While we all know what a brand is, a private label and a store label are different from any other brand because they are product lines that are owned, controlled, merchandised and sold by a specific retailer in its own stores. Among Indian retailers, Stop, Life and Kashish by Shoppers' Stop, and ETC by Ebony are private label brands. According to Synovate, is the market research arm of global communications specialist Aegis Group, the growth of private labels is about 2-3 times more than that of advertised brands .Among the product lines launched by retailers, the ones whose nomenclature is the name of the store itself are called store labels. Foodworld and Nilgiris have launched their own brand of supermarket products under the "Foodworld" and "Nilgiris" brand names.

There is a distinct advantage in naming the brand launched by the retailer after the same name as that of the store. But at the same time, the store label also carries the burden of not only the success of the brand, but also the failure, which may have a negative rub-off effect on the retailer's image. A store brand on the other hand is a brand name the retailer carries. Each retailer, because of its unique offering, is a brand in itself, which is what the store brand signifies. Nallis, Modern Bazaar and The Home Store are store brands since each of them stands for a certain retail offering.

Retailers are now aggressively moving into developing their own private labels as it not only makes economic sense in the form of retailers achieving higher margins, it also helps them to plug gaps in their product portfolio. For instance, in menswear, retailers say that gross margins on branded products vary from 25-38 per cent. Compared to that, the retailers can earn whopping margins of around 55-60 per cent on private labels. Private label products contribute to a retail brands differentiation. A retailer can achieve differentiation through a large (but not necessarily exclusive) portfolio of private label products. Service adds to the differentiation, and together with a unique product range, results in a strong retail brand. They are not perceived as being interchangeable with similar private label products launched by other retailers (unlike manufacturers of branded products, which are the same regardless of the retailer). Introduction of an in house brand of products helps the retailer to have means with which they can compete head on with the other branded products. An established private label brand provides the retailers a platform to negotiate with suppliers, and the retailers are thus self-sufficient in a certain category. They have more control over the merchandise and are able to make the required changes and modifications to suit the changing customer profile much quicker. This brings about a more consistent and acceptable product portfolio, which also helps reduce mark-downs. A retailer can create a stronger emotional connect with the consumer as the experience is not just the store experience but also the product experience. An outside brand could be purchased from any

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outlet. This is not so in the case of private labels, so the product experience keeps bringing the consumer back

The question is: why would retailers want to get into the trouble of launching an own brand when there are "n" number of local, regional and national brands for practically all kinds of products? The reasons are multifold.

SWOT OF THE MARKET

STRENGTH

1) Organized retailing at US$ 3.31 billion, growing at 8%.

2) 2nd largest contributor to GDP after agriculture at 20%.

3) Pattern of consumption changing along with shopping trends.

4) A Growing population will translate to move consumers.

5) Consumer spending increasing at 11% annually.

6) Almost 25 million sq. ft. retail space available.

7) Paradigm shift in shopping experience for consumers pulling in more people.

8) Most of the entrants to organized retail come from 3 main categories, and have

ventured into retail as their business extension.

Real Estate Developers

Corporate Houses

Manufacturers/Exporters

WEAKNESSES

1) Shortage of quality retail spaces at affordable rates.

2) Government regulations on development of real estate(Urban Land Ceiling Act)

3) Need to provide Value for Money-squeezing margins

4) Lack of industry status.

5) Retail revolution restricted to 250 million people due to monolithic urban-rural divide.

6) Footfalls not a clear indicator of sales as actual consumers lower in number.

7) Lack of huge investments for expansion

OPPORTUNITIES:

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Growth of Retail Sector in India

1) Increasing urban population-more participants in retail revolution.

2) Increase in consuming middle class population.

3) Social factors like dual household income has enhanced spending power.

4) Spends moving towards lifestyle products and esteem enhancing products.

5) Availability of old industrial lands-prime real estate locked in sick industrial units.

6) Average grocery spends at 42% of monthly spends-presents a huge opportunity.

7) Increase in use of credit cards.

THREATS:

1) Rising lease/rental costs affecting project viability.

2) FDI restrictions in the retail sector.

3) Poor monsoons and low GDP Growth could affect consumer spending drastically.

4) Archaic labor laws are a hindrance to providing 24/7 shopping experience.

5) Personalized service offered by Mom-&-Pop stores.

6) Unavailability of qualified personnel to support exponential growth in retail.

7) Differentiate taxation laws hindering expansion.

CHALLENGES

Retailing in its traditional form has been existing in India for decades. But retail management in the true sense (as retailing is known in the west) is a relatively new discipline in India. It is unlike other forms of marketing and the traditional marketing rules do not apply. In retailing, as in service, there is a fifth P added to the existing 4 of marketing, the People. Therefore the contact person (whom theconsumers interact with) becomes a doubly important entity. The most important difference is that where marketing has the classic 4 Ps (Product, Promotion, Price and place), in retailing a fifth P, people is added which is critical. They are critical to a service business like retailing both as employees who execute the business and the customers with whom retailers must interact.

The following are the key challenges of retailing:

• Large transactions: Retailers need to handle smaller transactions inlarge numbers and still be able to make money.

• Low price strategy: The Indian consumer being value-conscious, a keyto success for many retailers is the ability to attract customers by offering low price guarantee.

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• Aggressive sales, discount and collection schemes (say, credit facilities.) and thus keep the enthusiasm going.

• Indian consumer behaviors - Retailers need to conduct MRs and behavioral studies into the Indian psyche simply because he is so different from those in the west and in fact, different from other Indianconsumers. His shopping patterns need to be analyzed in detail.

• Location: A prime location in the city/town so a big plus. Things such aswaiting and parking areas need to be taken care of.

• Use of information technology (IT) in developing a supply chain andintegrating all the retailing processes from procurement to after sales.

As somebody rightly pointed out, India remains one of the last frontiers of modern retailing. Conquering the retailing in India will be a major challenge, given the complications that the unorganized sector poses those of the supply chain and consumer behavior as well as the glaring complexities of such a vast a market with all kinds of consumer segments thrown in. A wise retailing hawk would set up special cells; committees to track retailing industry throughout the country. Benchmarking the best in the country and seeing oneself as to where exactly he wants to be in the complicated perceptual map would be a fine starter. Any retail chain needs to experiment and re-orient to cater to the local needs and preferences. Given that these chains come with huge asset bases and financing from their international operations, this is not a difficult task. While Indian markets still beckon a large retail chain, the success of anyone foraying into the land of snake-charmers and maharajas ultimately depends on how well and in-depth understanding they have of the conditions, the people, the supply Retailing in India chain dynamics, the poorer (but strong) unorganized cousins and of course, the local Gods!

COMPETITOR ANALYSIS

The table below outlines some of the strategic moves being planned to change the competitive structure of Retail business in India.

Early Birds

Retailer Brands Plans Strengths Challenges Threats

44

Growth of Retail Sector in India

K Raheja Group

Shopper’s Stop, Crossword, Inorbit Mall Hyper City, Café Brio/Desi Café

310 Shoppers’ Stop Outlets by 2010, 60-70 new Crossword outlets within two years, 100 Café Brio/ Desi Café and 14 new Hypercity

Pulse on customer tastes with vast local retailing experience

Keeping up brand loyalty

Could get bogged down in positioning itself right

Future Group Pantaloon, Big Bazaar, Food Bazaar, Fashion Station, Blue Sky

A store a day for the next three to four years – 3,300 planned by 2010

Can evolve on vast customer experience and existing models

Expanding customer base, sourcing products at cheaper rates

Straddling with too many retail formats

Tata Trent Westside Looking to register it’s presence in hypermarkets; currently operates 21 stores

Already has an established brand like Westside

Sprucing up product offerings, opening more outlets, and introducing new retail formats

It’s smaller retail operations

RPG Spencer’s, Music World

Expansion into other major cities at prime locations; B-Cities next on list

Still considered a southern brand

Establishing itself into newer regions, sourcing products at competitive prices

Source : Indian Management, Volume 46, Issue 2009,

Debutantes Retailer Brands Plans Strengths Challenges Threats

Reliance Reliance Fresh

Plans to set up a range of different store formats, convenience stores and

Strong back end, nationwide fuel retailing platform

Getting the retail portfolio right for Indian tastes

Product pricing, infrastructure, manpower, brands

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hypermarkets as well as create a back-end retail-services business

Bharti Walmart

Field Fresh Pan-Indian operations expected

Bharti’s local expertise and Wal-Mart’s back-end make it a lethal combo

Wooing the price sensitive Indian consumer

Product pricing, shelf and overall offerings

In the Pipeline

Retailer Brands Plans Strengths Challenges Threats

Aditya Birla

Madura Garments, Birla Sun Life Insurance and Idea Cellular, Planet Fashion and Trouser Town

To roll out it’s retail business within the next 7-8 months with a combination of large and small stores

Extensive experience in supply-chain management, vendor development with premium brands like Louis Phillippe, Van Heusen and Allen Solly

Gaining a national footprint

Building retail formats from scratch

Hero Group

Easy Bill Floated Aero Infrastructure Ltd announcing foray into retail. Currently developing two industrial parks at Haridwar and Uttaranchal

Strong background in several manufacturing sectors; sound financial base

Creating retail operations from scratch

Little experience in everyday consumer retailing.

Future Outlook

Retailing in India is gradually inching its way toward becoming the next boom industry. The whole concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. Modern retail has entered India as seen in sprawling shopping centers, multi-storied malls and huge complexes offer shopping, entertainment and food all under one roof. The Indian retailing sector is at an inflexion point where the growth of organized retailing and growth in the consumption by the Indian population is going to take a higher growth trajectory. The Indian population is

46

Growth of Retail Sector in India

witnessing a significant change in its demographics. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing workingwomen population and emerging opportunities in the services sector are going to be the key growth drivers of the organized retail sector in India. Retail and real estate are the two booming sectors of India in the present times. And if industry experts are to be believed, the prospects of both the sectors are mutually dependent on each other. Retail, one of India’s largest industries, has presently emerged as one of the most dynamic and fast paced industries of our times with several players entering the market. Accounting for over 10 per cent of the country’s GDP and around eight per cent of the employment retailing in India is gradually inching its way toward becoming the next boom industry.

As the contemporary retail sector in India is reflected in sprawling shopping centers, multiplex- malls and huge complexes offer shopping, entertainment and food all under one roof, the concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. This has also contributed to large-scale investments in the real estate sector with major national and global players investing in developing the infrastructure and construction of the retailing business. The trends that are driving the growth of the retail sector in India are

Low share of organized retailing Falling real estate prices Increase in disposable income and customer aspiration Increase in expenditure for luxury items (CHART)

Road Ahead; Plans of Large Retailers

Reliance Retai l: investing Rs. 30,000 crore ($6.67 billion) in setting up multiple

retail formats with expected sales of Rs. 90,000 crore plus ($20 billion) by 2009-

10.

Pantaloon Retai l: Will occupy 10 mn sq.ft retail space and achieve Rs.9,000

crore-plus ($2 bn) sales by 2008.

RPG : Planning IPO will have 450-plus Music World, 50-plus Spencer's Hyper

covering 4 million sq.ft by 2010.

LIFESTYLE : Investing Rs.400 crore-plus ($90 million) in next five years on Max

Hypermarkets & value retail stores, home and lifestyle centres.

Raheja's : Operates Shoppers' Stop, Crossword, Inorbit Mall, and 'Home Stop'

formats. Will operate 55 "Hypercity" hypermarkets with US$100 million sales

across India by 2015.

Piramyd Retail : Aiming to occupy 1.75 million sq.ft retail spaces through 150

stores in next five years.

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Technology in Retail

Over the years as the consumer demand increased and the retailers geared up to meet this increase, technology evolved rapidly to support this growth. The hardware and software tools that have now become almost essential for retailing can be into 3 broad categories.

Customer Interfacing Systems

Bar Coding and Scanners

Point of sale systems use scanners and bar coding to identify an item, use pre-stored data to calculate the cost and generate the total bill for a client. Tunnel Scanning is a new concept where the consumer pushes the full shopping cart through an electronic gate to the point of sale. In a matter of seconds, the items in the cart are hit with laser beams and scanned. All that the consumer has to do is to pay for the goods.

Payment

Payment through credit cards has become quite widespread and this enables a fast and easy payment process. Electronic cheque conversion, a recent development in this area, processes a cheque electronically by transmitting transaction information to the retailer and consumer's bank. Rather than manually process a cheque, the retailer voids it and hands it back to the consumer along with a receipt, having digitally captured and stored the image of the cheque, which makes the process very fast.

Internet

Internet is also rapidly evolving as a customer interface, removing the need of a consumer physically visiting the store.

ERP System

Various ERP vendors have developed retail-specific systems which help in integrating all the functions from warehousing to distribution, front and back office store systems and merchandising. An integrated supply chain helps the retailer in maintaining his stocks, getting his supplies on time, preventing stock-outs and thus reducing his costs, while servicing the customer better.

CRM Systems

The rise of loyalty programs, mail order and the Internet has provided retailers with real access to consumer data. Data warehousing & mining technologies offers retailers the tools they need to make sense of their consumer data and apply it to business. This, along with the various available CRM (Customer Relationship Management) Systems, allows the retailers to study the purchase behavior of consumers in detail and grow the value of individual consumers to their businesses.

Advanced Planning and Scheduling Systems

APS systems can provide improved control across the supply chain, all the way from raw material suppliers right through to the retail shelf. These APS packages complement existing (but often limited) ERP packages. They enable consolidation of activities such as long term budgeting, monthly forecasting, weekly factory scheduling and daily distribution scheduling into one overall planning process using a single set of data.

Leading manufactures, distributors and retailers and considering APS packages such as those from i2, Manugistics, Bann, MerciaLincs and Stirling-Douglas.

Strategic Decision Support Systems

Store Site Location

Demographics and buying patterns of residents of an area can be used to compare various possible sites for opening new stores. Today, software packages are helping retailers not only in their locational decisions but in decisions regarding store sizing and floor-spaces as well.

Visual Merchandising

The decision on how to place & stack items in a store is no more taken on the gut feel of the store manager. A larger number of visual merchandising tools are available to him to evaluate the impact of his stacking options. The SPACEMAN Store Suit from AC Neilsen and ModaCAD are example of products helping in modeling a retail store design.

Investment Opportunities

Potential For Investment: The total estimated Investment Opportunity in the retail sector is around US$ 5-6 Billion in the Next five years.

Location: with modern retail formats having made their foray into the top cities namely Hyderabad, Coimbatore, Ahmedabad, Mumbai, Pune, Chennai, Bangalore, Delhi, Nagpur there exists tremendous potential in two tier towns over the next 5 years.

Sectors with High Growth Potential: Certain segments that promise a high growth are

Food and Grocery Clothing Furniture and Fixtures Pharmacy Durables, Footwear & Leather, Watch & Jewellery

Fastest Growing Formats: Some of the formats that offer good growth potential are: o Speciality and Super Market

Hyper Market Discount stores Department Stores Convenience Stores and E-Retailing

Supply Chain Infrastructure: Supply chain infrastructure in terms of cold chain and Logistics. .

Wholesale Trading: wholesale trading also holds huge potential for growth. German giant Metro AG and South African Shoprite Holdings have already made headway in this segment by setting up stores selling merchandise on a wholesale basis in Bangalore and Mumbai respectively. These new-format cash-and-carry stores attract large volumes from a sizeable number of retailers who do not have to maintain relationships with multiple suppliers for all their needs.

Cheap Consumer Credit

Government Initiatives & Regulations

There has always been a strong opposition to FDI in India’s retail sector (though 100 percent FDI is allowed in distribution companies that sell to the trade and not to the consumer). The BJP was not too keen on it early on, though towards the end of Vajpayee’s government‘s term there were noises that it would consider such a move.

These days, the left parties are orchestrating a passionate opposition to allowing FDI in retail. The arguments are familiar – that global retailers will swamp the Indian markets, wipe out small kirana stores and put millions of jobs in jeopardy. They also argue that giant global retailers will squeeze suppliers and finish them off. “ The negative effects in terms of job losses and the displacement of traditional supply chains by the monopoly/ monophony power of multinational retailers far outweigh the supposed benefits…” the left observed in a recent seven-page note that summarized its arguments against FDI. Given the political clout of the small trading community, because of their enormous numbers, the government has barred FDI in retailing since 1997. Most of India’s home grown retailers also oppose FDI, though for a different reason. “What is the hurry (to allow FDI)? For 10 years, China allowed only one foreign store per province. I allowed domestic chains to build up good valuation before opening FDI, “argues Kishore Biyani, managing director, Pantaloon Retail. “ The debate is not ‘whether or not to allow FDI, but ‘when and how’,” he clarifies. Biyani is also chairman of Confederation of Indian Industry’s retail committee, which estimates that Rs.20, 000 crore will be needed in retail to scale up to its potential. Indian companies need time to mobilize at least part of the capital before the foreign players are allowed in, argues CII. In private some domestic retailers fear getting lower valuations from their global counterparts if they sell out today. But five or 10 years later, when they have built up larger business, they may get far higher valuations. Of course, the argument of asking for more time to get even better valuation may not lose its appeal even a decade later, if the approach is instinctively protectionist. INDIA’s retail industry – the fourth largest in the world – accounts for 11 per cent of the country’s GDP and employs over 40 million people (about 7 per cent of Sector retailers (Yes, they have retailing PSU’s!) had a 32 percent share and private sector retailers had 45 per cent. total employment in the country). Now, a huge majority of the retail workforce is in kiranas.This sector, in fact acts as an informal social security net – almost anyone without a job can set up a kirana. The big worry is that global retailers will quickly put these kiranas out of business, leading to millions of job losses. Is that fear justified? The answer can be found in the experience of othercountries that allow FDI in retail. In Thailand and Malaysia, global retailers have spelt doom for the traditional mom and pop stores. In fact the Thai government had to step step in to save local retailers from annihilation. It set up Allied Retail Trade, a network of franchised stores, which brought small stores together to fight the big chains.

But if the Thailand story is forbidding, then the China one is inspirational. Global chains have had a 13 year run in china. In 1992, China had one supermarket. Today it has 60, 000. (Supermarkets are perceived to be kirana killers!). Four of the world’s 10 largest retailers, 35 of the top 50 and 78 of the top 250 have already opened stores in China. Hypermarkets, supermarkets, discount stores, cash & carry convenience stores every conceivable format operates in China. The globalization of china is complete.

So what impact has this had?

The top 100 retailers (both domestic and foreign) in China had combined sales of $60 billion in 2004, according to the China Chain Store & Franchise Association. These 100 companies have so far opened 30,416 stores with a total area of 25.8 million square metres. But – and here’s the revelation they have only 9.6 per cent share of China‘s $628- billion retail trade! That figure has grown from 2.9 per cent in 2000.

It must be mentioned that the global giants got unfettered access into China only in 2004. Therefore their performance cannot be compared with rest of the country’s retail sector, but must be benchmarked only against the top 100 firms. When seen thus, the foreign firms account for only 23 percent sales of the top 100 retailers. China’s public Now, the question is which theory is relevant to India – China’s or Thailand’s? “India cannot be compared with Thailand and Malaysia as the scale is much smaller and economic levels are dissimilar. The right comparison would be Germany 20-30 years ago or Brazil today.

China makes sense because of its similarities with India: large area, large chunk of underdeveloped population, disparity in income levels,” says Arvin Singhal, chairman of consultancy KSA Technopak.

Or better still, one could also look at the US story. Its retailing industry is one of the most matures ones in the world. It is also home to some of the world’s largest retailers. But there is a less understood aspect of the US retail scene – 95 percent of all retailers in the US are single – store operations. They may not be as the Indian Kirana, but they are still small ‘mom and pop’ operations on the US scale. Despite over six decades of dominance by large chains, these small players have not find a lot of them in the vicinity of a Wal- Mart or a target. They are also under pressure and their market share in on the decline. But the fact is that the single- store operations still control a little less than 50 percent of US retail trade.

Again, back home, in Chennai, where large and organised supermarket chains like FoodWorld and Nilgiri’s have grabbed a 20 percent market share, the kiranas haven’t been slaughtered. They are smarter, more efficient more customer- friendly than they were five years ago; they are matching the chains’ prices and continue to do brisk business. Even stores in close vicinity of these large supermarkets have survived. “Small businesses have their own competitive advantages. They are local; they are usually in the same block that the customers are in; and they are very convenient. They know their customers by name, so they offer great customer service. They have tailored their inventory for their customers, so they have great inventory management, and many times they give credit. Small businesses have their own model, offer a different product mix, and keep their customers happy. I think small business can grow and prosper with Wal Mart, “Menzer had argued in an inclusive interview with BW during his May visit.

Benefits of opening the Retail sector

Improve competition Develop the market :

Greater level of exports due to increased sourcing by major players Sourcing by Wal-Mart from China improved multifold after FDI permitted in China Similar increase in sourcing observed for Metro in India Provides access to global markets for Indian producers.

Investment in technology Cold storage chains solve the perennial problem of wastage. Greater investment in the food processing sector technology Better operations in production cycle and distribution.

Better lifestyle Greater level of wages paid by international players usually More product variety Newer product categories Economies of scale to help lower consumer price. Increased purchasing capacity of consumers

Manpower and skill development through retail training and Greater managerial talent inflow from other countries

Tourism Development :

A strong retailing sector boosts tourism as seen from the experience of Singapore and Dubai. Investment in whole supply chain Improved product basket from India for exports.

Long term benefits,up-gradation of agriculture, development of efficient small and medium size industries.

FDI would result in market growth and expansion. Employment generated at various levels, Increased consumer demand implies employment generation across the value chain does not need very high skill sets, needs high school graduates and other similar skill level. Currently this is a majorly unemployed demographic groupBoom in employment similar to job generation in ITES industry. On a much larger scale But new jobs comparatively lower down the value chain Greater clarity and objectivity can be achieved if one looks beyond kiranas at the larger issue of employment, Despite the entry of organized retail – domestic and foreign – in

China, its retail still employs 6 percent of the total workforce ( only marginally smaller than India). The top 100 retailers in China employ 810,000 people, a figure growing at over 25 percent every year. But compared with the US, the percentage looks paltry. In the US, almost 15 million people or 11.7 of the workforce are employed in retail. This is almost double the retail workforce in China – and much higher than in India!

Many believe that organised retail actually leads to job gains rather than job losses. This is not to say that the changeover will be painless. Shifting of jobs is bound to happen. “Supermarket chains will divert business from small vendors, but they also create many jobs,” argues retail expert Gale. One reason for that is growth of organised retail stimulates consumption. And increased consumption means more production and therefore more jobs.In India, owners of large and small stores will tell you that they face stockouts – products not available when a consumer asks for it. This is lost demand. And it is due to India’s rather inefficient supply chain. One could, therefore argue that India’s consumption is actually way below actual potential – and that there is inherent job loss of jobs that exists in the economy. Here poor distribution and below-par processes is another bottleneck. “If the economy grows at 6.5 percent or so every year, we will have 5-7 years. If you do not have an efficient distribution chain, the economy cannot grow…Such inefficiency will lead to job losses. If you do not have organized distribution, you won’t have employment growth,” argues Harsh Bahadur, managing director, Metro Cash & Carry, India. Finally, if the fear of kiranas being snuffed out is true, then the government ought to be equally concerned about Indian retailers as well. Several large and influential business groups like the Tatas and Ambanis have ambitious plans that include setting up of hundreds of supermarkets and hypermarkets. Won’t these kill kiranas and lead to job losses. In reality; foreign retailers will be in a position to influence employment only several years after they enter India. But they will have an impact on the consumer almost immediately. Of course, in India the consumer is invariably forgotten when protectionist lobbies voice their concern.

INTRODUCTION OF COMPANY

Company Profile

(There's more to discover)

HyperCITY provides a truly international shopping experience, where customers can

shop in comfort in a large, modern, & exciting environment. It offers a wide and

contemporary range of innovative products, sourced from both local and international

markets. The product range covers: Foods, Homeware, Home Entertainment, Hi-Tech,

Appliances, Furniture, Sports, Toys & Fashion.

Discover the difference

HyperCITY is more than just aisles and shelves, it also boasts of some very unique

shopping experiences, which sets us apart.

Speciality Areas

Exclusive imported food-From Waitrose, UK

24 hr Pharmacyfor round-the-clock medical supplies

Gaming Zonewith latest gaming equipment

Cricket Net where you can select & test your cricket gear

Demo Kitchen get product demos, taste recipes created by master chefs

Home Theatre Demo Room for sound-proof audio testing

Features & Facilities

ATM facility convenient cash withdrawal

Consumer financeenables easy purchase of consumer durables

Disabled access to store & toilets -

socially responsible - wheelchair facilities available

Trial rooms enables you try before you buy

Free gift wrapping makes gifting convenient & hassle-freeHassle Free Shopping!

Clearer aisles-minimum shopping-hour re-stocking

Faster check-outs without queues-

30 check out counters

Store Locations!

Vision

'To be an integral part of customer lives, by offering them a high quality shopping experience through great products at ever better prices.'

Exclusive Brands

We have a wide array of exclusive brands across all Categories. These brands ensure increased value to our customers through superior product offerings, quality and uniqueness at great prices.Food

Every Fresh Basket product guarantees freshness and quality on a daily basis, with all the goodness locked in. Fresh Basket offers the freshest selection of meat, seafood, fresh produce, freshly baked breads, specialty bread, etc.

HyperCITY is dedicated to bring wholesome food to your family at great prices. Our products are packed under hygienic conditions and are priced to offer real value, every

day. HyperCITY encompasses everyday foods like cereals, spices, flour, pulses, dry fruits and other products.

Voted the top supermarket chain in UK. Exclusively available at HyperCITY. Come and taste the best of teas, coffees, juices, jams and more.Home

Discover stylish essentials for your home with HyperCITY’s newly launched exclusive brand e b a n o. e b a n o presents a selection of basic products with a modern appeal. Bringing your home to life with contemporary designs, vibrant colours, great value & is present across Utensils, Cutlery, Bakeware, Crockery, Glassware, Pots'n'pans, Implements, Bed linen, Towels, Cushions, Table linen, pillows and more.

Make your home a more luxurious place with AVORIO, the newly launched brand from HyperCITY. AVORIO offers exclusive, versatile and classic designs to enhance your lifestyle. AVORIO spans Implements, Pots'n'pans, Glassware, Cutlery, Crockery, Towels, Bed linen, Table linen, Duvets & quilts and more.FashionHyperCITY offers a coordinated range at super prices; cutting across clothing, footwear, sunglasses, watches, hair accessories, bags and jewelry.

Vive Jewellery is known for its unique designs and excellent quality. Each piece is made in sterling silver with Rhodium plating. Vive uses high quality assorted semi- precious stones with very good lustre.

Comprises of a basic line of value packs at super duper prices; covering value packs of tees, socks, briefs, vests, basic denim, etc., for men, women & kids.

Everyday wear for men, women, kids and footwear, styled for value.

A range of quality denims for men, ladies and kids. The range comprises of basic denims, fashion denims, tees, cargos, denim shirts and jackets.Appliances Discover stylish essentials for your home with Technix.

Our Technix range of appliances will be available across microwaves, cook-tops and mixer-grinders.Sports

The Raleigh Series of bicycles are available exclusively at HyperCITY. Raleigh is one of the world’s biggest brands in Bicycles. Raleigh bicycles are simple, elegant, efficient and fun. They are designed with care and fitted with latest technology. Raleigh has the following varieties in bicycles - Mountain Sport, Platinum, Juvenile, Toy cycles, etc.

The Maxit line of sports equipment and apparels is available exclusively at HyperCITY. Maxit stands for - Maximum Range, i.e. it offers a superior line up of sports gear at great value. Maxit is available across sports categories like cricket, football, basketball, volleyball, boxing and baseball.

OUR TEAM MEMEBERS

B. S. Nagesh - Vice Chairman

John Wilcox - Chief of Operation

International Awards

GourmetCITY won accolades internationally and awarded as 'Most Innovative New

Concept - 2008’ by Plant Retail.

HyperCITY, Mumbai won The Award of Merit for Large Format Specialty Store at the

United States International Design Awards in New York on 15th January, 2007. This is

the first time that an Indian Company has received an award like this. This was the 36th

awards function for the Institute of Store Planners/VM+SD International Store Design,

New York..

HyperCITY was voted as India's top retail store by ‘Retail Week’, a leading U.K.

magazine revered by retailers world wide. It was voted as the ‘100 Shops You Must

Visit’, across the world and was featured amongst internationally renowned stores such

as Bloomingdales New York, Selfridges U.K, Louis Vuitton Paris and Carrefour

Shanghai. The special report carried weightage for innovation and creativity in retail, as

well as recognizing retail excellence. The report was based on a survey carried out by

‘Retail Week’ amongst key players in the retail industry consisting of businessmen,

analysts, retail consultants, editors and top shoppers around the globe.

Domestic Awards

Coca Cola Golden Spoon Awards 2009 - Images award for excellence in food retailing

awarded GourmetCITY as "Most Admired Food Retailer of the Year" & "Innovative

Retail Concept".

Star Retailer Awards awarded GourmetCITY "Debutant Retailer of the Year 2008".

The Bold 100 - IDG India CIO magazine has recognized Shoppers Stop and HyperCITY

as a recipient of 2008 CIO 100 Award. The annual award program recognizes those

executives and organizations those are playing not just to survive, but to win and

embrace great risk for the sake of great reward.

Most Admired Retailer of the Year for Retail Design & Visual Merchandising - Images

India Retail Forum, 2007.

Star Retailer - Value Retailer of the Year 2007.

Asia Retail Congress - Reid & Taylor Retailer of The Year (Hypermarket).

Core Values

• Indianness: confidence in ourselves.

• Leadership: to be a leader, both in thought and business.

• Respect & Humility: to respect every individual and be humble in our conduct.

• Introspection: leading to purposeful thinking.

• Openness: to be open and receptive to new ideas, knowledge and information.

• Valuing and Nurturing Relationships: to build long term relationships.

• Simplicity & Positivity: Simplicity and positivity in our thought, business and action.

• Adaptability: to be flexible and adaptable, to meet challenges.

• Flow: to respect and understand the universal laws of nature.

HyperCITYis not just an organisation - it is an institution, a centre of learning &

development. We believe that knowledge is the only weapon at our disposal and our

quest for it is focused, systematic and unwavering.

At Pantaloon, we take pride in challenging conventions and thinking out of the box, in

travelling on the road less traveled. Our corporate doctrine ‘Rewrite Rules, Retain

Values’ is derived from this spirit.

Over the years, the company has accelerated growth through its ability to lead change.

A number of its pioneering concepts have now emerged as industry standards. For

instance, the company integrated backwards into garment manufacturing even as it

expanded its retail presence at the front end, well before any other Indian retail

company attempted this. It was the first to introduce the concept of the retail

departmental store for the entire

family through HyperCITY in 2005 in malad.

Today we are the fastest growing retail company in India. The number of stores is going

to increase many folds year on year along with the new formats coming up. The way we

work is distinctly "HyperCITY".

Our courage to dream and to turn our dreams into reality – that change people’s

lives, is our biggest advantage.

RESEARCH METHODOLOGY

Customer Satisfaction

INTRODUCTION :

From the beginning of the “customer service revolution” almost 20 years ago, a

body of business research has focused on customer satisfaction and customer-focused

organizations.1 Business consultants, corporations and others have worked to identify

the characteristics of organizations that consistently please their customers, to develop

tools for monitoring customer satisfaction, and to build continuous, quality improvement

systems that respond to consumer feedback. Although much of the research has been

conducted by and for the corporate world, customer service and satisfaction is not

limited to the private sector. Publicly funded organizations that are incorporating

practices developed in the business world provide a growing body of experience and

study. Increasingly, federal, state and local government agencies are attempting to

gauge their performance and the effect on those they directly serve. Throughout the

public sector, initiatives to “reinvent” government—including education reform,

privatization, and managed care—have elevated customer service and satisfaction to

new priorities. Within the European Union, a shift is underway to re-think and reform

social services with social inclusion and “user involvement” as driving forces in quality

improvement.

Customer service standards and accountability. examines the critical role of

frontline staff and strategies for ensuring that employees have the capacity to put

customer service first, including training, employee empowerment, and recognition and

rewards for performance. describes tools and strategies used to research and improve

customer satisfaction,including surveys, customer behavior research, complaint

resolution approaches, testersand “secret shoppers,” and continuous feedback loops.

The conclusion briefly describes the potential for applying customer satisfaction

research and customer service strategies in the public sector and among vulnerable

populations.

Why Organizations Focus on Customer Satisfaction

Businesses monitor customer satisfaction in order to determine how to increase

their customer base, customer loyalty, revenue, profits, market share and survival.

Although greater profit is the primary driver, exemplary businesses focus on the

customer and his/her experience with the organization. They work to make their

customers happy and see customer satisfaction as the key to survival and profit.

Customer satisfaction in turn hinges on the quality and effects of their experiences and

the goods or services they receive.

What is Customer Satisfaction?

The definition of customer satisfaction has been widely debated as organizations

increasingly attempt to measure it. Customer satisfaction can be experienced in a

variety of situations and connected to both goods and services. It is a highly personal

assessment that is greatly affected by customer expectations. Satisfaction also is based

on the customer’s experience of both contact with the organization (the “moment of

truth” as it is called in business literature) and personal outcomes.

It was the consensus of the groups that lack of information often leads to low

expectations. They further agreed that the process of obtaining a service and the way it

is delivered can have a major impact on the users’ experience. The qualities of

relationships and staff were central to positive outcomes.8 Because customer

satisfaction is a highly variable assessment that every individual makes based on

his/her own information, expectations, direct contact and interaction, and impact, it

makes sense to involve and consult consumers when designing customer satisfaction

approaches.

Service Quality

Research identifies many characteristics that are associated with service

quality .Business researchers Benjamin Schneider and David Bowen assert that

“service organizations must meet three key customer needs to deliver service

excellence:” security, esteem, and justice.9 Research identifies an array of service

quality factors that are important for customers, including: Timeliness and convenience,

Personal attention, Reliability and dependability, Employee competence and

professionalism, Empathy, Responsiveness, Assurance, Availability, andTangibles such

as physical facilities and equipmentand the appearance of the personnel. Research

shows that these characteristics also apply to citizen satisfaction with public service

quality. Timely service is an especially strong determinant of quality across different

types of public services. Fairness and outcomes are additional factors important to

public service customers.10 Public sector quality improvement initiatives are on the rise

worldwide as contracting and private service provision has become more common. At

the same time, European and consumer-oriented services has produced a quality gap:

a gulf in perceptions of quality and the impact of services on the end user. She calls for

rethinking quality initiatives to interlink quality improvement with user involvement and

participation and with

can also help employees feel that they are part of something important, another

operating principle of high-performing companies.

A. It helps set and manage customer expectations.

B. Total Customer Experience

c. Personal Contact and Relationships

A customer satisfaction research program continuously gathers customer and market

requirements and helps measure customer satisfaction.100 To fully understand

customers’ expectations, experiences and perceptions requires an ongoing system of

research. Single strategy or inconsistent monitoring is not adequate. Ideally, customer-

derived information is consciously used to inform staff and improve services.

Customer Satisfaction in 7 Steps

It's a well known fact that no business can exist without customers. In the business of Website design, it's important to work closely with your customers to make sure the site or system you create for them is as close to their requirements as you can manage. Because it's critical that you form a close working relationship with your client, customer service is of vital importance. What follows are a selection of tips that will make your clients feel valued, wanted and loved.

1. Encourage Face- to – Face dealings

This is the most daunting and downright scary part of interacting with a customer. If you're not used to this sort of thing it can be a pretty nerve-wracking experience. Rest assured, though, it does get easier over time. It's important to meet your customers face to face at least once or even twice during the course of a project.

My experience has shown that a client finds it easier to relate to and work with someone they've actually met in person, rather than a voice on the phone or someone typing into an email or messenger program. When you do meet them, be calm, confident and above all, take time to ask them what they need. I believe that if a potential client spends over half the meeting doing the talking, you're well on your way to a sale.

2. Respond to messages promptly & keep your clients informed

This goes without saying really. We all know how annoying it is to wait days for a response to an email or phone call. It might not always be practical to deal with all customers' queries within the space of a few hours, but at least email or call them back and let them know you've received their message and you'll contact them about it as soon as possible. Even if you're not able to solve a problem right away, let the customer know you're working on it.

3.Be Friendly & Approachable

A fellow SitePointer once told me that you can hear a smile through the phone. This is very true. It's very important to be friendly, courteous and to make your clients feel like you're their friend and you're there to help them out. There will be times when you want to beat your clients over the head repeatedly with a blunt object - it happens to all of us. It's vital that you keep a clear head, respond to your clients' wishes as best you can, and at all times remain polite and courteous.

4.Have a clearly – Defined customer service policy

This may not be too important when you're just starting out, but a clearly defined customer service policy is going to save you a lot of time and effort in the long run. If a customer has a problem, what should they do? If the first option doesn't work, then what? Should they contact different people for billing and technical enquiries? If they're not satisfied with any aspect of your customer service, who should they tell?

There's nothing more annoying for a client than being passed from person to person, or not knowing who to turn to. Making sure they know exactly what to do at each stage of their enquiry should be of utmost importance. So make sure your customer service policy is present on your site -- and anywhere else it may be useful.

5.Attetion to Detail ( also known as ‘The little Niceties “)

Have you ever received a Happy Birthday email or card from a company you were a client of? Have you ever had a personalised sign-up confirmation email for a service that you could tell was typed from scratch? These little niceties can be time consuming and aren't always cost effective, but remember to do them.

Even if it's as small as sending a Happy Holidays email to all your customers, it's something. It shows you care; it shows there are real people on the other end of that screen or telephone; and most importantly, it makes the customer feel welcomed, wanted and valued.

6. Anticipate your client’s Needs & Go out of your way to help them out

Sometimes this is easier said than done! However, achieving this supreme level of understanding with your clients will do wonders for your working relationship.

Take this as an example: you're working on the front-end for your client's exciting new ecommerce endeavour. You have all the images, originals and files backed up on your desktop computer and the site is going really well. During a meeting with your client he/she happens to mention a hard-copy brochure their internal marketing people are developing. As if by magic, a couple of weeks later a CD-ROM arrives on their doorstep complete with high resolution versions of all the images you've used on the site. A note accompanies it which reads:

7.Honour your promise

It's possible this is the most important point in this article. The simple message: when you promise something, deliver. The most common example here is project delivery dates.

Clients don't like to be disappointed. Sometimes, something may not get done, or you might miss a deadline through no fault of your own. Projects can be late, technology can fail and sub-contractors don't always deliver on time. In this case a quick apology and assurance it'll be ready ASAP wouldn't go amiss.

RESEARCH METHODOLOY

Marketing research is the systematic objective and exhaustive search for and

study of the forth relevant to any problem in the field of marketing a systematic

approach is needed to solve the marketing problem. The approach is needed to solve

the marketing problem. The approach is planed and should be analytical and objective

which include the following steps.

Topic of Study:

Customer satisfaction at Hypercity products:

Duration of project study

Very short term

RESEARCH PROCESS-:

Setting the area under the study

Setting of Objective

Design the method of data

Defining the sample size

Collection of data

The present study can be accomplished by conducting a market research. Market

research is the systematic design, collection, analysis and reporting of data and findings

that are relevant to different marketing situations facing the company. The marketing

research process that was adopted in the present study consists of the following stages:

-

A) Defining the research objective:

The objective of the research is to know about the customer satisfaction at hypercity

(Jaipur)

1. To study the view of consumer.

2. To assess the effectiveness of selling programmers.

3. Are they satisfied with the price and quality of the product.

4. Increase in the sales.

5. To check the loyalty of consumers towards the brand.

6. What are the factors affects for the purchase?

Scope of the study:

Interpretation and analysis of collection data

Deduction and conclusion

The scope of the study is related to the Hypercity jaipur.

Respondents are consumer of hyper only for the purpose of study.

To know the awareness of people about different brands of retail sector.

Result will be the knowledge about customer’s preference towards exclusive and multi-brand retail

outlet that will be helpful to find out the factors that influence the satisfaction level of customer.

It will be helpful to know the connection between demographic factors of consumer like age, income,

education and choice of people for different types of product.

B) Developing the research plan:

The next step is to prepare a plan for getting the information needed for the research

C) Collection and sources of data:

A survey of Customers located in Jaipur area was done. We asked them to questions

related to our project.

D) Analyze the collected information

This involves converting raw data into useful information. It involves tabulation of data

and using Microsoft Excel software for developing graphs and charts to retrieve useful

information from the data collected.

E) Report research findings:

This phase marked the culmination of the marketing research effort. The report with the

research finding is a formal written document. The research findings and personal

experience will be used to propose by conveying the view of the Customers. The

methodology used for the study was very rigorous. Interviews with customers were held

and various books and websites were checked for any type of information related to the

study.

SAMPLING METHOD:

Random Sampling method is used for the collection of data.

The sample size of the study is of 100

SOURCES OF INFORMATION:

PRIMARY DATA – The primary data are those, which are collected for the first

time hence they are fresh and thus happens to be original in character. Primary data

pertain to demographic and socioeconomic characteristics of the consumer, attitudes

and opinion of the respondent, their awareness and knowledge and other similar

aspects.

Observation

Interviews

Opinions

The primary data for the present research work was obtained through the

observation

SECONDARY DATA - It includes those data, which were collected for some

earlier research work and are applicable in the study the researcher has presently

undertaken. The data collected from the websites and books was good enough to be

included in the study analyzed and concluded.

SOURCES OF SECONDARY DATA COLLECTION

Internet.

Company Website.

Other Websites

Books

Journals

Newspaper

SWOT ANALYSIS

STRENGTH

First Hyper retail outlet in jaipur

People are will to come.

Value added service

Quality of product.

Convenient to customer.

Hygiene standard.

High standard of display and shelf discipline.

Customer is informed through leaflet, by daily or weekly offers.

WEAKNESS

Cash team is not quick in billing.

Promo is not well communicated by marketing.

Proper benchmarking is not done.

On weekend and on evening, CSA can not attend properly to customers.

Complaint of customer should be fulfilling not on regular basis.

OPPORTUNITY

Loyalty card customer will increase through proper communication.

Value added service like replacement guarantee, money refund, and price

guarantee.

Exclusive offers for loyalty card customer.

More combo offers in all categories to increase ABV.

Weekly & fortnightly offers for customer’s exp. Kids carnival, school contact

programme, etc.

THREAT

More and more convenient store is coming.

More price war from unorganized retail

LIMITATIONS OF THE RESEARCH:

A though the research was conducted in a way to ensure accurate results but certain errors

might have occurred due to some unavoidable reasons.

DATA COLLECTION

-Non-response by some of the respondents.

-Since the population is not homogenous, some biasness might have creped up.

-Many persons were reluctant in responding.

FOR EMPLOYEES

A thought of Risk of loosing their jobs, if gave any company information

Busy in Store operations Or with Customers

FOR CUSTOMERS

Insufficient time

Prejudice of taking the enumerators as some company’s employee.

Occupancy with Carry Bags or kids

Sharing their Addresses and Contact Numbers was a cumbersome issue for

people.

DATA ANALYSIS & INTERPRETATION:

All the collected data was analyzed and interpreted to get the conclusion. The

objective of analysis is to an organized integrated and meaning feel whole.

Occupation of the consumer.

Occupation of the consumer No. of Consumer

Business 60

Service 30

Housewife 20

Others 10

WAREHOUSE

MANAGEM

ENT

FINANCE SYSTEM STORE

OPERATION

TRANSFER MANAGEMENT

ANALYSIS AND PLANNING

PURCHASE ORDER

MANAGEMENT

PRICE AND COST MANAGEMENT

MERCHANDISE RECEIPTS

I

Interpretation:- The above graph shows that most consumers are belong to Business

group, and 30 consumers are servicemen rests of consumers are housewife and others

1. Income group of consumer .

Income Group No. Of Consumer

Less then Rs.5000 p.m. 5

More than Rs. 5000 & less than Rs. 10,000 P.M. 25

More than Rs. 10,000 & less than Rs. 15,000 P.M. 60

More than Rs. 15,000 P.M. 30

CHART-3.1

CHART-3.2

Interpretation:-

From the above histogram it is the clear that the sample size made from 4.16% are

from whose monthly income is less than 5000 Rs PM. 20.83% from more than 5000 but

less than 10000 Rs. 50% customer from more than 10000 but less than 15000 Rs. 25%

customer from whose monthly income is more then 15000

2. Information source of hypercity

Source of Information No. Of Customer

Print Media 70

Exibation & fair 5

Neighbor & Relative 30

Local Cable network 15

Interpretation:-

CHART-3.3

According to above histogram 58.33% customer knew about the spencer from print

media, 4.16% from fair, 25% from neighbor & relative & remaining 12.5% knew from

local cable network.

3. Frequency to visit to hypercity

Interpretation:- from the survey of 120 customers, major 50% consumer are visit to

spencer mall monthly. 25% weekly 20.83% after 2-3month & remaining 4.16%

customers are visit to spencer mall 2-3 time in a week.

Frequency to Visit No. Of Customer

2 to 3 time in a week 5

Weekly 30

Monthly 60

After 2 to 3 Month 25

CHART-3.4

4. Purchasing product Every Visit From hypercity

Response No of Customers

Yes 115

No 5

Interpretation:-most of the customer i.e. 95.83% customers are purchase something

every time when they visit to spencer.

CHART-3.5

5.Knoledge of Various Product of hypercity

Response No. of Customers

Yes 90

No 5

Only few 25

Interpretation:-from the survey of 120 customers, major chunk that is 75% consumer

knew, 21% consumer knew about only few, & 4% consumer are not know about various

product of spencer.

CHART-3.6

5. Product you most like to purchase from hypercity

roduct No of customer

clothes 55

Grossly product 20

Electronic product 15

Sports & toys 15

Footwear 10

Others 5

Interpretation:-from the above histogram 45.83% customers are most likely purchase

cloths, 16.66% customer are most likely to purchase to grossly product, & electronic as

well as sports and toy are purchase by 12.5% customer.

CHART-3.7

7.why you give preference to hypercity

Reason No of customer

Good services 50

Cost efficient 40

Availability of product 20

Easily available 10

Interpretation:-above chat 41.86% customer prefer spencer due to its good services,

33.37% due to cost efficient, 16.67% due to availability of every product under a roof &

remaining, 8.83% are prefer spencer due to easily available of required product

CHART-3.8

8.From which mall you prefer to purchase mostly ?

Location No of customer

Hypercity 30

Gaurav Tower 50

Cristal palm 10

GTC 10

Interpretation:- there are 4 mall situated in different area of Jaipur most of the

consumer i.e. 50% of the customer are purchase from gaurav tower,30% from

HYpaercity,10% from Cristal palm remaining 10% are purchasing from GTC

CHART-3.9

9. hyper give offer time-to-time YES/NOT (if YES than) in which offer

you prefer to purchase?

Offer No of customer

Off on print price 60

Buy one get one 40

Lottery coupon offer 10

Others 10

Interpretation:-From the survey,50% consumer prefer to purchase from spencer due

to off on print price, 33.33% due to buy one get one free & 8.33% due to lottery coupon

offer.

CHART-3.11

10. At time of purchase product is not available you would

Response No of customer

Wait for it 40

Go to another branch of

Spencer

60

Purchase from other Retail

mall

10

Purchase from local Market 10

Interpretation:- from the survey, 50% customer are go for another branch of spencer

when any product is not available at the time of purchase, 33.33 are wait for it, 8.33%

purchase from another retail mart,& 8.33% purchase from local market.

CHART-3.12

11. Price of product in hypercity are appropriate as compare to other

retail mart

Response No of customer

Yes 118

No 2

Interpretation:- From the survey, Most of the customers i.e. 98.33%customers are

think that price of product in spencer are appropriate as compare to other retail mart.

CHART-3.13

12. Say about the billing process of hypercity

Response No of customer

Attractive 80

Good 20

Average 15

Need to improvement 5

Interpretation:-Above chart show that 66.67% customers are say that billing process

of spencer is attractive, 16.67% say that good, 12.5% say that average and 4.16% say

that need of improvement.

CHART-3.14

FINDINGS

SUGGESTION

CONCLUSION

Appendix

Bibliography

FINDING:

It is the findings of survey that was done for the project that brings the whole crux of the project.

Average no of People are using the organize retail from months and they are willing

to come down.

Most of people are aware of the Spencer’s.

When it comes to the CSA (customer sale associate) service most of customer of

Spencer’s are not so much happy with their service quality.

Most of people like the private label product of Spencer’s that are due to quality and

price of product in compare to market.

According to customer perception the price of “fruit and vegetable and some FMCG”

the price is higher then local retailer and some competitors.

It is found in the survey that most of customers are suspect able to change their service provider given

better deal in terms of “Price” and “Value added service”.

CONCLUSION

The research has done on the study of view of consumers about hyper product

from the study. Some customer is not satisfied with the price of. Benefits. Thus this

study provides the overall view of consumer about Hyper’s product

In the Retail market Hyper’ has better image in consumers mind. Everyone

likes to shop here. Hyper’s providing fresh and good range of FMCG,

Garments, and general product.

In the Indian retail market many players like More, India Bulls,

Subhiksha, are here. Hyper’s make good brand name among this market.

After having tough competition in retail market Spencer’s product range and

display of the products is much better as compare to other retail store and if

they want to catch more customers then they have to work on promotion

activities and they have to provide more attractive offers to their loyalty card

customers. Employees are very friendly to customers. Spencer’s has very

good appearing shop. Customers are very interested to come in Spencer’s

due to its good service.

SUGGESTION

1. Packaging should be eco-friendly.

2. Delivery of Spencer products should be on time.

3. Servicing should be improved.

4. Proper inspection of all branches should be there.

5. Company should start free schemes and discount to customer.

6. Company should have to reduce price of some product etc.

7. There should be proper and continuous benchmarking, so the chances of price &

quality higher then others will be reduce.

8. CSA should be more attentive so then solve more query of customer and tell then

about the offers and scheme of different products.

9. PCM (price change master) should be update properly and system should show the

different promo.

10.Offer simple choice by memorandum weekly and informed by “e” and mobile [what

in store and what is new].

11.Call back to customer and tell them what we have done for their suggestion and

compliant, those have written their views/ compliant about the service.

12.Your view matter book should be properly filled by customers.

13.Their should proper coordination between marketing and operation person the

promos what they are giving, so their should be no confusion between customer and

operation person.

14.Offering more attractive Promotional schemes.

ANALYSIS :-

After see this bench marking we can say that “More” and “India Bulls” Price

Policy is high and Spencer’s and Reliance fresh pricing policy is low.

When I asked to the customer about Spencer’s quality and rate they said to me

Spencer’s provide us good quality on good rate Spencer’s quality is good in comparison

of other stores we are satisfy for Spencer’s.

When I asked to customers about Reliance Fresh they said to me it provide

merchandise on cheep rate but it don’t have the quality and about India Bulls and More

customer perception is that they said they provide merchandise on high rate. When we

get good quality at cheaper rate in Spencer’s why we should go in other stores.

So we can say that Spencer’s have good Image in customer mind in comparison

of other stores.

APPENDIX

Questionnaire

Customer Satisfaction at Hypercity in Jaipur

Name: ………………………… Address: ………………………..

Age: ………………………… Tel. No.: ………………………

Occupation……………………. …. Sex………………………..

A) Service b) Business c) Housewife

Q. 1 income group

a) Less than Rs. 5000 P.m.

b) More than Rs. 5000 & less than Rs. 10,000 P.M.

c) More than Rs. 10,000 & less than Rs. 15,000 P.M.

d) More than Rs. 15,000 P.M.

Q.2 How did you know about the product?

a) Print Media b) Exhibition of Fair

c) Dealers & Suppliers d) Local cable Network

Q. 3 what is Your Frequency it visit to hypercity mall?

a) 2-3 time in a week b) Weekly

c) Monthly d) After 2-3 Month

Q. 4 Do you Purchase something every time?

a) Yes b) No

Q. 5 Do you know about various product of hypercity?

a) Yes b) No

Q. 6 which product you like most of hypercity?

a) Cloths B) Grossly product

C) Electronic Product D) Sports & Toys

e) Footwear and Other

Q. 7 why do you prefer hypercity?

a)Good Services

b) Cost efficient

c) Availability of every product under a roof

d) Easily available

Q. 8 from which hypercity you prefer to Purchase mostly?

a) GTC b) Gaurav Tower

c) HYPERCITY d) cristal palm

Q. 9 what do you think about the services given by the employee?

a) Better b) Good

c) Average d) Not Satisfactory

Q. 10 Do the hypercity give various offer time to time? If yes/ then Which type offer

you prefer to purchase from Hypercity? (Yes/No)

a) Off on Print Price

b) Buy one get one free

c) Lottery Coupon offers

d) Others

Q.11 At the time of purchase if any product is not available you would-

a) Wait for it

b) Go for another branch of Spencer

c) Purchase from other retail mall

d) Go at local Market

Q.12 Are price of product in hypercity are appropriate as compare to other Retail

Mart?

a) Yes b) No

Q. 13 what do want to say about the Billing Process of hypercity?

a) Attractive b) Good

c) Average d) Needs Improvement

Q. 14 your suggestion

……………………………………

References

Web Sites and Search Engines

www.indiabiznews.com www.economywatch.com www.google.com www.hypercity.com http://www.rediff.com/ http://www.ibef.org/Newspapers

The Times Of India The Indian Express The Economic Times Financial Express Business Standard Business Line

Books and Magazines

Business World The Indian Dream Business & Economy