Indian Retail Industry

EXECUTIVE SUMMARY sell is the operate that involves of merchandising goods or correctments immediately to end consumer for individualized, non air using up (Kotler, 2010). A sell merchant or sell broth is an assumeprise where they give away volume culturely from selling. Any firm selling its goods or services to the end consumers- whether it is manufacturer, wholesaler, or sell merchant- is said to be selling. It doesnt matter how the goods or services atomic chassis 18 s centenarian (may be by soul, with mail, teleph hotshot) or where (from a store, by the street or in the economic consumptionrs home).In the past, sellers secured customers loyalty by crack convenient kettle of fishs, sp ar or unique var. of goods, greater or break-dance services than competitors. sellers struggled in developed countries because of their satu roamd solid nutrientstuff site and forcing them to invest in developing countries like India, chinaw ar and so forth And I ndia has been be twenty percent rough complimentary securities pains for e trulyplaceseas sellers, according to AT Kearneys GRDI (2012). An Industrial summary on sell Industry primary(prenominal)ly concentrating on nourishment & food harvest-tide is d whizz in the in sure using Qualitative methods which takes fella digest, tracking gors & acquisitions and so forth nd Quantitative methods which take on equivalence among the companies and affinity with the US securities manufacturings. Certain limitation was faced eon searching for selective information besides its do sure it is from a reliable and trusted ancestry. 1 Chapter 1 INTRODUCTION 2 1. 1. Over belief sell is the process that involves of selling goods or services sharpenly to end consumer for nearbodyal, non task use. Present day consumers shop for goods and services at store retailers, non store retailers etc.tera precisely the beat out cognise retailer is the de beginmental store. Gen er in every(prenominal)y a retailer tend to buy goods or services in large quantities from manufacturers or meaningers hich may include a mid(prenominal)dleman (wholesaler) or may directly leverage from them and then sell those to the end user consumer as subatomic quantities or in individual items. sellers washstand be considered as the end of the append chain, because they ar final heart from which the consumer receives their desired goods or services. tho in the commercialiseers express of view retailing plays a major role in the oerall distribution strategy, which means that to attain an cost-effective supply chain attention retailer is the main source to assess the actual film in the foodstuffplace. about creative activity atomic number 82 retailers argon (as per R planeue)1 1. Wal-Mart (US) 2. hybridisation (France) 3. Metro (Ger umteen) 4. TESCO (UK) 5. Lidl Stiftury (Ger m whatsoever(prenominal) an(prenominal)) The manhood merchandise is found is ch thonicgoing persisting transformation. And especially when retail foodstuff is consider, lots of debut and cut throat contention is observed. If we consider in India the retail vault of heaven constitutes to 22% of GDP and provides 8% of employment. 2 Indian retail vault of heaven deserving is found to be US$ 350 gazillion and is increase at a rate of 15-20%3, it is estimated that the value of the retail sphere may increase up to US$ 450 by 2015.This mettlesome issue rate has attracted many of the immaterial investors to invest in India especially in food product and App bel as a transgress of FDI in multi dirt retail. 4 Top retailers in India atomic number 18 1. credit Fresh 2. Food carnival 1 2 www. m wizycontrol. com www. ibef. org 3 Pricewaterhousecooper explore 4 Deloitte inquiry 3 3. Spencers Mart 4. more than 5. Nilgiris The nonionic retail celestial sphere is found to be simply 5%, which shows a massive potential in retail field and estimated to in crease to 9% by 2015. portend 1. 1 Organized retail has vast scope of magnification Un form retail discernment Organized retail cleverness % 9% 20% 95% 91% 80% 2011-12 2015-16 2020-21 informant Indian retail food commercialise place sep 2011, Delioitte Aranca research 1. 2. ball-shaped Scenario In the put out part of 20th century, the beingness saw the emergence of the retail diligence, majorly the supermarket found to s overeign food product retail form. And with the posthumousst advancement in the engineering science like the bar write in code, RFID etc. al natural depressioned a store to manage thousands of items and just-in-time store replenishment. Computer operated logistic systems integrated with the stores assess the consumer pack in a individual electronic system has led to involution of the retail sector.But with the saturated topical anaesthetic market, high com require pushed the major retailers into the sphericalization though process. And at the ego uniform(prenominal) time many political scienceal relation in the mid 1990s make opened their economies inviting for unlike retail investors. However major issue faced is the sparing s deplorable cut down that has resulted due to the uncertainty in IT sector and an opposite(prenominal) financial spending. Moreover consumers themselves became very much to a greater extent charge conscious, sensitive to price hikes and conservative in their purchasing, particularly in the developed economies. 4 however though, Retail perseverance come abouts to be the worlds largest private industriousness with above US$ 8. jillion sales worldwide annually, this accounts rightly 10-15% of GDP for just about economies. 5 major(ip) employer in intimately of the economies ? ? ? ? 18% in US 14% in Poland 9% in China 17% in atomic number 63 deepgest retail countries in world (as per sales) ? ? ? ? ? US EU China UK India US$ 4. 7 trillion US$ 2. 9 trillion US$ 800 billion US$ 498 billion US$ 350 billon So from the above data it is evident that around developing countries like China and India made up to the top retailers in the world, which shows the huge potential for retail in these economies as major part of the retail is dominated by the nonunionised sector.Retailers around the Globe Table 1. 1 for adhere me drug 1 2 3 4 5 6 Country UK Spain France Germany Italy Switzerland % of internationalistic retailers turn over 55 51 49 47 45 42 5 www. Livemint. com 5 7 8 9 10 Austria UAE China Russia 42 41 40 39 Source CB Richard Ellis, 2010 The above table shows the niggardness of the multinational retailer in to their prudence, where UK topped the lean and India ranked 44 in the list (as a lot of clarifications for the international retailers argon inborn).Study in any case cogitate that developed economies atomic number 18 still the favourable markets for international retailers. 1. 3. Indian Scenario The retail assiduity in India is one of the nigh attracted market in the world. The major cerebrate for this is, the market is highly un nonionic. to the highest degree 90% of the retail market is under unstructured sector where the backing atomic number 18 run as kirana stores and family backupes. The create sector is scarce less than 10% which is very low compargond to other countries like US, UK etc which ar having 50%-70% organised sectors.Almost all global retailers ar looking turn out for an opport social unity to enter into the Indian market as they k right offs the emergence of the sector in India. however though food and market is having the maximum market dowery of round 69% in the retail market, its function in the organized market is only 3% which shows the retailers who atomic number 18 in the first place into food and mart sector hurl an advantage among other retailers. The research conducted by Technopak writinged that, in 2011 Indian food and grocery sector was estimated to be US D 325 billion that accounts for the 69% of the overall retail in India.This is standed to grow to USD 425 billion by the end of 2016 at a blend Annual product Rate of 5. 5%. In this, the market tract of the organized food and grocery was estimated at USD 9 billion which is expected to picture a offshoot to USD 34 billion by 2016 at a Compound Annual Growth Rate of 30%. 6 The playing field shows that in that location is an exponential gain in the Indian organized food and grocery sector in the b pointing few social classs. 1. 4. Major Retailers in Food and Grocery The major retailers in India ar trustingness Fresh, Spencer Mart, More, Nilgiris and double funfair.The various aspects of these retailers are explained in the following sections of this answer for. As the organized food sector is very slim, the market divides of these retailers are pretty tough to pick up. 6 http//www. indianretailer. com/ curb/sector-watch/food-and-grocery/Standing-against-each-other- 1489/ 6 1. 5. Research Objectives 1. To identify the market constituent and nature of argument of Indian retail intentness. 2. To apprehend the market surgical incisionation of the manufacturing. 3. To conduct PEST compend for the persistence. . To translate the difference amidst stand alone(predicate) and pudding stone variegation in the industry. 5. To contemplate the mergers and acquisitions carried out in the industry. 6. To study the international exposure of the industry. 7. To determine the technologies use in the industry. 8. To study the marketing initiatives carried out by the industry 9. To analyze the future prospects of the industry. 10. To Compare the Indian retail industry with US, UK and France. 7 Chapter 2 REVIEW OF literary works 8 2. 1. IntroductionThe size of Indian retail is about US $350 billion but it is highly unorganized. Indian retail is dominated by 15mn indie retailers consisting of kirana stores, chemists, footwear shops, apparel shops, paa n and bedi stalls, handcart and pavement vendors, which together makes up unorganized market. 7 But this placement leave alone non be the equivalent eternally specially with the fact that multinational companies are move to enter Indian market. Investors view India as an pleasant spend destination. India stands at fourth attr prompt location for FDI (Ernst & Young, 2012).In 2011, international retail ripening index (GRDI) express that time to enter Indian market is right off(Kearney,2011). Some major retailers in India (Kumar, 2011)? ? ? ? ? ? ? ? ? ? ? ? Food & grocery Big Bazaar, Food Bazaar Consumer electronics e-zone Entertainment roll Co. Books, Music and gifts Depot Fashion and accessories Electronic retailers clock wear retailers Pharmaceutical retailers Telecom retailers Jewellery retailers footgear retailers Catering service retailers 2. 2. Conditions in Retail IndustriesGlobally, A survey in small towns in atomic number 25 (Brennan,1991) showed that na rrow down services, offering better quality products and meliorate customer service were most successful strategies term sales & promotions and lowering prices were least successful. It was observed that consumers are more focussed on naked as a jaybird discounts compared to old ones. (Brennan, 2000). A survey conducted in south India showed some decision making styles of south Indian messs, mainly print conscious, high quality conscious, confuse by over choice style and re inceptional shopper style. (Canabal,M. E,2002).Until 2011 ,Indian key government denied FDI in multi target retail and even mavin brand retail was limited to 51% ownership. In November 2011, Indias central government 7 fear monitor international(Indian retail report Q1,2012) 9 announced retail reforms for both multi brand and champion brand retail. In December 2011, under push from opposition Indian government placed retail reforms on hold till it builded to a consensus. The reforms for angiotensin- converting enzyme-brand stores to enter Indian market but on a condition that 30% goods should be barter ford from local suppliers was okay by the regimen in January 2011.Organized retail is change magnitude at the rate of 45-50% per annum and increases its component part to 16% by 2012. On the other hand unorganized retail is increasing at the rate of 10%. Major increase faecal matter be seen in in-person care, jewellery, sports goods and beverages. 8 agree to A associates report, some of the benefits of multi-brand retail are ? ? ? Removal of intermediary Job creation No threat to kiranas India has been ranked as the most attractive nation for retail industry among 30 emerging markets. (Senjam Dwijorani, Consolidation phase in Indian retail industry).According to a Mc Kinsey & gild report titled The great Indian Bazaar organized retail comes of age in India. Organized retail is supposed to increase from 5% in 2008 to 14-18% by 2015. Private labels contribute to 10-12 % of organized retail industry and are growing very rapidly. Key players macrocosm west, Shoppers stop, Spencers, proximo sort out, belief and Bharti walmart. Highest insight is by Westside at 90% followed by reliance at 80% and pantaloons at 75%. Shoppers stop and spencers nominate 20 and 10% respectively.According to Deloittes report on Global causes of retailing 2013 , Retail beyond, the retail industry grows despite difficult economic condition. virtually of 250 retailers posted an increase in retail receipts with most of the companies experiencing declining sales. The top 250 discovered a rose-cheeked 3. 8 % composite net profit in 2011,matching the industries 2010 result. The average size of top 250 companies in 2011,as heedful by retail revenue topped US$17 billion. A crisil report shows the Indian retail market is most fragmented in the world and only 2% compromises of organized sector. This shows potential for crop is immense. ASA & Associates report, August 2012 10 Chapter 3 INDUSTRY summary 11 3. 1. securities industry Share and Nature of arguing The present-day(prenominal) retail segment contributes 22% of the expanses GDP and 8% of the lend employment. And more over India has emerged as the fifth most favourable destination for international retailers9. According to AT Kearneys GRDI (2012) India remains a high potential market with accelerated retail growth of 15-20% expected over the bordering atomic number 23 socio-economic classs. India retail sector values US$ 350 billion and is growing at a rate of 15-20%, as per Pricewaterhousecooper (PWC) research report.Mass grocery and apparel are the two most favoured segments for FDI in multi brand retail in India, according to the study conducted by Deloitte. The FDI inflow in bingle-brand retail concern during April 2000 to December 2012 stood at US$ 42. 7 zillion, as per the data released by Dept. of Industrial Policy and advancement (DIPP). A report (KPMG, 2010) indicates that the retail telephone line in India has not able to deliver the expected results, expect a few players. The growth of organized retail trade decreased from 35% in 2007-08 to 10% in 200-09.Food and Grocery segment has been dominated by retailers not organized till date, except a few players like Big Bazaar (Food bazaar), opinion ( reliance Fresh), RPG (Spencers), and AV Birla assembly (More). Organized retail is in continuous increase compared from past. Retail sight be classified in several(predicate) sectors much(prenominal) as Food & Grocery, Clothing, Durables goods, Shoes, Furniture, Services, Catering, Jewellery & Watches, Books, Music & Gifts, empathisey phones etc.. persona 3. 1 Grocery sales crosswise countries (2010) 18. 40% 12. 40% 11. 10% 10% 3% India Source IGD international 9 2% USA China Russia Brazil UK ww. ibef. org 12 The highest penetration of private label products is by Trent at 90%, followed by Reliance 80% and Pantaloons 75%, bountiful retailers suc h as Shoppers Stop and Spencers involve a penetration of 20% and 10%. 10 Figure 3. 2 Market Breakup by Revenue (2011) 17% 3% 6% 4% 10% 60% Food and Grocery garb & fashion Beauty & wellness Electronics Furniture & Furnishing others Source Indian retail market sep 2011, Delioitte Aranca research The Net Revenues of the top retailers in India Figure 3. 3 Retailer Food Bazaar Spencers Reliance Fresh More Nilgiris Source annual reports of the companies 010-11(Crs. ) 215. 1 98. 46 127. 67 163. 7 80. 49 2011-12(Crs. ) 298. 09 120. 62 210. 45 236. 8 97. 70 3. 2. Market Segmentation 3. 2. 1. Segment analysis The Indian economy is growing rapidly. An master(prenominal) contribution is made by the growing number of shop malls. shop malls became a centre of attraction or a hang-out place in metro cities. in that respect are development plans proposed one hundred fifty new malls in 2008. But what this does is we go away or ignore the traditional retail formats (pedlars, grocery stores an d tobacco 10 Consolidation phase in Indian Retail Industry, Senjam. 3 shops etc. ). They poke out to co-embody with the modern formats. Modern retail has helped companies to companies to increase use and hence the demand for their products on the market. For example, Indian consumers would commonly consume rice sold to the neighbouring Kiranas to witKolam for everyday use. With the launching of organized retail trade, it has been noted that the sale of Basmati rice increased by four times that he was a few forms back as a top quality, rice (Basmati) is now obtainable at approximately the same price as the normal price at local Kirana.Thus we domiciliate see the way a product is displayed, verbalise and contiguous and how he won the heart and the minds of consumers restores its sales. It utilisation continues to increase in the way we buttocks assign that the local market would go by a metamorphosis of a change. This means that non- union retail trade would suffer a se rious transposition due to the outdated technology, poor supply chain, wretched marketing etc. Thus, local stores would soon expire things of the past or limited unexpected last minute purchase. And it is also observed that avg. consumption of Indian consumer go away come down to 34% in CY2015 and in access up to 25% in CY2025.This indicates that, with gradual increase in income levels, Indian consumers are spending more on products of lifestyle or pimping the economies of lifestyle retail value. 11 Currently most favourite organized retail formats are ? Shopping Malls Malls are larger form of organized retail today. These are mainly located in metropolitan cities, close to urban periphery. The field of obtain centres varies from 60000 m? to 7, 00,000 m? and above. The approximation is to provide an ideal shopping experience that includes a mix of products, services and amusement all under one roof.Some examples are Inorbit mall, Ansal meat etc. Specialty stores These are the stores that focuses on limited market segments, specializing on particular products such as entertainment and leisure, gifts and so on. The most notable among these include channels such as Crossword, Planet M etc. Discounters As its name suggests, the shops or factory stores, offer discounts on MRP by selling in bulk to achieve economies of scale or bare stocks in season over. The family line includes various destructible goods/ non-perishable. Example Subhiksha. Department Store Stores ranging from 20000- vitamin D00 Ft? responding to the respective(a) needs of the consumers. It includes localized departments like habiliment, toys, home, groceries etc. the popular among these are Big Bazaar, D-Mart etc. Hypermarkets/Supermarkets Big self service outlets, with strong emphasis on Food & Grocery store and personal sales and designated as supermarkets. These can still be divided into mini supermarkets typically from 1000 to 2000 Ft? and large ? ? ? ? 11 McKinnsey Global In stitute 14 ? ? supermarkets from 3500 to 5000 Ft?. These stores now contribute to 30% of all Food & Grocery store in organized retail.More, Reliance saucily etc are some examples. Convenience stores These are comparatively low (400 2000 Ft? ) stores generally located near residential areas. They put up a limited cathode-ray oscilloscope of convenience high-sales of fear products in stock and are commonly open for long periods during the day, seven age a week. The prices are slightly high because of insurance premium convenience. MBO Points of sale multi brands, also known as category killers, offer several brands on a single product category. They are generally well in places of markets occupied and cities. 3. 3. Policy FrameworkSince liberalization several constitution measures cast been interpreted with regard to regulation and control, monetary policy, exportation and import, taxes, exchange and affair rate regulation, export promotion and incentives to high priori ty sectors. Food and plain industries has made an covenant with high priority a number of important releases and incentives. Some of the major policy changes are as follows 3. 3. 1. Regulation and Control According to the extant policy, FDI up to 100% allowed under the machine-driven route in food infrastructure (Food Park, refrigerating Chain / Storage).As for food retail FDI policy concerns do not permit foreign direct investment in the retail sector, with the exception of a single retail brand products. This policy is the same for all retail operations. FDI policy for the manufacture reserved for the SSI sector is the same for all items, so reserved and a separate dispensation for the items in the food processing sector is not intended. 3. 3. 2. Fiscal Policy and Taxes Broad fiscal policy changes have been introduced gradually. Excise & Import tariffs have been reduced substantially. Many processed foods are let off from excise duty.Custom tariffs were substantially reduced on whole shebang and equipment as well as tender materials and intermediates, especially for export end product. Corporate taxes were reduced, and in that respect is a mistake towards market related interest rates. in that respect are tax incentives for new manufacturing units for certain years, except in sectors such as Beer, wine, soda flavoured with concentrates, confectionery and chocolate, etc. Indian currency (rupee) is now fully convertible for authentic account and capital account convertibility in the unified exchange rate mechanism is foreseen in the overture years. 15Repatriation of profits is freely permitted in many industries, with certain exceptions, which is another requirement offset by dividend income from exports. 12 3. 3. 3. PEST ANALYSIS PEST analysis is concerned as the environmental influences on the business. The factors are Political, scotchal, well-disposed, and technological. 3. 3. 3. 1. Political Environment Political factors include governmen t policies, fiscal policy, labour laws, safety regulations, competitor regulations, political stability and consumer protection. That influence and limit various organizations and individuals in society.Legislation relating to the retail was damaged many years. Political factors include goods and services that the government asks to provide or provided. 3. 3. 3. 2. Economic Environment Economic factors include economic growth, interest rates, exchange rates and inflation rate. These factors have a significant impact on decision-making and business operations. give-and-take rates affect the costs of exports of goods and the supply and price of imported goods in the economy. The retail market consists of the acquire power of large number. So the bestow purchasing power is a function of current income, prices and availability of credit.Changes in economic conditions may affect the business or company. Economic forecasters Looking ahead to the next ecstasy and is potential to find its forecasts of rising costs, famines and up and down economic cycles. These changes in economic conditions provide new opportunities or threats in the market. 3. 3. 3. 3. Social Environment Social factors include income distribution, population growth rate, age, lifestyle changes, teaching and living conditions . Society that people grow in their beliefs, values and norms. People live in different parts of the country have different heathenish value, which mustiness be analyzed retail person or company.This will help you to understand the business strategy in order to meet the requirements of customers. cut is the social factor will also affect the business for retailers. 12 http//www. punebds. com/pf. asp 16 3. 3. 3. 4. Technological Environment Technological factors include technical aspects such as research and development activities, technology incentives and the rate of change of technological changes, new inventions and development, energy use and costs. They can deter mine barriers to entry, minimum efficient production and influence outsourcing decisions.Technological implementation can affect the cost, quality, and this leads to innovation. engineering science is extensively utilize in some of the areas such as ? ? ? ? ? ? ? ? Packing of the products Billing Mobile point of sale(POS) Digital signage Inventory management Customer service Price changes and auditing RFID and location tracking 3. 3. 4. PORTERS Five Forces door stay freshers Five Force model is to analyze the competition model, it helps to understand the nature of competition deep down the industry, and provides a good, simple but effective poser for the development and understanding of the competitive forces in the industry.Michael Porter created a framework, which identified tail fin forces which act to any increase or decrease the competitive forces in the industry. These five forces is ? ? ? ? ? Threat of new Entrants berth of suppliers Power of buyers Availability of sub stitutes Competitive rivalry 17 Figure 3. 4 3. 3. 4. 1. Threat of New Entrants The retail industry has seen a growth of the organized sector in recent years. Even though growth is not diversified, it was still significant enough to affect the unorganized retailers. This industry started ten years ago and has been declining number of independent retailers.If you walk done any mall, we name that most of them are chain stores and on that point exist only a hand full of independent shops. While barriers to the formment of trade is not insurmountable to overcome, the ability to take a leak favourable supply contracts, leases and be competitive, it becomes virtually im possible. Their vertical structure and centralized shopping gives retailers competitive advantage to independent dealers. 3. 3. 4. 2. Power of Suppliers In 1970, when Sears dominated the household appliance market, which set high standards for quality.Suppliers that did not meet these standards were omitted from Se ars line. In this way, retailers have time-tested to exploit kinships with suppliers. This can be attributed to the fact that in the retail industry, suppliers often have very particular power. Take the example of WalMart, which imposes strict controls on their suppliers. admit with a large retailer like WalMart can make or break a small supplier. 3. 3. 4. 3. Power of Buyers Individually, customers have very little bargain power with retail stores. The prices offered by the center-stores are usually negotiable.They come with a tag attached give tongue to fixed price. It warns the customer from the very entrance to the store, if you want discounted prices. s Very difficult to negotiate. , But as a whole, if customers require high quality products at competitive prices, it helps keep retailers honest. 18 3. 3. 4. 4. Availability of Substitutes There is no shortage such as in the retail sector. This is not a monopoly in the market. The inclination of an orbit in the retail secto r is not specialized in one good or service, but to deal with a wide range of products and services. This means that what one store offers, you will probably find it in a store.Therefore, innovation and product specialization are essential ingredients necessary to separately in the retail industry. Retailers offering products that are unique or have a clear absolute advantage over their competitors. 3. 3. 4. 5. Competitive Rivalry There is no market without competition, and there are no better ways than the existence of competitive forces in the market to improve the quality, price, supply chain management, inventory management, etc. Retailers always face stiff competition. The slow growth of the market for the retail market means that companies must fight each other for market share.More recently, they have tried to reduce the cut-throat price competition by offering frequent flyer points, membership and other special services to try to gain customer loyalty. Given the relatively w eak financial condition of unorganized retailers and physical space constraints on their expansion prospects of the sector itself is not able to meet the growing demand for retail. Therefore, organized retail, which now represents a small 4% of enumerate retail sector is likely to grow at a much hurried pace of 45-50% per annum and quadruple its share in total retail trade to 16% by 2011-12. 3. 4. Business DiversificationDiversification is a form of corporate strategy for a company. It seeks to increase profitability done greater sales volume obtained from new products and new markets. Diversification can occur either at the business unit level or at the corporate level. At the business unit level, it is most likely to poke out into a new segment of an industry that the business is already in. At the corporate level, it is generally via investing in a promising business exterior of the scope of the existing business unit. The different types of variegation that are discussed in this report are as follows 3. 4. 1. Standalone DiversificationSelf-contained and usually independently operating. They concentrate only on the specific category of products. Standalone diversification has large relationship with the firms current business. 19 3. 4. 2. tuck Diversification The companies markets new products or services that have no technological or commercial synergies with current products but that may appeal to new groups of customers. The conglomerate diversification has very little relationship with the firms current business. Therefore, the main reasons of adopting such a strategy are first to improve the profitability and the flexibility f the company, and second gear to get a better reply in capital markets as the company gets massiveger. Even if this strategy is very risky, it could also, if successful, provide increased growth and profitability. 3. 4. 3. future tense classify (Conglomerate) But while coevals like Bharti and Tata has teamed up with Wa l-Mart and Tesco in the wholesale business, Future Group has built its business by himself. dialogue over sourcing league with Lawson Inc. Japan ended without agreement is happening this year. Under the new legal regime, it could be more opportunities for future groups to join forces with international traders.Future Group has recently reorganized its retail assets simplification of business and bring greater clarity to investors for business, Biyani says, and sees further expansion, not least the food in the arm, which he draw as profitable. (And he adds Some of the high-margin businesses, where demand is not too high, that when concerns are greater food is good, profitable business .. This week, the Future Group has acquired evince Retail Services, which operates in Delhi supermarket chain Big Apple. Biyani also outlines its goals for the store chain Food Bazaar. Currently there are about 200 Food Bazaar stores. No.Maybe in five years, add another 150 to that number, he says. 3. 4. 4. Reliance Fresh (Conglomerate) Reliance Industries plans to merge all its retail units inwardly a single entity, which suggests he was not looking for a foreign partner in any of its businesses, a person with direct knowledge of the development said. The company started the process all the clubs eight independent retailers, such as clothing chain Reliance Trends and consumer electronics chain by Reliance Digital Reliance Fresh grocery chain, in a bid to remove defects and improve administrative cooperation and efficiency between different companies, people said.This will allow Reliance Fresh single retail entity by Reliance Retail, the groups holding company for retail sale. Reliance last Monday filed a petition in the Bombay High Court seeking consent for the scheme of arrangement of its several entities, including Reliance Retail, Reliance Fresh, 20 Reliance AutoZone format, car accessories, Reliance Trends, Reliance Foot marker footwear chains, consumer electronics cha in Media Reliance Digital, Reliance leisure, Reliance Gems and jewellery, and Reliance Replay Gaming. 3. 4. 5. Spencers (Conglomerate)Spencer Retail Ltd (Spencer) is one of the Indias multi-format retail chain. Established in 1996, Spencer is a group of RPG Enterprises, one of the leading conglomerates operating in India and subsidiaries Cesc Ltd. In 1989, RPG Spencer won, and in 2005 launched its retail brand in the Spencer. Consequently, it Spencer transmit to other retail formats starting Hyper Spencer, super late and daily formats. Currently Spencer food markets and food products, clothing and accessories, footwear products, home decor items and equipment and consumer durables. 3. 4. 6.More (Conglomerate) More is a group company Aditya Birla Retail Limited, a leading conglomerate in the retail industry with a clear focus on its vision to be a global company premiums. 3. 5. Mergers and Acquisitions 3. 5. 1. Reliance and BP (Merger) During the year 2010, BP and reliance industri es limited made the union in the oil and gas pedal business. 13 By announcing the partnership both the companies came to an understanding that BP takes 30% of partnership of 23 oil and gas production sharing contracts that which are through with(p) by reliance industries in India.This swan would help Indians in getting gas and will help to reduce the import cost include in gas. The same year reliance industries entered into partnership in us with an agreement of joint act with the companies Atlas Energy, pioneer Naturals Resources and Carrizo oil & gas by three different joint threaten agreements. 14 13 14 http//www. ril. com/ hypertext mark-up language/aboutus/major_milestones. html http//www. ril. com/html/aboutus/major_milestones. html 21 3. 5. 2. Bharti Wal-mart (Merger) In order to lead the retail stores in India, Walmart has begun talks with Bharti enterprises for forming a joint venture.Two companies has equal partnership in wholesale business in India, so they decided to continue their business relationship in retail business by requesting the government to make decision for allowing up to 51% foreign direct investment(FDI) in multi brand retail. 15 The aim of joint venture is to establish wholesale cash-and-carry stores and back-end supply chain management operations in line by victorious government guidelines. 3. 5. 3. Spencers India Limited (Acquisition) Spencers is one of the retail sector which sells food and non food FMCG products16.Spencers Retail is a part of the RPG Companies that deals with food, apparel, fashion, electronics, lifestyle products, music and books . More over it offers services like gift vouchers and light-headed loans. 17 Spencers has expanded its food retail chain by bringing food world that has been brought over by RPG group18 . The Company has filed an application with the honest High Court of Calcutta for merger of its wholly have subsidiary company Music World Retail Limited with the Company, effective from 1 Ja nuary 2012, which is pending commendation as of date19. 3. 6. International ExposureIn the year 2006-07 ,the size of food industry in India was established at around Rs 8,80,000 crores in that the food industry accounts for around 374000 crores. straight growth of Indian food processing industry is up to 13% per annum20. 3. 6. 1. Dairy Dairy firms are one of the main contributors of Indian food industry among various sectors. In 2006-07 the size was 198000 crores & it is estimated to be 366484 crores by 2015. The states of Gujarat, Tamil Nadu, Kerala, Karnataka, Punjab and Haryana have established many dairy co-operatives running successfully. Most of the packed milk segment is 15 16 http//www. bharti-walmart. n/Overview-CareerAtBhartiWalmart. aspx http//info. shine. com/company/Spencers-Retail/204. aspx 17 http//info. shine. com/company/Spencers-Retail/204. aspx 18 http//www. cesc. co. in/cesc/ entanglement/investor/ helpdesk/document/sub/Spencer%60s%20Retail_Annual%20Repo rt_201 1-12. pdf 19 http//www. cesc. co. in/cesc/web/investor/helpdesk/document/sub/Spencer%60s%20Retail_Annual%20Repo rt_2011-12. pdf 20 Cifti. org/Reports/Ficci_Technopak%2008. pdf 22 dominated by co-operatives it contributes about 70% of the total revenues. In the milk products India, the reports have given(p) that demand is growing faster than supply.The recent rise in milk prices have forced Indian government to Impose a ban on skimmed milk products and reduce Incentives for exports. Many products like Ghee, Curd, etc. has demand more and they are sold as unbranded in Indian market. As the health consciousness among people is increasing day by day ,the demand for milk is increasing in the market. Exports of milk from India to south east Asia countries have large(p) rapidly. The ice-cream industry though it is widespread is suffering from shortage of cold chain infrastructure and lack of big players in India. 3. 6. 2. Non-Alcoholic Beverages These are of two types namely ? change a nd Non-carbonated drinks Some of the hot beverages are tea and coffee. Almost Rs. 5000 crores was accounted by fruit juices and fruit found drinks. The annual growth rate would be 10-12% India is the biggest country to state tea in the world accounting for 28% of the total global production at 956 million kgs. Tea production in India is being more and more improving year by year whose swage itself is above Rs. 8000 crores. The growth has become 1. 2% per annum. India is the 4th largest exporter of tea in the world and it is also the fifth largest producer of coffee which is accounting up to 4% of total production in world.Almost everything produced is being exported. It came up to 75% of produced tea and coffee is exported21 The competitor for US food processing is Indian domestic industry. As it has the best climatic conditions it has got advantage to produce the rude goods and potential to cultivate the wide range of raw materials. some of the Indian companies have increased their market share by decreasing the prices for the products while import duties on food and ingredients have become relatively costly. The existing food laws will restrict the producers to use the ingredients, colors, flavors.Thus it has become the additional challenge to the US exporters enkindle in Indian market. 21 Food. export. org/resources/countryprofiledetail. cfm? itemnumber=1015 23 3. 7. Technologies used in retail industry Retail industry is one of the most growing industry in the world today with a market share of above 50% with organized sector having a share of 5% whereas unorganized sector has over 90% of share22. Now the factor is to know how to accommodate such share. moreover food & grocery alone takes around 62% of market share at bottom retail industry.Everyday thousands of thousands transaction are done in retail market let it be regarding food & grocery or may be some apparels or some clothing. But its really difficult to manage the details about all these. H ow to keep complete track of all the products? Earlier people used pen and paper techniques but will that suffice present days requirement. The answer to this doubt is a big No , it is not possible to implement such techniques today. At this part technology plays a vital role today. Storing the data in a proper manner so that whenever it is required can be fetched immediately without any delay. entropybase, Data warehousing, Data mining are some of the tools used nowadays for storing and retrieving data efficiently. Forecasting is used to reckon future demand, e-commerce used online order and purchasing, The next part discusses how hardly each of the technology has played important role in retail industry. ? Forecasting tools are used to predict the total demand of any product in the near future based on the present or past purchase made by consumers. their details are salve on a computer and based on that prediction is made how much will be actually required to suffice the requ irement.Database used to store details about a product how much is in the inventory, what is the amount that has been sold, who are the purchasers of such product, what is the buying frequency of the particular product etc. This is done using barcode scanners or RFID tags that is attached with the particular product. Barcode was the idea of two college students which actually came into effect on the late 1940s and early 1950s. Barcode is a code made of series of lines based on morse code and movie equipment. How it is read is by using light light and an oscilloscope23.RFID tags uses radio waves to identify things robotically at any time. it can either be active with their own means of sending signals or passive voice like using a reader to read the details. Tag may contain manufacturing date, lot number, and ensuant number. Use of Credit card, debit card to chip in for the products purchased can also be added to the technological practice session in retail industry. Using cell phones as a medium to intimidate the consumers about any new offers on any product. ? ? ? ? ? 22 23 www. cci. in www. barcode-printing. co. uk/history-of-barcodes. htm 24 ?Use of e-commerce has been the bottle sleep together of retail industry now. with the ease of ordering stuffs with a click of a button, paying after receiving the product and other facilities has really made life of humanity beings easy. Reliance Fresh, Spencers, Nilgiris, More, Big Bazaar and all uses such technologies. Food and grocery segment comprises mostly of all packed items having barcode on the backside through which its manufacturing date, end point date, price can be monitored. 3. 8. Marketing Initiatives There are a lot of retail companies coming up nowadays but how to introduce it to public.The best way is advertisement in scathe of tv ads, hoardings, newspapers, etc. This section discuss about how exactly few retail companies has used advertising a tool to introduce their product to public. For this project five major food and grocery companies in India, viz. Reliance Fresh, Spencers, More, Nilgiris and Big Bazaar are considered. 3. 8. 1. Reliance fresh Reliance fresh with its slender combination of red and green colour logotypetype reflects a green environment. Their major advertising types are ? ? ? ? ? Print or broadcast ads through newspapers.Packaging through carry bags. Directories like in telephone directories. audio recording materials like announcements through radio. Point-of-purchase displays as in when customers reach billing point they can see special offers or promotions. Other ways of promoting are direct marketing through e-mails, messages and personal selling through face to face interaction with customers. 3. 8. 2. Spencer mart Spencer follows same pattern as reliance like packaging, print ads, Audio materials, TV ads but one addition to it is every week a new print ad can be seen in local stores or website. 5 3. 8. 3. More More comes with orangish colour logo having tag line for you or hamesha extra. More advertises through newspapers, online advertisement, packaging, etc. They farm by offering discounts and promoting traditional and local specialities during brave season. 3. 8. 4. Nilgiris Niligiris started in 1905 has a logo of green colour . It is a supermarket chain in south India. The major selling product in Nilgiris is fresh vegetables with hygienic and superior qualities. advertize is very essential for promoting of products that led to the growth of Nilgiris.Direct marketing, personal selling, store promotion, sales promotion are other ways of advertising the product. 3. 8. 5. Big Bazaar Big Bazaars logo comes in orangeness and blue colour with tagline as Is se sasta aur accha kahin nahi. Some of its marketing initiatives taken arePromotional offers? saal ke sabse saste 3 din. ? Hafte ka sabse sasta din(Wednesday bazaar). ? metamorphose offers Junk swap offer. ? Future card(3% discount). ? Shakti card. ? Adverti sement(print ad,radio,newspaper). ? second by M. S. Dhoni 3. 9. Future OutlookRetail industry in India, as we know, is one of the fast growing industry which accounts for 22% of its GDP at present24. The sector consist of only 5% of organized market and the rest under unorganized which shows that there is a wide hazard for large scale companies in the Indian market (Singh, 2012). The proposal of FDI was considered for taking up the growth of the Indian retail market during early 1990s. It was in the year 1991, the Government has opened up the retail market to FDI through a series of steps which are (Singh 2012) 24 http//www. ibef. org/industry/retail-india. spx 26 Table 3. 1 1995 ? World Trade of Organizations General Agreement on Trade in Services, which includes both Wholesale and Retailing services, came into effect. FDI in cash-and-carry (wholesale) with 100% rights allowed under the Government approval route. FDI in cash-and-carry (wholesale) brought under the automatic rout e. Up to 51% investment in single-brand retail outlet permitted. 100% FDI in single brand retail and 51 % in Multi-brand retail. 1997 ? 2006 ? ? 2012 ? In the year 2007, the Indian retail market stood at Rs 1. 33 billion witnessing a growth of 10. %. In this, organized sector shared only 5. 9%, but itself showed a growth of 42. 7%. It was expected to maintain a much faster growth in the next 3 years (IMAGES F&R Research, 2009). As part of the action taken by the Government in 2006 regarding FDI, Wal-Mart has made an agreement with Bharti Enterprises to establish a joint venture, Bharti Wal-Mart private limited, for wholesale cash-and-carry and back-end supply chain management operations in India in the year 200725. This was a decision taken by Wal-Mart as the FDI policies were not favourable for retailing.The foreign retailers were still waiting for the Government to revamp their policies on FDI in retailing. Even though there was a fast growth in organized sector, its penetration i n the market was only 8-9% during 2009 which is very low as compared with countries like US, France etc with 60-80% penetration level26. During these days, the retail market looked gloomy and experts reported this will last for the next few months which will reduce the growth in organized retail sector. In 2011, the market stood at USD 396 billion. It was clear that acceptance of FDI in retail became essential for another growth to attain27.Also, according to A T Kearneys Global Retail Development Index (GRDI) 2012, India is the fifth most attracted market for International retailers and also the market is expected to show a growth of 15-20% over the next five years. 25 26 http//corporate. walmart. com/our-story/locations/india http//www. investindia. gov. in/? q=retailing-sector 27 http//www. deloitte. com/assets/Dcom-India/Local%20Assets/Documents/Indian_Retail_Market. pdf 27 Growth in organized sector can be achieved through retaining and attracting more customers in the future.A lso the retailers ability to manage supply chain efficiently, increase the operational efficiency through economies of scale, serviceability and optimal space management are certain other factors that can achieve growth in organized sector (Karthikeyan, 2010). Also the use of various tools like, GIS (Geographic Information System ) which helps the retailers to capture, store, manipulate, analyze, manage and present all types of geographical data which is highly used for locating and shifting of their stores to specific areas are considered (Mishra, 2009).The International retailers updates on the Indian status for FDI which allows them to enter the market with less constraints and more freedom. As the Government had not supported the foreign retailers negotiation in cost of the investment, they are still in doubt to establish in the market. For the organized sector to grow further, there should be some foreign investment and that which can show the growth of 15-20% in the next fiv e years. 3. 10. Comparison of Indian retail industry with US, UK and France.As the study shows that the top 5 global retailers are from US, UK and France, comparison study of Indian retail industry with these countries are done on the buttocks of the size of the industry, the major retailers within the country and the nature of competition within the country. Among the retailers above, its clear that US is the top on the basis of the size of the industry followed by France and UK. But the most attracted retail market among the above countries is India. The comparison given at a lower place explains more about the growth of these markets between 2007 and 2011. . 10. 1. Size of Industry The size of the retail industries of India (Singh, 2012) (Assistant Professor, Global Institute of Management & Technology, Noida) 28, USA29, UK30 and France31 in the year 2007 and 2011 are shown in the figure below In the French scenario, the value for the year 2010 was mentioned as USD 349. 65 bill ion. From the source it is established that, the growth was following a raise annual growth 28 29 http//www. dnb. co. in/IndianRetailIndustry/overview. asp http//www. slideshare. net/hitaishi9/retail-assignment, http//www. lideshare. net/hitaishi9/retailassignment 30 http//www. prospectsnet. com/cms/ShowPage/Home_page/Industry_insights/Retail/overview/p egiLLL, http//raceforopportunity. bitc. org. uk/sites/default/files/kcfinder/files/RaceforOpportunity/Retail%20Sector. p df 31 http//industryreviewstore. blogspot. in/2012/04/future-of-retailing-in-france-to-2016. html 28 rate of 4. 5% from 2006-2010. Hence, the value of the industry in 2007 is calculated as USD 304. 55 billion32. Figure 3. 5 4000 3500 3000 2500 2000 1500 1000 500 0 India US UK France 2007 2011The above figure shows the growth of the retail industries of the mentioned countries between 2007 and 2011. The growth rate is more for India and France than UK and US. The retail markets in UK and US are almost in a saturat ion state whereas the Indian retail market which is mostly unorganized has a wide range of opportunity for the modern retailers. The global retailers will be certainly looking transport to enter into Indian market as its organized sector is yet to grow. 32 http//www. slideshare. net/Allystephen/retailin-france-2011kh 29 3. 10. 2.Major Retailers, Their Market Shares and Nature of Competition The top 5 retailers in the four countries are given below and their market shares are shown in their respective regions33 Figure 3. 6 Wal-Mart 6% Metro Group Aditya Birla 6% 6% Future Group 54% RETAILERS IN INDIA Reliance Retail 28% The study shows that Future Group is the market leader in Indian retail industry with a market share of 54%. Followed by the challenger, Reliance Retail has a share of 28%. The next three retailers have almost equal shares which show that there is a tight competition within the followers.Figure 3. 7 RETAILERS IN USA 11% 11% 11% 52% Wal-Mart Kroger Target 15% Walgre ens Costco 33 http//www. planetretail. net/Presentations/grocery-2012-web. pdf 30 In USA, the retail industry is lead by Wal-Mart with a market share of 52% followed by four other retailers Kroger, Target, Walgreens and Costco with respective market shares of 15% for Kroger and 11% each for the rest of them. This shows that there is a tight competition within the four companies. The Indian and US retail industries are having almost same nature of competition. Figure 3. 8 RETAILERS IN UK 0% 15% 37% Tesco Sainsbury 19% 19% Walmart Morrisons Co-operative Group The retail industry in UK has different combinations of market shares among the companies. The chart shows that none of them is having more than 50% of the market share. The market leader is Tesco with 37% market share followed by Sainsbury and Walmart with 19% each. Morrisons is only 4% butt the two companies which shows that there is a strong competition between all the retailers in UK. Figure 3. 9 RETAILERS IN FRANCE 14% 17 % 28% point of intersection Leclerc Casino 18% 23% ITM Auchan 31Study shows that there exists a similar competition within the companies in France as in UK. Even though Carrefour is having the higher market share of 28% than the other retailers, Leclerc which holds the second position with a market share of 23% is not far behind. The rest of the companies have a competition within themselves as they have market shares between 14% and 18%. 32 Chapter 4 CONCLUSION 33 The report analysed in detail, the retail industry in India. The research initially started with the assembling of data about the Indian retail industry as a whole, and then moved onto global scenario of retail industries.Also, issues regarding the foreign direct investment(FDI) in the retail sector is covered. The key players currently operating in the retail industry and the bottlenecks that the retail industry is face in India are also analysed. Based on the findings, the future outlook of the Indian retail industry is mentioned in the report. 4. 1. Major Findings 1) The Retail sector in India is split up into two, the organised and the unorganised. 2) In terms of value the size of the retail sector in India is $350 billion. The organised sector contributes about 5%of the total trade. ) The retail sector in India contributes 10% to the everlasting(a) Domestic Product and 8% to the employment of the country. 4) In terms of growth the FMCG retail sector is the windy growing unit. 5) The foreign retail giants were initially certified from making investments in India. But now FDI is permitted 51% for multi brand retailing and 100%for single brand retailing. Again they can enter the markets through franchises. The report concludes that, retail industry in India has a very bright future prospect as it is undergoing through a transaction phase.It is expected to enrich the Indian economy in terms of Income and employment. The retail industry in India has come forth as one of the major dynamic and f ast paced industries with several players debut the market. From analysis & other reports and surveys it is quite clear that Indian retail players are now all set and ready to triumph over the organised retail sector. The Indian retail industry is now on a verge to experience speed actions and competitions, allowing the consumers to get the best deals out of it. 34 Chapter 5 REFERENCES 35REFERENCES 1. www. moneycontrol. com 2. www. ibef. org 3. Pricewaterhousecooper research 4. Deloitte research 5. www. Livemint. com 6. http//www. indianretailer. com/article/sector-watch/food-and-grocery/Standingagainst-each-other-1489/ 7. Business monitor international(Indian retail report Q1,2012) 8. ASA & Associates report, August 2012 9. http//www. punebds. com/pf. asp 10. http//www. managementparadise. com/forums/principles-management-p-o-m/208682pest-analysis-retail-industry. html 11. http//encyclopedia. thefreedictionary. com/PEST+analysis 12.