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RETAILING

INDUSTRY IN INDIA

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RETAILING

According to Kotler: Retailing includes all the activities

involved in selling goods or services to the final consumers for

personal, non business use. The Indian retail is dotted by traditionally market place

called bazaars or haats comprises of numerous small and

large shops, selling different or similar merchandise .

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INDUSTRY HISTORY

Traditionally retailing in India can be traced to The emergence of the neighborhood Kirana stores

catering to the convenience of the consumers

Era of government support for rural retail:

Indigenous franchise model of store chains run byKhadi & Village Industries Commission

1980s experienced slow change as India began toopen up economy.

Textiles sector with companies like Bombay Dyeing,Raymond's, S Kumar's and Grasim first saw theemergence of retail chains

Later Titan successfully created an organized retailingconcept and established a series of showrooms for its

premium watches

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The latter half of the 1990s saw a

fresh wave of entrants with a shiftfrom Manufactures to Pure Retailers.

For e.g. Food World, Subhiksha and

Nilgiris in food and FMCG; Planet M andMusic World in music; Crossword andFountainhead in books.

Post 1995 onwards saw an emergence

of shopping centers, mainly in urban areas, with facilities

like car parking targeted to provide a complete

destination experience for allsegments of society

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INDUSTRY IN PRESENT

The India Retail Industry is the largest among allthe industries, accounting for over 12 per cent of

the countrys GDP and around 8 per cent of the

employment. The Retail Industry in India has come

forth as one of the most dynamic and fast pacedindustries with several players entering the market.

But all of them have not yet tasted success

because of the heavy initial investments that are

required to break even with other companies andcompete with them. The India Retail Industry is

gradually inching its way towards becoming the

next boom industry.

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Types of Retail Sectors

Unorganized Retailing

Hawkers (Kirana)

Weekly Markets

Organized retailing

Convenient / Departmental stores

Factory outlets and discounts Market

Supermarkets Wholesalers market

Company and Franchises showroom

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sectors in Indian retail

Food

Books & Magazines

Fashion & Clothing

Personal Care

Optical ConsumerElectronics

Sport & Leisure

Footwear & Leather

Toys & Games

Jewellery & Watches

Furniture

Petrol

Home Ware

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Drivers of Retail change in India

1. Changing Income Profiles: Steady economic growthfuelled the increase in income in India. The average

middle class family's income rose by more than 20%

between 1999-2003.2. Diminishing difference between Rural and urban

India: Rural India accounts for over 75% of Indiapopulation and this in itself offers a tremendous

opportunity for generating volume driven growth.Tax benefit. In year 2002-03 LIC sold 50% of its

policies in rural India. Same BSNL also sold its 50%

connection in small towns .

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3. Changes in Consumption patterns:Occupational changes and expansion of media have

caused a significant change in the way the consumerlives and spends his money.

o The changes in income brought about changes in theaspirations and the spending patterns of the

consumers. the buying basket of the consumerchanged

4. The emergence of a young Earning India :Nearly 70% of the Indian population is below the age

of 34. taking advantages of employment opportunityin the booming service sector these young Indians areredefining service and consumption patterns

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Some of the Key Players in

Organized Retail

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Importance Largest and fastest growing sector in India.

Modern retailing forms one point stop for all shopping.

Consumer gets a large product variety of brands tochoose from one roof.

First it was a sellers market and now its changing tobuyers market.

By 2010 Indian retail sector would be generating 10million employment opportunities.

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Challenges to retail Development inIndia

Retail not being recognized as an industry in India.

The high costs of real estate.

Lack of Adequate infrastructure.

Multiple and complex taxation system.

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Size of the organized retail market(Rs Cr)

2001-02 2007 CAGR (%)(compound Annual growth

rate)

TOTAL 16,000 37,216 18

Food 1,800 7,473 33

Clothing 4,950 10,423 16

Cons.Durables 1,650 3,787 18

Books & Music 450 1,426 26

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Share of organized & unorganized retailwith comparison

85 15

81 19

55 45

40 60

36 64

30 70

20 80

3 97

1 99

0% 20% 40% 60% 80% 100%

USA

TAIWAN

MALASIA

THAILAND

BRAZIL

INDONESIA

CHINA

INDIA

PAKISTAN

ORGANISED

UNORGANISED

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Retail Trade- India, US and China

Trade($ bn) Employment(%) Shops(million)

Organized

Sectorshare (%)

India 180-394 7 12 2-3

China 360 12 2.7 20

US 3800 12.6-16 15.3 80

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Analysis of Growth

Organized retail growing at estimated 25% .

The Indian retail market, which is the fifth largestretail destination globally, has been ranked as the

most attractive emerging market for investment inthe retail sector by AT Kearney's eighth annualGlobal Retail Development Index (GRDI), in 2009.The share of retail trade in the country's grossdomestic product (GDP) was between 810 per centin 2007. It is currently around 12 per cent, and is

likely to reach 22 per cent by 2010. E.g.: Bharti has invested 60 Billion with the largest

retail Wal-Mart (last year).