RETAILING INDUSTRY IN INDIA

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 .

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 by Khadi & Village Industries Commission

1980s experienced slow change as India began to open up economy.

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

Later Titan successfully created an organized retailing concept and established a series of showrooms for its premium watches

The latter half of the 1990s saw a fresh wave of entrants with a shift from Manufactures to Pure Retailers.

For e.g. Food World, Subhiksha and Nilgiris in food and FMCG; Planet M and Music World in music; Crossword and Fountainhead 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 all segments of society

INDUSTRY IN PRESENT

The India Retail Industry is the largest among all the industries, accounting for over 12 per cent of the country’s 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 paced industries with several players entering the market. But all of them have not yet tasted success because of the heavy initial investments that are required to break even with other companies and compete with them. The India Retail Industry is gradually inching its way towards becoming the next boom industry.

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

sectors in Indian retail

Food       

Books & Magazines

Fashion & Clothing  

Personal Care

Optical Consumer Electronics  

Sport & Leisure

Footwear & Leather 

Toys & Games

Jewellery & Watches

Furniture 

Petrol        

Home Ware

Drivers of Retail change in India

1. Changing Income Profiles: Steady economic growth fuelled 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 India population 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 .

3. Changes in Consumption patterns: Occupational changes and expansion of media have caused a significant change in the way the consumer lives and spends his money.

o The changes in income brought about changes in the aspirations and the spending patterns of the consumers. the buying basket of the consumer changed

4. The emergence of a young Earning India : Nearly 70% of the Indian population is below the age of 34. taking advantages of employment opportunity in the booming service sector these young Indians are redefining service and consumption patterns

Some of the Key Players in Organized Retail

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 to choose from one roof.

First it was a sellers market and now its changing to buyers market.

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

Challenges to retail Development in India

Retail not being recognized as an industry in India.

The high costs of real estate.

Lack of Adequate infrastructure.

Multiple and complex taxation system.

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

Share of organized & unorganized retail with 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

Retail Trade- India, US and China

 Trade ($ bn)

Employment (%)

Shops (million)

Organized Sector

share (%)

India 180-394 7 12 2-3

China 360 12 2.7 20

US 3800 12.6-16 15.3 80

Analysis of Growth

Organized retail growing at estimated 25% . 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. The share of retail trade in the country's gross domestic product (GDP) was between 8–10 per cent in 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).