Retail Industry in India

To suggest measures for the development of Retail Industry In India. Methodology adopted for this report Is analytical, descriptive and comparative. Enabled the retail industry to perform on various parameters. During the literature review detailed study is firstly proposed about the meaning of retail and retail market. Then did a literature survey about the organized and unrecognized retail sector in India, the different players in the market and how they are performing. Then proceeded to study the scenario of Indian Retail Industry and the recent trends in retailing.

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After that analyzed the challenges and opportunities in Indian Retail Industry and finally summarized the project with some suggestions. ABSTRACT This project provides detailed information about the growth of retailing industry in India. It examines the growing awareness and brand consciousness among people across different socio-economic classes in India and how the urban and semi-urban retail markets are witnessing significant growth. It explores the role of the Government of India in the industry growth and the need for further reforms.

In India the vast middle class and its almost untapped retail industry are the key attractive forces for global retail giants wanting to enter into newer markets, which in urn will help the India Retail Industry to grow faster. The project includes growth of retail sector in India, strategies, strength and opportunities of retail stores, retail format in India, recent trends, and opportunities and challenges. This paper concludes with the likely impact of the entry of global players into the Indian retailing industry. It also highlights the challenges faced by the industry in near future. What is Retail?

Retailers are part of an integrated system called the supply chain. A retailer researchers goods or products in large quantities from manufacturers directly or through a wholesale, and then sells smaller quantities to the consumer for a profit. Retailing can be done in either fixed locations like stores or markets, door-to-door or by delivery. Retailing includes subordinated services, such as delivery. The term “retailer” is also applied where a service provider services the needs of a large number of individuals, such as a public.

This kind of market is very old, and countless such markets are still in operation around the whole world. II. In some parts of the world, the retail cuisines is still dominated by small family-run stores, but this market is increasingly being taken over by large retail chains. Structure of Indian Retail Sector In 2004, The High Court of Delhi defined the term retail ‘as a sale for final consumption in contrast to a sale for further sale or processing (I. E. Wholesale). A sale to the ultimate consumer. Thus, retailing can be said to be the interface between the producer and the individual consumer buying for personal consumption.

This excludes direct interface between the manufacturer and institutional buyers such as the government and other bulk customers. Retailing is the last link that connects the individual consumer with the manufacturing and distribution chain. A retailer is involved in the act of selling goods to the individual consumer at a margin of profit. Division of Retail Industry – Organized and Unrecognized Retailing The retail industry is mainly divided into: 1) Organized and 2) Unrecognized Retailing: Organized retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc.

These include the corporate-backed hypermarkets and retail chains, and also the privately owned large detail businesses like corporate backed Hyper markets, Retail Chains, Privately owned large retail businesses, Modern Retailing Format Stores. Unrecognized retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local Koran shops, owner manned general stores, pan/ ebbed shops, convenience stores, hand cart and pavement vendors, etc. The Indian retail sector is highly fragmented with 97 per cent of its business being run by the unrecognized retailers.

The organized retail however is at a very nascent stage. The sector is the largest source of employment after agriculture, and has deep integration into rural India generating more than 10 per cent of Indian’s GAP. More than 90% of the Indian Retail market is dominated by the unrecognized sector. In developed countries, the organized retail industry accounts for almost 80% of the total retail trade. In contrast, in India organized retail trade accounts for merely 5% of the total retail trade.

Unrecognized retail is expected to grow at 5% and reach a size of IIS$ 650 billion (76%), while organized retail is expected to grow at 25% and reach a size of IIS$ 200 billion by 2020 as per the sector profile by Federation of Indian Chambers of Commerce and Industry (FOCI). The organized retail segment in India is projected to be 9% of total retail market by 201 5 and 20% by 2020. Indian’s twin growth engines of economic development and demographic profile set it apart from other nations and present a compelling business case for global retailers looking to enter the market.

The Retail industry has been on a growth trajectory over the past few years. With the economy back on track, retailers are executing their expansion plans. The industry is expected to grow at a rate of 12% per annum for the next 5 years. Retailing companies are back to their expansion plans with the focus on Tier II and like Pun, Indore, Koch, etc. In their wake to tap the unsaturated potential in these markets. Rural retailing is now the focus for many retailers. It is observed that the rural regions saw consumption even during the economic slowdown.

Rural India accounts for 15th of the total consumption in India. Thus, most industry players do not want to be left out of the rural growth story and are devising strategies suited especially to the rural consumer. Corporate Initiatives in Rural Retailing l. TIC (E- Chapeau and Chapeau Sugar): TIC provides all materials directly from the producers thereby cutting down the middleman all together. II. HULL (SHASTA): Sells its products through women self-help groups who operate like a direct to home team of sales women in inaccessible areas where HI-Oil’s conventional sales system do not reach.

More than 99% retailer’s function in less than 500 square feet of shopping space. Global retail consultants ASK Technocrat have estimated that organized retailing in India is expected to touch RSI 35,000 core in the year 2005-06. The Indian retail sector is estimated at around RSI 900,000 core, of which the organized sector accounts for a mere 2 per cent indicating a huge potential market opportunity that is lying in the waiting for the consumer-savvy organized retailer.

Purchasing power of Indian urban consumer is growing and branded merchandise in categories like Apparels, Cosmetics, Shoes, Watches, Beverages, Food and even Jewelry, are slowly becoming lifestyle products that are widely accepted by the urban Indian consumer. Indian retailers need to advantage of this growth and aiming to grow, diversify and introduce new formats have to pay more attention to the brand building process. The emphasis here is on retail as a brand rather than retailers selling brands.

The focus should be on branding the retail business itself. In their preparation to face fierce competitive pressure, Indian retailers must come to recognize the value of building their own stores as brands to reinforce their marketing positioning, to communicate quality as well as value for money. Sustainable competitive advantage will be dependent on translating core values There is no doubt that the Indian retail scene is booming.

A number of large corporate houses like Data, Rajah, Partials, Goanna have already made their foray into this arena, with beauty and health stores, supermarkets, self-service music tortes, new age book stores, every-day-low-price stores, computers and peripherals stores, office equipment stores and home/building construction stores. Today the organized players have attacked every retail category. The Indian retail scene has witnessed too many players in too short a time, crowding several categories without looking at their core competencies, or having a well thought out branding strategy.