apparel retailing: challenges and prospects in india

By

DEPARTMENT OF COMMERCE

UNIVERSITY

LUCKNOW

2013

OF LUCKNOW

Doctor Of Philosophy IN

COMMERCE

Under the Supervision of

Prof. Somesh Kumar Shukla

THESIS

SUBMITTED TO THE UNIVERSITY OF LUCKNOW

FOR THE DEGREE OF

APPAREL RETAILING: CHALLENGESAND PROSPECTS IN INDIA

With Special Reference to Lucknow Division

M.Com., Ph.D., D.Lit.

SAUKAT ANSARI

i

Prof. S.K. Shukla Department of Commerce

University of Lucknow

Lucknow

CERTIFICATE

Certified that Mr.Saukat Ansari has completed the thesis titled

“APPAREL RETAILING: CHALLENGES AND PROSPECTS

IN INDIA-WITH SPECIAL REFERENCE TO LUCKNOW

DIVISION” for the award of Ph.D. degree in Commerce at

University of Lucknow, Lucknow under my supervision. To the best

of my knowledge and belief the thesis under reference is based on

original research work done by Mr.Saukat Ansari. He fulfills the

conditions laid down in relevant ordinances.

(Prof. S. K. Shukla)

Supervisor

ii

PREFACE

It was great experience writing this thesis. I got an opportunity

through this work to conduct a comprehensive study of the subject

that is still in evolutionary phase in the country in all the respects.

Going by the contribution of retail in the GDP of the country, it is the

single biggest source of employment and income for the people of

India.

The business of apparel retail in India has seen significant changes in

the last few years. We have seen the emergence of new formats and

application of global concepts and constructs albeit with

modifications to suit the Indian environment. It not only provides the

Indian consumers a wide choice, but also represents a very large

employment opportunity for people with diverse skill sets.

Despite the presence of the basic requirements for the growth of the

retail industry in India, it faces substantial hurdles that will retard and

inhibit its growth in future if not addressed sincerely. One of the key

impediments is the partial permission of FDI in MBOs. This has

largely resulted in limited capital investments in supply chain

infrastructure, which is a key for the development and growth of

apparel retailing and has also constrained access to world class retail

practices. Lack of adequate infrastructure and relatively high cost of

real estate are the other impediments to the growth of retailing. While

the industry and the government is trying to remove many of these

hurdles, some of roadblocks like lack of training required to fashion

retailers and setting up a body to keep a close watch on fast changing

iii

fashion trends still a concern and may continue to affect the smooth

growth of fashion industry-if it is not taken seriously.

The mindset of the retailers especially those involved in organized

part of retail needs to understand the role of customers that will be

helpful in the development of the business. Customers are confronted

umpteen numbers of alternatives in front of them. Sensing the

importance of matter at hand, it was taken by me as a subject of study

in the present thesis.

The study is focusing on apparel retailers’ perception about

challenges and prospects in the industry. Subject like apparel retailing

is broad in scope and nature. For the sake simplicity and readers

‘convenience, thesis has been developed chapter wise. There are eight

chapters. First chapter deals with introduction of apparel retailing.

Second chapter is concerned with retail formats. Content of third

chapter is related with emerging trends in apparel retailing. Fourth

chapter deals with challenges and prospects in apparel retailing. Fifth

chapter is concerned with analytical study. Chapter seven is related

with bibliography. And finally chapter eight deals with appendices.

As a researcher, I hope that the present work shall prove to be highly

effective one for an in-depth study of the subject which is yet to get

an industry status in India.

In the present research, I find utter lack of words to express my

indebtedness to my supervisor Prof. Somesh Kumar Shukla,

Department of Commerce, University of Lucknow, Lucknow whose

continuous guidance and help encouraged me a lot in completing the

study in time. Further, I am thankful to the Almighty for keeping me

iv

healthier and happier which play a decisive role in any assignment a

person undertakes and completes. I am thankful to all the faculty

members of Department of Commerce, University of Lucknow,

Lucknow for giving me inputs and suggestions to commence the

thesis in first instance; access to departmental library, Central Library

(Tagore Library), Gyanodaya, library of IIM, Lucknow, Giri Institute

of Development Studies, Lucknow, great place to learn. The help of

non-teaching members at the Department of Commerce at the

University too deserves my thankfulness.

At the end, I cannot forget the blessings of my parents and assistance

from my friends for constantly motivating me to culminate the hard

works into a thesis.

Happy and thoughtful reading ahead.

Date: (SAUKAT ANSARI)

v

CONTENTS

Page No.

Certificate i

Preface ii

List of Tables xiv

List of Figures xvi

Glossary of Terms and Abbreviations xviii

1. Introduction 1-52

1.1 Apparel

1.1.1 Features of Apparel

1.1.2 Functions of Apparel

1.2 Retailing

1.2.1 Retail and Retailing

1.2.2 Place of Retailing in a Distribution Channel

1.2.3 Organized and Unorganized Retailing

1.2.4 Significance of Retail Industry

1.2.5 Characteristics of Retailing

1.2.6 Activities Performed by Retailers

1.2.7 Challenges in Retail Business

1.2.8 Evolution of Retail in India

1.3 Apparel Retailers

1.3.1 Departmental Stores in the Apparel Category

1.3.2 Apparel Retailing in India

1.3.3 Indian Apparel Retail Scenario

vi

1.3.4 Characteristics of Apparel Retail Sector

1.3.5 Classification of Apparel

1.3.6 Key Menswear Brands

1.4 Lucknow Division

1.4.1 Lucknow District

1.4.2 Sitapur District

1.4.3 Lakhimpur Kheri District

1.4.4 Raebareli District

1.4.5 Unnao District

1.4.6 Hardoi District

1.5 Literature Review

1.6 Purpose of the Study

1.6.1 Objectives

1.6.2 Hypothesis

1.6.3 Limitations of the Study

1.7 Research Methodology

1.7.1 Research Level

1.7.2 Approach to Research

1.7.3Data Collection

1.7.4 Primary Data Techniques

1.7.5 Secondary Data and Material Collection

1.7.6 Sampling Unit

2. Retail Formats and Retailers 53-79

2.1 The Evolution of Retail Formats

2.2 Unorganized Retail Formats

vii

2.2.1 Mom and Pop Stores

2.2.2 Street Vendors

2.2.3 Kiosks

2.3 Modern Retail Formats

2.4 Classification of Retailers

2.4.1 Legal Forms

2.4.2 Operational Structure

2.4.3 Range of Merchandise

2.4.4 Degree of Services

2.4.5 Pricing Policy

2.4.6 Location

2.4.7 Size of Outlet

2.4.8 Based on Customer Contact

2.5 Types of Retailers Based on Merchandise and Pricing

2.5.1 Departmental Stores

2.5.2 Specialty Stores

2.5.3 Discount Stores

2.5.4 Super Markets, Superstores and Hypermarkets

2.6 Types of Retailers Based on Operational Structure

2.6.1 Independent Traders

2.6.2 Multiple or Retail Chain Stores

2.6.3 Co-operative Societies

2.6.4 Concessionaire

2.6.5 Franchising

2.7 Non-Store Retailing

viii

2.7.1 Mail Order

2.7.2 Mail Order Catalogues

2.7.3 Direct Response Advertising

2.7.4 Direct Mail

2.7.5 Direct Selling

2.7.6 Door-to-Door Trading

2.7.7 Mobile Shops

2.7.8 Markets (Haats)

2.7.9 Automatic Vending

2.7.10 Electronic Retailing

2.7.11 Retailing through Television

2.7.12 Retailing through Internet

3. Emerging Trends in Apparel Retailing 80-133

3.1 Influence of Fashion

3.1.1 India’s Fast-Growing Apparel Market

3.1.2 Increase in Disposable Income

3.1.3 New Occasions

3.1.4 Growth in Women’s Segment

3.1.5 Fashion Increasing a Form of Self- expression

3.1.6 Further Urbanization and the Comparative Youth

of India’s Population

3.1.7 Continued Rise of Organized Retail

3.1.8 Shape the Category

3.1.9 Focus on Inventory and Markdown Management

3.1.10 Take a Segmented View of the Market

ix

3.2 The Changing Face of Fashion Industry

3.2.1 Emergence of Mall Culture

3.2.2 Boutiques

3.2.3 Advent of Brands

3.2.4 Fashion on the Ramp

3.2.5 Beauty Pageants

3.2.6 Budding Designers

3.3 The Rising Mall Culture

3.3.1 Impulse Buying at Malls

3.3.2 Factors Affecting the Success of Malls

3.4 Application of Information Technology (IT) in Apparel

Retailing

3.4.1 Areas where it will have Most Impact

3.4.2 Inventory Control

3.4.3 Point of Sales (POS)

3.4.4 Sales Analysis

3.4.5 Planning and Forecasting

3.4.6 Collaborative Planning, Forecasting and

Replenishment (CPFR)

3.4.7 Other Areas of Development

3.5 Essential Requirement of an Information System

3.5.1 Be Simple for Clerks to Operate

3.5.2 Monitor Sales and Inventory Levels Daily

3.5.3 Monthly

3.5.4 Ease of Creation of New or Computer

x

Recommended Purchase Orders

3.5.5 Electronic Data Interchange (EDI)

3.5.6 Comprehensive Information Receiving

3.6 Enterprise Resource Planning (ERP)

3.7 New Trends in IT Applications in Retailing

3.7.1 Web Enabled System

3.7.2 Data Mining Tools

3.7.3 New LAN/WAN Tools and Strategies

3.7.4 Interactive Kiosks

3.7.5 Self-Scanning for Faster Processing

3.8 The Need for Product Identification

3.9 Radio Frequency Identification (RFID)

3.10 E-Commerce or E-Tailing

3.11 Prevailing Trends in Indian Readymade Garment Industry

3.11.1 Overview-Indian Apparel Market

3.11.2 Indian Fashion Retail Poised for Big Times

3.12 Entry Options for Foreign Players Prior to FDI Policy

3.12.1 Franchise Agreements

3.12.2 Cash and Carry Wholesale Trading

3.12.3 Strategic Licensing Agreements

3.12.4 Manufacturing and Wholly Owned Subsidiaries

3.13 FDI Policy in India

3.13.1 FDI Policy with Regard to Retailing in India

3.13.2 Prospected Changes in FDI Policy for Retail

Sector

xi

3.14 Single and Multi-Brand Retailing

3.14.1 FDI in Single-Brand Retail

3.14.2 FDI in Multi-Brand Retail

4. Challenges and Prospects in Apparel Retailing 134-183

4.1 Challenges to Retail Development in India

4.1.1 Retail in India-Getting Organized to Drive Growth

4.1.2 Market Overview

4.1.3 Market Segments

4.2 Investment Opportunities in the Retail Sector

4.2.1 Reasons Why Retail is Booming?

4.2.2 Reasons Why Indian Organized Retail is on the

Brink of Revolution?

4.2.3 Disturbing Trends

4.3 Focus on India: How Competitive is its Textile and

Clothing Industry?

4.3.1 SWOT Analysis for India

4.3.2 Investment in Textile Machinery

4.3.3 Competitive Position of Pakistan

4.3.4 Competitive Position of Bangladesh and Sri Lanka

4.4 Production of Fibres

4.5 Indian Retail Reforms

4.5.1 Indian Retail Reforms on Hold

4.5.2 Single-Brand Retail Reforms Approved

4.5.3 Social Impact and Controversy with Retail

Reforms

xii

4.5.4 Controversy over Indian Retail Reforms

4.5.5 Opposition to Retail Reforms

4.5.6 Support for Retail Reforms

4.5.7 Farmer Groups

4.5.8 Economists and Entrepreneurs

4.5.9 Chief Ministers of Indian States

4.5.10 Current Supermarkets

5. Analytical Study 184-233

5.1 Sample Size

5.2 Observations, Findings and Interpretations

5.2.1 Types of Retailers

5.2.2 Amount invested initially?

5.2.3 Dou you deal in?

5.2.4 Do you deal in branded apparel?

5.2.5 Do you face competition from?

5.2.6 How do your competitors affect you?

5.2.7 What do you think about your employees?

5.2.8 Do you have the problems because of location?

5.2.9 If yes, what kinds of problems?

5.2.10What do you think about foreign players/

Companies?

5.2.11 What prospects do you perceive in apparel

retailing?

5.2.12 Is high consuming class helping retailing growth?

5.2.13 If yes, who are your main customers?

xiii

5.2.14 What age groups do often shop from your outlets?

5.2.15 What role does fashion play in apparel retailing?

5.2.16 What do you perceive about Mall Culture?

6. Conclusions and Suggestions 234-245

7. Bibliography 246-250

8. Appendices 251-253

8.1 Questionnaire Used in the Survey

***

xiv

LIST OF TABLES

Table No. Title Page No.

1.1 Key Menswear Brands 26

3.1 Apparel is the most profitable segment of the

Indian retail market today 86

4.1 Major textile production clusters in India 141

5.1 No. of Respondents in Districts 184

5.2 Types of Retailers 186

5.3 Amount invested initially? 189

5.4 Dou you deal in? 192

5.5 Do you deal in branded apparel? 195

5.6 Do you face competition from? 198

5.7 How do your competitors affect you? 201

5.8 What do you think about your employees? 204

5.9 Do you have the problems because of location? 207

5.10 If yes, what kinds of problems? 210

5.11 What do you think about foreign players/

companies? 213

5.12 What prospects do you perceive in apparel

retailing? 217

5.13 Is high consuming class helping retailing growth? 220

5.14 If yes, who are your main customers? 223

xv

5.15 What age groups do often shop from your

outlets? 226

5.16 What role does fashion play in apparel retailing? 229

5.17 What do you perceive about Mall Culture? 232

***

xvi

LIST OF FIGURES

Figure No. Title Page No.

1.1 Typical Marketing Channels 4

1.2 Organized and Unorganized Retailing 5

1.3 Activities of Retailers 8

1.4 Evolution of Retail in India 14

1.5 Classification of Apparel 25

2.1 Forces Affecting Modern Retail Formats 57

2.2 Classification of Retailers based on Legal Form 58

2.3 Classification of Retailers based on Operational

Structure 59

2.4 Classification of Retailers based on Range of

Merchandise 59

2.5 Classification of Retailers based on Degree of

Services 60

2.6 Classification of Retailers based on Pricing Policy 61

2.7 Classification of Retailers based on Size of Outlet 62

4.1 Key Segments of the Textile Industry 139

5.1 Types of Retailers 187

5.2 Amount invested initially? 190

xvii

5.3 Dou you deal in? 193

5.4 Do you deal in branded apparel? 196

5.5 Do you face competition from? 199

5.6 How do your competitors affect you? 202

5.7 What do you think about your employees? 205

5.8 Do you have the problems because of location? 208

5.9 If yes, what kinds of problems? 211

5.10 What do you think about foreign players/

companies? 214

5.11 What prospects do you perceive in apparel

retailing? 218

5.12 Is high consuming class helping retailing growth? 221

5.13 If yes, who are your main customers? 224

5.14 What age groups do often shop from your outlets? 227

5.15 What role does fashion play in apparel retailing? 230

5.16 What do you perceive about Mall Culture? 233

***

xviii

GLOSSARY OF TERMS AND ABBREVIATIONS

ATM Asynchronous Transfer Mode

ATM Automatic Teller Machine

BPO Business Process Outsourcing

CAGR Compound Annual Growth Rate

CIFA Consortium of Indian Farmers Association

CII Confederation of Indian Industry

CPRF Collaborative Planning, Forecasting and Replenishment

DIPP Department of Industrial Policy and Promotion

ECR Efficient Customer Responce

EDI Electronic Data Interchange

EDLP Every Day Low Price

ERR Enterprise Resource Planning

EU European Union

FDI Foreign Direct Investment

FEMA Foreign Exchange Management Act

FIPB Foreign Investment Promotion Board

FPSs Fair Price Shops

GDP Gross Domestic Product

GRDI Global Retail Development Index

IBEF Indian Brand Equity Fund

IT Information Technology

ITMF International Textile Manufacturers Federation

LAN Local Area Network

LSM Local Store Marketing

xix

MBOs Multi Brand Outlets

PDS Public Distribution System

PO Purchase Order

POS Point of Sale

PSS Portable Shopping System

QR Quick Response

RBI Reserve Bank of India

RMDs Ready Made Garments

RFID Radio Frequency Identification

SIA Secretariat for Industrial Assistance

SKNL S.Kumars Nationwide Limited

TMC Technology Mission on Cotton

TUFS Technology Upgradation Fund Scheme

UPC Universal Product Code

VAT Value Added Tax

WAN Wide Area Network

***

Chapter-1

INTRODUCTION

1

1.1 Apparel

Apparel means clothing, especially outerwear; garments and attire.

Apparel is a term that refers to a covering for the human body that is

worn. The working of clothing is exclusively a human characteristic

and is a feature of nearly all human societies. The amount and type of

clothing worn depends on physical, social and geographical

considerations.1

1.1.1 Features of Apparel

Physically, clothing serves many purposes; it can serve as protection

from the elements, can enhance safety during hazardous activities

such as hiking and cooking. It protects human from rough surfaces by

providing a barrier between the skin and the environment. Clothes can

protect humans from insect bites. Clothes can regulate temperature in

the cold or heat. Further, it can provide a hygienic barrier, keeping

toxins away from the body and limiting the transmission of germs,

clothing also provides protection from harmful ultra violet radiation.

1.1.2 Functions of Apparel

The primary function of clothing is to improve the comfort of the

wearer. In hot climates, clothing provides protection from sunburn or

wind damage, while in cold climates its thermal insulation properties

are generally more important. Shelter usually reduces the functional

need for clothing.

Clothing performs a range of social and cultural functions, such as

individual, occupational and sexual differentiation, and social status.

2

In many societies, norms about clothing reflect standards of modesty,

religion, gender, and social status. Clothing may also function as a

form of adornment and an expression of personal taste or style.

Humans have shown extreme inventiveness in devising clothing

solutions to environmental hazards. Some examples include: space

suits, armor, diving suits, swim suits, beekeeper gear, and other

protective clothing.

The wearing of clothes also has social implications. They are worn to

cover those parts of the body which social norms require to be

covered, and act as a form of adornment, as well as other social

purposes.

In most cultures, gender differentiation of clothing is considered

appropriate for men and women. The differences are in styles, colours

and fabrics.

1.2 Retailing

Retailing is the final connection in the marketing channel that brings

goods from manufacturers to consumers. In other words, retailing is

the combination of activities involved in selling or renting consumer

goods and services directly to ultimate consumers for their personal

and household use. In addition to selling retailing includes different

and diverse activities like buying, advertising, data processing and

maintaining inventory.

Retailing includes all the activities involved in selling goods or

services directly to finals consumers for their personal, non-business

3

use. Any organization that does this selling-whether a manufacturer,

wholesaler, on retailer-is doing retailing. It does not matter how the

goods or services are sold (by person, mail, telephone, or vending

machine) or where they are sold (in a store, on the street, or in the

consumer’ home). On the other hand, a retailer or retail store is any

business enterprise whose sales volume comes primarily from

retailing.

1.2.1. Retail and Retailing

The word ‘retail’ is derived from the French word ‘retaillier’, which

means ‘to cut a piece off’ or ‘to break bulk’. Retail is any business

that directs it marketing efforts towards satisfying the final consumer

based upon the organization of selling goods and services as means of

distribution.

The term ‘retailing’ is derived from the old French word ‘retailer’

meaning ‘a piece of’ or ‘to cut up.’ This can be applied to the

functions carried out by the retailer-acquiring whole stock of goods

which they divide into smaller amounts which are sold to individual

consumers. Retailing can be referred to all activities involved in

marketing and distribution of goods and service.

1.2.2 Place of Retailing in a Distribution Channel

When you buy a product, you rarely buy it directly from the

manufacturer. Most products of the goods and service do not sell

their products directly to end or final users. Between you (the final

user) and the manufacturers are a number of intermediaries. These

4

intermediaries constitute a distribution channel or marketing channel.

Some of the most common marketing channels are:

(1) (2) (3)

Fig.1.1 Typical Marketing Channels

1.2.3 Organized and Unorganized Retailing

Indian retail industry is divided into two sectors – organized and

unorganized.

Organized retail sector refers to the sectors undertaken by licensed

retailers, that is, those who are registered for tax on moveable

commodities at times of sales under VAT system. At present the

name of the tax is commerce tax. These include the corporate retail

formats of the exclusive brand outlets, hypermarkets, departmental

stores and shopping malls.

Manufacturer Manufacturer Manufacturer

Wholesaler

Retailer

Retailer

Consumer Consumer Consumer

Fe

efb

ac

k

5

Unorganized retailing on the other hand, refers to the traditional

formats of low cost retailing, for example, hand cart and pavement

vendors, the local kirana shops, owner-manned general stores,

paan/beedi shops, convenience stores, hardware shop at the corner of

your street selling everything from bathroom fittings to paints and

small construction tools; or slightly more organized medical store and

a host of other small retail businesses in apparel, electronics, etc.

Retailing

Unorganised Retailing

Kirana Shops

Convenience Stores

Corporate Backed Hypermarket

Paan/Beedi Shops

Privately Owned Large Retail Businesses

Hand Cart & Pavement Vendors

Owner Manned General Stores

Retail Chains

Organised Retailing

Fig.1.2Organized and Unorganized Retailing

1.2.4 Significance of Retail Industry

Consumer money drives the economy, and retail is where consumers

spend that money. Boutiques, restaurants, discount superstores, mail-

order companies and e-tailers-these establishments where consumers

spend their hard-earned money. When goods are put in the hands or

shopping bags of consumers, retailers realize revenue-and so do the

wholesalers, distributors, and manufacturers that make up the rest of

the consumer goods distribution chain. In addition, retail transactions

6

serve as a means for collecting sales taxes, which support public

services of all kinds.

Retails goods are traditionally divided into durable goods, such as

furniture, cars, and large appliances, which are expected to last at

least five years and non-durable goods, which include food, clothing,

and other categories far too numerous to mention but which

eventually form the bulk of the stuff you see on make shift tables at

garage sales.

Retail industry provides immense opportunities to entrepreneurs and

workforce as sales people and clerks, the industry has also

opportunities for people interested in determining what goods will be

sold, getting these goods to the right place at the right time, and

managing the operations, finance, and administration of retail

companies.

Retailing is the dynamic industry-constantly changing due to shift in

the needs of the consumers and the growth of technology. Retail

formats and companies that were unknown three decades ago are now

major forces in the economy. Therefore, the challenges for retail

manager the world over are increasing-they must take decision raging

from setting the price of a bag of rice to setting up multimillion dollar

stores in malls. Selecting target markets, determining what

merchandise and services to offer, negotiating with suppliers, training

sales people - these are just a few of the many functions that retail

manager has to perform on a perpetual basis.

7

1.2.5 Characteristics of Retailing

Retailing can be distinguished in various ways from other businesses

such as manufacturing. Retailing differs from manufacturing in the

following ways:

• There is direct end-user interaction in retailing.

• It is the only point in the value chain to provide a platform for

promotions.

• Sales of the retail level are generally in smaller unit sizes.

• Location is a critical factor in retail business.

• In most retail businesses, services are as important as core

products.

• There are a large number of retail units compared to other

members of the value chain. This occurs primarily to meet the

requirements of geographical coverage and population density.

1.2.6 Activities Performed by Retailers

Retailers undertake various business activities and perform functions

that add value to the offerings they make to their target segments.

Retailers provide convenient location, stock, and appropriate mix of

merchandise in suitable packages in accordance with the needs and

wants of customers.

The four major activities carried out by retailers are: arranging

assortment, breaking bulk, holding stock and providing services.

The retailer industry in India is largely unorgani

predominantly consists of small, independent, own

Retailing is India

and constitutes 13% of the GDP. There are around 5 million retail

outlets in India

kiosks (tea stalls, snack

Food sales constitute a high proportion of the retail sales.

Modern retail formats are showing robust growth as several retail

chains have established a base in metropolita

South India, and are spreading all over India at a rapid pace.

However, space and rentals are proving to be the biggest constraints

to the development of large formats in metropolitan cities since

retailers are aiming at prime lo

In urban India, families are experiencing growth in income but dearth

of time. More and more women are taking up corporate jobs, which is

adding to the family's income and leading to better lifestyles. Rising

8

Fig.1.3 Activities of Retailers

The retailer industry in India is largely unorgani

minantly consists of small, independent, owner-

Retailing is India's largest industry in terms of contribution to

constitutes 13% of the GDP. There are around 5 million retail

outlets in India.2 There are also an unaccounted number of

kiosks (tea stalls, snack centres , etc.) and pushcarts / mobile vendors.



chains have established a base in metropolitan cities, especially in




retailers are aiming at prime location.




The retailer industry in India is largely unorganized and

-managed shops.

try in terms of contribution to GDP

constitutes 13% of the GDP. There are around 5 million retail

There are also an unaccounted number of low cost

etc.) and pushcarts / mobile vendors.



n cities, especially in







9

incomes has led to an increased demand for better quality products

while lack of time had led to a demand for convenience and services.

The demand for frozen, instant, ready-to-cook, ready-to-eat food has

been on rise, especially in the metropolitan and large cities in India.

There is also a strong trend in favour of one stop shops like super-

markets and department stores.

The Mc Kinsey Report 2010 predicts that FDI will help the retail

business to grow to US $ 460-470 billion (Rs.21811.633 billion-

22285.802 billion) by 2010. There has been a strong resistance to

Foreign Direct Investment (DFI) in retailing from small traders who

fear that foreign companies would take away their business, lead to

the closure of many small trading businesses, and result in large-scale

un-employment. Therefore, government has discouraged FDI in the

retail sector. At present, foreign retailers can enter the retailing sector

only through restricted modes.

1.2.4 Challenges in Retail Business

To become a truly flourishing industry, retailing needs to cross the

following hurdles:

• Automatic approval is not allowed for foreign investment in

retail.

• Regulations restricting real estate purchases, and cumbersome

local laws.

• Taxation which favours small retail businesses.

• Lack of trained work force.

10

• Absence of developed supply chain and integrated IT

management.

• Low skill level for retailing management.

• Intrinsic complexity of retailing - rapid price changes, constant

threat of product obsolescence and low margins.

1.2.5 Evolution of Retail in India

While barter would be considered to be the oldest from of retail trade,

since Independence, retail in India has evolved to support the unique

needs of our country given its size and complexity. Haats, Mandis

and Melas have always been a part of the Indian landscape. They still

continue to be present in most parts of the country and from an

essential part of life and trade in various areas.

The PDS or the Public Distribution System would easily emerge as

the single largest has its origin in the ‘retaining’ system introduced by

the British during the World War II. The system was started in 1939

in Bombay and subsequently extended to other cities and towns. By

the year 1946, as many as 771 cities/towns were covered. The system

was abolished post war; however, on attaining Independence, India

was forced to reintroduce it in the face of renewed inflationary

pressure in the economy.

The Green Revolution and food self-sufficiency brought about a new

dimension in the food grains management. The focus was on fair

procurement price for farmers to insulate them from market

anomalies, buffer stocking, and control of market prices and public

distribution of essential commodities. Food Corporation of India was

11

established in 1965, to function as an autonomous organization,

working on commercial lines, to undertake purchase, storage,

movement, transport, distribution and sale of food grains and other

food stuff.

In 1984, Government of India created the Ministry of Food and Civil

Supplies with two departments namely Department of Food and

Department of Civil Supplies; the letter bring in charge of PDS.

The PDS as is understood today is a means for distribution of

essential commodities to a large number of people through a network

of Fair Price Shops (FPS’s) on a recurring basis. The commodities

are as follows.

• Wheat

• Rice

• Sugar

• Kerosene

PDS evolved as a major instrument of the government’s economic

policy for ensuring availability of food grains to the public at

affordable prices as well as for enhancing the food security for the

poor. It is an important constituent of the strategy for poverty

eradication and is intended to serve as a safety net for the poor whose

number is more than 330 million and are nutritionally at risk. PDS

with a network of about 4.78lakh Fair Price Shops (FPS) is perhaps

the largest distribution network of its type in the world.3 PDS is a

crucial part of life in many parts of India. PDS is operated under the

joint responsibility of the Central and the State Government. The

12

Central Government has the responsibility for procurement, storage,

transportation and bulk allocation of food grains, etc. The

responsibility for distributing the same to the consumers through the

network of FPSs rests with the State Governments. The operational

responsibilities including allocation within the State, identification of

families below poverty line, issue of ration cards, supervision and

monitoring the functioning of FPS’s rests with the State

Governments.4

The Khadi &Village Industries (KVIC) was also set up post

Independence. Today there are more than 7,050 KVIC stores across

the country.5

The cooperative movement in India owes its origin to agriculture and

allied sectors. Towards the end of the19th century, the problems of

rural indebtedness and the consequent conditions of farmers created

an environment for the chit funds and cooperative societies. The

farmers generally found the cooperative movement an attractive

mechanism for pooling the meagre resources for solving common

problems relating to credit, supplies of inputs and marketing of

agricultural produce. The experience gained in the working of

cooperatives led to the enactment of Cooperative Credit Societies

Act, 1904. Subsequently more comprehensive legislation called the

Cooperative Societies Act was enacted. This Act, inter alia, provided

for the creation of the post of registrar of cooperative societies and

registration of cooperative societies for various purposes and audit.

13

The co-operative movement in India is amongst the largest in the

world, with strong links across the country’s vast geographical

expanses and varied cultural traditions. The co-operative sector plays

a crucial role in agro-processing, fertilizer and cash crop production

in the country. In fact, operations of dairy co-operatives have

propelled India to attain the top position in milk production in the

world. Additionally, edible oil marketed through co-operatives and

handloom co-operatives are being recognized around the world now

for their efficiency and social empowerment.6

The National Cooperative Consumers’ Federation of India Limited

NCCF) is the apex federation of the consumer cooperatives in the

country. NCCF was set on 16 October, 1965 and is administered

under the Multi State Cooperative Societies Act, 2002. The present

membership of the NCCF is 136 comprising of Primary Cooperative

Stores. Wholesale Societies, State level Consumer Cooperative

Federations, National Cooperative Development Corporation and the

Government of India. The commercial operations of the NCCF are

handled through its headquarters at New Delhi and 34 branches/sub-

branches located in the State Capitals and other important procuring

centers in different parts of the country.

In the past decade the Indian market place has transformed

dramatically. However, from the 1950’s to the 80’s investments in

various industries was limited due to low purchasing power in the

hands of the consumer and the government’s policies favoring of the

small scale sector. Initial steps towards liberalization were taken in

the period of 1985-90. It was at this time that many restrictions on

14

private companies were lifted, and in the 1990’sthe Indian economy

slowly progressed from being state led to becoming “market

friendly/market oriented”.

While independent retail stores like Vivek’s and Nalli’s have existed

in India for a long time, the first attempts at organized retailing were

noticed in the textiles sector. One of the pioneers in this field was

Raymond’s, which set up stores to retail fabric. It also developed a

dealer network to retail its fabric. These dealers sold a mix of fabrics

of various textile companies. Other textile manufacturers who also

set up their own retail chains were Reliance-which set up Vimal

showrooms and Garden Silk Mills with Garden Vareli. It was but

natural that with the growth of textile retail, readymade branded

apparel could not be far behind and the next wave of organized retail

in India saw the likes of Madura Garments, Arvind Mills, etc set up

showrooms for branded menswear. With the success of the branded

menswear store the New Age Departmental Store arrived in India in

the early nineties.

Fig.1.4 Evolution of Retail in India

15

This was in a sense the beginning of a new era for retail in India. The

fact that post liberalization the economy had opened up and a new

large middle class with spending power had emerged, helped shape

this sector. The vast middle class market demanded value for money

products. The emergence of the modern Indian housewife, who

managed her home and work led to a demand for more products, a

better shopping ambience, convenience and one stop shopping. This

has fuelled the growth of departmental stores, super markets, and

other specialty stores. The concept of retail as entertainment came to

India with the advent of malls. The development of malls is now

visible not only in the major metros but also in the other parts/other

districts of the country.

1.3 Apparel Retailers

Numerous clothing shops are to be found in Indian cities and towns,

especially in shopping centres and markets. Industry experts estimate

the total apparel market in India to be to the tune of Rs. 48,000 -

50,000 crore. Of this, branded apparel is only to the extent of Rs.

9000-10,000 crore.7

Overall, analysts expect the market to grow at 10% to 15% per

annum. The market is over crowed with small and major players.

There are mixes of traditional and modern stores. Traditional outlets

are family-owned business units, generally small in size and cramped,

with little emphasis on alluring displays, and advertising depends on

word-of-mouth or only on their strong customer relationship. They

basically stock a limited range of unbranded or local and popular

16

items. These sets of retailers depend on local wholesalers or traders

from manufacturing centers such as Ludhiana, Surat, Ahmedabad,

Kanchipuram and Lucknow for specific kind of clothing. Retailers

usually position their stores on the basis of pricing, quality, and

variety of merchandise and extend various services to their customers

such as credit, home delivery, selection of products at home, tailoring

facility, alteration, returns, and adjustments.

Retailers prefer to attend to their regular and loyal customers

themselves rather than letting the salespeople to attend them. A large

number of such retailers are located in the central business districts or

main markets of the cities, and only a limited number of independent

retailers own massive retail units with designer decor and impassive

layout, known as 'showroom'.

These outlets deal in unstitched or ready-to-wear or both kinds of

offerings. With time, few of the leading independent retail stores from

the unorganized sector have established themselves as successful

retail chains such as Nalli, Kumarans from Chennai, and Bombay

Selection, Meena Bazar from Delhi, Sant Footwear from Ludhiana,

and Delco and Metro from Delhi.

Small townships and social areas of India have a large numbers of

retail stores selling clothes, basically unstitched stuff for the entire

family. These outlets are very small in size, have provisions for

customer to sit inside the shop with retailers and select the

merchandise. The traditional retail set up has been distinctively

classified on account of occasion-specific dressing (formal, casual,

and party/wedding), sex (menswear and women's wear) etc. Because

17

of their rock-bottom prices, which are much lower than prices of

branded products, they attract a large number of customers.

In contrast, modern clothing stores are auspicious with attractive

window displays. Most of the manufacturing companies in order to

achieve maximum level of retail penetration to drive bargain, are

using all possible retails formats in the organized sector such as

franchise, retail chain company- owned outlet, etc.

Apparel has identified various types of retail formats within the

organized retail sector such as retail chain, franchise, company owned

stores and department store etc. In the branched clothing segment,

leading company are going for exclusive show-room with trendy and

at ambience to enhance the shopping experience of their shoppers; for

example, Raymonds has 263 outlets, Madura Coats has 100 stores

while Grasim has 106 stores.8

In apparel retailing, a retailer has two choices: either create his own

brand or sell other brands. Own brand definitely offers higher margins

over non-store brands. Margins in apparel retailing covered anywhere

between 40% and 50%. Independent retailers usually prefer to sell

multiple brands rather than specific brand.

1.3.1 Departmental Stores in the Apparel Category

For many foreign and private brands, department stores offer the ideal

retail format for apparel product category. Given the relatively high

prices of leading brands, traditional retailers are reluctant to stock

premium goods. Until now department stores have been few and far

18

between in India. But department store chains are now growing,

reflecting the fast pace of modernization in the Indian retailing

industry as a whole.

Prior to economic reforms that began in 1991, department stores did

not seem a viable business in India because of the relative lack of

branded consumer goods available in the market. While a few cutlets

that called themselves department stores did exist, these were

nowhere close to international standards.

Customer patronizing department stores in India are predominantly

from upper-middle and high-income classes since such stores mainly

stock premium brands. To cater to their customers' growing appetite

to foreign brands most department stores stock a range of these.

Indeed, because of their late development in India, department stores

are still considered by most Indians as exclusive shopping outlets that

stock premium, high quality and fashionable products.

1.3.2 Apparel Retailing in India

A new focus on the apparel retail sector has attracted attention in

recent days. Top exporters have introduced their own brands and are

aggressively positioning themselves within segments of the domestic

markets. The rising importance of brand segments in the domestic

market combined with the pressure of competition is blurring the

boundaries between exports and domestic production in countries

with large home markets, such as India. With the changing lifestyle,

organized retail is playing a key role in structuring the Indian

19

domestic market, reinforced in particular by rising incomes and

growing purchasing power among consumers in rapidly growing

sectors of the economy such as information technology and Business

Process Outsourcing (BPO).

Retail sector in India is witnessing a huge exercise as traditional

markets make way for new formats such as departmental stores,

hypermarkets, supermarkets and specialty stores. The branded apparel

market represents the largest source of growth. The men’s branded

apparel market is growing at a rate of 21.8% and branded women

apparel segments represents 35% of the total branded apparel market

and is growing at an incredible 23% annually.9

Leading domestic retailers are becoming more firmly entrenched,

increasing their scale of operations and stabilizing their scale of

operations and stabilizing their logistics and technology initiatives. A

few significant foreign players have been selling their branded

apparel in India for number of years. But, now, just like their India

counterparts, global apparel brands are setting up their own apparel

outlets, instead of just selling through departmental stores. Though

local retailers generally enjoy higher margins, they won’t be able to

keep global retailers at bay for long because of international

experience, buying power, IT systems and cash flow to tolerate lower

profits. Presence of these brands will make the Indian consumer

become more aware of the international fashion and lifestyle trends

leading to a move –up of the industry in the value chain.

20

1.3.3 Indian Apparel Retail Scenario

In its market research report, Indian Retail Sector – An Outlook

[2005-2010] RNCOS (market research consulting company)

estimated the Indian apparel retail industry generated revenue of $2.0

billion(Rs.89.863 billion) in 2004 with a growth rate of 8.2% during

2000-04. As a result, this industry in India is second largest in the

world after china. The Indian apparel retail industry varies within

even short distances as the designs of the outfits are based on the

regions fashion trends.

According to Global Retail Development Index (GRDI) 2013 India is

positioned as the leading destination for retail investment. This

followed from the saturation in western retail markets and we find big

retailers like Wal-Mart and Tesco entering into Indian market. AT

Kearney has estimated India’s total retail market at US$ 202.6 billion

(Rs.9606.603 billion) which is expected to grow at a compounded 30

percent over the next five years. With the organized retail segment

growing at the rate of 25-30 percent per annum, revenues from the

sector are expected to triple from the current US$ 24 billion

(Rs.1137.9984 billion) by 2010.

Niche foreign are making a beeline for the Indian market. In fact,

despite the FDI policy pertaining to retail being unclear, over 10

foreign niche segment retailers have recently set up or announced

their intention to set up shop in India using the franchisee route, with

several others waiting in the wings.

21

International brands such as Benetton, Lacoste, Levi Strauss,

Crocodile, Lee, Wrangler, Nike, Reebok, Adidas, Guess, Esprit,

Mango, Hugo Boss, Mark & Spencer’s and Tommy Hilfiger have

already built a retail presence in the country, while market watchers

point out that several more such as Versace, FCUK, Zara, Mother

Care, IKEA, Fendi, NEXT, Debenhams, Trussardi, and DKNY have

charted out a strategy to enter the Indian market. Most of the brands

entering the market are targeted at the premium end. According to

estimates, the premium apparel segment in India is valued at about

Rs.1900 crore and growing at 20 percent.10

In addition to the patterns above, four additional factors which are

transforming supplier capacities in ways that are blurring the

boundaries between firms producing for the domestic market and

those producing for exports are as follow:

1. Enchantment of local capabilities in the area of logistics i.e.

ware housing and customized tracking systems.

2. Interesting emergence of design as a source of competitive

advantage in Indian apparel.

3. Growing importance of local investment by Indian firms as a

way to counter the exclusion of Indian from all major regional

trade agreements and advantage of tariff free entry into major

markets that many of India’s competitors enjoy i.e. Mexico in

the US markets, turkey and Bangladesh in EU markets.

4. Increasing focus on domestic brands.

5. Renowned exporters in the country such as Reliance,

Raymond, Orient Craft etc. are developing their supplies

22

networks and distribution systems, seeking distinctive niches

and generally staking out their terrain in the domestic market to

consolidate their first mover advantage. Success story has

emerged in the domestic apparel garment segments for the

local brands and not limited to Pantaloon, Lifestyle and

Westside only. No wonder a heavy weight like the Reliance

group is planning to do a Wal-Mart in India.

Now there is an increasing demand of branded apparel segment in the

domestic retail market for same features that are valued in demanding

export markets. These shifts in retail are fuelling the demand for good

quality and trendy apparel, which in turn deepening the importance of

aesthetics and design in the domestic market. It is worthwhile to

mention that the rise of younger class of middle-class consumers,

spawned by the booming BPO and IT sector, has led to burgeoning

demand for locally designed, ready to wear clothing in Indian

mentors. As many surveys have established, with good salaries,

strong peer pressure and the growing availability of brands across

product categories, spending in retail is being driven by the segment

in large and mid-sized metros.

In India, clothing retail accounts for 36% of organized retail business.

It is the largest sector. Ready-made apparel accounted for an

estimated 20% domestic clothing sales in 2005.11 With growing

working women wearing western wear to work, and pressed for time,

market for good readymade clothes is likely to grow. India is a film-

crazy nation, and the largest producer of films, with more than 1,000

every year. They provide entertainment and an escape from reality for

23

India’s masses, and set the popular fashion trend. Bollywood fashions

have become pan Indian. They affect various sectors of the market

including clothing, weddings and fashion accessories.

With the advent of modern format retailers and the growth of plastic

cards, affluent urban Indian women are shopping like never before.

They spend morning browsing in stores looking for deals or latest

styles. Upper income urban women are adopting ethnic chic. These

are designer clothes that incorporate Indian motifs, ethnic fabric and

are a fusion of western and Indian styles.

In the large urban centres, apparel retailers, like Shoppers Stop,

Westside and Pantaloon have popularized their private labels, which

have attracted urban shoppers. Westside carries only its own private

labels, while for other stores, 20% to 30% of their apparel turnover is

from private labels. Customers have loyalty to a store rather than any

particular garment brand. This has led to thriving unbranded or local

brand market for ready-to-wear clothes leading to serve competition.

Hence organized retailers like Lifestyle, for instance, has loyalty

program called ` The Inner Circle`, while Pantaloons offers a` Green

Card` Rewards programmes, Westside has `Club West` to woo

customers. Customers look to design and fit of the clothes, and use

the shop’s name as a quality standard.

According to a report by Data Monitor (2006) 12, global apparel,

accessories & luxuries market is likely to grow by 4.5% annually and

Asia pacific region is anticipated to acquire leadership position by

2011. Apparel sector in India poses a lot of challenges to a marketer.

24

So far India`s share in the world apparel trade has been

insignificant(less than 3%). World garment trade is estimated at

around US$125 billion (Rs.5534.1875 billion) annually. The Biggest

manufacturer & supplier is China producing over US$ 50

billion(Rs.2213.675 billion) , followed by Mexico which produces

over 8 billion and followed by many countries like India, Sri Lanka

and Bangladesh, being the third place countries making and exporting

garments worth $ 5-6 billion(Rs.221.3675-265.641 billion) annually.

1.3.4 Characteristics of Apparel Retail Sector

As apparel retail is led by fashion, a player needs to keep a close

watch on fashion amongst teenagers as they are the trend setters. Role

of Bollywood in spreading fashion needs to be understood. Seasonal

variation on stocking pattern and need to clear inventory at the end of

season should be understood by apparel retailer. Typically once an

item is sold from the outlet, retailers ensure that there is no repetition

of same. It gets replaced by different design, style, and colour.

Importance of store layout, decor is very critical. A browser visiting

the store frequently likes to see changes in the layout otherwise he

may carry the impression that stocks are not moving out of store.

Category management becomes very crucial function as transforming

of design into production and delivery has to be completed before

fashion or fad changes in the market.

This highlights the importance of sales promotions- short term

activities which induces trade or consumer to buy now rather than in

future as the value of apparel after the season goes down substantially

25

and inventory carrying burden turns out to be very high. Apparel

retailer needs to understand critical role of sales promotions.

Attractive promotions induces purchase acceleration, stock piling and

brand switching on the part of a consumer which substantially

reduces retailer`s financial and inventory risk and consumer`s

financial and psychological risk.

1.3.5 Classification of Apparel

The textile manufacturers were among the first to get into branded

menswear in the Indian market. This sector is perhaps the most

developed in terms of supply chain sophistication in the branded

clothing market. The apparel sector can be broadly classified into

Men’s apparel, Women’s apparel and children’s wear. Each of them

can be further classified into Formal, Casual, Indian wear, Sports

Wear and Accessories.

Apparel

Women’s wear Children’s

wear

Menswear

• Belts

• Ties

• Socks

• Handker-

chiefs

• Track

suits

• Shorts

• T-shirts

• Kurta

• Pyjama

• Dhoti

Kurta

• Sherwani

• T-shirts

• Shirts

• Jeans

• Casual

Trousers

• Shirts

• Trousers

• Blazers/

Jackets

• Suits

Fig.1.5 Classification of Apparel

26

The same classification can be reworked for women’s wear and

children’s wear. Thus we can see that this sector has many

classifications and sub-classifications adding to the complexity and

the competitiveness of this sector. Apparel Retail in India is

characterised by the existence of a large number of regional, national

and international brands.

Another important characteristic is that retail occurs through multiple

formats, for example an Arrow shirt would be retailed through stores

like Shopper’s Stop, Pantaloon, etc and also through the company’s

own retail outlets.

In menswear, the key players are Arvind Brands, Madura Garments,

Raymond’s/ Park Avenue.

1.3.6 Key Menswear Brands

Formal wear Casual wear Denims Sports wear

Arrow

Louis Philippe

Van Heusen

Park Avenue

Allen Solly

Color Plus

Dockers

Benetton

Wills Sports

Levi’s

Lee

Wrangler

Pepe

Ruf n Tuf

Reebok

Nike

Adidas

Table 1.1

27

In India, a national brand in women’s wears is virtually non-existent.

Most branding that is visible in women’s wear is only in the western

casual clothing segment. However, this is a growing segment where

sizeable opportunities exist in the women’s ethnic wear. Allen Solly,

a leading brand in menswear, has entered the women’s western wear.

Local manufactures again rule a large section of the children’s

clothing market though a few national brands line Gini & Jony and

Ruff kids have emerged in the market. Invariably, these brands started

by retailing within larger department stores before setting up their

own and franchised retail outlets.

Apparel retail occurs through a company’s own outlets or through the

multi brand outlets. Over the past few years, this sector has seen the

development of private labels by many department stores.

1.4 Lucknow Division

Lucknow Division is an administrative geographical unit of Uttar

Pradesh of India. Lucknow is the administrative headquarters of the

division. As of 2005, the division consists of Lucknow district,

Hardoi district, Lakhimpur Kheri district, Raebareli district, Sitapur

district and Unnao district.

Uttar Pradesh is now divided into seventy one districts under eighteen

divisions. Districts are administered by District Magistrates and

divisions are administered by Divisional Commissioners.Lucknow,

the capital of the state, constitutes the Lucknow district.

28

The Indian state of Uttar Pradesh borders with Nepal and the Indian

states of Bihar, Jharkhand, Madhya Pradesh, Chhattisgarh, Rajasthan,

Haryana, Uttarakhand and National Capital Territory of Delhi.

1.4.2 Lucknow District

Lucknow District is a district located in the Uttar Pradesh state in

northern India. The city of Lucknow is the district headquarters and

the district is part of Lucknow Division and also is the capital of Uttar

Pradesh. The City was established in 1775 as the nawab of Awadh

moved his capital from Faizabad to Lucknow and made it one of the

most prosperous and glittering cities in all India.

29

1.4.3 Economy

The economy of Lucknow city was earlier based on the tertiary sector

with about majority of the workforce being employed as government

servants. Large-scale industrial establishments are low compared to

other north Indian state capitals like New Delhi and Chandigarh.

Currently the economy is growing with the contributions from more

professionals in the fields of IT, Manufacturing and processing and

Medical/Bio-Technology. Business-promoting institutions viz. CII

and EDII have a presence in city. On October 2010, Lucknow ranked

6th among all the cities in India for fastest job-creation, City has

steadily grown into a competitive IT centre.

Lucknow has a great potential in handicraft sector and it accounts for

60% of the total exports from the state. The state has emerged as a

hub for IT and ITES industries including software, BPOs and

electronics. The major export items from are marble products,

textiles, handicrafts, art pieces, gems and jewellery, textiles,

electronics, software, computer, hardware & software, apparel, brass

work, silk, leather and leather goods, glass items, art metal,

chemicals. City has promoted Public‐Private Partnerships in big way

in various sectors such as power, roads, expressways, education.

1.4.4 Demographics

According to the 2011 Census Lucknow district has a population of

45,88,455. This gives it a ranking of 31st in India (out of a total of

640). The district has a population density of 1,815 inhabitants per

30

square kilometer. Its population growth rate over the decade 2001-

2011 was 25.79 %. Lucknow has a sex ratio of 906 females for every

1000 males and a literacy rate of 79.33 %.

1.4.5 Chikan industry of Lucknow - Pride of India

The chikan work of Lucknow is one of the most popular embroidery

works in India. It has a certain grace and elegance which ensures that

it never goes out of style. It is said to have been originally introduced

by Nur Jahan, the beautiful wife of Mughal emperor, Jahangir. The

work became popular in a number of important cities of indo-

gangatic plain.

The designs depend for its effect on the variety of stitches and

different grades of threads used to form the patterns which includes

the lace like jali, the opaque fillings and the delicacy or boldness of

outline and details. Tiny raised flowers done in what seem to be

French knots are balanced by the flat stem stitch and large areas of

open work to prevent either a crowded or too scattered appearance.

The stitches employed are back-stitch, chain stitch, and hemstitch

forming an open work pattern.

Individual floral motifs may embellish the entire garment or just one

corner. Among the floral motifs embroidered, the jasmine, rose,

flowering stems, lotus and the paisley motif are the most popular.

Chikan work has very light, gossamer - like quality. This makes it

very suitable for the seemingly hot climate.

31

Some of the popular motifs are Kairi; dhaniya patti; phanda; dhum

patti; ghas, patti; murri; kangan; joda murri; maharaki; sadi-maharaki;

daraz/ katub; pechani; tanire; gitti; phanda; keel; kangira.

A Chikan suit is a regal treasure in any fashion connoisseur's

wardrobe. Really the great thing about this form of embroidery is that

it never goes out of fashion and it suits women/ men of all ages. If

you are going to invest in a few pairs of elegant wear, try adding

chikan to your wardrobe. If you wear chikan you really are wearing a

piece of history, as it is a form of embroidery that has been art part of

India for centuries.

Chikan embroidery in Lucknow is the biggest artisan cluster of India.

There are about 5 lakhs artisans of hand embroidery associated with

this cluster. Apart from this, the artisans from other fields such as

cutting, stitching, Hand Block Textile Printing, jali work and washer

men are also a part of this cluster. The total number of artisans

associated with Chikan Embroidery, Cluster, other than Chikankari

artisans, is about 5000.

There are about 4000 manufacturing units in Lucknow having

individual turnover of Rs.10 crore to 10 lakhs. The total turnover of

industry is about Rs.1000 crore including export out of India of about

Rs.200 crore.

32

1.4.6 Sitapur District

Sitapur District is one of the districts of Uttar Pradesh state of India,

with Sitapur town as the district headquarters. Sitapur district is a part

of Lucknow Division. This district covers an area of 5,7432 km.

1.4.7 Economy

In 2006 the Ministry of Panchayati Raj named Sitapur one of the

country's 250 most backward districts (out of a total of 640). It is one

of the 34 districts in Uttar Pradesh currently receiving funds from the

Backward Regions Grant Fund Programme (BRGF).

Agriculture is the main occupation of the district. The important crops

are wheat, Rice, Urad, Sugarcane, Musturd and Groundnuts. The

district was very famous for its textile industries during 17th and 18th

century, but now it is not famous from industrial point of view. There

are five sugar mills, flour mills and rice mills in the district. It is

mainly famous for its cotton and woolen mates.

1.4.8 Demographics

According to the 2011 Census Sitapur district has a population of

4474446. This gives it a ranking of 38th in India (out of a total of

640).The district has a population density of 779 inhabitants per

square kilometer. Its population growth rate over the decade 2001-

2011 was 23.62 %. Sitapur has a sex ratio of 879 females for every


33

1.4.9 Lakhimpur Kheri District

Lakhimpur Kheri is a district of Uttar Pradesh in the Lucknow

Division. It is located in India along the border with Nepal. The

headquarters of the Lakhimpur Kheri District are situated in the city

of Lakhimpur. Lakhimpur Kheri district is a part of Lucknow

Division and is the largest district in terms of area in the state (Total

Area = 7680 square km).

Lakhimpur Kheri is famous for Dudhwa National Park, the only

National Park in Uttar Pradesh.It is home to a large number of rare

and endangered species including tiger, leopard, swamp deer, hispid

hare, Bengal florican, etc. Being a Terai district it is rich in natural

resources with lush green scenery and many rivers.

1.4.10 Economy

In 2006 the Ministry of Panchayati Raj named Lakhimpur Kheri one

of the country's 250 most backward districts (out of a total of 640). It

is one of the 34 districts in Uttar Pradesh currently receiving funds

from the Backward Regions Grant Fund Programme (BRGF).

Known for its sugar cane industry, it satisfies a huge part of the

world's sugar demands. Some of the biggest sugar mills are in the

district Bajaj sugar mill in Gola Gokarnath and Bajaj sugar mill in

Palia Kalan and DSCL sugar mills (Ajbapur), Kumbhi sugar mills

Kumbhi, (Mohammdi) are the four largest sugar mills in Asia.

Balrampur Industries also runs its sugar mills from Lakhimpur.

Lakhimpur is also famous for cottage industries of incense sticks.

34

The main industry which dominates Lakhimpur Kheri is the sugar

industry. It houses various sugar industries ranging from small plants

to big integrated sugar mills.There are many private, government and

co-operative sugar mills in the region. Steel Authority of India

Limited (SAIL) is setting up a steel processing unit in Behjam,

Lakhimpur at an estimated cost of Rs 85 crore. The processing unit

will have an installed capacity of 100,000 tonnes per annum and

produce TMT (Thermo Mechanically Treated) bars from input

material sourced from SAIL’s integrated steel plants.

1.4.11 Demographics

According to the 2011 Census Lakhimpur Kheri District has a

population of 4013634. This gives it a ranking of 56th in India (out of

a total of 640). The district has a population density of 523

inhabitants per square kilometre. Its population growth rate over the

decade 2001–2011 was 25.14 %. Kheri has a sex ratio of 887 females

for every 1000 males and a literacy rate of 62.71 %.

1.4.12 Raebareli District

Raebareli is a city and a municipal board in the Indian state of Uttar

Pradesh. It is the administrative headquarters of Raebareli District.

1.4.13 Economy

In 2006 the Ministry of Panchayati Raj named Raebareli one of the




35

1.4.14 Demographics

According to the 2011 census Raebareli district has a population of


640). The district has a population density of 739 inhabitants per

square kilometre .Its population growth rate over the decade 2001-

2011 was 18.51 %. Rae Bareli has a sex ratio of 941 females for

every 1000 males, and a literacy rate of 69.04 %.

1.4.15 Unnao District

The town of Unnao is the headquarters of Unnao District in Uttar

Pradesh, India between Kanpur and Lucknow. It is approximately

18 km from Kanpur & 60 km from Lucknow . It is connected to these

two cities by roadway as well as by railway. The nearest airport is at

Amausi about 50 km from Unnao. Unnao district is a part of Central

Ganges Plain of the state covering an area of 4558 square km.

1.4.16 Economy

In 2006 the Ministry of Panchayati Raj named Unnao one of the




1.4.17 Demographics

According to the 2011 Census Unnao district has a population of


640). The district has a population density of 682 inhabitants per

36

square kilometre.Its population growth rate over the decade 2001-

2011 was 15.19 %. Unnao has a sex ratio of 901 females for every


1.4.18 Hardoi District

Hardoi is a riyasat and a municipal board in Hardoi district in the

Indian state of Uttar Pradesh. It is the administrative headquarters of

Hardoi District.

1.4.19 Economy

In 1901, the main activities were wood-carving industry, saltpetre

works and grain trade. The district exported grain, sugar, hides,

tobacco and saltpetre.

Agriculture is the main activity in the district and many people

depend on it. 3980.45 square km. of Hardoi district are devoted to

agriculture. The main crops are paddy, sugarcane, wheat, vegetables,

pulses and oilseeds. A small proportion of the total cultivated area is

used for horticulture: guava, mangos, some herbs, etc. Irrigation is

made possible by the presence of the Hardoi and Lucknow branches

of the Sarda Canal.Generally people of the district depend upon the

Agriculture based economy.

1.4.19 Demographics

As of 2011 India Census, Hardoi district had a population of

4,091,380. Males constitute 54% of the population and females 46%.

Average literacy rate of Hardoi in 2011 were 68.89% compared to

37

51.88 of 2001, lower than the national average of 74.9%: male

literacy is 77%, and female literacy is 59%. In Hardoi, 13% of the

population is under 6 years of age.

1.5 Literature Review

There are many authors and researchers who have worked in this area

but the contributions of some of them have been included in this

study to make it more comprehensive and valuable.

According to Koshy (1997),13 fashion garments are differentiated by

innovative fabrics and / or substantial use of trims, embellishments

and / or presence of high degree of craftsmanship in the form of bead,

sequin work and / or sophisticated design, colour and styling inputs.

Bagchi (1997) 14 critically examined the removal of quota between

1995 and 2005 in four phases is not as beneficial as it is projected by

developed world. The first two phases are composed of goods which

are not of high importance and already almost free. These two phases

are not of high importance. The other two phases are of high

importance.

Chandra (1998) 15 in his article wrote on challenges ahead of Indian

textile and clothing industry in post quota regime. It put special

emphasis on production capabilities and efficiencies as most essential

elements to fight global competition. It suggests various strategic

decisions Indian textile manufacturers have to make to survive the

competitiveness in post quota regime.

38

Bhamra, Heeley and Tyler (1998)16 describe ‘conventional

approaches to product development in textile and clothing industry

have been characterized by functional independence. Each participant

contributes to the process sequentially.’

Verma (2001)17 in his article emphasized on the impact on the Indian

textile and clothing industry after quota elimination. It says that

Indian textile and clothing exporters have to bring in necessary

changes in their methods of production, management style, capacities,

marketing skills and productivity level in order to remain competitive

in international market. Also it put special emphasis on the size of

Indian textile units when compared to its counterpart in China.

Simpson and Shetty (2001)18 did a vast study on India’s textile

industry. The purpose of study is to analyze India’s textile and

apparel industry, its structural problems, market access barriers, and

measurements taken by government of India to enhance the industry’s

competitiveness in the post – Multi Fibre Agreement (MFA) era. The

study also assesses India’s textile and apparel market potential and

trade and investment opportunities for U.S. firms as India steps into a

more free and transparent trade regime.

Verma (2002)19 did a comprehensive study with objective to evaluate

the export competitiveness of Indian textile and clothing sector.

Because Indian textile and clothing sector is predominantly cotton

based, the study is focused on cotton textile and clothing and look at

the entire value chain from fiber to garment and retail distribution.

39

Leung and Taylor (2002) 20 in a study on fashion buying criteria of

X generation consumers in Hong Kong found that consumers of this

category are attracted by a good interior store layout; and feel good

service is essential when buying fashionable clothing.

In the Indian context, a study was done by Sinha et al. (2002) 21

on

store choice behavior that indicated Indian shoppers on an overall

basis give importance to proximity of the store, merchandise and

service provided by the store and stores dealing in apparels are also

chosen based on ambience.

Kincade, Doris H; Woodard, Ginger A; Park, Haesun (2002)22

studied Buyer-seller relationship for promotional support in the

apparel sector which is critical for success.

Willans (2002)23 says ‘several fashion retailers have adopted a

concept known as ‘edited retailing’ whereby the customer is offered a

limited though changing choice of merchandise that is highly co-

ordinated, offering a high degree of product range compatibility.’

As per Moye and Kincade (2003),24 the occasion for which an

apparel item is bought does influence the consumer’s importance

rating of the store environment and there were higher expectations for

the environment of a store offering formal merchandize than a store

offering casual merchandize.

Meenakshi (2003) 25 did a comprehensive study on the opportunities

that would be provided by WTO to Indian Textile industry. This

paper gives a lot emphasis on new capacity installation to take the

40

benefits to the fullest extent in India has to be a true gainer in

competition to other nations. Since India’s own consumption per

capita is also on the rise with the rise of income and consumption

habits, the profit margins available to Indian textile and clothing

producers will be more. But in export market, the prices will be

driven by international factors and profits will be under pressure. So

the exporters might have to go for strategy of partial exports and

partial domestic sale.

Pandey (2003) 26 in his article expected that Indian textile exporter

would be benefited with quota elimination. It discusses on various

sectors of textile and clothing. Also he expects that hosiery industry

will be one of the gainer and small scale exporters will be more

competitive due to small size and controlled cost and lower

overheads.

Vivek (2004) 27 in his article had said that JC Penny a leading retail

chain of US looks India for sourcing its garments in woven and

hosiery. He is of opinion that India will be fulfilling its major need of

Hosiery and woven garments in cotton while China will be good for

synthetic fabrics and its garments.

Chugan (2005)28 emphasized that Indian textile Industry has to

change to be more competitive in the long run. This paper emphasizes

that merely cost competence is not enough to maintain the lead while

Indian companied has to have a global competitive view.

Trivedi (2005) 29 in his article concluded that the textile is one sector

where India has high ambitions and can achieve robust growth

41

through moderate human skills. India has skilled labour and does

better in this sector as compared to others. This will also increase the

employment and the social structure will be better off.

To quote Panthaki (2005),30 the textile industry in India is vital to the

economy of the country as it contributes to over 6% of the gross

domestic product to India and earns 18% of the total foreign exchange

earnings of the country.

The present garment segment of the textile industry provides

employment to around seven million people (Apparel Talk, 2005).31

Fashion as part of history repeats itself and is defined as the

prevailing style in clothing at any given period of time write Amaden

and Crawford (2005).32

Paromita Goswami (2007)33 conducted a study on how college

students in urban areas shopped for apparels. The factors investigated

for the study were brand conscious and needed variety and best

quality for their apparel purchase. Furthermore, parents influence

their purchase behavior the most, followed by peer store approval,

friends’ influence and peer product influence.

According to Kunz and Garner (2007), 34 the textile and the apparel

business provides employment for more than any other business

segment, directly providing a livelihood for many millions of people,

including 37 million individuals in India alone.

Dr.Biradar et.al. (2008)35 in their article pointed out that the

organized retail sector is registering tremendous growth fuelled by

42

the unleashed spending power of new age customers who have

considerable disposable income and willingness to have new

shopping experience. It is emphasized that India’s top retailers are

largely lifestyle, clothing and apparel stores followed by grocery

stores. The paper further mentions that increasing number of nuclear

families, working women, greater work pressure and increased

commuting time; convenience has become a priority for Indian

consumers. All these aspects offer an excellent business opportunity

for organized retailers in the country.

Designers have acknowledged that they alone cannot decide what

their customers want and they are offering as more of fashion to

consumers’ attention, opine Diamond and Diamond (2008).36

According to Kumar and Sunderesan (2010), 37 textiles are among

the leading sectors in the Indian economy in terms of production,

exports, employment and contribution to the exchequer.

India earns around 27% of the foreign exchange from exports of

textiles and related products remark Gopalakrishnan et-al (2010).38

As competition and pressure on profit margin grow, fashion

manufacturers are looking wider for inspiration on how to maintain a

competitive business (The Indian Textile Journal, 2010).39

Fashion today is not restricted to grown-ups, but kids too are

becoming fashion conscious these days especially when it comes to

dressing (Apparel Online, 2010).40

43

Fashion has truly become a serious business in India, according to

(Textile Trends, 2010).41

As per Amsamani and Punna (2010),42 there is now a buzz in the

fashion and high tech industries about integration of technical and

smart intelligent functionality into fabrics for clothing.

With fashion rapidly becoming „a must have� for the masses and

technology playing an important role in making it viable to

incorporate fashion elements at reasonable prices, the retailers around

the world are also embracing this change. „Leggings� seen as a

fashion forward statement in the 80s is now a universal trend that has

become mainstream fashion and these versatile fashions are the

fashion world’s latest obsession (Apparel Online, 2011).43

Considered as one of the largest employment generator, the Indian

textile industry provides employment not only to people involved in it

but also to various ancillary sectors like agriculture and recent survey

has revealed that the textile industry contributed twelve million jobs

in the year 2010 (Indian Textile Journal, 2011).44

In this contemporary world of fashion, where dressing is a powerful

form of expression, more and more youngsters are adopting

“character inspired merchandise” by wearing their favorites cartoon

and comic characters on their T-shirts (Apparel Online, 2011).45

1.6 Purpose of the Study

Retailing is a new emerging section of the economy having a lot of

potential to contribute maximum to the GDP. In the days ahead,

44

competition is bound to be stiff. In this way all players of the

industry, that is, buyers, sellers and competitors, should keep

themselves updated with current happenings and trends of the

industry. It is only possible with the help of Research and

Development (R&D) because by using this mean, anybody can have a

clear cut knowledge about the real scene of the industry (apparel

industry).In this regard, the present study will be proved as a very

useful and vital tool for all concerned users and it will provide

approximately all the pertinent facts about apparel retailing.

1.6.1 Objectives

Every study is based on certain problems and in the whole various

alternatives (solutions) regarding these are researched and evaluated.

In this way, every study has some specific motives to be achieved by

using various tools of research. In case of present study, the industry

of apparel retailing is facing a lot of problems in the form of

following questions. What to do, how to do, are certain questions,

which are looking out for answers. But, no qualitative work has been

done to address these problems, the present study will make an

endeavor to find suitable answers. The present study will:

1. Analyze the key trends that are taking place in apparel retailing.

2. Assist in creating awareness of the developments in apparel

retailing with respect to various product categories.

3. Help to know the drivers responsible for the growth of organized

apparel retailing and new retail formats.

45

4. Evaluate India’s preparedness in these fast emerging changes in

retail marketing.

5. Evaluate the extent and impact of FDI in apparel retailing.

6. Enlighten the strengths and weaknesses of the industry.

These solutions will give the apparel retailing a facelift, so that, they

can march ahead to generate revenue, employment and thereby could

contribute to the nation building.

1.6.2 Hypothesis

On the basis of literatures, following hypotheses are framed:

H 1: Emergence of modern retail formats has created the problems of

parking, high price of real estate, requirement of skilled personnel.

H 2: Income of consumers is positively related with shopping from

modern retail formats.

H 3: Young consumers prefer to shop from modern retail formats.

H 4: People have started preferring branded products and readymade

garments (RMGs).

1.6.3 Limitation of the Study

All efforts have been made to ensure that the research is designed and

conducted to optimize the ability to achieve the research objectives.

However there are some constrains that do not validate the research

but made to be acknowledge.

46

1. This study is restricted to the Lucknow Division only.

2. This evaluation is based on primary data generated through

questionnaire and collected from the apparel retailers of different

districts of Lucknow Division and as such its findings depend on

accuracy of data.

3. The sample consists of 350 apparel retailers from different districts

of Lucknow Division of Uttar Pradesh. The sample is selected

conveniently and in single phase so as the opinion suggested by the

retailers is situation based. Also study is limited to the apparel

retailers and does not depend on the respondents who deal in different

products.

4. As the primary data and observational method of research has its

own limitations and based on the respondent the study is limited to

Lucknow Division only and it cannot be applicable to the retailers of

the other states of India or at International Level.

5. The study is based on the responses of the retailers who are highly

subjective in nature and hence generalization made may not be totally

true /accurate.

1.7 Research Methodology

1.7.1 Research Level

Since the objective of the study is to find out challenges and prospects

inherent in apparel retailing, exploratory research will prove handy in

collecting data. The exploratory research attempts to discover general

information about a topic. The research follows a format that is less

structured and more flexible than descriptive research. The

47

descriptive method of research is to gather information about the

present existing condition. The emphasis is on describing rather than

on judging or interpreting. Along with this, the types of retailers will

be studied to establish the relationship between invested amount and

the location of outlets. Therefore, the level of research will have both

of the following:

• Exploratory

• Descriptive

1.7.2 Approach to Research

• Quantitative

A research technique in which scientific, concrete, and projectable

numerical data that can be statistically analyzed is gathered, often

from large samples; also called hard data. To give the study a

concrete statistical shape, the use of quantitative approach in the

collection of data has been attempted. Here it will be pertinent to

write that no quantitative technique for data analysis has been used.

The analysis of the data in finding and interpretation part is purely

descriptive in a manner taking cognizance of different dimensions of

the matter at hand.

• Qualitative

Qualitative approach generates verbal information rather than

numerical values. Instead of using statistical analysis, the qualitative

approach utilizes content or holistic analysis; to explain and

comprehend the research findings, inductive and not deductive

48

reasoning is used. The main point of the qualitative research method

is that measurement is valid, reliable and can be generalized with its

clear anticipation of cause and effect.

1.7.3 Data Collection

To select a data collection instrument, there are several factors to be

considered:

1. Technical adequacy: reliability, validity, freedom from bias, etc.

2. Practicality: cost, duration, personnel needs, etc.

3. Ethics: protection of human nights, privacy, legality, etc.

The research employed for collection of data involves both primary

and secondary basis. However the following techniques of Data

Collection shall be used:

1.7.4 Primary Data Techniques

• Questionnaire

• Sampling and Sampling Units

While the focus is to study the retailers’ challenges and prospects

what exactly they perceive and experience. Retailers will be taken

into confidence that they will reveal the desired information. A

sample is a subset of a unit or a population collected as a

representation. In sampling, a researcher decides as to who will be

surveyed. The portion of the population that researcher needs to target

49

and that represents entire population is known as the sampling unit. It

will be a non- probability sampling.

The method of random sampling is the best one suited for the present

study in order to avoid biasness in approaches.

1.7.5 Secondary Data and Material Collection

• Inputs available on Internet

• Books, Magazines and other periodicals existing on marketing

and retailing.

With the use of survey questionnaire and published literatures, this

study takes on the combined quantitative and qualitative approach. By

means of employing this combined approach, the researcher is able to

obtain the advantages of both quantitative and qualitative approaches

and overcome their limitations.

1.7.6 Sampling Unit

• Apparel Retailers of Lucknow Division.

50

References

1. dictionary.reference.com/Apparel

2. Mc Kinsey & Company

3. http:/fcamin.nic.in

4. http:/fcamin.nic.in

5. www.kvic.org.in

6. http:/india.gov.in/citizen/cooperatives/cooperatives

7. www.indiaretailing.com

8. www.indiaretailing.com

9. AT Kearney.com

10. Global Retail Development Index (GRDI) 2013

11. Consumer Lifestyles in India, EuromonitorInternationalConsumer

Lifestyles Database (2005)

12. Global Apparel, accessories and luxury goods, Data Monitor,

(2006)

13. www. darliekoshy.com/publication/htm

14. shodhganga.inflibnet.ac.in/jspui

15. www.iimb.ernet.in/chandra

51

16. www.emeraldinsight.com/journals

17. www.esocialsciences.org

18. shodhganga.inflibnet.ac.in/jspui/bitstream

19. www.eu.ldc.org



22. onlinelibrary.wiley.com

23. www.ibm.com./businesscenter/au

24. www.ijsrp.org/research-paper








32. www.amazon.com

52

33. shaktipublication.org

34. www.abeebooks.com

35. shaktipublication.org


37. www.indiantextilejournal.com/articles


39. www.indiantextilejournal.com/content/viewpoint/articles

40. www.emarketer.com/apparel

41. www.textileintelligence.com



44. www.indiantextilejournal.com/content/viewpoint/articles


-----:o:-----

Chapter-2

RETAIL FORMATS AND

RETAILERS

53

2.1 The Evolution of Retail Formats

The origins of retail are as old as trade itself. Barter was the oldest

form of trade. For centuries, most merchandise was sold in market

places by peddlers. Medieval markets were dependent on local

sources of supplies of perishable goods because journeys were far too

slow to allow for long distance transportation. However, customers

did travel considerable distances for specialty items. The peddlers

who provided people with the basic goods and necessities that they

could not be self-sufficient in, followed one of the earliest forms of

retail trade. Even in prehistoric times, the peddler travelled long

distances to bring products to locations which were in short supply.

They could be termed as early entrepreneurs who saw the opportunity

in serving the needs of the consumers at a profit.

For centuries now, India has been operating within her own unique

concept of retailing. Retailing in its initial period was witnessed at the

weekly haats or gathering in a market place where vendors put on

display their produce (goods).Of course, this practice is still prevalent

in many towns and cities in India. Then the market saw the

emergence of the local baniya and his neighbourhood ‘Kirana shop’.

These were the common local mummy-daddy or multipurpose

departmental stores, located in residential areas. Such shops stocked

goods with multipurpose utility and were built with the vision of

providing convenience at the doorstep of the consumer.

54

2.2 Unorganized Retail Formats

Unorganized retailing refers to the traditional format of low-cost

retailing, for example, hand cart and pavement vendors and mobile

vendors, the local kirana shops, owner- managed general stores,

paan/beedi shops, convenience stores, hardware shop at the corner of

your street selling everything from bathroom fittings to paints and

small construction tools; or the slightly more organized medical store

and a host of other small retail business in apparel, electronics,etc.

2.2.1 Mom-and-Pop Stores

These are small family-owned businesses, which sell a small

collection of goods to the customers. They are individually run and

cater to small sections of the society. These stores are known for their

high standards of customer service.

2.2.2 Street Vendors

Street vendors, or hawkers who sell goods on the streets, are quite

popular in India. Through shouting out their wares, they draw the

attention of customers. Street vendors are found in almost every city

in India, and the business capital, Mumbai, the number of shopping

areas comprised solely of street vendors. These hawkers sell not just

clothes and accessories, but also local food.

55

2.2.3 Kiosks

Kiosks are box-like shops which sell small and expensive items like

cigarettes, toffees, newspapers and magazines, water packets and

sometimes, tea and coffee. These are most commonly found on every

street in a city and cater primarily to local residents.

2.3 Modern Retail Formats

The retail business operates in a dynamic environment, the changing

customer demand, opening up of markets, technological

developments and ever increasing competition- all affect the retail

business. New retail formats are constantly evolving. The customer,

who needed to go to withdraw cash, may just find an ATM of the

bank at the gas station. What’s more, he can also purchase groceries

and other essential items at the convenience store located there.

The departmental stores may be a comparatively recent phenomenon

in India, with a specially created ambience making shopping an

experimental affair. Indeed, we are even beginning to demand places

where we can avail the luxuries of spending the whole day in one

place, taking advantage of a bouquet of services in which shopping is

only a part. Therefore, you can browse window shop, make

purchases, break off for a meal, take in some entertainment.

This concept of organized retail marketing has caught on like

lightning. It creates a distribution network that cuts out various

intermediary costs and creates a whole smoothen interface between

manufacturer and customer. This organized network which bridges

56

the distance between the manufacturer and the consumer has seen

many of the world’s leading entrepreneurs successfully walk down a

particularly profitable road.

The retail industry is the world’s largest private industry and accounts

for over 8 percent of the GDP in western countries. Now, it is India’s

turn. Today, we stand at the crossroads of a retail revolution. After 50

years of unorganized retailing and fragmented kirana stores with very

basic offerings, fixed prices, zero usage of technology and little or no

ambience the industry has finally begun to move towards

modernization, systematization and consolidation.

Retailers in India like abroad are diverse in forms such as street

vendors to large groups line ABRL, Bharati, Trent, Reliance Retail,

Shoppers, Life style, Future Group, RPG to multiplex chains like

Adlabs, Cinemax, PVR, Inox, FR, or food courts i.e., Blue foods,

SRS, Gigabytes, Spices and vices are few names in long list and

different formats.

The new formats give the customer the choice of picking up a

product, comparing it with others and then taking a decision on

buying. This requires that the products are displayed and packaged

attractively. It also becomes necessary to provide all the information

with respect to price, date of manufacture, weight, expiry, etc on the

product itself to aid decision-making. The world of retail changed,

when in 1995, Amazon.com opened its doors to a worldwide market

on the Web.1

57

Forces Affecting Modern Retail Formats

Dynamic consumers’ behaviour, consumers’ demography, retail

attributes and retail marketing strategies affect modern retail formats.2

ccc

Fig. 2.1: Forces Affecting Modern Retail Formats

Source: Middle-East Journal of Scientific Research 11(4): 482, 2012.

Dynamic

Consumer

Behaviour

Consumers’

Demography

Modern Retail

Formats

Retail

Attributes

Retail Marketing

Strategies

58

2.4 Classification of Retailers

Because there are so many different kinds of retail firms, classifying

them all into one neat system becomes difficult. We can use different

bases for classifying retail firms. Different types of classifications are:

2.4.1 Legal Form

The three basic legal forms of ownership are sole proprietorship,

partnership and limited liability companies (private or public).

Fig. 2.2: Classification of Retailers based on Legal Form

2.4.2 Operational Structure

There are three operational structures:

• The independent trader (usually operating only one outlet);

• The multiple or chain stores;

• The co-operatives.

Proprietorship

Partnership

Limited Company

(Private or Public)

Classification of Retailers Based on Legal Form

59

Fig.2.3Classification of Retailers based on Operational Structure

2.4.3 Range of Merchandise

Some retail businesses offer a wide range of goods. Examples of

these include variety stores like Marks & Spencer or department

stores like Harrods. Others concentrate on narrow ranges like health

foods; leather goods, greeting cards and these are called specialty

stores or niche-retailers.

Fig. 2.4 Classification of Retailers based on Range of merchandise

Independent

Traders

Chain Stores

(Multiples)

Co-operatives

Classification of Retailers Based on Operational

Structure

Specialty Stores

(Niche Retailers)

Variety Stores

(Departmental

Stores)

Classification of Retailers Based on

Range of Merchandise

60

2.4.4 Degree of Service

Although many retail outlets have been converted or built to self-

service or self-standards, there are others which offer their consumers

services such as delivery, credit, gift wrapping, repairs, etc. It is

interesting to note that many former self-service retailers are now

looking at ways of gaining competitive advantage by adding new

customer services.

Fig. 2.5 Classification of Retailers based on Degree of Services

2.4.5 Pricing Policy

Some retailers choose to emphasize low price rather than the service

element of their retailing mix. Aldi, the German food retailer,

expanded very rapidly in the late 1980’s by pricing below the

competition. Others choose to price above competition knowing that

(High) Large No. of Consumer Services

such as high credit, home delivery,

high involvement of sales staff in

attending customer needs such as

help in selection etc.

(Low)

Self Service & Self

Selection

Classification of Retailers Based on Degree

of Services

61

they will generate business on the basis of some other attribute such

as convenient location or exclusive image.

Fig. 2.6 Classification of Retailers based on Pricing Policy

2.4.6 Location

Another way to classify retailers is according to geographic location.

With the increasing cost of town centre sites and traffic congestion,

many retailers have sought edge-of-town locations, whilst others have

preferred to stay in ‘cluster’ locations in town centres as shown here.

Stand alone stores, Shopping Centres or Complex, Destination stores

and Convenience stores are based on location.

2.4.7 Size of Outlet

The average size of many multiples’ branches has increased quite

markedly over the past few years as more and more firms become

large and medium-space users. The term ‘superstore’ has been used to

define outlets between 25,000 and 50,000 square feet and

hypermarkets are those stores over 50,000 square feet. Many outlets

are now being built in the 50,000-100,000 square feet range. The

High Price

(Convenience Stores)

Lower Price

(Discount Stores)

Classification of Retailers Based on Pricing

62

number of superstores and hypermarkets increased from two in 1963

to 400 in 1986 and reached 1000 in 1995.3

Fig. 2.7 Classification of Retailers Based on Size of Outlet

2.4.8 Based on Customer Contact

Most retail transactions are conducted by face-to face contact in retail

stores. However, a significant proportion of retail sales is generated

by non-store retailing operations such as mail order catalogues,

telephone selling, e-retailing, vending machines, door-to-door to

selling or mobile shops.

Some of these categories overlap but they are all important in

specific marketing situations. The conventional and most common

classification of retail organizations based primarily on operational

structure and range of merchandise.

2.5 Types of Retailers Based on Merchandise and Pricing

The earlier classification was based on the range of operation, and

physical characteristics of the stores. Now we can classify stores

Surplus Stores (25000-50000 Sq. Feet)

Small Stores (0-25000 Sq. Feet)

Hyper Markets (Over 50000 Sq. Feet)

Classification of Retailers Based on Size of Outlet

63

based on merchandise and pricing mechanism. In Indian context,

these classifications may be new or developing in the form and hence

you cannot distinctly identify a store by these typical classifications.

These are departmental stores, specialty stores and discount stores.

2.5.1 Department Store

A department store is defined as a large store selling:

• A broad variety and deep assortment.

• Offer considerable customer services and organized into

physically separate departments.

Large department stores have started appearing in Indian scenario like

Shoppers’ Stop, Vivek & Co. THS, and Globus to name a few. But

they cannot be compared to the departmental stores worldwide. Some

of the US large department stores chains are Sears, J C penny, etc.

Some large departmental store groups own many branches and these

chains are called multiple department stores.

A departmental store is organized into departments selling clothing

and accessories, home furnishings and furniture, toys and games,

consumer durables, and kitchenware.

Some of the characteristics of Department Store are:

• Located in central market area of major shopping centre,

locations supported by potentially large catchments.

• Availability of parking space.

• Freedom for the customer to move around the store and view.

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• Relatively high prices with margins large enough to cover

heavy staffing, the range of services offered and high

accommodation costs.

• Provision of a large number of specialized goods in one

location, which allows associated sales.

• Availability of personal assistance in shopping, added customer

services and amenities.

• Special staff expertise in particular products demonstration.

Wide range of customer services such as delivery, credit, the

making-up of soft furnishing and the provision restaurants,

cloakrooms, telephones, etc.

2.5.2 Specialty Stores

A Specially Store has narrow product line with deep assortment (i.e.,

has more in the same product category) and provides a high degree of

customer service. You will notice that in complete contrast to

Department stores, specialty stores have narrow product line or

narrow variety but deep assortment. It means there are a few products

with a wide variety of range, quality and colour for customers to

choose. This offers customers after selection along with assistance in

selections by stores sales people. Examples of this kind of Indian

context are: Planet M, Music World and many apparel and shoe

stores. Zodiac and Park Avenue (Raymond) are men’s specialty store.

A retail store selling a great variety of a particular characteristic group

of merchandise is known as an Emporium (saree emporium, art

emporium, etc).

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2.5.3 Discount Stores

A discount store is a general merchandise retailer that offers broad

variety of merchandise, shallow assortment, limited service and low

price. Discount stores tend to have characteristics such as:

• Very low prices (value of money)

• Low gross margins.

• High degree of self-service (no frills attached)

• Low-cost fittings.

• No free services, such as delivery

• Reliance on heavy advertising in nearby large population

centres.

• Relative isolation of locations from conventional shopping

areas with consequently low rents predominantly in ‘edge-of-

town’ sites (highways).

The dependence is therefore on shoppers requiring:

• Good communications

• Plenty of parking space

• Visibility of the site from some distance.

The examples of discount store chains are Wal-Mart and K-Mart. In

India, so far discount stores have not appeared on retail scene in a big

way. The reasons are three fold. Unlike most western countries,

Indian manufactures have much higher bargaining power with their

retailers. As there are very large number of small retailers and no

retail association with the influence to negotiate with manufacturers.

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The other reason is that retailers themselves do not have economies of

scale to offer discount on their own. In general, merchandise retailing,

factors like MRP-prescribed pricing and single countrywide pricing

policies adopted by most organized vendors deter the growth of

discount stores in the country.

Subhiksha of Chennai was the first chain to adopt discounting as key

strategy. Other food chains and super markets have started offering

discounts but in a limited manner.

Some other forms of discount formats found predominantly in west:

• There are discount specialty formats as well they specialize in

a given type of merchandise lines.

• There are discount stores (found in the large numbers)

adopting an everyday low pricing strategy and they are known

as an Every Day Low Price (EDLP) format.

• A category killer format is a large specialty store featuring an

enormous selection of its product category at relatively lower

prices.

• The factory outlet format is owned and operated by the

manufacturer selling their discontinued merchandise, factory

seconds, cancelled orders, etc., at very low prices located in the

adjacency of the factory itself. Some of the textile mills in

Mumbai like Bombay Dyeing and Morarjee have their factory

outlets in the precincts of their factories.

• The warehouse format is a large sale of discounted

merchandise by an individual or an organization in the free

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access ambience of a warehouse. This format has a large width

and depth of the multi categories in retails.

• A single price denomination format store retails scrambled

merchandise lines at just one price point, which is generally a

low price point. Such retail outlets are famous in the US and

the best example of this format is the Dollar stores spread

across the country. Similar to this are some Indian stores where

every item is Rs. 5 or 15 mainly having plastic toys or hair

clips/bands etc.

2.5.4 Super Markets, Superstores and Hypermarkets

A super market is a self-service food store offering groceries along

with other merchandise for household maintenance and laundry, etc.

and size of under 25,000 square feet. They are relatively large, low-

cost, low-margin, high volume, and self-service stores. Number of

supermarkets has come up in most cities in last few years. A typical

Indian Super Market is about 3000 square feet.

Superstores are large supermarkets of 25,000 plus square feet. A

superstore has space for offering known traditional goods and

services like a pharmacy, a flower shop, a bookstore, a salad bar, a

bakery, etc. under one roof (Nilgiris, Banglore).

A shopping mall is an arrangement of retail stores and other places

for leisure time activities such as dining, entertainment, etc, selected

on their contribution to an overall merchandising plan. A mall is

spread over a large area of more than 200000 square feet and runs as

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an integrated business by an individual or an organization, to which

independent retailers pay for opportunities to participate.

A shopping centre or a plaza is a configuration of five or more tenant

spaces of approximately, 1,000 square feet, each used for retailing

developed under one building plan in such a way to have a unified

character. (Kannaiya shopping centre in Linking Road, Mumbai,

Fountain Plaza, Egmore, Chennai, Basant Lok in Vasant Vihar, ND.

The term ‘hypermarket’ is reserved for units over 50,000 square feet

selling area or more, retailing groceries, general merchandise goods,

pharmacy, flower shop, photo shop, other concessions, etc. with a

wide variety of merchandise offering in large quantities in each

category selling huge volume at less margins (Ansal Plaza, ND.4

Characteristics of above type of retail formats are:

• Substantial surface car parking spaces under the control of the

superstore retailer and serving the superstore largely or

exclusively.

• A range of 25,000-30,000 individual items, covering most

foods and many non-foods (the latter may take up 40 per cent

of the total selling area).

• A broadly similar pricing, service and general marketing

strategy to the discount store.

• The comprehensive in-store use of information technology

such as electronic point-of-sale equipment, and advanced food

preparation equipment, e.g. for in-store bakeries.

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2.6 Types of Retailers Based on Operational Structure

These are types of retailers which include independent traders,

multiple chain stores, cooperative societies, concessionaires, and

franchising. They are different from the merchandise-based store

because they have independent supply mechanisms and hence price

variations are high.

2.6.1 Independent Traders

A single individual or sole trader owns the majority of shops in India.

Even in US more than 90 % of retailers own and operate single stores.

Independents are defined as retail organizations (other than co-

operative societies) with less than ten branches or no branches. The

usual number of branches controlled by the sole trader is one or at the

most two. A family mostly owns this type of retail format with high

dependence on the owner. Kirana shops, drug stores, STD/PCO

outlets etc. are very good examples of such retailers.

As most of retail sales come from unorganized retail (organized retail

being only 2 % of total retail sales), almost 98 % retail sales is

generated by Independents. However, in developed economies,

though there are large numbers of independent traders (over 90 % in

US), their market share is less than 50%.5

Advantages of the Independent Traders

• As the owner (management) has direct contact with the

customers and therefore can quickly respond to their needs.

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• Independent traders can be very flexible owing to their small

size/small operations.

• They are not bound by any bureaucratic rules that may restrict

retail chains or cooperative society managed stores. So, they

can free to locate their store wherever they want and the type of

merchandise they sell.

Disadvantages of the sole trader

• Price competition from retail multiples who can reduce their

costs through bulk buying and other economies of scale.

• Lack of specialist expertise in retail functions, e.g. buying, in

store merchandising, accounting, or possibly lack of time to

carry them out adequately. Single store retailers have to rely on

owner-managers’ capabilities to make broad range of retail

decisions.

• The cost of advertisement and promotion is very high for a

single store.

• Lack of capital to expand and improve the business. Especially

in case of networking and use of IT for development of

business, the expenditures are too high for a single store.

• Inertia-the small trader may not wish to expand because of the

extra problems expansion brings.

• Due to high accommodation costs the independent often lacks

the advantage of being in a large shopping centre with heavy

pedestrian traffic generation.

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• Changing shopping habits brought about by increased car usage

has concentrated purchase in large well-located ‘one-stop’

stores in cities.

2.6.2 Multiple or Retail Chain Stores

The large multiple retail organization is invariably of the join-stock

company type (either private or public) and therefore in common

ownership with a degree of centralized control. A large multiple is

defined as an organization (other than co-operative) with ten or more

branches. This form is strongest in department stores, specialty stores,

variety stores, food stores, drug stores etc. Their size allows them to

buy in large quantities at lower prices, and they can afford to hire

specialists to deal with pricing, promotion, merchandising, inventory

control, etc.

Most chains have well defined management philosophies. Consistent

strategies with reference to store hours, product assortment, prices,

sales personnel, promotion and other policies must be maintained

throughout all branches in order to project a particular image of the

chain. This call for centralized decision making which in turn result in

difficulties for individual units in adapting to local needs of the target

markets. These also limit innovation of individual units.

In India many manufacturer own retail chains, which then sell their

products only. Examples of this kind of are Videocon Plazas, BPL

Gallery, Raymond, Titan Watches, etc.

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Another form of multiple chains is Voluntary Chain. A Wholesaler –

sponsored group of independent retailers engaged in bulk buying and

common merchandising is called Voluntary chain.

2.6.3 Co-operative Societies

The Co-operative Movement began in Rochdale in 1844. A co-

operative society is defined as a co-operative retailing organization

trading on co-operative principles, affiliated to the National Co-

operative Movement (through the Cooperative Union) and registered

under the Cooperative Societies Acts. Because many retail co-

operative societies operate branches they are in this respect similar to

multiple chains, but in the form of organization and control they are

in many ways quite different.

The principles of the Movement applicable to retailing are:

• Voluntary and open membership

• Democratic control; one member one vote

• Payment of limited interest on capital

Sahakari Bhandar and Bazar are two leading Mumbai based

cooperative chains. Delhi has couple of large cooperatives. Mother

Dairy of Delhi even distributes fresh vegetable from its milk

distribution centres. Milk cooperatives are believed to have a

substantial 10 percent share of the all India market which is about Rs.

60,000-70,000 crores.

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Another form of cooperative is a Consumer Cooperative, which is a

retail firm owned customer. Such societies can be seen in the

educational campuses etc.

In contrast to cooperative, independent retailers who set up a central

buying organization is called a Retailer Cooperative.

2.6.4 Concessionaire

The stopover store format it one that rides piggyback on another retail

outlet, say a petrol pump. This stopover format is a concession that

offers instant use or ready to eat categories of merchandise.

A Kiosk is one such concessionaire format placed in a mall or a

shopping centre or a bus station, airport, etc. A kiosk is a small

freestanding open pavilion often open on one or more sides used for

information, sales and promotion.

Partnership and alliances for concessions offer a great deal of

opportunity for increasing customer contact, share of mind and share

of heart especially in large formats such as department stores, mall

and hypermarkets. By striking trust, or with complementary

marketers who are concessionaires, a retailer can add convenience,

and broaden his relationship with customers.

In addition to alliances such as McDonald’s with Crossroads, Qwikys

with Lifestyle, Ritazza with Shoppers’ stop, retail ventures are trying

to link with such concessions as travel, information, entertainment,

communication, etc. in order to hit upon that winning signature

configuration.

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2.6.5 Franchising

Franchising is the granting of sole selling rights within a given

geographical area. The franchising company (the franchiser) supplies

equipment and/ or raw materials for a license who either pays a

franchise fee or a percentage of turnover, or contracts to buy supplies

from the franchiser( or a mixture of these methods of payment). The

licensee is also helped in finding a location and is trained in all

aspects of the business. Generally, franchises are distinguished by

three characteristics:

• The franchiser owns a trade or service and licenses it to

franchises in return for royalty payments.

• The franchiser pays for a part of the system. This is normally in

two parts, one initial fee, which is only a small part of the total

amount. Second, service fee on turnover on monthly or

quarterly basis.

• The franchiser provides its franchisee with marketing and

operations systems for doing business.

Franchising is beneficial to both franchiser and franchisee. Benefits

to franchiser are:

• Covering new territory.

• The franchisees familiarity with community and conditio ns.

• Hard work of persons who are entrepreneurs rather than

employees.

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Benefits to franchisee are:

• Buying into a proven business with a well known and accepted

brand name,

• Receiving support in areas of marketing, advertising, site

selection, training /staffing.

• Borrowing money from banks becomes easier.

The most common problems in franchising business are:

• Franchiser encroaching on franchises’ territory by bringing in

another franchisee same locality,

• Exaggerated claim of support by franchiser, and

• High failure rate.

Franchising is most frequently found in service retailing such as, car

maintenance (Maruti), education (NIIT, APTECH computer centres)

etc.; retail catering (Kentucky Fried Chicken, McDonald), etc.

2.7 Non-store Retailing

2.7.1 Mail Order

Mail order retailing- using the mail to get orders and/or facilitate

delivery- takes several forms as follows:

2.7.2 Mail Order Catalogues

These are mainly of two types- the general merchandise catalogue,

and the specialist catalogue. Much of the selling is done through a

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network of part-time agents who are paid a commission to give on the

things they sell.

The advantages of the general merchandise mail order catalogue to

the customer are:

• ‘Free’ credit

• Price stability over the lifetime of the catalogue

• Savings in transport fares and petrol

• Wide selection of merchandise

2.7.3 Direct Response Advertising

This is the use of advertising in newspapers or magazines to describe

a product and stimulate the customer to write or telephone for it. Most

national newspapers have a Saturday bargain squares section

advertising all manner of postal bargains.

2.7.4 Direct mail

This is the use of advertising literature sent directly to the potential

customer for the purpose of selling goods or services. The Reader’s

Digest have been particularly successful in selling books in this

manner and records, tapes and collectors pieces are also sold via

direct mail.

2.7.5 Direct Selling

Direct selling that is direct selling of the product by salesman to you

takes several forms as follows:

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2.7.6 Door-to-door Trading

Selling by sales persons is being done to launch new products. A

variety of foodstuffs are also regularly delivered to the doorstep, e.g.

milk, bread, eggs, vegetables. Avon cosmetics are sold in this manner.

2.7.7 Mobile Shops

These are travelling shops and are distinct from which milk, bread,

news papers etc. are delivered. Vegetables, plastic toys and other

small goods of house hold use are sold by hand driven carts.

2.7.8 Markets (Haats)

Haats or rural markets remain the traditional way of retailing in rural

and semi-urban India. In these markets, sellers bring their

merchandise on particular day (s) to particular place. Vegetables,

groceries and housed items are sold in this type of markets. Name of

many localities were derived because on a particular day a Haat

would be organised there. For example: Itwara, Budhwara,

Mangalwara etc.

2.7.9 Automatic Vending

Selling out of machines has been part of the retail scene for many

years (particularly for making a local telephone call) and there has

been something of a recent boom in auto-vending, notably in closed,

relatively vandal-proof areas such as sports centres and airports. This

possible limitation reduces the main advantage of the machine in that

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they can be in operation for twenty-four hours a day, seven days a

week. Banks are providing this type of service through ATMs.

2.7.10 Electronic Retailing

Electronic retailing has two formats, namely, television shopping and

on-line computer shopping services.

2.7.11 Retailing through Television

In this retail format customers watch aTV programme demonstrating

merchandise and then place an order over telephone. Major players in

India are Asian Sky Shop, TSN, TVC, Tale brands etc.

2.7.12 Retailing through Internet

In this retail format customers and retailer communicate through an

interactive electronic system (internet). After browsing through and

satisfying himself customer places an order through internet, phone or

by mail. Major retailer in India using this format is Jaldi.com,

Indiainfo.com, and Rediff.com. Amazon.com has established itself as

a major no-store book retailer.

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REFERENCES

1. Amazon.com 2. Middle-East Journal of Scientfic Research 3. Global Retail Development Index

4. retailyatra.com

5. retailindia/asia.com

-----:o:-----

Chapter-3

EMERGING TRENDS

IN APPAREL RETAILING

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3.1 Influence of Fashion

Fashion has played a key role in shaping apparel consumerism. With

the change in lifestyle, fashion in India is becoming more stratified, as

in the West. Technology, ideas and lifestyles are moving concurrently

and speedily. Companies and brands that offered monotonous,

mundane products for years have now tripled their product ranges and

new appealing shapes and forms are being launched each season. Top

notch professional bodies in fashion trade are now working towards

developing the fashion supply chain through backward linkages with

suppliers and mills, and forward linkages with the retail and

distribution network. In the minds of apparel customers, where they

shop and what they wear are cultural touchstones. Customers define

their identities by the stores where they shop and the brands they

endorse or reject. They project their affinities, their societal status and

their tastes via the clothes they purchase.

However, apparel retailers are confronting the increased pace and

complexity impacting their industry and are challenged to emerge

with a value proposition for their customers. A great deal is changing.

The focus on fast-fashion and constantly rotating styles makes

accurate, timely category and merchandise planning an imperative.

Missing key fashion trends means losing relevancy with consumers.

3.1.1 India’s Fast-Growing Apparel Market

India’s apparel market is in the process of change. Rapid growth and

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rising urbanization have spawned a new class of consumers with

more money to spend, and a growing passion for fashion. In India’s

high-growth, fast-changing retail clothing market, we see significant

new growth opportunities for foreign and domestic players. Indian

apparel sales are expected to reach an estimated $25 billion in 2010,

having grown in excess of 10 percent over the past 5 years—a growth

rate faster than that of the overall India retail market—and the

trajectory is expected to continue. In India, apparel is the second

largest retail category (behind food and groceries), representing

approximately 10 percent of the total market.1 This growth is being

driven by a number of factors:

3.1.2 Increase in Disposable Income

By 2005, 21 million of India’s 210 million households already

earned more than $4,000 a year, qualifying them for membership in

what we call “the consuming class.” Based on McKinsey Research

2005, by 2015 the number of consuming class households will likely

triple to 64 million.

3.1.3 New Occasions

As the lifestyles of India’s prospering urban consumers have evolved,

their clothing needs have broadened, reflecting more varied usage

occasions. For men, clothing choices once came primarily in three

basic categories: home-wear, work clothes, and special occasion

wear. Now, with more “socializing” opportunities, men are buying

more sophisticated combinations of outfits:

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1) Party wear

2) Sports wear

3) Clothes for hanging out at the mall.

Not long ago, for example, men from India’s northern regions only

required a good dark suit or Sherwani, the traditional long coat, to

cover big occasions and important celebrations. But over the past

several years, men have begun to supplement those staples with

expensive Western style jackets, and collared shirts—some in

“funky” patterns and cut for a night on the town, others in stripes or

checks for casual meetings with important business associates. Today,

Indians are more inclined than consumers in other markets to buy

apparel for a specific purpose. Indeed, 38 percent of Indian

respondents to a recent McKinsey Study2012 said they were highly

likely to buy apparel for special events—a significantly higher

proportion than in Brazil (5 percent), Russia (3 percent) or China (6

percent). Family celebrations and weddings continue to eat up an

enormous share of Indian consumers’ clothing budgets.2

3.1.4 Growth in the Women’s Segment

Historically, the men’s apparel market in India has been significantly

larger than the women’s apparel market. With only 20 percent of

India’s urban women in the workforce, women’s wardrobes have

traditionally been limited to home wear and items for special

occasions. Now, women are more willing to dress differently when

they venture beyond the home—to shop, for example, or visit a

school or office.

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3.1.5 Fashion Increasingly a Form of Self-Expression

Increasingly, Indian consumers are embracing the idea of fashion for

its own sake, as a means of self-expression, and not merely as a

functional purchase. Television, movies, advertising & Internet

bombard today’s Indian consumer with new ideas about style, even as

American-style shopping malls lure them away from traditional

marketplaces. Traditional clothing remains central to the way

consumers dress, and the quality and craftsmanship of classic Indian

clothing have drawn rave reviews in recent years from some of the

world’s leading designers, style magazines, and fashion blogs. In a

recent McKinsey survey of Indian consumers, 62 percent said they

thought it was important to “keep up with trends.” More than ever,

Indian consumers are experimenting with combining styles, as seen in

the recent “Indo-fusion,” boom, which mixes the silhouettes of the

East with the comfort cut of the West. Over the next five years, we

expect this growth to continue and the size of the market to nearly

double. The increase will come partly from continued gains in

disposable income, but it’s not just that Indians have more to spend.

As they prosper, Indian consumers will naturally continue to spend

more of what they earn on what they wear. Our experience suggests

consumers worldwide typically spend an average of 5-6 percent of

total income on apparel, but the figure is often significantly higher in

emerging markets. Consumers in China’s larger cities, for example,

spend 10 percent of their income on clothing, nearly double what

their counterparts in Indian cities spend. That higher propensity to

spend on clothes has helped to make China’s apparel market 4-6

times larger than India’s. Brazil’s consumers similarly spend more

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per capita on clothing than either India’s or China’s. Besides

continued momentum from the trends mentioned above, we see two

additional forces that will inject further growth into India’s apparel

sector:

3.1.6 Further Urbanization and the Comparative Youth of India’s

Population

At present, just 29 percent of India’s population resides in cities,

among the lowest urbanization rates of any nation in the world.3 But

that has been changing. Over the next 20 years, we expect the number

of Indians living in cities to grow by 300 million, where they will don

new styles and fashions to match new lifestyles. A large percentage of

these new city dwellers will be in their twenties, and making first-

time choices for whole categories of clothing items including denims,

shirts, and even shoes.

3.1.7 Continued Rise of Organized Retail

Large, branded store chains where products are systematically

stocked and displayed, will speed the transformation of consumer

preferences. For now, organized retail accounts for less than 20

percent of all Indian apparel purchases; the rest takes place in tiny,

family-run shops. But over the past five years, scores of shopping

malls have opened on the outskirts of India’s largest cities and the

trend is sure to accelerate. New formats on the scene include “export

overrun” discounters, international franchises, hypermarkets, and

luxury European boutiques.

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These changes will have far-reaching implications for designers,

manufacturers, and retailers targeting the Indian apparel market.

Spanish fashion giant Inditex (Zara) has announced plans to enter

India. Fast Retailing (Uniqlo) has pegged 2012 for market entry.

But as in the fashion industry everywhere, success in India will

depend on getting many things right at once: figuring out what

consumers want, developing a profitable retail concept, and building a

solid team. How, then, to compete in this promising but fast-changing

market? We see three success factors:

3.1.8 Shape the Category

Winners will innovate occasions, looks, and wardrobes; the focus will

therefore be broader than just building brands. This is already being

done in some areas: over the past three years, for instance, major

jewellery brands have revived a 5,000 year-old “sacred” day known

as “Akshay Tritha,” which now accounts for the largest single-day

jewellery sales in India. Similarly, the “Friday dressing” concept,

introduced by one apparel brand, asked young professionals to buy

brighter colours for Fridays, expanding the wardrobe in the process.

Equally critical will be innovating styles: saree-suits, for example,

and other fusion approaches that simplify otherwise difficult -to-wear

apparel have thus far proven more successful than typical Western

suits and evening dresses.

There is even a place for more cutting-edge trends such as organic

clothing: apparel retailers Van Heusen and Arrow recently launched

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100 percent organic lines made of cotton, linen, and natural dyes.

3.1.9 Focus on Inventory and Markdown Management

Today, apparel is one of India’s most attractive business segments

due to its high margins. Looking at an index based on the cost of a

basic white shirt, we have found that Indian apparel prices have

doubled over the last decade, and tend to be 25 to 30 percent higher

than in China as a result of supply chain inefficiencies and restricted

competition.

Apparel is the most profitable segment of the Indian retail

market today

Category Typical

retailer

margins

Description

Food 15-20% More than 80% organized retail in India

is food-however margins are not as high

Apparel 35-50% Highest retailer margins through apparel

The more organized segments like men’s

formals provide the highest returns

Electronics 5-10% Household appliances may provide as

much as 8-10%, however categories like

cell phones may be as low as 5-6 %

Table 3.1

Source : McKinsey Research 2012

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We expect that situation to change as India’s fashion industry draws

new players and capital in years to come. For one thing, apparel retail

in India relies heavily on sales promotions and special events.

Tempting as it will be to bring Western concepts like “fast fashion”

and large assortments to India out of the gate, innovation has its risks,

including higher markdowns and lower sell-through if the new offer

or collection is not a hit. And uncertainty on inventory management

and ordering in the absence of historical sales data is likely to be the

norm. Winners will need to get the back-end operations right much

earlier than the scale of the market suggests: managing margin

through smarter in-season markdowns, a disciplined balance between

core fashion and high fashion, managing inventory through a proper

mix of made-to-order and later engagement rates, and keeping 50 to

60 percent of regularly restocked items at the core have become part

of a winning retail formula. Though optimum margins on these pieces

of clothing may not be as much as the more expensive, high-impact

fashion pieces, they keep customers coming back regularly. The high

fashion range should be advertised and showcased, but kept only to

10 to 15 percent of inventory to reduce the impact of markdowns.

3.1.10 Take a Segmented View of the Market

As in many other emerging markets, not all consumer segments or

geographies are the same. Research, for example, shows that some

segments of apparel shoppers spent 20 times more than others-driven

not only by income, but also by lifestyle. For example, consumers in

the north tend to spend more than in other regions due to cooler

climates and different approaches to social occasions. Similarly,

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retailers cannot ignore the smaller cities, which will drive apparel

growth opportunities, even for more expensive brands. Benetton, for

example, recently hit $100 million in sales in India, and is targeting

$250 million within the next 3-4 years, largely by targeting smaller

cities, which are already contributing about 20 percent to the

company’s growth and growing much more quickly than in the larger

markets.4 Winners who want to build real scale in India will be those

who understand the market in a granular manner, and then “own” the

customer throughout their lifecycle with a portfolio of brands, price

points, and formats.

3.2 The Changing Face of Fashion Industry

India is a country with diversified customs and cultures. People

following various traditions live here, their way of dressing also differ

from each other. The traces of Indians being fashionable can be found

out from the ancient remains of Harappa and Mohenjodaro

civilizations. After the independence, globalization is being witnessed

in the Indian fashion industry, due to which changes have occurred in

the style of Indian dressing.

Styles of wearing saris and salwar-kameez have changed. The look is

more cosmopolitan than region-specific. Different styles of blouses

like, halter neck, back button blouses, high neck blouses, puffed

sleeve blouses, etc. have become the hot favourite among women.

The average lengths of the blouses have decreased. Saris are draped

mostly in traditional back pallo style or gujarati style. Indian fashion

scene is greatly influenced by its films. For example Mumtaz style

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sari draping inspired by yester-year heroine Mumtaz. Here sari is

tightly draped around the body.

As far as salwar-kameez is concerned numerous styles and patterns

can be given to this garment. For instance the kameez can be long,

short, A-line, skin tight, etc. Such variations can be done to salwar as

well as dupattas. Modern version of kameez is known as kurti, it

could be coupled with jeans, pants or churidar. It has taken the form

of Indo-western outfit. People in western countries too have started

wearing kurtis.

3.2.1 Emergence of Mall Culture

Mall culture is slowly and steadily growing in India. Many brands

and private labels are launched in the Indian market. The first such

retail outlet was Shoppers Stop which launched India’s first multi-

brand store in the year 1993.

The specialty of such malls is that they offer a wide range of varied

branded stuff, all under single roof. Some of the famous malls of

India are Pantaloons, Westside, Lifestyle, Globus, etc. These retail

outlets have also launched clothing line under private labels,

manufactured and sold by them. For example- Pantaloons has many

private labels under its brand like All, Fashion station and Mela.

Some of the major private labels even operate as exclusive stores. The

buyer gets an international shopping experience in such retail outlets.

There are no nagging sales persons pressurizing the customers to

buy/purchase.

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Family stores are becoming hot favorite shopping hub for the middle-

class and upper middle class shoppers. These stores sell garments of

nearly all age groups and sexes. Apparels of various brands can be

found in family stores. They are being considered as one-stop

shopping destination. Roopam, Big Bazaar, Fashion station, V-mart,

Maxx, etc are examples of some family stores.

3.2.2 Boutiques

Another aspect seen in the changing face of Indian garment industry

is the increasing popularity of 'Boutiques'. A boutique is a small shop

or departmental store selling designer, unique and trendy products. A

wide range of items can be displayed in a boutique like watches,

eveningwear, sportswear, t-shirts, tuxedos, etc. Boutiques are

generally specialty stores. Exclusive designer items can be purchased

from such stores. High profile designers of India mainly merchandise

through their personal boutiques. However it is not mandatory that

only famous designer open a boutique. Even common person could

do it and make it big in this field. It could be started even with small

investment of money. More and more Indians are inclining towards

designer wear outfits due to increase in income of the people. India's

first boutique was opened in Mumbai in 1965 named 'Dagina' by Mr.

Chandu Morarjee. Boutiques are operated both online and offline, this

concept is yielding positive outcome for the retailers.

The emergence of fashion boutiques started from Mumbai, them

spreading onto Delhi, Chennai and other metropolitan and big cities

of India. Also to support this concept, art galleries came up which

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usually showcase either ready-to-wear or ready-to-stitch garments.

India's first art gallery was opened by Gunvanti Vilji in Mumbai in

1972 under the name 'Aakar art gallery'.

These fashion stores or designer boutiques display items which

cannot be found in common retail malls or shops. These specialty

stores even make customized garments that are made to order. Some

time back only rich and famous people were customers of such

boutiques, but now due to increasing demand of designer outfits more

and more fashions stores are opening up.

A new genre of talented housewife developed who used to design

designer outfits under their own private labels. These are the

designers whose clientele ranges from a common Indians to the

affluent class people.

The next step in retail concept was the surfacing of 'Fashion Houses',

which are headed by eminent designers. Ensemble was the first

fashion house of India founded in 1987. The collections available in

these outlets have very high price tag which could be afforded by the

rich customers only.5

3.2.3 Advent of Brands

The market of branded garments is growing up in India. More and

more people are switching on to branded apparel than non-branded

ones as it provides quality assurance. Liberty shirts were the first

company to sell shirts under its brand name in India during 1950's.

Then there was no looking back for the branded apparel market.

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Many national as well as international brands have established

themselves in Indian garment industry. Allen Solly, Van Heusen,

Louis Philipe, Charagh Din, Raymonds, Arrow, etc. are some leading

national brands. The branded apparel market saw a boost due to

growing denim demand. Many international brands entered the denim

industry in India like- Lee, Levi's, Seven Jeans, Pepe Jeans, etc. But

these foreign brands get a tough competition from Indian branded

denim manufacturers like Flying Machine, Wrangler, Killer, Numero

Uno, etc. Branded clothes have captivated the market of both

menswear and women's wear and slowly catching up in childrenwear

segment. The Indian consumer has become brand conscious which is

a sign of globalization of Indian apparel industry.

3.2.4 Fashion on the Ramp

Displaying clothes through fashion shows is a western concept but

now have become a common fashion event in India. In fashion

catwalk the models display the collection of designers on ramp. In

1932 the first fashion catwalk was organized in India at Taj Mahal

hotel by Catherine Courtney. Fashion catwalk in India was started by

Sylla and Nergish, the Spencer sisters. Now many conceptual, theme

based fashion shows are being held in contrast to simpler forms of

catwalk of yester years.

3.2.5 Beauty Pageants

In India the popularity of beauty pageants have increased, especially

Miss India contests. It has widely influenced the Indian fashion

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scenario. These contests are sponsored by leading companies related

to textile, apparel, fashion and media.

Miss India contest was first held in 1964 which was organized by

Femina group. Reita Faria was the first Miss India to won

international title of Miss World in 1966. She was followed by Zeenat

Amaan winning the crown of Miss Asia-Pacific in 1970. Further the

beauties who made it to the international beauty titles were Sushmita

Sen ( Miss Universe 1994), Aishwarya Rai (Miss World 1994), Diana

Hayden (Miss World 1997), Yukta Mookhey (Miss World 1999),

Lara Dutta (Miss Universe 2000), Priyanka Chopra ( Miss World

2000) and Dia Mirza ( Miss Asia-Pacific 2000). Eminent designers

display their collection through the stunning outfits worn by these

beauties. Indian fashion got international exposure and acclamation

through the medium of such beauty contests.

3.2.6 Budding Designers

Indians have started experimenting with fashion trends and styles;

they are all geared up for the international exposure. This fact can be

proved by the existence of 80 plus odd small and big fashion schools

in India. Thousands of designers are produced every year by these

institutes. Designers are getting exposure through fashion weeks, here

they can show their talent to Indian and foreign audience.

These fashion weeks have contributed to the change in style

preference especially in women’s wear. Indo-western or fusion wear

is the most preferred manner of dressing gaining popularity globally.

Pure traditional outfits are worn on special occasions only. Earlier

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buying designer wear outfit was a very costly affair and upper class

people could only afford them. But now it is possible for the common

people to wear designer clothes, this change occurred due to

popularity of diffusion of fashion.

3.3 The Rising Mall Culture

Organized retail in India has undergone sea changes in the post-

liberation era. Malls, a trend pioneered in the west is solely catching

up in the Indian scenario. There are many factors which have spurred

this development. The two more important factors are:

• Severe dearth of organized retail.

• The necessity to replicate the mall experience of shopping in

countries other than India.

During the initial stages, malls were providing the image benchmarks

for communities. Then the people moving to new suburbs started to

view the emergence of malls in the vicinity of their residences as very

essential for improving the quality of their life and convenience. This

was possible through malls as they provided retail and entertainment

in a controlled internal environment. In fact it can be said that it is

the ‘quality of life’ factor which has led to the emergence of the mall

culture in India. For instance, in Mumbai one of the largest real estate

developers, C.L.Raheja group, pioneered the mall scene with

Shoppers’ Stop chain of departmental stores. Hiranandani’s is another

example, where they as a real estate developer run the Haiko

Supermarket and The Loft, a shoe shop chain in Powai (Mumbai).

This is in keeping with the global trend where Wal-Mart, the World’s

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largest retailer is also the largest real estate developer, as they own

most of their stores across the world. This implies that a well

integrated real estate strategy forms a critical part of the Wal-Mart’s

success story.

The success of India’s first three malls namely, Spenders’ Plaza in

Chennai, The Asnal Plaza in Delhi and The Crossroads Malls in

Mumbai has given a boost to the market. Simultaneously, Indian

consumers especially the cash rich middle class have changed the

face of retailing, with malls becoming the norm for shopping.

In fact, it is said that organized retail growth is at 35 percent

compared to a 6 percent growth of unorganized retail. On the basis of

a white paper prepared by KSA Technopak, India needs to create at

least 110 million square foot of additional retail space per year on the

prediction of a sustained GDP growth rate of about 6 percent. The

following reasons can be attributed to the growth of malls in India:

• A fast growing middle class with higher discretionary income.

• It is estimated that the middle class of 300 million will increase

to 520 million in 5 years.

• The Indian economy is growing at 6.5 percent per annum

while the population is growing at 1.7 percent per annum.

• There will be an increase in the number of double income

households.

• Focus on the youth as a target market.

• Researchers reveal that consumer spending grew at a rate of 6

percent per annum in the last 10 years.

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• Influence of media and marketing communication resulting in

changing aspirations, lifestyle orientation and change in

consumer perceptions about shopping.

• Ability of mall developers to make shopping an enjoyable

experience through cost effectiveness, added convenience

along with the fun element put in.

Organized retailers are working at adding value to consumer’s

shopping experience through malls which provide the right mix of

shopping, eating joints and entertainment. Thus, the end result is a

great and complete shopping experience for the entire family in an

environment, where there is variety and choice. Malls, through value

addition in terms of customer care initiatives, special offer, events and

promotions are able to add to the shopping customers’ delight.6

3.3.1 Impulse Buying at Malls

It is said that with the rise of the mall format the incidence of impulse

buying has also increased among customers. Academicians define

impulse buying as a form of customer behaviour characterized by

buying goods which are not planned purchases. For example, one

may walk into a mall to buy a pair of high heeled shoes and may

come back with a dress, matching handbag and other unnecessary

accessories but without the high heeled shoes.

It is estimated that a major proportion of sales for malls is through

the impulse purchase account. In a study conducted by J. Jeffrey

Inman of the U.W. Madison A.C. Nielson Center for Marketing

Research and Russell S. Winter of the University of California at

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Berkeley, it was found that unplanned purchase accounted for 68

percent of items bought during major shopping trips and 54 percent of

smaller trips. The study involved studying the shopping behaviour of

4,200 consumers in 14 cities and taking into account 30,000

purchases. This study also indicated that impulse purchase to a great

extent depended upon the in-store display within a store, especially

near the cash counter.

According to retailers, impulse buying does not occur in all product

categories. More often than not impulse purchases get restricted to

purchases of low priced products such as CDs, apparel, and

cosmetics. But, according to Kris lyer, CEO Crossroads, the

definition of inexpensive may also vary from one person to another.

Hence, the products purchased on impulse may also vary from one

person to another. He continues “One person may consider an Rs

5,000 CD inexpensive and buy it on impulse, whereas, another person

might consider an Rs 500 CD inexpensive and buy that. “According

to Mehul Choksi,Chairman, Gitanjali Group (parent company for Gili

and D’damas) impulse purchases of branded jewellery especially at

malls, have been at prices ranging anywhere between Rs 5,000 and Rs

50,000. He adds that in the past few years sales of diamond jewellery

have increased from Rs 5000 crores to Rs 20,000 crores. As much of

Rs 2,500 corers can be attributed to impulse purchases.7

Another example is of the Arvind brands, which are available at malls

as well as at standalone stores. This aspect is asserted by Darshan

Mehta, CEO Arvind Brands, who says “There is a greater incidence

of our product being picked up at malls as an impulse purchase.”Mall

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and brand management calls for employing various strategies to lure

customers to go for impulse purchases.

These strategies include:

• Design malls with attractors or anchor tenants and interceptors.

Attractors refer to the large department stores or popular food

chains, strategically located at the four corners of the mall

which draws a lot of footfalls, encourages widow shopping and

can result in impulse buying behavior among consumers.

• Use attractive visual merchandise, make point of sale areas and

service covers as focal points, and provide a high level of

service showing concern for customers. Such concerns will

enable the customer to experience carefree shopping, enjoy

quick and efficient customer service, home delivery, gift

wrapping services etc.- all of which can not only include

impulse buying but in the long run even translate into brand

loyalty.

Since impulse buying and unplanned purchases constitute a

large part of sales at malls, many retailers are attempting at

trying innovative methods to increase the incidence of impulse

buying. Moreover, many major brands are opting to include

malls in their distribution network to take advantage of

impulse purchases. In the words of Mehul Choksi, Chairman,

Gitanjali group, “Malls have so many footfalls that there is a

greater chance that a shopper who has come to buy a perfume

wanders over to a jewellery booth next door and ends up

buying some jewellery instead.” He also believes that since

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malls have major brands, consumers feel confident that the

products available at malls will be of high quality and such

consumer confidence facilitates impulse sales.

3.3.2 Factors Affecting the Success of Malls

Malls are here to stay and with time, they will need to differentiate

themselves and work towards building long lasting relationship with

customers, ensuring repeatability of visit and purchases. Having a

proper mall management system calls for looking into the following:

• Manage customers more efficiently by working out retention

programmes.

• Use information technology to develop the right information

base on keeping a track of where money is flowing, what is

being sold (i.e. which and brand of goods are selling fast) etc.

to work towards creating a specialty mall. For instance, the

Wedding Mall at Gurgaon.

• Install a mall planning software to take care of planning and

analysis of revenue to provide and support proper management.

• Retail space in mall is much more than just a commodity

because of its varied mix, distinct identity and tenant mix. This

differentiating factor providing value propositions to the

consumer can be achieved through proper mall management

and the anchors in the mall. For instance, the same mall is

house for competitors like Shoppers Stop and Lifestyle.

• Make shopping in mall a pleasurable experience by providing

tangible as well as intangible benefits to customers. For

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example, The Forum provides tangible and intangible benefits

to its shoppers. Tangible benefits are in the form of parking

space for vehicles, air-conditioning, seating, activities and in

house promotions and mall management. Intangible benefits

include continued service, assistance to consumers and

maintenance of a good tenant mix.

• The success of a mall party depends on the presence of other

stores within the mall and especially on the mall’s anchor

stores. The agglomeration of such stores helps consumers is

attracted to reduce their search costs. Retailers across the globe

agree that consumers are attracted to malls because of the

presence of well known anchor stores. Thus, a large number of

footfalls can result in more sales. Moreover, the anchor stores

not only help to generate mall traffic by increasing sales but

can also help to reduce the cost towards promotions and other

overhead costs for a smaller store. Customers are attracted

toward large stores with established reputations to purchases

products. While, the mall developers can bank on the long

standing reputation of such stores and the benefits it would

create for them in the long run.

• Malls need to provide the right mix of organized shopping

stores (in terms of categories and formats), food courts (or

eating joints) and entertainment (games, movies etc.). The

retail space at the mall should be properly planned so that the

end result will be a great and complete shopping experience for

the family in an environment, where there is variety and choice.

The ‘value addition’ provided at the mall must clearly be

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defined to include customer care initiative, special offers,

events and promotion- to add convenience along with a fun

element to the shopping experience.

Many of the retailers are locating themselves in mall as the latter have

an Advantage of attracting footfalls which helps in reducing their

marketing costs. For, while a retailer on a standalone location may

take about five years to earn good returns, in a mall the retailer is

likely to take only half of that period. Thus, in spite of having to pay a

bit more on rental/lease, the high footfalls in the mall would enable

them to earn higher revenues. Nevertheless, ultimately, the true

success of a mall largely depends on a critical mix of retail, food and

entertainment in an appropriate proposition. For, while shopping at

malls, consumers are seeking variety, convenience and quality.

3.4 Application of Information Technology (IT) In

Apparel Retailing

Information technology has revolutionized every business. It has

entered in every aspect of doing business and retailing is no exception

to it. Even very small retailers use computers for some sort of

information management. Today, retailers need for more information

and that too very fast and better tool to analyse the information

available to make quick and better decisions. Information technology

promises to deliver all these three things that are providing data, as

soon as it is required and tools to process data.

Information Technology is crucial for modern organized retailing.

Without the application of information technology, various core-

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retailing elements like store operations, merchandising, inventory

control simply cannot function in an effective and efficient manner.

IT is also the basis of some key innovations like Supply Chain

Management (SCM), Quick Response (QR) or Efficient Customer

Response (ECR) and Collaborative Planning and Forecasting (CPFR).

3.4.1 Areas Where It Will Have Most Impact

For retailers, main operational areas that can be computerized are:

inventory control, point of sale and analysis, planning and

forecasting, and administration, accounts, and database of customers,

suppliers, etc.

3.4.2 Inventory Control

The basic function of any information system is inventory

classification. For example, a men’s clothes specialty store may sell

men’s shirts, trousers, suits, ties, socks and other accessories, each

item within a category type carries a barcode that identifies the SKU.

That code or description makes it easier to purchase, receive and

distribute goods. Inventory control begins with ordering the item than

tracking merchandise form the time it is received to the time it is sold.

Inventory control also avoids out of stock and overstocking situations.

Thus always having the merchandise that customers want and not

losing sales. Information system should have these inventory-control

features/characterics.

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3.4.3 Point Of Sale (POS)

Point of sale is a place where computerizing retail business can have

its greatest advantages. Rapid and secure checkout is the first priority

of any retail operation. POS terminals capture the most important

data, the actual sale. This data come handy for leading retailers in

managing merchandise and inventory in a more efficient manner.

3.4.4 Sales Analysis

Sales analysis for retail means, viz., what are the fast mover stocks;

what is not selling; what is your stock position, how many units are

on order and what has been delivered; how many days supplies you

are left with based on past performance or projected sales; do you

need to make any adjustments or corrections etc. Answers to such

questions and many more can be given by a computerized

information system in an instant and many times by depicting graphs,

visuals and statistics.

3.4.5 Planning and Forecasting

Computer with relevant software can assist greatly in planning and

forecasting merchandise with the availability of voluminous data on

past sales, analysis with different variables on micro and macro level

becomes easier. For example, a retailer would like to analyse price

sensitivity of customers or what colours design had been best selling

in the past etc. Such data can be helpful in planning, forecasting,

budgeting and controlling, etc.

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3.4.6 Collaborative Planning, Forecasting and Replenishment

(CPFR)

By aligning forecasts of a retailer and a vendor, CPFR offers the

opportunity to increase in stock positions, gross margins and sales,

while reducing inventory investments and stock-outs. CPFR is based

on managing forecasts and inventory levels on an exception basis,

alerting participating organizations to potential problems, the excess

stock or nearing stock outs, while allowing them to concentrate on

further developing their businesses.

CPFR collaboration requires specific software that will enable data

analysis by exception. CPFR software must allow each company to

set its own exception rules, in order to manage exceptions that have

importance within its organization. The software should be internet-

based to give both retailers and vendors easy access to the data. In

addition, the software must have proven security in order to maintain

information confidentiality throughout the supply chain. Integrity

must be maintained so retailers have access to only their vendors’

information. In addition, vendors must be prevented from viewing

other vendors’ information.

3.4.7 Other Areas of Development

Other areas where most retailers have computerized are; payroll,

accounts, Database of customers, suppliers, return goods details, etc.

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3.5 Essential Requirement of an Information System

3.5.1 Be Simple for Clerks to Operate

The operating system should be simple to understand and easy to

operate by the clerks. Workstations are most commonly used at the

Point of Sale (POS). At the point of sale, the customers bring the item

with a barcode or other inventory label to the POS workstation and

the clerk either types in the product details or scans the barcode; the

correct price is displayed for that item for customer, on that day,

including any promotions like discounts. The transaction is stored and

posted the inventory, customer and vendors and the sales data is

stored and tabulated to be used for summary reports. In this case the

clerk has simply to enter the correct data or use credit card readers,

use bar code readers, cash drawers or receipt printers. These are all

simple tasks and can be learnt with a little training.

3.5.2 Monitor Sales & Inventory Levels Daily

After end-of-day has been posted, a sales summary/restocking report

should be printed, monitoring level of sales and inventory in the store.

This report can be used to re-stock shelves to their stocking levels so

that you know the merchandise is on the floor ready to be sold. It

helps you to spot, if there is a problem with missing merchandise; and

looks for demand, requisitions and sold data, critical items reaching

their critical level and special orders.

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3.5.3 Monthly

At the end-of-month, the system should produce a snapshot of the

month, reporting on: sales, including real sales and costs of sales,

ending inventory levels, number of items received during the month,

zero sold items, etc.

3.5.4 Ease of Creation of New or Computer Recommended

Purchase Orders

While building a Purchase Order (PO) you would like the ability to

add new inventory, view receiving and sales history and view

previous Pos for a given item, the software should have capacity to

allow this. Your computer should offer auto-generated POs based on

pre-determined model stock levels or using seasonal sales data,

critical levels, special order data and average vendor fill time etc.

3.5.5 Electronic Data Interchange (EDI)

Once your purchase order has been created, you may be able to

transfer it directly into your vendors’ computers through electronic

data interchange. This provides quicker turnaround and vendor’s

chance of errors (nobody at the vendor location has to type in your

data). EDI is becoming increasingly important as businesses are

embracing new technology.

3.5.6 Comprehensive Information Receiving

One can expect comprehensive information and data transfer through

the network; such as update the inventory, send information to

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accounts payable and print the price tags for the merchandise, co-

relate with the PO, etc.

3.6 Enterprise Resource Planning (ERP)

Most leading retailers internationally have adopted ERP solutions.

These are of two types: packaged solutions like SAP and People Soft

that run a suite of integrated applications and the more specialised

retail software providers which partner other leading edge software

vendors to offer suite applications. These include JDA; Retek and

Essentus.These players cover the vertical aspect and all the functions

in a chain, from warehouse to distribution, front and back office store

system and merchandising. Broadly, the goals of an ERP

implementation include reducing the cost of operation, closing books

faster, improving cash management, global financial management and

better decision making for national and global operations. In the

entire ERP scenario, the organizations no longer feeds in the data

required to process the information. SAP, JDA and Baan are the key

international players in India, in application software for retail. While

SAP and Baan are ERP software, JDA is specialized ERP software.

India is yet to develop to accommodate such packages in its system of

retail business today.

3.7 New Trends in IT Applications in Retailing

New developments have taken place with number of software

available for effective and efficient management of retail business.

These software and system designed for large retail outlets, chain

stores and firms. They need to be suitably customized to our

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demands, in addition to training of employees in use of these software

and system.

3.7.1 Web Enabled System

The Internet has had an impact on virtually all businesses. Therefore,

this could be hottest trend of them all. Web enabled system can

provide suppliers access to Point of Sale (POS) data. This is the basis

of CPFR, a development that is on top of management focus charts

for global majors.

3.7.2 Data Mining Tools

Retailing business is data intensive. Large retailers carry huge variety

of merchandise and cater to millions of customers. The reams of data

generated, if analyzed effectively, can result in significant turnaround

in customer demand analysis, assortment optimization, demand

forecasting. Leading retailers will increasingly use data mining

software to make sense software to make sense of the mountain of

data their system generates.

3.7.3 New LAN/ WAN Tools and Strategies

Retailing is a classic example of hub and spoke operation. Such

business needs networking. Using Asynchronous Transfer Mode

(ATM) networking technology, retailers can create proprietary

networks for high-speed data, voice and video transfer. Over these

networks, they can send graphic advertising files, Lotus Notes, e-

mails large volume of POS data, and ad hoc SQL data requests.

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3.7.4 Interactive Kiosks

At Florsheim Express, a customer can use an interactive kiosk to

make his choice. The kiosk has a database of all the designs the store

can supply. It also has a search facility based on price or type of shoe.

The customer can place his order from this selection. The orders are

sent by the local store to Florsheim, which ships the merchandise

directly to the customer. End result: Florsheim can effectively reduce

inventory at retail point.

At Circuit City, leading consumers durables chains in the USA,

interactive kiosks provide assemble to order facility to computer

customers. Customers can also specify whether they would like to

have the computer delivered to their home or to the stores.

3.7.5 Self-Scanning for Faster Processing

Symbol Technologies Portable Shopping System (PSS) is being used

by Sam’s Club, Kroger and Costco in the USA and Sainbury’s and

Safeway in the UK.The customer first unlock the scanner by inserting

a store card or credit card into the scanner to remove it from it locked

position. The items can now be scanned. A receipt is printed after the

scanning is over. The customer then takes the receipt to the cashier

and pays for his purchases. Self-scanning increased customer loyalty,

though there can be issues about shrinkage.

3.8 The Need for Product Identification

A typical retail store offers at least a few hundred units of products to

the consumer. In order to keep track of what has been sold and to be

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able to re-order products, the retailer needs to know the quantities, the

types, colours, sizes and other characteristics of the product sold. It is

not humanly possible to remember all these varieties over a period of

time. Even if attempted, it is a time consuming exercise and could be

error ridden. Thus, a need was felt for developing a machine readable

system which could help identify the product across various retail

locations and provide all information associated with it quickly.

The Universal Product Code (UPS) or Barcode as it is popularly

known was developed from this need. While the first barcode patent

was issued in 1952, the retail industry adopted it much later, since to

implement a barcode system, hardware to produce the codes and

software to interpret the information contained in them was required.

Once this was developed, the grocery retailers were the first to adopt

the barcode(UPS).

Barcode is one of the IT tools used for automatic data capture. As

opposed to manual data entry, which is tedious and prone to in

accuracies and errors, bar coding enable data capture with 100%

accuracy and in micro-seconds. Barcodes can be used to represent

information related to product attributes, other supplementary

information like batch number, manufacturing / expiry dates,

consigner/ consignee, etc.

3.9 Radio Frequency Identification (RFID)

Radio Frequency Identification or RFID is fast transforming the way

business is being conducted and monitored across the supply chain.

RFID was invented in 1948, by Harry Stockman, yet it had to wait its

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turn before emerging onto the common market. The interest in RFID

picked up due to initiatives of the retail giant, Wal-Mart, who has

made it mandatory for its suppliers to tag shipments and goods

coming into distribution centres and stores with RFID tags by 2005,

with an extension into 2006. Metro Group, the world’s fifth largest

retailing firm, is also following the lead of Wal-Mart.

Radio Frequency Identification (RFID) can be described as a wireless

bare code which provides wireless communication between objects

and readers. RFID uses tags or transponders that collect data and

manage it in a portable, chargeable database. It has the ability to

identify and track products and equipment real-time, without contact

or line-of-sight. These tags, unlike bar codes, offer the possibility of

reading, writing, transmitting, storing and updating information.

While there are a great of similarities between the barcode and RFID

tag, the chief differentiation is the level of technology used. Bar

coding scans a printed label with either optical laser or imaging

technology, while RFID scans or interrogates a semiconductor tag

using radio frequency (wireless) technology.

Apart from inventory tracking, this technology enables the retailer to

track the task being performed by the employees within the store and

also enables them to be more productive and responsive to customers’

needs by enabling the tracking of customer profiles, transaction

histories, levels of stocks and other data which may affect the actual

sale from taking place. For example, a customer selects the last of a

particular item on the store shelf; a restock notice instantly on a sales

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associate work pad; a nearby digital display promotes a likely

substitute purchase to the customer; and the customer’s profile is

updated to include the new purchase. This new data then impacts

future actions and reactions.

3.10 E- Commerce or E- Tailing

The rise of the Internet has led to some phenomenal changes in the

way business is conducted in various industries. In retail, it has

opened up a new avenue for retailers to reach out to customers and

suppliers in markets where they do not have a physical presence. It

has presented opportunities for deepening customer relations,

streamlining operations, cutting costs and discovering new sources of

revenue. Electronic commerce includes the online trading of goods

and services and encompasses various trading steps such as online

marketing, ordering, payment and delivery. E-commerce has been

termed as a generic title that describes a range of technologies and

practices that are available to potentially improve the efficiencies of

trading relationships. In the more mature retail markets of the world,

the websites of most of the retailers enable business to be conducted

online. The reasons for the emergence of e-tailing as a viable source

of business, stems from the fact that it can offer a larger basket to the

consumer. For example, the largest book and mortar book store chain-

Barnes and Noble offers 20,000 books at any point of time.

Amazon.com on the other hand, offers 4 million books. It is also one

of the few businesses that allow the consumer to shop at a time and

day suited to him. He can shop 365 days a year, 24 hours a day and 7

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days a week. Electronic retailing may also be looked as a case of

reverse marketing, where consumers seek out products.8

3.11Prevailing Trends in Indian Readymade Garment

Industry

Textile industry in India is widely comprehensive, integrating whole

range of raw material to finished product that includes fiber

manufacturing, spinning, knitting and weaving, and garment

manufacture. Industry provides almost every single aspect:

• Raw Material: Cotton, linen, wool, silk and manmade fibers

like viscose, polyester, polypropylene and acrylic. Indian

companies have marked presence in even non-traditional

segments.

• Fabric Production: Suiting-shirting, dress material, fabrics for

shorts and trousers, denim, hosiery, fleeces flats and woolen

knits, technical fabrics and so on.

• Apparel Production Formalwear, casual wear, active

sportswear, traditional wear, under garments, outerwear, kids

wear, and you name - it produces.

• Marie-ups Production: A wide range of bedding, towels, bath,

table mats/linens, kitchen accessories and more.

Additionally, to aid above all there are well established infrastructure,

multi-benefited governmental, political and regulatory system that

would lure foreign investors.

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In recent years, the readymade garment segment has seen vertical

growth. Accounting nearly Rs. 20,000 cores, this industry is growing

at the rate of 20 percent, with massive visibility and consideration

margins. The largest segment for the readymade garment segment

includes the age-group of 16-35 that is very brand conscious and

gives priority to high quality. Branded readymade garments account

over 21 percent of the readymade garment industry.9

3.11.1 Overview- Indian Readymade Apparel Market

Despite substantial growth comparing to the international

readymade garment market of nearly 183mn USD, the Indian

readymade garment market is still in a budding phase. Due to the

higher introduction cost of brand in India for the foreign players,

domestic players have no fear of any outside competition. The main

obstacle to the organized players is the huge unorganized scenario

of the market. In a move to compete, the organized players have

rolled out their own strategy of standardizing the goods.10

The brands introduced by these major textile players hold much

intrinsic power and high on quality and pricing factors. They present

the inheritance and constancy in the garment piece.

Shiyaram's is venturing into readymade garment to grip the

continuously changing fashion trends. It is becoming a prominent

designer of men's readymade garments and accessories from fabric

manufacturer. The two major unique selling points of the recently

launched Siyaram's brand, Monday to Sunday Dressing would be the

widespread 30,000 retail outlets, where it is selling fabrics and

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second, the fabric quality that Siyaram's has, which guarantees that

the buyer gets the high quality at a cheaper price.

In accordance of its venture into men's readymade clothing line,

Siyaram's Monday to Sunday Dressing would include casuals, semi-

formals, formals, club wear in the middle and premium segments,

targeting the youth. At first the Monday to Sunday Dressing line

would be introduced in Southern and Western India, and would be

sold through its retail outlets.

The leader in the suiting segment, S. Kumars Nationwide Limited

(SKNL) is the newest to join the rat race. It has launched a brand;

"Belmonte" the exclusivity of the brand is that it is only brand in the

economy section, which brings both fabric and readymade garments

under single label. The brand has been targeted towards the young

group. The brand offers a wide range style with perfect fitting.

The other growing strategy major textile players adapted is

'Acquisition'. Many of companies have used this strategy to dive into

readymade garment segment. Raymond's acquired Colorplus to jump

in casual-wear, adding brands like Raymond's, Parx and Park Avenue.

Opting the similar strategy, Indian Rayon acquired garments division

of Madura Coats, "Madura Garments" and entered the luring apparels

market with the successful brands like Van Heusen, Allen Solly, Peter

England and Louis Philippe. Textile leader, Bombay Dyeing also gets

hold of Proline to dive in the sportswear segment as well as adding

Vivaldi range to its formal menswear.

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The above initiatives taken by the major brands depicts that the textile

players now started opting strategies to mark their presence in the

readymade garment segment. Their sheer benefits laze in substantial

production capacities, which can launch new products in minimum

lead-time, offering high quality.

Despite the smaller players in the unorganized market are in much

more advantageous situation, in the long run they might lose out. The

following are few problems faced by smaller players:

Smaller Market: There few cities and towns that they can concentrate

on, since these cities holds about 50 percent of the Sec A&B of

population that have a disposable income. As a result, very few

opportunities are there for smaller players.

Limited Capacities: The restriction that these smaller players have is

that they cannot emerge beyond a definite level. Additionally,

inadequate logistics and improper supply chain managements created

huge problems for the smaller players.

Inadequate Logistic & Strength: For advertising and brand building,

these smaller players are forced to extend their reach geographically,

which makes supply chain management more complex. To match

with increasing demand in competitive markets, stress on producing

volumes also increases. To sustain existence these players will have

to inject in more investments to their businesses in the areas of

designing capabilities, brand making and retailing.

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Insufficient Funds: Funds will be a key restraint for the smaller

players. Funds have to be spawned rapidly in a massively capital

demanding market that is seeing huge volumes of growth.

As per the industry forecasters, the textile majors are planning to take

hold on the readymade garment market by entering into complete

entire value chain. Players that are not making fabrics for kids wear

and sportswear may start producing the same to enter this segment.

The suiting brands are also picking up the trend, with the integrating

fabric and readymade garment under the single brand. S Kumar's

Nationwide Limited takes lead with introducing Belmonte brand in

both fabric and readymade garment apparel. Other players like Mayur

Suitings and Donear are also planning to enter in the readymade

garment market. Arvind Mills is planning with the usual fabric and

Ready Made Garments (RMGs) apparel strategy in the men's casual

wear segment.

Apart from the above-mentioned strategies, there is one more

initiative to rule out in the readymade market that is "foreign

collaborations". Textile Company based in Rajasthan, Banswara

Syntex shake hands with French readymade apparels major

Carreman. It is a joint venture initiative with Carreman Michel

Thierry. The joint venture company is called "Carreman Fabrics”.

Mr. Dwarka Das Agarwal ventured in the luring exclusive menswear

segment in 1998, with casual brand TNG. He sensed the global trend

of relaxed cotton casuals was in fashion ever then. Many brands, such

as Black berrys, Freelook, Biba, Stori, Essence, Moustache, Natalia,

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Shapes, Ruff Kids, Koutons, LFC, Upper Class etc. are performing

well in cut throat competition in the readymade garment. A

Hyderabad based player, Priyadarshini Spinning foray the readymade

garment segment by establishing a shirt manufacturing unit at the

Garment Park in Hyderabad. It is also collaborating with local and

international players for marketing its shirts range.

Creation and focusing in the value chain strengthens the smaller

players. The main factors where the brands need more concentration

are designing, production, quality and merchandising. But, the

designing is the most significant of the value chain, which requires

maximum focus. The merchandising is noteworthy factor stage for

the smaller players, as involvement, creation and fabric selection adds

value to the creation. The retailing is also an important factor for the

smaller players. They may face problem if their merchandize remain

for long on retail shelves, since the value of the fashion drops,

resulting increase in inventory costs.

Today, the buyers of readymade garment segment are aware of the

running trends, and demand the newest in fashion and products at a

reasonable cost. At the front position of this evolution are the smaller

players, which private labels that are thoroughly transforming the

dressing way of men, women and children. With the supply chain

limitations eased, organization in real estate markets, and rationale tax

structure, the readymade garment segment has become more lucrative

and it is anticipated that the readymade garment segment will be the

main segment in the next five years.

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3.11.2 Indian Fashion Retail Poised for Big Times

With organized retail developing in India, the fashion apparel

industry is booming with international and domestic brands making

their presence felt not only in the metros but also in smaller towns.

With a dominant presence in malls, markets, stand-alone stores and

other retail outlets, the apparel and textiles industry is one of the

largest selling segments in the retailing sector. With every player

aiming to become a lifestyle brand with the addition of related

segments such as jewelry, cosmetics, watches and health and beauty

among others, the fashion segment as a whole would account nearly

60 per cent of the total retail sector. According to a Technopak

Indian Textile & Apparel Compendium 2010 the total textile and

apparel industry was valued at Rs 327000 crores in 2009 and is

estimated to grow at 11% Compound Annual Growth Rate(CAGR) to

reach Rs 10,32,000 crores by 2020.

With fashion apparels and lifestyle products accounting for around 95

per cent of total sales in department stores, and 70 per cent in

hypermarkets such as Big Bazaar or Spencer's Retail, this segment is

rapidly growing with increasing incomes of the urban population.

Brands in apparel, textiles, jewelry, accessories, footwear, cosmetics

and salons have raised the Indian business parameters higher than

ever before. With a population touching one-and-a-half billion and a

massive consumer class, India is considered as the most preferred

destinations for foreign investments. The Technopak study shows

that men's wear is the biggest segment in apparels estimated at around

Rs 66,300 crores compared to women's wear at Rs 57,745 crores.

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However, women's wear is growing faster at a CAGR of 12 per cent

and is expected to gain majority share in future. Kids-wear is also

growing rapidly with higher growth in girlswear.11

There are many factors that have helped the fashion industry thrive

over the last decade. The massive spread-out of malls, hyper markets

and supermarkets, mergers and acquisitions that have allowed

international brands to step in, expansion of domestic brands and

retailers along with a boom in premium luxury retail segment have all

helped in the growth story. Indian fashion designers having made a

mark in international ramp shows, improved merchandising and

customer relations by apparel brands have also helped this segment.

Companies such as Madura Garments, Raymond, Levi's, Arvind

Brands etc have all achieved their targets while adding more EBOs,

MBOs and LFS to their retail chains. Having created a strong brand

identity in all their related segments, they have all expanded their

product assortment mix while also increasing their production

capacity year-on-year.

However, if the retail boom is to continue, retailers and brands should

take some factors into account such as collaborative tie-ups with non-

competent services providers and brands, uniform sizing and

personalized services throughout the country. At the same time they

have to concentrate on certain lucrative market segments. Also

organized merchandising format, trained sales personnel, improved

customer relations and EBO's and shop-in-shop system for high-

profile brands is also on the cards. As regards selling techniques, the

brands should offer value-added products and not cash discounts.

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Women's western wear and children wear is a lucrative segment that

has been booming over the last few years. Many domestic and

international brands are now cashing in on this segment. With women

rapidly taking to western wear even in the smaller cities and increase

of working women with more disposable incomes, this segment is

one of the fastest growing in India today. From economy to premium

players, both domestic and international brands are now realizing the

enormous potential of penetrating deep into the Indian markets and

are reaping in the harvest while it lasts.

3.12 Entry Options for Foreign Players Prior to FDI

Policy

Although prior to Jan 24, 2006, FDI was not authorized in retailing,

most general players had been operating in the country. Some of

entrance routes used by them are:

3.12.1 Franchise Agreements

It is an easiest track to come in the Indian market. In franchising and

commission agents' services, FDI (unless otherwise prohibited) is

allowed with the approval of the Reserve Bank of India (RBI) under

the Foreign Exchange Management Act. This is a most usual mode

for entrance of quick food bondage opposite a world. Apart from

quick food bondage identical to Pizza Hut, players such as Lacoste,

Mango, Nike as good as Marks as good as Spencer, have entered

Indian marketplace by this route.

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3.12.2 Cash and Carry Wholesale Trading

100% FDI is allowed in wholesale trading which involves building of

a large distribution infrastructure to assist local manufacturers. The

wholesaler deals only with smaller retailers and not Consumers.

Metro AG of Germany was the first significant global player to enter

India through this route.

3.12.3 Strategic Licensing agreements

Some foreign brands give exclusive licenses and distribution rights to

Indian companies. Through these rights, Indian companies can either

sell it through their own stores, or enter into shop-in-shop

arrangements or distribute the brands to franchisees. Mango, the

Spanish apparel brand has entered India through this route with an

agreement with Piramyd, Mumbai, SPAR entered into a similar

agreement with Radhakrishna Foodlands Pvt. Ltd

3.12.4Manufacturing and Wholly Owned Subsidiaries.

The foreign brands such as Nike, Reebok, Adidas, etc. that have

wholly-owned subsidiaries in manufacturing are treated as Indian

companies and are, therefore, allowed to do retail. These companies

have been authorized to sell products to Indian consumers by

franchising, internal distributors, existent Indian retailers, own

outlets, etc. For instance, Nike entered through an exclusive licensing

agreement with Sierra Enterprises but now has a wholly owned

subsidiary, Nike India Private Limited.

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3.13 FDI Policy in India

FDI as defined in Dictionary of Economics (Graham Bannock et.al) is

investment in a foreign country through the acquisition of a local

company or the establishment there of an operation on a new

(Greenfield) site. To put in simple words, FDI refers to capital

inflows from abroad that is invested in or to enhance the production

capacity of the economy.12

Foreign Investment in India is governed by the FDI policy announced

by the Government of India and the provision of the Foreign

Exchange Management Act (FEMA) 1999. The Reserve Bank of

India (RBI) in this regard had issued a notification13, which contains

the Foreign Exchange Management (Transfer or issue of security by a

person resident outside India) Regulations, 2000. This notification has

been amended from time to time. The Ministry of Commerce and

Industry, Government of India is the nodal agency for motoring and

reviewing the FDI policy on continued basis and changes in sectoral

policy/ sectoral equity cap. The FDI policy is notified through Press

Notes by the Secretariat for Industrial Assistance (SIA), Department

of Industrial Policy and Promotion (DIPP). The foreign investors are

free to invest in India, except few sectors/activities, where prior

approval from the RBI or Foreign Investment Promotion Board

(FIPB) would be required.

3.13.1 FDI Policy with Regard to Retailing in India

It will be prudent to look into Press Note 4 of 2006 issued by

Department of Industrial Policy and Promotion (DIPP) and

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consolidated FDI Policy issued in October 201014

which provide the

sector specific guidelines for FDI with regard to the conduct of

trading activities.

a) FDI up to 100% for cash and carry wholesale trading and

export trading allowed under the automatic route.

b) FDI up to 51 % with prior Government approval (i.e. FIPB) for

retail trade of 'Single Brand' products, subject to Press Note 3

(2006 Series)15

c) FDI up is not permitted in Multi Brand Retailing in India.

3.13.2 Prospected Changes in FDI Policy for Retail Sector in

India

The government (led by Dr. Manmohan Singh, announced

following prospective reforms in Indian Retail Sector :

1. India will allow FDI of up to 51 % in "multi-brand" sector.

2. Single brand retailers such as Apple and Ikea, can own 100%

of their Indian stores, up from previous cap of 51 %.

3. The retailers (both single and multi-brand) will have to source

at least 30% of their goods from small and medium sized

Indian suppliers.

4. All retail stores can open up their operations in population

having over 1 million. Out of approximately 7935 towns and

cities in India, 55 suffice such criteria.

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5. Multi-brand retailers must bring minimum investment of US$

100 million. Half of this must be invested in back-end

infrastructure facilities such as cold chains, refrigeration,

transportation, packaging etc. to reduce post-harvest losses and

provide remunerative prices to farmers.

6. The opening of retail competition (policy) will be within

parameters of state laws and regulations.

7. Finally FDI up to 51% is permitted in multi brand retailing by

the Parliament since December, 2012.

3.14 Single and Multi-Brand Retailing

3.14.1 FDI in Single-Brand Retail

The Government has not categorically defined the meaning of "Single

Brand" anywhere neither in any of its circulars nor any notifications.

In single-brand retail, FDI up to 51 per cent is allowed, subject to

Foreign Investment Promotion Board (FIPB) approval and subject to

the conditions mentioned in Press Note No.316 that (a) only single

brand products would be sold (i.e., retail of goods of multi-brand even

if produced by the same manufacturer would not be allowed), (b)

products should be sold under the same brand internationally, (c)

single-brand product retail would only cover products which are

branded during manufacturing and (d) any addition to product

categories to be sold under "single-brand" would require fresh

approval from the government. While the phrase 'single brand' has not

been defined, it implies that foreign companies would be allowed to

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sell goods sold internationally under a 'single brand', viz., Reebok,

Nokia, and Adidas. Retailing of goods of multiple brands, even if

such products were produced by the same manufacturer, would not be

allowed / permitted.

Going a step further, we examine the concept of 'single brand' and the

associated conditions:

FDI in 'Single brand' retail implies that a retail store with foreign

investment can only sell one brand. For example, if Adidas were to

obtain permission to retail its flagship brand in India, those retail

outlets could only sell products under the Adidas brand and not the

Reebok brand, for which separate permission is required. If granted

permission, Adidas could sell products under the Reebok brand in

separate outlets.

3.14.2 FDI in Multi-Brand Retail

The government has also not defined the term Multi Brand. FDI in

Multi Brand retail implies that a retail store with a foreign investment

can sell multiple brands under one roof.

In July 2010, Department of Industrial Policy and Promotion (DIPP),

Ministry of Commerce circulated a discussion paper17 on allowing

FDI in multi-brand retail. The paper doesn't suggest any upper limit

on FDI in multi-brand retail. If implemented, it would open the doors

for global retail giants to enter and establish their footprints on the

retail landscape of India. Opening up FDI in multi-brand retail will

mean that global retailers including Wal-Mart, Carrefour and Tesco

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can open stores offering a range of household items and grocery

directly to consumers in the same way as the ubiquitous 'kirana' store.

The Indian retail sector has predominantly comprised of unorganized

players in the form of locally owned, Mom and Pop stores or the'

kirana' stores as they are known in common parlance, single owner

general stores, paan-shops, convenience stores, hand cart and

pavement vendors, etc. On the other hand, organized retailing

involves trading activities undertaken by licensed retailers, that is,

those who are registered for sales tax, income tax, etc. basically

involving the corporate-backed hypermarkets and retail chains, and

also the privately owned large retail businesses.

However, the tremendous growth prospect of the sector coupled with

successfully established models of organized retail in other Asian

markets such as China has paved the way for the establishment of

organized retail in India as well. In addition to this, a number of

homegrown corporate giants such as Future Group and Aditya Birla

retail have furthered the cause of organized retail by setting up

exclusive outlets across India. Nevertheless, there is still a long way

to go before Foreign Direct Investment (FDI) in Indian Retail can be

realized in its entirety.

The Indian retail is a robust pillar of the economy with a 13 %

contribution to the GDP and employs 6% of the nation's workforce.

According to Indian Brand Equity Foundation (IBEF), the Indian

retail is valued at about US$ 450 billion, expected to grow by 10.2%

in 2011-12. Of this, organized retail only forms 6.5% of the total.

128

Hence, there is enormous scope for expansion through infrastructure

and investment support. Furthermore, while unorganized retail has

been pegged at a rate of 6% annually, organized retail has been

booming at a stupendous growth rate of 35%. In fact, it is expected to

reach 16% to 18% of the total market within the next five years.18

A recent A.T. Kearney annual Global Retail Development Index

(GRDI) 2013 confirmed India as the most attractive market for retail

investment for a third consecutive year. Despite this, the entry for

global retail giants in the form of FDI's has remained more or less

restricted and the government has maintained a tight leash over the

FDI policy in retail, primarily owing to perceived threat posed by

organized retailers on the small scale kirana shop owners.

Though the voices have been growing louder for Multi-Brand FDI to

be permitted for retail, there is still a long way to go before all the

pieces of the jigsaw are put together. For the moment though, the

Indian government aims to take up this case gradually as suggested

by the 2010-11 Economic Survey(Ministry of Finance) report which

states "Permitting FDI (foreign direct investment) in retail in a

phased manner beginning with metros and incentivizing the existing

retail shops to modernize could help address the concerns of farmers

and consumers. FDI in retail may also help to bring in technical

know-how to set up efficient supply chains which could act as

models of development.

There are a multitude of reasons being floated around to prevent the

liberalization of the FDI norms for Indian retail:

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• Primary among these is the concern regarding the kirana stores

as well other locally operated Mom and Pop stores being

adversely affected by the entry of global retail giants such as

Wal-Mart, Carrefour and Tesco. As these brands would come

with advanced capabilities of scale and infrastructure in

addition to having deep pockets, it is argued that this would

result in the loss of jobs for lakhs of people absorbed in the

unorganized sector.

• There has also been a debate over the kind of employment that

would be generated as it is assumed that semi-skilled people

would not be absorbed into the system. As majority of the

workforce in India falls in this category, doubts have been

parlayed about the value that would be generated by opening

up the sector.

• Fears have also been raised over the lowering of prices of

products owing to better operational efficiencies of the

organized players that would affect the profit margins of the

unorganized players.

• Instability surrounding the political arena with a number of

scams of varying magnitudes doing the rounds has also led to a

sense of uncertainty among foreign investors.

Many industry experts though, feel that the reservations against the

introduction of Multi-Brand retail are mostly misplaced. The

successful deployment of 100% FDI in China is a case in point.

Partial FDI in retail was introduced in 1992 in China. Subsequently,

in December 2004, the Chinese retail market was fully opened up to

130

utilize the enormous manpower and wide customer base available that

has led to a rapid growth of the sector. Today, its retail sector is the

second largest (in value) in the world with global retailers such as

Wal-Mart, 7-Eleven and Carrefour comprising 10% of the total

merchandise/goods.

Multi-brand retail, if allowed, is expected to transform the retail

landscape in a significant way:

• Firstly, the organized players would bring in the much needed

investment that would spur the further growth of the sector.

This would be particularly important for sustenance of some

of the domestic retailers that don't have the resources to ride

out the storm during an economic slump such as the case with

Vishal, Subhiksha and Koutons, which couldn't arrange for

funds to sustain their growth.

• The technical know-how, global best practices, quality

standards and cost competitiveness brought forth through FDI

would augur well for the domestic players to garner the

necessary support to sustain their growth.

• Indian has also been crippled by rising inflation rates that have

refused to come within accepted levels. A key reason for this

has been attributed to the vastly avoidable supply chain costs

in the Indian food and grocery sales which has been estimated

to be a whopping US$ 24 billion. The infrastructure support

extended to improve the backend processes of the supply

chain would enable to eliminate such wastages and enhance

the operational efficiency.

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• FDI in multi-brand retail would in no way endanger the jobs

of people employed in the unorganized retail sector. On the

contrary, it would lead to the creation of millions of jobs as

massive infrastructure capabilities would be needed to cater to

the changing lifestyle needs of the urban Indian who is keen

on allocating the disposable income towards organized

retailing in addition to the local kirana stores. These stores

would be able to retain their importance owing to their unique

characteristics of convenience, proximity and skills in

retaining customers. Also, these would be more prominent in

the Tier-II and Tier-III cities where the organized

supermarkets would find it harder to establish themselves.

• The numerous intermediaries would be restricted and

therefore, the farmers would get to enjoy a bigger share of the

total market.

FDI in multi-brand retail is therefore a necessary step that needs to be

taken to propel further growth in the sector. This would not only

prove to be fruitful for the economy as a whole but will also integrate

the Indian retail sector with the global retail market. It is not a

question of 'how' it will be done but 'when'.

Amidst opposition from its own allies, government went ahead

implementing its decision to allow FDI in multi-brand retail. Under

the notification relating to FDI in multi-brand retail, multinational

companies can invest up to 51 per cent to open stores in 10 states and

UTs which have so far agreed to implement the decision. The

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decision to allow Multi brand retailers to open stores rests with the

state governments.

Minimum amount to be brought in by the foreign investor would be

$100 million and outlets may be set up only in cities with a

population of more than 10 lakhs.

India Inc. hailed the government's decision to implement FDI in multi

brand retail and voiced that it will give a strong message to investors

that the government means business and stands firm on its initiatives.

This decision is a right step and will go a long way in capital infusion

and is expected to strengthen the farmer's community.

133

References 1. Ministry of Textile

2. McKinsey&Company

3. Census of India, 2011

4. Economic Times,April 15,2010 ‘Benetton India revenue likely to

touchUS$250m in 4 years”

5. www.Fibre2Fashion.com

6. KSA Technopak

7. A.C.Nielson Centre for Marketing Research

8. Data Monitor Global Internet Report



11. Technopak Indian Textile&Apparel Compendium,2010

12. Hemant Batra, Retailing Sector in India Pros Cons 9Nov 30,

2010) http://www.legallyindia.com

13. Notification No. FEMA 20/2000-RB dated May 3, 2000

14. FDI_Circular_02/2010,DIPP

15. http:/siadipp.nic.in/policy/changes/pn3 2006

16. http:/siadipp.nic.in/policy/changes/pn3 2006

17. Discussion Paper on FDI in Multi Brand Retail Trading,

http//dipp.nic.in/discussion Papers/DP FDI Multi Brand Retail

Trading_06July2010

18. India Brand Equity Foundation

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Chapter-4

CHALLENGES AND

PROSPECTS

IN

APPAREL RETAILING

134

4.1 Challenges to Retail Development in India

The retail industry in India is growing at a significant pace. However,

there are several problems faced by the industry. The major

challenges for the sector include:

• Retail not being recognized as an industry in India

Lack of recognition as an industry hampers the availability of finance

to the existing and new players. This affects growth and expansion

plans of the industry.

• The high costs of real estate

Real estate prices in some cities in India are among the highest in the

world. The lease or sent of the property is one of the major areas of

expenditure, high lease rentals eat into the profitability of a project.

• High stamp duties

In addition to high cost of real estate, the sector also faces very high

stamp duties on transfer of property, which varies from state to state.

The presence of strong pro-tenancy laws makes it difficult to evict

tenants. The problem is compounded by problems of clear titles to

ownership, while at the same time as are the legal processes for

settling of property disputes.

• Lack of infrastructure

Poor roads, unreliable power supply, lack of adequate warehouses,

etc. hamper the growth of retail industry.

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• Multiple and complex taxation system

The sales tax rates vary from state to state, while organized players

have to face a multiple point control and tax system, there is

considerable sales tax evasion by small stores. In many locations,

retailers have to face a multi point octroi. With the introduction of

Value Added Tax (VAT) in 2005, certain anomalies in the existing

sales tax system causing disruption in the supply chain are likely to

get corrected over a period of time.

The industry is facing a severe shortage of talented professionals,

especially at the middle-management level.

Most Indian retail players are under serious pressure to make their

supply chains more efficient in order to deliver the levels of quality

and service that consumers are demanding.

Lack of adequate infrastructure with respect to roads, electricity and

ports has further led to the impediment of a pan-India network of

suppliers. Due to these constraints, retail chains have to resort to

multiple vendors for their requirements, thereby, raising costs of

products and prices of the products.

The available talent pool does not back retail sector as the sector has

only recently emerged from its nascent phase. Further, retailing is yet

to become a preferred career option for most of India's educated class

that has chosen sectors like IT, BPO and financial services.

Even though the Government is attempting to implement a uniform

value-added tax across states, the system is currently plagued with

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differential tax rates for various states leading to increased costs and

complexities in establishing an effective distribution network.

Stringent labor laws govern the number of hours worked and

minimum wages to be paid leading to limited f1exibility of operations

and employment of part-time employees. Further, multiple clearances

are required by the same company for opening new outlets adding to

the costs incurred and time taken to expand presence in the country.

The retail sector does not have 'industry' status yet making it difficult

for retailers to raise finance from banks to fund their expansion plans.

Government restrictions on the FDI are leading to an absence of

foreign players resulting into limited exposure to best practices.

Non-availability of Government land and zonal restrictions has made

it difficult to find a good real estate in terms of location and size. Also

lack of clear ownership titles and high stamp duty has resulted in

disorganized nature of transactions.

4.1.1Retail in India - Getting Organized to Drive Growth

Although India has emerged as one of the world’s most attractive

markets, the country is grappling with critical infrastructure and

policy issues. The Confederation of Indian Industry (CII) engaged

A.T. Kearney to conduct research to better understand the challenges

facing organized retail in India today, and to develop specific,

actionable recommendations.

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The research identified ten over-arching issues, which are widely

experienced by retailers in India:

• Underdeveloped supply chain capabilities

• Inadequate utilities

• IT infrastructure hurdles

• Supply base (vendor) hurdles

• Inadequate human resources

• Limited consumer insights

• Taxation challenges

• Real Estate hurdles

• Insufficient government incentives

• Policy challenges

The research also examined these issues across geographies,

specifically for seven states and union territories. Additionally, the

report discusses potential actions that the government and the retail

industry can take to improve the retail climate.

4.1.2 Market Overview 1

• The textiles industry accounts for 14 percent of the total

industrial production in India.

• At current prices, it accounts for 4 percent of the GDP US$

51.36 billion.

• The textiles segment, comprising cotton, wool, silk, manmade

and jute textiles and textile products, has grown by 7.5 percent

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between April and November 2009, as compared to 1 percent

in the same period in 2008.

• The industry provides direct employment to more than 35

million people and is the second-largest employment generator

after agriculture.

4.1.3 Market Segments

The textiles and apparel industry can be broadly segmented as:

Yarn and Fibre

• Natural fibre and yarn

• Manmade fiber and yarn

Processed Fabrics

• Woolen textiles

• Silk textiles

• Jute textiles

• Cotton textiles

• Readymade Garments (RMGs)

• Apparel

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Key Segments of the Textiles Industry2

Process Output

Raw material Cotton, Jute, Silk, Wool

Ginning Fibre

Spinning Yarn

Weaving/Knitting Fabric

Processing Processed Fabric

Garments/ Final Garment/ apparel

Apparel Production

Fig. 4.1

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Advantage India

Raw Material Production

India has the largest area under cotton cultivation-9 million hectares-

constituting 25 per cent of the world’s total cultivation area. India is

the second-largest producer of silk in the world.

Sourcing Hub

• Several international retail giants such as Marks & Spencer are

leveraging India as a key global sourcing destination.

Availability of Skilled Workforce

• The industry is the second- largest employment generator after

agriculture. Several centres of excellence are available for

providing an impetus to academics and research in textiles

Favourable Government Policies

• Initiatives such as the Technology Upgradation Fund Scheme

(TUFS) and Technology Mission on Cotton (TMC), among

several others, aid the development of the domestic industry

and attract potential investors.

Favourable Climatic Conditions

• Coastal regions favour growing and processing because of

availability of optimum humidity. Necessary humidity reduces

shrinkage and rupture in fabrics hence reduces wastage.

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Processed Fabric, RMG and Apparel

Major textile production clusters in India 3

Product State

Woolen knitwear Punjab (Ludhiana)

Handloom, made-ups Haryana (Panipat)

Handblock printing, apparel

manufacturing Rajasthan (Sanganer)

Hand processing Rajasthan (Jodhpur)

Defence-related textiles Uttar Pradesh (Kanpur)

Powerloom weaving and

processing Gujarat (Surat)

Cotton hosiery West Bengal (Kolkata)

Powerloom towels and blankets Maharashtra (Sholapur)

Cotton ginning Andhra Pradesh (Guntur)

Home furnishings Kerala (Kannur)

Cotton knitwear Tamil Nadu (Tirupur)

Powerloom, hand loom, home

Furnishing Tamil Nadu (Coimbatore)

Surgical textiles Tamil Nadu (Madurai)

Table 4.1

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4.2 Investment Opportunities in the Retail Sector

AT Kearney's study on global retailing trends found that India is the least

competitive as well as least saturated of all major global markets. This

implies that there are significantly low entry barriers for players trying to

setup base in India, in terms of the competitive landscape. The report

further stated that global retailers such as Wal-Mart, Carrefour, Tesco and

Casino would take advantage of the more favourable FDI rules that are

likely in India and enter the country through partnerships with local

retailers. Other retailers such as Marks & Spencer and the Benetton

Group, who operate through a franchisee model, would most likely switch

to a hybrid ownership structure.

A good talent pool, unlimited opportunities, huge markets and

availability of quality raw materials at cheaper costs is expected to

make India overtake the world's best retail economies by 2042,

according to industry players.

The retail industry in India, according to experts, will be a major

employment generator in the future. Currently, the market share of

organized modern retail is just over 4 per cent of the total retail

industry, thereby leaving a huge untapped opportunity.

The sector is expected to see an investment of over $30 billion within

the next 4-5 years, catapulting modern retail in the country to $175-

200 billion by 2016, according to Technopak 2012 estimates.

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On the total organized retail market of Rs 550 billion, the business of

fashion accounts for Rs 300.80 billion, which translates in to nearly

55 per cent of the organized retail segment in the country.

Total fashion sector was estimated at Rs 1,914 billion and forms

about 15 percent of the country's retail market of Rs.12,000 billion.

Commanding such a large chunk of the organized retail business in

India, fashion retailing has indeed been responsible for single-

handedly driving the business of retail in India.4

4.2.1 Reasons Why Retail is Booming?

It has been a two decades since India embarked on an ambitious

economic liberalization programme. Over the last five years, many of

its benefits have manifested themselves and one of the areas where

growth is clearly reflected is retailing.

The latest pronouncements of Finance Minister P Chidambaram about

the sector have fuelled interest in stocks from the segment. Let's turn

the spotlight on the factors that triggered the exponential growth in

the sector.

• Primary Reasons

The prime reasons that fuelled this boom include favorable

demographics, rising customer incomes, real estate developments,

especially the emergence of new shopping malls, availability of better

sourcing options - both from within India and overseas – and

changing lifestyle.

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These factors have transformed hitherto savings-oriented and

conservative Indian consumers and made them akin to those in

developed markets.

• Organized Versus Unorganized

In a sharp contrast to the retail sector in developed economies,

retailing in India - though large in terms of size - is highly fragmented

and unorganized. With close to 12 million retail outlets the country

has one of the highest retail densities worldwide.

Retailers include street vendors, supermarkets, and department stores.

Counter stores, kiosks, street markets and vendors, where the

ownership and management rest with one person are classified as

traditional or unorganized retail outlets.

These formats typically require employees with low skills and

account for around two-thirds of the sector's output. These are highly

competitive outlets, with minimal rental costs (unregistered kiosks or

traditional property), cheap labour (work is shared by family

members) and negligible overheads and taxes.

However, unorganized retailers suffer due to poor shopping

experience and inability to offer a wide range of products and value-

addition due to lack of sourcing capabilities.

The modern Indian consumer is seeking more value in terms of

improved availability and quality, pleasant shopping environment,

financing options, trial rooms for clothing products, return and

exchange policies and competitive prices. This has created a rapidly

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growing opportunity for organized, modern retail formats to emerge

in recent years and grow at a fast pace.

Inefficiency in the existing supply chains presents further opportunity

for organized players to draw on this large market even as lack of

consumer culture and low purchasing power restricted the

development of modern formats. Migration from unorganized to

organized retail has been visible with economic development in most

countries(including India).

• Changing Age Profile and Disintegration of Joint Family

India is witnessing a change in the age and income profiles of its over

1 billion population, which is likely to fuel accelerated consumption

in the years to come. The country is believed to have an average age

of 24 years for its population as against 36 years for the USA and 30

years for China. A younger population tends to have higher

aspirations and spends more as it enters the earning phase. Besides,

the gradual disintegration of the traditional Indian joint family system

has led to nuclearisation of families, which in turn has led to

enhanced demand. Add to this an increasing population of working

women and new job opportunities in emerging service sectors such as

IT-enabled services, retail, entertainment and financial services.

With declining interest rates, the aversion of domestic consumers to

taking loans is also fast disappearing. Growing media penetration is

leading to a convergence of aspirations of various classes of

consumers, bridging the rural-urban divide.

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• Growing Disposable Income

More Indian households are getting added to the consuming class

with the growth in income levels. The number of households with

income of over Rs 45,000 per annum is expected to grow from 58

million in 1999-2000 to 81 million by 2005-06.

This large base of households with growing disposable income is

expected to drive demand for organized retail. Of this, 56 per cent

(44. 8 million households) are expected to be concentrated in urban

and sub-urban India.5

Changing income demographics, age profile and macro environment

are visible in the growth in consumption of durables. To cite live

examples, the installed base of cars, cable TV subscribers and cellular

subscribers has increased significantly over the last five years.

In line with predictions made in 2002, organized retailing in India is

well on its way to become a Rs. 35,000 crore market by 2005.

The retailing industry in India estimated at Rs. 930,000 crore (2003-

04) is expected to grow at 5% p.a. In line with predictions made in

2002, organized retailing is well on its way to become a Rs 35,000

crore market by 2005. The size of organized retailing market stands at

RS 28,000 crore in 2004, thereby, making up a mere 3% of the total

retailing market. Moving forward, organized retailing is projected to

grow at the rate of 25-30% p.a. and is estimated to reach over an

astounding Rs 100,000 crore by 2010. Its contribution to total

retailing sales is likely to rise to 9% by the end of the decade.6

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Currently the fashion sector in India commands a lion's share in the

country's organized retail pie. This is in line with the retail evolution

in other parts of the world, where fashion led the retail development

in the early stages of evolution and was followed by other categories

like food & grocery, durables, etc.

4.2.2 Reasons Why Indian Organized Retail is on the Brink of a

Revolution?

The last few years have seen rapid transformation in many areas like:

• Scalable and profitable retail models are well established for

most of the categories

• 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

• Suppliers/brands are willing to partner with retailers

• Scalable and profitable retail models are well established for

most of the categories

Last few years have seen development of the scalable and

profitable retail models across categories. Large Indian corporate

groups like Tata, Reliance, Raheja, lTC, Bombay Dyeing,

Murugappa Group, Piramal Group, etc have expressed serious

interest in investing in retailing. In addition, foreign investors

and private equity players are also firming up plans to identify

investment opportunities in the Indian retail sector. Investments

into the sector are estimated at Rs. 2,000-2,500 crore in the next

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2-3 years, and over Rs. 20,000 crore by the end of 2010. Stocks

in the retail sector are also becoming increasingly attractive from

an investor's point of view. On the strength of the strong industry

dynamics, listed retail companies like Pantaloon and Trent are

trading at twice the levels than what they were at the beginning

of the year. These stocks also enjoy price-earnings ratios (P/E

ratios) and market capitalization-to sales ratios that are

significantly higher than those of even international retailers

indicating the positive investor expectations from these

companies. Successful development of value based concepts

such as Big Bazaar, Giant and Vishal Mega Mart as well as

development of retail space in smaller cities and towns will drive

organized retail into the next level of cities. Small towns with a

population of 5-10 lakh are witnessing a defined increase in

disposable income coupled with high aspirational levels leading

to enhanced spending on consumer goods along with lesser

aversion to credit.

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%.

• Rapid evolution of new-age young Indian consumers

This continuously evolving consumer segment is the youngest in the

world with a median age of 24 as compared to other developed

economies like the USA where the 'baby boom' generation is now

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nearing retirement. The young Indian consumer is willing to spend on

lifestyle-oriented products and services and aversion to credit is now

a thing of the past. Further, consumers are spending on a wider range

of products and services because of which non-conventional product

categories like cell phone ringtones (estimated at Rs 400 crore) and

Valentine's Day gifts (Rs. 1,500 crore) have evolved in very low time

spans. The promotion of India as a tourist destination has led to

foreign brands wanting to establish presence here. 7

• Retail space no longer a constraint

Mall developers across the country are creating superior real estate

options at a frenzied pace. From 35-40 operational malls currently

occupying approximately 6 million sq ft of retail space, India is

expected to have over 200 new malls by 2006-end, thereby adding

retail space to the tune of35-40 million sq ft. Further, by 2010,500-

600 malls occupying approx 120 million sq ft are at various stage of

planning. Of the 200 malls expected to be launched by 2006-end,

about 50% are estimated to come up in 6 metros - NCR, Mumbai,

Bangalore, Kolkata, Hyderabad & Chennai with NCR & Mumbai

alone accounting for almost 60 of these new malls. However, by

2010, mall developments are anticipated to spread across 60 cities in

the country. The fast-paced growth of mall development has been

further fuelled by government authorities like the Delhi Development

Authority (DDA) beginning to release real estate space for retail

development in prime retail areas like Vasant Kunj and Saket in New

Delhi. In fact, DDA made a whopping Rs. 740 crore from the sale of

three plots in Vasant Kunj.

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Many mall developers, in a bid to offer distinctive value propositions,

are planning 'specialty malls'. These niche developments will emerge

as one-stop destinations in their chosen product categories. The

Delhi-based Aerens Group is one such exclusive jewellery mall.

Further, a number of analogous developments like a 'Wedding Mall'

by Omaxe Group, 'Automobile Mall' etc. is also in the offing. In line

with international trends, 'Home Malls' offering the entire range of

building and interior decor solutions are also coming up in various

parts of the country including Gurgaon & Kolkata. Concepts like a

'Toys Mall' exclusively for kids and a 'Factory Outlet Mall' offering

branded apparel at throw-away prices are also popular in developed

economies and are likely to crop up in India.

4.2.3 Disturbing Trends

A disturbing trend is the 'clustering' of a large number of malls in a

relatively small geographical area. A chief example is Gurgaon where

over 20 new malls are likely to become operational in the next two

years. This unhealthy concentration of supply in a suburban zone with

a limited catchment population will lead to mall developers burning

their fingers as their plans are not backed by the requisite planning

and market research.

Malls are likely to be the prime drivers of organized retailing

revolution in the country. This is especially true in the Indian context

as 'destination' high street locations like Fifth Avenue in New York,

Champs Elysees in Paris, Oxford Street in London and Causeway

Bay in Hong Kong are not likely to develop in India due to the lack of

151

appropriate planning of high street shopping centers. High street

locations in India are fraught with problems such as lack of

maintenance of common areas, encumbrances on property, absence of

single ownership and management, parking hassles, general lack of

civic sense, etc. However, as mall developers offer a wide variety of

real estate options to retailers with the assurance of guaranteed

footfalls, retailers are likely to introspect the viability of stores in high

street locations. Further, with the increase in supply, prices are likely

to fall. This will, in effect, induce retailers who had hitherto avoided

high street shopping centers due to the prohibitive lease rentals, to

evaluate establishing presence in these locations. In the long run, both

high street retailing and malls are expected to flourish, each

complementing the other.

4.3 Focus on India: How Competitive is its Textile and

Clothing Industry?

• Labour Costs

Hourly labour costs in India are among the lowest in the world. At

only US$0.67 in 2004, they were significantly lower than competitors

in the EU and US markets such as Taiwan (US$7.58), South Korea

(US$7.10), Czech Republic (US$3.94), Turkey (US$2.88), Morocco

(US$2.56), Mexico (US$2.l9), Tunisia (US$2.05), Thailand

(US$1.29), and the Philippines (US$1.12). They were also lower than

in China's coastal region (US$0.76). Admittedly they were higher

than in Indonesia (US$0.55), inland China (US$0.48), Sri Lanka

(US$0.46), Pakistan (US$0.37), Vietnam (US$0.28), and Bangladesh

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(US$0.28). However, such differences are easily overshadowed by

differences in other costs and productivity levels.8

4.3.1 SWOT Analysis for India: Strengths, Weakness,

Opportunities and Threats

Strengths

• India has an abundant domestic raw material supply. It is

number three among the world's raw cotton producers, and is a

significant manufacturer of manmade fibres.

• It has a strong and diversified textile manufacturing base.

• The country has a large domestic market as well as a large and

rapidly growing consumer market, enabling its manufacturers

to achieve economies of scale labour costs are minimal.

• India has a large and growing economy, and one which ranks

as the world's number four in terms of purchasing power parity.

• India has a vibrant capital market.

• The country has a good strategic location, being close to the

vast South Asian market.

• India has a large pool of skilled manpower and one of the

world's largest pools of professionals.

• The industry is exempt from customs duty on industrial inputs,

and benefits from corporate tax holidays for 100% EOUs

(export oriented units) and EPZs (export processing zones).

• India has a stable parliamentary democracy, unlike many other

low cost suppliers around the world.

• The availability of cloth per head in India is growing.

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• The development of IT and communications in India has been

rapid.

• India's foreign currency reserves are growing.

• Gradual progress is being made on structural reforms.

• Industrial cluster formation is taking place in certain cities.

• The first fully operational apparel park has opened in Netaji-

Tirupur and more on follow.

• India has a number of well recognized textile and fashion

training institutes.

Weaknesses

• Much of India's infrastructure is in need of improvement,

including ports, airports, roads, and power.

• The garment export industry has a relatively narrow product

base: four products account for over half of exports.

• High technology in India is limited to only a few factories.

• Too much of the decentralized garment sector is still based on

traditional tailoring.

• There are too many small garment units.

• India is distant from its two main markets, the United States

and the European Union.

• The industry suffers from low productivity and inconsistent

quality.

• The industry tends to be inward-looking and resistant to

change, especially in the case of small units.

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• In a survey by the International Textile Manufacturers

Federation (ITMF), India's power costs were found to be the

second highest of seven countries.

• Human resources development in the industry has been

neglected.

• Textile plants tend to be small in size and low-tech; in

particular, there are insufficient numbers of shuttle-less looms.

• The cotton yield in India is low and contamination, high.

• Foreign direct investment is discouraged by low labour

productivity, restrictive labour laws, rising costs of imports,

and power and infrastructure bottlenecks.

• Labour laws are often weighted towards employees.

Opportunities

• India has great potential to vastly increase its exports now that

quotas have been eliminated.

• With its low labour costs, India is well-placed to capitalize on

the shift of production to Asia.

• The imposition of safeguard quotas against China will provide

India with more scope to expand its share in restricted (and

unrestricted) categories.

• The Indian domestic market provides opportunities for

economies of scale.

• World fibre consumption continues to increase.

• India has the capabilities and infrastructure needed to capture a

slice of the global expansion in technical textiles.

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• According to the ITMF, the Indian industry has a competitive

advantage in raw material and labour cost in yarn and fabric

manufacture.

Threats

• India is at risk of being squeezed out of major markets by

Chinese export growth.

• Following the end of quotas, the major importing countries are

likely to step up the use of non-tariff barriers by, for example,

insisting that factories comply with environmental and labour

standards.

• An increase in anti-dumping and anti-subsidy measures is

likely.

• India could face growing competition from regional trade

blocks and preferential trade deals which are designed to

benefit other countries.

• The dispute with Pakistan over Kashmir will limit the

opportunities for intra-regional trade between the two countries

and hence opportunities for production synergies.

• Chinese government support to exporters makes India's exports

less competitive. Falling prices in the quota-free era could hit

margins.

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4.3.2 Investment in Textile Machinery

Shuttleless Looms

In the case of shuttleless weaving machinery - the more advanced

technology than shuttle looms- India fares badly. With only 9,210

looms installed at the beginning of 2004, India was dwarfed by

China's 2,11,900 looms, Thailand's 53,500 looms, Indonesia's 29,000

looms and Turkey's 18,000 looms.On the other hand, India acquired

8,586 looms during the ten years to 2004, which was almost as many

as the number installed at the beginning of 2004. This demonstrates

that almost all of its installed capacity is less than ten years old.

4.3.3 Competitive Position of Pakistan

Pakistan has a competitive industry with very low costs, a plentiful

labour supply, and a plentiful raw material supply-including an

indigenos supply of cotton and a vertically integrated industry. It has

established good positions in developed country markets, and has

benefited from government subsidies. In addition, it has received

other government support and is favoured politically by the USA for

its cooperation in the war on terrorism. However, in common with

other countries in South Asia, it suffers from the problems which

arise from being relatively distant from EU markets in comparison

with countries in Eastern Europe and the Mediterranean Rim.

4.3.4 Competitive Position of Bangladesh and Sri Lanka

Bangladesh and Sri Lanka developed as a result of their very low

costs and quota-free and duty-free access to the EU market.

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Bangladesh also has an indigenous supply of raw cotton. Both have

achieved a strong market position and Sri Lankan exporters have built

up particularly good relationships with European and US buyers. But

neither has special locational advantages and both suffer from a lack

of backward linkages. As a result, lead times and costs are higher than

those achieved by many of their competitors. And since the abolition

of quotas, quota-free access has ceased to be a benefit.

The global textile & apparel industry generated total revenue of USD

1467.5 Billion. The global apparel and accessories industry generated

total revenues of USD 1,098.6 Billion in 2005; equivalent to 74.9% of

the overall industry value. The global textile sector was worth USD

214.7 Billion in 2005, which represented 14.6% of the Industry value

share. The global textile & apparel industry is expected to reach a

value of USD 1,781.7 Billion by the end of 2010.9

India contributes to about 25% share in the world trade of cotton yarn.

India, the world's third-largest producer of cotton and second-largest

producer of cotton yams and textiles, IS poised to play an

increasingly important role in global cotton and textile markets as a

result domestic and multilateral policy reform. Indian textile industry

contributes about 22% to the world spindleage and about 6 % to the

world rotor capacity installed. India has second highest spindle age in

the world after China with an installed capacity of 38.60 Million.

Textile industry contributes about 61 % of the world loomage. Indian

textile industry has the highest loomage (including hand looms) in the

world and contributes about 61 % of the world loomage. It

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contributes about 12% to the world production of textile fibers and

yams. India is one of the largest consumers of cotton in the world,

ranking second to China in production of cotton yam and fabrics and

first in installed spinning and weaving capacity Total consumption of

cotton/ man-made fibers and filament yams is 5,155 Million Kg

(2004-05).

Through export friendly government policies and positive efforts by

the exporting community, textile exports increased substantially from

USD 7.55 Billion in 1993-94 to USD 17 Billion in 2005-06. The

readymade garment sector is the biggest segment in the India's textile

export basket contributing over 46% of the total textile exports.

Exports of cotton based items continue to pre-dominate which is

natural in view that India is the world's third-largest producer of

cotton Exports have grown at an average of 9.47% p.a. over the last

decade. Textiles exports (including Jute, Coir & handicraft): USD

13,065.24 Million (2004-05).10

4.4 Production of Fibres

Strength Post 2005, removal of quota restrictions to give a major

boost. Export target in textile at USD 50 billion by 2010. Low per

capita consumption in India (2.8 vs. Global average of 6.8). Cost

competitiveness.11

Indian companies need to focus on Product Development; Increased

use of CAD to develop designing capabilities; Investing in Trend

Forecasting to enable the growth of industry. The growth

opportunities exist in following areas:

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Competition in domestic market need to improve the working

conditions of the people who are involved in this profession; Need to

revamp Consumer Consciousness; Tackle Chinese Aggression over

the International Market.12

Setting up Textile lndustries oriented SEZs starting up new courses

like Textile Manufacturing and Textile Technology at ITIs and

Engineering Institutes Liberalized labour laws, tax and other benefits

of a Special Economic Zone need to be implemented ;Access to high

quality and cost-effective manpower; Excellent connectivity by road,

rail, air and ports Single-window clearance.

A Mckinsey study claims retail productivity in India is very low

compared to international peer measures. For example, the labour

productivity in Indian retail was just 6% of the labour productivity in

United States in 2010. India's labour productivity in food retailing is

about 5% compared to Brazil's 14%; while India's labor productivity

in non-food retailing is about 8% compared to Poland's 25%.

Total retail employment in India, both organized and unorganized,

account for about 6% of Indian labor work force currently - most of

which is unorganized, this about a third of levels in United States and

Europe; and about half of levels in other emerging economies. A

complete expansion of retail sector to levels and productivity similar

to other emerging economies and developed economies such as the

United States would create over 50 million jobs in India. Training and

development of labor and management for higher retail productivity

is expected to be a challenge.

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To become a truly flourishing industry, retailing in India needs to

cross the following hurdles: 13

• Automatic approval is not allowed for foreign investment in

retail.

• Regulations restricting real estate purchases, and cumbersome

local laws.

• Taxation, which favours small retail businesses.

• Absence of developed supply chain and integrated IT

management.

• Lack of trained work force.

• Low skill level for retailing management.

• Lack of Retailing Courses and study options

• Intrinsic complexity of retailing - rapid price changes, constant

threat of product obsolescence and low margins.

In November 2011, the Indian government announced relaxation of

some rules and the opening of retail market to competition.

4.5 Indian Retail Reforms

Until 2011, Indian central government denied foreign direct

investment (FDI) in multi-brand Indian retail, forbidding foreign

groups from any ownership in supermarkets, convenience stores or

any retail outlets, to sell multiple products from different brands

directly to Indian consumers.

The government of Manmohan Singh, Prime Minister, announced

on 24 November 2011 the following:

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• India will allow foreign groups to own up to 51 per cent in

"multi-brand retailers", as supermarkets are known in India, in

the most radical pro-liberalization reform passed by an Indian

cabinet in years;

• Single brand retailers, such as Apple and Ikea, can own 100

percent of their Indian stores, up from the previous cap of 51

percent;

• Both multi-brand and single brand stores in India will have to

source nearly a third of their goods from small and medium-

sized Indian suppliers;

• All multi-brand and single brand stores in India must confine

their operations to 53odd cities with a population over one

million, out of some 7935 towns and cities in India. It is

expected that these stores will now have full access to over 200

million urban consumers in India;

• Multi-brand retailers must have a minimum investment of

US$l00 million with at least half of the amount invested in

back end infrastructure, including cold chains, refrigeration,

transportation, packing, sorting and processing to considerably

reduce the post harvest losses and bring remunerative prices to

farmers;

• The opening of retail competition will be within India's federal

structure of government. In other words, the policy is an

enabling legal framework for India. The states of India have the

prerogative to accept it and implement it, or they can decide to

not implement it if they so choose. Actual implementation of

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policy will be within the parameters of state laws and

regulations.

The opening of retail industry to global competition is expected to

spur a retail rush to India. It has the potential to transform not only

the retailing landscape but also the nation's ailing infrastructure.

A Wall Street Journal article claims that fresh investments in Indian

organized retail will generate 10 million new jobs between 2012-

2014, and about five to six million of them in logistics alone; even

though the retail market is being opened to just 53 cities out of about

8000 towns and cities in India.

It is expected to help tame stubbornly high inflation but is likely to be

vehemently opposed by millions of small retailers, who see large

foreign chains as a threat. The need to control food price inflation-

averaging double-digit rises over several years-prompted the

government to open the sector, analysts claims. Hitherto India's food

supplies have been controlled by tens of millions of middlemen (less

than 5% of Indian population). Traders add huge mark-ups to farm

prices, while offering little by way of technical support to help

farmers boost their productivity, packaging technology, pushing up

retail prices significantly. Analysts said allowing in big foreign

retailers would provide an impetus for them to set up modern supply

chains, with refrigerated vans, cold storage and more efficient

logistics.

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4.5.1 Indian Retail Reforms on Hold

According to Bloomberg, on 3 December 2011, the Chief Minister of

the Indian state of West Bengal, Mamata Banerjee, who is against the

policy and whose Trinamool Congress brings 19 votes to the ruling

Congress party-led coalition, claimed that India's government may

put the FDI retail reforms on hold until it reaches consensus within

the ruling coalition. Reuters reports that this risked a possible dilution

of the policy rather than a change of heart."

India Today claimed that the resistance to Indian retail reforms is

primarily because it has been badly sold, even though it can help fix

the exploitation of Indian farmers by the decades-old "arhtiya" and

"mandi" monopoly system. India Today claims the policy is good for

the small Indian farmer and the Indian consumer.14

Pratap Mehta, president of the Centre for Policy Research, claimed

any U-turn or postponement of retail reforms will cause an immense

loss of face to the Congress-led central government of Manmohan

Singh. The mom-and-pop farmers of India support these reforms. The

consumers of India want the reforms. The government has already

annoyed those who oppose change and innovation in retail. By

putting retail reforms on hold, the government will additionally

alienate much larger segment of Indian population supporting FDI. So

they will now have the worst of both worlds, claims Mehta.

Deepak Parekh, Ashok Ganguly and other economic policy leaders of

India, on 4 December 2011, called placing investment and innovation

in retail on hold for the sake of vested interests as unfair and

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detrimental to vast majority in India. They urged farmers, consumers

and the common people to raise their voice against this false drama of

apprehension against investment and modernizing trade in organized

retailing. They called upon Indians to come out and strongly support

progressive measures and reforms with the same spirit and gusto with

which we take the liberties to criticize policies we do not appreciate.

Several newspapers claimed on 6 December 2011 that India

parliament is expected to shelve retail reforms while the ruling

Congress party seeks consensus from the opposition and the Congress

party's own coalition partners. Suspension of retail reforms on 7

December 2011 would be, the reports claimed, an embarrassing

defeat or the Indian government, suggesting it is weak and ineffective

in implementing its ideas.

Anand Sharma, India's Commerce and Industry Minister, after a

meeting of all political parties on 7 December, 2011 said, "The

decision to allow foreign direct investment in retail is suspended till

consensus is reached with all stakeholders.

4.5.2 Single-Brand Retail Reforms Approved

On January11, 2012, India approved increased competition and

innovation in single-brand retail. The reform seeks to attract

investments in production and marketing, improve the availability of

goods for the consumer, encourage increased sourcing of goods from

India, and enhance competitiveness of Indian enterprises through

access to global designs, technologies and management practices. In

this announcement, India requires single-brand retailer, with greater

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than 51 % foreign ownership, to source at least 30% of the value of

products from Indian small industries, village and cottage industries,

artisans and craftsmen.

4.5.3 Social Impact and Controversy with Retail Reforms

The November 2011 retail reforms in India have sparked intense

activism, both in opposition and in support of the reforms.

4.5.4 Controversy over Indian Retail Reforms

A horticultural produce retail market in Kolkata, India; produce loss

in these retail formats is very high for perishables.

Critics of the Indian retail reforms announcement are making one or

more of the following points14:

• Independent stores will close, leading to massive job losses.

Wal-Mart employs very few people in the United States. If

allowed to expand in India as much as Wal-Mart has expanded

in the United States, few thousand jobs may be created but

millions will be lost.

• Wal-Mart will lower prices to dump goods, get competition out

of the way, become a monopoly, and then raise prices. We have

seen this in the case of the soft drinks industry. Pepsi and Coke

came in and wiped out all the domestic brands.

• India doesn't need foreign retailers, since homegrown

companies and traditional markets may be able to do the job.

• Work will be done by Indians, profits will go to foreigners.

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• Remember East India Company. It entered India as a trader and

then took over politically.

• There will be sterile homogeneity and Indian cities will look

like cities anywhere else. The government hasn't built

consensus.

Supporters claim none of these objections has merit. They claim:16

• Organized retail will need workers. Wal-Mart employs 1.4

million people in United States alone. With United States

population of about 300 million, and India's population of

about 1200 million, if Wal-Mart-like retail companies were to

expand in India as much as their presence in the United States,

and the staffing level in Indian stores kept at the same level as

in the United States stores, Wal-Mart alone would employ 5.6

million Indian citizens. Wal-Mart has a 6.5% market share of

the total United States retail. Adjusted for this market share, the

expected jobs in future Indian organized retail would total over

85 million. In addition, millions of additional jobs will be

created during the building of and the maintenance of retail

stores, roads, cold storage centers, software industry, electronic

cash registers and other retail supporting organizations. Instead

of job losses, retail reforms are likely to be massive boost to

Indian job availability.

• KPMG - one of the world's largest audit companies - finds that

in China, the employment in both retail and wholesale trade

increased from 4% in 1992 to about 7% in 2001, post China

opening its retail to foreign and domestic innovation and

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competition. In absolute terms, China experienced the creation

of 26 million new jobs within 9 years; post China announcing

FDI retail reforms. Additionally, contrary to some concerns in

China, post retail reforms, the number of traditional small

retailers also grew by 30% over 5 years.17

• India needs trillions of dollars to build its infrastructure,

hospitals, housing and schools for its growing population.

Indian economy is small, with limited surplus capital. Indian

government is already operating on budget deficits. It is simply

not possible for Indian investors or Indian government to fund

this expansion, job creation and growth at the rate India needs.

Global investment capital through FDI is necessary. Beyond

capital, Indian retail industry needs knowledge and global

integration. Global retail leaders, some of which are partly

owned by people of Indian origin, can bring this knowledge.

Global integration can potentially open export markets for

Indian farmers and producers. Wal-Mart, for example, expects

to source and export some $1 billion worth of goods from India

every year, since it came into Indian wholesale retail market.

• Wal-Mart, Carrefour, Tesco, Target, Metro, Coop are some of

over 350 global retail companies with annual sales over $1

billion. These retail companies have operated for over 30 years

in numerous countries. They have not become monopolies.

Competition between Wal-Mart-like retailers has kept food

prices in check. Canada credits their very low inflation rates to

Wal-Mart-effect. Anti-trust laws and state regulations, such as

those in Indian legal code, have prevented food monopolies

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from forming anywhere in the world. Price inflation in these

countries has been 5 to 10 times lower than price inflation in

India. The current consumer price inflation in Europe and the

United States is less than 2%, compared to India's double digit

inflation/price rise.

• The Pepsi and Coke example is meaningless in the context of

Indian beverage market. More competition is lacking because

of limited demand. Indian consumer has limited interest in soft

drinks. Soft drinks represent less than 5% of Indian beverage

market, Indian consumer prefers milk-based, tea and coffee and

these account for 90% of Indian beverage market. In these

markets, Coca Cola and Pepsi have plenty of competition. The

next most important market in India is bottled water that

outsells combined soft drink sales of the Pepsi and Coca Cola.

Bottled water, milk, coffee and tea market in India are big

markets, and have plenty of domestic brands, European brands

like Nestle, as well as Pepsi and Coca Cola. Organized retail

too will have numerous brands and strong competition.

• Comparing 21st century to 18th century is inappropriate.

Conditions today are not same as in the 18th century. India

wasn't a democracy then, it is today. Global awareness and

news media were not the same in 18th century as today.

Consider China today. It has over 57 million square feet of

retail space owned by foreigners, employing millions of

Chinese citizens. Yet, China hasn't become a vassal of

imperialists. It enjoys respect from all global powers. Other

Asian countries like Malaysia, Taiwan, Thailand and Indonesia

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see foreign retailers as catalysts of new technology and price

reduction; and they have benefitted immensely by welcoming

FDI in retail. India too will benefit by integrating with the

world, rather than isolating itself.

• With 51 % FDI limit in multi-brand retailers, nearly half of any

profits will remain in India. Any profits will be subject to taxes,

and such taxes will reduce Indian government budget deficit.

Many years ago, China adopted the retail reform policy India

has announced; China allowed FOI in its retail sector. It has

taken FOI-financed retailers in China between 5 to 10 years to

post profits, in large part because of huge investments they had

to make initially. Like China, it is unlikely foreign retailers will

earn any profits in India for the first 5 to 1 0 years. Ultimately,

retail companies must earn profits with hard work and by

creating value.

• States have a right to say no to retail FOI within their

jurisdiction. States have the right to add restrictions to the retail

policy announced before they implement them. Thus, they can

place limits on number, market share, style, diversity,

homogeneity and other factors to suit their cultural preferences.

Finally, in future, states can always introduce regulations and

India can change the law to ensure the benefits of retail reforms

reach the poorest and weakest segments of Indian society, free

and fair retail competition does indeed lead to sharply lower

inflation than current levels, small farmers get better prices,

jobs created by organized retail pay well, and healthier food

becomes available to more households.

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• Inbuilt inefficiencies and wastage in distribution and storage

account for why, according to some estimates, as much as 40%

of food product doesn't reach consumers. Fifty million children

in India are malnourished. Food often rots at farms, in transit,

or in antiquated state-run warehouses. Cost-conscious

organized retail companies will avoid waste and loss, making

food available to the weakest and poorest segment of Indian

society, while increasing the income of small farmers. Wal-

Mart, for example, since its arrival in Indian wholesale retail

market, has successfully introduced "Direct Farm Project" at

Haider Nagar near Malerkotla in Punjab, where 110 farmers

have been connected with Bharti Wal-Mart for sourcing fresh

vegetables directly, thereby reducing waste and bringing

fresher produce to Indian consumers. Indian small shops

employ workers without proper contracts, making them work

long hours. Many unorganized small shops depend on child

labour. A well-regulated retail sector will help curtail some of

these abuses.

• Organized retail has enabled a wide range of companies to start

and flourish in other countries. For example, in the United

States, an organized retailer named Whole Foods has rapidly

grown to annual revenues of $9 billion by working closely with

farmers, delighting customers and caring about the

communities it has stores in.

• The claims that there is no consensus are without merit. About

10 years ago, when opposition formed the central government,

they had proposed retail reforms and suggested India consider

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FDI in retail. Retail reforms discussions are not new. More

recently, retail reforms announced evolved after a process of

intense consultations and consensus building initiative. In

2010, the Indian government circulated a discussion paper on

FDI retail reforms. On July 6, 2011, another version of the

discussion paper was circulated by the central government of

India. Comments from a wide cross-section of Indian society

including farmers' associations, industry bodies, consumer

forums, academics, traders' associations, investors, economists

were analyzed in depth before the matter was discussed by the

Committee of Secretaries. By early August 2011, the consensus

from various segments of Indian society was overwhelming in

favor of retail reforms. The reform outline was presented in

India's Rajya Sabha in August 2011. The announced reforms

are the result of this consensus process. The current opposition

is not helping the consensus process, since consensus is not

built by threats and disruption. Those who oppose current retail

reforms should help build consensus with ideas and proposals,

if they have any. The opposition parties currently disrupting the

Indian Parliament on retail reforms have not offered even one

idea or a single proposal on how India can eliminate food

spoilage, reduce inflation, improve food security, feed the poor,

improve the incomes of small farmers.

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4.5.5 Opposition to Retail Reforms

Within a week of retail reform announcement, Indian government has

faced a political backlash against its decision to allow competition

and 51 % ownership of multi-brand organized retail in India.

Despite the fact that Salman Khurshid, India's law minister, claiming

that many opposition parties, including the Bharatiya Janta Party, had

privately encouraged the government to push through the retail

reform, the intense criticism now targets Congress-led coalition

government, and its decision to push through one of the biggest

economic reforms in years for India. Opposition parties claim

supermarket chains are ill-advised, unilateral and unwelcome.

The opposition claims the entry of organized retailers would lead to

their dominance that would decimate local retailers and force millions

of people out of work.

Mamata Banerjee, the chief minister of West Bengal and the leader of

the Trinamool Congress, announced her opposition to retail reform,

claiming "Some people might support it, but I do not support it. You

see America is America. …. and India is India. One has to see what

one's capacity is."

Other states whose Chief Ministers have either personally announced

opposition or announced reluctance to implement the retail reforms:

Tamil Nadu, Uttar Pradesh, Bihar and Madhya Pradesh.

Chief Ministers of many states have not made a personal statement in

opposition or support of India needing retail reforms. Gujarat, Kerala,

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Karnataka and Rajasthan are examples of these states. Both sides

have made conflicting claims about the position of chief ministers

from these states.

A Wall Street Journal article reports that in Uttar Pradesh, Uma

Bharti, a senior leader of the opposition Bharatiya Janta Party (BJP),

threatened to "set fire to the first Wal-Mart store whenever it opens;"

with her colleague Sushma Swaraj busy tweeting up a storm of

misinformation about how Wal-Mart allegedly ruined the U.S.

economy and economic system.

On 1 December 2011, an India-wide "bandh" (close all business in

protest) was called by political parties opposite the retail reform.

While many organizations responded, the reach of the protest was

mixed. The Times of India, a national newspaper of India, claimed

people appeared divided over the bandh call and internal rivalry

among trade associations led to a mixed response, leaving many

stores open day-long and others opening for business as usual in the

second half of the day. Even Purti Group, a network of stores owned

and operated by Nitin Gadkari were open for business, ignoring the

call for bandh. Gadkari is the president of BJP, the key party currently

organizing opposition to retail reform.

The Hindu, another widely circulated newspaper in India, claimed the

opposition's call for a nationwide shutdown on 1 December 2011, in

protest of retail reform received a mixed response. Some states had

strong support, while most did not. Even in states where opposition

political parties are in power, many ignored the call for the shutdown.

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In Gujarat, Bihar, Delhi, Andhra Pradesh, Haryana, Punjab and

Assam the call evoked a partial response. While a number of

wholesale markets observed the shutdown, the newspaper claimed a

majority of kirana stores and neighborhood small shops - for whom

apparently the trade bandh had been called - remained open, ignoring

the shutdown call. Conflicting claims were made by the organizers of

the nationwide shutdown. Contrary to eyewitness reports, one Trader

union's secretary general claimed traders across the country

participated wholeheartedly in the strike.

The political parties opposing the retail reforms physically disrupted

and forced India's Parliament to adjourn again on Friday 2 December,

2011. The Indian government refused to cave in, in its attempt to

convince through dialogue that retail reforms are necessary to protect

the farmers and consumers. Indian Parliament has been dysfunctional

for the entire week of November 28, 2011 over the opposition to retail

reforms especially in multi-brand.

4.5.6 Support for Retail Reforms

In a pan-Indian survey conducted over the weekend of 3 December,

2011, overwhelming majority of consumers and farmers in and

around ten major cities across the country support the retail reforms.

Over 90 per cent of consumers said FDI in retail will bring down

prices and offer a wider choice of goods. Nearly 78 per cent of

farmers said they will get better prices for their produce from multi-

format stores. Over 75 per cent of the traders claimed their marketing

resources will continue to be needed to push sales through multiple

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channels, but they may have to accept lower margins for greater

volumes /large scale.

4.5.7 Farmer Groups

Various farmer associations in India have announced their support for

the retail reforms. For example:

• Shriram Gadhve of All India Vegetable Growers Association

(AIVGA) claims his organization supports retail reform. He

claimed that currently, it is the middlemen commission agents who

benefit at the cost of farmers. He urged that the retail reform must

focus on rural areas and that farmers receive benefits. Gadhve

claimed, "A better cold storage would help since this could help

prevent the existing loss of 34% of fruits and vegetables due to

inefficient, systems in place." AIVGA operates in nine states

including Maharashtra, Andhra Pradesh, West Bengal, Bihar,

Punjab and Haryana with 2,200 farmer outfits as its members.

• Bharat Krishak Samaj, a farmer association with more than 75,000

members says it supports retail reform. Ajay Vir Jakhar, the

chairman of Bharat Krishak Samaj, claimed a monopoly exists

between the private guilds of middlemen, commission agents at

the sabzi mandis (India's wholesale markets for vegetables and

farm produce) and the small shop keepers in the unorganized retail

market. Given the perishable nature of food like fruit and

vegetables, without the option of safe and reliable cold storage, the

farmer is compelled to sell his crop at whatever price he can get.

He cannot wait for a better price and is thus exploited by the

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current monopoly of middlemen. Jakhar asked that the

government make it mandatory for organized retailers to buy 75%

of their produce directly from farmers, bypassing the middlemen

monopoly and India's sabzi mandi auction system.

• Consortium of Indian Farmers Associations (CIFA) announced its

support for retail reform. Chengal Reddy, secretary general of

(CIFA) claimed retail reform could do lots for Indian farmers.

Reddy commented, "India has 600 million farmers, 1,200 million

consumers and 5 million traders. I fail to understand why political

parties are taking an anti-farmer stand and worried about half a

million brokers and small shopkeepers." CIF A mainly operates in

Andhra Pradesh, Karnataka and Tamil Nadu; but has a growing

members from rest of India, including Shetkari Sanghatana in

Maharashtra, Rajasthan Kisan Union and Himachal Farmer

Organizations.

• Prakash Thakur, the chairman of the People for Environment

Horticulture & Livelihood of Himachal Pradesh, announcing his

support for retail reforms claimed FDI is expected to roll out

produce storage centers that will increase market access, reduce

the number of middlemen and enhance returns to farmers. Highly

perishable fruits like cherry, apricot, peaches and plums have a

huge demand but are unable to tap the market fully because of lack

of cold storage and transport infrastructure. Sales will boost with

the opening up of retail. Even though India is the second-largest

producer of fruits and vegetables in the world, its storage

infrastructure is grossly inadequate, claimed Thakur.

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• Sharad Joshi, founder of Shetkari Sangathana (farmers

association), has announced his support for retail reforms. Joshi

claims FDI will help the farm sector improve critical infrastructure

and integrate farmer-consumer relationship. Today, the existing

retail has not been able to supply fresh vegetables to the

consumers because they have not invested in the backward

integration. When the farmers' produce reaches the end consumer

directly, the farmers will naturally be benefited. Joshi feels retail

reform is just a first step of needed agricultural reforms in India,

and that the government should pursue additional reforms.

Suryamurthy, in an article in The Telegraph, claims farmer groups

across India do not support status quo and seek retail reforms,

because with the current retail system the farmer is being exploited.

For example, the article claims:

• Indian farmers get only one third of the price consumers pay

for food staples, the rest is taken as commissions and markups

by middlemen and shopkeepers.

• For perishable horticulture produce, average price farmers

receive is barely 12 to 15% of the final price consumer pays.

• Indian potato farmers sell their crop for Rs. 2 to 3 a kilogram,

while the Indian consumer buys the same potato for Rs. 12 to

20 a kilogram.

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4.5.8 Economists and Entrepreneurs

Many business groups in India are welcoming the transformation of a

long-protected sector that has left Indian shoppers bereft of the scale

and variety of their counterparts in more developed markets.

B. Muthuraman, the president of the Confederation of Indian

Industry, claimed the retail reform would open enormous

opportunities and lead to much-needed investment in cold chain,

warehousing and contract farming.

Organized retailers will reduce waste by improving logistics, creating

cold storage to prevent food spoilage, improve hygiene and product

safety, reduce counterfeit trade and tax evasion on expensive item

purchases, and create dependable supply chains for secure supply of

food staples, fruits and vegetables. They will increase choice and

reduce India's rampant inflation by reducing waste, spoilage and

cutting out middlemen. Fresh investment in organized retail, the

supporters of retail reform claim will generate 10 million new jobs by

2014, about five to six million of them in logistics alone.

Organized retail will offer the small Indian farmer more competing

venues to sell his or her products, and increase income from less

spoilage and waste. A Food and Agricultural Organization report

claims that currently, in India, the small farmer faces significant

losses post-harvest at the farm and because of poor roads, inadequate

storage technologies, inefficient supply chains and farmer's inability

to bring the produce into retail markets dominated by small

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shopkeepers. These experts claim India's post-harvest losses to

exceed 25%, on average, every year for each farmer.

Unlike the current monopoly of middlemen buyer, retail reforms offer

farmers access to more buyers from organized retail. More buyers

will compete for farmers produce leading to better support for farmers

and to better bids. With less spoilage of staples and agricultural

produce, global retail companies can find and provide additional

markets to Indian farmers. Wal-Mart, since its arrival in India's

wholesale retail market, already sources and exports about $1 billion

worth of Indian goods for its global customers.

Not only do these losses reduce food security in India, the study

claims that poor farmers and others loose income because of the

waste and inefficient retail. Over US$50 billion of additional income

can become available to Indian farmers by preventing post-harvest

farm losses, improving transport, proper storage and retail. Organized

retail is also expected to initiate infrastructure development creating

millions of rural and urban jobs for India's growing population. One

study claims that if these post-harvest food staple losses could be

eliminated with better infrastructure and retail network in India,

enough food would be saved every year to feed 70 to 100 million

people over the year.17

Supporters of retail reform, The Economist claims, say it will increase

competition and quality while reducing prices helping to reduce

India's rampant inflation that is close to the double digits. These

supporters claim that unorganized small shopkeepers will continue to

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exist alongside large organized supermarkets, because for many

Indians they will remain the most accessible and most convenient

place to shop.

Amartya Sen, the Indian born Nobel Prize winning economist, in a

December, 2011 interview claims foreign direct investment in multi

brand retail can be good thing or bad thing depending on the nature of

the investment. Quite often, claims Professor Sen, FDI is a good thing

for India.

4.5.9 Chief Ministers of Indian States

Supporters of retail reform who have voiced the need to promote

organized retail include Chief Ministers of several states of India,

several belonging to political parties that have no affiliation with

Congress-led central government of India. The list includes the Chief

Ministers of Maharashtra, Andhra Pradesh, Tamil Nadu and Gujarat.

In a report submitted earlier in 2011, these Chief Ministers urged the

Prime Minister to prioritize reforms to help promote organized retail,

shorten the retail path from farm to consumer, allow organized retail

to buy direct from farmers at remunerative produce prices, and reduce

farm to retail costs. Similarly, the Chief Minister of Delhi has come

out in support of the retail reform, as have the Chief Ministers of the

two farming states of Haryana and Punjab in north India. The Chief

Ministers of Haryana and Punjab claim that the announced retail

reforms will immensely benefit farmers in their states.

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The Chief Minister of the state of Maharashtra - the state with the

highest GDP in India and home to its financial capital Mumbai - has

also welcomed the retail reform.

Tarun Gogoi, the Chief Minister of Assam, an eastern state in India,

announcing his support to the retail reform, claimed "this will go a

long way in bringing about a sea change in rural economy. The

decision will boost agriculture and allied sectors, manufacturing,

logistics, integrated cold chains, refrigerated transportation and food

processing facilities in a big way." Criticizing the BJP-organized

opposition, Gogoi claimed that these parties, who had just a few years

ago dubbed opening up retail as good for India, are now singing a

different tune.

4.5.10 Current Supermarkets

Existing Indian retail firms such as Spencer's, Foodworld

Supermarkets Ltd, Nilgiri's and ShopRite support retail reform and

consider international competition as a blessing in disguise. They

expect a flurry of joint ventures with global majors for expansion

capital and opportunity to gain expertise in supply chain management.

Spencer's Retail with 200 stores in India, and with retail of fresh

vegetables and fruits accounting for 55 per cent of its business claims

retail reform to be a win-win situation, as they already procure the

farm products directly from the growers without the involvement of

middlemen or traders. Spencer's claims that there is scope for it to

expand its footprint in terms of store location as well as procuring

farm products. Food world, which operates over 60 stores, plans to

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ramp up its presence to more than 200 locations. It has already tied up

with Hong Kong-based Dairy Farm International. With the relaxation

in international investments in Indian retail, India's Food world

expects its global relationship will only get stronger. Competition and

investment in retail will provide more benefits to consumers through

lower prices, wider availability and significant improvement in supply

chain logistics.

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References

1. Ministry of Textile 2008-09 Annual Report.

2. Ernst & Young Research

3. “India in the Global Textile Ecosystem” 2007 Ernst & Young, CII

4. Technopak Reports, 2012

5. Business Standard

6. KSA Technopak India Retail Report 2005.

7. Technopak Reports, 2012

8. Textile Intelligence Limited(U.K.)

9. Ernst & Young India

10. Compendium of Textile Statistics, 2006.


12. KPMG India.

13. Mc Kinsey & Company.

14. FDI in Multi Brand Retail, Ministry of Commerce.

15. “A good retail decision badly sold” India Today, 3Dec. 2011.

16. “Singh criticism mounts after retail U-turns” The Financial Times

4 Dec. 2011.

17. Ministry of Commerce & Industry, GOI.

18. “Enter, Farmer with an FDI in retail query” Calcutta, India

The Telegraph.

-----:o:-----

Chapter-5

ANALYTICAL STUDY

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5.1 Sample Size

For the purpose of consistency and accuracy in response the number

of retailers surveyed has been kept 350 across the Lucknow Division

consisting Lucknow District, Hardoi District, Lakhimpur Kheri,

Raebareli, Sitapur and Unnao District.

It is good to have large number of respondents to generate huge

response, but possibility of erring by the data analyst and thereby at

wrong interpretation cannot be ruled out.

The sample has been chosen randomly at the place where retailers

were located. The following table is all about the sample size of

respondents and districts:

Table 5.1

No. of Respondents in Districts

Name of the District Sample Size

Lucknow 100

Hardoi 50

Lakhimpur Kheri 50

Raebareli 50

Sitapur 50

Unnao 50

Total Sample 350

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5.2 Observations, Findings and Interpretations

5.2.1 Types of Retailers?

A marketplace is a location where goods and services are exchanged.

The traditional market square is a city square where traders set up

stalls and buyers browse the merchandise. This kind of market is very

old, and countless such markets are still in operation around the

whole world.

In some parts of the world, the retail business is still dominated by

small family-run stores, but this market is increasingly being taken

over by large retail chains.

Apparel retailers are basically of two types: local retailers and market

retailers. Local retailers are those who are serving the local

customers. They do their business based on their personal relations

and familiarity among customers.

They have started business with low investment. They employ very

few persons or no persons at all. They act solely to run their business.

Market retailers have made heavy investment. They have

competition with other competitors. They spent a handsome amount

to make their presence in the market.

Observation1. Local retailers are less in numbers as compared to

market retailers. Local retailers are 63 against 287 market retailers.

There is a tendency that they want to move from a particular locality

to market place.

186

Observation2. Local retailers will get winder base to serve by

moving from particular locality to market place. With the growth of

retailing, retail is adopting very innovative retail formats such as

malls, supermarkets, hypermarkets, etc. Apparel marketers are the

linking pin between the designers and their customers. Successful

marketers understand that identifying consumer needs, sturdy

branding, and product image are all essential elements for building an

effective and meaningful marketing campaign. Local Store Marketing

(LSM), also known as neighbourhood marketing, is a marketing that

refers to the application of different variables in a business’s

marketing mix dependent on localized specifications including the

consumer, competition and store characteristics.

Table 5.2

Types of Retailers

District Local Retailer Market Retailer Total

Lucknow 13 87 100

Hardoi 06 44 50

Lakhimpur 11 39 50

Raebareli 13 37 50

Sitapur 16 34 50

Unnao 04 46 50

Total 63 287 350

Source: Primary Data

Under present study, 63 local appa

287 market retailers have been surveyed.

Local retailers do not have enough resources and aspiratio

to market places wher

constraints such as capital, their scal

Local retailers are doing their business on small

They are using thei

0

50

100

150

200

250

300

350

30%

14%

13%

12%

16%

Market Retailer

187

Figure 5.1

Under present study, 63 local apparel retailers have been surveyed.

arket retailers have been surveyed.

Local retailers do not have enough resources and aspiratio

to market places where there is larger scope. The

ints such as capital, their scale of operations, high rent, etc.

s are doing their business on small scale and content.

sing their infrastructure and family labo

15%

Market Retailer

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

21%

17%21%

25%

6%

Local Retailer

retailers have been surveyed.

Local retailers do not have enough resources and aspirations to move

there is larger scope. They have various

f operations, high rent, etc.

scale and content.

r infrastructure and family labour to run their

Local Retailer

Market Retailer

Total

21%

10%

Local Retailer

Lucnkow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

188

outlets. They are operating in the locating where there is no direct

competition.

5.2.2 Amount invested initially?

Investment is essential for any business activity. Small apparel

retailers have started business with small investment.

Every new business owner needs to know the fundamentals. Even the

smallest of shops will require a Rs.1,00,000 initial investment to

cover renovations and that first batch of inventory.

A Vibrant Economy, India topped the list of emerging markets for

retail investments. The apparel industry is fragmented and highly

competitive. There are a number of major players, but there are also

countless niche stores and private companies that cater to specific

demographics. Too, general merchandisers and foreign companies

bring more competition to the sector. Consequently, apparel

companies need to be highly efficient to survive in this cut throat

industry.

Observation1. Small places/ districts need small amount of

investment initilly.

Observation2. Retailers started business with up to Rs. 5 lakhs and 6

to 10 lakhs. They outnumber Rs. 11-50 lakhs and above 50 lakhs.

They are 288 against 62.

Having the right product is also essential. Fashion trends change

frequently, and companies need to adapt to varying consumer tastes

quickly. If you love

up a retail clothing store. Opening your own retail business may look

like an expensive project.

District Up to 5L

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

Total


0

50

100

150

200

250

300

350

189

you love fashion, and are good with people, you can open


like an expensive project.

Table 5.3

Amount invested initially?

Up to 5L 6-10 L 11-50 L Above 50

04 35 54 07

11 39 00 00

15 35 00 00

25 25 00 00

33 17 00 00

22 27 01 00

110 178 55 07


fashion, and are good with people, you can open


(Rs. Lakhs)

Above 50 Total

07 100

00 50

00 50

00 50

00 50

00 50

07 350

Up to 5L

6-10 L

11-50 L

Above 50

Total

Amount of investment depends upon scale of oper

outlets, etc.

Lucknow Division has six dis

Lakhimpur, Raebareli, Sitapur and Unnao.

Lucknow district is comparatively m

need higher amount of capital to start business.

Surveyed data reveal that 110 retailers

up to Rs. 5 Lak

is highest. Retailers who opened shops by investing

3% 10%

23%30%

20%

Upto 5

98%

0%0%0%0% 2%

11

190

Figure 5.2

Amount of investment depends upon scale of operations, location of

ivision has six districts namely-Luc

akhimpur, Raebareli, Sitapur and Unnao.

Lucknow district is comparatively more developed. Here retailer

need higher amount of capital to start business.

data reveal that 110 retailers started business with investing

khs, 178 opened outlets by investing 6-

is highest. Retailers who opened shops by investing

10%

14%

Upto 5

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

20%

22%20%

14%

9%

15%

6 -10

11-50

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

100%

0%0%0%0%0%

Above 50

ations, location of

Lucknow, Hardoi,

ore developed. Here retailers

started business with investing

-10 Lakhs which

is highest. Retailers who opened shops by investing 11-50Lakhs are

20%

10

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

Above 50

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

191

77. Only 7 retailers said that they opened shops by investing above 50

Lakhs.

5.2.3 Dou you deal in?

Apparel is classified into three categories-

• Menswear

• Women’s wear

• Kids wear

Some retailers specialize in particular categories. But offering all

categories prove profitable and it helps in promotion as a complete

shop selling everything for everyone.

There are many types of women’s apparel, including depresses, social

apparel, suits, outerwear, sportswear and active wear. There are also

specialty categories, such as bridal gowns and maternity clothes.

Observation 1.Most of the sample surveyed sell/deal in all categories

of apparel. 244 outlets sell menswear, women’s wear and kids wear.

Observation2. Kids wear does not have many outlets. They are sold

with menswear, women’s wear. They are just 12 in sample survey.

Thus we can classify women’s wear on the following bases:

• Size ranges

• Age

• Economic status/price

• Season

192

• Style

• Occasion

Garments for children in the commonly acknowledged size ranges

include styling and construction features specifically dedicated to the

clothing needs of that wearer population.

Men’s apparel continues to be the largest segment in apparel retail in

India. It has the presence of a large number of international brands.

The children’s wear market is growing rapidly and has seen many

international brands entering India.

Table 5.4

Do you deal in?

District Menswear Womenswear Kidswear All Total

Lucknow 19 37 11 33 100

Hardoi 03 01 00 46 50

Lakhimpur 00 00 00 50 50

Raebareli 06 03 00 41 50

Sitapur 02 02 00 46 50

Unnao 12 09 01 28 50

Total 42 52 12 244 350


0

50

100

150

200

250

300

350

45%

7%0%14%

5%

29%

Menswear

92%

0%

0%0%0%8%

Kidswear

193

Figure 5.3

45%

Menswear

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

71%

2%

0%

6%

4% 17%

Womenswear

92%

Kidswear

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

14%

20%

17%

19%

11%

All

Menswear

Womenswear

Kidswear

All

Total

Womenswear

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

19%

All

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

194

Indian shoppers often like to shop at one place. Keeping this in mind

Indian apparel retailers try to sell all categories at one place. In this

study, they are 244 who are selling all categories. There are 42

outlets that are exclusively selling menswear. 52 outlets are selling

women’s wear only. There are 12 outlets selling kids wear. There is

tendency to focus specialization as marketing tool. They like to

promote themselves as only for men, ladies or kids, sariwala,

suitwala, etc.

5.2.4 Do you deal in branded apparel?

Use of readymade garments (RMG) has been increasing. This has

also brought the use of branded apparel. Indian companies and

foreign companies are in process bringing more and more brands in

the market.

Economic growth and high disposable income have created

favourable conditions for readymade garments and hence branded

cloths. Apparel tags, labels and specialty trim play an essential role in

today’s supply chain. Not only do they promote brand recognition,

communicate important consumer information such as size and price

or point of sale data like the barcode, but they also help protect

against theft and counterfeiting. These elements even can be

combined into one single tag or label as a carrier of a complete

solution.

Observation1.Most of the retail outlets are selling branded apparel.

Those who are selling branded apparel are 327 against 23 of not

selling branded apparel.

195

Observation2. There is an apparent tendency among retailer to sell

branded items.

With the fashion industry moving and changing at lightning speed, it

is most critical than ever for retailers, brand owners and contract

manufacturers to be able to reliably and quickly process the large

amounts of information necessary for apparel labeling.

Today, every product is branded. There is presence of almost all

kinds of global brands in the present market situation. The launches

of more and more brands into the market have increased the demand

of shelf space and hence demand for retail outlets.

Table 5.5

Do you deal is branded apparel?

District Yes No Total

Lucknow 97 03 100

Hardoi 41 09 50

Lakhimpur 50 00 50

Raebareli 49 01 50

Sitapur 40 10 50

Unnao 50 00 50

Total 327 23 350


There are forces which have in

These include high econom

urbanization, cloth as means

327 respondents said that they s

those who sell non

have been becoming popular day

foreign players in this segment.

0

50

100

150

200

250

300

350

30%

15%15%

12%

15%

Yes

196

Figure 5.4

There are forces which have increased the use of branded apparel

These include high economic growth, high disposable income, high

urbanization, cloth as means of self-expression etc.

327 respondents said that they sell branded apparel against 23 of

those who sell non-branded apparel. Readymade garments (RMGs))

have been becoming popular day-by-day. There are big Indian and

players in this segment.

13%

Yes

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

13%

39%

0%4%

44%

0%

No

creased the use of branded apparel.

ic growth, high disposable income, high

ell branded apparel against 23 of

eadymade garments (RMGs))

e are big Indian and

Yes

No

Total

No

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

197

Companies manufacturing readymade garments and ready- to- wear

are promoting themselves comprehensively. They have created

awareness among consumers.

5.2.5 Do you face competition from?

Unorganized apparel retailers are those retailers who are not

registered; they do not maintain account; they do not pay taxes etc.

They are operated and managed by family members, say, it is a

family business. As against this, organized retailers are those who are

big in operations and dealings. They are registered and they pay

taxes. They include the corporate backed hypermarkets and retail

chains and also the privately owned large retail businesses. The

emerging trends in fashion retailing help the economic growth in

India. Indian organized retail is increasing with high pace in very

short span of time. Ultimately fashion retailing has a scope of

tremendous economic growth both in India and abroad.

Observation1. Apparel retailers face competition from both

organized and unorganized retailers.

Observation2. There is a move from unorganized to organized

retailing.

The relaxation by the Government on regulatory controls on FDI has

added to the growth of the fashion retail industry. The emergence of

shopping malls is also increasing rapidly in all over India. Change in

consumers’ behavior towards shopping and lifestyle. Growth in

income levels and emerging new generation customers are supporting

the growth of fashion retailing in India. The apparel and textile

industry is India’s largest selling segments of the retailing sector.

Apparel industry has become a lifestyle brand having segments not

only clothing but also fash

District

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

Total


0

50

100

150

200

250

300

350

198




only clothing but also fashion accessories jewelries, watches, etc.

Table 5.6

Do you face competition from?

Unorganized Organized Both

01 54 45

00 14 36

00 08 42

00 06 44

01 03 46

00 09 41

02 94 254





, watches, etc.

Both Total

45 100

36 50

42 50

44 50

46 50

41 50

254 350

Unorganized

Organized

Both

Total

Healthy competition is necessary f

part of the apparel retailing is done in unorganized sector.

As far as competition is concerned, respondents replied that they face

competition from both organized and organized sectors. The number

is 254 who said they

organized retail formats in apparel is giving stiff competition to

unorganized retailers. They, in fact, exist to serve different sets of

customers but in reality they are competitors of each other.

Unorganized retail

stand strong in the market.

50%

0%

50%

0%

Unorganized

199

Figure 5.5

Healthy competition is necessary for growth of any industry. Large




is 254 who said they have competition from both. Emerging




Unorganized retailers prepare themselves to face competitions and

stand strong in the market.

50%

0%

0%

Unorganized

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

57%

15%

9%

6% 3%10%

Organized

18%

14%

17%17%

18%

16%

Both

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

or growth of any industry. Large




have competition from both. Emerging




ers prepare themselves to face competitions and

Organized

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

Lucknow

Lakhimpur

Raebareli

200

5.2.6 How do your competitors affect you?

Apparel retailers perceive that they have competition from organized

and unorganized retailers. Fashion retailing is flourishing, new

formats of retailing are emerging, etc, and these have reduced the

sales of traditional retailers. To cope up the high competition, they are

also forced to decrease their profit margins. High movement and

connectivity of customers have increased competition among retailers

to sale their products to existing and new customers.

Apparel industry has tremendous product variety, short product life

cycles, explosive and changeable demand, long and stiff distribution

network. The fashion industry has been undergoing transitional shift

over the last 20 years.

To cope with a highly competitive and challenging environment,

retailers are hiring and promoting people with a wide range of skills

and interests. At a first glance, identifying competitors appear easy. A

retailer’s primary competitors are other retailers using the same

format. Thus, department stores compete against other department

stores and supermarkets against other supermarkets. This competition

between the same types of retailers is called intratype competition.

Observation1.Due to competitors, apparel retailers are forced to

decrease their profit margins. 151 respondents gave this view.

Observation2. They are falling competition other then loss of sale

and decrease in margins. 125 out of 350 have this opinion.

Observation3. Due to competition, their sales have been decreased.

District By decreasing

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

Total


0

50

100

150

200

250

300

350

201

Table 5.7

How do your competitors affect you?

By decreasing

sales

By decreasing

margins

By increasing

competition

10 24

11 18

15 15

12 31

14 31

12 32

74 151

ource: Primary Data

By decreasing sales

By decreasing margins

By increasing competition

Total

How do your competitors affect you?

By increasing

competition

Total

66 100

21 50

20 50

07 50

05 50

06 50

125 350

By decreasing sales

By decreasing margins


Total

Competition is manifested by respondents in different forms.74

respondents said that due to competition, their

decreased. They are struggling for their survival. A large number of

respondents agree that they have reduced their profit margins to

remain in the market. They are 151 in number.

125 respondents said that they face competition in one form

another due to changing markets and consumer buying habits.

Increasing urbanization and mobility of consumers have changed the

shopping behaviour.

14%

20%

16%19%

16%

By decreasing sales

202

Figure 5.6


respondents said that due to competition, their sales have been



remain in the market. They are 151 in number.

125 respondents said that they face competition in one form



shopping behaviour.

14%

15%

By decreasing sales

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

16%

20%21%

21%

By decreasing

margins

53%

17%

16%

5%4% 5%


Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao


sales have been



125 respondents said that they face competition in one form or



12%

10%

By decreasing

marginsLucknow

Hardoi

Lakhimpu

r

Raebareli

Lucknow

Lakhimpur

Raebareli

203

5.2.7 What do you think about your employees?

Employees are very important for successful functioning of any retail

outlet. The industry is facing a severe shortage of talented

professional, especially at the middle management level. Most Indian

retail players are under serious pressure to make their supply chains

more efficient in order to deliver the levels of quality and service that

consumers are demanding.

The available talent pool does not back retail sector as the sector has

only recently emerged from its nascent phase. Retailing is yet to

become preferred career option for most of Indian’s educated class

that has chosen sectors like IT, BOP and financial services.

Observation1. Employees do not have formal training to be manned

in retail outlets. They are taking training on job itself. 187

respondents said that their employees are taking on job.

Observation2. Personnel at franchisee outlets, outlets in

supermarkets, hyper markets, etc., are highly trained they have

undergone training before joining the job. Even the employer gives

the sort training before joining. They are 106 against 187 of training

on job and 57 of unskilled.

Lack of trained personnel has emerged as a major area of concern for

the Indian retail sector. This is mostly because there is hardly any

proper training institution for retail technologies. The demand for

better trained labour force has led several players mulling over the

possibility of setting up their own training institutions.

What do you think about your

District Unskilled

Luck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

Total


0

50

100

150

200

250

300

350

204

Table 5.8

What do you think about your employees?

Unskilled Training on Job Highly Skilled

02 49 49

07 27 16

13 26 11

18 22 10

14 30 06

03 33 14

57 187 106


employees?

Highly Skilled Total

49 100

16 50

11 50

10 50

06 50

14 50

106 350

Unskilled

Training on Job

Highly Skilled

Total

Apparel retailing is facing problems due to shortage of skilled

manpower.

There are institutiona

producing skilled and trained personnel. There are lacks of adequate

technical and professional institutions in India.

57 respondents said that their employees are unskilled. Data reveal

that 187 outlets having p

Only 106 agree that their employees are highly skilled.

3%

23%32%

25%

5%

Unskilled

10%

205

Figure 5.7


There are institutional and organizational problems thereby not


technical and professional institutions in India.


that 187 outlets having personnel who are taking training on job itself.


12%

23%

Unskilled

Luck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

26%

14%

14%

12%

16%

18%

Training on Job

46%

15%

10%

10%

6%13%

Highly Skilled

Luck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao


l and organizational problems thereby not



ersonnel who are taking training on job itself.


14%

Training on Job

Luck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

Luck now

Lakhimpur

Raebareli

206

Problem of untrained personnel can be solved by opening more and

more institutions that provide training in retailing. There may be

another way to solve this problem if big players open their own

training institutes to train their staff according to their requirements.

5.2.8 Do you have the problems because of locations?

Location is very important in case of apparel retail outlets. Shopping

centers began to be established from 1995 onwards. A unique

example was the establishment of margin free markets in Kerala. The

millennium year saw the emergence of supermarkets and

hypermarkets.

Lack of adequate infrastructure with respect to roods, electricity and

ports has led to the impediment of a pan India network of suppliers.

Due to these constraints, retail chains have to resort to multiple

vendors for their requirements, thereby raising costs and prices.

Observation1. 250 respondents said yes they have problems because

of their locality.

Observation2. Before opening the shop, location should be studied

properly.

Observation3. After opening the shop, locational shortcomings

should be minimized.

Retailers want to be located where there are many shoppers but only

if that shopper meets the definition for their target market. Small

retail stores may benefit from the traffic of nearby large stores.

207

• How many people walk or drive past the location?

• Is the area served by public transportation?

• Can customers and delivery trucks easily get in and out of

parking lot?

• Is there adequate parking?

Table 5.9

Do you have the problems because of locations?

District Yes No Total

Luck now 54 46 100

Hardoi 36 14 50

Lakhimpur 36 14 50

Raebareli 46 04 50

Sitapur 41 09 50

Unnao 37 13 50

Total 250 100 350


Location is very important in retailing. There may be advantages and

disadvantages of a particular location. 250 retailers responded that

they have problems because of their locat

responded that they have no problems because of their location.

In India, outlets are opened without proper study. Availability of

shops is taken into consideration on top priority. Shops are developed

without fulfilling basic requ

0

50

100

150

200

250

300

350

14%

18%

16%15%

Yes

208

Figure 5.8



they have problems because of their location. Against this, 100




without fulfilling basic requirements.

22%

15%14%

YesLuck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

46%

14%

14%4%

9%

13%

No



ion. Against this, 100




Yes

No

Total

46%

No Luck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

209

The traditional inclination of Indian retailers to own property further

increases capital investment, and this along with their penchant to

continue their business at the same place makes the location decision

even more important.

5.2.9 If yes, what kind of problems?

There are problems because of location. Other area businesses in your

location can actually help or hurt your retail shop. Determine if the

types of businesses nearby are compatible you or your store. For

example, a high end fashion boutique may not be successful next door

to discount variety store. Place it next to a hair salon and it may do

much more business.

Besides the base rent, consider all costs involved when:

• Who pays for lawn care, building maintenance, utilities and

security?

• Who pays for the upkeep and repair of the heating air units?

• If the location is remote, now much additional marketing will it

take for customers to find you?

• How much is the average utility bill?

Observation1. Most of the respondents said that they have to pay

high rent. They are 118 out of 350.

Observation2. Problem of parking is also high among retailers.

Adequate parking facility helps in increasing sales. Parking problem

stands next to high rent.

210

• Will you need to make any repair, do any painting or

remodeling to have the location fit your need?

• Will the retailer be responsible for property taxes?

The location you can afford now and what you can afford in the

future should vary. It is difficult to create sales projects on a new

business, but one way to get help in determining how much rent you

can pay is to find out what sales similar retail businesses are making

and now much rent they are paying.

Everywhere we turn today we are faced with parking problems, from

office parks, to retail centres. Shop till you drop. That is what real

estate developers in the country world have people to do in the

months to come. The major problem that upcoming malls are going

to face is of parking.

Table 5.10 If yes, what kind of problems?

District High rent

High maintenance

charge

Parking problems

High cost if shop is owned

Total

Lucknow 12 01 38 03 54

Hardoi 17 02 14 03 36

Lakhimpur 12 05 14 05 36

Raebareli 24 02 19 01 46

Sitapur 30 00 11 00 41

Unnao 23 00 14 00 37

Total 118 10 110 12 250


0

50

100

150

200

250

10%

20%26%

20%

High rent

34%

13%

17%

10%13%

Parking problems

211

Figure 5.9

High rent

High maintenance

charge

Parking problems

High cost

Total

10%

14%10%

High rent

Lucknow

Hardio

Lakhimpur

Raebareli

Sitapur

Unnao

10%

20%

50%

20%0%

0%

High maintenance

change

13%

Parking problems

Lucknow

Hardio

Lakhimpur

Raebareli

Sitapur

Unnao

25%

25%42%

8%0%

0%

High cost if shop is

owned

High rent

High maintenance

charge

Parking problems

High cost

Total

20%

High maintenance

change Lucknow

Hardio

Lakhimpur

Raebareli

Sitapur

Unnao

High cost if shop is

owned

Lucknow

Hardio

Lakhimpur

Raebareli

Sitapur

Unnao

212

Problems due to locations are evident. Al problems cannot be taken

into consideration. Problems taken into account are high rent, high

maintenance charge, parking problems and high cost if shop is

owned.

118 respondents said that they attribute high rent as location problem.

There are only 10 respondents who said that they have to maintain

their shops because of their locations which prove costly to them.

Parking problem is well known in retailing. There are 110

respondents who said that they have problems because of parking.

High cost of real estate is also harming growth of retail sector.

5.2.10 What do you think about foreign players/companies?

Retailing is one of the world largest private industries. Liberalization

in FDI has caused a massive restructuring in retail industry. The

benefit of FDI is retail industry superimposes its cost factors.

Opening the retail industry of FDI will bring forth benefits in terms of

advance employment, organized retail stores, availability of quality

products at a better and cheaper price. It enables a country’s product

or service to enter into the global market. Foreign companies will

provide following advantages:

• Cheaper production facilities

• Availability of new technology

• Long term cash liquidity

213

Observation1. Domestic/Indian retailers see presence of foreign

retailers as harmful. They are of the opinion that foreign companies

will reduce their share in total market share.

Observation2.Organized apparel retailers perceive that foreign

players are proving beneficial and will be helpful. They will promote

use of branded apparel. They are 46 against 185 o those who thought

them harmful.

Observation3. Indian apparel retailers to great extent have no idea

about the role of international apparel retailers. Indian apparel

retailing fear that foreign companies are capturing their markets and

harming is this way. They have better production facility and

efficient distribution system that will harm Indian players.

Table 5.11

What do you think about foreign players/companies?

District Helpful Harmful No Idea Total

Lucknow 31 25 44 100

Hardoi 01 34 15 50

Lakhimpur 03 29 18 50

Raebareli 03 34 13 50

Sitapur 03 36 11 50

Unnao 05 27 18 50

Total 46 185 119 350


0

50

100

150

200

250

300

350

67%

2%

6%

7%

7% 11%

Helpful

214

Figure 5.10

67%

HelpfulLucknow

Hardoi

Lakhimpu

r

Raebareli

Sitapur

14%

16%

18%

19%

15%

Harmful

37%

13%15%

11%

9%15%

No IdeaLucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

Helpful

Harmful

No Idea

Total

14%

18%

16%

Harmful

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

Lucknow

Lakhimpur

Raebareli

215

Indian economy has been opened. India has been following LPG

Model (Liberalization, Privatization and Globalization Model).

Government has opened the economy for foreign companies and

retail is not the exception.

46 respondents expressed that presence of foreign companies would

prove helpful. They have introduced and will introduce new formats

and marketing tools that will prove advantageous for apparel retail

and hence their own growth.

A large number of retailers perceive that foreign companies will harm

them in one way or another. 119 respondents have no idea about

effects of foreign companies.

In this globalized world, Indian retailers should learn how to do

business in presence foreign players. In fact, they are helping

organized retail growth and modernizing the apparel industry/sector.

5.2.11 What prospects do you perceive in apparel retailing?

Indian apparel business is anticipated to reach a growth rate faster

than that of the overall retail market. In Indian market, apparel is

second largest retail segment after food and groceries. The growth is

triggered by a number of influential factors:

• Rise in average household income

• Increasing trends of special occasions.

• Growth of women empowerment

• Self expression.

• Rapid urbanization and modernization

216

• Incessant growth of organized retail

• Diffusion of fashion innovators

Observation1. 176 respondents said that prospect is good is

apparel retailing. Apparel retailing has high growth because of

various factors such as high disposable income, higher economic

growth, fashion consciousness etc.

Observation2. 94 respondents said that there is excellent scope in

apparel retailing. For men, clothing preference covers mainly three

basic categories such as casual wear, formals, and special occasion

wear. With more socializing opportunities, now men are

purchasing latest forms of apparels like party wear, sportswear,

gym wear, ethnic wear, etc. From the post few years, men have

started preferring western style jackets, and collared shirts, funky

fashion, stripes or checks for business meetings. Nowadays,

Indians are more prone than western consumers to buy apparel for

special occasions.

Increasingly, Indian consumers are taking on the concept of

fashions for self-expression. Television, advertising and the

Internet bombard Indian consumer with innovative ideas about

fashions and style too.

Large branded retail outlets where merchandises are

systematically shelved and displayed will speed the change of

consumer buying pattern. Over the past ten years there has been

rapid acceleration of new shopping malls and hypermarkets across

major cities of India.

Innovators and early majority are main agents of diffusion of

fashion. The Friday dressing’ idea by some of the retailers

encourages gen next to buy dresses for Fridays

What prospects do you perceive in

District

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

Total


0

50

100

150

200

250

300

350

217



encourages gen next to buy dresses for Fridays.

Table 5.12

hat prospects do you perceive in apparel retailing?

Excellent Good Average

34 49 17

14 25 11

Lakhimpur 13 17 16

12 28 10

09 25 10

12 32 06

94 176 70




apparel retailing?

Poor Total

00 100

00 50

04 50

00 50

06 50

00 50

10 350

Excellent

Good

Average

Poor

Total

Apparel retailing is growing rapidly. There is bright future is this

sector.94 respondents see excellent prospects. Largest numbers agree

that being the apparel retailer the

future. 70 said that future is average. Only 10 responses are for poor.

Organized retail is booming. New formats have been becoming

popular. New occasions are also fueling of clothing retail. Clothing

has become the means

foreign capital are also responsible for growth of apparel industry in

India.

36%

15%14%

13%

9%

13%

Excellent

24%

23%

14%

14%9%

Average

218

Figure 5.11



that being the apparel retailer they have good fortune now and in




has become the means of self-expression. Government policies on


15%

Excellent

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

28%

14%

10%16%

14%

18%

Good

16%

Average

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

0% 0%

40%

0%

60%

0%

Poor



y have good fortune now and in




expression. Government policies on


14%

Good

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

0%

Poor

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

219

5.2.12 Is high consuming class helping retailing growth?

There are certain trends in consumption behavior that have a direct

and significant impact on the business strategy and profitability of

retail business. These trends relate to the changing demography

increasing individualization, computerization, mobility, and demand

in terms of sustainability and dematerialization.

Demographically, there is an increase in the number of consumers

with greater purchasing power and more migrant consumers. In the

west there is a fall in the number of young consumers and increase in

the number of senior consumers. In India, there are more young

consumers than their senior counterparts. The composition of

households is also changing with an increase in smaller and newer

forms of family units.

Observation1. A good number of respondents agree that consuming

class is helping is retailing growth. They are 308 against 42 who said

no.

Observation2. Apparel retailing is growing phenomenally in recent

years. People who have high income and willing to spend are mainly

behind this.

There is also an increase in consumer power both on an individual

and on a collective basis. It is reflected in demand-led production and

focus on narrow riches. There has also been perceptible focus shift in

consumption from merely acquiring a product or service to

experiencing it. The retail industry has tried to respond to th

with greater focus on customer service and retail atmospherics.

Is high consuming class helping retailing growth?

District

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

Total


0

50

100

150

200

250

300

350

220

experiencing it. The retail industry has tried to respond to th


Table 5.13

high consuming class helping retailing growth?

Yes

100

38

40

48

37

45

308


experiencing it. The retail industry has tried to respond to these trends


high consuming class helping retailing growth?

No Total

00 100

12 50

10 50

02 50

13 50

05 50

42 350

Yes

No

Total

Rising national income and per capita income have created new

‘consuming classes. Consuming class means people with high

disposable income. They want quality products and same ti

unique shopping experience. They believe in look good and feel

good.

308 respondents said that this class is helping retail growth. Against

this, only 42 said no. India is an emerging economy and has attained a

high level of economic development.

5.2.13 If yes, who are your main customers?

Customers are classified into four categories:

• Upper class

• Upper middle class

• Middle class

• Those covering all above segments/classes.

32%

13%

16%

12%

15%

Yes

221

Figure 5.12



disposable income. They want quality products and same ti




high level of economic development.

who are your main customers?

Customers are classified into four categories:

Upper class

Upper middle class

Middle class

Those covering all above segments/classes.

12%

Yes

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

0%

28%

24%

5%

31%

12%

No



disposable income. They want quality products and same time




No

Lucknow

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

222

Upper class customers are those customers who are very rich and elite

in the society. Upper middle class falls between upper class and

middle class. Middle class represents those who have very humble

living. They do not have much and same time they do not have less to

spend. Upper class includes people who have inherited wealth.

Upper middle class represents those who are career oriented

professionals and corporate.

Observation1. Large number responded that middle class is their

main customers. They are 132, against 123 of upper middle class and

40 of upper class.

Observation2. Middle class is the force behind apparel retailing

growth. Upper class is used to be using fine and branded apparel but

since middle class has joined them, demand for branded apparel has

increased many folds.

Managers who prefer to spend on clothes, education, books, furniture,

home appliances, etc.

Middle class people are average-pay-white-collar class of society who

prefer to spend on popular and trendy products, personal vehicles,

banded goods, good homes, college education for children,

entertainment, etc.

Under present study, customers are divided into three categories-

upper class, upper middle class, and middle class.

If

District

Luck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

Total


0

50

100

150

200

250

300

350

223

Table 5.14

If yes, who are your main customers?

Upper

Class

Upper

Middle Class

Middle

Class Segments

23 36 40

03 21 14

00 10 18

05 20 23

03 13 21

06 23 16

40 123 132


are your main customers?

All

Segments

Total

01 100

00 38

12 40

00 48

00 37

00 45

13 308

Upper Class

Upper Middle Class

Middle Class

All Segments

Total

Data reveals that 40 retailers said that upper clas

customers, 123 for upper middle class and 132 the highest for middle

class. Only 13 respondents said that all segments shop from their

outlets.

It is observed that retailers focus on a particular segment in belief that

they can serve this

of different segments are different.

7%

0%

13%

8%

15%

Upper Class

30%

14%

17%

16%

12%

Middle Class

224

Figure 5.13

Data reveals that 40 retailers said that upper clas




they can serve this segment better. Requirements and paying capacity

of different segments are different.

57%

Upper Class

Luck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

29%

17%

8%16%

11%

19%

Upper Middle Class

11%

Middle Class

Luck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

8%0%

92%

0%0%0%

All Segments

Data reveals that 40 retailers said that upper class is their main




segment better. Requirements and paying capacity

Upper Middle Class

Luck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

All Segments

Luck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

225

5.2.14 What age groups do often shop from your outlets?

The age factor clearly appears to have a distinct impact on fashion

lifestyles. Most consumes realize that their works change as they get

older. There are however, a range of other demographic factors that

influence consumption decisions, such as gender (boys and girls often

purchase different types of products), ethnic background and income.

India is witnessing a change in the age and income profiles of its over

1 billion population, which is likely to fuel accelerated consumption

in the years to come. The country is believed to have an average age

of 24 years for its population as against 36 years for the USA and 30

years for China. A younger population tends to have higher

aspirations and spends more as it enters the earning phase.

Observation1. A good deal of respondents said that most frequent

shoppers from their outlets are in age gap of 26-35 years. They are

272.

Observation2. Age group between 36-50 years has low

representation. They are only 70.

Observation3. Age group above 50 years has no presentation at all.

Their shopping is done by other members of the family.

Besides, the gradual disintegration of the traditional Indian joint

family system has led to nuclearization of families, which in turn has

led to enhanced demand. Add to this an increasing population of

working women and new job opportunities in emerging service

sectors such as IT

entertainment and financial services.

What ag

District 15

Luck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

Total


0

50

100

150

200

250

300

350

226

sectors such as IT-enabled services, retail, food services,

entertainment and financial services.

Table 5.15

age groups do often shop from your outlets?

15-25 yrs 26-35 yrs 36-50 yrs Above 50

08 80 12 00

00 42 08 00

00 31 19 00

00 44 06 00

00 36 14 00

00 39 11 00

08 272 70 00


vices, retail, food services,

e groups do often shop from your outlets?

Above 50 Total

00 100

00 50

00 50

00 50

00 50

00 50

00 350

15-25 yrs

26-35 yrs

36-50 yrs

Above 50

Total

Age is the one of the important demographic factors taken into

account while studying the consumer behavior. Respo

asked about the frequent shoppers. As far as 15

are concerned, there are only 8 responses. 26

main shoppers according to the responses of retailers. Customers

aging 36-50 years, there are 70 responses.

shopping is not done by above 50 years persons. There might be that

they accompany with younger members of their family.

100%

0%0%0%0%0%

15-

227

Figure 5.14


account while studying the consumer behavior. Respo

asked about the frequent shoppers. As far as 15-25 years customers

are concerned, there are only 8 responses. 26-35 years customers are


50 years, there are 70 responses. Respondents said that



-25 yrs

Luck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

30%

16%11%

16%

13%

14%

26-35 yrs

17%

11%

27%9%

20%

16%

36-50 yrs

Luck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao


account while studying the consumer behavior. Respondents are

25 years customers

35 years customers are


Respondents said that



16%

35 yrs

Luck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

Luck now

Lakhimpur

Raebareli

228

5.2.15 What role does fashion play in appeal shopping?

Fashion has touched every sphere of modern consumers. Marketers

have realized the immense potential to yield business in this booming

segment. In present scenario irrespective of the class Indian

consumers are adopting fashionable items quickly and conveniently

with the rise in competition. Fashion marketing is utilizing recent

trends in fashion to analyze, develop and implement sales strategies.

Apparel sector in India has taken a paradigm shift. With the growth

and rising of urbanization has given rise to fashionable gen next

consumers having attitude of spending huge amount of money to look

trendy.

Observation1. Fashion plays a vital role in apparel shopping. 313

respondents agree that fashion has high role to play in apparel

retailing. Apparel is more than what basically it is.

Observation2. Only 31 respondents say that fashion plays a low role.

Retail apparel market has also gone through significant changes and

created growth opportunities. Technology has revolutionized fashion

retailing from every aspect. Internet and mobile technologies has

transformed the way retailing do the business. In the highly

competitive market scenario retailers have become technology

conscious. To sustain and attract customers and achieve global

competitiveness fashion retailers are adopting technology.

Increasingly, Indian consumers are embracing the idea of fashion for

its own sake, as a means of self expression, not merely as a functional

purpose.

What role does fashion play in appeal shopping?

District

Luck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

Total


0

50

100

150

200

250

300

350

229


Table 5.16


High Low Not sure

100 00 00

41 08 01

39 07 04

49 01 00

37 13 00

47 02 01

313 31 06




Not sure Total

100

50

50

50

50

50

350

High

Low

Not sure

Total

Apparel industry is fashion driven. Fashion has very short life. It

plays very important

fashion has high role in apparel shopping. As against this, only 31

said that fashion has low role. There are 6 respondents who are not

sure about the role of fashion.

In India, mainly Bollywood invents and s

and young generations are main followers. Adults and aged parsons

are promoted by film stars.

32%

12%16%

12%

15%

High

0%

230

Figure 5.15


plays very important role in shopping. 313 respondents said that



sure about the role of fashion.

In India, mainly Bollywood invents and spreads fashion. And teens


are promoted by film stars.

13%

High

Luck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

0%

26%

23%

3%

42%

6%

Low

0%

16%

67%

0%0%

17%

Not sure

Luck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao


role in shopping. 313 respondents said that



preads fashion. And teens


Low

Luck now

Hardoi

Lakhimpur

Raebareli

Sitapur

Unnao

Luck now

Lakhimpur

Raebareli

231

5.2.16 What do you perceive about Mall Culture?

Both for locals and for visitors from abroad, nothing seems to

mobilize India’s transformation from a stagnant third-world country

into an emerging economic super-power as much as its sparkling new

malls. Eager to cash is, India’s real estate developers are in frenzy: up

to 600 malls are likely to be up and running in India by the end of

2011 up from 250 malls is year 2009, according to KSA Technopak

2010, a New Delhi, based consulting firm.

Organized retailers use the contemporary formats by which shoppers

has the edge of a world class shopping experience. Fine examples of

these formats are Pantaloon, Shoppers stop and Trent.

Observation1. A good number of respondents said that malls are

harmful for their business. They are 188 against only 43 who said

that malls are helpful.

Observation2. 119 respondents responded as ‘no idea’ about how

malls are affecting their business.

Malls are the largest form of organized retailing today. Malls are

located mainly in metro cities, in proximity to urban outskirts, this

format ranges from approximately 60,000 sq. ft. to 700000 square feet

and above. They lend an ideal shopping experience with an

amalgamation of product, service and entertainment, all under a

common roof.

As long as the youthfulness of Indians is the focus of the world eyes,

there is every possibility that mall culture shall prosper. However, the

burning concern is optimum management of malls while keeping the

cost low.

What do you perceive about Mall C

District

Luck now

Hardoi

Lakhimur

Raebareli

Sitapur

Unnao

Total


0

50

100

150

200

250

300

350

232


Table 5.17

hat do you perceive about Mall Culture?

Helpful Harmful No idea

30 56 14

01 28 21

00 18 32

03 31 16

02 30 18

07 25 18

43 188 119



ulture?

No idea Total

14 100

21 50

32 50

16 50

18 50

18 50

119 350

Helpful

Harmful

No idea

Total

Malls have provided ideal place for retailing. Real estate developers

are focusing in developing malls in metros and big cities. 43

respondents said that they think malls as helpful for their business.

Whereas 188 said that these malls are harmful. A good number of

respondents have no idea about effect of malls. They are 119 in

numbers.

70%

2%

0%

7%

5%16%

Helpful

233

Figure 5.16



ndents said that they think malls as helpful for their business.



-----:o:-----

70%

Helpful

Luck now

Hardoi

Lakhimur

Raebareli

Sitapur

Unnao

30%

15%10%

16%

16%

13%

Harmful

12%

18%

27%13%

15%

15%

No idea

Luck now

Hardoi

Lakhimur

Raebareli

Sitapur

Unnao



ndents said that they think malls as helpful for their business.



15%

Harmful

Luck now

Hardoi

Lakhimur

Raebareli

Sitapur

Unnao

Luck now

Hardoi

Lakhimur

Raebareli

Sitapur

Unnao

Chapter-6

CONCLUSIONS AND

SUGGESTIONS

234

1.1 Apparel means clothing, especially outwear, garments and attire.

Apparel is a term that refers to a covering for the human body that is

worn.

1.2 Physically, clothing serves many purposes; it can serve as

protection from the elements, can enhance safety during hazardous

activities such as hiking and cooking. The primary function of

clothing is to improve the comfort of the wearer. Shelter usually

reduces the functional need for clothing.

1.3 Retailing is the final connection in the marketing channel that

brings goods from manufacturers to consumers. Retailing includes all

the activities involved in selling goods or services directly to final

consumers for their personal, non-business use.

1.4 The word ‘retail’ is derived from the French word ‘relaillier’

which means ‘to out a piece off’ or ‘to break bulk’

1.5 Indian retail industry is divided into two categories- organized and

unorganized. Organized retail sector refers to the sectors undertaken

by licensed retailers, that is, those who are registered for tax on

moveable commodities at times of sale under VAT system. These

include the corporate retail formats of the exclusive brand outlets,

hypermarkets, departmental stores and shopping malls.

1.6 Unorganized retailing refers to the traditional formats of low cost

retailing, for example, hand cart and pavement vendors, the local

kirana shops, owner-managed general stores, paan/beedi shops,

convenience stores, etc.

235

1.7 Consumer money drives the economy, and retail is where

consumers spend that money. When goods are put in the hands of

consumers, retailers realize revenue and so do the wholesalers,

distributors, and manufacture that made up the rest of the consumer

goods distribution chain.

1.8 Retailing can be distinguished from other businesses. There is

direct end-user interaction; platform for promotions; sales in smaller

sizes; locational importance; large numbers.

1.9 Retailers perform various business activities- arranging

assortments, breaking bulk, holding stock, and providing services.

1.10 Retail in industry is facing following problems: regulation

restricting real estate purchases, taxation which favours small

businesses, lack of trained work force, etc.

1.11 While barter would be considered to be the oldest form of retail

trade, since Independence, retail in India has evolved to support the

unique needs of our country given its size and complexity.

1.12 Numerous clothing shops are to be found in Indian cities and

towns, especially in shopping centres and markets. Small townships

and social areas of India have a large numbers of retail stores selling

clothes, basically unstitched stuff for the entire family.

1.13 For many foreign and private brands, department stores offer the

ideal retail format for apparel product category. A new focus on

apparel retail sector has attracted attention in recent days. Top

236

exporters have introduced their own brands and are aggressively

positioning themselves within segments of the domestic markets.

1.14 As apparel retail is led by fashion, a player needs to keep a close

watch on fashion amongst teenagers as they are the trend setters.

1.15 The textile manufactures were among the first to get into braded

menswear in the Indian market. This sector is perhaps the most

developed in terms of supply chain sophistication in the branded

clothing market. The apparel sector can be broadly classified into

men’s apparel, women’s apparel and children’s wear.

1.16 Lucknow Division is an administrative geographical unit of

Uttar Pradesh of India. Lucknow is the administrative headquarters

of the division. Division consists of following districts namely

Lucknow, Hardoi, Lakhimpur, Raebareli, Sitpaur and Unnao.

1.17 The chikan work of Lucknow is one of the most popular

embroidery works in India.

2.1 The origins of retail are as old as trade itself. Barter was the

oldest form of trade. For centuries, most merchandise was sold by

peddlers. Retailing in its initial period was witnessed at the weekly

haats or gathering in a market place where vendors put on display

their produce (goods). Mon-and-pop stores are small family-owned

businesses, which sell a small collection of goods to the customers.

They are individually run and cater to small sections of the society.

2.2 The retail business operates is a dynamic environment, the

changing customer demand, opening up of markets, technological

237

developments and ever increasing competition all- affect the retail

business. The departmental stores may be a comparatively recent

phenomenon in India, with a specially created ambience making

shopping an experimental affair.

2.3 Dynamic consumers’ behaviors, consumers’ demography, retail

attributes and retail marketing strategies affect modern retail formats.

2.4 Retailers can be classified on following bases: legal form;

operational structure; range of merchandise; degree of service, pricing

policy; location; size of outlets; based on customer contact. Another

classification is based on merchandise and pricing mechanism. These

are department stores, specialty stores, discount stores, super

markets, super stores, and hypermarkets, independent traders,

multiple or retail chain stores, co-operative societies, concessionaire,

franchising. There is non-store retailing which includes mail order,

mail order catalogues, direct mail, direct selling, door-to-door trading,

and mobile shops.

2.5 Electronic retailing has two formats, namely, television shopping

and on-line computer shopping services. Fashion has played a key

role in shaping apparel consumerism. With change in lifestyle,

fashion in India is becoming more stratified, as in the West.

3.1 Rapid growth and rising urbanization have spawned a new class

of consumers with more money to spend, and a growing passion for

fashion. In India’s high growth, fast-changing retail clothing market,

we see significant new growth opportunities for foreigner and

domestic players.

238

3.2 As the lifestyles of India’s prospering urban consumers have

evolved, their clothing needs have broadened, reflecting more varied

usage occasions.

3.3 Now women are more willing to dress differently when they

venture beyond the home- to shop, for example, or visit an office or

school.

3.4 Increasingly, Indian consumers are embracing the idea of fashion

for its own sake, as a means of self-expression, and not merely as a

functional purpose. India is a country with diversified customs and

cultures. People following various traditions live here, their way of

dressing also differ from each other.

3.5 Mall culture is slowly and steadily growing in India. Many brands

and private labels are launched in the Indian markets. The first such

retail outlet was Shoppers Stop which launched India’s first multi-

brand store in the year 1993. The market of branded garments is

growing up in India. More and more people are switching on to

branded apparel than non-branded ones as it provides quality

assurance.

3.6 Displaying clothes through fashion shows is a western concept

but now have become a common fashion event.

3.7 Impulse buying is a form of customer behavior characterized by

buying goods which are not planned purchases.

3.8 Point of sale is a place where computerizing retail business can

have its greatest advantages. Rapid and secure checkout is the first

239

priority of any retail operation. POS terminals capture the most

important data, the actual sale.

3.9 A typical retail store offers at least a few hundred units of

products to the consumer. In order to keep track of what has been

sold and to be able to re-order products, the retailer needs to know the

qualities, the types, colours, size and other characteristics of the

product sold. The Universal Product Code (UPS) or Barcode as it is

popularly known was developed for this need. Radio Frequency

Identification or RFID is fast transforming the way business is being

conducted and monitored across the supply chain.

3.10 The rise of the Internet has led to some phenomenal changes in

the way business is conducted in various industries. In retail, it has

opened up a new avenue for retailers to reach out to customer and

suppliers in markets where they do not have a physical presence.

3.11 Textile industry in India is widely comprehensive, integrating

whole range of raw material to finished product that includes fiber

manufacturing, spinning, knitting and weaving and garment

manufacture.

3.12 FDI refers to capital inflows from abroad that is invested in or to

enhance the production capacity of the economy. FDI is governed by

FDI policy announced by GOI and the provision of FEMA, 1999.

4.1 The retail industry in India is growing at a significant pace.

However, there are several problems faced by the industry. These

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are the high cost of real estate, high stamp duties, lack of

infrastructure multiple and complex taxation system.

4.2 The retail industry is booming. The reasons include favourable

demographics, rising customer incomes, real estate developments,

especially the emergence of new shopping malls, availability of better

sourcing options both from within India and overseas and changing

lifestyle.

4.3 The last few years have seen rapid transformation in any areas

like, scalable and profitable retail models are well established for

most of the categories; Indian consumer are rapidly evolving and

accepting modern formats; India is on the radar of global retailers;

suppliers/ brads are willing to partner with retailers.

4.4 The Govt. has introduced reforms in retail sector. India will allow

foreign groups to own up to 51 per cent in multi- brand retailing.

Single brand retailers can own 100 percent of their Indian stores.

5.1 Apparel retailers are of two types: local retailer and market

retailers. Local retailers are those who are serving the local

customers. Against this, market retailers are located in market places

where customers from different parts come for shopping. They have

competition with other retailers present over there. They need to

make heavy investments.

5.2 Investment is necessary for any business activity. Small retailers

started business with small capital. A Vibrant Economy India topped

the list of emerging markets for retail investments. The apparel

241

industry is fragmented and highly competitive. There are number of

major players, but there are countless niche stores and private

complainer that cater to specific demographics.

5.3 Apparel retailers deal in menswear, women’s wear and kids wear.

Some retailers specialize in particular categories. But selling for all

categories prove profitable and it helps in promoting as a complete

shop everything for everyone.

5.4 Usage of branded apparel and readymade garments has been on

rise. Big players are selling their own labels while small retailers are

selling brands of others. Apparel tags, labels and specialty trim play

an essential role today’s supply chain. There is presence of almost all

kinds of global brands in the present market situation. The launches

of more and more brands into the market have increased the demand

for shelf space and hence the demand for retail outlets.

5.5 There is the co-existence of organized and unorganized retailers.

Unorganized retailers are not in position to compete with big

organized retailers. The share of organized retailing is increasing but

still the major share of the market is controlled by unorganized

players. India is a vast country with different cultures and customs.

These are manifested in our dressing. Our various needs of dressing

can only be fulfilled by unorganized retailing.

5.6 This sector is highly competitive. Organized retailers are giving

tough competition to small unorganized players. Sales of small

players have been decreasing. To sustain in the market, they have

242

reduced their profit margins. These steps have been helping them

little. These help for their survival only.

5.7 Employees play very important role in functioning of any retail

outlet. The industry is facing severe shortage of talented

professionals. Indian players are under serious pressure to deliver the

levels of quality and service that consumers are demanding.

5.8 Location is vital in retail marketing. Shopping centres began to be

established from 1995 onwards. The millennium year saw the

emergence of super markets and hypermarkets.

5.9 There are locational problems. Other area businesses in your

location can actually help or hurts your retail shop. Determine if the

types of businesses nearby are compatible you are your store.

5.10 Retailing is one of the world’s largest private industries.

Liberalization in FDI has caused a massive restructuring in retail

industry. The benefit of FDI in retail industry superimposes its cost

factor. It enables a country’s product or service to enter into the

global market.

5.11 Indian apparel business is anticipated to reach a growth rate

faster than that of the overall retail market. In Indian market, apparel

is second largest retail segment after food and groceries.

5.12 There are certain trends in consumption behaviour that have a

direct and significant impact on the business strategy and profitability

of retail business. These trends relate to the changing demography,

243

increasing individualization computerization, mobility, and demand

in terms of sustainability and dematerialization.

5.13 Customers are conveniently classified into three categories:

upper class, upper middle class and middle class. Rising of great

middle class has changed the scene of retailing.

5.14 India is witnessing a change in the age and income profiles of its

over 1 billion population, which is likely to fuel accelerated

consumption in the years to come.

5.15 Apparel sector in India has taken a paradigm shift. With the

growth and rising of urbanization has given rise to fashionable gen

next consumers having attitudes of spending huge amount of money

to look trendy.

5.16 Organized retailers use the contemporary formats by which

shoppers have the edges of a world class shopping experience. Malls

have provided ideal place for retailing. Real estate developers are

focusing in developing malls in metros and big cities.

Suggestions

Based on the observations and data collected following are the

suggestions:

� Parking is becoming a complex problem of present and futures.

Before the construction of shops and malls starts, maximum

space for parking should be earmarked on lane basis so that

large number of vehicles could be arranged without problem.

244

This can be a highly difficult decision given the cost of

allocating larger space to the parking. But, here the choice is

limited one and hence the investment in space allocation or

floor construction has to be made. Else harassments and

damage to the small vehicles lead the customers to desist from

such places. This also is desired if there can be an alternative

parking space for emergency purposes.

� Training to the staff that is in direct touch with customers and

visitors is essential to any business. The importance becomes

more intense in retailing. The courteous attitude makes a

difference to the customers. However, the personal attributes

and character formulation of the staff member suffer from

rigidity and hence care shall be taken in such cases. Facilitate

the growth and strengthen human resource development

institutions, including the National Institute of Fashion

Technology on innovative lines. Focus on health and life

insurance for weavers and technical skill development.

� As apparel retail is led by fashion, a player needs to keep a

close watch on fashion amongst teenagers as they are the trend

setters. Role of Bollywood in spreading fashion needs to be

understood. Seasonal variation on stocking pattern and need

to clear inventory at the end of the season should be understood

by apparel retailers.

� Opening up of the retail trade to FDI will pave the way for flow

of investment in new technology and marketing of farm

produce in India. Allowing foreign equity participation up to

245

100 percent through automatic route in this sector with certain

exceptions.

� Technology should be upgraded in terms of logistics,

production, and distribution channels. Recognizing the vital

role of IT in a progressively IT-driven global economic

environment, as also its scope in bringing about speed,

efficiency and transparency in delivery systems, Govt.will play

a proactive role in promoting and facilitating adoption of IT in

the textile industry and trade. Using IT as the platform, a strong

commercial intelligence network will be built up and suitable

infrastructure for harnessing the potential of e-commerce will

be put in place.

� Economies of scale would help lower consumer prices and

increase the purchasing power of the consumer.

� Apparel retailers have to cope with higher expenses for both

costs of goods and operating costs.

� Funding requirements of different segments of the textile

industry will be periodically reviewed and short-term and long-

term requirements spelled out, particularly of the handloom,

power loom, handicrafts and sericultures.Innovative measures

for tapping public and private sector findings will be worked

out.

� A strong retailing sector would promote tourism.

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Chapter-7

BIBLIOGRAPHY

246

Books

1. Bajaj, Chetan, Tuli,Rajnish and Nidhi, Srivastava, Retail

Management,2nd Edition 2008,Oxford University Press.

2. Joseph, Mathew and Soundararajan,Nirupama,Retail in

India,Edition 2010, Academic Foundation.

3. Kothari, C.R., 2nd Edition Research Methodology Excel Books

Publishers.

4. Kotler, Philip, Marketing Management, Prentice-Hall Publisher.

5. Levy, Michael, Weitz, Barton A and Pandit ,Ajay, Retailing

Management, 6th Edition 2008, Tata Mc Graw Hill Publishing

Company.

6. Nair, Suja, 3rd Edition, Retail Management, Himalaya Publishing

House.

7. Pradhan, Swapna, Retailing Management,4th Edition 2012, Tata

Mc Graw Hill Publishing Company.

8. Sinha, Piyush Kumar and Unyal,Dwarika Prasad,Managing

Retailing, Edition 2008, Oxford University Press.

Journals

9. Global Journal of Retail Management, Delhi

10. International Journal of Commerce & Management, Lucknow

247

11. International Journal of Retail & Distribution Management-

Multidimensional Investigation of Apparel Retailing in India,

Vol.No.36, Issue: 9, pp676-688, Emerald Group Publishers Ltd.

12. Middle-East Journal of Scientific Research

13. Vyas H.Preeta, 2007, Sales Promotion Practices in Apparel Retail

Sector and Challenges Ahead, W.P.No.2007-11-02

Articles

14. Hindustan Times 2011,A Guide to FDI in Retail Sector Nov.30

15. Hindustan Times 2011,Re-tailing:A close Look at some basic

issues,Nov.30

Websites

16. dictionary.reference.com/Apparel

17.www.business.mapsofindia.com/top-brands-india/top-apparel-

brands-in-india.html

18.www.cygnusindia.com

19.www.dipp.nic.in/discussionPapers/DPFDIMultiBrandRetailTradin

g_06 July, 2010

20.www.en.wikipedia.org/wiki/Retailing_in_India

21.www.fashionunited.in/news/fashion/indias-apparel-retail-to-touch-

rs-470-lakh-cr-by-2020-080920101106

248

22. www.fcamin.nic.in

23. www.fcamin.nic.in

24.www.Fibre2Fashion.com

25.www.fibre2fashion.com/industry-article/7/697/organized-retailing-

in-india1.asp

26. www.icrier.org/pdf/working Paper222.p

27.www.kvic.org.in

28.www.pinnaclejournals.com/setup/socialscience/paper26.pdf

www.siadipp.nic.in/policy/changes/pn3 2006

29.www.wiki.answers.com/Q/What_are_the_existing_apparel_brands

_in_India

30. A.C.Nielson Centre for Marketing Research

31. AT Kearney.com

32. Census of India, 2011


34. Consumer Lifestyles in India, Euromonitor International

Consumer

35. Lifestyles Database (2005)

36. Data Monitor Global Internet Report

249

37. Ernst & Young India

38. Ernst & Young Research

39. FDI in Multi Brand Retail, Ministry of Commerce.

40. FDI_Circular_02/2010, DIPP

41. Global Apparel, accessories and luxury goods, Data Monitor,

(2006)

42. India Brand Equity Foundation

43. India in the Global Textile Ecosystem” 2007 Ernst & Young, CII

44. KPMG India

45. KSA Technopak

46. McKinsey&Company

47. Ministry of Commerce & Industry, GOI.

48. Ministry of Textile

49. Ministry of Textile 2008-09 Annual Report.

50. Notification No. FEMA 20/2000-RB dated May 3, 2000

51. Technopak Indian Textile&Apparel Compendium,2010

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53. Textile Intelligence Limited (U.K.)

250

Magazines

54. Business Today

55. Business World

56. India Today

57. Outlook

Newspapers

58. Business Standard

59. Financial Express

60. The Economic Times

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Chapter-8

APPENDICES

251

Appendix 1

Questionnaire Used in the Survey

Lucknow Division Apparel Retailing Challenges and Prospects Survey

1. Types of Retailers?

Local Retailer Market Retailer

2. Amount invested initially?

Up to Rs.5 Lakhs Rs.6 Lakhs-Rs.10 Lakhs

Rs.11Lakhs-Rs.50 Lakhs Above Rs.50 Lakhs

3. Dou you deal in?

Menswear Women’s wear Kids wear All of the above

4. Do you deal in branded apparel?

Yes No

5. Do you face competition from?

Unorganized Apparel Retailers Organized Apparel Retailers

Both

6. How do your competitors affect you?

By decreasing sales By decreasing sales


252

7. What do you think about your employees?

Unskilled Training on Job Highly

skilled

8. Do you have the problems because of location of your shop?

Yes No

9. If yes, what kinds of problems?

High rent High maintenance charge

Parking problems High cost if shop is owned

10. What do you think about foreign players/companies?


11. What prospects do you perceive in apparel retailing?

Excellent Good Average Poor

12. Is high consuming class helping retailing growth?

Yes No

13. If yes, who are your main customers?

Upper Class Upper Middle Class

Middle Class All segments of society

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14. What age groups do often shop from your outlet?

15-25 Years 26-35 Years

36-50 Years Above 50 Years

15. What role does fashion play in apparel shopping?

High Low Not sure

16. What do you perceive about Mall Culture?


Name of Retailer:

Location:

Any suggestion from the Retailer for improvement in Apparel

Retailing:

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apparel retailing: challenges and prospects in india

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