INDUSTRY PROFILE The Indian retail industry is the fifth largest in the world. Comprising of organized and unorganized sectors, India retail industry is one of the fastest growing industries in India, especially over the last few years. Though initially, the retail industry in India was mostly unorganized, however with the change of tastes and preferences of the consumers, the industry is getting more popular these days and getting organized as well. With growing market demand, the industry is expected to grow at a pace of 25-30% annually. The India retail industry is expected to grow from Rs. 35,000 crore in 2004-05 to Rs. 109,000 crore by the year 2010.

Growth of Indian Retail

According to the 8th Annual Global Retail Development Index (GRDI) of AT Kearney, India retail industry is the most promising emerging market for investment. In 2007, the retail trade in India had a share of 8-10% in the GDP (Gross Domestic Product) of the country. In 2009, it rose to 12%. It is also expected to reach 22% by 2010.

According to a report by Northbride Capita, the India retail industry is expected to grow to US$ 700 billion by 2010. By the same time, the organized sector will be 20% of the total market share. It can be mentioned here that, the share of organized sector in 2007 was 7.5% of the total retail market.

Major Retailers in India

Pantaloon:

Pantaloon is one of the biggest retailers in India with more than 450 stores across the country. Headquartered in Mumbai, it has more than 5 million sq. ft retail space located across the country. It's growing at an enviable pace and is expected to reach 30 million sq. ft by the year 2010. In 2001, Pantaloon launched country's first hypermarket ‘Big Bazaar’. It has the following retail segments:

Food & Grocery: Big Bazaar, Food Bazaar Home Solutions: Hometown, Furniture Bazaar, Collection-i Consumer Electronics: e-zone Shoes: Shoe Factory Books, Music & Gifts: Depot Health & Beauty Care: Star, Sitara E-tailing: Futurebazaar.com Entertainment: Bowling Co.

Tata Group

Tata group is another major player in Indian retail industry with its subsidiary Trent, which operates Westside and Star India Bazaar. Established in 1998, it also acquired the largest book and music retailer in India ‘Landmark’ in 2005. Trent owns over 4 lakh sq. ft retail space across the country.

RPG Group

RPG Group is one of the earlier entrants in the Indian retail market, when it came into food & grocery retailing in 1996 with its retail Foodworld stores. Later it also opened the pharmacy and beauty care outlets ‘Health & Glow’.

Reliance

Reliance is one of the biggest players in Indian retail industry. More than 300 Reliance Fresh stores and Reliance Mart are quite popular in the Indian retail market. It's expecting its sales to reach Rs. 90,000 crores by 2010.

AV Birla Group

AV Birla Group has a strong presence in Indian apparel retailing. The brands like Louis Phillipe, Allen Solly, Van Heusen, Peter England are quite popular. It's also investing in other segments of retail. It will invest Rs. 8000-9000 crores by 2010.

Retail formats in India

Hypermarts/supermarkets: large self-servicing outlets offering products from a variety of categories.

Mom-and-pop stores: they are family owned business catering to small sections; they are individually handled retail outlets and have a personal touch.

Departmental stores: are general retail merchandisers offering quality products and services.

Convenience stores: are located in residential areas with slightly higher prices goods due to the convenience offered.

Shopping malls: the biggest form of retail in India, malls offers customers a mix of all types of products and services including entertainment and food under a single roof.

E-trailers: are retailers providing online buying and selling of products and services. Discount stores: these are factory outlets that give discount on the MRP.

Vending: it is a relatively new entry, in the retail sector. Here beverages, snacks and other small items can be bought via vending machine.

Category killers: small specialty stores that offer a variety of categories. They are known as category killers as they focus on specific categories, such as electronics and sporting goods. This is also known as Multi Brand Outlets or MBO's.

Specialty stores: are retail chains dealing in specific categories and provide deep assortment. Mumbai's Crossword Book Store and RPG's Music World are a couple of examples.

Challenges facing Indian retail industry The tax structure in India favors small retail business Lack of adequate infrastructure facilities High cost of real estate Dissimilarity in consumer groups Restrictions in Foreign Direct Investment Shortage of retail study options Shortage of trained manpower Low retail management skill

The Future

The retail industry in India is currently growing at a great pace and is expected to go up to US$ 833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018 at a CAGR of 10%. As the country has got a high growth rates, the consumer spending has also gone up and is also expected to go up further in the future. In the last four year, the consumer spending in India climbed up to 75%. As a result, the India retail industry is expected to grow further in the future days. By the year 2013, the organized sector is also expected to grow at

The BMI India Retail Report for the third-quarter of 2010, forecasts that the total retail sales will grow from US$ 353 billion in 2010 to US$ 543.2 billion by 2014. With the expanding middle and upper class consumer base, there will also be opportunities in India's tier II and III cities. The greater availability of personal credit and a growing vehicle population to improve mobility also contribute to a trend towards annual retail sales growth of 11.4 per cent. Mass grocery retail (MGR) sales in India are forecast to undergo enormous growth over the forecast period. BMI further predicts that sales through MGR outlets will increase by 154 per cent to reach US$ 15.29 billion by 2014. This is a consequence of India's dramatic, rapid shift from small independent retailers to large, modern outlets.

BMI forecasts consumer electronic sales at US$ 29.86 billion in 2010, with over the counter (OTC) pharmaceutical sales at US$ 3.28 billion. The latter is predicted to be the fastest growing retail sub-sector and BMI forecasts that sales will reach US$ 6.18 billion by 2014, an increase of 88.5 per cent.

China and India are predicted to account for almost 91 per cent of regional retail sales in 2010 and by 2014 their share of the regional market is expected to be more than 92 per cent. Growth in regional retail sales for 2010-2014 is estimated by BMI at 72.2 per cent, an annual average of 14 per cent. India should experience the most rapid rate of growth in the region, followed by China.

For India, its forecast market share of 13.9 per cent in 2010 is expected to increase to 14.3 per cent by 2014.

Moreover, for the 4th time in five years, India has been ranked as the most attractive nation for retail investment among 30 emerging markets by the US-based global management consulting firm, A T Kearney in its 8th annual Global Retail Development Index (GRDI) 2009. India remains among the leaders in the 2010 GRDI and presents major retail opportunities. India's retail market is expected to be worth about US$ 410 billion, with 5 per cent of sales through organised retail, meaning that the opportunity in India remains immense. Retail should continue to grow rapidly—up to US$ 535 billion in 2013, with 10 per cent coming from organised retail, reflecting a fast-growing middle class, demanding higher quality shopping environments and stronger brands, the report added. Bharti Retail strengthened its position in northern India by opening 59 stores, Bharti Wal-Mart is expected to open 10 to 15 wholesale locations in the next three years, and Marks & Spencer is considering plans to open additional outlets in the next few years.

Established retailers are tapping into the growing retail market by introducing innovative store formats. Spencer's Retail, More (owned by Aditya Birla Group) and Shoppers Stop (owned by K Raheja Group) already plan to expand.

According to a McKinsey & Company report titled 'The Great Indian Bazaar: Organised Retail Comes of Age in India', organised retail in India is expected to increase from 5 per cent of the total market in 2008 to 14 - 18 per cent of the total retail market and reach US$ 450 billion by 2015.

Furthermore, according to a report titled 'India Organised Retail Market 2010', published by Knight Frank India in May 2010 during 2010-12, around 55 million square feet (sq ft) of retail space will be ready in Mumbai, national capital region (NCR), Bengaluru, Kolkata, Chennai, Hyderabad and Pune. Besides, between 2010 and 2012, the organised retail real estate stock will grow from the existing 41 million sq ft to 95 million sq ft.

India continues to be among the most attractive countries for global retailers. Foreign direct investment (FDI) inflows between April 2000 and April 2010, in single-brand retail trading, stood at US$ 194.69 million, according to the Department of Industrial Policy and Promotion (DIPP).

Leading watchmaker Titan Industries Limited plans to invest about US$ 21.83 million for opening 50 premium watch outlets Helios in next five years to attain a sales target of US$ 87.31 million. "We are looking to open Helios outlets in Mumbai, Delhi, Hyderabad, Kolkata, Chennai, Pune, Ahmedabad etc in next 12 months," said Ajoy Chawla, Vice President (Retail), Titan.

British high street retailer, Marks and Spencer (M&S) plans to significantly increase its retail presence in India, targetting 50 stores in the next three years. M&S currently operates 17 stores in India through a joint venture (JV) with Reliance Retail.

Chinese retail major, Yishion has entered the Indian market and plans to have at least 125 points of sales, including exclusive stores and multi-brand outlets, across India by 2012. It will open its first exclusive store in New Delhi by September 2010.

Spain's Inditex, Europe's largest clothing retailer opened the first store of its flagship Zara brand in India in June 2010. It further plans to open a total of five Zara outlets in India.

Bharti Retail, owner of Easy Day store—supermarkets and hypermarts—plans to invest about US$ 2.5 billion over the next five years to add about 10 million sq ft of retail space in the country by then, according to a company spokesperson.

Raymond Weil plans to invest US$ 883,665 in India during 2010, according to Olivier Bernheim, President and CEO, Raymond Weil.

Policy Initiatives

FDI up to 51 per cent under the Government route is allowed in retail trade of Single Brand products, according to the Consolidated FDI Policy document.

Road Ahead

According to industry experts, the next phase of growth is expected to come from rural markets.

According to a market research report published in June 2008 by RNCOS titled, 'Booming Retail Sector in India', organised retail market in India is expected to reach US$ 50 billion by 2011. The key findings of the report are:

Number of shopping malls is expected to increase at a CAGR of more than 18.9 per cent from 2007 to 2015

Rural market is projected to dominate the retail industry landscape in India by 2012 with total market share of above 50 per cent

Driven by the expanding retail market, the third party logistics market is forecasted to reach US$ 20 billion by 2011

Apparel, along with food and grocery, will lead organised retailing in India

Exchange rate used: 1 USD = 45.81 INR (as on June 2010)

Background and inception of the company Setup in 1996, Megamart is a venture of the prestigious Arvind Ltd. In spite of being a value retail chain, Megamart boasts of providing an excellent shopping experience. The brand believes

that 'no frills' ought not to come at the cost of great ambience, customer-friendly store layouts and well designed interiors.

Megamart arrived at a time when multi-brand discount outlets were still an unheard of phenomenon and changed the rules of the retailing in India. By keeping overheads and other costs to a bare minimum, it was able to pass on maximum savings to customers. Today, Megamart is the largest player in this segment.

Megamart operates in 2 formats – Megamart stores that occupy around 2000 – 4000 sq. ft. and BIG Megamart stores that occupy 30,000 – 60,000 sq. ft.

BIG Megamart stores have on offer more than 200 of the top international & national brands with fabulous offers throughout the year. Add to this some of the best deals around and you have a shopping experience that is truly unparalleled.

Megamart store network is growing at a rapid pace by adding 5000 Sq. ft. every week.

Megamart, a pioneer in the apparel value-retail segment, is today the largest value-retail chain in India. By offering customers complete value-for-money through best of deals throughout the year with some of the top international and national apparel brands all at fabulous deals. The chain is spread over 60 cities with around 160 stores across the country giving you a guarantee of mega brands and mega savings.

Nature of the business carried

VALUE- RETAILING

Value retailing is a big format store concept, where branded products and accessories are sold under best deals. This concept is mainly planned mainly for II and III tier cities with the promotion of mega savings offer. These cities have good potential providing as aspiration to the consumers to buy products at best deals. Value retail stores offer products with an inexpensive price tag. Also their promotions take the guise of price-cuts, added freebies, off-labels, added discounts on big bill-sizes and many more.

Earlier, the strong blow of recession also caused a noticeable shift in consumers preferences

causing a sloth in the retail growth. Consumers restricted their shopping budgets, and opted to buy goods at discount sales, and during promotional offers. But, even after the world has recovered from recession, the consumers who were used to buying products on discounts and offers continue to seek the same. They prefer to buy quality items at prices that are comparatively less than branded ones. This helped the value retailers to reap solid gains, and larger format value retail concept stores were started. The concept of large format stores gave way for more return on investments comparatively over small format stores.

Growth of value Retailers:

A decade before, a product that was sold in the market at a discounted rate would arouse suspicions in the consumers minds regarding its worth. More often, these kinds of products comprised of seconds, and rejected items. But, this phenomenon took a complete turn with the emergence of value retailing concept. Customers prefer to make the most of what these stores are offering them. These products prove to be defect free and also provided a shopping experience to customers that were similar to the high streets.

Value retailing remains on a high priority in the consumers shopping list increasing sales for factory outlets, closeout stores, and off-price products. H&M, Primark (UK), New Look, The buckle, Aeropostale, and Fast retailing are a few of the successful value retailers to name. They provide quality goods at inexpensive prices; products that are neither seconds, nor rejected. While their main stores hold stock of new merchandise matching with the current seasons, the surplus stock gives way to this new retail concept. Merchandise are sold at these stores with round the year discounts ranging anywhere from 20-80%.

Despite all the appealing discounts they get, the consumers need not have to compromise in terms of the ambience offered along with the quality customer service. The interior of the store initiates the shoppers to have an aspiration to own a brand, and also provide the ability to buy it. The only limitations of these stores being, that they relay on surplus stock, and sell merchandise that is a season old, but most of the shoppers do not have any complaints regarding the same.

There is a shift in the price-fashion arena, and this shift is being aptly utilized by the value retailers. The rapid growth of value retailing poses a tremendous threat to traditional retailers. Top brands include; Gap, Nordstrom, American Eagle, Abercrombie & Fitch etc. The trend of value retailers offering apparels at 365 days discount is penetrating deeper into the market segment day by day posing a threat to the branded apparel makers. Value retail outlets can be defined as a big retail stop in the organized apparel sector. It offers everything under one roof, especially at a price range not available in branded outlets. The growing power of value retailers is likely to create a deep impact on textile and apparel manufacturers also. Differentiating on value curves, apparel manufacturers will have to follow different levels for each segment, i.e. for brands and value retailers.

Consumers of today are more spoilt for choices, having the option of choosing among global brands, local brands, and private labels. Value retail formats hold a promise to the consumers that they get value for every penny they spend.

Vision, Mission and Quality Policy

The underlying theme running across the broad spectrum of all business activities at Arvind is that of enhancing lifestyles of people, across all diversities and demographics.

To serve that end, the corporate vision for Arvind states: 'We will enable people to experience a better quality of life by providing enriching and inspiring lifestyle solutions'.

PHILOSOPHY

WE BELIEVEIn people and their unlimited potential. In content and focus in problem solving. In teams for effective performance. In intellect & its power.

WE ENDEAVOURTo select, train and coach people to obtain higher responsibilities. To nurture talent to build leaders for tomorrow's corporation. To reward, celebrate and activate all intellectual business contributions.

WE DREAMOf excellence in all endeavours. Of mutual benefit and prosperity. Of making the world a better place to live in. We Make Things Happen.

Products Profile

Fashion Mart offers complete range of fashion accessories like jewellery, stoles and scarves, handbags & clutches, belts, fragrances, wallets, sunglasses, watches, cosmetics and beauty care products.

Home Mart is a one stop destination offering you a wide variety of home solutions to chose such as bed sheets, comforters, pillow fillers , cushion fillers, towels etc

It also offers a complete range of kitchen ware like crockery, mugs, non-stick cookware, storage containers, curtains and a complete range in kitchen linen.

Travel Mart offers a wide range of travel gear like suitcases, backpacks, duffle bags and strolleys. One could also chose from an attractive range of travel accessories like locks, key chains, laptop bags etc

Women's Wear

Western wear

Megamart Stores

Auburn Hill, Cherokee

BIG Megamart

Cherokee, Allen Solly, Scullers, Auburn Hill, Expozay, Tantra, Miss Players, Global Trendz

Ethnic wear

Megamart Stores

Aurelia, Karigari

BIG Megamart

Karigari, W, Nayans, Sushilas, Aurelia, Huur, Neerus, Zariwala, Estyle, Charms by Prafful, Leisha

Lingerie

Megamart Stores

Skinn

BIG Megamart

Amante, Lovable, City Girl, Juliet

Men's Wear

Formal Wear

Megamart Stores

Auburn Hill, Colors, Excalibur, Elitus, Turtle

BIG Megamart

Louis Philippe, Ruggers, Van Heusen, Peter England, Excalibur Elitus, Auburn Hill, Pan America, Park Avenue, Celebrity, Options, Wills Lifestyle

Casual Wear

Megamart Stores

Ruggers Cherokee

BIG Megamart

Cherokee, US Polo, Scullers, Farenheit, Indigo Nation, Allen Solly, Parx, Enryca, V., Color Plus, Classic Polo, Lerros, Giordano, Dockers, Kmark, Tantra, Prostyle, Allen Solly Youth,

Ethnic Wear

Megamart Stores

Karigari

BIG Megamart

Manu, Karigari, Yash

Suits & Blazers

Megamart Stores

Auburn Hill, Excalibur, Elitus, Arrow

BIG Megamart

Parx, Auburn Hill, Excalibur, Elitus, Belmonte, Shapes, Thomas Scott, Wills Lifestyle, John Players, Notting Hill

Innerwear

Megamart Stores

Skinn, VIP

BIG Megamart

VIP, Hanes, Skinn, Euro

Youth's Wear

Denims

Megamart Stores

Flying Machine, Lee, Levis, Newport, Pepe, Signature, Spykar, US Polo, Wrangler, Colt, Edge, Cherokee, Miss Cherokee

BIG Megamart

Colt, Pepe, Newport, Wrangler, Lee, Levis, Lemax, Cherokee, Signature, Spykar, Jealous 21, Flying Machine

Casual Wear

Megamart Stores

Lee, Signature, Wrangler, Miss Cherokee, Flying Machine

BIG Megamart

Ruggers, Dockers, Kappa, Indian Terrain, Colt, Spykar, Flying Machine, Lee, Wrangler, Levis, V., Stori, Bossini, MTV, Bay Island, Cherokee, UCB, Basics, Tantra, Crocodile, Classic Polo, Greg Norman

Sports wear

Megamart Stores

Colt, Newport, Flying Machine, Lee, Wrangler, Cherokee

BIG Megamart

Edge, Reebok, Nike

Kid's Wear

Apparel

Megamart Stores

Cherokee, Disney Kids

BIG Megamart

Gini & Jony, Drop, Seals, Globe, Disney Kids, Isabelle, Karigari, Myfaa, UCB Kids

Toys

Megamart Stores

Not available

BIG Megamart

Mera Toys

Area of Operation

National level operation- The chain is spread over 60 cities with around 160 stores across the country giving you a guarantee of mega brands and mega savings. Megamart operates in 2 formats – Megamart stores that occupy around 2000 – 4000 sq. ft. and BIG Megamart stores that occupy 30,000 – 60,000 sq. ft. Megamart store network is growing at a rapid pace by adding 5000 Sq. ft. every week.

Ownership Pattern

Public limited- under the subsidiary of Arvind group ltd company.

Competitors Information

C1-Brand Factory is a chain of stores operated by Pantaloon Retail India. Launched in September 2006, it currently has eight outlets in India. The outlets are between 60,000 to 100,000 square feet (9,300 m2) in size and offer around 120 brands such as Esprit, Van Heusen and Levis. The chain offers a minimum discount of 20% for its merchandise and targets customers in the 20-35 age group. The chain had more than a million customers within its first year of operation and witness a footfall between 2000-5000 customers per day.

It has stores in Ahmedabad, Bangalore, Kolkata, Ghaziabad, Hyderabad, Pune, Chennai, Mumbai and Tiruchirapalli.Ten more outlets are proposed to be built soon in the country.

C2-MAX the largest value fashion retailer in the Middle East offers fashion clothing, footwear, accessories and household products at amazing value, all under one roof.

Launched in UAE in May 2004, Max is today the largest value fashion retail chain in the Middle East. Max caters to the mid market section of the population. With 114 stores across UAE, KSA, Jordan, Kuwait, Bahrain, Qatar, Oman, Turkey, Egypt, Yemen & India, MAX plans to expand its network in more potential markets within the Middle East & beyond. With stores that typically measures between 18,000 to 30,000 sq. ft., Max retails private label clothing for men, women and children as well as footwear and home. ( http://www.maxfashionretail.com/ )

C3-WESTSIDE the Westside stores have numerous departments to meet the varied shopping needs of customers. These include Menswear, Women’s wear, Kid’s wear, Footwear, Cosmetics, Perfumes and Handbags, Household Accessories, lingerie, and Gifts. The company has already established 49 Westside departmental stores (measuring 15,000 - 30,000 square feet each) in Ahmedabad, Bengaluru, Chandigarh, Chennai, Delhi, Gurgaon, Ghaziabad & Noida (to be considered as 1 city), Hubli, Hyderabad, Indore, Jabalpur, Jaipur, Kanpur, Kolkata, Ludhiana, Lucknow, Mangalore, Mumbai, Mysore, Nagpur, Nashik, Pune, Raipur, Rajkot, Surat, Vadodara and Jammu. The company hopes to expand rapidly with similar format stores that offer a fine balance between style and price retailing.( http://www.mywestside.com/ )

C4-PROMART

C5-GRAB STORE

C5-THE LOOT

Infrastructural Facilities Megamart has selected Oracle® Retail merchandising, planning, supply chain and stores applications to support its aggressive growth plans as it seeks to achieve leadership in fashion and value retailing in India. Oracle Retail will help support these plans by providing Arvind with an integrated, scalable platform to manage its retail processes from supply chain to stores. Oracle Retail and other business applications will be deployed through Arvind’s network of a centralized distribution center and other regional distribution centers across India With this deployment, Arvind expects to increase its inventory turns, improve its forecast accuracy, enable shorter replenishment lead times and overall improve its service levels to the current 93 Megamart stores and Outlet Centres. This will ultimately help ensure that customers at Megamart stores will find the brands, styles and sizes they are looking for. The Indian retail market, which is the fifth largest retail destination globally according to industry estimates, is expected to grow from US$ 330 billion in 2007 to US$ 427 billion by 2010 and US$ 637 billion by 2015. Simultaneously, organised retail, which presently accounts for 4 per cent of the total market, is likely to increase its share to 22 percent by 2010.

2) Mega Mart offers a unique retail experience,combining a premium ambience with amazingly low prices. A pioneer inthis category, Mega Mart has penetrated into tier 2 & 3 cities & has opened

over 200 stores. Megamart engaged the services of reputed design house JHP - London; an award winning design consultancy firm to design their stores. JHP has designed and executed several

retail projects throughout the world. JHP are the designers behind Selfridges, ASDA and many of the other leading retail destinations across the world, including the retail space of the upcoming Heathrow Terminals.

To provide best service to the customers, Megamart is investing heavily on training the Fashion Assistants who will man the Outlet Centres. The company is also making sizeable investments to support these plans in information technology

Work flow model (End to End)

Vendors outsource

SWOT (Strengths and Weaknesses and its External Opportunities and Threats)

Strength

1)Skills or Important expertise

low-cost manufacturing capabilities

excellent mass merchandising skills

2)Valuable Physical Assets

State of the art plants and equipment

Attractive store locations

3) Valuable Human Assets

Experienced and capable workforce

Talented employees in key areas

Weakness

1)Not fully present in north India

2)Behind rivals in e-commerce capabilities

3)Weaker dealer network than key rivals and lack of global distribution capability

OPPORTUNITIES

1. Increasing urban population-more participants in retail revolution.

2. Increase in consuming middle class population.

3. Social factors like dual household income has enhanced spending power.

4. Spends moving towards lifestyle products and esteem enhancing products.

6. Average grocery spends at 42% of monthly spends-presents a huge opportunity.

7. Increase in use of credit cards.

8. Increase in FDI.

THREATS

1) Increase in number of e-commerce websites due to easy access of internet and shortage of time for customers.

2) FDI restrictions in the retail sector3) Cheaper imports4) Increase in domestic competition.5) To make balance between price and quality

Mckensy’s 7S frame work with special reference to organization under study

Strategy

1. Value-for-money by giving customers 365days discount offer.

2. Economic customer focus.

3. Focus on apparel value retail segment format.

4. Megamart boasts of providing an excellent shopping experience by offering great ambience, customer-friendly store layouts and well designed interior.

Style