RESEARCH PAPER PRESENTED

ON

ORGANISED RETAIL IN INDIA

SUBMITTED BY:

MD.ABDUL QUADIR

TO

RUBY CHANDA MAM

Abstract:

This report provides detailed information about the present structure of organized retailing industry in India. It examines the growing awareness and brand consciousness among people across different socio-economic classes in India and how the urban and semi-urban retail markets are witnessing significant growth.

It explores the role of the Government of India in the industry's growth and the need for further reforms. The foray of four major business houses in India including Pantaloon Retail India Limited, RPG Group, Tata Group and Raheja Group into organized retailing.

OBJECTIVES OF RESEARCH PAPER

To identify the Present Scenario & Future Growth in Organised Retail in India.Impact of FDI in this sector.To attract new Players towards Retail .

Hypothesis

Study the structure of organized retail industry in India.

Study the leading players in the organized retail industry in India and analyze their strategies.

Examine the recent trends in the organized retail industry in India.

Key Elements

Growth in retail market

Organized & unorganized retain in India

Challenges in retail

Introduction

India has 12 million retail outlets. The retail sector is the second largest source of employment and the job market is hugely receptive to retailing expertise It is estimated to create 50,000 jobs a year in the next five years.

Organized retail in India is expected to grow at an astronomical pace over the next four years, making it critical for companies to differentiate themselves in a highly competitive environment. Retailers can use a data- driven approach to create a competitive advantage by better understanding customers and their needs. Retailers should overhaul/build their data analytics capabilities now if they hope to remain ahead of the curve.

Organized retail, one of the most notable emerging sectors of the Indian economy, continues to attract significant investments and interest from leading national and international retail players. It has also generated considerable opposition from small traders and shopkeepers who are

worried about the impact of large-scale organized retail on their businesses. As a result, the government has been forced to carefully examine the long-term implications of organized retail in India.

According to independent estimates, the retail sector in India is poised to grow from US$270 billion in 2006 to $427 billion by 2010, at a 12-percent annual growth rate .Organized retailers in India today remain primarily focused on the essential building blocks of a successful retail model (e.g., acquiring prime retail space nationwide, developing optimal procurement models and supply chain infrastructure, designing appropriate store formats, and managing store operations). But often overlooked is the need to develop a continuous understanding of the Indian customer’s preferences and buying behavior—information that can be used to maximize customer lifetime value (CLTV).

Retail in India

Growth of Organized Retail:-

India’s retail sector generated total revenues of approximately $300 billion in 2007,of which the organized sector constituted only 6 percent. However, the sector is expected to grow at a CAGR of 12 percent to $427 billion by 2010 , with organized retail expected to contribute 15 percent of total retail revenues.

The Indian retail sector has been dominated so far by the 12 million small retail outlets (part of the unorganized sector) spread across India. A comparison among BRIC countries (Brazil, Russia, India, and China) indicates the expected steep growth in organized retail in India. China and Brazil took 10 to 15 years to raise the share of their organized retail sectors from 5 percent when they began, to 20 percent and 75 percent of the total retail market in 2006, respectively. India’s organized retail sector is also moving at a fast pace, aided by improving infrastructure, a booming economy, and changing customer preferences. The most obvious indication is the rapid rate at which new retail space is being built—forecast to grow from 32 million square feet in 2005 to 400 million square feet in 2011, at an annualized growth rate of 52 percent.

Evolution of Retail in India and the Organized-Unorganized Divide

Retail Market in India (US$ in billions) Projected CAGR, 2006–2010: 12%

Comparison with Other Countries (2006) India has tremendous potential for growth in organized retail

Retail in India - A Challenge

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 organized sector include:

Taxation laws that favor small retailers.

Different structure of sales tax in different states.

Multi-point octroi collection.

Lack of trained workforce.

Problems of supply chain and logistics.

High cost of real estate.

Limited land available at prime locations.

According to analysts, for this industry to thrive, Indian retailers need to emulate worldwide retail practices such as accuracy in financial reporting, increased levels of corporate governance and greater accountability among employees. Retailers need to use the latest techniques to enhance the consumer's shopping experience...

Foreign Direct Investment in Retailing in India - Its Emergence & Prospects

In recent years the destination sectors in FDI have became more varied. FDI inflows have shifted from infrastructure, natural resources and export driven manufacturing to other areas such as retailing, tourism, construction and off shore services. A World Bank study showed that cumulative FDI inflows to the retail sector in the 20 largest developing countries amounted to US$ 45 billion in 1998 -2002 (about 7 per cent of the total of these countries). The study showed that after liberalization; countries such as Brazil, Poland and Thailand have received significant FDI in retailing. In spite of the recent developments in retailing and its immense contribution to the economy, retailing continues to be are the least evolved industries and the growth of organized retailing in India has been much slower as compared to rest of the world. Over a period of 10 years, the show of organized retailing in total retailing has grown from 10 per cent to 40 percent in Brazil and 20 percent in China, while in India it is only 2 per cent (between 1995 -2005). One important reason for this is that retailing is one of the few sectors where foreign direct investment is not allowed. Within the country, there have been protests by trading associations and other stakeholders against allowing FDI in retailing. On the other hand, the growing market has attracted foreign investors and India has been portrayed as an important investment destination for the global retail chains. The present paper attempts to analyze the reason why foreign retailers are interested in India, the strategies they are adopting to enter India and there prospects in India.

After the waves of globalization, liberalization and privatization marketing scenario particularly retailing has changed radically. These changes have resulted in emergence of new environment for buyers’ behavior and purchasing habits. It is worth mentioning that retailing in India has been hailed as one of the sun-rise sectors in the economy.

Conclusion

In this context an effort has been made in this paper to review the emergence of global retailers in India, to examine the govt. policy relating to FDI in retailing and to evaluate the prospects of global retailing in India & impact of the entry of global players into the Indian retailing industry. To face current challenges in India & examine the recent trends in organized retail in India.