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CHAPTER-1

RETAIL INDUSTRY IN INDIA

RETAIL DEFINATION & MEANING

RETAIL FORMATS

EVOLUTION OF INDIAN RETAIL

RETAIL TRENDS IN INDIA

AN OVERVIEW OF INDIAN RETAIL

STRUCTURE OF INDIAN RETAIL

SIZE OF RETAIL SECTOR.

FDI IN RETAIL

MAJOR COMPONENTS IN RETAIL

FUNCTIONS IN RETAIL OPERATION

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FIGURE 1.1

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RETAIL DEFINITION

The word retail is derived from the French word retailer, meaning to cut a

piece off or to break bulk. It includes all the activities directly related to the

sale of goods and services to the ultimate consumer for personal or non-business use. In simple terms, it implies a first-hand transaction with the

customer

MEANING OF RETAIL

A retailer buys goods or products in large quantities from manufacturers or

importers, either directly or through a wholesaler, and then sells smaller

quantities to the end-user. Retailing involves a direct interface with thecustomer & the coordination of business activities from end to end- right from

the concept or design stage of a product or offerings, to its delivery & post-

delivery service to the customer. The world over the retail sector has grown

rapidly with increasing sophistication and modernization of the life-style of

households and individuals and with increasing globalisation of trade; India

has begun to cater up rather astonishingly rapidly. The industry has

contributed to the economic growth of many countries & is undoubtedly one ofthe fastest changing & dynamic industries in the India and world today.

THE EVOLUTION OF INDIAN RETAIL INDUSTRY

For Indian retailing, things started to change slowly in the 1980s, when India

first began opening its economy. Textiles sector (which companies like

Bombay Dyeing, Raymond's, S Kumar's and Grasim) was the first to see the

emergence of retail chains. Later on, Titan, maker of premium watches,successfully created an organized retailing concept in India by establishing a

series of elegant showrooms. For long, these remained the only organized

retailers, but the latter half of the 1990s saw a fresh wave of entrants in the

retailing business. These were pure retailers with no serious plans of getting

into manufacturing. These entrants were in various fields, like - Food World,

Subhiksha and Nilgiris in food and FMCG; Planet M and Music World in

music; Crossword and Fountainhead in books. As of the year ending 2000 thesize of the Indian organized retail industry was estimated at around Rs.

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13,000 crore. Retail growth is already gathering momentum and the organized

retail industry is expected to grow by 30 per cent in the next five years and is

expected to touch Rs. 45,000 crore in 2005. Thus, the growth potential for the

organized retailer is enormous

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RETAIL

Introduction

India has often been called a nation of shopkeepers. Presumably the

reason forThis is; that, a large number of retail enterprises exist in India. In

2004, there were 12 million such units of which 98% are small family

businesses, utilizing only Household labor. Even among retail enterprises,

which employ hired workers.

Majority of them use less than three workers. Retailing is the

combination of activities involved in selling or renting consumer goods and

services directly to ultimate consumers for their personal or household use. In

addition to selling, retailing includes such diverse activities as, buying,

advertising, data processing and maintaining inventory. While sales people

regularly call on institutional customers, to initiate and conclude transactions,

most end users or final customers, patronize stores. This makes store

location, product assortment, timings, store fixtures, sales personnel, delivery

and other factors, very critical in drawing customers to the store. Final

customers make many unplanned. In contrast those who buy for resale or use

in manufacturing are more systematic in their purchasing. Therefore, retailers

need to place impulse items in high traffic locations, organize, store layout ,

trains sales people in suggestion , and place related items next to each other,

to stimulate purchase.

WHAT DOES THE RETAILING INDUSTRY INCLUDE?

Department Stores

Discount Stores

Clothing Stores

Specialty retailers

Convenience Stores

Grocery Stores

Drug Stores

Home furnishing retailers

Auto Retailers

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Direct Sales Catalog and mail order companies

Retailing consists of the sale of goods or merchandise from a fixed

location, such as a department store; shopping mall etc .The retailer buys

goods or products in large quantities from manufacturers either directly orthrough a wholesaler, and then sells smaller quantities to the end-user. Retail

establishments are often called shops or stores. Retailers are at the end of

the supply chain. Manufacturing marketers see the process of retailing as a

necessary part of their overall distribution strategy. In the retail outlet various

type of good and service are provide to the customer but all the goods and

services are generally homogenous in nature through all the other retail

outlets. Product and services of every company are available in every retail

outlet. It is also find that many customer only used to shopping in own decided

outlet rather from every outlets even there is homogenous among the product

and service offer by the

Every retail outlet .So This put the question in the mind of the every

retailer that is there is any gap between what customer expected from

retailers and what retailer provides to customer during shopping. No two

customers have the identical likes and preferences. Delivery value and

narrowing down the zone of tolerance is a tightrope walk for marketer in

organized retail sector. Especially in market like India the challenges is

formidable because organizations need to cater to a wide and diverse group

of customers .Thus building equity and generating volumes in such complex

market tapers down to the function of managing customer expectation.

Customers take their time to first sketch their needs and then arrive at a

specific decision. At the end of the day the question is what does the

customer expect? How to fulfill the glaring gap between need and

expectations? The answers to this question are by delivering the value

But in many case retailers are not aware of what their customer expect.

Hence they are unable to deliver the right value to the right customer and

satisfy them .Especially in this competitive scenario where the customer are

well informed, commanding and demanding at the same time it has become

imperative for the organization to be updated on the WHAT,WHYand

HOW of each and every customer. This calls for empathizing with the

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customer by indulging into their priorities and decision making. Even in the

case of a product as simple as beauty soap, customer have versatile

expectations like, good packaging fragrance, herbal or medical benefit,

glowing skin etc. and all this at an affordable price. A daunting task but

companies have no option but to offer the expected value, that too by keeping

the operating costs low.

Following general expectations of a typical customer

Value of Money

Availability and location

Service expectations Quality in Product

Need based solution

So in other to deliver the value, Retail outlets in addition to providing

products and services, need to cater for a wide range of motives. The various

determinants of retail outlet preference include cleanliness, well-stocked

shelves, and range of products, helpful staff, disabled access, wide aisles, car

parking, multiple billing points and environmentally friendly goods. Thesediffering motives arise as retailers cater to different types of shoppers who

include economic consumers (concern with value), personalized consumers

(concern with relationships), recreational shoppers (shopping as a leisure

activity) and apathetic consumers (who dislike shopping). Retailers have to

satisfy budding customers, older consumers as well as time crunched

individuals whose motives all tend to be conflicting as well as different.

Retailers need to establish a good image to prevent customers from shopping

around. They must cater to shoppers need for pleasure and practicality. If

expressed as a calculation, customer satisfaction might look something like

this:

Customer expectations

Companies Performance/ Companies Satisfaction

Satisfaction is a consumers post-purchase evaluation of the overall

service experience. It is an affective reaction (Menon and Dub, 2000) in

which the consumers needs, desires and expectations during the course of

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the service experience have been met or exceeded (Lovelock, 2001).

Satisfaction in this sense could mean that a supermarket has just barely met

the customers expectations, not exceeded nor disappointed those

expectations. The benefits of taking the customers response beyond

satisfaction at this level by exceeding expectations, is a competitive strategy

many retailers aspire to achieve. There is a recurrent struggle for existence

and survival in the wake of deep competition, drastically changing customer

attitudes and expectation levels. The study would enable us to understand the

impact of various factors that influence a consumers shopping behavior in a

departmental store. It would also help in knowing the magnitude and direction

of movement of these factors amongst each other. These factors have been

divided into three heads- Store, Situation and Shopper factors.

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THE IMPORTANCE OF RETAILING

Organized retailing in India was estimated at Rs.18,000 crores in 2002-

2003 and has grown at about 40% over the last 3 years (Source KSA Retail

Outlook). Retailing has a tremendous impact on the economy. It involves highannual sales And employment. As a major source of employment retailing

offers a wide range of career opportunities including; store management,

merchandising and owning

A retail business. Consumers benefit from retailing in that, retailers

perform marketing functions that makes it possible for customers to have

access to a broad variety of products and services. Retailing also helps to

create place, time and possession utilities. A retailer's service also helps to

enhance a product's image. In general, retailers perform four distinct function

as, shown in Figure 1.1 below: Retailers participate in the sorting process by

collecting an assortment of goods and services from a wide variety of

suppliers and offering them for sale. The width and depth of assortment

depend upon the individual retailer's strategy.

They provide information to consumers through advertising, displays

and signs and sales personnel. Marketing research support is given to other

channels, members. They store merchandise, mark prices on it, place items

on the selling floor and otherwise handle products; usually they pay suppliers

for items before selling, them to final customers. They complete transactions

by using appropriate locations, and timings, credit policies, and other services

e.g. delivery. Retailing in a way, is the final stage in marketing channels for

consumer products. Retailers provide the vital link between producers and

ultimate consumers.

RETAIL STRATEGY AND STRUCTURE

Successful retail operations depend largely on two main dimensions:

margin and turnover. How far a retail enterprise can reach in margin and

turnover depends essentially on the type of business (product lines) and the

style and scale of the operations. In addition the turnover ,also depends upon

the professional competence of the enterprise.In a given business two retail

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companies may choose two different margin levels,and yet both may be

successful, provided the strategy and style of management are appropriate.

Margin Turnover ModelRonald R. Gist "Suggested a conceptual frame work, using margin and

turnover, for understanding the retail structure and evolving a retail strategy."

Margin is defined as the percentage mark tip at which the inventory in the

store is sold and turnover is the number of times the average inventory is sold

in a year. is a diagrammatic representation of the frame work and can be

applied to almost any type of retail business. Depending upon the,

combination of the two parameters, a retail business will fall into one of the

four quadrants. For instance L-L signifies a position, which is low on both

margin and turnover; whereas, H-L indicates high margin and low turnover.

Low Margin High Turnover Stores

Such an operation assumes that low price is the most significant

determinant of customer patronage. The stores in this category price their

products below the market level. Marketing communication focuses mainly onprice. They provide Very few services; if any, and they normally entail an extra

charge whenever they do. The merchandise in these stores is generally pre-

sold or self sold. This means that the customers buy the product, rather than

the store selling them. These stores are typically located in isolated locations

and usually stock a wide range of fast moving goods in several merchandise

lines. The inventory consists of well-known brands for which the manufacturer

through national advertising creates a consumer pull. Local promotion focuses

on low price. Wal-mart in the United States is an example and Pantaloon

Chain or Subhiksha are Indian examples of such stores.

High Margin Low Turnover

This operation is based on the premise that distinctive merchandise,

service and sales approach are the most important factors for attracting

customers. Stores in this category price their products higher than those in the

market, but not necessarily higher than those in similar outlets. The focus in

marketing communication is on product quality and uniqueness. Merchandise

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is primarily sold in store and not pre-sold. These stores provide a large

number of services

High Margin High Turnover StoresThese stores generally stock a narrow line of products with turnover of

Reasonably high frequency. They could be situated in a non-commercial area

but not too far from a major thoroughfare. Their location advantage allows

them to charge a higher price. High overhead costs and, low volumes also

necessitate a higher price.

Low Margin-Low Turnover StoresRetail enterprises in this category are pushed to maintain low margins

because of price wars. Compounding this problem is the low volume of sales,

which is probably a result of poor management, unsuitable location etc. such

businesses, normally get wiped out over a period of time. RETAILING

FORMATS (CLASSIFYING RETAIL FIRMS) Regardless of the particular type

of retailer (such as a supermarket or a department store), retailers can be

categorized by (a)Ownership, (b) Store strategy mix, and (c) Non store operations. Figure 1.3

illustrates this concept.

1. Form of Ownership

A sole proprietor, partners or a corporation can own a retail business

like any other type of business. A majority of retail business in India are sole

proprietorships and partnerships.

2. Independent Retailer

Generally operates one outlet and offers personalized service, a

convenient location and close customer contact. Roughly 98% of all the retail

businesses in India, are managed and run by independents, including barber

shops, drycleaners, furniture stores, bookshops, LPG Gas Agencies and

neighbourhood stores. This is due to the fact that into retailing is easy and it

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requires low investment and little technical knowledge. This obviously results

in a high degree of competition. Most independent retailers fail because of the

ease of entry, poor management skills and inadequate resources.

3. Retail Chain

It involves common ownership of multiple units. In such units, the

purchasing and decision making are centralized. Chains often rely on,

specialization, standardization and elaborate control- systems. Consequently

chains are able to serve a large dispersed target market and maintain a well

known company name. Chain stores have been successful, mainly because

they have the opportunity to take advantage of "economies of scale" in buying

and selling goods. They can maintain their prices, thus increasing their

margins, or they can cut prices and attract greater sales volume. Unlike

smaller, independent retailers with lesser financial means, they can also take

advantage of such tools as computers and information technology. Examples

of retail chains in India are Shoppers stop; West side and IOC, convenience

stores at select petrol filling stations.

4. Retail Franchising

Is a contractual arrangement between a "franchiser" (which may be a

manufacturer, wholesaler, or a service sponsor) and a "franchisee" or

franchisees, which allows the latter to conduct a certain form of business

under an established name and according to a specific set of rules. The

franchise agreement gives the franchiser much discretion in controlling the

operations of small retailers. In exchange for fees, royalties and a share of the

profits, the franchiser offers assistance and very often supplies as well.

Classic examples of franchising are; McDonalds, Pizza Hut and Nirulas.

5. Cooperatives

A retail cooperative is a group of independent retailers,that have combined

their financial resources and their expertise in order to effectively control their

wholesaling needs. They share purchases, storage, shopping facilities,

advertising planning and other functions. The individual retailers retain their

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independence, but agree on broad common policies. Amul is a typical

example of a cooperative in India.

Store Strategy MixRetailers can be classified by retail store strategy mix, which is an

integrated combination of hours, location, assortment, service, advertising,

and prices etc. The various categories are:

(A) Convenience Store:

Is generally a well situated, food oriented store with long operating

house and a limited number of items. Consumers use a convenience store;

for fill in items such as bread, milk, eggs, chocolates and candy etc.

(B) Super markets:

Is a diversified store which sells a broad range of food and non food

items. A supermarket typically carries small house hold appliances, some

apparel items, bakery, film developing, jams, pickles, books, audio/video CD's

etc. The Govt. run Super bazaar, and Kendriya Bhandar in Delhi are good

examples of a super market. Similarly in Mumbai, we have Apna Bazar and

Sahakari Bhandar.

(C) Department Stores:

A department store usually sells a general line of apparel for the family,

household linens, home furnishings and appliances. Large format apparel

department stores include Pantaloon, Ebony and Pyramid. Others in this

category are: Shoppers Stop and Westside.

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(D) Speciality Store:

Concentrates on the sale of a single line of products or services, such

as Audio equipment, Jewellery, Beauty and Health Care, etc. Consumers are

not confronted with racks of unrelated merchandise. Successful specialitystores in India include, Music World for audio needs, Tanishq for jewellery and

McDonalds, Pizza Hut and Nirula's for food services.

(E) Hyper Markets:

Is a special kind of combination store which integrates an economy

super market with a discount department store. A hyper market generally has

an ambience which attracts the family as whole. Pantaloon Retail India Ltd.(PRIL) through its hypermarket "Big Bazar", offers products at prices which

are 25% - 30% lower than the market price.

Non Store Retailing

In non store retailing, customers do not go to a store to buy. This type

of retailing is growing very fast. Among the reasons are; the ability to buy

merchandise not available in local stores, the increasing number of womenworkers, and the presence of unskilled retail sales persons who can not

provide information to help shoppers make buying decisions The major types

of non store retailing are:

(A) In Home Retailing:

Where, a sales transaction takes place in a home setting - including

door-door selling. It gives the sales person an opportunity to demonstrate

products in a very personal manner. He/She has the prospect's attention and

there are fewer distractions as compared to a store setting. Examples of in

home retailing include, Eureka Forbes vaccum cleaners and water filters.

(B) Telesales/Telephone Retailing:

This involves contact between the prospectand the retailer over the

phone, for the purpose of making a sale or purchase. Alarge number of mobile

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phone service providers use this method. Other examples are private

insurance companies, and credit companies etc.

(C) Catalog Retailing:This is a type of non store retailing in which the retailers offers the

merchandise in a catalogue, which includes ordering instructions and

customer orders by mail. The basic attraction for shoppers is convenience.

The advantages to the retailers include lover operating costs, lower rents,

smaller sales staff and absence of shop lifting. This trend is catching up fast in

India. Burlington's catalogue shopping was quite popular in recent times.

Some multi level marketing companies like Oriflame also resort to catalogueretailing.

(D) Direct Response Retailing:

Here the marketers advertise these products/ services in magazines,

newspapers, radio and/or television offering an address or telephone number

so that consumers can write or call to place an order. It is also sometimes

referred to as "Direct response advertising." The availability of credit cardsand toll free numbers stimulate direct response by telephone. The goal is to

induce the customer to make an immediate and direct response to the

advertisement to "order now." Telebrands is a classic example of direct

response retailing. Times shopping India is another example.

(E) Automatic Vending:

Although in a very nascent stage in India, is the ultimate in nonpersonal, non store retailing. Products are sold directly to customers/buyers

from machines. These machines dispense products which enable customers

to buy after closing hours. ATM's dispensing cash at odd hours

(F) Electronic Retailing/E-Tailing:

Is a retail format in which retailers communicate with customers and

offer products and services for sale, over the internet. The rapid diffusion of

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internet access and usage, and the perceived low cost of entry has stimulated

the creation of thousands of entrepreneurial electronic retailing ventures

during the last 10 years or so. Amazon.com, E-bay and Bazee.com

HDFCSec.com are some of the many e-tailers operating today. THE WHEEL

OF RETAILING Is a hypothesis that attempts to explain the emergence of

new retailing institutions and their eventual decline and replacement by newer

retailing institutions. Like products retailing institutions also have a life cycle.

According to this theory new retailers enter the market as, low margin, low

price,low status institutions. The cycle begins with retailers attracting

customers by offering low price and low service. Over a period of time these

retailers want to expand their markets and begin to stock more merchandise,

provide more services, and open more convenient locations. This trading up

process. Increases the retailers costs and prices, creating opportunities for

new low price retailers to enter the market. The evolution of the department

store illustrates the "wheel of retailing" theory. In its entry phase, the

department store was a low cost-low service venture. With time it moved up

into the trading-up phase. It upgraded its facilities, stock selection, advertising

and service. The same department store then moves into the vulnerability

phase, because it becomes vulnerable to low cost/low service formats, such

as full line discount stores and category specialists. Figure 1.5 illustrates this

theory. While the wheel hypothesis has a great deal of intuitive appeal and

has been borne out in general by many studies of retail development, it only

reflects a pattern. It is not a sure indicator of every change, nor was it ever

intended to describe the development of every individual retailer.

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RETAILING DECISIONS

There are many factors for retailers to consider while developing and

implementing their marketing plans. Among the major retailing decisions are

these related to (a) Target markets (b) Merchandise management (c) Storelocation (d) Store image (e) Store personnel (f) Store design (g) Promotion,

and (h) Credit and collections. This is shown diagrammatically in Figure 1.6.

Target Markets:

Although retailers normally aim at the mass market, a growing number

are engaging in marketing research and market segmentation, because they

are finding it increasingly difficult to satisfy everyone. Through a careful

definition of target markets, retailers can use their resources and capabilities

to position themselves more effectively and achieve differential advantage.

The tremendous growth in number of speciality stores in recent years is

largely due to their ability to define precisely the type of customers, they want

to serve.

Merchandise Management:

The objective here is to identify the merchandise that customers want,

and make it available at the right price, in the right place at the right time.

Merchandise Management includes (i) merchandise planning (ii) merchandise

purchase, and (iii) merchandise control. Merchandise planning deals with

decisions relating to the breadth and depth of the mix, needed to satisfy target

customers to achieve the retailers return on investment. This involves sales

forecasting, inventory requirements, decisions regarding gross margins andmark ups etc. Merchandise buying involves decisions relating to centralized or

decentralized buying, merchandise resources and negotiation with suppliers.

Merchandise Control: deals with maintaining the proper level of inventory and

protecting it against shrinkage (theft, pilferage etc.)

Store Location:

Location is critical to the success of a retail store. A store's trading-area is thearea surrounding the store from which the outlet draws a majority of its

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customers. The extent of this area depends upon the merchandise sold. For

example some people might be willing to travel a longer distance to shop at a

speciality store because of the unique and prestigious merchandise offered.

Having decided on the trading area a specific site must then be selected.

Factors affecting the site include, traffic patterns, accessability, competitors'

location, availability and cost and population shifts within the area.

Store Image:

A store image is the mental picture, or personality of the store, a

retailer likes to project to customers. Image is affected by advertising,

services; store layout, personnel, as well as the quality, depth and breadth ofmerchandise. Customers tend to shop in stores that fit their images of

themselves.

Store Personnel:

Sales personnel at a retail store can help build customer loyalty and

store image. A major complaint in many lanes of retailing, is the poor attitude

of a salesperson. There is a growing trend now, to provide training to, thesesales clerks to convert them from order takers to effective sales associates.

Store Design:

A store's exterior and interior design affect its image and profit

potential. The exterior should be attractive and inviting and should blend with

the store's general surroundings. The term "Atmospherics" is used to refer to

the retailer's effort at creating the right ambience. Merchandise display isequally important. An effective layout guides the customer though the various

sections in the store and facilitates purchase.

Promotion:

Retail promotion includes all communication from retailers to

consumers and between sales people and customers. The objective is to

build the stores image, promote customer traffic, and sell specific products. Itincludes, both, personal and non personal promotion. Personal

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communication is personal selling - the face to face interaction between the

buyer and the seller. Department stores and speciality stores, emphasize this

form of promotion. Non personal promotion is advertising. The media used

are TV, Radio, Newspapers, Outdoor displays and direct mail, other forms of

promotion include, displays, special sales, give always and contests etc.

Credits & Collections:

Retailers are generally wary of providing credit, because of additional

costs-financing accounts receivables, processing forms and bad debts etc.

But many customers prefer some form of credit while purchasing. This

explains the popularity of different types of credit cards and debit cards.

EMERGING TRENDS IN RETAILING

In recent years the nature of retailing has changed dramatically, as

firms try to protect their positions in the market place. Many customers are no

longer willing to spend as much time on shopping as they once did. Some

sectors of retailing have become saturated, several retailers are operating

under high levels of debt and number of retailers after running frequent"sales", have found it difficult to maintain regular prices. Retailers are adapting

to*the shopping needs and time constraints of working women, dual earner

households and the increased customer interest in quality and customer

service:

Shopping Malls:

A growing number of shopping malls are coming up all over thecountry. In north India; there seems to be a proliferation of such malls

surrounding Delhi, in places like Gurgaon and Noida. In general they target

higher income customers, with their prestigious speciality shops, restaurants

and department stores.

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Factory Outlets:

Manufacturers are opening factory outlets to sell off surplus inventories

and outdated merchandise. This forward vertical integration gives

manufacturers greater control' over distribution, than selling the merchandiseto off price retailers. Mohini knitwear of Ludhiana (Punjab) and number of

woolen and hosiery manufacturers set up their outlets in Delhi during winters.

Non Store Retailing:

Non store retailing is accelerating at a faster rate than in store retailing.

This includes direct marketing. In Home shopping TV shopping and e-tailing

etc.

Diversification of Offerings:

Scrambled (unrelated products or services) merchandising is taking on

a broader meaning and inter type competition among retailers is growing. For

instance Citibank is organizing tourist trips and sending mail order catalogues

to its credit card customers.

Impact of Technology on Shopping Behavior:

The way retailers present their merchandise and conduct their

transactions are changing. Cable TV Channels are used to present

merchandise, Videos have replaced catalogues and computer linkages to

acquire information and make purchases are on the increase. Virtual

shopping through PDA's is another possibility.

Multi Channel Retailing:

Traditional store based and catalogue retailers are placing more

emphasis on their electronic channels and evolving into multi channel

retailers, because they can reach new markets and overcome limitations

posed by traditional formats,

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FIGURE 1.3

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RETAIL TREND IN INDIA

Globally, retail is the largest private industry. However, in India, it is in

its nascent stages. The total retail market is estimated at Rs 900,000 Crores.

Organized retail at around 5% is estimated at Rs 28,000 Crores. The

organized retail share as per the estimates made by most consultants is

estimated to reach a level of 10% by 2010. In absolute terms this would

amount to Rs 110,000 Crores. Retail is Indias largest industry, accounting for

over 10 percent of the countrys GDP and around eight percent of

employment.

Retailing in India is gradually inching its way to becoming the next boom

industry. The whole concept of shopping has altered in terms of format and

consumer buying behavior, ushering in a revolution in shopping. Modern retail

has entered India as seen in sprawling shopping centers, multi-storied malls

and huge complexes offer shopping, entertainment and food all under one

roof. India represents an economic opportunity on a massive scale, both as a

global base and as a domestic market. Indian Retail sector consists of small

family-owned stores, located in residential areas, with a shop floor of less than

500 square feet.

Retailing in India is at a nascent stage of is evolution, but within a small period

of time certain trends are clearly emerging which are in line with the global

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FIGURE 1.4

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experiences. Organized retailing is witnessing a wave of players entering the

industry. These players are experimenting with various retail formats. Yet,

Indian retailing has still not been able to come up with many successful

formats that can be scaled up and applied across India. Some of the notable

exceptions have been garment retailers like Madura Garments & Raymonds

who was scaled their exclusive showroom format across the country.

OVERVIEW OF INDIAN RETAIL SECTOR.

The India Retail Industry is the largest among all the industries, the

retail sector has helped in giving strong impetus to overall economic growth

as a significant driver of the growth of services sector, which contributes as

mush as 54 per cent of GDP. It has strong backward and forward linkages

with other sectors like agriculture and industry through stimulating demand for

goods and through mass marketing, packaging, storage and transport.

Moreover, it creates considerable direct and indirect employment in the

economy. Also, the consumers have benefited in terms of wide range of

products available in a market. The Retail Industry in India has come forth as

one of the most dynamic and fast paced industries with several players

entering the market. But all of them have not yet tasted success because of

the heavy initial investments that are required to break even with other

companies and compete with them

The total concept and idea of shopping has undergone an attention

drawing change in terms of format and consumer buying behavior, ushering in

a revolution in shopping in India. Modern retailing has entered into the Retail

market in India as is observed in the form of bustling shopping centers, multi-storied malls and the huge complexes that offer shopping, entertainment and

food all under one roof. With growing time constraints and choices, the

consumer is getting used to having options readily at hand when one steps

out to make the final purchase decision without much dissonance Need for an

enhanced look and feel of the shopping environment. With retail ambiences

getting upgraded, clearly the poky neighborhood kirana stores are becoming

part of the past for the hypermarket consumer, and one will soon find it difficult

to shop "regularly" at the dusty grocery shop.

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Today with the growth of malls and hypermarkets, consumers no longer

think "expensive looking" means "expensive". To actually establish premium

imagery through shopping environment is going to be that much more difficult!

Need for customer service to encourage consumers to come back again and

again and buy more. Quite contrary to the thought that technology will

dehumanize transactions, the truth is humans will make all the difference.

It may seem that in a vast country like India, this is restricted to a few

urban towns. This could be myopic thinking. The revolution was brewing in

South India in the 90s but seems to have taken speed in the 21st century.

As "retail" brands see the value of volumes and with the ready

availability of both technologies for back-end management and real estate for

front-end face, business compulsions and opportunities will make them

expand faster than one can imagine.

Consumers moving up the "diminishing return" curve. After getting a

certain level of quality in many categories, consumers are unwilling to pay

more for incremental quality and so are ready to make do with "acceptable

quality", which store brands offer very easily.

Media fragmentation makes its more and more difficult for mass

marketed brands to actually connect with consumers. So the battle moves to

the market place where by sheer ownership, store brands hold an edge.

They are cost advantage, because store brands operate on much less

overheads because their target markets are limited to the catchments area in

and around the store and so depend much less on "expensive" mass media

brand-building advertising. And above all there are fewer partners to share the

"margin goodies" with. A large young working population with median age of

24 years, nuclear families in urban areas, along with increasing

workingwomen population and emerging opportunities in the services sector

are going to be the key factors in the growth of the organized Retail sector in

India. The growth pattern in organized retailing and in the consumption made

by the Indian population will follow a rising graph helping the newer

businessmen to enter the India Retail Industry.

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In India the vast middle class and its almost untapped retail industry

are the key attractive forces for global retail giants wanting to enter into

newer markets, Clearly, the impact of this retail revolution could be bigger

than just the changing faade of the market place and enhancing consumer

buying experience. It is a looming threat to "mass brand marketers" and the

sooner they take cognizance of that, the better. Mass retailers may not only

redefine shopping experiences, but also redefine market spaces. The future

of the India Retail Industry looks promising with the growing of the market,

with the government policies becoming more favorable and the emerging

technologies facilitating operations.

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STRUCTURE OF INDIAN RETAIL SECTOR

The retail sector is classified broadly into two:

1. Organised Retail Sector and,

2. Unorganised Retail Sector

ORGANISED RETAIL

Organized retailing refers to trading activities undertaken by licensed

retailers, that is, those who are registered for sales tax, income tax, etc.

These include the corporate-backed hypermarkets and retail chains, and also

the privately owned large number of retailers, greater enforcement of taxation

mechanisms and better labour law monitoring systems. It is not just a stocking

and selling, but is more about efficient supply chain management, developing

vender relationships, quality customer service, efficient merchandising and

timely promotional campaigns. It, however, constitutes a very little share of at

around 5 per cent (Rs 500 billion) of the total retail market. According to the

Retailers Association of India, the share of organised sector to the overall

retailing market in India is expected to grow from 3 per cent to 20 per cent in

the next 10 years. The KSA Technopaks estimate is that by 2005, the

organised retail sector would be employing in excess of 2, 50, 000 individuals

directly and perhaps 8-10 times as many indirectly in the supply chain. The

organised retailing has been successful in metropolitan cities so far, more so

in the south and west India. It is expected that the tier II cities would take

another 5 years to absorb modern retailing opportunities. Moreover, the case

for Indian retailers to explore rural markets is also strong due to the size of

rural population and agricultural income growth in last couple of years. A clear

indicator of this potential is the share of rural market across most categories

of consumption.

UNORGANISED RETAIL

Unorganized retailing, on the other hand, represents 97 per cent of the

total retail market is mainly characterised by typically small retailers,

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traditional formats of low-cost retailing, more prone to tax evasion and lack of

labour law supervision. The local kiranashops, owner manned general stores,

paan/beedishops, convenience stores, hand cart and pavement vendors, etc.

Food retail trade is a very large segment of the total economic activity of our

country and due to its vast employment potential; it deserves very special

focused attention. Efficiency enhancements and increase in the food retail

sales activity would have a cascading effect on employment and economic

activity in the rural areas for the marginalized workers. India is one of the

largest unorganised retail markets in the world and more than 96 per cent of

the retailers work in less than 500 sq ft of area.

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SIZE OF THE MODERN RETAIL SECTOR

A retail revolution is sweeping through India. Organized retail, which is 5% of

the whole currently, is in turn pegged to grow to Rs. 100,000 Crores by 2015.

And one consequence of all those investments will be the fact that India's

present two square-feet per capita retailing space will rise 15-20% by 2010.

The emergence of new formats and the evolution of modern retail in India has

attracted attention in recent years. The retail sector, currently, is said to

contribute 12 per cent of Indias GDP and is expected to grow at a robust rate

of 45 per cent per annum by the end of 2008 (Associated Chambers of

Commerce and Industry of India, ASSOCHAM). This growth would expandthe size of the market to over Rs 14, 79,000 crore from its current level of Rs

5, 88,000 crore. The Indian retail market is estimated at Rs 9,300 billion and is

expected to grow at a compounded rate of 30 per cent over the next five

years (Retailers Association of India). Moreover, the retail sector employs over

7 per cent (21 million) of the national workforce, the second only to

agriculture. The retail density more than doubled between 1978 and 1996 and

the number of outlets per 1000 people at an all India level, increased from 6.5

in 2000 to 20.5 in 2005. For the urban sector alone, the shop density

increased from 12.6 per 1000 people in 1999 to 20.3 per 1000 people in 2005.

Until now, Indian retailers have very little bargaining power with

manufacturers, unlike in the case of retailers in developed countries.

With the growth of malls, multiplexes, and hypermarkets, the consumer is

being exposed to a new kind of shopping experience and services which is

quietly and surely redefining her expectations from shopping.

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A look at the statistics shows that the retail sector in India is worth USD 394

billion and is growing at the rate of 30% annually. Study has found that

retailing ($180 billion) contributes to 10 per cent of GDP and employs 7 per

cent (21 million) of the workforce. According to AT Kearney, India is given the

top ranking as the next foreign investment destination, as markets like China

become increasingly saturated. India is the 4th largest economy as regards

GDP (in PPP terms) and is expected to rank 3rd by 2010 just behind US and

China1. Over the past few years, the retail sales in India are hovering around

33-35% of GDP as compared to around 20% in the US. The table gives the

picture of India's retail trade as compared to the US and China.

The last few years witnessed immense growth by this sector, the key driversbeing changing consumer profile and demographics, increase in the number

of international brands available in the Indian market, economic implications

of the government increasing urbanization, credit availability, and

improvement in the infrastructure, increasing investments in technology and

real estate building a world class shopping environment for the consumers. In

order to keep pace with the increasing demand, there has been a hectic

activity in terms of entry of international labels, expansion plans, and focus ontechnology, operations and processes. This has lead to more complex

relationships involving suppliers, third party distributors and retailers, which

can be dealt with the help of an efficient supply chain. A proper supply chain

will help meet the competition head-on, manage stock availability; supplier

relations, new value-added services, cost cutting and most importantly reduce

the wastage levels in fresh produce.

FOREIGN DIRECT INVESTMENT (FDI) IN RETAIL

The recent clamor about opening up the retail sector to Foreign Direct

Investment (FDI) becomes a very sensitive issue, the most important factor

against FDI driven modern retailing is that it is labour displacing to the extent

that it can only expand by destroying the traditional retail sector. This is

because the primary task of government in India is still to provide livelihoods

and not create so called efficiencies of scale by creating redundancies. As per

present regulations, no FDI is permitted in retail trade in India. Allowing 49%

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Increased local sourcing.

Provide better value to end consumers.

Investments and improvement in the supply chains and warehousing.

Franchising opportunities for local entrepreneurs.

Growth of infrastructure.

Increased efficiency.

Cost reduction.

Implementation of IT in retail.

Stimulate infant industries and other supporting industries.

DRAWBACKS OF FDI IN RETAIL

Would give rise to cut-throat competition rather than promoting

incremental business.

Promoting cartels and creating monopoly.

Increase in the real estate prices.

Marginalize domestic entrepreneurs.

The financial strength of foreign players would displace the

unorganized players.

Absence of proper regulatory guidelines would induce unfair trade

practices like Predatory pricing.

Thus it can be said that this investment boom could change the face of Indianretail by offering quality goods at lower prices to the consumers. In addition to

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this, the presence of global retailers will further enhance exports from India as

they would also source Indi

goods for their international outlets in a big way leading to a remarkable

increase in Indian exports.

SWOT ANALYSISFOR RETAIL SECTOR

KEY SUCCESS FACTORS:

Price

Schemes

Customer Delight

Availability of all types/brands

34

198

99

7

15

22

30

FDI in retail

Years

Retail sales grew @ 19.6% CAGR for the next 4 yearsafter the introduction of FDI in 2002

FIGURE-1.7

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Quality of products

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STRENGTHS:

1. Price Lowest, full value

2. Schemes innovative, targeting new and potential customers

3. Availability availability of all items and maximum brands. This is because

of the different tastes and preferences of customers

4. Good Customer base and spreading word of mouth Brand of

the future.

WEAKNESS:

1. Non enthusiastic staff at stores.2. Initial Bad image due to hiccups at launch or long speculation.

3. Quality problems.

4. Communication problems within the organization

OPPORTUNITIES:

1. The other retailers like Vishal Mega mart have set up the trend for these

types of retail outlets in a place where just around 9% of population goes to

supermarkets

2. The market itself which is growing at very fast rate.

3. The expansion of the city at a fast pace and new centers like City Centre,

Ansal Plaza, Omaxe and numerous other malls coming up in the city.

THREATS:

1. The competitors are placed very well in the market and their

association with the customers.

2. The credit system provided by the Kirana and Departmental stores.

Therefore it becomes difficult for the customer to switch.

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STRENGTHS

Price Lowest, full value

Schemes innovative,targeting new and potential

customers

Availability availability of all

items and maximum brands.

This is because of the different

tastes and preferences of

customers Good Customer base and

spreading word of mouth

Brand of the future.

WEAKNESS

Non enthusiastic staff at stores.

Initial Bad image due to hiccups atlaunch or long speculation.

Quality problems.

Communication problems within

the organization

THREATS

The competitors are placed

very well in the market and

their association with the

customers.

The credit system provided by

the Kirana and Departmentalstores. Therefore it becomes

difficult for the customer to

switch.

OPPORTUNITIES The other retailers like Vishal Mega

mart have set up the trend for

these types of retail outlets in a

place where just around 9% of

population goes to supermarkets

The market itself which is growing

at very fast rate. The expansion of the city at fast

pace and new centers like magnum

mall, Ishaniya mall and numerous

other malls coming up in the city.

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Although the weakness quoted above can develop when the operations start,

but these have been stated above so that a proactive approach can be

adopted rather than a reactive approach. This will definitely help Reliance to

be excellent, both functionally as well as strategically.MAJOR COMPONENTS OF RETAIL SECTOR

The major components of the retail sector are: Food and Grocery, Fast

Moving Consumer Goods (FMCG), Consumer Durables, Apparel, Footwear

and leather, Watches, Jewellery, and Health and Beauty

The anatomy of the retail market has shown that the clothing and textiles

constitutes 39 per cent of the organised retail pie, followed by food and

grocery, which accounts for 11 Percent share of organised retail market.

Percentage Share Of Retail

Segments in Total

Retail Sector

39

1159

8

7

7

3

83

Clothing and Textiles

Food and Grocery

Consumer Durable

Footwear

Furniture and

Furnishing

Catering Services

Jewellery and Watches

Books, Music and

Gifts

Mobile Handsets

Others

However, according to the survey conducted by KPMG for Federation of

Indian Chamber of Commerce and Industry (FICCI), among these, the food

and grocery is expected to witness the fastest growth followed by clothing as

the second-fastest growing segment.

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CHANGING RETAIL FOOD SECTOR

1. Introduction

One of the major facets of globalization that is changing the food

marketing system, both domestically in India and internationally in other

countries, is the emergence of supermarkets and hypermarkets4 into the

retailing sector. In other words, the retail sector has become more globalize.

In India, the development of these modern retail outlets has seen tremendous

growth since the 1990s. The pull factors driving the rise of hypermarkets

coupled with the multi-nationalization of supermarket chains include, among

others, the relaxation of investment and trade restriction and hence the influxof Fids to the country, and increase in urbanization and increase of population

and thus market density. At the global front, the saturation of and increased

competition and profit squeeze in food markets in Europe and North America

have forced the hypermarkets companies to expand their territories to the

Asia-Pacific Region which are enjoying buoyant economic growth. The

presence of these supermarkets and hypermarkets brought direct impact onto

the local scene affecting traditional market outlets, consumers, suppliers,trade and employment. Traditional markets are losing ground, but are still

important outlets for fresh fruits and vegetables. This paper attempts to

elucidate the Indias changing food retail sector. The first part reviews the

development of the food retail sector with emphasis on the emergence of

supermarkets and hypermarkets. This is followed by the identification of the

driving forces that drive the development of these modern retails outlets. This

is then followed by the discussion on the impacts of the modern retail sector

on traditional retail outlets, agricultural production and food quality. The final

part summarizes the implications of these changes on the policy.

2. Development of the Food Retail Sector

The food retail sector is made up of wet markets, dry markets, night

markets, sundry/provision shops, convenience stores, discount stores,

specialty stores, supermarkets, department stores, and hypermarkets. Thesedifferent channels cater to different segments of the Indian population.

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Traditionally the provision shops made up the large segment of the food retail

sector. As time progress and due to various factors such as consumer

lifestyle, price disadvantage and limited working capital, the number of these

provision shops has been on the decline. Nevertheless, these segments still

contribute around 25% of all retail sales in India. The total numbers of retail

outlet (food/non-food) establishments in India increased from 126,385

establishments in 1999 to 139,960 in 2003 The retail outlets comprise

department stores, supermarkets, hypermarkets, convenience stores,

traditional stores such as independent grocers, etc. Food retail outlets made

up 75% of the total number of retail outlets in the country, the majority of

which were independent grocers. The structure of the retail sector has

changed with the increasing presence of hypermarket, supermarket and direct

selling. A survey on shopping habits in 1997 indicated that shoppers at

.2.1 Modern Retail Store

Modern retail stores such as supermarkets and hypermarkets are

mainly located in the majorurban centers and are continuing to grow in

numbers. The foreign-owned supermarkets isdominated by Giant, Tesco,

Makro, and Carrefour, while the local-owned is The Store, X-Tra, and Mydin.

Tables 3 and 4 show the profile of the supermarkets and their sales share,

respectively. The Government has recently introduced new guidelines on the

opening of new hypermarkets in an attempt to slow down their rapid growth

and to provide some level of protection for small retailers. More Indians are

shopping at these stores, particularly the affluent middle to upper income

consumers, because these large retail stores offer a wide range of

sophisticated food and beverage products. Their products are mainly made up

of high quality, branded goods sourced from both local and overseas

suppliers. These retailers are increasingly sourcing from local sources to

remain price competitive. For example, Tesco sources 95% of the products

from local suppliers.

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2.2 Convenience Store

Convenience stores are still a fairly new retail store concept in India.

They have around 11% of the total retail sales. These stores are mainly

located in major urban centers and along the North-South Highway to capturebusy customers who seek convenience. They concentrate on selling a small

range of convenience foods in medium to small sized packaging, usually

single serve sizes. Imported products form a small proportion of their product

lines. More convenience stores such as petrol station stores have been

opening, particularly in major urban center and along the North-South

Highway. These store concepts are still at the early stage of introduction and

most shoppers do not automatically turn to these stores for their shopping

needs. The limited ranges of products offered by these stores also act as a

barrier to attracting more customers to these stores. The main convenience

store is 7-Eleven although other smaller local convenience stores exist.

2.3 Traditional Store

The traditional stores sub-sector is large but highly fragmented. It

includes provision shops, grocery shops, wet markets, mini markets and othersimilar retail outlets, which sell a limited range of food and beverage products

on a small scale. They generally sell local products and brands with low to no

presence for imported products, depending on the target customers and the

location of the store. The majority of Indians continues to shop from traditional

stores and still continue to command a significant share of the retail market,

as these types of outlets are conveniently located near to their homes or

places of work. Most of these retailers continue to source their products from

local suppliers to remain price competitive.

2.4 Future Scenario

Supermarkets and hypermarkets will continue to perform strongly over

in the future. It is very unlikely that independent grocery stores will be able to

bridge the pricing advantage and convenient and comfortable shopping

environment that these two types of outlets offer. Strong economic conditions

will ensure that there is a continued increase in demand for niche and value-

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d. Food Safety Concern

Together with improvement in education level and increase in income,

Indian is more aware of nutritional issues, and shifts in shopping habits

towards healthy eating.

e. Infrastructure and Advances in Technology

The good infrastructure together with advances in technology in India

has made the rapid rise of supermarkets in India possible. Besides, nearly

90% of the household in India have refrigerators, and the number of homes

with microwaves ovens around 15-20% and growing.

4. Impacts on Traditional Outlets

Independent grocers such as provision shops and mini-markets

gradually closed. Many would attribute this to the emergence of modern

retailing with supermarkets and hypermarkets. In 2003, retailers with an

annual turnover of at least RM1.25 million accounted for the largest share of

total retail sales in India. This was not the case before 2000, when retailers

with less than RM1.25 million in retail turnover, collectively, accounted forslightly more than 50% of total

retail sales.

5. Impact on Agricultural Producers

The differences between the hypermarkets marketing channel

compares to the traditional one are as follows: (i) under the traditional system,

the farmers produce has to go through a number of intermediaries before itreaches the consumers. Whereas in the case of marketing through the

hypermarket, the farmers could either sell their produce direct to or through

the processors who then sell it to the hypermarkets, hence shortening the

distribution channel;

(ii) under the traditional channel, the price is generally discovered through

personal negotiation while the sale to the hypermarkets are normally

formalized in the form of contract; hence price is determined by the hyper-retailer who then passes it down to the producer;

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(iii) the transactions between the supplier and the hypermarkets are normally

done under contractual terms

(iv) producers or suppliers are subjected to rigorous quality standards as

specified in the contracts. There is no empirical study that has been carried to

evaluate the economic impacts of such arrangement on the producer as well

as on the marketing system in India. The preliminary observation on this

development suggests that invasion of MNCs into the food retailing sector has

redefined the supply chain management. It provides a new market outlet for

the producers

6. Consumers Preferences, Perception and Opinion of

Modern Retail Food Outlets

A total of 120 respondents were interviewed to obtain consumers

preferences, perception and opinion of modern food retail outlets such as

supermarkets and hypermarkets. Although the number of respondents is

small, nevertheless, it provides some insight on the consumers

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CHAPTER 2

COMPANY PROFILE

INTRODUCTION

PRODUCT RANGE

STORE BRAND

COMPETATIOR PROFILE OF SPENCER

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CHAPTER -2

COMPANY PROFILE

SPENCERS HYPER(JAIPUR)

INTRODUCTION

Pencers Retail is one of Indias fastest growing retail stores with

multiple formats and retailing food, apparel, fashion, electronSics, lifestyle

products, music and books. Established in 1996, Spencers has become a

popular destination for shoppers in India with supermarkets, hypermarkets

and dailies spread all over India. RPG Enterprises comprises of more than20 companies spanning across 7 business sectors, Retail, Technology,

Entertainment, Power, Transmission, Tyres and Specialties. It has a turnover

of US$ 3 billion.

Spencers has retail footage of over 1.3 million square feet and over 350

Spencers stores in 50 cities.

RPG enterprises

40,000 + Employees

4, 00,000 + Shareholders

R- RESPOND

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1995 RPG Cellular commences its operations.

1988 HMV (His Masters Voice) is acquired

1985 Saregama India (formerly the Gramophone of India Ltd) is

acquired

1983 RPG Life Sciences (formerly Searle India) is acquired

1979 Inception of RPG Enterprises by Mr. RP Goenka, a Rs. 700

million group, which comprises Phillips Carbon Black, Asian Cables,

Agarpara Jute and Murphy (India).

What is it that defines RPG Enterprises success and carries it onthrough generations?

The set of values and the visionary focus of its leaders, which forms

the distinct identity of RPG Enterprises, is what constitute its business

drivers.

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ITS VISION AND CORE VALUES ARE:

We shall be a leading Indian Group with a focus on market capitalization

through:

Leadership in profitability and revenue growth in our chosen businesses

Being a customer-centric organization and

Being the most exciting workplace.

People Orientation

Innovation & Entrepreneurship

Transparency & Integrity

Passion for Superior Performance

ITS QUALITY POLICY

Group is to achieve customer satisfaction, through building trust and

confidence in our customers by anticipating, understanding and meeting in

full, customers' needs with a helpful attitude and supportive behaviour and

providing them with consistent quality products and services.

We will attain this as a team with the full involvement of our suppliers,

employees and partners."

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MIAN MOTOS OF THE COMPANY

S.T.U.C= Show that you care

SPENCER'S OPENS FIRST OUTLET IN MUMBAI

Spencers Retail today is the largest supermarket chain in India.

At Spencers there are extensive range of products and durables,

designed to satisfy all shopping needs. Today SPENCERS has 350

stores across 50 cities covering a retail trading area of half a million

square feet and an astonishing 3 million customers a month. No

wonder, after more than 100 years, people continue to trust the name

Spencers. And this trust has been the outcome of a consistent high-

quality service.

In 1863, since we first opened our gates to the Indian consumer, But

our Endeavour, by which we still stand firm, has always been to provide

a pleasant and delightful shopping experience for you, our valued

customer. As RPG, when we took over Spencers, we pioneered the

retail revolution in India, by introducing the concept of specialty stores

like Food World, Health and Glow and Music World. In 2000,

SPENCERS introduced the Indian consumer to the first ever

Hypermarket.

SPENCERS is having five type of Outlet for different need of different

type of customers.

SPENCERS FRESH

SPENCERS EXPRESS

SPENCRES DAILY

SPENCERS SUPER

SPENCERS HYPER

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SPENCERS WAY

Organized modern retailing which encompasses the four key

ingredients

Price

Product

Service

Ambience

WHAT WE SELL

We believe in presenting you with a unique experience that

compliments your shopping. An experience that can only be delivered

through valuing your time and making you feel special. These are the

values that we have internalized over the last 100 years to deliver what

we call,' Shopping, the Spencer's Way.'

Our endless choice of foods is what makes shopping at Spencer's sospecial. Exotic fruits & vegetables, sauces & supplies for your favourite

international cuisines, and imported foods. Added to these are a wide

range of diet food, organic food and specialty cuisines, giving you the

perfect reason to indulge your taste buds at Spencer's.

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OUR PRODUCT PROFILE INCLUDES THE

FOLLOWING:

Fresh Fruits & Vegetable

Groceries, Grains and Cereals

Baked Chilled and Frozen Foods

Personal Care and Baby Care Products

Home Care Products

Office and Home Stationery

Apparel and Fashion Accessories

Electrical and Electronics

SPENCERS RETAIL SPENCERS

VERTICAL

SPENCERS FRESH

SPENCERS DAILY BOOK &

BEYOND

SPENCERS X-PRESS MUSIC

WORLD

SPENCERS SUPER CELLUCON

SPENCERS HYPER

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PG RETAIL VISION

To be a customer focused differentiated, foods intensive retail

company with clusters of destination and convenience stores.

(Hyper, Super, Dailies)

To establish Spencers express & mass proliferate.

To set up Retail chains in focused verticals like music, books, mobility

solutions, apparel, footwear, luxury brands and life style brands where

domain knowledge exists or is acquired through partnerships.

To achieve pan India presence with 2000 store through current

verticals by 2009 & 5000 stores by 2011.

SPENCERS RETAIL GROWTH

Indias largest Super market chain

350 Stores today and a new store every 2 days.

Hyper and super alone will be 150+ by 2011

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SPENCERS RETAIL- FOOD VERTICAL FORMATS

Area inSq.ft

Assortment Mix

Spencer

s Daily

3000-5000 Fruits & vegetables, Beverages, staples, ready to eat,

processed foods, takeaways, bakery,

home & personal care, fish,meat,

Spencer

s X-

Press

1400-1800 Store next door with essential SKUS form above

Spencer

s Super

10000-

18000

Full offering of dailys + home, brown goods, select

apparels

Spencer

s Hyper

30000-

75000

Full offering of supers + full range HWP & Apparels,

white goods, electronics & electrical

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BRAND STRATEGY FOR SPENCERS RETAIL

Customers focused, differentiated, foods intensive retail

company with cluster of destination and convenience store

Brand strategy for Spencers retail has been mapped with strong

focus on unique brand differentiators

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FIGURE-2.2

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Retailgrowth

Favourabledemographics

Malls boom

Risingconsumers

FIGURE-2.3

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DIFFERENTIATION IS THE MANTRA

PRODUCT RANGESPENCERS HYPER (JAIPUR)

The company launched its first hyper store in Jaipur and plans to

expand in the city with six more stores - a super format in Vaishali Nagar, a daily

format in Bapu Nagar and four express formats in Bani Park, Jhotwara Road,

Adarsh Nagar, and Mansarovar each.

'There are 15 Spencer's stores due to be launched in Jaipur by the end of 2007',

said J H Mehta, president & CEO of Spencer's Retail.Mehta said that Spencer's hyper store in the city is spread across an area

of 20,000 sq.ft 'this will be the first organized retail format in Jaipur', he claimed

Spencer's hyper store offers almost 25,000 products under one roof. From

groceries, fruits and vegetables to personal care products, toys and appliances,

shoppers can choose from a plethora of merchandise. The store also has a

bakery, and food court.

Sumantra Banerjee, president & CEO of RPG Retail said, 'We aredelighted to bring an international shopping experience to the discerning

customers of Jaipur. Spencer's addresses the contemporary retail aspirations of

Jaipur, a city preserving its old-world charm.

RPG Retail has so far opened over 150 Spencer's outlets with 9

hypermarkets, 5 supermarkets, 3 fresh, 17 express and 116 dailies across 30

cities in the country. Spencer's currently has a national consumer base of over

35million people.

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FIGURE-2.4

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IN SPENCERS HYPER MAIN SECTION ARE

1. FMCG

2. F&V3. STAPLES

4. HWP

5. Garments

6. Electronics & Electrical

FMCG

THERE ARE NINE MAJOR CATEGORIES IN FMCG-:

Ready food

Instant food

Chilli & frozen

Household needs

Beauty care Toiletries

Beverages & severages

Fish & meat

Bakery & food serving

THERE ARE TWO TYPES OF SUBCATEGORIES-:

Food

Nonfood

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ELECTRONICS & ELECTRICAL

All electronics and electrical items like Iron, Owen, T.V., Freeze,

Washing Machine, Mixer Grinder, Tube, Bulb etc.

STORE BRAND

Spencers to further its leading market position has developed its own

brand called Spencers Value which covers most product categories from

FMCG, HWP, Electronics, Staples and several other product categories.

In FMCG category they have Spencers value jam, Spencers Dipper,

and Spencers phenyl. IN HWP they have Spencers value double bed sheet,

Spencers value kadai, Spencers value Tawa, Spencers value wet Tissues.

In HWP Section if we talk about Dinner set category they have their home

brand called RAK dinner set which come under top ten brand of Spencers

Hyper.With all the above, and an unparallel customer service focus, Spencers

home products have good image in consumers mind.

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FIGURE-2.5

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HOW THE FOUR PS SHOULD BE THERE FOR SPENCER TO

OPERATE BETTER IN THE MARKET:

PRICE EQUIVALENT TO THE MARKET

PROMOTION STRONG AND AGGRESSIVE

PLACE EASILY ACCESSIBLE AND NEAR TO

RESIDENTIAL AREAS

PRODUCTS ALL VARIETIES AND GOOD QUALITY

These are the 4 Ps which should be as explained above when it launches

itself into the market and for the better and fast growth prospects of

SPENCER HYPER (JAIPUR).

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COMPETATIOR PROFILE OF SPENCER

RELIANCE

RELIANCE GROUP

The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is

India's largest private sector enterprise, with businesses in the energy and

materials value chain. Group's annual revenues are in excess of USD 27

billion. The flagship company, Reliance Industries Limited, is a Fortune Global500 company and is the largest private sector company in India. Backward

vertical integration has been the cornerstone of the evolution and growth of

Reliance. Starting with textiles in the late seventies, Reliance pursued a

strategy of backward vertical integration - in polyester, fibre intermediates,

plastics, petrochemicals, petroleum refining and oil and gas exploration and

production to be fully integrated along the materials and energy value chain.

The Group's activities span exploration and production of oil and gas,petroleum refining and marketing, petrochemicals (polyester, fibre

intermediates, plastics and chemicals), textiles and retail. Reliance enjoys

global leadership in its businesses, The Group exports products in excess of

USD 15 billion to more than 100 countries in the world. There are more than

25,000 employees on the rolls of Group Companies. Major Group Companies

are Reliance Industries Limited (including main subsidiaries Reliance

Petroleum Limited and Reliance Retail Limited) and Reliance Industrial

Infrastructure Limited.

RELIANCE FRESH

APKA FRESH APKA PADAOS ME

Indias Fortune 500 private sector giant, Reliance Industries Ltd, has, in

fact, been first off the blocks by launching its first Reliance Fresh outlets in

Hyderabad,

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Reliance fresh is the retail chain division of reliance industries of India

which is headed by mukesh ambani. Reliance has entered into this segment

by opening new retail stores into almost every metropolitan and regional area

of India. Reliance plans to invest rs 25000 crores in the next 4 years in their

retail division and plans to begin retail stores in 784 cities across the country.

The reliance fresh supermarket chain is rils rs25,000 crore venture and it

plans to add more stores across different g, and eventually have a pan-India

footprint by year 2011. The super marts will sell fresh fruits and vegetables,

staples, groceries, fresh juice bars and dairy products and also will sport a

separate enclosure and supply-chain for non-vegetarian products. Besides,

the stores would provide direct employment to 5lakh young Indians and

indirect job opportunities to a million people, according to the company. The

company also has plans to train students and housewives in customer care

and quality services for part-time jobs.

RELIANCE FRESH IN MYSORE

In Mysore their are 4 outlets of reliance fresh:

1. NAZARBAD

2. N.R. MOHALLA

3. K.D.Road

4. CHAMARAJA DOUBLE ROAD

On an average turn over is 50,000rs in Mysore, where as compare to

other cities it is too low. Their main aim is to provide good quality products in

lower price & customer service & customer satisfaction. According to reliance

fresh store manager they were satisfying 75% of customer expectations.

Reliance Retail Ltd. Launched its much awaited format and India's

largest hypermarket under the brand name 'Reliance Mart' at Iskon Mall, SG

Highway, Ahemdabad on August 15. After the successful launch of the

Supermarket format 'Reliance Fresh' and the consumer electronics concept

mega store 'Reliance Digital', the hypermarket is the third retail format

launched by Reliance Retail.

Spread across 165,000 square feet of shopping area, RelianceMart will

provide the shoppers a never before experienced shopping delight. The

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hypermarket will carry a range of over 95,000 products catering to the entire

family. Shoppers will have the option to choose from the wide array of

products in every category ranging from fresh produce, Food & grocery, home

care products, apparel and accessories, non - food FMCH products,

consumer durables and IT, Automotive

Accessories, lifestyle Product, Footwear and much more. Commenting

on the launch of this new product, Shri. Mukesh Ambani, Chairman and

Managing Director, Reliance Industries Ltd. said, 'Organised Retail has

potential to trigger socio-economic transformation on an unprecedented scale

in our country and will bring about enormous spin-off benefits to the Indian

economy and its various constituents'. The launch of Reliance Mart is yet

another step by Reliance Retail towards providing an nternational shopping

experience to all our customers at unmatched affordability, guaranteed quality

and choice of products and services. RelianceMart marks the achievement of

another milestone in our effort to unleash a retail revolution in India.' Shri

Ambani added. RelianceMart offers some unique services to the shoppers like

tailoring, shoe repair, watch repair, a photo shop, gift services and laundry

services all within the store. The store also houses its own

Fresh bakery serving 'hot off the oven' bread and bread products

through out the day and local savories, an ice-cream train for the kids, a

chakki, ready-made batter and loose tea and pickle for housewives

RelianceMart will also sell fine jewelry and fashion jewelry as a part of its

Lifestyle section. RelianceMart will also house a health and wellness store

providing pharmaceutical drugs and other wellness products. For the

shopper's convenience, the store providing pharmaceutical drugs and other

wellness products. For the shopper's convenience, the store has a cafeteria

providing quality food and beverages for ready consumption, an ATM machine

and a consumer service / membership desk to provide the customer a truly

international shopping experience. The hypermarket also launched a host of

Reliance's own brands in select categories with superior quality and

affordable prices like 'First Class', 'Network, Netplay, Team Spirit' and Sparsh

in Men's and Women's Formal / Casual and Ethnic wear, 'DNM- X' in the

jeans category for men and women, 'Panda' for kids clothing and ' Grip' in the

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luggage section. The footwear category will carry 'Zig' in formal wear. 'Hi

Attitude' for semi -formal, 'Tosco' as party wear and 'Monza' for the sports

V MARTEach single step is a new step, towards life, towards future. A story that

started with a small confident step is today exploring and Running the retail

revolution in India. Way back in 2003, V Mart opened its first store at Law

Garden, Ahmedabad and today boast of its presence in almost all the major

cities across India. With chain of 26 outlets in 22 cities V Mart is having pan

India presence, V Mart covers over 3,50,000 sq.ft. of area and delights 60,000

satisfied shoppers each day.V Mart is a multi-branded family store that workson the Value for money retail concept thus providing the masses with the

best quality at cheaper price.

The vast product range caters to every age and all the family needs

with Apparels for men, women & kids, Food & Home products, Health &

Wellness, Lifestyle Products, Footwear and Travel Accessories for men,

women and kids. The Sabse Sasta, Sabse Achcha Story. V Mart has

positioned itself in the Value for Money category thus providing customers

with the most economic and best of quality products. The Sabse Sasta, Sabse

Achcha theme says every thing about V Mart, the philosophy and the values.

One can find the best of products, quality, latest fashion and every thing that

keeps customers healthy and happy and of course the vast range to choose

from. company hopes to expand rapidly with similar format stores that offer a

fine balance between style and price retailing. V Mart targets to expand into a

100 outlets by March 2010.

Wal-Mart

World's largest discount retailer.

Headquarters:

Bentonville, AR 72716

Employees: 2,200,000+

CEO: Lee Scott

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When you think of Wal-Mart, think big! It's the world's biggest retailer

and also the biggest employer with over 2 million full- and part-time workers

worldwide -- 1.4 million in the U.S. It operates Wal-Mart stores along with

Sam's Club membership warehouses in the U.S. and 12 foreign countries.

Known for its low pricing and wide selection of goods, Wal-Mart has become

the undisputed king of retailing. It is also a feared giant for its sheer size and

pricing power.

As of May 2008, Wal-Mart had the following store count:

Retail Units Worldwide 7,343

US Retail Units 4,195

Wal-Mart Stores 937

Super centers 2,527

Sam's Clubs 593

Neighborhood Market 138

International Retail Units 3,148

Wal-Mart Discount Stores average 107,000 square feet, employ an

average of 225 associates and offer 120,000 items.Wal-Mart Super centers

average 185,000 square feet, employ 350 or more associates on average and

offer 142,000different items.Each Sam's Club employs an average of 160 to

175 associates and offers approximately 5,500 different products. A

membership fee ($35 annually for businesses/$40 annually for individuals) is

required to shop at Sam's Club. There are 584 Sam's Club locations.

The company also operates Neighborhood Markets. Generally, they

are located in markets with Wal-Mart Super centers, supplementing a strong

food distribution network and providing added convenience while maintaining

Wal-Mart's Every Day Low Prices. First opened in 1998, the now more than

120 Neighborhood Markets, averaging 4