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Acknowledgement
A task or project cannot be completed alone. It requires the effort of many
individuals. I take this opportunity to thank all those who helped me
complete this project.
I express my sincere gratitude to Prof. C.S.Patnaik for giving us the
opportunity to undergo this project. I further thank his for lending a helpinghand when it came to solving my problems related to the project. This
project would not have been possible without his valuable time and
support.
I also thank IFIM Business Schoolfor an opportunity to undertake a Soft
skills project at the start of our !A course which helped us to understand
deeply for those topics which are untouched.
This project is an attempt to talk about the Scenario of "etailing and its
#perations in India.
Any suggestions to improve are always welcome.
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Executive Summar
$emographics continue to show a positive report to spur retailing growth.
%onsumers aged &'()* years is emerging as the fastest growing consumer
group and the mean age of Indians is now pegged at &+, a mean age that
reinforces spending across all the retailing channels of grocery, non(grocery
and non(store.
The government stance of protecting local retailers and prohibiting -''
foreign direct investment in retailing continued in &''*, restraining
international retailers/ entry. 0owever, there was gradual economic reform,
giving way to easier and faster franchising agreements as well as the
loosening of 1onal regulations on retail expansion, thus stimulating retailing.
2on(store retailing is expected to continue its fast(paced growth from a
miniscule base. Across all channels, growth in retailing is expected to be
boosted heightened competition during the forecast period due to the growing.
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Introduction
India3s retail market which is seen as T04 5#6$I24 by global players has grabbed
attention of the most developed nations. This is no wonder to the one who knows that
the total Indian retail market is 7S 89*'bn. :-;, '',''' crore I2" approx.< of which
organi1ed retailing is only around 9 percent i.e. 7S 8=bn :9;,''' crore I2" approx"etailing includes all activities involved in selling goods or services directly to final
consumers for personal, non(business use. A retailer or retail store is any business
enterprise whose sales volume comes primarily from retailing.? "etail is India/s largest
industry, accounting for over -' per cent of the country/s 5$@ and around eight per cent
of the employment. "etail industry in India is at the crossroads. It has emerged as one
of the most dynamic and fast paced industries with several players entering the market.
The presence of -*million kirana stores brings into light the very fact that the Indian
retail industry is highly fragmented unorgani1ed. "etailing in India is gradually inching
its way toward becoming the next boom industry, organi1ed retailing in particular. The
whole concept of shopping has altered in terms of format and consumer buying
behavior, ushering in a revolution in shopping in India. odern retail has entered Indiaas seen in sprawling shopping centers, multi(storied malls and huge complexes offer
shopping, entertainment and food all under one roof.
The future of Indian retailing may even witness the concept of &) hour retailing. 4ven
though this concept has been in existence in few retail segments like pharmaceuticals
and fuel, it still remains to be a challenge for other segments like food and groceries,
apparel etc to adopt this trend.
Although the organi1ed retailing in India is coming up in a big way, it cannot simply
ignore the competition from the conventional stores because of various factors like
reach, extending credit facility and other intangible factors like the human touch which
are provided only by the conventional stores.
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The urban retail market has been embracing various new formats and the malls turned
out to be the trend setters by promising the concept of shoppertainment. The trends in
the rural market also have been changing from the old 0aats and elas to the rural
malls like B%haupal Sagar3 launched by IT%, $% Shriram 5roups one(stop shopping
destination called B0ariyali !a1aar3, 5odrej groups agri store BAdhar3 etc.
Introduction to !"eration
Management
#perations management is an area of business that is concerned with the production of
good quality goods and services, and involves the responsibility of ensuring
that business operationsare efficientand effective. It is the management of resources,
the distribution of goods and services to customers.
A@I%S The Association for #perations anagementalso defines operations
management as Cthe field of study that focuses on the effectively planning, scheduling,
use, and control of a manufacturing or service organi1ation through the study of
concepts fromdesign engineering,industrial engineering, management informationsystems, quality management, production management, inventory
management, accounting, and other functions as they affect the organi1ationC.
Additionally, The #perations anagement !ody of Dnowledge :#!#D< Eramework
defines the scope of operations management and the activities and techniques that are
a part of the operations management profession.
#perations also refer to the production of goods and services, the set of value(added
activities that transform inputs into many outputs. Eundamentally, these value(adding
creative activities should be aligned with market opportunity for optimal enterprise
performance.
http://en.wikipedia.org/wiki/Business_operationshttp://en.wikipedia.org/wiki/Efficienthttp://en.wikipedia.org/wiki/Effectivehttp://en.wikipedia.org/wiki/APICS_The_Association_for_Operations_Managementhttp://en.wikipedia.org/wiki/Design_engineeringhttp://en.wikipedia.org/wiki/Industrial_engineeringhttp://en.wikipedia.org/wiki/Management_information_systemshttp://en.wikipedia.org/wiki/Management_information_systemshttp://en.wikipedia.org/wiki/Quality_managementhttp://en.wikipedia.org/wiki/Production_managementhttp://en.wikipedia.org/wiki/Inventory_managementhttp://en.wikipedia.org/wiki/Inventory_managementhttp://en.wikipedia.org/wiki/Accountinghttp://en.wikipedia.org/wiki/Business_operationshttp://en.wikipedia.org/wiki/Efficienthttp://en.wikipedia.org/wiki/Effectivehttp://en.wikipedia.org/wiki/APICS_The_Association_for_Operations_Managementhttp://en.wikipedia.org/wiki/Design_engineeringhttp://en.wikipedia.org/wiki/Industrial_engineeringhttp://en.wikipedia.org/wiki/Management_information_systemshttp://en.wikipedia.org/wiki/Management_information_systemshttp://en.wikipedia.org/wiki/Quality_managementhttp://en.wikipedia.org/wiki/Production_managementhttp://en.wikipedia.org/wiki/Inventory_managementhttp://en.wikipedia.org/wiki/Inventory_managementhttp://en.wikipedia.org/wiki/Accounting -
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!"erations as a #ransformation Process
Inputs Transformation #utput
#perations management is about the way organi1ations produce goods and services.
4verything you wear, eat, sit on, use, read or knock about on the sports field comes to
you courtesy of the operations managers who organi1ed its production. 4very book you
borrow from the library, every treatment you receive at the hospital, every service you
expect in the shops and every lecture you attend at university all have been produced.
This definition reflects the essential nature of #perations anagementF it is a central
activity in organi1ing things. Another way of looking at an operation is to consider it as a
transformation process.
#perations are a transformation processF they convert a set of resources :I2@7TS< into
services and goods :#7T@7TS
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Information
A tourist office gathers and provides information to holiday makers, and assists in
advising on places to stay or visit.
Customers
At an airport, you are one of the many resources being processed. The operation
you are involved in is about processing your ticket and baggage, moving from
ticket desk through the customs and duty(free areas, to deliver you to the
awaiting plane.
Extending the "rocess...
If we add a few more parts to the transformation process, we can see the key elements
that operations managers need to consider. #perations is about designing services,
products and delivery systemsF
-. anaging and controlling the operations system.
&. Einding ways to improve operations.
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!"erations Management is all a%out "roviding customers with "roducts and
services.
Gou survive by giving customers with what they want
4very @roduct or Service is really a bundle of different attributes.
@roduct, place, price, performance, quality, timing, service, etc.
%ustomers are looking for a bundle of characteristics
Total bundle provides the level of value customers deem appropriate
!uying products with the attributes they want at the lowest price possible
Attributes
@rice
Huality
Image
@erformance
Safety
@lace distribution
Time delivery, availability
0ow do you decide which product to produceJ
0ow do you find out what attributes your product should haveJ
0ow do you get those attributes into your productJ
Khat processJ
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Khat resources do you needJ
Khere do you get those resourcesJ
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Exam"les of !"erations &ecisions
#perations managers must make decisions on three levels
Strategic
Tactical
#perating
S#$A#E'IC &ECISI!(S)
6onger term decisions
7sually made at the senior management level
@roduct and service strategy
%ompetitive priorities
@ositioning strategy
6ocation, capacity
6ong term partnerships
Huality system and overall approach to quality
#AC#ICA* &ECISI!(S
edium term decisions
Tactical in nature
ade by middle and senior managers
@rocess design
Technology management
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Lob design and workforce management
%apacity management
Eacility location
Eacility layout
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!PE$A#I(' &ECISI!(S
Shorter term decisions
ade at middle and lower management levels
Eorecasting
aterials management
Inventory management
Aggregate planning
aster production scheduling
@roduction control
Scheduling
+hat is $etail,
The word /retail/ is derived from the Erench word /retailer/ meaning /to cut a piece off/ or
/to break bulk/. In simple terms it involves activities whereby product or services are sold
to final consumers in small quantities. Although retailing in its various formats has been
around our country for many decades, it has been confined for along time to family
owned corner shops.
4nglishmen are great soccer enthusiasts, and they strongly think that one should never
give Indians a corner. It stems from the belief that, if you give an Indian a corner he
would end up setting a shop. That is how great Indians retail management skill is
considered.
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#he Facts
"etailing in more developed countries is big business and better organi1ed that what it
is in India. "eport published by cDinsey M %o. in partnership with %onfederation of
Indian Industry :%II< states that the global retail business is worth a staggering 7S 8 +
trillion. The ratio of organi1ed retailing to unorgani1ed in 7S is around =' to &', in
4urope it is +' to 9', while in Asia it comes to around &' to ='.
In India the scenario is quiet unique, organi1ed retailing accounts for a mere * of the
total retail sector. Although there are around * million retail stores in India, N' of these
have a floor space area of *'' sq.ft. or less. The emergence of organi1ed retailing in
India is a recent phenomenon and is concentrated in the top &' urban towns and cities.
#he $eason
This emergence of organi1ed retailing has been due to the demographic and
psychographic changes taking place in the life of urban consumers.
5rowing number of nuclear families, working women, greater work pressure, changing
values and 6ifestyles, increased commuting time, influence of western way of life etc.
have meant that the needs and wants of consumers have shifted from just being %ost
and "elationship drive to !rand and 4xperience driven, while the Oalue element still
dominating the buying decisions.
'lo%al Scenario"etail stores constitute &' of 7S 5$@ M are the 9 rd largest employer segment in
7SA.
%hina on the other hand has attracted several global retailers in recent times. "etail
sector employs + of the population in %hina. ajor retailers like Kal(art M %arrefour
have already entered the %hinese market. In the year &''9, Kal(art M %arrefour had
sales of 7S 8 +'.) %rore M 7S 8 -;' %rore respectively.
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The global retail industry has traveled a long way from a small beginning to an industry
where the world wide retail sales is valued at 8 + x -' * %rore. The top &'' retailers
alone accounts for 9' of the worldwide demand. "etail turnover in the 47 is
approximately 4uros &,'',''' %rore and the sector average growth is showing an
upward pattern. The Asian economies :excluding Lapan< are expected to grow at ;
consistently till &''*(';.
#n the global "etail stage, little has remained same over the last decade. #ne of the
few similarities with today is that Kal(art was ranked the top retailer in the world then
M it still holds that distinction. #ther than Kal(art/s dominance, there/s a little about
today/s environment that looks like the mid(-NN's. The global economy has changed,
consumer demand has shifted M retailers/ operating systems today are infused with far
more technology than was the case six years ago.
Scenario of $etailing in India
"etailing is the most active and attractive sector of last decade. Khile the retailing
industry itself has been present since ages in our country, it is only the recent past that it
has witnessed so much dynamism. The emergence of retailing in India has more to do
with the increased purchasing power of buyers, especially post(liberali1ation, increase
in product variety, and increase in economies of scale, with the aid of modern supply
and distributions solution.
Indian retailing today is at an interesting crossroads. The retail sales are at the highest
point in history and new technologies are improving retail productivity. though there are
many opportunities to start a new retail business, retailers are facing numerouschallenges.
-E C/A**E('ES)
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-< 6#%ATI#2P
0$ight Place1 $ight choice0
6ocation is the most important ingredient for any business that relies on customers, and
is typically the prime consideration in a customer3s store choice. 6ocations decisions are
harder to change because retailers have to either make sustainable investments to buy
and develop real estate or commit to long term lease with developers. Khen formulating
decision about where to locate, the retailer must refer to the strategic planP
Q Investigate alternative trading areas.
Q $etermine the type of desirable store locationQ 4valuate alternative specific store sites
&< 4"%0A2$IS4P
The primary goal of the most retailers is to sell the right kind of merchandise and
nothing is more central to the strategic thrust of the retailing firm. erchandising
consists of activities involved in acquiring particular goods and services and making
them available at a place, time and quantity that enable the retailer to reach its goals.
erchandising is perhaps, the most important function for any retail organi1ation, as it
decides what finally goes on shelf of the store.
9< @"I%I25P
@ricing is a crucial strategic variable due to its direct relationship with a firm/s goal and
its interaction with other retailing elements. The importance of pricing decisions is
growing because today/s customers are looking for good value when they buy
merchandise and services. @rice is the easiest and quickest variable to change.
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)< TA"54T A7$I42%4P
C%onsumer the prime moverC
C%onsumer @ullC, however, seems to be the most important driving factor behind the
sustenance of the industry. The purchasing power of the customers has increased to a
great extent, with the influencing the retail industry to a great extent, a variety of other
factors also seem to fuel the retailing boom.
*< S%A64 #E #@4"ATI#2SP
Scale of operations includes all the supply chain activities, which are carried out in the
business. It is one of the challenges that the Indian retailers are facing. The cost of
business operations is very high in India.
P$ESE(# I(&IA( SCE(A$I!
Q 7norgani1ed marketP "s. *=9,''' crores
Q #rgani1ed marketP "s.*, ''' croresQ *R growth in organi1ed retailing between &'''(&''*
Q #ver ),''' new modern #utlets in the last 9 years
Q #ver *,''',''' sq. ft. of mall space under development
Q The top 9 modern retailers control over +*',''' sq. ft. of retai l space
Q #ver )'',''' shoppers walk through their doors every week
Q 5rowth in organi1ed retailing on par with expectations and projections of the last *
GearsP on course to touch "s. 9*,''' crores :7S8 + !illion< or more by &''*(';
Ma2or "laers
( Eood and grocery
( Eashion
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consumers are rapidly evolving and accepting modern formats overwhelmingly. "etail
Space is no more a constraint for growth. India is on the radar of 5lobal "etailers and
suppliers brands worldwide are willing to partner with retailers here. Eurther, large
Indian corporate groups like Tata, "eliance, "aheja, IT%, !ombay $yeing, urugappa
M @iramal 5roups etc and also foreign investors and private equity players are firming
up plans to identify investment opportunities in the Indian retail sector. The quantum of
investments is likely to skyrocket as the inherent attractiveness of the segment lures
more and more investors to earn large profits. Investments into the sector are estimated
at I2" &''' ( &*'' %rore in the next &(9 years, and over I2" &',''' %rore by end of
&'-'.
Eew of India/s top retailers areP
-. Big Ba3aar4Pantaloons)!ig !a1aar, a division of @antaloon "etail :India< 6td is
already India/s biggest retailer. In the year &''9('), it had revenue of "s ;*=.9- crores
M by &'-'F it is targeting revenue of "s =,='' %rore.
5. Food +orld)Eood Korld in India is an alliance between the "@5 group in India with
$airy Earm International of the Lardine atheson 5roup..
6. A"na Ba3aar)It is a "s -)'(crore consumer co(operative society with a customerbase of over -& lakh, plans to cater to an upwardly mobile urban population.
7. Margin Free)It is a Derala based discount store, which is uniformly spread across
&)' argin Eree franchisees in Derala, Tamil 2adu and Darnataka.
Kholesale trading is another area, which has potential for rapid growth. 5erman giant
etro A5 and South African Shoprite 0oldings have already made headway in this
segment by setting up stores selling merchandise on a wholesale basis in !angalore
and umbai respectively. These new(format cash(and(carry stores attract large
volumes from a si1eable number of retailers who do not have to maintain relationships
with multiple suppliers for all their needs.
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I(&IA( $E#AI* IS M!8I(' I(#! SEC!(& 'EA$
9: FI$S# 'EA$)
:%reate awareness@eople? is that aspect of the marketing mix which adds tangibility to the service of
creating an experience
th P) P$!CESSES
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Dth P ) P/SICA* E8I&E(CE
anaging Appearance of the building M 6ocation
aintaining Temperature , usic, 6ighting and Eragrance inside the store
Availability of services like @rams, Kheel %hair, Oalet @arking etc
Stylish Stocking of erchandise
C/A('ES I( $E#AI*I('
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Conclusion
Eor a start, these retailers need to invest much more in capturing more specific market.Intelligence as well as almost real(time customer purchase behavior information. The
retailers also need to make substantial investment in understandingacquiring some
advanced expertise in developing more accurate and scientific demand forecasting
models. "e(engineering of product sourcing philosophies(aligned more towards
collaborative planning and replenishment should then be next on their agenda. The
message, therefore for the existing small and medium independent retailers is to closely
examine what changes are taking place in their immediate vicinity, and analy1e Khether
their current market offers a potential redevelopment of the area into a more modern
multi(option destination. If it does, and most commercial areas in India do have this
potential, it would be very useful to form a consortium of other such small retailers in
that vicinity and take a pro(active approach to pool in resources and improve the overall
infrastructure. The next effort should be to encourage retailers to make some
investments in improving the interiors of their respective establishments to make
shopping an enjoyable experience for the customer.
As the retail marketplace changes shape and competition increases, the potential for
improving retail productivity and cutting costs is likely to decrease. Therefore, it will
become important for retailers to secure a distinctive position in the marketplace based
on value, relationships or experience.
$ $ain check
E Esta%lishment
# #rade
A Affiliated Chains
I Investment !""t
* *ow Price 'uarant
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