CHAPTER 1: INTRODUCTION

Organized retail today accounts for less than 5% of India’s retail business, but is bound to

grow, forcing choices on the government, and upon itself. China’s experience and those

of other Asian countries that recently modernized their retail sector can provide valuable

insight on what choices make sense. Serving local consumer tastes in China with over

1.3 billion people poses a similar challenge in India, with its 1.15 billion people. Chinese

regulations, at both the central and local levels, had created confusion and difficulty for

retailers trying to open new businesses or acquire established ones.

India’s regulatory patchwork frequently impedes the efficient flow of products and needs

to be coordinated across states and local jurisdictions. Finally, the Chinese transportation

infrastructure varies across the country’s vast expanse. They are modern and highly

efficient, especially in urban and coastal areas, and organized retail is most successful

here. India needs better transportation and cold-chain supply-chain infrastructure across

the country.

Loosening foreign entry into the retail sector should be based on a strategic quid pro quo:

the profit potential of India’s large retail market for retail operations knowhow and

investment that are critical to modernizing and improving the efficiency of Indian retail.

Taiwan opened up its retail sector to foreigners in the 1980s without creating a regulatory

environment for the emergence of a strong retail sector. Predictably, foreign companies

dominate Taiwanese retail today. In contrast, Japan’s distribution networks and regulatory

environment have been inhospitable to foreign retailers and the Japanese pay today for

this absence of competition with some of the highest retail prices in the world.

South Korea and China managed the process of foreign entry more gradually, initially

encouraging joint ventures between domestic and foreign retailers before looser

regulations on FDI in retail were brought in. Both countries now have the benefit of a

vibrant domestic retail sector, and the competition between domestic and foreign retailers

has yielded low prices and good service.

India is already following China’s example, initially encouraging joint ventures between

domestic and foreign retailers before allowing 100% FDI in organized multi-brand retail.

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This gradual opening up should preserve a vibrant domestic retail sector in the long term,

and provide India with a solid foundation of domestic expertise and human capital. For

long-term success, organized retailers should pursue a few key strategies.

First, build capabilities and backend logistics infrastructure. Domestic firms should

partner with established foreign firms to capitalize on combining foreign retail knowhow

with domestic market knowledge. This is happening already. UK-based Tesco is working

with the Tatas; US-based Wal-Mart with Bharti, etc. Over time, these joint ventures will

dissolve but both the domestic and foreign firms will have the capabilities to establish

successful retail businesses independently.

While the government is rapidly investing in transportation infrastructure, organized

retailers should either invest in their own supply-chain infrastructure or promote

intermediaries that develop and invest in cutting-edge supply-chain infrastructure.

Second, learn local and regional preferences in developing the merchandising mix. ‘One

size fits all’ is not a winning strategy, as Subhiksha, till recently one of India’s retail

success stories, learnt the hard way through bankruptcy when it expanded rapidly into the

north from its south Indian roots with little local market knowledge. Merchandising

correctly in a diverse country such as India takes time, trial and error, and is critical for

success. Third, to deal with the kirana challenge, organized retailers should actively

engage customers and local political leaders, to demonstrate the value of their retail

enterprise, especially in the context of political challenges from kirana lobbyists.

For example, Bharti has created a retail academy to train thousands of people in Punjab.

Creating thousands of jobs over time develops a political constituency of employees.

But the kirana challenge is not just political, it is also competitive. Given the high

customer loyalty to these micro-local outlets, helping kiranas become more efficient

while allowing them to effectively serve their clients can be both politically expedient

and profitable. One way to address this situation is for organised retailers to engage in

‘co-opetition’: to make customers out of their smaller retail rivals.

We already see this taking form in India with cash-and-carry stores that essentially serve

as wholesalers to kiranas and other local establishments, as well as to individual

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shoppers. Tesco-Tata, Bharti-Wal-Mart and Metro have all created cash-and-carry

formats. In fact, the government has recognized the political benefits of co-opetition by

allowing 100% FDI in the cash-and-carry format. A competitive organized retail sector

would be a boon for the Indian consumer because the industry will be forced to

continuously improve on products, service and price, letting India be in the vanguard of

retail innovation. Such tough competition can produce strong domestic retailers who

themselves may expand overseas. Perhaps, more importantly, the presence of foreign

retailers would create a huge opportunity for Indian farmers, food processors and other

manufacturers. Foreign retailers that have positive experience with domestic suppliers

sourcing for the Indian market are also likely to source from Indian suppliers for their

global operations. Consider this: if a $300-billion American behemoth like Wal-Mart

sourced even 10% of its products from India, the potential for Indian farmers and

manufacturers is huge. The export potential may even dwarf the direct benefits from

organized retail.

1.1 EVOLUTION OF THE INDIAN RETAIL MARKET

Retailing goes back to centuries; it started as a very primitive business but today has

grown tremendously. First people

were doing businesses with their

neighbors. Goods were

exchanged between them.

Gradually people began to collect

themselves to a given

neighborhood, which provides a

geographical place to do the

exchange. This not only

increases the exposure of a given

good but also helps a lot towards

the development of a more

formalized system. Gradually, a

few more start to get together to

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a place that in turn creates a need for a common place. Later this common place was

called a fair. With the passing of time the number of people doing businesses in a given

fair increased, issues like security, transportation becomes a matter of concern. This

semi-formalized system then gave birth to small-scale groceries, where people start to

provide more combinations in their own neighborhoods. Then came the issue of choice in

given grocery, the choices the customer had was limited, this was the beginning of the

concept of “everything under one roof”. As time passes, joint family changes into nuclear

family. There too both members started earning which resulted into a new way of

lifestyle. From then instead of mom-and-pop type of stores organized retail stores came

into existence. Based on the ICICI Research, the Indian Retail Market evolution can be

traced in the following way:

Retail has become largest source of employment and has deep penetration into rural

India. Retailing contributes to 10% of GDP and around 8% of the employment. Retail

sector is one of India’s fastest growing sectors with a 5% compounded annual growth

rate. It is expected that retail in India could be worth US$ 175- 200 billion by 2016. The

organized retail industry in India had not evolved till the early 1990s. Until then the

industry was dominated by the unorganized sector. It was a seller’s market with a limited

number of brands and little choice available to customers. Lack of trained manpower, tax

laws and government regulations, consumer awareness and restrictions over entry of

foreign player delayed the growth of organized retailing. Organized retail chains

comprise only 3% of the Indian market. Rest 97% market is comprised of mom- and –

pop type shops. Now the number of organized retail stores is gradually increasing.

According to ETIG (Economic Times Intelligence Group), the size of the organized retail

industry was about Rs. 160 billion in 2001-02. In 2005 budget Government has allowed

26% Foreign Direct Investment (FDI) in the retail sector. Organized retailing is on

continuous increase of its market share from the past. Retailing can be categorized as of

different sectors like food and groceries, clothing and textiles, consumer durables,

footwear, furniture and furnishing, catering services, jewellery and watches, books, music

and gifts, mobile handsets and others.

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RECENT TRENDS

Health & Beauty1%Clothing & Textile36%Entertainment1%Watch &

Jewellery17%Books, Music & Gifts3%Food &

Grocery14%Pharma2%Footwear13%Home3%Durables10%

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Retailing in India is witnessing a huge revamping exercise as can be seen in the graph

India is rated the fifth most attractive emerging retail market: a potential goldmine.

Estimated to be US$ 200 billion, of which organized retailing (i.e. modern trade)

makes

up 3 percent or US$ 6.4 billion

As per a report by KPMG the annual growth of department stores is estimated at 24%

Ranked second in a Global Retail Development Index of 30 developing countries

drawn

up by AT Kearney.

Multiple drivers leading to a consumption boom:

o Favorable demographics

o Growth in income

o Increasing population of women

o Raising aspirations: Value added goods sales

Food and apparel retailing key drivers of growth

Organized retailing in India has been largely an urban

Phenomenon with affluent classes and growing number of double-income

households.

More successful in cities in the south and west of India. Reasons range from

differences in consumer buying behavior to cost of real estate and taxation laws.

Rural markets emerging as a huge opportunity for retailers reflected in the share of

the rural market across most categories of consumption

o Mahamaza is leveraging technology and network marketing concepts to act

as an aggregator and serve the rural markets.

IT is a tool that has been used by retailers ranging from Amazon.com to eBay to

radically change buying behavior across the globe.

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1.2 RETAIL SALES IN INDIA

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1.3 CHALLENGES TO RETAIL DEVELOPMENT IN INDIA

Organized retail in India is little over a decade old. It is largely an urban phenomenon and

the pace of growth is still slow. Some of the reasons for this slow growth are: -

THE KIRANAS CONTINUE - The very first challenge facing the organized retail

industry in India is competition from the unorganized sector. Traditionally retailing

has established in India for centuries. It is a low cost structure, mostly owner operated,

has negligible real estate and labor costs and little or no taxes to pay. Consumer

familiarity that runs from generation to generation is one big advantage for the

traditional retailing sector.

On the other hand, organized sector have big expenses to meet and yet have to keep

prices low enough to compete with the traditional sector.

RETAIL NOT BEING RECOGNIZED AS AN INDUSTRY IN INDIA – Lack of

recognition as an industry hampers the availability of finance to the existing and new

players. This affects growth and expansion plans.

THE HIGH COSTS OF REAL ESTATE – Real estate prices in some cities in India

are amongst the highest in the world. The lease or rent of property is one of the major

areas of expenditure; a high lease rental reduces the profitability of a project.

HIGH STAMP DUTIES i– In addition to the high cost of real estate the sector also

faces very high stamp duties on transfer of property, which varies from state to state

(12.5% in Gujarat and 8% in Delhi). The problem is compounded by problems of clear

titles to ownership, while at the same time land use conversion is time consuming and

complex as is the legal process for settling of property disputes.

LACK OF ADEQUATE INFRASTRUCTURE - Poor roads and the lack of a cold

chain infrastructure hampers the development of food and grocery retail in India. The

existing supermarkets and foods retailers have to invest a substantial amount of money

and time in building a cold chain network.

MULTIPLE AND COMPLEX TAXATION SYSTEMii – The sales tax rates vary

from state to state, while organized players have to face a multiple point control and

system there is considerable sales tax evasion by unorganised stores. In many

locations, retailers have to face a multi point octroi with the introduction of value

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Added Tax (VAT) in 2005, certain anomalies in the existing sales tax system causing

disruption in the supply chain are likely to get corrected over a period of time.

There is price war between different retail organizations. Each and every one is saying to

provide goods at low cost and offers various promotional schemes. In such a case it is

difficult to keep one’s customers with oneself.

OPPORTUNITIES

Retail marketing gets various opportunities to grow up in the Indian market. Not only

retailing but Manufacturers as well as suppliers, and buyers have various opportunities,

some of which are mentioned below-

WHAT IS IN STORE- Organized retail provides brands much needed visibility and

platform for customer interaction. It also helps in launching of new product or

product variant and in market penetration. It has wider product range and more

frequent, speedier deliveries.

URBANIZATION – Increased urbanization has shifted consumers to one place and

thus a single retail can catch more customers.

NUCLEAR FAMILY- As the time passed away joint families came in a new form

i.e. nuclear family. Again the income level of these nuclear families increases because

both members started earning. This results into increased power of purchase and lack

of time. Now they want everything under one roof. This brought the concept of

organized retailing.

PLASTIC REVOLUTION – Increased use of credit cards is in favor of retail

marketing. It creates requirement even when it is not necessary.

JO DIKHTA HAI WOH BIKTA HAI – Organized retail stores put stress on proper

infrastructure like well maintained building, air conditioning, trained employees,

electronic machine, parking facilities and proper display of goods category wise. Here

customers feel comfort, joy and entertainment. Purchasing becomes joy for him. Self-

selection saves time and gives more opportunities and satisfaction. Fix cost removes

the threat of misleading. They avail various discounts and promotional schemes

presented by the manufacturers. They also get product of different varieties and of

proper quality.

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EMPLOYMENT - Retail marketing is one of the largest employments generating

industry. It provides employment to skilled, semi-skilled as well as to unskilled

persons. Thus it helps in the socio- economic development of the society.

PRICE WAR – Increase in the no of retail outlets increases competition among these

retailers. To attract customers they give various promotional schemes as various

discounts, buy one get one free, another product with any particular product, festival

special, etc.

CONTRACT FARMING – The retail marketers directly purchase from farmers and

reducing middlemen, thus provide proper cost to farmers and also set proper price for

consumers. They also make contract with farmers to get proper amount of crops and

vegetables.

REDUCES SUPPLY CHAIN MANAGEMENT - The big players of retail

marketing and the manufacturing companies directly come in contact thus reducing

many intermediary chains. Manufacturers also give many promotional schemes for

their product that is beneficial for consumers.

1.4 NEW TRAJECTORY IN RETAIL

SECTOR

The Indian retail market currently stands at

USD 396 billion and is likely to grow further

at 12% to increase to USD 574 billion by

2015. This sector is the second largest

employer after agriculture, employing more

than 35 million people with wholesale trade

generating an additional employment to 5.50 million more. The growing disposable

income in the country is resulting in increasing consumer spending habits. The

government is considering in allowing foreign direct investment (FDI) in multi-brand

retailing as a measure to make India more attractive to overseas investors. The proposal,

piloted by the Department of Industrial Policy and Promotion (DIPP), is currently at the

discussion stage and is awaiting government clearance.

Consumption Patterns of the Industry

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The total retail

spending is

estimated to

double in the next

five years. Of this,

organized retail—

currently growing

at a CAGR of

22%--is estimated

to be 21% of total

retail expenditure.

The food and grocery segment is the highest contributor to the retail sector with

maximum contribution coming from traditional retailing, while penetration of modern

retail is highest in the clothing and fashion segment, at 23% of the growth.

Trends in the Retail Industry

• Emergence of organized retail: Real estate development in the country, for example, the

construction of mega malls and shopping malls, is augmenting the growth of the

organized retail Business

• Spending capacity of youth of India: India has a large youth population, which is a

conducive environment to growth of this sector

• Raising incomes and purchasing power: The per

capita income in India has doubled between 2000-

01

and 2009-10 resulting in improved purchasing

power.

• Changing mindset of customers: The customer mind set is gradually shifting from low

price to better convenience, high value and a better shopping experience

• Easy customer credit: Emergence of concepts such as quick and easy loans, EMIs, loan

through credit cards,. has made purchasing possible for Indian consumers, for products

such as consumer durables

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• Higher brand consciousness: There is high brand consciousness among the youth; 60%

of India‘s

population is below the age of 30 leading to popularization of brands and products

1.4.1 MARKET OPPORTUNITIES

Top contributors across the segments

The food and grocery segment is the highest contributor to the retail sector (60%) with

minimum penetration of organized retailing. Penetration of modern retail is maximum

(23%) in the clothing and fashion segment, which is 10% of the total retail sector.

Besides, organized retail in beauty, wellness and electronics through specialty stores is

growing at a rapid pace.

Few highlights of the opportunities available under various segments are:

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1.4.2 TAX AND REGULATORY STRUCTURE

In the post liberalization scenario, India is considered a premium destination for foreign

investment. It is hence essential to have a thorough understanding of the alternative

funding options available in the market. At the same time, India poses some unique and

interesting challenges to potential investors. Thus, navigating such risks not only requires

being aware of the available options, but identifying all exogenous factors that can

probably as well impact them. Therefore, financing a business requires rigorous

background evaluations, such as studying the type of business entity, nature of business,

prevailing economic scenario, duration of financing requirement, etc. In addition, there

are various structuring models for investments in India. To hedge investment risks and

comply with various regulatory restrictions, foreign investors may invest in the form of a

joint venture company.

Foreign companies could also invest in India through a franchisee model. However, other

investment structures could also be considered in order to enable compliance with the

regulatory requirements. Typically, profits generated through investment are repatriated

in the form of dividend/royalty payments to the foreign investors. Nonetheless, there are

various tax and regulatory implications associated with such investment/repatriation

models. To add, any investor would typically structure its investment in a tax efficient

manner as this will enable easy repatriation of capital and profits. Therefore, capital

structuring plays an important role while making any investment decision. Exchange

control regulations and tax provisions are enacted to achieve different objectives of the

goverment. The key challenge is, thus, to decide on the funding option that is not only

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permitted as per the exchange control regulations but is 'tax efficient' at the same time.

There have been numerous instances of conflicting provisions within such regulations;

hence synchronization of these regulations becomes vital and crucial.

Repatriation strategy

Foreign capital invested in India is generally allowed to be repatriated along with capital

appreciation, if any, after payment of taxes due on them, subject to other tax and

regulatory conditions. Hence, in formalizing a strategy to achieve a tax efficient

repatriation, the following aspects/options could be examined in detail:

1.4.3 SECTOR ANALYSISFood and Grocery Retail

• Business Monitor International (BMI) forecast that sales through Mass Grocery Retail

outlets to reach

to USD 27.67 billion by 2015

• According to industry estimates, lack of supply chain infrastructure results in 40% loss

of farm produce; investment in back-end infrastructure should help reducing this

• Sourcing of processed food from SMEs could result in higher margins

• Political support for FDI in food and grocery may face challenges and many state may

not allow FDI

or else allow with more restriction

• Hypermarkets and supermarkets are the best suited retail structure for this segment

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Apparel Retail

• Readymade and western outfits are growing at 40-45% annually

• Opening of multi-brand apparel retail for FDI is not expected to face major political

deliberations

• For apparel retail, investment in back-end infrastructure lies in creation of warehouses

• Manufacturing facilities (for private label brand) and logistics is most likely to be

outsourced

• International retailer could have private label brand sourced from SME segment

• Departmental store is the best suited retail structure for this segment

Furniture and Furnishings

• Category faces stiff competition from small time traditional retailers as well as

individual carpenters

• For furniture retail, options for investment in back-end infrastructure lies in creation of

manufacturing

facilities/warehouses

• Some of the furniture products could be sourced from the SME segment

• FDI in furniture retail is not expected to face major political deliberations

• Specialty retail outlet is best suited structure for this segment

Beauty and Wellness

• Penetration level of modern retail is just 4% and there is a huge untapped potential in

this segment

• Private label brands in some of the product categories can be sourced from the SME

segment

• FDI in multi-brand beauty and wellness stores is not expected to face major political

deliberations

• Specialty retail outlet is the best suited structure for this segment

Gems and Jewelry

• Branded jewelry has rapidly acquired a niche over the past few years. Increasing

purchasing power

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and disposable income of India’s middle class has resulted in growth of this industry

• Opening of multi-brand gems and jewelry stores is not expected to face major political

deliberations

• Special design products could be sourced from the SME segment

• Target segment for retailers are largely in the metros and tier-1 cities

Consumer Durables

• Traditionally market is largely dominated by branded store, penetration of modern retail

is 12% in consumer electronics segment

• Consumers are brand conscious for consumer durables hence sourcing of products from

SME the segment is not favorable

• Target segment for retailers would not just be restricted in the metros and tier-1 cities, it

would also include tier-2 cities

• FDI in consumer durables sector too is not expected to face any major political

deliberation

Liberalization of FDI in multi-brand retail is getting closer to reality. After almost a year

of deliberations post the White Paper published by the DIPP/ Ministry of Commerce and

Industry, a Retail FDI Draft document has been submitted to the Union Cabinet for

approval. This is the final hurdle that needs to be surpassed. However, there are all

indications that the Cabinet is likely to endorse this liberalization since the government is

committed to advance this sector. Accordingly, we could expect the final policy to be

announced within the next six months to a year.

One aspect seems to be clear that will be no `one-shot, big-bang’ kind of approach toward

introducing FDI in multi-brand retail. Instead, we could expect a phased liberalization

approach with a number of conditions laid down, at least initially, for foreign retailers to

enter India. These conditions would be intended to assure the opposition parties,the local

retailer lobbies, the farmer and trade unions, etc. that the government has adopted a

'balanced/mid-way' kind of approach after due consideration of the views of all

stakeholders involved. Of the various conditions that are being discussed for entry, the

most significant, from a foreign retailer perspective, are likely to be:- the minimum

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investment threshold (say USD 100 Million) for entry, and the permissions/support

required from local State governments to enable foreign retailers to set up business in

their respective states. Thus, we are likely to witness a second round of `political uproars

and debates’ from the state level authorities and politicians, once the policy is actually

announced. Amongst the larger and important states (from a retail market perspective),

Maharashtra, New Delhi, Punjab, Andhra Pradesh, Tamil Nadu, West Bengal and Gujarat

are likely to support the policy faster than the other states. While the opposition-ruled

states such as Karnataka and Uttar Pradesh are likely to stage a round of political

`posturing’ before the policy translates into stores on the ground. Nevertheless, it is a

clear signal to the foreign retailers who have been patiently waiting in the wings to begin

their groundwork for their India entry. They will have some gainful time now, as the

liberalization is likely to be more phased and calibrated. With their competitors eyeing

for the same cities and probing for the best locations, potential entrants should start

developing their plans, strategize their store locations and initiate discussions with their

local partners. Also, India being a large and complex market with under-developed

logistics and back-end infrastructure, adequate time and attention needs to be given on

this specific area since the back-end retail infrastructure that has been taken for granted in

developed countries (even in China for that matter) is still at a nascent stage in India.

1.5 INDIA RETAIL SECTOR – THE CURRENT AND FUTURE

The BMI India Retail Report for the first-quarter of 2011 forecasts that total retail sales

will grow from US$ 392.63 billion in 2011 to US$ 674.37 billion by 2014. Strong

underlying economic growth, population expansion, the increasing wealth of individuals

and the rapid construction of organised retail infrastructure are key factors behind the

forecast growth. With the expanding middle and upper class consumer base, there will

also be opportunities in India's tier II and III cities.

Mass grocery retail (MGR) sales in India are expected to undergo enormous growth over

the forecast period. BMI predicts that sales through MGR outlets will increase by 145 per

cent to reach US$ 21.35 billion by 2014.

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BMI forecasts consumer electronic sales at US$ 29.09 billion in 2011, with over-the-

counter (OTC) pharmaceutical sales at US$ 2.69 billion. The former sub-sector is

expected to show growth of 55.6 per cent between 2011 and 2014, reaching US$ 45.27

billion, with projected double-digit growth of key products such as notebooks, mobile

handsets and TVs. OTC pharmaceuticals, meanwhile, should increase slightly more, by

56.5 per cent throughout the forecast period, to reach US$ 4.21 billion.

China and India are predicted to account for more than 91 per cent of regional retail sales

in 2011, and by 2014 their share of the regional market is expected to be more than 92

per cent. Growth in regional retail sales for 2011-2014 is forecast by BMI at 48.1 per

cent, an annual average 15 per cent.

According to a McKinsey & Company report titled 'The Great Indian Bazaar: Organised

Retail Comes of Age in India', organised retail in India is expected to increase from 5 per

cent of the total market in 2008 to 14 - 18 per cent of the total retail market and reach

US$ 450 billion by 2015.

Furthermore, according to a report titled 'India Organised Retail Market 2010', published

by Knight Frank India in May 2010 during 2010-12, around 55 million square feet (sq ft)

of retail space will be ready in Mumbai, national capital region (NCR), Bengaluru,

Kolkata, Chennai, Hyderabad and Pune. Besides, between 2010 and 2012, the organised

retail real estate stock will grow from the existing 41 million sq ft to 95 million sq ft.

Driven by the growth of organised retail coupled with changing consumer habits, food

retail sector in India is set to be more than double to US$ 150 billion by 2025, according

to a report by KPMG.

India's retail market is expected to be worth about US$ 410 billion, with 5 per cent of

sales through organised retail, meaning that the opportunity in India remains immense.

Retail should continue to grow rapidly—up to US$ 535 billion in 2013, with 10 per cent

coming from organised retail, reflecting a fast-growing middle class, demanding higher

quality shopping environments and stronger brands, according to the report ‘Expanding

Opportunities for Global Retailers’, released by A T Kearney.

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India has been ranked as the third most attractive nation for retail investment among 30

emerging markets by the US-based global management consulting firm, A T Kearney in

its 9th annual Global Retail Development Index (GRDI) 2010.

Foreign direct investment (FDI) inflows between April 2000 and October 2010, in single-

brand retail trading, stood at US$ 197.04 million, according to the Department of

Industrial Policy and Promotion (DIPP).

Carrefour, the world’s second-largest retailer, has opened its first cash-and-carry

store in India in New Delhi. Germany-based wholesale company Metro Cash &

Carry (MCC) opened its second wholesale centre at Uppal in Hyderabad, taking

to its number to six in the country.

Electronic retail chain major, Next Retail India, plans to open 400 showrooms

across the country during January-March 2011 increasing the total number of

retail stores to 1,000 by the end of the fiscal year 2010-11.

Jewellery retail store chain Tanishq plans to open 15 new retail stores in various

parts of the country in the 2011-12 fiscal.

V Mart Retail Ltd, a medium-sized hypermarket format retail chain, is set to

open 40 outlets over the next three years, starting with 13 stores in 2011, in Tier-

II and Tier-III cities.

Reliance Retail, the wholly owned subsidiary of Mukesh Ambani's Reliance

Industries, is set to open 150 stores by the end of March 2011 and double the

number of stores across the country in all formats within five years.

Future Value Retail, a Future Group venture, will take its hypermarket chain Big

Bazaar to smaller cities of Andhra Pradesh, with an investment of around US$

1.54 million to US$ 4.41 million depending on the size and format.

RPG-owned Spencer's Retail plans to set up 15-20 new stores in the country in

2011-12.

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Spar Hypermarkets, the global food retailing chain of the Dubai-based

Landmark Group, expects to start funding its India expansion beyond 2013 out of

its local cash flow in the country. So far, the Landmark Group has invested US$

51.31 million in setting up five hypermarkets and plans to pump in another US$

51.31 million into the next phase of expansion.

Leading watchmaker Titan Industries Limited plans to invest about US$ 21.83

million for opening 50 premium watch outlets Helios in next five years to attain a

sales target of US$ 87.31 million.

British high street retailer, Marks and Spencer (M&S) plans to significantly

increase its retail presence in India, targeting 50 stores in the next three years.

Spain's Inditex, Europe's largest clothing retailer opened the first store of its

flagship Zara brand in India in June 2010. It further plans to open a total of five

Zara outlets in India.

Bharti Retail, owner of Easy Day store—supermarkets and hypermarts—plans to

invest about US$ 2.5 billion over the next five years to add about 10 million sq ft

of retail space in the country by then, according to a company spokesperson.

There is very huge potential for the growth of organized Retailing in India. By following

some of the strategies it can rise tremendously and can reach each and every nock and

corner. Open communication should be established between functional departments. A

balance should be maintained between brand building and promotion. Non-marketing

factors like gas prices, weather etc. should be avoided and new schemes should always be

launched. 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 India Retail Industry is gradually

inching its way towards becoming the next boom industry.

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CHAPTER 2: LITERATURE REVIEW

Although there are a number of anecdotal reports regarding the effects of mega-retailers,

Wal-Mart in particular, empirical research reports are limited.. Noteworthy U.S. studies,

including Beaumont (1994), Stone & Artz (1995), Shils & Taylor (1997), have concluded

that the opening of mega-retailers in a community has the potential to impact on existing

smaller merchants in two ways. Firstly, there will be an effect on the retail business in

terms of changes to sales levels; increasing in outlets in the immediate area carrying

different product categories to the mega-retail outlets, a result of increased traffic and

declining in the overall market area in outlets carrying similar categories (Stone & Artz,

1995). Secondly, changes in the way the merchants conduct their business in terms of

competitive strategies: reduction in number of employees; due either to a fall off in sales

or increased efficiencies in the business, changes in marketing practices: pricing, product

mix and store positioning, location of outlet and recognition of customer service as being

central to survival.

Shils & Taylor’s (1999) comprehensive study identifies both social and economic

effects, the social effects being the physical and social decline of neighborhoods as

retailers fail to survive, noting (in areas visited) «profound changes in joblessness and

socialization.» The most serious economic effects include retail closures as the traditional

retailers fail to compete, with the consequent loss of jobs including the employment of

the owners themselves and reduced numbers of employees; both a result of Shil &

Taylor’s «drain away» effect caused by the presence of mega-retailers shifting activities

from various geographic traditional retail centers or clusters.

In seeking community approval to locate stores, mega-retailers have promised

increased job numbers. In several situations it is reported the number of jobs have not

materialized to the extent promised, a situation exacerbated by the fact that, according to

the Stils & Taylor study, “in exchange for 1 new part-time job in a mega-discount store,

about 11/2 full time jobs are eliminated in smaller stores.” Further, most jobs in the

21

mega-retail stores are “minimum wage” with little opportunity for improvement or

promotion and most are non-union with all the ramifications implicit in such situations

(i.e. absence of provision of benefits to large numbers of employees). In some situations,

they report, the megaretailers have closed down operations after several years. Having

forced the closure of much of the local retail trade, the closures leave a retail vacuum and

an exacerbated unemployment problem (Dalal, Al-Khatib, DaCosta, and Decker, 1994).

More fundamental economic effects put forward by Stils and Taylor are, firstly, the

erosion of “free retail market” choice for consumers both in terms of choice of retailer

and location and brand plus other choice issues. Citing 1996 Wal-Mart’s CEO, David D.

Glass’s statement at their annual stockholders meeting of that year “We are going to

dominate North America.” they point to the ‘decimation of communities’ “main street”

retailers, unable to compete.

Conversely, Archer & Taylor (1994) argue that small retailers can survive “in the

shadow of the retail giants” the key being levels of customer service that the mega-

retailers can’t provide, their very size limiting their abilities in this area. More

specifically, Berry (1999, 2001) contends that by using five well-documented retailing

best practices, the “Five Pillars of Retailing”, survival and success can be achieved.

Berry’s “Five Pillars” of retailing or best retail practices, components of his “retail

model”, are:

1. Solve Customers Problems

2. Treat Customers with Respect

3. Connect with Customers’ Emotions

4. Set the Fairest (not lowest) Price

5. Save Customers’ Time

Berry argues that all five of the pillars must be developed in order for the concept to be

effective. In the absence of an instrument in the literature to operationalize Berry’s

22

model, the authors have developed five measures or scales described under the

methodology section of this article. 

While mega-retailing traces its origins back to the creation of the first department

store by Aristide Boucicaut in Paris in 1852 (Chirouze, 2003), the arrival of mega-

retailing in Canada and Ontario in particular has been the result of the expansion of U.S.

mega-retailers into the country since the late 1980’s. Insofar as Ontario is concerned,

expansion was confined largely to the more populous southern part of the province with

the greater concentration in the Greater Toronto Area (GTA); Jones and Doucet (1998)

record 93 (4.5 million square feet) of this form of outlet in the GTA area by 1990

increasing to 268 (11.1 million square feet) by 1998. Expansion has continued with 2002

data showing 614 outlets (29 million sq. feet), (Hernandez, Biasotto, and Jones, 2003;

Hernandez, Jones, and Maze, 2003; Simmons, 2003).

23

CHAPTER 3: EMERGING TRENDS IN UNORGANISED

AND ORGANISED RETAIL MARKETS & CUSTOMER

SHOPPING BEHAVIOR IN INDIAN SCENARIO

India has witnessed a frenetic pace of retail development over the past five years.

Goldman Sachs has estimated that the Indian Economic growth could actually exceed

that of China by 2015. It is believed that the Country has potential to deliver the faster

growth over the next 50 years. (1) As we all know that India has been a nation of

Dukandars, having –approximately 12 million retailers. Obviously retailing is in our

blood –either as a shopkeeper or as a shopper. The Indian Retail market is estimated to

grow from the current US $ 330 billion to US $ 427 billion by 2010 & U. S. $ 637 by

2015. Retail which contributes 10% of our GDP is the largest source of employment after

agriculture. (Annexure: 10)

In the year 2004, ratio of Big Market-Small Market retail was 3:97 which is expected to

be 9:91 by 2010. (Annexure: 9 It is not just the global players like Wal-Mart, Tesco and

Metro group are eying to capture a pie of this galloping market but also the domestic

corporate behemoths like Reliance, NeelKamal, KK Modi, Aditya Birla group, and

Bharti group too are at the same stage of retail development.

There is increased sophistication in the shopping pattern of customers, which has resulted

to the emergence of big retail chains in most metros; mini metros and towns being the

next target. Customer taste and preferences are changing leading to radical transformation

in lifestyles and spending patterns which in turn is giving rise to new business

opportunities. The generic growth is likely to be driven by changing lifestyles and by

strong surge in income, which in turn will be supported by favorable demographic

patterns. Development of mega malls in India is adding new dimensions to the booming

retail sector. There is significant development in retail landscape not only in the metros

24

but also in the smaller cities. Even ITC went one step ahead to revolutionize rural retail

by developing ‘Choupal Sagar’; a rural mall, for the Rural India. On one hand there are

groups of visionary corporate working constantly to improve upon urban shopping

experience and on the other hand some companies are trying to infuse innovative retail

experience into the rural Set up. Given the situation we can say that Indian Retailing is at

boom.

3.1 THE MACRO PICTURE

Retailer inspired by the wall-mart story of growth in small town America, are tempted to

focus on smaller towns and villages in India. However, a careful analysis of the town

strata-wise population, population growth, migration trends of customer spending

analysis reveals a very different picture of India. As per the NCAER estimates,

( Annexure 7& 8) the share of the 35 towns with a present population of greater than 1

million in India’s total population would grow much faster than their smaller

counterparts, from 10.2 % today to reach 14.4 % by 2025. Simultaneously, the share of

these towns in retail market would grow from 21 % today to 40 % by 2025. Within these

top 35 towns, an estimated 70 to 80 % of retail trade would be in the organised Market

sector. This is similar to the experience in China where in cities like Sanghai and

Beijing, the organised Market sector accounts for 70 to 80 % of overall retails trade in

certain categories. Retailers should therefore focus on top 37 towns in the next decade, as

the opportunity in smaller towns and rural India would be smaller and more fragmented

as compared to the larger towns. But again this is the one side of the coin. only.

3.2 CLASSIFICATION OF INDIA (CUSTOMERS) ON THE BASIS

OF RESEARCH

Research Conducted by Future Group future group2 research classifies Indian Customers

into three sets and provides a base to the retailers in segmenting the Indian market. The

25

research shows that serving class consists of approximately 55% of the population, the

major one & only 14% are in the upper middle class, regarded as consuming class.

It indicates that retailers should target this segment (India 2) rather than focusing on India

one only, and should formulate their strategies according to the needs and expectations of

serving class, to flourish in the market

Classification of Customers

India 1 India 2 India 3

Consuming Class Serving Class Struggling class

Constitutes only 14 %

of the country’s

population

Most of these customers

have a substantial

disposable income and

they form part of

usually called as the

upper middle and the

lower middle class

Includes people like

drivers, house hold

helpers, office peons,

liftmen, washer man etc.

These people make life

easier and more

comfortable for the

consuming class or

India 1.

Research indicates that

for every India one at

least three India Twos

are there, making up

approx. 55 % of the

population but due to

low income they have a

very little disposable

income to spend on

buying aspirational

It lives hand-to-mouth

existence, so can not

afford to even aspire for

good living.

Unfortunately this

segment will continue to

be on the peripheries of

the consumption cycle

in India, in years to

come.

26

goods & services .

Source: Future Group Research, Published in the Book “It Happened in India” by Kishore Biyani,

2007 issue.

3.3 EMERGING TRENDS IN CONSUMERS’ INCOME &

CONSUMPTION PATTERN

NCAER study and some other data published by different research & consulting sources

indicate the following trend in Consumer income and put the following projections about

the Indian retailing:

1) Growing Prosperity: Making Indian Consumers Great: As per India’s Marketing

White book (2006)3 by Business world, India has around 192 million households. Of

these, only a little over six million are ‘affluent’ – that is, with household income in

excess of INR215, 000. Another 75 million households are in the category of ‘well off’

immediately below the affluent, earning between INR45, 000 and INR 2, 15,000. This is

a sizable proportion which offers excellent opportunity for organised Market retailers to

serve.

2) Increase in the Sizable Disposable Income: Business communities believe that

sizable disposable income in India is concentrated in the urban areas and well off and

affluent classes; income distribution in India is unequal compared to other Asian

economies. In fact, the 20 million middle class home in rural India equals the number in

urban India4 and thus have the same purchasing power.

Therefore, there is significant and considerable opportunity for organised Market retailers

in the rural areas as well. There is no denying that the rural market holds immense

promise for the Big Market retail but companies ponder over, how to serve that market

profitably. Unlike the urban market, it is less developed in terms of infrastructural

facilities.

27

3) Place is no more important: The Major issue is to find out a suitable business model

and retail format to fit local taste and preferences. Of course, cost of doing business in

rural market would be lesser, as compared to urban market but reaching out to the mass is

a concern. For example the most successful and the largest incorporation, Wal-Mart

started in the rural market where as competition started in the urban market. This retailer

has proved that it is important to understand how do you operate your business model

rather than where you do it. Given the increasing urban exposure of rural India, the urban

and the rural upper-income groups can form an interesting continuum market, giving it a

scale of 23 million households, or 115 million consumers.

4) Increasing Potential in Rural Markets: NCAER data shows that for 1998-99, for a

basket of 22 FMCG products it tracks, a total of over Rs 91,500 crore was spent. Of this,

37% was spent by the two lowest-income groups in rural India, and only about 20% by

the top two income groups in urban areas.

This is, perhaps, the best and only statement of the structure and potential of the Indian

market. Hence, marketers have to worry about purchasing power of consumers not where

do they reside. For example there are nearly 42,000 rural haats, average number of sales

outlets per haat is 300 and average sales per outlet is INR 900 and average foot fall in a

haat is about 4,500. In rural India there are 50 million Kisan Credit Card (KCC) holders.

These are some of the indicators how rural India is performing well & coming up.

5) As per NCAER data no. of Household having income of < 90,000 per annum in

2005-06 was 1,32,249 ( 000) is projected to come down to 1,14,394 by 2009-10 which

indicates that middle class is growing and they are emerging as real customers.

( Annexure:1,2,3,4)

6) Higher Proportionate Rural Expenditure: While an average City-dweller may be

spending almost twice than his counter-part in rural areas but in terms of allocation of his

budget to key segments, the villager has sprung a few surprises. According to the latest

data on household Consumption expenditure, rural India is allocating almost 10% of the

monthly household Budget for fuel & Lighting while an average urban household spends

28

9% under the same head. (Annexure: 11) .Still it remains attractive because of intense

competition in Urban India.

In value terms, however there is a sharp difference with rural Indian households

earmarking Rs. 60 a month as consumption expenditure, compared to Rs.110 in cities and

towns. After all, at Rs.19 a day or Rs. 625 a month, the average consumption spending

too is low in rural areas, compared to Rs. 39 a day or Rs.1171 a month in urban India.

The rapid rise in incomes will lead to an even faster increase in demand for consumer

durables and expendables. Result by; the ownership of goods will also go up significantly

by getting empowered through rise in the size of the great Indian middle class.

(Annexure-5, 6, 7)

7) Young Population: By 2010 almost half of our citizens will be in the working age

group of 20-24 years. A youthful, exuberant generation, bred on success will not drive

the productivity but also set a spiraling effect on consumption & generation of income.

Currently the country has a population of over one billion, 60% of which is under 30

years of age. This means majority of the population is young and working class with

higher purchasing power. The low median age of population means a higher current

consumption rate which augurs well for the retail sector. Consumer spending in India has

grown at over 12 percent since mid-1990s and 64 per cent of Indian GDP is accounted for

by private consumption. Over the last decade, the average Indian spending has gone up

from INR 5,745 in 1992-93 to INR 16,457 in 2003-04 and is expected to grow around its

trend rate of 12 per cent per annum.

8) Fundamental Changes in Indian Economy: There are fundamental but significant

changes underway in our economy. In January 2006, the government announced that

foreign companies can own up to 51 percent of a single brand retail company, such as

Nike or Adidas. This decision would certainly encourage retailers such as Zara5 and Gap6

to enter this market. Tesco is planning to enter the market through a partnership with

Home Care Retail Mart Pvt Ltd and expects to open 50 stores by 2010.7

29

3.4 EMERGING TRENDS IN MODERN RETAIL FORMATS

It is difficult to fit a successful international format directly and expect a similar

performance in India. The lessons from multinationals expanding to new geographies

also point to this. For example, Wal-Mart is highly successful in USA but the story is

different in Asian countries like China. Therefore, it is important for a retailer to look at

local conditions and insights into the local buying behavior before shaping the format

choice. Considering the diversity in terms of taste and preferences prevailing in India, the

retailers may go for experimentation to identify the winning format suited to different

geographies and segments. For example, the taste in south is different from that in north

and this brings challenges to the retailers. Therefore, most of grocery retailers are region

centric at this point in time. The available research findings on retail indicate the

following trends in Modern Retail formats:

1) Trial & Error: Now a number of retailers are in a mode of experimentation and

trying several formats which are essentially the representation of retailing

concepts to fit into the consumer mind space. Apart from geography even rural

and urban divide poses different kind of challenge to the retailer. Pantaloon Retail

India is experimenting with several retail formats to cater to a wide segment of

consumers in the market. Some of the new formats are Fashion Station (popular

fashion), Blue Sky (fashion accessories), aLL (fashion apparel for plus-size

individuals), Collection i (home furnishings), Depot (books & music) and E-Zone

(Consumer electronics).

Emergence of Wholesale Clubs: Since retailers are trying to segment the market with

the help of formats, they developed another new format in the form of Wholesale Club to

sell a segment of consumers, who purchase on bulk and look out for substantial discounts

and offers. The new format is going to be a kind of wholesale club which is likely to be

located close to Food Bazaar. Consumers who are interested to purchase on bulk can take

benefit from this format. Similarly the Land mark group also operates multiple formats

such as hypermarket (Max), departmental store (Lifestyle), Shoe mart and Funcity8 etc.

Such experimentation and identification of an appropriate format for the local conditions

30

would separate winners from losers in India, possibly implying multiple formats could be

the reality in the long run. Pantaloon Retail India Ltd is a live example of that in Indian

scenario.

1) Increasing Acceptance of Rural Markets: Mall-mania is phenomenal in India

and is spreading fast and entering even the second tier cities in India. Real estate

developers are jumping very fast to take this further from Metro cities to smaller

cities and corporate houses like ITC and Sriram group are making steady progress

to make this phenomena feasible in rural markets as well. There is no denying that

the top notch cities like Mumbai, Delhi, Bangalore, Hyderabad, Kolkata, Chennai

and Pune are leading the way but the second tier cities like Ludhiana, Patiala,

Nagpur and Surat are also catching the eye of all retailers. Retail developers are in

such a mood that they may over ride the requirement in a specific city.

2) Govt. is also promoting the Development of Modern Retail Formats: Large

format malls are increasingly getting prominence with adequate retail space

allocated to leisure and entertainment. Some states like Punjab have lifted

entertainment tax on multiplexes till 2009. This boosted the confidence of the

mall developers to accommodate entertainment players like PVR, Waves, Adlab

and Fun Republic in large malls.

3) Efficient Buying: Increasing Importance of Supermarkets & Discount

Stores: Such a format provides the greatest selection of any general merchandize

and very often serves as the anchor store in shopping mall or shopping centre. In

India, the number of department stores is less as compared to other retail formats

such as supermarkets and discount stores. Shoppers' Stop is the first one to open a

department store in the early 1990s and currently operates 19 stores in 10

different cities in India .The store strongly focuses on lifestyle retailing and

mainly divides into five departments such as apparel, accessories, home décor,

gift ideas and other services. Shopper’s Stop is getting stronger and stronger year

after year. It attracts more than 12 million shoppers every year with a conversion

rate of 38 per cent. In the end of FY2000 this retailer had 5 stores and is in the

process of reaching 39 stores with retail space of 2,502,747 sq ft by FY08.

31

Another operator Lifestyle India began operations in 1998 with its first store in

Chennai in 1999 and in March 2006 it opened one of the largest department stores in

the same city. The store spreads over 75,000 sq. ft and store provides customers a

great shopping experience with three floors of apparel, footwear, products for

children, household furniture and decor, health and beauty products.

2) Hypermarkets: The Biggest Crowd Puller: Hypermarkets have emerged as the

biggest crowd pullers due to the fact that regular repeat purchases are a norm at

such outlets. Hypermarkets not only offer consumers the most extensive

merchandise mix, product and brand choices under one roof, but also create

superior value for money advantages of hypermarket shopping. With product

categories on offer ranging from fresh produce and FMCG products to

electronics, value apparels, house ware, do it yourself (DIY) and outdoor

products, the hypermarkets are emerging as one of the popular formats in India..

Number of players operating hypermarket format are increasing day by day. One

of the leading players in this format is Pantaloon Retail India Limited which

operates 32 Big Bazaars in twenty cities. In early 2006, the K. Raheja Corp (C.L.

Raheja Group) has introduced its value retail concept hyper city which is the

country’s largest hypermarket at 118000 sq ft. hyper city Retail plans to open 55

hypermarkets by 2015. As the market is expanding and consumers are in a mood

to accept changes, hypermarkets are getting overwhelming response from

consumer. Currently there are about 40 odd hypermarkets in India but this format

holds a great potential for growth.

3) Customers still rely on traditional concepts: A super market normally sells

grocery, fresh, cut vegetables, fruits, frozen foods, toiletries, cosmetics, small

utensils, cutlery, stationery and Gift items. In India Food World, Food Bazaar,

Nilgiri (30 plus stores), and Adani are the leading super market operators .One of

the biggest super market operators in the western India is Adani Retail Limited

which operates Adani super market plans to continue its journey to reach total 19

cities with the store strength of 60 plus in the state of Gujarat. ARL also plans to

expand its operation in the neighboring states of Rajasthan, Madhya Pradesh,

Maharashtra and Chhattisgarh.

32

Subhiksha is one of the leading super market operators, who largely operates in the

southern part of India is expanding to western India. One more retailer Reliance

Retail is on the move and this retailer opened its Reliance Fresh-a super market chain

with 11 stores in Hyderabad in November 2006 and is planning to enter 70 more

cities within 2 years.

4) Emergence of Private-Label Brands: The private labels are offering flexibility

to both the retailer and the consumer on price front. The objective of the store is

to offer variety at affordable price in each category. Food Bazaar have made the

transition from just a grocery retailer to developing emotional bonding with

shoppers by providing some value added services to the shoppers. Some of these

initiatives include : ( Jo Dikhta Hai wo hi Bikta Hai )

Live chakki: which allows customers to buy fresh wheat and have it grinded there

at the store

Fresh Juice counter: This provides customer to have fresh juices.

Live dairy: This provides customers with fresh milk and milk products.

Live kitchen: Customers have the option of buying vegetables, getting them

chopped, cooked fully or partly. Soups, salads and sandwiches are also available at live

kitchen.

5) Ease of Shopping & Customized Services: Order of the Day: To activate it a

new format has emerged in the name of Convenience Store. A Convenience

store offers locational advantage to the shoppers and provides ease of shopping

and customized service to the shoppers. It charges average to above average

prices, depending on the product category and carries a moderate number of stock

keeping units (SKUs). Normally it remains open for long hours and shoppers use

it for buying fill-in merchandize and emergency purchases. In India, Convenience

stores occupied 23 thousand sq. meter of retail space with sales of about Rs 1347

33

million in 2005 and are expected occupy 85 thousand square meter of selling

space by 2010 .

6) Magnetic Effect: Discounters not Shopkeepers: Wal-Mart, the largest retailer

in the world is a discounter. Practically the discounters offer several advantages

such as lower price, wider assortment and quality assurance. The discounters like

Wal-Mart and Aldi were able to quickly build scale and pass on the benefits to the

consumer. However, in the long run success depends on the operational efficiency

and consistent value delivery to the consumer. The same retailer Wal-Mart

struggles in Asian countries like China but extremely successful in USA. It is

believed that the average Indian consumer is highly price-sensitive and looks for

savings in term of money in their grocery purchase. So price-value equation is a

critical component in most of the grocery purchases.

7) Category Killer: A New Concept imported from U.S.: The category killer

concept originated in the U.S. due to abundance of cheap land and the dominant

car culture. Category Killer is a kind of discount specialty store that offers less

variety but deep assortment of merchandise. By offering a deep assortment in a

category at comparative low prices, category specialist can be able to “kill’ that

specific category of merchandize for other retailers. Generally such kind of

retailers uses a self service approach. They use their buying power to negotiate

low prices, excellent terms and assured supply when items are scarce. In India this

kind of retail stores are not prevalent at this point of time. But there is scope for

such kind of format. In India, Mega-Mart is one sort of category killer which sells

apparel products.

8) Dollar Stores: Dollar stores have their roots in America's homey five-and- dimes,

the general stores that offered a range of products at low prices. But modern

dollar-store retailers are having more sophisticated operations; leveraging their

growing buying power to strike special deals with vendors and continuously

striving for unique advantage of both convenience and price. Some chains sell all

their goods at $1 or less. Others offer selected items at higher prices. Most sell a

combination of paper products, health and beauty supplies, cleaning products,

paper and stationery, household goods, toys, food and sometimes clothing. Both

34

private-label and brand-name goods fill the shelves. They are looking for

employing technology to manage large distribution networks. Store 99 is the

example of it in Indian Scenario.

9) Retail Development in Rural India: A Market with Silver lining: Chennai

based market research firm Francis Kanoi estimated the size of the rural market to

be INR 1, 08,000 crore annually. During the survey in 2002 the firm took into

account four categories - FMCG, durables, agri-inputs, and two- and four-

wheelers for their estimation. Rural incomes are growing steadily as well.

NCAER data shows while the number of middle-class households (with annual

income between Rs 45,000 and Rs 2.15 lakh) is at 16.4 million in urban India, the

figure stands at 15.6 million18 in the rural areas, data from. Largely this rural

market is untapped and there is huge opportunity for retailers.

Recent Developments in Rural Retailing: Therefore, in recent times rural retailing is

witnessing explorations by both corporate houses and entrepreneurs – ITC's Choupal

Sagar, HLL's project Shakthi and Mahamaza are some of the models being tried out. At

this juncture there is no conclusive evidence of winning rural retail formats available.

However, corporate forays into rural retail are expected to bring more experimentation

and innovation in term of retail format. The Godrej Adhaar, the rural retail initiative of

Godrej Agrovet Ltd operates a chain of 18 stores providing a host of services to farmers

and their families and is planning to set up at least 1,000 stores19 across rural India in the

next five years. Apart from Godrej Adhar and Choupal Sagar other formats operating

successfully in the rural area are, M & M Shubh Labh stores, Escorts rural stores, Tata

Kisan Sansar, and Warnabazaar, Maharashtra (annual sale Rs 40 crore).

DSCL Haryali Kisan Bazaar

Hariyali stores keep wide range of product assortments such as fertilizers, pesticides,

farm implements, seeds, animal feed and irrigation equipment among other agriculture

related products. They also have officers who offer free advices to farmers regarding best

agriculture practices. Offering insurance and financial services to farmers is part of the

business. So far, 22 "Hariyali" Stores have been operational in different states across

North India. Farmer response has been extremely encouraging. A centre is attracting 150

35

- 200 farmers a day. Hariyali Kisaan Bazaar has plans to rapidly scale up the operations

& create a national footprint covering all the major agricultural markets of the country.

Mahindra & Mahindra Shubh Labh

This is the rural initiative taken by Mahindra & Mahindra group to provide complete

package of products and services related to firm productivity. One of the basic objectives

is to establish market linkage and optimize farm produce supply chain. There are about

franchised Shub Labh store established in ten states in India.

14: e-Retailing: The importance of internet retailing is growing all over the world. Some

internet retailers such as e Bay and rediff.com are providing a platform to vendors to sell

their products online and they do not take the responsibility of delivering the product to

buyer. They provide virtual shopping space to the vendors. On the other hand online

retailers like amazon.com and walmart.com have to maintain their warehouse to stock

products and take the responsibility of delivering products to the buyer. So, most of the

brick and mortar stores are entering into online retailing as they have physical

infrastructure and they can use that to capture additional consumer wallet. All the big

retailers like Target, Sears and Kmart are operating online shop and some manufactures

also operate online.

For example Apple Inc. operates through apple.com and Dell Inc. sells its products online

Through dell.com.

In India internet retailing is growing by 29% CAGR and Euro-monitor report estimates

that the a CAGR 48 per cent and in value term it going to touch INR 27 billion by 2010

from INR 4 billion in 2005. The report also predicts that the contribution of internet

retailing to non-store retailing to is likely to be 46 per cent by 2010.

Emerging recent developments in the Indian Mall Development scenario include the

coming up of so called Gen X Malls and Central which is a Seamless Mall. Gen X Malls

have been defined Chesterton Megharaj as greater than 5, 00,000 sq.ft and incorporate

36

large entertainment area with enough space for parking and excellent infrastructural

benefit that shall be passed on to the retailer . The target audience for the Gen X malls

is tourist /out of town visitor and the person from the city looking for entertainment

options. So, we can say that we are moving from a nation of Dukandars to a Nation that

loves to shop.

Driving forces determining shopping behavior of Indian Customers: A Meta-

Analysis of Indian Customers indicate the following factors as the driving force

determining the shopping behavior & attitude of the Indian customers:

Factors affecting shoppers’ behavior Shopping behavior

Greed Drives a customer to purchase more

than what he or she need.

A wide range of options, better

products, and lower prices generate the

increased desire to purchase.

Fear to loose opportunity Higher purchase is driven by the fear

that current price offer may not be

available for long-time and thus the

product has to be purchased at once.

Envy or Demonstration Effect Envy sets in when a customer sees

others buying and making the best out

of deal.

Price-value Equation It is believed that Average Indian

customer is highly Price-Sensitive and

looks for savings in terms of money in

their grocery purchase.

37

Private-Label Brands In India the concept of Private-Label

Brand is in its nascent stage and

customers still rely on branded product

Live culture Jo Dikhta Hai, Wo hi Bikta hai

Source: Generated from the Primary and secondary research published by Future Group.

4. COMPANY PROFILES

4.1 EASY DAY STORES

Easyday stores are one-stop-shop that cater to every family’s day to day needs.  These

stores offer a wide assortment of products like personal care products, stationery,

household articles, hosiery items, daily-need groceries including staples, processed foods,

bakery & dairy products, meat & poultry and fresh produce.  Its  large format, Easyday

Market, stocks apparels for men, women and kids, home furnishings, home ware,

cosmetics, a wide range of kids’ toys, small appliances, mobile phones and stationery,

besides having live bakery, meat shop, poultry and fish, fresh fruits and vegetables,

grocery and general merchandise.

Vision

Future Group shall deliver Everything, Everywhere, Every time for Every Indian

Consumer in the most profitable manner.

Mission

They share the vision and belief that our customers and stakeholders shall be served

only by creating and executing future scenarios in the consumption space leading to

economic development.

38

They will be the trendsetters in evolving delivery formats, creating retail realty,

making consumption affordable for all customer segments – for classes and for

masses.

They shall infuse Indian brands with confidence and

renewed ambition.

They shall be efficient, cost- conscious and committed

to quality in whatever we do.

They shall ensure that our positive attitude, sincerity,

humility and united determination shall be the driving

force to make us successful.

BRAND OFFERED

Easy Day, Bharti Wal-Mart Private Ltd (a joint venture between Bharti Enterprises and

Wal-Mart for wholesale cash-and-carry and back-end supply chain management

operations in India)

Bharti Enterprises, one of India’s leading business groups has recently forayed into the

retail sector with its wholly owned subsidiary, Bharti Retail Pvt Ltd. Food & Grocery and

fresh produce is a prime component of the product offerings at Easy Day.

The company has launched neighbourhood stores in Punjab called Easy Day and is

expanding the chain with multiple consumer friendly format stores in India. These stores

are 100 per cent owned and operated by Bharti.

The retail space area covered by Easy Day is 2,500 to

39

4,500 sq ft and currently there are seven operational stores in Ludhiana, Jallandhar and

Patiala. These stores offer a wide assortment of products such as personal care products,

stationery, household articles, hosiery items, food and grocery and fresh produce. A

private label –‘Great Value’ has also been introduced in the grocery section. The

company also plans to open supermarkets of size 30,000 - 50,000 sq ft and hypermarkets

of size 70,000 - 75,000 sq ft in the near future.

Bharti Wal-Mart Private Ltd is a business-to-business (B2B) joint venture between

Bharti Enterprises and Wal-Mart for wholesale cash-and-carry and back-end supply chain

management operations in India to serve small retailers, manufacturers and farmers. The

joint venture (JV) has already set up a distribution centre in Punjab which will partly

service the merchandise needs of the JV’s cash-and-carry stores as well as retail stores

around the area, including Bharti Retail’s wholly owned Easy Day stores.

The JV is scheduled to launch its first B2B wholesale cash and carry store in Northern

India in the first quarter of 2009. A typical cash-and carry store will stand between

50,000 and 100,000 sq ft and sell a wide range of fruits and vegetables, groceries,

footwear, clothing and other general merchandise items .

MARKETING INITIATIVES

Easyday stores promise “Sabse Kam Daam, Har Din” and offer an extensive product mix

at everyday low prices (EDLP), which are relatively lower by at least 3-5 per cent on a

‘monthly basket of products’ vis-a-vis similar stores.

TRAINING PROGRAMMES

Bharti Retail provides its store employees with a rigorous 2-3 weeks on-the-job training

and subsequently continuous training during store operations.

QUICK FACTS

Year of first store launch: 2008

Total number of outlets at present: 120 (Easyday); 10 (Easyday Market)

40

Total number of outlets as revealed in Retailer Anniversary Issue 2010: 58

(Easyday); 3 (Easyday Market)

Target consumers: Neighbourhood (for Easyday); customers buying monthly supplies

or apparels (for Easyday Market)

Employee strength: 5000 (Bharti Retail)

Region with strongest presence: Punjab, Haryana, Rajasthan, Uttar Pradesh, Madhya

Pradesh and Uttaranchal (Easyday & Easyday Market) and Chhattisgarh (Easyday

Market)

Bharti Retail has planned investment of $ US 2 to 2.5 billion by 2015 and we will

approximately have about 10 million square feet of retail experience across India.

EASY DAY IN PATIALA

Bharti Retail, a wholly owned subsidiary of Bharti Enterprises, launched its third

compact-hypermarket store 'Easyday Market' in Patiala.

Located at Omaxe Mall, Patiala, the new store offers

customers a great shopping experience, high in-stock

levels and a wide range of quality products at the best

prices under one roof.

The Easyday Market in Patiala is a 30,000 square feet

store offering over 16,000 quality products, including

trendy fashion wear such as George (international brand) and Astitva (Indian Ethnic

Wear), home ware, a range of electronics & electrical appliances, mobile phones, toys,

bakery products, food & grocery and fresh fruits & vegetables. Other categories include

health & beauty products, basic home furnishings, food & grocery, hygienic meat and

fish & chicken all at unbelievably low prices. Easyday Market has provided quality

employment opportunities to the people of Patiala that include housewives, differently-

abled people, meat cutters, fruits and vegetable sellers, school and college dropouts.

41

Since its launch in April 2008, Easyday has successfully offered products at lowest prices

every day, so that the customers can save money. Easyday stores are a one stop shop,

catering to every family's daily and monthly needs. They bring together relevant and a

wide range of quality products along with great in-store experience and service, at lowest

prices.

4.2

More is a pan-India retail chain operated by the Aditya Birla Group company, Aditya Birla

Retail Ltd. Currently it has 540 supermarkets and nine hypermarkets across the country.

It plans to increase it to 1,300 supermarkets and 65 hypermarkets respectively by 2016.

The Group's foray into the retail sector began in December 2006 when it acquired

Trinethra, the chain of stores based in south India. May 2007 saw Aditya Birla Retail

Limited (ABRL) launch their own brand of stores called 'More.' ABRL's vision is "to

consistently provide the Indian consumer complete and differentiated shopping

experiences and be amongst India's top retailers while delivering superior returns to all

stakeholders".

Currently, there are over 575 supermarkets and 12

hypermarkets. All the supermarkets are branded 'More.'

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and the hypermarkets are branded 'More Megastore'. The company has over 11,000

employees and has a pan-India presence.

More. supermarkets are neighbourhood stores with the core proposition of offering value,

convenience and trust to the customers and averaging 2,500 sq ft area. The hypermarkets

are self-service superstores offering value and range in food and non-food products and

services at a single location. Hypermarkets are located in large catchment areas and

encourage mass consumption with discount prices and substantial depth of assortment

with an average store size of 55,000 sq ft shopping area.

In May 2009 Aditya Birla Retail introduced a value

proposition for its supermarkets and encapsulated it into

a promise of giving its customers "Hamesha Extra"

which has resonated with the consumer. "Hamesha

Extra" is the core essence of More. It means customers

will always feel that they have got something extra

while shopping at More.

Within a short span of less than three years, More. has more than one million members as

part of its loyalty programme. More. has also launched a huge range of private labels in

food and grocery, staples and apparel which have already obtained a significant share of

category as well as salience with the consumer.

Aditya Birla Retail was presented the 'Retail Best Employer of the Year' award at the

Reid and Taylor Awards for Retail Excellence, by the global jury of the Asia Retail

Congress 2009 and again in 2011. In the same forum, ABRL's CEO, Mr. Thomas

Varghese was awarded the Prestigious Retail Icon Award by the global jury of the Asia

Retail Congress 2011.

Aditya Birla Retail Limited was also awarded the Reid & Taylor Award for Retail

Excellence by the global jury of Asia Retail Congress 2010 for the best marketing

campaign of the year – Launch of Hamesha Extra. It was also presented the Golden Star

43

Award 2009-2010 for the most admired Retailer of the year (Food & Grocery) for

excellence in Food, Hospitality, Service and Retailing.

In March 2011, the 10th Indira Award for Marketing Excellence was awarded to Aditya

Birla Retail Limited CEO, Mr. Thomas Varghese for his outstanding contribution to

brand building.

Supermarket

more. – Located in neighborhood’s, it sells a range of fresh fruits & vegetables, groceries,

personal care, home care, general merchandise & a basic range of apparels. Currently,

there are over 600 more. supermarkets across the country.

Hypermarket

more.MEGASTORE – It sells a range of products across fruits and vegetables, groceries,

FMCG products. more.MEGASTORE also has a strong emphasis on general merchandise,

apparels & CDIT.

Currently, thirteen hypermarkets operate under the brand more.MEGASTORE in Mysore,

Vadodara, Aurangabad, Indore, Bengaluru (3), Mumbai, New Delhi (2), Hyderabad,

Nasik and Vashi.

Clubmore

Clubmore is the store loyalty program, which has a membership base of over 1 million

members.

Private labels

Aditya Birla Retail Limited provides customers products under its own labels. Private

label Food Brands include Feasters, Kitchen's Promise, and Best of India. Home &

Personal care brands include Enriche, 110%, Pestex, Paradise and Germex.

44

CHAPTER 5: OBJECTIVES

Objective of the Projected Study and Analysis the How “Consume Perception

Towards Supermarket Private Brand Products: A Comparative

Study of Bharti Easyday & Aditya More”

1. To study and analyses the present scenario of Retail Outlets in India.

2. To study about the role of retail and organised markets in Indian society.

3. To study and find out the effect of retail and unorganised markets on the

consumer loyalty.

4. To evaluate the consumer awareness and loyalty about the emerging retail and

unorganised markets in Punjab.

5. To analyses the number of different retail and organised markets in different cities

of Punjab.

6. To study the price comparability and transparency of Bharti easy day stores in

Patiala.

7. To study the price offered and overall satisfaction with pricing policies of Bharti

easy day.

45

CHAPTER 6: RESEARCH METHODOLOGY

The Research Methodology used by me for the purpose of this project is as follows:-

Research Design:-

The research design used here for this project is a combination of Exploratory &

Explanatory designs. First a general know about of the “Consumer Buying

Behaviour in Organised Retail Outlet: A Case Study of EasyDay

Stores in Patiala City”. Then a personal interaction with the people concerned is

made to figure out the results.

Data Collection Method:-

Primary Data (Sampling):-

The sampling units in my project are Consumers. The sample size was small by

following the convenience sampling method. There were queries for the persons

interacted & the questionnaires have been attached at last.

SAMPLING SIZE

The sample size of my research is 100 consumers. Large samples give more

reliable results that is why I tried my best to cover more users (consumers) in Patiala.

Sample Size —

Sample Unit – 100: Users (consumer)

Area of Survey — Punjab.

Data Availability: Data has been collected from the Users (Consumer) related to

different cities of Punjab like Patiala.

46

The Research stands for :-

1. To know how of the actual phenomenon occurring & exploring the new ideas

with a clear & precise insight.

2. To test the hypothesis with being variables to be compared within their

relationship.

Data Analysis & Interpretation:-

The statistical tools used by me are mainly average, Percentage, & comparisons etc. I

would like to give brief points about

1. Questionnaire: - The questionnaires are given to respondent with no

pressurization at all, i.e. he/she is free to provide the information whatever the

concern is. One thing to be kept in mind that personal question apart from name,

address etc. should not be included.

2. Direct Interviews: - The direct interviews are one up against all the data collection

tools just because one can judge that what a person is telling to the surveyor.

Although it is time consuming but the information gathered is of much more

weightage than others.

3. Sampling design, Procedure & Sample size:-A sample is always a part of the

desired universe & it should represent each & every aspect of the study being

conducted. The only thing is that the sample being chosen is of relevance &

accurate source of information. My sampling design is based on random sampling

because each element gets probability to be included & all choices made are

independent of each other.

Limitations:-

The main limitation encountered during the project course was the responding error by

Management Executives & Consumers, but the approximate figures of data & facts are

sufficient for the purpose of this project.

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CHAPTER 6: DATA ANALYSIS

1. Where do you belong to?

Table 1:

URBAN 84

RURAL 16

Graph 1:

Interpretation: According to the graph out of 100 respondents 84% belong to Urban and

rest 16% belong to Rural

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2. Your Profession?

Table 2:

Professional 27

Student 25

Govt. Service 20

Businessman 28

Graph 2:

Interpretation: According to the graph out of 100 respondents 27% are professional,

25% are students, and rest 20% are in Govt. Service and 28% are businessman.

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3. Educational Background

Table 3:

Matric 2

Higher Secondary 13

Graduate 37

Post Graduate 48

Graph 3:

Interpretation: According to the graph out of 100 respondents 14% are studied till

higher secondary, 40% are graduate and rest 46% are Post Graduate.

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4. Do you understand what is organised retail and unorganised Market Retail?

Table 4:

YES 93

NO 7

Graph 4:

Interpretation: According to the graph out of 100 respondents 93% says Yes they

understand what is organised Market and Unorganised Retail and rest 7% says they do

not understand what is organised Market and Unorganised Retail.

51

5. How often you visit to Retail Outlets in a month?

Table 5:

1-5 Times 78

5-10 Times 14

More than 10 times 8

Graph 5:

Interpretation: According to the graph out of 100 respondents 78% respondents visits 1-

5 times, 14% respondents visits 5-10 times and rest 8% respondents visits more than 10

times.

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6. How much time you spend in the Retail Outlets?

Table 6:

0-1 Hours 67

1-2 Hours 22

More than 2 Hours 11

Graph 6:

Interpretation: According to the graph out of 100 respondents 67% respondents spend

0-1 hrs and rest 22% respondents spend 1-2 hrs and rest 11% sometimes spend more than

2 hours in the retail outlet.

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7. On a visit of 5 times to a mall how many times do you actually purchase?  

Table 7:

Once 14

Twice 30

Thrice 12

More 44

Graph 7:

Interpretation: According to the graph out of 100 respondents 14% respondents visits

once, 30% respondents visits Twice, 12% respondents visits Thrice and rest 44%

respondents visit more than thrice.

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8. In which retail outlet do you prefer to visit?

Table 8:

Aditya More 64

Easy Day 93

Graph 8:

Interpretation: According to the graph out of 100 respondents 64 respondents prefer

Aditya More and 93 respondents prefer Easy Day.

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9. What would be the purpose to visit Retail Outlets?

Table 9:

Window Shopping 51

Shopping 49

Watching Movies 11

Exhibition cum sale 13

Playing console games 21

Date with a friend 39

Graph 9:

Interpretation: According to the graph out of 100 respondents 51 respondents do

window shopping, 49 for shopping, 11 respondents prefer to watch movie, 13 respondent

like to visit exhibition cum sale, 21 play console games and rest 39 date with a friend.

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10. What are the main attractions of the Retail Outlets?

Table 10:

Parking facility 41

Same rate as of bazaar 49

Every commodity under one roof 72

Packed & Hygienic food 58

Latest /Branded varieties 31

Centrally Air-Conditioned 79

Well equipped lifts and elevators 59

Graph 10:

Interpretation: According to the graph out of 100 respondents 41 of them say there

parking facility, 49 of them says same rate as of bazaar, 72 of them says every

commodity under one root, 58 of them says packed & hygienic, 31 of them says

latest/branded varieties, 79 of them says centrally air conditioned and rest 59 of them

says well equipped lits and elevators are the main attraction of the Retail Outlet.

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11. According to you what would be the Future of Unorganised Market Retail

Stores? Will they stay in the market for another 10 or more Years or not

Table 11:

YES 60

NO 40

Graph 11:

Interpretation: According to the graph out of 100 respondents 60% says Yes it stay in

the market for another 10 or more Years or not and rest 40% says No.

58

12. If you have some emergency where do you go for shopping?

Table 12:

The Traditional store Closer to your home 78

The Mega Mart 22

Graph 12:

Interpretation: According to the graph out of 100 respondents 78% says the traditional

store or unorganised retail closer to your home and rest 22% says that the mega mart or

organised retail.

59

13. Benefits you get from the traditional stores?

Table 13:

Credit 20

Friendly Relation 58

Free home delivery 12

Any other 10

Graph 13:

Interpretation: According to the graph out of 100 respondents 20% respondents get

credit, 58% respondents gets friendly relation, 12% respondents gets free home delivery

and rest 10% respondents gets any other.

60

14. What is the scope of the organised retail in India?

Table 14:

Developed 70

Underdeveloped 25

Failure 5

Graph 14:

Interpretation: According to the graph out of 100 respondents 70% respondents think

that the retail in India can be developed, 25% respondents can think the retail in India can

be underdeveloped and rest 5% respondents can think the retail in India can be failure.

61

15. What are the growth prospects and issues related to the retail industry?

Table 15:

Managed Market 28

On time Delivery 15

Quality Product 57

Graph 15:

Interpretation: According to the graph out of 100 respondents 28% respondents say the

management market are the growth prospects and issues related to the retail industry,

15% respondents say on time delivery are the growth prospects and issues related to the

retail industry and rest 57% respondents say quality products are the growth prospects

and issues related to the retail industry.

62

16. What are the opportunities & challenges in front of the retailers in India and

emerging trends there?

Table 16:

Maintaining Quality 16

Competitiveness 60

Better Environment 16

Irregular Govt. Policies 8

Graph 16:

Interpretation: According to the graph out of 100 respondents 16% says maintaining

quality, 60% says competitiveness, 16% says better environment and rest 8% says

irregular Govt. Policies.

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17. According to you the boom in the retail Industry will reach to the rural area or

will it only concentrated to the urban area.

Table 17:

YES 68

NO 32

Graph 17:

Interpretation: According to the graph out of 100 respondents 68% respondents says

Yes the retail Industry will reach to the rural area and rest 32% says No it will only

concentrated to the urban area.

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18. How has retailers approach to you?

Table 18:

Through Pamphlet 46

Through local T.V Channel 28

Through local News paper 28

Through SMS 12

Through Hoardings 6

Graph 18:

Interpretation: According to the graph out of 100 respondents 46 of them says through

pamphlets, 28 of them says through local T.V channels, 28 of them says through local

news Paper, 12 of them says through SMS and rest 6 of them says through hoardings

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19. Rate the Range of Products available in Retail Store?

Table:

  Good Average Poor

Easy Day 79 11 3

More 43 16 5

Graph:

INTERPRETATION: According to 93 respondents of easy day say that 67 of them say

that Products available in Retail Store are good, 29 of them say that Products available in

Retail Store are average and rest 4 of them say that Products available in Retail Store are

poor.

According to 64 respondents of Aditya More say that 43 of them say that Products

available in Retail Store are good, 16 of them say that Products available in Retail Store

are average and rest 5 of them say that Products available in Retail Store are poor.

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20. Rate the discount offers of Retail Store?

Table:

  Good Average Poor

Easy Day 81 10 2

More 33 21 10

Graph:

INTERPRETATION: According to 93 respondents of easy day say that 81 of them say

that the discount offers of Retail Store are good, 10 of them say that discount offers of

Retail Store are average and rest 2 of them say that discount offers of Retail Store are

poor.

According to 64 respondents of More say that 33 of them say that the discount

offers of Retail Store are good, 21 of them say that discount offers of Retail Store are

average and rest 10 of them say that discount offers of Retail Store are poor.

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21. Enough Choice of PricesTable:

  Strongly Agree Agree Disagree Strongly Disagree

Easy Day 51 33 7 2

More 32 21 9 2

Graph:

INTERPRETATION: According to 93 respondents of easy day say that 51 of them

strongly agree that there is enough choice of prices, 33 of them agree that there is enough

choice of prices, 7 of them disagree that there is enough choice of prices and rest 2 of

them strongly disagree that there is enough choice of prices.

According to 64 respondents of Aditya More say that 32 of them strongly agree

that there is enough choice of prices, 21 of them agree that there is enough choice of

prices, 9 of them disagree that there is enough choice of prices and rest 2 of them strongly

disagree that there is enough choice of prices.

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22. Price Comparability

Table:

  Strongly Agree Agree Disagree Strongly Disagree

Easy Day 54 33 5 1

More 35 23 5 1

Graph:

INTERPRETATION: According to 93 respondents of easy day say that 54 of them

strongly agree that there is prices comparability, 33 of them agree that there is prices

comparability, 5 of them disagree that there is prices comparability and rest 1 of them

strongly disagree that there is prices comparability.

According to 64 respondents of Aditya More say that that 23 of them strongly

agree that there is prices comparability, 5 of them agree that there is prices comparability,

5 of them disagree that there is prices comparability and rest 1 of them strongly disagree

that there is prices comparability.

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23. Transparency

Table:

  Strongly

Agree

Agree Disagree Strongly

Disagree

Easy Day 62 30 1 0

More 53 9 2 0

Graph:

INTERPRETATION: According to 93 respondents of easy day say that 62 of them

strongly agree that there is transparency, 30 of them agree that there transparency, 1 of

them disagree that there is transparency and rest 1 of them strongly disagree that there is

transparency.

According to 64 respondents of More say that that 53 of them strongly agree that

there is transparency, 9 of them agree that there is transparency, and rest 2 of them

disagree that there is transparency.

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24. Overall Satisfaction with Pricing Policies of Retail Store?Table:

  Highly Satisfactory

Satisfactory Averagely Satisfactory

Dissatisfactory Highly Dissatisfactory

Easy Day 64 27 2 0 0

More 43 19 2 0 0

Graph:

INTERPRETATION: According to 93 respondents of easy day say that 64 of them say

that Overall Satisfaction with Pricing Policies of Retail Store are highly satisfactory, 27 of

them say that Overall Satisfaction with Pricing Policies of Retail Store are satisfactory, 2 of

them say that Overall Satisfaction with Pricing Policies of Retail Store are average

satisfactory.

According to 64 respondents say that 43 of them say that Overall Satisfaction with Pricing

Policies of Retail Store are highly satisfactory, 19 of them say that Overall Satisfaction with

Pricing Policies of Retail Store are satisfactory, 2 of them say that Overall Satisfaction with

Pricing Policies of Retail Store are average satisfactory.

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CHAPTER 7: KEY OBSERVATIONS

The primary data collected from the respondents, led to the following key observations

about customers’ shopping behaviour in Indian scenario among the modern retail

formats:

1. Master and serving class employee, never shop at the same store, though lower

middle class visits hyper markets and discount stores, the upper middle class

frequents department stores, specialty chains and super market.

2. For India two, the clean and shiny environment of modern retail stores creates the

perception that such stores are too expensive and exclusive, so they are not meant

for them. India two tends to feel alienated in environment, frequent by India one.

3. India two moves and finds lot of comfort in crowds, so they normally hesitate in

visiting the stores having broader area coverage.

4. It is observed during the research that given the right environment and a correct

emotional connect with customers, anything is possible , as Big Bazaar did by

celebrating Sabse Sasta Din , and attracted the unexpected crowd.

5. Research indicated that Customers feel conservative to buy fruits & Vegetable

from air-conditioned supermarkets. They still prefer to buy these kind of products

either from the local mobile vegetables sellers or from the nearest sabji Market.

Probably this is working as deterrent factor for the growth of Supermarkets in

India in a sense that they are able to attract visitors rather customers.

6. It was observed that customers looked into Price-Value equation. Most of the

retailers reported that customers were very much conscious for the value, and they

usually compared the value sacrificed & received. It played a very key role in

their buying decision process.

7. It was also observed on the basis of primary as well as secondary research, that

retailers often overlook the schemes & offerings expected by the customers and

tried to impose their own offerings upon customers which ultimately cause the

dissatisfaction.

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8. Shopkeepers dealing in apparels, accessories, & other items reported that they

were able to attract the Customers but conversion rate is not more than 30-40%

which is again very alarming and a matter of high concern.

9. Shopkeepers dealing in food items & Vegetables reported that :

a) Customers for food items always expect hyper discounts & offers.

b) Where as customers for vegetables still believe in the past notion that

vegetables sold in the open market are fresh.

10. Shopkeepers dealing in jewellery items reported that in case of unbranded

jewellery items Indian customers still rely on their traditional jewellery merchant

only.

11. All the shopkeepers (interviewed) in every category reported that female

customers proved to be great bargainers than their male counterparts.

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CHAPTER 8: CONCLUSION

Most of the consumer belong to urban area rather than rural areas. Retail Outlets are

more a fashion and that is more likely to attract the students or young generation . As

the trend is just started more and more people have started visiting Retail Outlets.

Most of the respondents have a knowledge regarding organised retail store and

Unorganised Market Retail.

Retail Outlets are more a fashion and that is more likely to attract the students or

young generation. As the trend is just started more and more people have started

visiting Retail Outlets.

More and more consumer like to visit malls, and spend more that 5 hours there. Many

of the consumers shop for their daily needs as more are there for window shopping.

The main attractions are the branded clothes and that every commodity available

under one roof.

According to the respondents the traditional store can’t stop working they will remain

in the race of retail for the next 10 years or so on. Right now the scenario of the

market is like that most of the respondents like to go to traditional shops rather than

the retail outlets. Whenever some emergency come, in which consumer like to buy

the grocery, respondent will prefer Pap-Mom that is traditional shops. Benefits of the

retail stores are credit, free home delivery, friendly relation and other benefits like

professional staff, ambient parking facility, pollution free environment and so on.

According to the respondents the scenario right now for retail outlets is

underdeveloped, still need time to grow so to developed. According to the

respondents the retail outlets are the managed market, they have the quality products

and they provide a better on time and hassle free delivery system.

Opportunities & challenges in front of the retailers in India and emerging trends are

that they have to maintain the quality, provide better environment, competitiveness

and the irregular government policies.

While summarizing the facts and looking at the present scenario, the retail industry

will reach to the rural area but with time, right now it is still not well established in

the urban areas as well.

74

To attract the attention of customers, big retail malls across the country are promising

the best deals at lowest prices on most of the fast moving items they stock.

Easy Day have the cheapest price or your money back challenge on. Competition

among big stores is also fuelled by a new entrant.

Mostly customers consider Easy Day as the most cheap retail store. Along with

Aditya More, Easy Day is also considered as cheap store.

Easy Day are considered the stores that has better quality than Aditya More. Easy

Day has quality based products and the consumers who prefer Aditya More With

Aditya More and Easy Day in the case of quality is very less.

Aditya More are much behind to Easy Day in the sense of product variety. Mostly

consumers thinks that Easy Day provides much varieties to purchasers. Employees of

Easy Day has more knowledge about store than the employees of Aditya More.

Service of Easy Day is superior to its competitors as respondents are in favour of

Aditya More is the second choice for customers in the case of service.

After completing this research we come to know that Only easy day is ahead of

Aditya More because of its prime Location and higher product range.

But there are few areas where these malls needs amendments and these suggestions

are mentioned in these malls.

Advertising is an important factor of getting sales promotion and Easy Day is ahead

of Aditya More, easy day in apparel in the Patiala, but Product Quality of easy day is

better than Aditya More in Patiala. Product Range of easy day is better than that of

Aditya More.

75

CHAPTER 9: SUGGESTIONS

After conducting the Meta –Analysis for the Indian retailing market, it can be

concluded that:

1) Retailers need to think about shoppers not just about a format as understanding the

shoppers’ dynamics holds the key to such a business. Retailers would have to create

new delivery formats that can cater to the huge mass of consumers.

2) Retailers must understand what value shopper is looking for and how the retailers can

deliver that desired value to the customer. However, most retailers look for what they

are offering and how shoppers can fit into retailer’s scheme of offerings.

3) In the long run such strategies may not be viable. Sam Walton and Jack Welch share

a same line of thinking that consumer is the source of competitive advantage and one

of leading UK based retailers Tesco Inc. has shown how understanding consumer can

be a source of redefining business and gaining sustainable advantage.

All the formats are profitable and each format is tailor made to fulfill customer need.

It is the value offering which makes Tesco so popular and profitable. Similarly in India

Pantaloon Retail runs several formats and for value retailing Big Bazaar is receiving

exceptional response from the customers.

4) Retailing in India is entirely different from western countries for that matter even

from Asian counterparts. Studies show that upgraded Kirana stores are growing at the

same rate as organised store retailers.

5) It is also observed that in the changing retailing environment, understanding the

psyche of customer is critical to success in retailing.Aggregate level picture may be

misleading, as it averages the beats and the valleys. Hence, individual understanding

is desirable.

6) Though, some Indians are behaving as sophisticated shoppers, tens of millions are

still novice but no less avid consumers are joining the fray every year. So, retailers

76

have to acknowledge this change and also stay a step a head of the evolution curve of

the Indian market.

7) Finally, it is not the format that gives business sustainability rather it is one of the

vehicles to deliver the value to the customer.

8) Indian consumers are still family-driven entities. Shopping, entertainment and eating

out are family events. Since these decisions are normally group decisions, hence a

marketer has to address family sensibilities more rigorously to woo Indian customers.

9) Indian customers have become more sensitive to quality, customer service and status.

He/She is ready to pay, sometimes, astronomical sums provided their needs are

satisfied. They are basically looking for an experience which is more of cognitive

than physical. In brief, Jo Dikhta Hai Wo Hi Bikta Hai.

In some cases, few unorganised store owners find no competition because they

understand what their customers want. So ultimately it can be said that for a retailer

understanding the customers is just like climbing the Greased Pole.

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BIBLIOGRAPHY

Books:

Berry, L.L. (2001). “The Old Pillars of New Retailing” Harvard Business Review, 79,

4, 131-137.

Bijapurkar, R. (2003), The New, Improved Indian Consumer, Business World,     8th

December, PP. 28-36.

Consumer & Marketers, Marketing White Book (2006) P. 109

FDI in Retail Sector in India, Arpita Mukherjee, Nitisha Patel, ICRIER

Publication,pg.31

India Retail Hand book ,ICICI and AC Neilson , ORG Marg ( 2006)

Living it Up, India Today, August, 22,2005, pp.86

Marketing White Book (2006), Business World, pp.237,114-115.

Non-Store Retailing, Retailing in India, Euro monitor Report, 2006

Retailing in Punjab: 2010 and beyond (2006), An image & CII study.

The Global Retail Development Index (2006), At Kearney

TSMG ( Tata Strategic Management Group) Analysis, 2006.

Website:

http://www.franchiseek.com/Market_ Trends_Retail_0304.htm

http://www.etretailbiz.com/feb2004/fRetail.html

http://www.amec.com.mx/revista/num_7_2004/Virchez_Jorge.htm

http://www.researchandmarkets.com/reportinfo.asp?report_id=340653

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ANNEXURE: QUESTIONNAIRE

Dear Respondent,

I am a student of management studies; I am supposed to undertake a

survey on “Consume Perception Towards Supermarket Private

Brand Products: A Comparative Study of Bharti Easyday &

Aditya More”. I expect full co-operation from your side.

1. Your Name______________________ Age:_____ E-mail Id___________

2. Where do you belong to?

(a) Urban (b) Rural

3. Your Profession?

(a) Professional b) Student c) Govt. Service

(d) Businessman

4. Educational Background

(a) Matric (b) Higher Secondary (c) Graduate

(d) Post Graduate

5. Do you understand what is organised Market and unorganised Market Retail?

Yes No

6. How often you visit to Retail Outlets in a month?

(a) 1-5 Times (b) 5-10 Times (c) More than 10 times

7. How much time you spend in the Retail Outlets?

(a) 1-3 Hours (b) 3-6 Hours (c) More than 6 Hours

8. On a visit of 5 times to a mall how many times do you actually purchase?  

79

(a) Once (b) Twice (c) Thrice (d) More

9. What would be the purpose to visit Retail Outlets?

(a) Window Shopping (b) Shopping (c) Watching Movies

(d) Exhibition cum sale (e) Playing console games

(f) Date with a friend

10. What are the main attractions of the Retail Outlets?

(a) Parking facility (b) Same rate as of bazaar

(c) Every commodity under one roof (d) Packed & Hygienic food

(e) Latest /Branded varieties (f) Centrally Air-Conditioned

(g) Well equipped lifts and elevators

11. According to you what would be the Future of unorganised Retail Stores?

Will they stay in the market for another 10 or more Years or not

(a) Yes (b) No

12. Where do you prefer shopping?

(a) Big Market Retail Outlets (b) Small Market Retail

13. If you have some emergency where do you go for shopping

(a). The Popmam(traditional store) Closer to you home

(b). The mega mart

14. Benefits you get from the traditional stores?

(a) Credit (b) Friendly Relation

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(c) Free home delivery (d) Any other___________

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15. What is the scope of the organised Market Retail in India?

(a) Developed (b) Underdeveloped (c) Failure

16. What are the growth prospects and issues related to the retail industry?

(a) Managed Market (b) On time Delivery (c) Quality Product

17. What are the opportunities & challenges in front of the retailers in India and emerging trends there?

(a) Maintaining Quality (b) Competitiveness

(c) Better Environment (d) Irregular Govt. Policies

18. According to you the boom in the retail Industry will reach to the rural area or

will it only concentrated to the urban area

(a) Yes (b) No

19. Rate the Range of Products available in Retail Store?

Good Average Poor

Easy Day

More

20. Rate the discount offers of Retail Store?

Good Average Poor

Easy Day

More

21. Enough Choice of Prices

(RETAILER) offers a wide enough choice of [PRODUCTS] at different prices.

Strongly Agree Agree Disagree Strongly

Disagree

Easy Day

More

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22. Price Comparability

You can easily compare prices of products at (RETAILER) when buying [PRODUCTS]

Strongly Agree Agree Disagree Strongly

Disagree

Easy Day

More

23. Transparency

Prices are clear and accurate, i.e. you know exactly what you are going to pay, before you buy

the product.

Strongly Agree Agree Disagree Strongly Disagree

Easy Day

More

24. Overall Satisfaction with Pricing Policies of Retail Store?

Highly

Satisfactory

Satisfactory Averagely

Satisfactory

Dissatisfactory Highly

Dissatisfactory

Easy Day

More

83