Executive Summary

Retailing in India came with evolutionary patterns from Kirana store to Super market. This sector was un-
organized in the initial stage, and after that it carried forward by the textiles industries through the dealer
model. Now it is growing as supermarket and hypermarket. The main drivers of the retail evolution in India
are buying behavior of the customer, increase in disposable income of middle class, infrastructure
development and changing customer choice. The target segments of retailers are the younger middle class
earners which belong to more than 20% of total population.
The growth in retail sector also comes through innovative ideas. As retailers are providing the
innovative buying options at different store like as cash & Carry, lowest price day (Sabse Sasta din) which
help to increase the customer base. Initially organize retail was involve in the apparels and footwear. Now
retail has included the food chains, book & CD store (landmark)

and electronics (CROMA store a Tata retail chain). These all changes occurred at a passage of time so; it is an
evolution rather than revolution. This paper help to give information about the journey of retail in India,
different formats of retails chains, drivers of the retail industry, and finally the barrier in the growth of
Indian retail.

Retail in India: Revolution or Evolution

Evolution of Retail in India:

The journey of retail started long back through the Kirana store in India. This is first effort by local
shopkeeper. The shopping centre concept comes into the existence in year 1869, with Mumbai Crawford
market and Kolkata’s New Market in year1874. The underground shopping complex Palika Bazaar in New
Delhi was established in the late 1970s and mini malls on the Banglore’s Brigade Road come into existence in
1980s.

Government of India entered into the rural India by franchisees called Khadi Bhandar. These stores serve as
outlets for products made by village...

As we understand, retailing involves all activities directly related to the sale of goods and
services to the ultimate consumer for personal, non-business use. Simple retailing is
maturing into a more microscopic and systematized process.

The era of rural retail industry could be categorized into two formats: weekly markets and
village fairs. Primarily weekly formats catered to the daily necessities of villagers.
Village fairs were larger in size with a wide variety of goods sold from food, clothing,
cosmetics and small consumer durables. The traditional era saw the emergence of the
neighborhood 'Kirana' store to cater to convenience of the Indian consumers. The era of
government support saw indigenous franchise model of store chains run by Khadi &
Village Industries Commission. The KVIC has a countrywide chain of 7000 plus stores in
India. This period also witnessed the emergence of shopping centers with car parking
facility. The Modern era has a host of small and large formats with exclusive outlets
showcasing a complete range of products. The department stores and shopping malls
targeting to provide a complete destination experience for all segments of the society.
The hyper and super markets are consistently trying to provide the customer with the 3
V's. (Value, Variety and Volume)

Over the last three years, this sector has witnessed an exorbitant growth due to the
establishment of numerous international quality formats to suit the Indian purchase
behavior, the improvement in retail processes, the development of retail specific
properties and the emergence of both, domestic and international organizations.
Retailing sector is the second largest employer in the country with almost over 12 million
retail outlets in India and only 4% of them being larger than 500 square feet in size.
Although retailing in India is fairly fragmented, organized retailing is gaining momentum
rapidly growing at almost 25-30% per annum and is forecasted to touch a figure of Rs
I,50,000 crore by 2010. The economy is projected to grow at 8.1% in 2005-2006 having
grown at a steady pace of around 6% over the last 10 years.

Organized retailers are the contemporary formats by which shoppers have the edge of a
world class shopping experience. Fine examples of these formats are Pantaloon, Shoppers
Stop and Trent. Organized retail may broadly be classified into the following formats-

Malls The largest form of organized retiling today. Malls are located mainly in metro
cities, in proximity to urban outskirts, this format ranges from approximately 60,000 sq ft
to 7,00,000 sq ft and above. They lend an ideal shopping experience with an
amalgamation of product, service and entertainment, all under a common roof.

Hypermarkets They are typically large, starting from 40,000sq. ft plus are usually
located outside the city limits. This format comprises of a multiple division layout, and
usually has an" industrial- look" interior. Hypermarkets generally provide daily
necessities and grocery like items. Pricing is competitive and they also offer volume
discounts.

MBO's Multi Brand outlets, also known as Category Killers, offer several brands across
a single product category. These usually do well in busy market places and Metros.

Super Markets Large self service outlets, catering to varied shopper needs are termed as
Super markets. These are located in or near residential high streets. These stores today
contribute to 30% of all food & grocery organized retail sales. Super Markets can further
be classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large
supermarkets ranging from a size of 3,500 sq ft to 5,000 sq ft. having a strong focus on
food & grocery and personal sales.

Discount Stores As the name suggests, discount stores or factory outlets, offer discounts
on the MRP through selling in bulk reaching economies of scale or excess stock left over
at the season. The product category can range from a variety of perishable/ non
perishable goods.

Convenience Stores These are relatively small stores 400-2,000 sq. feet located near
residential areas. They stock a limited range of high-turnover convenience products and
are usually open for extended periods during the day, seven days a week. Prices are
slightly higher due to the convenience premium.

Departmental Store Large stores ranging from 20000-50000 sq. ft, catering to a variety
of consumer needs. Further classified into localized departments such as clothing, toys,
home, groceries, etc.
Exclusive Store Ranging from a size of 500 sq ft to 5,000 sq ft. & above, this format is
owned/ managed by the Company or through its franchise. These can offer single brand
as well as multiple bands.

Specialty Store These formats focus on a specific product category, Medium sized
layout in strategic location. Specialty stores provide a large variety base for the
consumers to choose from.

Despite the presence of the basic ingredients required for growth of the retail industry in
India, it still faces substantial hurdles that will retard and inhibit its growth in the future.
One of the key impediments is the lack of FDI. This has largely resulted in limited capital
investments in supply chain infrastructure, which is a key for development and growth of
retailing and has also constrained access to world-class retail practices. Lack of proper
infrastructure and relatively high cost of real estate are the other impediments to the
growth of retailing. While the industry and the government are trying to remove many of
these hurdles, some of the roadblocks will remain and will continue to affect the smooth
growth of this industry

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

Growth of Indian Retail

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

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

Major Retailers in India

Pantaloon:

Pantaloon is one of the biggest retailers in India with more than 450 stores across the
country. Headquartered in Mumbai, it has more than 5 million sq. ft retail space located
across the country. It's growing at an enviable pace and is expected to reach 30 million
sq. ft by the year 2010. In 2001, Pantaloon launched country's first hypermarket ‘Big
Bazaar’. It has the following retail segments:
 • Food & Grocery: Big Bazaar, Food Bazaar
• Home Solutions: Hometown, Furniture Bazaar, Collection-i
• Consumer Electronics: e-zone
• Shoes: Shoe Factory
• Books, Music & Gifts: Depot
• Health & Beauty Care: Star, Sitara
• E-tailing: Futurebazaar.com
• Entertainment: Bowling Co.

Tata Group

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

RPG Group

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

Reliance

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

AV Birla Group

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

Retail formats in India

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

categories.

• Mom-and-pop stores: they are family owned business catering to small sections;
they are individually handled retail outlets and have a personal touch.
• Departmental stores: are general retail merchandisers offering quality products
and services.
• Convenience stores: are located in residential areas with slightly higher prices
goods due to the convenience offered.
 •Shopping malls: the biggest form of retail in India, malls offers customers a mix
of all types of products and services including entertainment and food under a
single roof.
• E-trailers: are retailers providing online buying and selling of products and
services.
• Discount stores: these are factory outlets that give discount on the MRP.
• Vending: it is a relatively new entry, in the retail sector. Here beverages, snacks
and other small items can be bought via vending machine.
• Category killers: small specialty stores that offer a variety of categories. They are
known as category killers as they focus on specific categories, such as electronics
and sporting goods. This is also known as Multi Brand Outlets or MBO's.
• Specialty stores: are retail chains dealing in specific categories and provide deep
assortment. Mumbai's Crossword Book Store and RPG's Music World are a
couple of examples.

Challenges facing Indian retail industry

• The tax structure in India favors small retail business

• Lack of adequate infrastructure facilities
• High cost of real estate
• Dissimilarity in consumer groups
• Restrictions in Foreign Direct Investment
• Shortage of retail study options
• Shortage of trained manpower
• Low retail management skill

The Future

The retail industry in India is currently growing at a great pace and is expected to go up
to US$ 833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the
year 2018 at a CAGR of 10%. As the country has got a high growth rates, the consumer
spending has also gone up and is also expected to go up further in the future. In the last
four year, the consumer spending in India climbed up to 75%. As a result, the India retail
industry is expected to grow further in the future days. By the year 2013, the organized
sector is also expected to grow at a CAGR of 40%.

Related Links
• India Shopping Malls
• Scope of Retail Market
• Organized Retail Market
• Growth Factors Retail sector
• Opportunities Retail sector
• Challenges Facing
• Role of Supply Chain Retail
• Employment Generation
• Impact on Lifestyles
• Emerging Trends
• Growth of Retail Companies
• Evolution of Indian Retail
• FDI Retail Sector
• Formats Retail Sector
• Consumer Durables Retail