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Retail Industry in India:challenges Opportunties and Strategies

Introduction

Retailing involves all activities incidental to selling to ultimate consumer for their personnel family and household use. It does this by organizing their availability on a relatively large scale and supplying them to a customers on arelatively smallscale. Retailer is any person/organization instrumental in reaching the goods or merchandise oer services to the end users.Retailer is a must and cannot be eliminated.

The Indian retailing industry is becoming intensely competitive, as more and more payers are Vying for the same set of customers. The major retail players are Pantaloon Retail, Shoppers Stop, Reliance,etc..,

Retailing is one of the biggest sectors and it is witnessing revolution in India. The new entrant in retailing in India signifies the beginning of retail revolution. India’s retail market is expected to grow tremendously in next few years. According to AT Kearney, The Windows of Opportunity shows that Retailing in India was at opening stage in 1995 and now it is in peaking stage in 2006. India’s retail market is expected to grow tremendously in next few years. India shows US0 billion retail market that is expected to grow 10% a year, with modern retailing just beginning. India ranks first in 2005. In fact, in 2005 and 2006, India is the most compelling opportunity for retailers, because now India is in peaking stage.

This window of opportunity is useful for executives who plan their market-specific strategies; the four stages or the lifecycle of this industry is as as follows:

Introduction:

An introduction is the opening phase of a market and is one that is just entering the GRDI, Global Retail Development Index This index is based on more than 25 macro-economic and retail –specific variables.for instance ,the country risk includes parameters like political risk,economic performance,debt indicators,credit ratings,access bank finance and business risk.The market attractiveness covers reail sales per capita ,urban population ,laws and regulations and business efficiency.

Iin this stage all, which are outside the top 30 markets, falls in this stage. At this stage, retailers should monitor and performing high-level assessments, they should plan for their entry strategies. India in the late 1990′s is a good example in the opening stage, while in 2006, Kazakhstan is the country in introduction stage.

Stategy suggested:A rapid penetration strategy is suggested at this stage i>e low price and high promotion.

Growth:

In growth stage, the market is developing quickly and also ready for modern retailing. Countries, which are in Peaking stage, are India, Ukraine and Vietnam. Retailers entering this stage have the best chance for long-term success. Retailers at this stage should enter through local representations, sourcing offices and new stores. Wal-Mart success in china in the late 1990′s and early 2000′s gives us the importance of committing to a promising high-growth market at right time.

Strategy suggested: The strategy of adopting quality and styled products with new models and shift of advertising from product awareness to product preference Eg the big bazaar advt says surf exel is cheaper than the market price.The idea behind adopting strategy is to strengthen against competitors.

Maturity:

In this stage the market is still big and growing, but the space for new entrants will become tighter and retailers should act quickly at this stage because retailers at this stage have limited time to explore, and also their margin for error is thin. In general , they should act according to the established rules and should be open to face the competition from international retailers. This stage generally lasts longer than the previous two stages.

Strategy suggested: Enter new market segments that is either enter new geographic areas eg vishal megha mart has opened stores in smaller cities tier II and III cities

Decline:

The window of opportunity is closing fast and modern retail share is reaching 40 to 60 percent. Though the opportunity is closing the existing retailers can enter with new formats such as discount models or non-food formats such as consumer electronics and apparel.

Window of opportunity ends for about 5 to 10years before a market enters the closing phase and reaches saturation level. India for example, was in the opening stage in 1995 and entered peaking stage in the year 2003 and reached number 1 rank in2005.

Strategy suggested: Identifying weak segments, maintaining investment level selectively.

Unorganized retailing in India

In India, the most of the retail sector is unorganized. In India, the retail business contributes around 11 percent of GDP. Of this, the organized retail sector accounts only for about 3 percent share, and the remaining share is contributed by the unorganized sector. The main challenge facing the organized sector is the competition from unorganized sector. Unorganized retailing has been there in India for centuries, theses are named as mom-pop stores. The main advantage in unorganized retailing is consumer familiarity that runs from generation to generation. It is a low cost structure, they are mostly operated by owners, has very low real estate and labor costs and has low taxes to pay.

Organized retailing in India

In late 1990′s the retail sector has witnessed a level of transformation. Retailing is being perceived as a beginner and as an attractive commercial business for organized business i.e. the pure retailer is starting to emerge now. Organized retail business in India is very small but has tremendous scope. The total in 2005 stood at 5 billion, accounting for about 11% of GDP. In this total market, the organized retail accounts for only billion of total revenue. According to A T Kearney, the organized retailing is expected to be more than billion revenue by 2010.

In organized retailing will grow faster than unorganized sector and the growth speed will be responsible for its high market share, which is expected to be $ 17 billion by 2010-11.

Retailing will show good prospects in cities like Mumbai, Delhi, Chennai, kolkata, Banglore and Kanpur. After Dubai, Singapore and Hong Kong, In India Delhi will be the next big retail destination, According to Confederation of Indian Industries whose findings have shown that Delhi has the good resources and good conditions for the retail sector. Out of the total earnings of the Government of Delhi Rs 11,000 crore, Rs 6,500 crore is achieved from the retail sector.

- Share of Organised Retail

1999 2002 2005

Total Retail (in billion INR) 7000 8250 10000

Organized Retail (in billion INR) 50 150 350

% Share of Organized Retail 0.70% 1.80% 3.5%

The organized sector is expected to grow faster than GDP growth in next few years driven by favorable demographic patterns, changing lifestyles, and strong income growth. This organized retail sector mix includes supermarkets, hypermarkets discounted stores and specialty stores, departmental stores. For example, Spencer network has 69 stores, which includes seven Spencer hypermarkets, three Spencer super markets and 49 Spencer Dailys. Now the company is planning to open 20 stores in 10 cities in six months. The top 10 retailers account only for 2% of total market, today modern retailing is expected to enter a boom phase, which has major players and these players might capture 10% of total market, within next five years. The retail sales in India for future are shown below (data from 2005-2008 is based on estimates):

PRESENT INDIAN SCENARIO

* Unorganized market: Rs. 583,000 crores

* Organized market: Rs.5, 000 crores

* 5X growth in organized retailing between 2000-2005

* Over 4,000 new modern Outlets in the last 3 years

* Over 5,000,000 sq. ft. of mall space under development

* The top 3 modern retailers control over 750,000 sq. ft. of retail space

* Over 400,000 shoppers walk through their doors every week

Growth drivers in India for retail sector

• Rising incomes and improvements in infrastructure are enlarging consumer markets and accelerating the convergence of consumer tastes.

• Liberalization of the Indian economy

• Increase in spending Percapita Income.

• Advent of dual income families also helps in the growth of retail sector.

• Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc.

• Consumer preference for shopping in new environs

• The Internet revolution is making the Indian consumer more accessible to the growing influences of domestic and foreign retail chains. Reach of satellite T.V. channels is helping in creating awareness about global products for local markets.

• About 47% of India’s population is under the age of 20; and this will increase to 55% by 2015. This young population, which is technology-savvy, watch more than 50 TV satellite channels, and display the highest propensity to spend, will immensely contribute to the growth of the retail sector in the country.

• Availability of quality real estate and mall management practices

• Foreign companies’ attraction to India is the billion-plus population.

Employment opportunities in retail sector in India

India’s retail industry is the second largest sector, after agriculture, which provides employment. According to Associated Chambers of

Tags: Indiachallenges, Industry, Opportunties, Retail, strategies

The Exuberant Age of Retail in India

THE EXUBERANT AGE OF RETAIL IN INDIA

*Rizwana Atiq – Lecturer,Department of Business Administration, Integral University, Lucknow

Abstract

India has stepped in the exuberant age of retail. It ranks second after Russia as the most alluring destination for retailers among 30 emerging markets, according to the Global Retail Development Index developed by AT Kearney, a consultancy. The 10-12% increase in the economy’s disposable income can be seen clearly by the way goods and services are being brought and sold. Retail Trade contributes 10-11% of India’s GDP and currently employs over 4 crore people.

THE DRIVE FOR RETAIL :

The reason for the boom in retail is the gradual increase in disposable incomes of the middle and upper class household. Countries like US, Japan, U.K. have started out sourcing business activities and are willing to pay a handsome package to those who deserve. The out sourcing will create 10-24 million jobs by 2020. The Indian youth is zealous, Intelligence and has the will to work hard. This is attracted foreign business organizations in the country where by increasing the income levels and the purchasing power of consumers. The Indian consumer has a great amount of disposable income which has increased demand level of the country. This demand is accompanied by the desire to get the best quality. In India over 65% of the population is below 35 years of age and 54% are below 25 years. They have enough to pay for all their dream desires. Moreover there is a switch from joint family to nuclear family and DINK segment is making its presents felt. Driven by changing lifestyles, strong income growth and favourable demographic patterns, Indian retail is expanding at a rapid pace.

Mall space, from a meager one million square feet in 2002, is expected to touch an estimated 60 million square feet by end-2008, says Jones Lang LaSalle’s third annual Retailer Sentiment Survey-Asia.

The Indian consumer wants the best . This has increased demand for exclusive brands . Now Nike has over 100 outlets and Reebok has over 400 outlets. Thus the increase consumption pattern is having a direct bearing on the growth of retail sector. The consumption in 2005-06 was Rs. 2124000 Crore (Approximately 480 billion.)

THE INDIAN RETAILERS:

1. RPG:-It was the first to get into retail Business in India.Foodworld began as adivision of Spencer& Co., a part of RPG Group in May 1996,with supermarket in Chennai.Today Foood world is a separate company: a joint venture between Spencer & Co. and Dairy Farm international.

2. The TATA Group It has signed a joint venture for a new subsidiary, Infiniti retail, a large format multi brand chain for consumer durables. For lifestyle and the food and grocery segment, it operates through its retail arm Trent. Trent forayed into the hypermarket business with Star India Bazar.

3. Pantaloons Retail: The Company’s value retailing includes includes Big Bazar which is a hypermarket, Food Bazar which is a supermarket and Fashion Station, popular fashion stores. Pantaloon Retail (India) Limited is part of the future Group. The Future Group operates through many verticals viz Future retail, Future Capital, Future Space, Future Logistics and Future Group.

4. Vishal Retail Group: The store has spread over 25000 Sqft. It offers fashion accessories, grocery product, apparel & Electrical gadgets. The Group entered the hypermarket segment with its first such store in Udaipur.

5. Reliance Retail: It has set a revenue target by 2010-11 which is about double of the present revenues of all organized retail business in India. Reliance operates Qwik Mart, quick transaction stores offering the convenience of buying household food and non-food merchandise, music, take-away café and convenience-oriented ancillary services without a price penalty.

6. Subhiksha: The stores are small sized and functional with average size of 1500-2000sqft.

7. Nilgiri’s: The Company’s strategy is backward integration with an increase focus on fresh fruit and vegetables.

8. Trinethra:- It is a South based grocery chain. The stores in Kerala to have a bakery attached for which the Company has tied up with Ann’s Bakery.

A LOOK AT THE RETAIL FORMATS

1.Department Store : This represents retail outlets that stocks a wide range of merchandise. Stores often provide customers with exclusive membership cards on purchases up to a certain value. The major players are Ebony, Globus, Life Style, Shoper’s Stop and Westside.

2.Super market : They are self service stores which concentrate on the prize aspect to attract customers like Food Bazaar, Subhiksha and Fab-mall. Supermarket is a self-service store offering a range of food and household articles.

3.Hyper market : It is a department store combined with super market although in India the hyper markets are not well developed still we have a few player like Reliance retail, Big Bazaar and a few more. The latest to make a big splash in the retail scene is the Aditya Birla Retail (ABRL), the retail arm of the -billion Aditya Birla Group, which plans to invest between Rs 250 and Rs300 crore for setting up a dozen hypermarkets under the brand name ‘More Megastore’ in the country. The hypermarkets will offer 60,000 products sourced through over 500 suppliers say company officials. The group also plans to open ‘Family Stores’ stocking apparel from Madura Garments, the owner Louis Philippe, Van Heusen, Allen Solly and Peter England brands and also distributes the international brand Esprit in India.

4. Discount Store : It is a department store except that it sells products at a lower prize for example The Loot and My Dollar Store.

5. Specialty Store : They offer a large range of selections within a single merchandise category for example The Gold Souk in Gurgaon and the Music World and Planet M.

6. Conveyance Store : The stock most essential and FMGC products like food items and several products of daily use. The major players are Red Shop and My Mart. Although world wide they are open through out the day and night but this is not so all the palyers within this format in India.

7.Kiosk : they are small retails outletswhich are open on all sides and sell consumer goods like edibles and snacks, newspapers and so on. emphasis is on designing the kiosk façade-thet sport attractrive colour schemes. Some of the players are Mr. Orange , Cookie Man, Corn Man ,Kidz on Wheelz and so on.

TIE-UPS IN RETAIL

Indian retailers are trying to tie-up with global brands through franchise and licensing agreement because they benefits both the partners. The global companies have funds expertise and goodwill while the Indian companies have the right feel of the domestic market.

? India has global retail giants like Bharti-Wal-Mart. Wal-Mart’s (the world’s biggest retailer) tie up with Bharti Enterprises for cash & carry operations, seems to have encouraged French retailer Carrefour, to enter the Indian market through the wholesale route.

? Mukesh Ambani-controlled Reliance Retail is entering into talks with UK fashion retailer Marks & Spencer (M&S) to float an equal joint venture for apparel, gourmet food and cafes. The gourmet food format may be integrated with Reliance Fresh wherever possible. This would help M&S attain immediate scale in food business as Reliance Fresh has 491 stores selling foods, fruits and vegetables, and may be scaled up to 1,400 stores by the end of next fiscal. Marks & Spencer is present in India through a franchisee arrangement with Planet Retail since 2001 and operates more than 20 stores in India out of its 760-strong global network. Within four months of rolling out its first store in November 2007, Reliance Retail opened 500 stores in various formats, spanning 3-million square ft of occupied space in various cities.

? Home Solutions Retail India (HSRIL), a part of the Kishore Biyani-owned Future Group, will soon start retailing lightings and electrical products under the Bijli Ghar brand. This is the first time a major corporate retailer has unveiled plans to enter the unorganised Rs80,000 crore lighting market dominated by small and medium city and region-specific players across the country. The company already has a joint venture with Asian Electronics and Idiom Design & Consulting to launch the products. The lighting stores will open in 80 Big Bazaar outlets across the country and, in the next six to nine months, the company is planning of opening standalone stores, targeting revenues of Rs100 crore in the first year of operations.

FUTURE AHEAD IN RETAIL

Merrill Lynch which is a an advisory firm, expects the Indian Retail industry to grow to US0 billion by 2010.

• Spencer’s is planning to set up 500 more stores by June 2008 with an investment of nearly US$ 125.89 million.

• Hypercity is planning to set up 250 Expresscity stores in the convenience store format across the country in the next five years.

• DLF plans to invest US$ 4.02 billion over four years to develop about 20 large shopping malls across the country.

• Israeli mall developer Plaza Center NV plans to invest US$ 1.25 billion over the next five-seven years to set up 50 malls in India.

The domestic retail sector is

Tags: Exuberant, India, Retail

FUTURE TRENDS OF RETAIL IN INDIA

FUTURE TRENDS OF RETAIL IN INDIA

ABSTRACT

Retail is India’s largest industry, accounting for over 10 per cent of the country’s GDP and around eight per cent of the employment. Retail industry in India is at the crossroads. It has emerged as one of the most dynamic and fast paced industries with several players entering the market. But because of the heavy initial investments required, break even is difficult to achieve and many of these players have not tasted success so far. However, the future is promising; the market is growing, government policies are becoming more favorable and emerging technologies are facilitating operations.

 FUTURE TRENDS OF RETAIL IN INDIA

R.Yuvarani*

INTRODUCTION

Indian retail sector is highly fragmented as compared to the developed as well as the other developing countries. This shows a great potential for the organized retail industry to prosper in India, as the market for the final consumption in India is very large. Retail trade is largely in the hands of private independent owners and distributor’s structure for fast moving consumer goods consisting of multiple layers such as carrying and forwarding agents, distributors, stockiest, wholesalers and retailers. Thus, the growth potential for the organized retailer is enormous. In the next 2-3 years, India will finally see operations of a number of very serious international players- net withstanding the current restrictions on FDI in retail.

The Indian retail sector is ready to take on challenges from global retail players such as Wal-mart and Carrefour because unlike them, they have a better understanding of the Indian consumer’s psyche. Ultimately, a successful retailer is one who understands his customer. The Indian customer is looking for an emotional connection, a sense of belonging. Hence, to be successful any retail outlet has to be localized. The customer should feel that it is a part of his culture, his perceived values, and does not try to impose alien values or concepts on him. Indian customer is not keen to buy something just because it is sold by an international company.

PRESENT SCENARIO

Retailing in India is witness to the boom in terms of modern retailing formats, shopping malls etc. the future of retailing for any product across the country will definitely be in malls where the consumer can get variety, quality and ambience.

However, in spite of this continuous debate to be or not to be, recently Government has allowed up to 51 percent FDI in single brand retailing by foreign companies like Reebok and Louis Vuiton. As of now, single brand retailers operate through the franchisee route and there is a strong view that FDI in this segment would not displace jobs or impact the local industry but help create employment.

Even today the government is undecided about the level FDI in retail, but a number of foreign players, including the Wal-mart stores, Inc., have announced their intention to enter India in a big way. At present Wal-mart is operating through its subsidiary in Bangalore, which was functioning as a liaison office till last year. Now it is in the process of setting up offices in New Delhi and Mumbai.

RETAILING IN THE 21ST CENTURY

Retailing in the new millennium stands as an exciting, complex and critical sector of business in most developed as well as emerging economies. Today, the retailing industry is being buffeted by a number of forces simultaneously, e.g., increasing competition within and across retailing formats, the growth of online retailing, the advent of “Radio Frequency Identification (RFID) technology, the explosion in customer-level data availability, the global expansion of major retail chains like WAL-MART and METRO Group and so on. Making sense of it all is not easy but of vital importance to retailing practitioners, analysis and policymakers.

RETAIL IN INDIA – THE FUTURE

According to a study the size of the Indian Retail market is currently estimated at    Rs.704 crores, which accounts for a meager 3% of the total retail market. As the market becomes more and more organized the Indian retail industry will gain greater worth. The Retail sector in the small towns and cities will increase by 50% to 60% pertaining to easy and inexpensive availability of land and demand among consumers.

Growth in India Real estate sector is also complementing the Retail sector and thus it becomes a strong feature for the future trend. Over a period of next 4 years there will be a retail space demand of 40 million sq. ft. However with growing real estate sector space constraint will not be there to meet this demand. The growth in the retail sector is also caused by the development of retail specific properties like malls and multiplexes.

According to a report, from the year 2003 to 2008 the retail sales are growing at a rate of 8.3% per annum. With this the organized retail which currently has only 3% of the total market share will acquire 15%-20% of the market share by the year 2010.

Factors that are playing a role in fuelling the bright future of the Indian Retail are as follows:

The income of an average Indian is increasing and thus there is a proportional increase in the purchasing power. The infrastructure is improving greatly in all regions is benefiting the market. Indian economy and its policies are also becoming more and more liberal making way for a wide range of companies to enter Indian market. Indian population has learnt to become a good consumer and all national and international brands are benefiting with this new awareness. Another great factor is the internet revolution, which is allowing foreign brands to understand Indian consumers and influence them before entering the market. Due to the reach of media in the remotest of the markets, consumers are now aware of the global products and it helps brands to build themselves faster in a new region

However despite these factors contributing to the growth of Indian retail Industry, there are a few challenges that the industry faces which need to be dealt with in order to realize the complete scope of growth in Indian market.

Foreign direct investment is not allowed in retail sector, which can be a concern for many brands. But Franchise agreements circumvent this problem. Along with this regulation, local laws, and real estate purchase restrictions bring up challenges. Other than this lack of integrated supply chain, management, and lack of trained workforce and flux of the market in terms of price and product choice also need to be eliminated.

The Indian Retail Street is set to glow brighter with India recapturing its position as the most attractive destination for global retailers, despite the global slump. According to the Global Retail Development Index (GRDI) released by US-based global management consulting firm, A T Kearney, India has emerged as best country amongst 30 emerging markets. This reinforces the fact that trade with India is a golden opportunity to be capitalized upon. Interestingly, Russia clinched the second position, while China settled for the third spot. The report also stated that India has become the most attractive destination for retail investment for the fourth time in five years.

Currently India has one of the largest numbers of retail outlets in the world. According to a report by images Retail estimates the number of operational malls will grow more than two-fold, i.e., it will cross 412, with 205 million square feet getting covered by 2010. Nearly 715 malls will be added by 2015, with major retail developments in tier-II and tier-III cities fuelling further growth.
Many global retailers have given thumps up to trade with India.
The future ahead Industry experts see the rise of the rural sector in the coming years. Currently, rural market comprises nearly half of the domestic retail market of India, i.e., US$ 300 billion. The per capital income of the rural India has reportedly grown by 50 percent over the last 10 years, mainly because of the rising commodity prices and better productivity. According to E&Y India, basic infrastructure, generation of employment guarantee schemes, better information services and access to funding are ushering in good times for the rural households.

• As per the new market research report by RNCOS, organized retail market is expected to reach US$ 50 billion by 2011

• The boom in the retail market will fuel the growth of the logistic market. It is estimated the market will reach around US billion by 2011.

• Retailing of mobile handset and accessories is estimated to reach close to US0 million by 2010.

• Rural market is estimated to lead the Indian retail industry landscape in the future.

• Shopping malls are expected to increase at a CAGR of more than 18.9 per cent from 2007 to 2015.

INDIAN RETAIL LANDSCAPE

Raising income and increase consumerism are fueling retail growth.

Year

$ billion retail growth

1998

201

2000

204

2002

238

2004

278

2006*

321

2008*

368

2010*

421

*Estimates

Sources: Retail in India-A CII-AT Kearney report

According to NCEAR

Tags: FUTURE, India, Retail, TRENDS

The goal the action digi-retail

The goal of the action digi-retail
H Special Secretariat for Digital Planning for the Ministry of Economy and Finance, in cooperation aided by the company “Digital Aid SA has set the purpose to boost the use of ICT by enterprises during the retail industry.
Already past actions (“Go”, “Electronic Business”, “Digital Future», «e-services», etc.) were undertaken either by EOMMEX, either by your General Secretariat of Industry, or from the IS SA had yield particular look at creating web stores and basic infrastructure e-commerce in Small , and Medium Enterprises within country. And may provide a point of e-business when, cause significant interest in such assistance.
However, the truth inside retail sector has changed significantly. Today, companies in the marketplace faced increased competitive challenges while addressing a audience which can be more digitally literate than in the past. Consumers today at significantly higher rates, search, compare and buying products online. Informed within the service quality shops using social media marketing. Subject to new types promotion (marketing) that will be not anymore restricted to traditional varieties of advertising in traditional media, but extended to your Internet and mobile devices fast. Retailers contest with each other, with continuous and many more transparent information to consumers about prices and new items, utilizing the web.
Investments in i . t . and communications companies in your retail industry still can’t feel confined to electronic online sales. Hence, the Special Secretariat of Digital Design designs and sets the action in consultation digi-retail within the implementation of targeted investment in retail trade from existing businesses operating inside the Greek territory. The action differs significantly from past approaches.
The intention of action is usually to provide utmost in assisted businesses:
• Conditions extrovert to set and enhance their competitive position by exploiting information and communication technologies,
• Capacity diversify product provided in the competition to build conditions for expansion within their turnover, utilizing advanced technologies and related services,
• Opportunities to improve sales and personalized, consistent and integrated technique to clients and
• Requirements to cut back operating costs by making use of it to automate warehouse management processes, sales, purchasing and implementing promotional activities.
The opportunity using of ICT will enable participating companies to effectively address the adverse reactions of economic slowdown also to adapt quickly to changes in consumer behavior patterns, due to this.
In addition to the substantial and immediate benefits in to the Greek economy, these activities contribute fruitfully to succeed in most goals of your OP “Digital Convergence and specifically those for this Lisbon strategy and agenda for Europe 2020.
Points for consultation:
D1. Believe that the digi-retail activities ought to be targeted as before other actions, an extremely basic technology needs of retailers (web shops, standard) or maybe the conditions of competition and the healthy the world wide web inside our country, create demands for more advanced technological options that broaden the purchaser base and help control the internal management in the retail business?
D2. Identify new powerful trends while in the habits of consumers according to technology and from where the retailers must respond quickly to new technological means? Precisely what these?

If you want to get educated more about digi retail then visit our website to learn more about digi retail

Tags: action, digiretail, goal

New Era in Retail-the Road & Challenges Ahead

NEW ERA IN RETAIL-THE ROAD & CHALLENGES AHEAD

   ABSTRACT: 

In India, the most of the retail sector is unorganized. In India, the retail business contributes around 11 percent of GDP. Of this, the organized retail sector accounts only for about 3 percent share, and the remaining share is contributed by the unorganized sector. The main challenge facing the organized sector is the competition from unorganized sector. Unorganized retailing has been there in India for centuries, theses are named as mom-pop stores. The main advantage in unorganized retailing is consumer familiarity that runs from generation to generation. It is a low cost structure; they are mostly operated by owners, has very low real estate and labor costs and has low taxes to pay.

In organized retailing will grow faster than unorganized sector and the growth speed will be responsible for its high market share, which is expected to be $ 17 billion by 2010-11.
Retailing will show good prospects in cities like Mumbai, Delhi, Chennai, kolkata, Bangalore and Kanpur. After Dubai, Singapore and Hong Kong, In India Delhi will be the next big retail destination, According to Confederation of Indian industries whose findings have shown that Delhi has the good resources and good conditions for the retail sector. Out of the total earnings of the Government of Delhi Rs 11,000 crore, Rs 6,500 crore is achieved from the retail sector.
- Share of Organized Retail

1999 2002 2005
Total Retail (in billion INR) 7000 8250 10000
Organized Retail (in billion INR) 50 150 350
% Share of Organized Retail 0.70% 1.80% 3.5%

The organized sector is expected to grow faster than GDP growth in next few years driven by favorable demographic patterns, changing lifestyles, and strong income growth. This organized retail sector mix includes supermarkets,

hypermarkets discounted stores and specialty stores, departmental stores. For example, Spencer network has 69 stores, which includes seven Spencer hypermarkets, three Spencer super markets and 49 Spencer Dailys. Now the company is planning to open 20 stores in 10 cities in six months. The top 10 retailers account only for 2% of total market, today modern retailing is expected to enter a boom phase, which has major players and these players might capture 10% of total market, within next five years

But In India the Retailing industry has a long way to go,and to become a truly flourishing industry, retailing needs to cross the following hurdles:

* The first challenge facing the organized retail sector is the competition from unorganized sector.
* In retail sector, Automatic approval is not allowed for foreign investment.
* Taxation, which favors small retail businesses.
* Developed supply chain and integrated IT management is absent in retail sector.
* Lack of trained work force.
* Low skill level for retailing management.
* Intrinsic complexity of retailing- rapid price changes, threat of product obsolescence and low margins.
* Organized retail sector has to pay huge taxes, which is negligible for small retail business.

NEW ERA IN RETAIL-THE ROAD & CHALLENGES AHEAD

Retailing involves all activities incidental to selling to ultimate consumer for their personnel family and household use. It does this by organizing their availability on a relatively large scale and supplying them to customers on a relatively small scale. Retailer is any person/organization instrumental in reaching the goods or merchandise ore services to the end users. Retailer is a must and cannot be eliminated.

The Indian retailing industry is becoming intensely competitive, as more and more payers are Vying for the same set of customers. The major retail players are Pantaloon Retail, Shoppers Stop, Reliance, etc..,

Retailing is one of the biggest sectors and it is witnessing revolution in India. The new entrant in retailing in India signifies the beginning of retail revolution. India’s retail market is expected to grow tremendously in next few years. According to AT Kearney, The Windows of Opportunity shows that Retailing in India was at opening stage in 1995 and now it is in peaking stage in 2006. India’s retail market is expected to grow tremendously in next few years. India shows US0 billion retail market that is expected to grow 10% a year, with modern retailing just beginning. India ranks first in 2005. In fact, in 2005 and 2006, India is the most compelling opportunity for retailers, because now India is in peaking stage.

Challenges in the Retail Industry:

“Retail today is all about being better, faster, and leaner. Columbus IT helps you overcome the challenges of the retail industry and write your ticket to success.” — Dmitry Davydov, Key Retail Acount Manager, Columbus IT Russia.

The retail industry faces challenges similar to those in other industries. What’s different is that they combine together to put a great deal of pressure on retailers in today’s modern economy. With a fast-paced society and faster-paced

Technological changes, customers want new, different, and customized goods now, and they’re not willing to wait.

 At the same time, pressures on the backend are mounting, too. Larger retailers, with their efficiencies of scale and international scope, are pushing prices down and slashing margins.

To compete, you have to think like a Wal-Mart, even if you are a medium-sized retailer. Technology offers your company a way to apply modern ERP and CRM techniques on a global scale, whether through bricks-and-mortar stores, or over the Internet.

 Face and overcome these retail challenges with Columbus IT Retail solutions.

 Decentralized Operations

As a manager, ideally you’d like to be able to walk down the hall from your office and into any one of your stores or warehouses. In reality, that’s not possible. You have to hire the right people, staff your other locations, and rely on them to do the job right.

Technology has the advantage of being able to bring you and your employees together – whether they’re located in Minsk or Montana. Columbus IT retail solutions provide you with a centralized solution for your decentralized business.

Data flows from your stores and warehouses to your head office every night, so you have up-to-date sales and inventory information. You can make pricing changes across the board, or implement a new sales campaign to reflect the success or failure of one of your major products at one store – or all of them.

 Staff Turnover

There’s a higher rate of staff turnover in the retail industry, compared to other industries. This varies by country. European countries, for example, tend to retain store-level personnel more successfully. North America has a turnover rate of 200-300% of front-end employees in certain segments.

What does this mean for your business? While you can implement and pursue staff retention programs – and it makes good sense to do so – you’re going to have new employees coming through your doors on a regular basis. Getting them trained on your systems rapidly and cost-effectively is critical so that they can become productive members of your team as soon as possible.

 Columbus IT has you covered. First, our retail systems, led by our flagship product Retail  Chain manager, are easy to learn, easy to use, and easy to train others on.

Second, we train as we go. While we’re developing and implementing your retail solution, we’ll be training your staff at the same. As soon as your retail solution is finished, they’re ready to use it – no downtime.

 Third, we can integrate with your existing third-party systems – such as a POS system. Existing employees don’t have to retrain on a new system, and since we can retain your best-of-breed components, new employees are more likely to have experience with them. 

The bottom line: It’s simply a fact of life that your staff turnover is going to be higher than in other industries. The good news is that Columbus IT Retail solutions help you manage that turnover sensibly, with training and easy-to-use systems, from the start.

Shrinkage

Consider these sobering statistics on shrinkage (also known as inventory shrink):

For every dollar lost to shrinkage, you can lose to in profits. (UK statistic) You’ll only detect 3% of the shrinkage when it happens – the other 97% you’ll discover later. (UK statistic) For every theft you detect, 46 others will go undetected. (UK statistic) In 2005, total inventory shrinkage cost U.S. retailers .3-billion US. Administrative error is responsible for 14.6% of shrinkage, and employee theft is responsible for 47.9% of shrinkage (National Retail

Tags: Ahead, Challenges, Retailthe, Road