THE RETAILING VIRUS-THE FASTEST SPREADING IN INDIA. Dr. C.Kandasamy, Professor, Advanced Management College, 18 th KM, Bannerghatta Road, Bangalore-83

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1 THE RETAILING VIRUS-THE FASTEST SPREADING IN INDIA Dr. C.Kandasamy, Professor, Advanced Management College, 18 th KM, Bannerghatta Road, Bangalore-83 ABSTRACT Customer is the king and customer is always right is followed blindly by all the retailers to please its customers. India is being looked as one of the most attractive host for retail developments. The development of malls in India has given a new meaning to retailing. Indian customer is exposed to completely new kind of shopping experience. The rising standard of living has opened new avenues for shopping. INTRODUCTION Retailing, considered a sunrise industry today is the most happening industry with almost all the big players vying for a share of the coveted pie. India is being seen as a potential goldmine. India's vast middle class and its almost untapped retail industry are key attractions for global retail giants wanting to enter newer markets India has been ranked first in a Global Retail Development Index of 30 developing countries drawn up by A T Kearney A.T. Kearney Global Retail Development Index Page 32

2 Country 2005 Rank India 1 Russia 2 Ukraine 3 China 4 Slovenia 5 About the study A.T. Kearney's Global Retail Development Index ranks 30 emerging countries on the urgency for retailers to enter the country. The scores are based on 25 variables across four primary categories: economic and political risk; market attractiveness; market saturation; and time pressure (difference or addition between gross domestic product and modern retail area growth). The infecting virus started its effects by propelling traditional markets make way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Western-style malls have begun appearing in metros and second-rung cities alike introducing the Indian consumer to a shopping experience like never before. The development of malls in India has given a new meaning to Retailing. Malls are expected to usher in a more organized retailing environment by clearly demarcating product and service offerings.the consumer is exposed to a new kind of shopping experience, which is quietly and surely redefining the definition of shopping Organized Retailing in India The Virus fast spreading All The Mega Retailers Tata's (Westside Chain Of Stores), RPG Group- (Food world, Music world, Health And Glow), The Primal's - Crosswords, The Rahejas -Shopper's Stop And Globus, And Pantaloons All Are Heading In Neck-To-Neck Competition Page 33

3 Retail sales in India amounted to about Rs.7400 billion in 2002, expanded at an average annual rate of 7% during With the upturn in economic growth during 2003, retail sales are also expected to expand at a higher pace of nearly 10% across the country and in the coming years retail sales predicted to rise more rapidly than consumer expenditure in The forecast growth in real retail sales during is 8.3% per year compared with 7.1% for consumer expenditure. According to a latest report by Euro monitor International, a leading provider of global consumer-market intelligence sales from these large-format stores are to expand at growth rates ranging from 24% to 49% per year during It is estimated that about 225 new malls are coming up in India and will offer between million square of retail space in 50 plus cities over the next five years. With average size of the local stores being square feet, the total area under retail could be anywhere between million square Feet. Organized retail is set to grow fast. This is further substantiated with the Fitch report that expects organized retail to grow to 15-20% by 2010 Non store based Retailing All the big players are providing a pleasant shopping experience to Indian 's at the same time the service providers have focuses don making this shopping experience convenient and at the comfort of customer's home with just a click of mouse or at their doorstep.non store based retailing is also gaining peaking sales. 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 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. As India Page 34

4 continues to get strongly integrated with the world economy riding the waves of globalization, the retail sector is bound to take big leaps in the years to come. Be it store based retailing or non store based retailing both focus on making shopping convenient and pleasant for customers Key Strategic Factors in Retailing * The availability of credit and the reduction in rate of interest has led to a boom in real estate market making a way for establishment of new shopping malls * Improving standards of living and constant economic growth -its needless to say as we see our young aspirants with good jobs and handsome packages.the big thanks should actually go the BPO industry which opened jobs for young graduates and part time jobs for undergraduates. Their favorite place top shell out their salaries are the shopping Malls * Working women to a great extend has contributed to increasing standards of living Heightened marketing of credit cards by banks; the credit card penetration reached 17 million. * Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc. * Credit card usage is another factor that is driving organized retail growth * Another factor that is driving organized retail is the car sales. With Availability of credit and increased aspirations of the youth to have a car, car sales grew by 41% last month. Car sales and retail are directly linked. As people have cars, they will come to a destination to shop and entertain themselves * Reduction in import duties-offering more global sourcing options Organized retailing Unique selling proposition Page 35

5 Retailers offer an experience that local retailer cannot offer by offering good * Product width and depth giving customer great variety of choice and an amazing ambience * Retailers have some unique advantages for managing brands such as continuous and actionable dialogue with consumers, control over brand Presentation at point-of-sale, control over shopping environment, display location/adjacencies, and signage's * If they keep their supply chain in place they can eliminate the intermediaries involved and can offer products at attractive prices. * There is an assurance of quality when customers shop with organized retailers Impact on distribution channel The role of the intermediary is being diminished gradually, which has obvious implication of backlash of the trade channel upwards towards the suppliers. In India channel economics in favour of the middlemen is still strong enough Therefore when Food World, the largest grocer in India has a "direct supply" contract with over 20% of its key suppliers, it gives rise to conflict of interest with the distribution infrastructure that suppliers have painstakingly built over the years. Thus companies like HLL have evolved a distinct distribution channel altogether (called "Modern Trade") to service the needs of such large grocers. Even the mom and pop stores (known as kirana shops) are affected due to this" unfair" back-end advantage extended by the supplier to its leading accounts. Conclusion The point here is how long will be able to stop these conflicts with the pace at which the retailing is growing there might be a possibility that the manufacturers start selling goods directly to the retailers or we cannot deny the possibility where the big FMGC giants like HLL, Colgate pamolive will open up their exclusive outlets in metros and make their franchisee in the smaller town to reach out every person.we cannot deny any possibilities as future is uncertain Page 36

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