PEOPLE PERCEPTION ABOUT RETAIL INDUSTRY IN INDIA

Submitted by: STUDENT NAME: COURSE: SPECIALISATION: SAURABH GROVER MBA {M&S} MARKETING & SALES

ENROLLMENT NO.: A7002209011

UNDER GUIDANCE
FACULTY GUIDE: Dr. Fatima Beena (Asst. Prof.) ABS (DISSERTATION REPORT IN PARTIAL FULFILLMENT OF THE AWARD OF FULL TIME MASTERS IN BUSINESS ADMINISTRATION (200911))

AMITY BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH LUCKNOW

STUDENTS STATEMENT

Certified that this report is prepared based on the Dissertation project undertaken by SAURABH GROVER under the guidance of Dr. FATIMA BEENA (Asst. Prof.) at Amity University, Lucknow Campus in partial fulfilment of the requirement for award of degree of Master Of Business Administration (M&S) from Amity University, Uttar Pradesh.

Date.

Signature: SAURABH GROVER Student

Signature: Dr. FATIMA BEENA Faculty Guide

Signature: Prof R.P.SINGH Director(A.B.S)

FACULTY CERTIFICATE

Forwarded here with a dissertation report on People perception about retail industry in india submitted by SAURABH GROVER Enrollment NO. A7002209011, student of MBA (M&S) 3rd Semester (2009-2011). This project work is partial fulfillment of the requirement for the degree of Master in Business Administration from Amity University Lucknow Campus, Uttar Pradesh.

Dr. FATIMA BEENA (Asst. Prof.) ABS AMITY UNIVERSITY, LUCKNOW CAMPUS UTTAR PRADESH

Acknowledgement

No work is a single mans effort. Cooperation, guidance and coordination are required at various levels for the successful completion of a project. I take this opportunity to express my gratitude to all those people who have been instrumental in successful completion of my project. I extend my sincere thanks to my faculty guide Dr. Fatima Beena, who helped me in all possible ways and constantly encouraged me throughout my project. I also thank her for her valuable guidance and for being understanding and supportive. I am also grateful to the respondents who filled my questionnaires in Lucknow. Their enthusiastic feedback has given my project a direction. All errors, if any, in the project are my sole responsibility. I would also like to express my gratitude towards my parents and friends, who have always been my source of inspiration and motivation.

Saurabh Grover

SYNOPSIS

Report title Area covered Sample unit Sample size Tools

: People perception about retail industry in india : Lucknow : Malls in Lucknow : 100 : questionnaire and interview

Report guided by: Dr Fatima Beena

TABLE OF Contents

CONTENTS
1.Research Objective 2.EXECUTIVE SUMMARY 3.PREFACE

Chapter 1- INTRODUCTION
History Retailing and pricing Retail types Retail Industry Retail Crimes & Fraud Consumer goods & Retail growth

Chapter 2- LITERATURE REVIEW Chapter 3- Research Methodology

Significance and scope Hypothesis Limitation

Chapter 4- RECOMMENDATION & CONCLSION

Chapter 5- GRAPHICAL INTERPRETATION AND ANALYSIS OF DATA

Biblography

Research objective

To know the market penetration. To know the market size . To know the service provide by a retail sector . To have the knowledge of consumer behavior To know the customer satisfaction toward organized and unorganized

Executive summary

To point out from where does consumer prefer to purchase every day life product .to out where the consumer are more interested in buying different product from shop near their place (house)? To the find out the consumer choice regarding. They are going for discount or not. do now what are the behavior of traders to words the consumer .what type relationship they maintain with their consumer. Whether are interested to buy product on credit. Primary data is collected through personal interview and questionnaire and secondary data is through journal, magazine, and searching on Internet Research design is exploratory and descriptive research. Sample size is of 100 and sample plan is of random sample.

Organized retailing is relatively new to India, although it has begun to expand rapidly and has given though time to unorganized sector. As with other consumer-oriented goods and services, this sector should benefit from rising wealth, industry deregulation and a greater openness to international influences. By 2010, however, the organized sector could account for as much as 20% of the total retail sector, based on current trends

Preface

In a sharp contrast to the retail sector in developed economies, retailing in India - though large in terms of size - is highly fragmented and unorganized. With close to 12 million retail outlets the country has one of the highest retail densities worldwide. Retailers include street vendors, supermarkets, department stores, restaurants, hotels and even two-wheeler and car showrooms. Indian retailing industry has seen phenomenal growth in the last 5 years. Organized retailing has finally emerged from the shadows of unorganized retailing and is contributing significantly in the growth of Indian retail sector. Unorganized retailers suffer due to poor shopping experience and inability to offer a wide range of products and value-addition due to lack of sourcing capabilities. The modern Indian consumer is seeking more value in terms of improved availability and quality, pleasant shopping environment, financing options, trial rooms for clothing products, return and exchange policies and competitive prices. This has created a rapidly growing opportunity for organized, modern retail formats to emerge in recent years and grow at a fast pace. Inefficiency in the existing supply chains presents further opportunity for organized players to draw on this large market even as lack of consumer culture and low

purchasing power restricted the development of modern formats. Migration from unorganized to organized retail has been visible with economic development in most countries.

Introduction to Retail
Retailing consists of the sale of goods or merchandise, from a fixed location such as a department store or kiosk, in small or individual lots for direct consumption by the purchaser. Retail comes from the French word retaillier which refers to "cutting off, clip and divide" in terms of tailoring (1365). It first was recorded as a noun with the meaning of a "sale in small quantities" in 1433 (French). Its literal meaning for retail was to "cut off, shred, paring". Like the French, the word retail in both Dutch and German (detailhandel and Einzelhandel respectively) also refer to sale of small quantities or items.

Retail Industry

Retail consists of the sale of goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser.[1] Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, a "retailer" buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy. The term "retailer" is also applied where a service provider services the needs of a large number of individuals, such as a public utility, like electric power.

Shops may be on residential streets, shopping streets with few or no houses or in a shopping mall. Shopping streets may be for pedestrians only. Sometimes a shopping street has a partial or full roof to protect customers from precipitation. Online retailing, a type of electronic commerce used for business-to-consumer (B2C) transactions and mail order, are forms of non-shop retailin

Retail sector: on an upward curve

India's vast middle class and its almost untapped retail industry are key attractions for global retail giants wanting to enter newer markets. While organized retail in India is only two per cent of the total US$ 215 billion retail industry, it is expected to grow 25 per cent annually, driven by changing lifestyles, strong income growth and favorable demographic patterns. KSA-Technopak, a retail consulting and research agency, predicts that by 2010, organized retailing in India will cross the US$ 21.5-billion mark from the current size of US$ 7.5 billion.

Retail space: up for grabs

By 2007, an estimated 50 million square feet of quality retail space will be available across India. This is in sharp contrast to the situation a decade ago. Then, there was not one shopping mall in India. Today, in Delhi, Mumbai and their suburbs, there are about 100 malls. Of the 700 new malls coming up all over India, 40 per cent are concentrated

in the smaller cities. Organized retailing in small-town India is growing at a staggering 50-60 per cent a year compared to 35-40 per cent in the large cities.

A push for branded retail

India's branded retail sector, estimated at about US$ 6 billion, makes up only three per cent of the total market, but is forecast to grow at 25-30 per cent a year over the next four years, with plush department stores and malls springing up across the country.

Food retail
Food dominates the shopping basket in India. The US$ 6.1 billion Indian foods industry, which forms 44 per cent of the entire FMCG sales, is growing at 9 per cent and has set the growth agenda for modern trade formats. Since nearly 60 per cent of the average Indian grocery basket comprises non-branded items, the branded food industry is homing in on converting Indian consumers to branded food.

The mobile revolution

The retail market for mobile phones - handset, airtime and accessories - is already a US$ 16.7 billion business, growing at over 20 per cent per year. In comparison, the consumer electronics and appliance market looks paltry, at just US$ 5.6 billion, with growth rate just half of the mobile market, and that too in a good year

 Kids retailing: no child's play

Kids retailing is growing by leaps and bounds in India and those in the industry say it is likely to see 30-35 per cent growth per annum. From clothes to stationary, sportswear, outerwear, tailored clothing, eyewear, watches, fragrance, footwear and accessories, the list is endless. Apparel, however, remains the key revenue driver accounting for almost 80 per cent of total sales. According to industry insiders, The total apparel market in India for kids is around US$ 2.9 billion, out of which about US$ 668.2 780.5 million is branded apparel.

Future of Retail in India

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%.

RETAIL FORMATS IN INDIA

1.Mom-and-pop Stores
These are small family-owned businesses, which sell a small collection of goods to the customers. They are individually run and cater to small sections of the society. These stores are known for their high standards of customer service.

2.Department stores
Department stores are general merchandisers. They offer to the customers mid- to high-quality products. Though they sell general goods, some department stores sell only a select line of products. Examples in India would include stores like "Westside" and "Lifestyle"--popular department stores.

3.Category Killers
Specialty stores are called category killers. Category killers are specialized in their fields and offer one category of products. Most popular examples of category killers include electronic stores like Best Buy and sports accessories stores like Sports Authority.

4.Malls

Malls are the largest retail format in India One of the most popular and most visited retail formats in India is the mall. These are the largest retail format in India. Malls provide everything that a person wants to buy, all under one roof. From clothes and accessories to food or cinemas, malls

provide all of this, and more. Examples include Spencers Plaza in Chennai, India, or the Forum Mall in Bangalore.

5.Discount Stores

Discount stores offer price reduction Discount stores are those that offer their products at a discount, that is, at a lesser rate than the maximum retail price. This is mainly done when there is additional stock left over towards the end of any season. Discount stores sell their goods at a reduced rate with an aim of drawing bargain shoppers.

6.Supermarkets
One of the other popular retail formats in India is the supermarkets. A supermarket is

a grocery store that sells food and household goods. They are large, most often selfservice and offer a huge variety of products. People head to supermarkets when they need to stock up on groceries and other items. They provide products for reasonable prices, and of mid to high quality.

7.Street vendors
Street vendors, or hawkers who sell goods on the streets, are quite popular in India. Through shouting out their wares, they draw the attention of customers. Street vendors are found in almost every city in India, and the business capital of Mumbai has a number of shopping areas comprised solely of street vendors. These hawkers sell not just clothes and accessories, but also local food.

8.Hypermarkets
Similar to supermarkets, hypermarkets in India are a combination of supermarket and department store. These are large retailers that provide all kinds of groceries and general goods. Saravana Stores in Chennai, Big Bazaar and Reliance Fresh are hypermarkets that draw enormous crowds.

9.Kiosks
Kiosks are box-like shops, which sell small and inexpensive items like cigarettes, toffees, newspapers and magazines, water packets and sometimes, tea and coffee. These are most commonly found on every street in a city, and cater primarily to local residents.

COMPETITION OVERVIEW

Profile of the Major Players

Pantaloon Retail
Pantaloon Retail (India) Limited, is Indias leading retail company with presence across multiple lines of businesses. The company owns and manages multiple retail formats that cater to a wide cross-section of the Indian society and is able to capture almost the entire consumption basket of the Indian consumer. Headquartered in Mumbai (Bombay), the

company operates through 4 million square feet of retail space, has over 140 stores across 32 cities in India and employs over 14,000 people. The company registered a turnover of Rs 20.19 billion for FY 2005-06. Pantaloon Retail (India) Limited, is a large Indian retailer, which is part of the Future Group, and operates multiple retail formats in both the value and lifestyle segment of the Indian consumer market. Headquartered in Mumbai, the company has over 1,000 stores across 71 cities in India and employs over 30,000 people , and as of 2010, it was the country's largest listed retailer by market capitalization and revenue

With effect from 1 January 2010 the company separated its discount store business, which includes the Big Bazaar hypermarket and the Food Bazaar supermarket businesses, into Future Value Retail Ltd., its wholly-owned subsidiary, so that the company may be listed independently

The companys brands include Pantaloons, a chain of fashion outlets, Big Bazaar, a

hypermarket chain and Food Bazaar, a supermarket chain. Some of the company's other regional brands include, Depot, Shoe Factory, Brand Factory, Blue Sky, aLL, Top 10 and Star and Sitara. A subsidiary company, Home Solutions Retail (India) Limited, operates Home Town, a large-format home solutions store, Collection i, selling home furniture products and EZone focussed on catering to the consumer electronics segment.

Lifestyle International
Lifestyle International Holdings Ltds principal activity is the operation of lifestyle department store and retail outlets. It focuses on high-end department store format. As of December 31, 2005, Lifestyle International operated its retailing business through two brandnames, SOGO and Jiuguang. The SOGO Department Stores consists of the Company'sflagship department store, SOGO CWB, in Causeway Bay, Hong Kong, and the Tsimshatsuistore, which features a slightly different format that targets younger group

of customers. TheJiuguang Department Store, which is located in Shanghai, has a similar business format asthat of the SOGO store. During the year ended December 31, 2005, it launched SOGOCLUB, a lifestyle service center. Some of the Companys subsidiaries include Asia KineticLimited, Congenial Company Limited, Eastlord Development Limited, Everwin Worldwide Limited and Fine Shine Limited.

RPG Retail

RPG Enterprises is one of Indias largest business conglomerates, with a turnover of US$ 1.65 billion (Rs 7,472 crore) and assets worth US$ 1.8 billion. Since its inception in 1979,RPG Enterprises has been one of the fastest growing groups in India with more than 20 companies operating successfully in 7 business sectors: Retail, IT & Communications,

Entertainment, Power, Transmission, Tyres and Life Sciences. Spencers retail is the largest supermarket chain in India. Spencers retail offers the completegamut of products & durables ranging from bread to bed covers; from toothpaste totelevision. Spencers today is operating across 80 stores spread across 20 cities in the countrywith a retail trading area of more than half a million square feet, and rapidly growing. Spencers Retail is located in various parts of India like Chennai, Hyderabad, Vizag, Bangalore, Mumbai, Aurangabad, Pune, Ghaziabad, Faridabad, Delhi, Cochin, Trivandrumand many more to come by this financial year.

Shoppers Stop

The foundation of Shoppers Stop was laid on October 27, 1991 by the K. Raheja Corp. group of companies. From its inception, Shoppers Stop has progressed from being a single brand shop to becoming a Fashion & Lifestyle store for the family.

Shoppers Stop is the only retailer from India to become a member of the prestigious Intercontinental Group of Departmental Stores (IGDS). The IGDS consists of 29 experienced retailers from all over the world, which include established stores like Selfridges(England), Karstadt (Germany), Shanghai No. 1 (China), Matahari (Indonesia), Takashimaya(Japan), C K Tang (Singapore), Manor (Switzerland) and Lamcy Plaza (Dubai). Thismembership is restricted to one member organization per country/region

Trent (Tata)
Trent (Tata) was established in 1998, Trent operates some of the nations largest and fastestgrowing retail store chains. A beginning was made in 1998 with Westside, a lifestyle retailchain, which was followed up in 2004 with Star India Bazaar, a hypermarket with a large assortment of products at the lowest prices. In 2005, it acquired Landmark, Indias largest book and music retailer.

In a recently signed deal, Trent has agreed to anchor 12 malls set up by DLF Universal Ltd across the country, at its Westside, Landmark and Star India Bazaar outlets. This

amounts to about 27 locations, totaling to about a million square feet of space.

Drivers of Retail Growth

The study of the history of retailing business throws up the fact that in most economies organized retailing passes through four distinct phases in its evolution cycle. In the first phase, new entrants create awareness of modern formats and raise consumer expectations. During the second phase, consumers demand modern formats as the

market develops, leading to strong growth. As the market matures, intense competition forces retailers to invest in back-end operating efficiency. In the final phase, retailers explore new markets as well as inorganic opportunities as growth tapers off. Supply chain management (SCM) attains top priority in the third phase of evolution. Fierce competition forces retailers to respond quickly to changes in the market, bringing forth the importance of SCM in handling availability of stock, supplier relationships, value-added services and cost cutting. Traditional retailers are expected to enhance their investments in supply chain, whilst new entrants are likely to look at supply chain first broadening their national reach.

What drove the retailing in India?

India is currently in the second phase of the retail evolution, with domestic customers becoming more demanding with their rising standard of living and changing lifestyles. Change in customers' focus from just buying to broad shopping (buying, entertainment and experience) has led to a pick-up in momentum in organized formats of retailing. Unavailability of quality retail space has been one of the main constraints for development of organized formats in India. In the past, negative yield on leased property and lack of bank funding due to unorganised property market resulted in a dearth of quality retail space in the country. The spread between yield on property and its financing cost has turned positive with the fall in interest rates. Attractive yields on investments have resulted in a sharp increase in

property development. From 25 operational malls in 2003, the country is expecting to have over 220 malls by 2006 with a cumulative estimated space of 40 million sq ft and over 600 malls by 2010, with as much as 100 million sq ft retail space. Pro-active steps taken by the government permitting use of land for commercial development in various cities, including Mumbai and Delhi, have also contributed to increased availability of retail space in the country. Availability of retail space is expected to increase further whenever property funds and investment trusts are permitted, which will help create a secondary market for real estate in the country. Consumerism and brand proliferation also enhanced organised retailing in the country. Most of the world's leading brands, including like L'Oreal, Espirit, Louis Vuitton, Marks & Spencer, Tommy Hilfiger, Louis Phillipe, Levis, Pepe, Lee, Arrow, Dockers, Red Tape, Clairns, Hugo Boss, Tiffany, Bulgari, Ecco, Chambor, Revlon, Philips, Corelle, Magppie, Nike, Reebok, Parker, Ray Ban, Lego and Mattel, are now present in India. Another factor that accelerated the growth of organised retailing is media proliferation. Increased advertisements and brand promotions have led to a growing consumer spending across a wide range of product categories.

What will fuel the boom?

Differential sales tax rates exist across states in the country. Besides, there is multiplepoint octroi/entry tax collection.

All these add to cost and complexity of distribution as these necessitate multiple warehouses and do not allow for centralisation of certain procurements given the incidence of local levies. Implementation of Value Added Tax will streamline the complexities in the tax structure and narrow the cost disadvantage between organised and unorganised retailers. While some leading retailers are still able to get funding from banks, the smaller ones are constrained for funding for growth. Similarly, equity options are also restricted as foreign direct investment is not permitted in the retail trading sector. FDI restrictions have also stalled entry of international majors to retailing in the country, which could have otherwise helped the industry develop with funding and bring better practices and systems. However, positive changes are expected on the FDI front. The development of road infrastructure, especially the Golden Quadrilateral project interlinking North-West and East-West corridors, will bring in efficiency in supply chain and reduce wastages.

Where are the road-blocks?

Non-availability of trained manpower, especially at the management level, poses a key risk for the retail sector. Besides, as organised retail grows rapidly, there will be pressure on existing players as new entrants look for trained manpower at various levels. Opening up of FDI in retail could see the entry of international majors which will put further pressure on the manpower of existing retailers.

SCM efficiencies are essential to retailers to maintain and improve margins. SCM includes vendor and logistics management which is underdeveloped in India. However, with growing size of operations, SCM efficiencies will become a key differentiator of profitability in retail.

The road ahead

Notwithstanding some stumbling blocks, no one can mistake the immense potential of the boom in the domestic retail sector. Given the size and the purchasing power of the Indian consumer, the road ahead can only get smoother and it is only a matter of time before the domestic retail industry is on par with its western counterparts.

Challenges facing Indian retail industry

1.The tax structure in India favors small retail business

2.Lack of adequate infrastructure facilities

3.High cost of real estate

4. Dissimilarity in consumer groups

5.Restrictions in Foreign Direct Investment

6.Shortage of retail study options

7.Shortage of trained manpower 8.Low retail management skil

Reasons for Retail Growth

It has been a decade-and-a-half since India embarked on an ambitious economic liberalisation programme. Over the last five years, many of its benefits have manifested themselves and one of the areas where growth is clearly reflected is retailing. The latest pronouncements of Finance Minister P Chidambaram about the sector have fuelled interest in stocks from the segment. Let's turn the spotlight on the factors that triggered the exponential growth in the sector.

Primary reasons

The prime reasons that fuelled this boom include favourable demographics, rising consumer incomes, real estate developments, especially the emergence of new shopping malls, availability of better sourcing options - both from within India and overseas - and changing lifestyle. These factors have transformed hitherto savings-oriented and conservative Indian consumers and made them akin to those in developed markets.

Organized versus unorganized Retailing

In a sharp contrast to the retail sector in developed economies, retailing in India - though large in terms of size - is highly fragmented and unorganized. With close to 12 million retail outlets the country has one of the highest retail densities worldwide. Retailers include street vendors, supermarkets, department stores, restaurants, hotels and even two-wheeler and car showrooms. Counter stores, kiosks, street markets and vendors, where the ownership and management rest with one person, are classified as traditional or unorganized retail outlets.

These formats typically require employees with low skills and account for around twothirds of the sector's output. These are highly competitive outlets, with minimal rental costs (unregistered kiosks or traditional property), cheap labor (work is shared by family members) and negligible overheads and taxes. However, unorganized retailers suffer due to poor shopping experience and inability to offer a wide range of products and value-addition due to lack of sourcing capabilities. The modern Indian consumer is seeking more value in terms of improved availability and quality, pleasant shopping environment, financing options, trial rooms for clothing products, return and exchange policies and competitive prices. This has created a rapidly

growing opportunity for organized, modern retail formats to emerge in recent years and grow at a fast pace. Inefficiency in the existing supply chains presents further opportunity for organised players to draw on this large market even as lack of consumer culture and low purchasing power restricted the development of modern formats. Migration from unorganised to organised retail has been visible with economic development in most countries.

Changing age profile and disintegration of joint family

India is witnessing a change in the age and income profiles of its over 1 billion population, which is likely to fuel accelerated consumption in the years to come. The country is believed to have an average age of 24 years for its population as against 36 years for the USA and 30 years for China. A younger population tends to have higher aspirations and spends more as it enters the earning phase.

Besides, the gradual disintegration of the traditional Indian joint family system has led to nuclearisation of families, which in turn has led to enhanced demand. Add to this an increasing population of working women and new job opportunities in emerging service sectors such as IT-enabled services, retail, food services, entertainment and financial services. With declining interest rates, the aversion of domestic consumers to taking loans is also fast disappearing. Growing media penetration is leading to a convergence of aspirations of various classes of consumers, bridging the rural-urban divide.

Growing disposable income

More Indian households are getting added to the consuming class with the growth in income levels. The number of households with income of over Rs 45,000 per annum is expected to grow from 58 million in 1999-2000 to 81 million by 2005-06. This large base of households with growing disposable income is expected to drive demand for organized retail. Of this, 56 per cent (44. 8 million households) are expected to be concentrated in urban India. Changing income demographics, age profile and macro environment are visible in the growth in consumption of durables. To cite live examples, the installed base of cars, cable TV subscribers and cellular subscribers has increased significantly over the last five years.

India: Consumer goods and retail forecast

FROM THE ECONOMIST INTELLIGENCE UNIT

2005 Retail trade 15,40 Retail sales (Rs bn) Retail sales (US$ bn) Retail sales volume growth (%) Retail sales US$ value growth (%) Clothing, cosmetics & household goods 58,35 Clothing, sales value (US$ m) Perfumes & fragrances, sales value (US$ m) Electronic & domestic appliances Television sets (stock per 1,000 population) Television sets, sales volume ('000) Cable-TV subscribers (per 1,000 population) Personal computers, sales volume ('000) Refrigerators, sales volume ('000) Video recorders, sales volume ('000) 28 693 91

2006

2007

2008

2009

2010

9 17,360 19,465 21,715 24,215 27,107 349.4 385.8 421.3 467.0 516.3 6.0 13.6 7.5 10.4 7.7 9.2 6.9 10.8 6.8 10.6 564.7 7.3 9.4

2 65,818 74,505 84,724 96,130 107,883 2,103 2,291 2,464 2,696 2,941 3,169

94

97

101

109

118

8,867 9,436 10,029 10,655 11,204 11,795 29 789 30 31 32 33 1,352 6,542 129

894 1,026 1,178

4,230 4,626 5,048 5,505 5,996 121 121 125 127 128

The retail sector in India is undergoing substantial growth and development, driven by the impact of rising incomes, increasing urbanisation, low interest rates, greater brand

competition and a youth-driven culture. Retail sales grew by 10.5% in rupee terms in 2005, equivalent to a volume rise of 6%. Retailing is undergoing a structural shift in India, as supply slowly moves from small, family-run shops to larger, organised retail outlets. The rising number of attractive stores and foreign brands, coupled with readily available credit, will support steady real growth in retail sales of 7.2% a year between 2006 and 2010.

Income growth and structural changes will fuel growth

Apart from steady income gains, consumer financing has become a major driver in the consumer durables industry. In the case of more expensive consumer goods, such as refrigerators, washing machines, colour televisions and personal computers, retailers are joining forces with banks and finance companies to market their goods more aggressively. Among department stores, other factors that will support rising sales include a strong emphasis on retail technology, loyalty schemes, private labels and the subletting of floor space in larger stores to smaller retailers selling a variety of products and services, such as music and coffee.

Organised retailing will expand sharply

Organised retailing is relatively new to India, although it has begun to expand rapidly. As with other consumer-oriented goods and services, this sector should benefit from rising wealth, industry deregulation and a greater openness to international influences. Perhaps only 3% of retail sales in India are accounted for by organised retailers. By 2010, however, the organised sector could account for as much as 20% of the total retail sector, based on current trends. At present, around 96% of the more than 5m retail

premises of all types in India are smaller than 50 sq metres. Yet this is beginning to change. Shopping malls are becoming increasingly common in large Indian cities, and developers have plans to add hundreds of new malls over the next three years. Although not all of these plans will be realisedand many of the new malls will be much smaller than their Western counterpartsIndian consumers will have a far larger number of attractive, comfortable, brand-conscious outlets in which to shop. Competition from the traditional retail sector will continue to be a major issue for international firms entering the Indian market, whether directly at the wholesale level or indirectly through local firms. Traditional shops are mostly owner-operated, have low labour and property costs, and generally pay little or no tax. New entrants to the organised retail sector will also face higher labour and property costs than traditional firms and must bear the additional expense of back-up power supplies. Other impediments include high intermediation costs, expensiveand often inadequate

supply-chain infrastructure, inflexible labour laws, complicated property codes, multiple licensing requirements and a shortage of skilled managerial staff.

Retailers will target affluent and well-off households

GDP per head in India was about US$730 in 2005 (at market exchange rates), but this figure disguises wide variations across social strata and between regions. There were nearly 13m households (6.4% of the total) with an annual income of more than US$5,000 in 2005. These households already own a wide variety of consumer goods, including cars, and constitute India's most sought-after consumers. Apart from these relatively wealthy Indians, 34m households (16.5% of the total) had annual incomes of US$3,000-5,000. These "well-off" households can afford, and many already own, airconditioners, washing machines, refrigerators, colour televisions and motor scooters.

This segment, which is increasingly brand-conscious, is the target market for the rapidly growing organised retail sector in India.

The food and groceries sector has strong growth prospects

The greatest opportunities for retail sales growth are likely to be in the food and groceries sector. Modern retailinginvolving large shops and supermarkets constitutes less than 1% of the total food-retailing sector. The rest is composed of traditional kiosks and small jshops. Indian food retailing is, however, moving inexorably towards the supermarket format, and consumers in the affluent, upper-income segment are attracted to brand names, variety and convenience. Other sectors that are likely to see growth include consumer durables, information technology (IT), home improvement, and health and beauty. A more sophisticated front-end retail infrastructure will also create more demand. India's biggest retailer, Pantaloon, plans to increase its 300,000 sq metres of retail space to 1m sq metres by end-2007, enabling it to expand its Pantaloon department stores as well as its Big Bazaar hypermarkets and Food Bazaar supermarkets. India's biggest private-sector company, Reliance Industries, has ambitious plans to enter the retail sector. The company is thought to be considering investment of Rs100bn (US$2.2bn) over the next two years to establish more than 1,500 outlets across the country employing 400,000-500,000 people. Increasingly, local manufacturers and wholesalers are establishing retail outlets in a bid to ensure higher margins. This has been especially true of retailers in the IT sector, where growth is likely to be robust. Zenith of the US, Acer India (Taiwan) and a local company, HCL Infosystems, have all set up retail outlets across India, with more locations planned. New product development and relatively inexpensive financing are

fuelling the trend. Existing local IT distributors and wholesalers are also expanding into the retail sector.

Foreign investment will play a bigger role in retailing

The opening of the retail sector to foreign direct investment (FDI)a policy change that would alter radically the face of the Indian economyis happening slowly. Since February 2005 the government has taken several liberalising steps, but it continues to disallow FDI by retailers of multiple brands, keeping out the big hypermarket groups and discounters. This is a carefully crafted decision designed to cause minimum political damage domestically, while showing foreign investors that liberalisation remains on track. Foreign firms will continue to lobby for liberalisation and have cited the restriction on FDI as a factor limiting future growth. Their options should multiply as food imports are liberalised and import duties come down. The government will also need to reform real-estate laws and restructure tax regimes further if it is to attract international retailers. Wal-Mart of the US will continue its high-profile campaign to open up India's retail sector to foreign companies. Tesco of the UK and Carrefour of France are also sizing up the Indian market. Wal-Mart argues it would use local producers not only for its Indian operations, but also for its global network as this could increase India's exports. As domestic companies expand into the organised retail sector, the pressure on the government to open the sector to foreign investment is likely to increase on competition grounds. Some domestic companies, such as Reliance Industries, are confident that their

familiarity with the numerous business operating difficulties in India would give them a distinct competitive advantage over foreign companies.

Literature Review

Many researches are done on Unorganized Retail Sector and some of them are as follows: According to TATAS MARKET ANALYSIS

Although still at a nascent stage, organized retailing in India is witnessing a radical transformation. The in crease in the number of retail chains across the country is an indication that organized retailing is emerging as an industry and will boom in a big way in the near future. At present, the contribution of organized retailing to the total sales (US $ 180 billion) of the Indian retail industry is just about two percent. However, studies indicate that organized retailing will grow to 20 percent by the end of the decade. According to a report prepared by McKinsey & Co and the Confederation of Indian Industry (CII), India's retailing industry has the potential to generate US$ 300 billion per year by 2010. Population growth combined with an increase in disposable incomes is providing the impetus to this boom. Household groceries and apparel are the key drivers in India's organized retail industry. Food retail in particular is the sunrise sector. Research revels that this category of retail is expected to grow to US$ 1.6 billion over the next five years. The organized apparel segment is of 1.8 bn and is expected to grow at a steady 9.5 percent per annum over the next three years. There are various retail formats currently in use in India. These include hyper and supermarkets, convenience stores, department stores and specialty chains. Among these formats a notable trend has been the development of integrated retail-cum-entertainment centers and malls as opposed to stand-alone developments. About 25 million square feet of organized retail space is expected to come up across the country by 2005. Mumbai and Delhi rank amongst the top

two cities in India for organized retail growth. Although, the emergence of the organized retail outlets has predominantly been an urban phenomenon, in the next couple of years, organized retailers will to enter semi-urban areas in India, where disposable income is also fast increasing. Retailing is not yet officially recognized as an industry. India does not allow 100 percent foreign direct investment (FDI) in the retailing sector. There have been discussions between the government and the industry on opening up the retail sector to FDI, and at least allow 26 percent foreign equity initially, but a decision has not yet been taken. A case is being made to the Government of India by officials of some global majors to allow FDI in retail trading of low-volume, high-value products. Though 100 percent FDI is not allowed, it is still possible for the foreign retailers to enter the Indian market through three channels - franchise agreements, cash and carry wholesale trading, and strategic license agreements. With tariffs on imported consumer items gradually being aligned to meet prescribed WTO norms and reduction of import restrictions, the retailing sector will get a major boost. To attract and sustain the interest of international retailers, India still has quite a way to go by way of reforming the real estate laws, restructuring the tax structure, and allowing FDI in the retailsector. According to recent DSP Merrill Lynch report, the key factor providing a thrust to this retail boom is the changing age profile of spenders. A new set of young earners who are in their mid twenties has emerged and over seven million people are entering this category every year. The number of people who earn over US$ 5,000 plus per annum (see table below) is growing at an intense pace and this is

primarily attributed to the rapid rise in young earners (those in their mid twenties).

According to Resource centre The retail sector in India is witnessing a huge revamp as traditional markets and family run 'pop-n-son' shops are steadily paving the way for new format retail outlets, departmental stores, mono and multi-branded retail shops and specialty stores. Even in IT industry the scenario is undergoing stellar changes as traditional

Shushmul Maheshwari gives an overview of the different strategies adapted by retailers in the organized and unorganized retail segments His findings are as follows Today, retailing doesnt involve just dealing or marketing from shops, it includes analyzing the market in an effort to provide reasonable prices together with an array of options and experience to customers. The sole purpose of all this is retaining the brand loyalty of customers. Indian retail is currently a US$ 245 billion market and is anticipated to extend to almost US$ 385 billion mark by the next five years. The Indian retail sector is currently sporting a brand new look and together with a 46.64 per cent three-year Compounded Annual Growth Rate (CAGR), Conventional marketplaces are paving way for new shopping malls, the likes of superstores, shopping plazas, supermarkets and brand label stores. International style shopping centers have started dotting the skyline of cities and smaller towns, acquainting the Indian customer to a unique shopping experience. The retail industry in India is split up into the unorganized and organised retail segments. The unorganized retail sector includes the big, average and modest grocery stores and the chemist shops. A

changeover is taking place from the conventional retail sector to organized retailing. But the unorganised segment still dominates and leads the industry. By 2010, the Indian retailing sector is anticipated to become an Rs 12.5 trillion market. The share of organised retailing is supposed to jump to about 10 per cent from the existing three per cent. The anticipated staggering growth in organised retailing provides an opportunity to expand the market for both established and new players. According to the latest report India Retail Sector Analysis (200607) by RNCOS, the total retail market is primarily focused in rural regions, which makes up 55 per cent or US$ 165 billion of the overall retail market as opposed to urban segment, which represents 45 per cent or US$ 135 billion of the gross retail market. The rural market is spread over 627,000 villages, even though its centre of attention is focused around a core group of 100,000 villages that makes up 50 per cent of the rural populace.

Research Methodology

Research Methodology

Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. The main objectives of a research are to find out truth which is hidden and which has not been discovered. According to advance learners Dictionary of current English the definition of research is A careful investigation or inquiry especially through search for new facts in any branch of knowledge

Sources of dataTo meet the specific objective of problem, primary data is collected. Primary data can be collected either through survey or experiments. For collecting primary data I had use the survey method.

SURVEY METHODTo conduct my research the first step was to prepare the questionnaire for the consumer, which includes preparing question and arranging them systematically in the form of consumer questionnaire. I even went to different showroom and asking each and every customer, for the necessary information that I needed to accomplish my objective in the area. The questionnaire includes the queries related with other preference, popularity of the brand, and suggestion for improvement. While my visit to the consumers and showrooms I found many facts and practical problems, which I have mentioned in to the chapter of findings and observations. The process of selecting information from people through questionnaire. There are two types of questionnaire 1-Open ended question 2- Close ended question

For collecting the data I have use the closeended questions. Through this I have get the needed information about customer preference about various brands of microwave oven. Open-ended questions used for the specific problems as like suggestion.

OBSERVATIONThis process is nothing but recording information about people & their behavior without asking any specific question.

INTERVIEW METHODPersonal interview is mainly the formal data collection tool either may be structured or unstructured, direct or indirect.

SECONDARY DATASecondary data means data that are already available. Its collected through -Searching of Internet -Magazine, Newspapers, Books, Journals -Collecting & analyzed data by some other agencies.

RESEARCH DESIGNThere are generally two types of research design. 1-Exploratory Research 2-Descriptive Research I have used exploratory & descriptive research both. In exploratory research I have precise investigation or of developing the working hypothesis from an operational point of view. The major emphasis in such studies is on the discovery of ideas, in sights& problems.

As a descriptive research I must be define the problem clearly & obtain complete & accurate information, & make a carefully planned procedure for collecting data. This research design must make enough provision for protection against bias& must maximize reliability, with due concern for the economical completion of the research study.

Research Plan
Description of the coverage should to cover the area of the Lucknow city. I personally went to each showrooms and customers situated within the area. I collect the necessary information from the each showroom, which I found is necessary to accomplish my objective, and for the completion of this project.

DATA COLLECTIONSampling Technique:

For proposed research plan non-probability sampling has been adopted for the selection of samples. In the nonprobability sampling the type

chosen was judgmental sampling. The reason behind this was that we had to assess the customers attitude specifically and we had to judge their thinking about unorganized retail sector.

Sampling plan:
Random sampling is used for the purpose of the research work.

Sampling unit:
. In sampling researches, decide who will be surveyed. The portion of population that researches need to target and that represents the entire population is known as SAMPLING UNITS. The target population is should be selected in such a way that everyone in the population has that equal chances of being included in the sample.

Sample size:
The sample size consists of 110 units out of which the most logical and non biased response are selected thus the sample size is taken out to be 100.

SIGNIFICANCE

Retail sector has vast scope in India earlier retail sector was mainly an metro city and big company are mainly focused an bag city . because they are mainly focused on highly income group. But seeing the demand and thinking the company thought also focus in the lower income and middle income group people. That s why their started opening their retail sectoring different -2 small city also . which is turn increased their sales and business.

SCOPE

Retail sector is growing sector and it will not only increase the employment rate but also increase the economy of the country . with the help of retail sector .product are become more closer to the people they dont have to search for product it is easily available to them.

FUTURE

Retail sector has great future in India .today many big company are entering into this sector like bharti is coming as wall mart .In luck now organized retail sector gone to boom and many other new retail sector are still to be opened . Unorganized retail provide to benefit to the lower income group mostly. Because mostly the product which they buy daily used by the among the credit. so unorganized sector is benefit provide .where as organized retail sector provide benefit to both middle and high class income people. Also is different big MNC will come India and invest their money an retail sector .then they will many job opportunity for different people and also it will help am increasing the an economy growth.

Hypothesis

Earlier when I Was going to do my research it was assumed that maximum of the customer purchase goods from unorganized sector .the reason for my assumption for that was every one wants to purchase the product near to house. As I started doing my research work by filling the questionnaire and personal interview From the customer in luck now and some other city .I realized that maximum of them want to purchase on unorganized sector.

Findings

The most important part of this management research program is to find whether Unorganized sector have suffered because of organized retailing. For this purpose retailers of Unorganized and Organized sectors have been surveyed for the following purpose: 1. Brand Loyalty 2. Competition between two sectors. 3. Foreign Investments 4. To find whether customer have purchase intentions or not. 5. To find out whether there is any increase in sale of not after as a result of Organized sectors.

Conclusion

In the last few years much has been written about the retail revolution in India. Industry analysts, consultants, other in India are focusing on massive middle class opportunity and the explosion of retail in India. New shopping malls are opening up, foreign investment is coming to India, and old cinemas halls are converting to multiplex. Organised retail was launched in India with the launch of first malls in 1999. There were only three malls existed in India till 2002. Retailing in India at that time was a child of evolution. Since then many changes have taken place, some of them are: Consumer markets have increased since then. With the increase in sales of television and then cables and satellite channels, the mass reached of brands have increased. Income growth and structural changes has fuel growth.

Apart from steady income gains, consumer financing has become a major driver in the consumer durables industry. In the case of more expensive consumer goods, such as refrigerators, washing machines, colour televisions and personal computers, retailers can join hands with banks and finance companies to market their goods more aggressively. Among department stores, other factors that will support rising sales include a strong emphasis on retail technology, loyalty schemes, private labels and the subletting of floor

space in larger stores to smaller retailers selling a variety of products and services, such as music and coffee. Organized retailing is relatively new to India, although it has begun to expand rapidly and has given though time to unorganized sector. As with other consumer-oriented

goods and services, this sector should benefit from rising wealth, industry deregulation and a greater openness to international influences. By 2010, however, the organized sector could account for as much as 20% of the total retail sector, based on current trends. Shopping malls are becoming increasingly common in large Indian cities, and developers have plans to add hundreds of new malls over the next three years. Although not all of these plans will be realisedand many of the new malls will be much smaller than their Western counterpartsIndian consumers will have a far larger number of attractive, comfortable, brand-conscious outlets in which to shop. Competition from the traditional retail sector will continue to be a major issue for international firms entering the Indian market, whether directly at the wholesale level or indirectly through local firms. Traditional shops are mostly owner-operated, have low labour and property costs, and generally pay little or no tax. New entrants to the organized retail sector will also face higher labour and property costs than traditional firms and must bear the additional expense of back-up power supplies. Other impediments include high intermediation costs, expensiveand often inadequate

supply-chain infrastructure, inflexible labour laws, complicated property codes, multiple licensing requirements and a shortage of skilled managerial staff. Although the retail sector in India is undergoing substantial growth and development, driven by the impact of rising incomes, increasing urbanisation, low interest rates, greater brand competition and a youth-driven culture but at same time the biggest challenge for the Indian retail industry is its huge unorganized market, which accounts for a staggering.

Recommendations
Technology is going to be the dark horse in corporations bid to reduce costs, optimise supply chain processes and improve productivity and profits. The benefits that

technology offers are manifold and include - improved efficiency and visibility, lower costs, lower inventory levels yet constant product availability, better asset utilisation and increased sales through better out-of-stock goods management. There is huge potential in India specially, companies should try to tap middle class people. The products and brands should meet the need and budgets of real Indian middle class family as there is huge potential in this class. There are more than 220 million households with yearly income between 90,000 and 200,000 Rs which need to be explored. Although 97% of the market has been captured by unorganized sector but it facing a tough competition from organized sectors because of big malls. If unorganised sectors are want to maintain this growth then they have to attract customers by: Launching new schemes. Providing good quality products at reasonable price. They should impart training to their ground staff, so that they can handle customers well. One of the main reason why prefer malls over unorganized retail store is that, every thing is available under one roof. They dont have to walk distances for buying particular products. They can also have a good time with their family and friends.

QUESTIONNAIRE 1. From where you buy the goods?

70% 60% 50% 40% 30% 20% 10% 0%

65%

35%

local shops big stores

1st Qtr

Local shops Big stores

65% 35%

Interpretation:65% people purchase goods in local shop and 35% people purchase product from big stores 2. Are you aware of the difference between organized and unorganized retail sector?

no 60%

yes 40%

Yes No

60% 40%

Interpretation: 60% people do not have knowledge about organized retail only 40% people are aware of organized retail sector. 3. Which sector you prefer for buying the goods any products?

Unorganized

Organized

Unorganized Organized

65% 35%

Interpretation: 65% people prefer buying the goods from unorganized retail shops while 35% people prefer organized shop. 4. Why you prefer organized retail sector?

40 30 20 10 0 Series1 convinie 35 credit 20 near to 30 others 15

Convenience Credit Near to house Others Interpretation:

35% 20% 30% 15%

35 % people prefer convenience while 20% people prefer credit, 30% people prefer nearby shopping. 5. Why you prefer unorganized retail sector?

other discount proper display availability 0

10 10 25 25 20 40 30 40 50 Series1

Availability Proper display Discount Others

40% 25% 25% 10%

Interpretation:35 % people prefer product availability while 25% people prefer proper display and discount each.

60 6. What you think that organized Retail sector is goods & should be open more? 40 20 0 Series1

yes 40

no 60

Yes No

40% 60%

Interpretation: Only 40% people were of the view that more organized malls and bazaar should be there while majority of respondents, 60% were against this view. 7. If Unorganized Retail shop is Nearest to you then will you buy the products from it?

30%

70%
yes no

Yes No

70% 30%

Interpretation: 70% people were in favor that they will buy from small shops if they were near to them. 8. Why you purchase the Product from Particular store?

40 30 20 10 0 Series1 proper convini relatio discou 25 20 40 40 other 5

Proper display Convenience Relationship Discount Others

25% 20% 40% 40% 05%

Interpretation:Maximum number of people with 40% each purchases good on the basis of relationship with the shopkeeper and discount available on the goods, while 25% people purchases after seeing proper display 9. What change you think should be done in an unorganized sector to compete with organized sector?

50 40 30 20 10 0
av ai la bi l it ho y m e de liv er y di s ot he rs pl ay

Series1

Proper display Availability Home delivery Others

20% 30% 40% 10%

Interpretation:

Most of the people with 40% suggest home delivery, 30% availability, and 20% proper display should be done in order that this sector should compete with the organized one.

10. What other Facilities you want from an unorganized retail sector?

60 40 20 0 Series1

discount 45

variety 40

others 15

Discount Variety Others

45% 40% 15%

Interpretation: 45% of the respondents said they need discounts on purchases while 40% ask for more variety of products. 11. Does infrastructure if any store influences you to buy Product from there?

60 50 40 30 20 10 0 yes no Series1

Yes No

55% 45%

Interpretation: 55% of the respondents are in favor of the view while 45% were against it.

Bibliography

The following books and websites have been consulted for writing up to this project:

1. Books: -

1. Kotler, Philip Marketing Management Published by Pearson Education (Singapore) Pte. Ltd.

2. Kothari, C.R Research Methodology Published by New Age International (P) Ltd.

3. Cooper Business Research Published by Tata McGraw Hill

4. Websites:-

www.google.com www.economictimes.com
www.Scribd.com