Current scenario in retail marketing with special reference to organised retailing

Vol . III : Issue. 11 ISSN:0975-9999
SELP Journal of Social Science July - September 2012
47
CURRENT SCENARIO IN RETAIL MARAKETING WITH SPECIAL
REFERENCE TO ORGANISED RETAILING
Dr.C.Paramasivan,
Assistant Professor &Research Supervisior,
Department of commerce, Periyar EVR College Trichy.
M.Hajera Banu, Lecturer in Commerce,
Vivekanandha College of Arts and sciences for women,Tiruchengode.
ABSTRACT
The Indian retail industry has scaled impeccable growth over the last decade with an amiable
acceptance to organized retailing formats. The industry is maturing towards modern concept of
retailing, cornering the conventional unorganized family-owned business. India has been ranked
as the fourth most attractive nation for retail investment among 30 emerging markets. With market
liberalization, growing consumerism and the entry of corporate players, the Indian retail sector is
currently experiencing developments at an evolutionary rate like nowhere else in the world. This
article consists of the following objectives such as To assess the progress ,analyse the opportunities
know FDI scenario ,and To study the regulatory frame work of organized retail marketing.
Key words: retail marketing, Hypermarkets, supermarkets, Department stores,
Introduction
Retailing is the most active and
attractive sector. Retailing industry has been
present for many years in our country. It is only
the recent past that has witnessed so much
dynamism in this industry. The International
retail store chains have caught the fancy of many
travelers abroad. The action hitherto is missing
from the Indian business scene. The emergence
of retailing in India has more to do with the
purchasing power of buyers, especially of those
who live in the post liberalization period. The
retail industry offers increasing economies of
scale, with the aid of modern supply and
distribution management systems and solutions.
The current retailing revolution has provided an
impetus from multiple sources. These
“revolutionaries “include many traditional and
conventional stores upgrading themselves to
modern retailing, companies in competitive
environments are entering into the market
directly to ensure exclusive assortment for their
products and services. Chain stores coming up
to meet the needs of the manufacturers who do
not fall into either of the above categories is
also an effect of this. Attractiveness,
accessibility and affordability seen to the key
offerings of the retailing chain.
Objective of the Paper
To assess the progress in organized
retailing in India
To analyse the opportunities available
for organized retailers
To know FDI scenario in organized
retail marketing.
To study the regulatory frame work of
organized retail marketing.
The Emerging Sectors
Retailing, one of the largest sectors in
the global economy, isgoing through a
transition phase, not only in India, but all over
the world. For a long time, thecorner grocery
stores (Kirana stores) were the only choice
available to the consumer, especially in the
urban areas. this is slowly giving way to
international formats of retailing. The

48
traditional food and grocery segment has seen
the emergence of supermarkets/grocery
chains(Food World, Nilgris, andApna Bazaar),
Convenience stores, HP Speed mart) and fast-
food chains (Mc Donalds,Dominos).The
emergence of new sectors has been
accompanied by changes in existing formats,
as well as the beginning of new formats. They
are given below
Hypermarkets: Hypermarkets are big-box
formats with an average size that ranges
between 60,000-120,000 square feet, and they
stock multiple lines of products such as food
and grocery, general merchandise, sports goods,
and apparels. Hypermarkets are mammoth
outlets that are fewer in number but cater to a
larger area (3-5 kilometer). Hyper CITY, Big
Bazaar, RPG Spencer’s and Shoprite Hyper are
some major players in this format.
Supermarkets: The average size of
supermarkets range from 10,000-30,000 square
feet. They are a smaller version of hypermarkets
that holds multiple lines of merchandise but is
limited in number when compared with
supermarkets. Supermarkets are spread across
the city, are greater in number, but cater to a
smaller area (1-2 kilometer). Food world, Food
Bazaar and Spinach are some major players in
this format.
Convenience stores: Convenience stores offer
easy purchase experience through easily
accessible store locations. The stores are
basically small in size (500-3,000 square feet),
which allows quick shopping and fast
checkouts. Subhiksha and Reliance Fresh are
some major players in this format.
Cash-and-carry outlets: Cash-and-carry outlet
is strictly not a retail format, but considering
the business dynamics it follows it can qualify
for a retail format. In a retail business usually a
consumer has to purchase one or more products
but under this format, the consumers have to
buy a minimum volume of products or value
specified by the cash-and-carry retailer. In this
format the buyers are basically small retailers
or catering service providers who purchase in
bulk quantities. This stores’ size ranges from
100,000 square feet to 300,000 square feet. At
present, Metro is a major player that falls under
this format. Wal-mart’s alliance with Bharti and
Tesco’s with Trent will also come under the
cash-and-carry format.
Discount stores: The focus of these stores is
to offer merchandise at a price that is lower than
the market price, and to gain profit from
volumes. These stores keep merchandise mainly
on the basis of its salability. Usually these are
no-frill stores with simple surroundings and less
service. Big Bazaar and Subhiksha are some
famous examples.
Specialty stores: These stores usually
‘specialise’ in one line/category of merchandise.
As these stores are concerned with only one
type of merchandise, they are able to offer a
wider range of products at a lower price.
Examples: Next and Vijay Sales.
Department stores: These stores are typically
lifestyle stores where most of the merchandise
constitutes apparels and products other than
food and grocery. These stores offer high quality
service to consumers. These stores stock lesser
merchandise than other formats since the
merchandise is stored in a presentable manner.
Notable examples are Shoppers Stop, Westside,
Trent, and Globus.
Category killers: Many major retail chains
have adapted small specialty store concepts and
have expanded themselves to create large
specialty stores. These expanded, large
speciality stores are known as ‘category killers’.
Ezone, which specialises in electronics, and
Staples, which specialises in office stationery,
are examples of category killers.

49
Boon for Organized Retailers
Organized retail concentration in tier II and
III cities
Initially the retail revolution began in
the big tier I cities in India; however, as tier I
cities are relatively saturated now, retailers,
especially value retailers, are finding their way
to smaller tier II and tier III cities as well. The
changing landscape of the Indian retail segment
and the increasing competition has also forced
retailers to tap growth opportunities in tier II
and III cities in India.
Internet drives awareness and online
purchases
There has been a substantial increase
in the number of Indians who use the Internet
and a concomitant increase in the number of
online purchases. Indians have started using the
Internet not only for increasing awareness but
also to shop online, which has opened a whole
new channel of retailing in the Indian retail
scenario. Online retailing offers consumers the
convenience of ordering merchandise to their
doorstep. Recently, Future Group, which owns
Pantaloon, has initiated a measure to capitalise
on the online opportunity through
futurebazaar.com. A similar venture
flipkart.com is also proving the new channel to
be highly viable, especially since it eliminates
the biggest cost of the physical store.
Easy credit availability – a boon for
organised retail
The higher penetration of credit cards
in India has also boosted the growth of the
organised retail sector; in fact, the young
population’s increasing fancy for plastic money
has further fuelled their purchasing power. Even
though the organised retail sector is at a nascent
stage (constituted 5.9% of the total retail
industry in 2007), it is growing at a rapid pace.
Moreover, the spurt in issuance of credit cards
and loans by both Indian as well as foreign
banks has further boosted the segment’s
growth. According to the RBI, as on FY09, the
total number of outstanding credit and debit
cards in India was 24.7 million and 137.4
million respectively.
Retail investment
Investments in the retail sector have
improved since FDI has been allowed in single-
brand and cash-and-carry formats. According
to the Technopak estimates, investments in the
organised retail will touch US$ 35 billion in
the next five years or so. Investments allow
organised players in retail to expand at a very
high rate. All key retailers in India have
expansion plans over the next 3-4 years; for
instance, Pantaloon has an ambitious expansion
plan to take its retail space up to 30 million
square feet by 2011. Likewise, Vishal Retail is
expected to take its total store count to 500 with
an estimated retail space of around 10 million
square feet by 2011.
Availability of quality real estate
According to industry sources, mall
space in India has grown from a meager 1.0
million square feet in 2002 to about 57.3 million
square feet by the end of 2008; tier I cities are
expected to account for around 73% of the mall
space and the rest is likely to be equally divided
between tier II and tier III cities.
FDI scenario in organised retail market
In 1991, the Indian government
introduced the economic policy to attract
foreign investments and since then, it has
amended the policy from time to time in various
sectors to allow higher levels of foreign

50
participation. The government policy in retail
sector allows 100% foreign investment in
wholesale cash-and-carry and single-brand
retailing but prohibits investments in retail
trading. In 1997, the government imposed
restrictions on FDI in retail sector but in 2006,
these were lifted and opened in single-brand
retailing and in cash-and-carry formats.
The cash-and-carry business is the easiest mode
of entry for foreign retailers into India. Many
global players like Metro and Shoprite have
already entered the market. Wal-mart has forged
an alliance with Bharti for a cash-and-carry
business, and Bharti is concentrating on front-
end retail. Similarly, Tesco has entered India
through an alliance with Trent (Tata Group).
Apart from investing in the cash-and-carry
business, Trent will also support the back-end
activities of Trent Ltd.
Slowly the government is opening up to the idea
of permitting FDI in the Indian retail sector;
consequently there is greater momentum in the
sector. Last year, owing to the global meltdown,
investments dropped in all sectors. The
government has therefore changed the
guidelines for foreign investments to boost
investments in the current year. This move is
certainly likely to improve the investment
climate in the Indian retail space.
Regulatory Framework
The Indian government has not focused on retail
as an industry. Until now, there are no specific
rules and regulations that are to be followed by
retail companies. However, there are certain
laws that the retailers need to follow, which
are general in nature and which pertain to the
establishment of stores and the conduct of
activities. These laws are as follows:
· Shop and Establishment Act
· Standards of Weights and Measures Act
· Provisions of the Contract Labour
(Regulations and Abolition) Act
· The Income Tax Act
· Customs Act
· The Companies Act
Apart from the above Acts, the companies also
follow certain regional rules and regulations
on the basis of the stores’ location. In some
regions regulations are imposed on the
organised retailers to restrict their expansion
and to promote regional retailers; for instance,
the Tamil Nadu government imposed a 10%
surcharge on organised retailers; Retailers are
also required to take necessary approvals from
local bodies to carry on with their business.
There is no single window for clearances, and
companies have to go to different agencies to
get approvals, which is one of the biggest
hurdles that the segment faces.
Conclusion
The Indian organized retail market has become
more competitive in terms of implementing
newer business models on the operational
format, and pricing, and in terms of efficiency.
The organized retail sector will largely benefit
in terms of productivity and growth if sectors
like agriculture, food processing, and textile are
encouraged further. The above-mentioned
sectors would receive a remarkable boost if
they would supply to big Indian and foreign
retail players, which will ensure their growth
in tandem with the retail sector. Moreover, the
organized retail sector will directly and

51
indirectly improve the country’s employment
scenario.
Many Indian retail players have already started
purchasing supplies directly from farmers and
other suppliers, which has invariably eliminated
the supply-chain complexities and large number
of intermediaries, and has resultantly lowered
prices for consumers. Furthermore, the
amendment of the Agriculture Product
MarketingAct (APMC) has revamped the farm
produce supply chain.
Reference books
1. Gibsten B. Vedamani,(2008),Retail
Management functional Principles &
Practices, Jaico Publishing House,,pp.43-
65
2. Dr.Mathala Juliet Gupta, Chetan V.
Hiremath, Appareal Retail Outlet
Selection: Influence of service levels in
Goa, Indian journal of Marketing.Nov-
2011
3. Sinha ,P.K.and Kar,S.K.(2007),An insight
into the growth of new retail formats in
India. Workingpaper no. 2007-03-
04,IIM,AAhmedabad .
4. Mc.Nair,Malcom P.(1958) significant
Trends and Developments in the Postwar
period. In A.B.smith (Ed.),Competitive
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5. Khurana,S.(2008).Customer Expectation
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of Haryana State.ICFAI University
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6. Madhurima Deb and Gautam Singha
(2007).Importance of service
quality.Marketing Managaement.vol.6(1)
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7. Sonia ,Customer Perception towards
Mega Mart,Services Marketing,Vol.6(4):
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8. FDI in Multi Brand Retail will Increase
Investment Opportunities in Organised
Retail SectorNews by Month,September
26, 2011
9. Namratha.G&NaziaHasan,Badruka
Institute ofForeignTradeKachiguda,
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10. Anushree Agnihotri and Prathap Oburai,
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MerchandisingElements in
Organized Grocery Stores (2002)
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