current scenario in retail maraketing with special

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The Indian retail industry has scaled impeccable growth over the last decade with an amiable acceptance to organized retailing formats. The industry is maturing ...
Vol . III : Issue. 11

ISSN:0975-9999

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 opportuniti es know FDI scenario ,and To study the regulatory frame work of organized retail marketing.

Key words: retail marketing, Hypermarkets, supermarkets, Department stores, 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.

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. T hese “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 SELP Journal of Social Science

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 47

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traditional food and grocery segment has seen the emergence of supermarkets/grocery chains(Food World, Nilgris, and Apna Bazaar), Convenience stores, HP Speed mart) and fastfood 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

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 stor es 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.

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 SELP Journal of Social Science

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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.

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.

Retail investment Investments in the retail sector have improved since FDI has been allowed in singlebrand 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.

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 thr ough 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.

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.

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 SELP Journal of Social Science

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 49

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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 frontend 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.

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

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 SELP Journal of Social Science

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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 consumer s. Furthermore, the amendment of the Agriculture Product Marketing Act (APMC) has revamped the farm produce supply chain.

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