Retail Management in India-23.pdf - Mimts.org

suppress the consumer exploitation by the multination
companies. The share of organized retailing is less than
I % in India, compared to 80% in USA, 40% in Thailand
and 20% in china. As per some estimates, there are over
200 retail mall projects under construction or under active
planning stage spanning over 25 cities. The existing
supply chain in India for most goods is woefully
inefficient, and built around obsolete warehousing,
logistics and transportation technology. Furthermore, the
omnipresent middleman compounds this problem. India
was now part ofthe global economy and that the economy
was riding on the back of middle class consumption.
Finally the impression was that large foreign companies
were poised to invest in large shopping centers as the
Indian market is now reputed to be the fastest growing
retail market in the world. (Sridhar 2007). According to a
survey by at Kearney, an overwhelming proportion of the
Rs. 4, 00,000 crores Indian retail market constitutes the
unorganized sector. In fact only rs. 20,000 crores of
segments ofthe market are organized. India has been called
a nation of shopkeepers due to the existence of a large
number of enterprises in the country which totaled over
12 million in 2003. About 78% of these are small family
business utilizing only household labor. Even among retail
enterprises that employ hired workers, the bulk of them
use less than three workers. India's first true shopping
mall complete with food courts, recreation facilities, and
large car parking space called "Cross Roads" was
inaugurated in 1999 in Mumbai.The report in media
indicated that a tie-up between Walmart and Bharati
Enterprises has been made and this venture is significant
in the Indian retail management market. As per their
agreement, BHARATI will run the front end of the
business and Wal-Mart the supply chain. Reliance
industry was also made collaboration with Britain's Tesco
and France's Carfefour. It plans to invest 5.6 billion dollars
in 4,000 stores in 1,500 towns across India. As per
the report of financial express, dated 4-10-07, A V Birla
has announced investment ofRs.8, 000 crores in retail via
super markets and hypermarkets and presently has 16 more
stores in Pune 7 stores in Mumbai. As per this report Delhi
is to be retailer's paradise, since it is the hot bed of retail
consumption with a high annual household consumption
expenditure of Rs.9511 crores.
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The announcement that foreign retailers are planning to
enter the Indian market has caused concern that small
traders will be adversely affected. In addition, concerns
have, been expressed that through vertical integration from
plough to place producers will be squeezed into ever lower
margins. (Reddy 2005). The government assured that the
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local traders will not be impacted. The deployment of
foreign collaboration stores indicates that economies of
scale, efficient supply line, and market research will
determine the survival of the business.
The Indian retail trade has been seen to be the fastest
growing in the world. (Techno Pack2006). There are
numerous estimates ofthe size ofthe retail sector in India.
Crisil estimates that the size ofthe retail market was Rs.l 0
trillion in 2006. Retail trade in India is backward looking as
it is grossly undercapit alised as per the report ofTechnop
pack.
According to Euro Monitor International, retail sales are
predicted to rise more rapidly than consumer expenditure
during 2003-08. The growth forecast in real retail sales
during 2003-08 is 8.3% per year compared with 7.1 % for
consumer expenditure. The modernization of retail sector
will be reflected in the rapid rise in sales ofsupermarkets,
department stores and hyper markets. This is because of
the growing affluent and upper middle class and their
preference for shopping at new types ofretail stores, given
the convenience they offer such as shopping ambience,
variety and a single point source of purchase.
The entry offoreign retailers in India will entirely change
the life style of Indian consumers and markets will be
expanded exponentially. The foreign multinational
companies are having financial muscle and technical
empiricism and experience of the customer behaviors.
Walmart is the largest retail company in the world and the
largest employer in the United States. The annual revenues
of Walmart were 258 billion dollars or 2% of US gross
domestic product. It offers everyday low prices to
consumers. It also makes sales at reduced levels to
competitors. For selling every day for lower prices
exposed a wide publicity to the store in US. But there are
several criticisms also explored about the behavior of the
organization. The Wal--Mart company pays lower levels
of salaries to its employees. On the other hand the
productive business model ofWal-Mart has received much
praise. It can dictate terms to suppliers. The success of
Wal-Mart is adoption of high technology and computerized
systems in their business transactions. In supply chain
system, it adopted radio frequency identification system
of goods in transit. (Williams 2004)
A.C.Nelson estimates the size of the Indian retail market
to be 250 billion dollars and adds that only 23% of 23
major cities have modem cities. According to various
research organizations reports indicate retail management
has large purchasing potential in different ways. The
government argues that regulatory reform will enable gains
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for customers through the reform of supply chain
management. The recent studies of shopping malls as
managed entertainment centers characterize them as
virtual realities with little reference to the immediate
environment, instead referring byimplication to other such
spaces around the world. They are internally self
referential and consumer movements within them are
disorientated in relation to the outside world. (Holmes
2001). The shopping malls also face several criticisms in
western countries, one of the criticisms of malls is that
they lead to the replacement of the traditional main street
and its subsequent decline (Lowe 2000: Baker 2006: Guy
2006). Kohli (1989) argues that the Indian middle class
supported trade liberalism as they were attracted by the
concrete benefits of tax reduction and greater access to
consumer goods. Retail developments along with gated
communities, redeveloped market places and casinos have
changed the face of the western countries as public or
civic spaces have been replaced with private space owned
by developers(Voyce 2006: 275). Kothari (1993) has called
the growing amnesia towards poverty and the poor in
liberalizing India. The overseas experience of mall
development is that they are usually constructed to form a
predictable controlled environment which acts to keep
deviant behavior on the outside and to form a "consumerist
form of citizenship" inside (Christophersons). Blaike
(2000: 1043) argues that" the neo liberal paradigm is highly
totalizing and universalizing. Its views on the role oflocal
people in applying their local knowledge and skills in
action are therefore myopic. Local knowledge is sidelined
and reduced both theoretically and practically to market
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information on the technical choices available, and the
local appropriateness of these choices to their
environment and individual and household endowments.
The paradigm is indifferent to the localness of the
appropriate institutions which should be induced to meet
market need. Malls may be seen as sealed enclaves that
reveal the continuum ofmiddle class consumers and their
involvement in shopping and recreation insulated from the
unsavory streets of the city (Sandercock 1997:311).
Shopping malls are becoming more popular as one stop
shops. In these malls all kinds of goods will be available
under one roof. They are attractive places as they are
destinations that replace the old civic meeting places of
earlier times. They provide respite from the heat and cold
and they provide possible spaces for dissatisfied elements
of the community. The holding of title of the property is
the most important and influencing factor in establishment
of shopping malls.
Retail Management is basically depends upon 6 important
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elements. They are Price, Sales Personnel, Quality of
Merchandise.
Assortment ofmerchandise, advertising, and Services and
other convenience services. It is generally all consumers
on the earth desires goods with high quality at lower prices.
The large quantity of purchases directly from
manufacturer will provide a chance for getting goods at
lower prices for the consumers. The behavior ofthe sales
personnel is another important and influencing factor in
determining the business transactions. The malls are
providing reputed high quality branded products to the
consumers. Branded products, needs no introduction about
the quality. The buyer of the branded product automatically
knows the quality ofgoods. The shopping malls can
further divided as specialty stores which are meant for
exclusively for young men, ladies, sports, children etc.,
The consumer is most important and influencing person
to the commercial enterprise. The behavior of the
consumer towards shopping malls is another important
area for survival of the business. Several researches had
been conducted globally to find out the consumer
behavior at malls. Behavior in malls is described as a
willingness or desire to stay, explore, work or affiliate.
(Mehrabian and Russell 1974). According to Berman and
Evans (1995), most often retailers are categorized by their
product strategy (i.e. merchandising assortment) and
pricing strategies, the store' environment is one of the
important factors to attract the consumers. The store
environment includes color, music, crowding, shopping
enjoyment, returning, attraction and friendliness towards
others, spending money. Time spent browsing etc., Achabal,
Gorr and Mahajan 1982, Kumar and Leone(1988) and
Walters) 1991) find a significant impact ofpromotions on
store switching traffic. It is unlikely that consumers would
keep track of weekly promotions on a multitude of categories
in all the stores in their neighborhood. Mall is a
place where a collection ofshops all adjoins a pedestrian,
or an exclusively pedestrian street, that allows shoppers to
walk without interference from vehicle traffic (Blochet at
1994). In north America and Australia, mall is generally
refer to large shopping areas while the term arcade is more
often used, especially in Britain, to refer to a narrow
pedestrian only street, often covered or between closely
spaced buildings(Sandiekci and Holt 1996). Bucklin and
Latta in (1992) show that retail promotions in anyone
category do no directly influence a consumer's store choice
decision, but they indirectly affect where the category is
purchased. Richardson, Jain and Dick (1996) highlighted
the difference between consumer's perceptions of price
levels in various stores and reality, showing that consum-
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ers may use non-price related cues like service offerings
and quality levels to form their price perceptions. Bell, Ho
and Tang (1998) found that location no longer explains
most of the variance in store choice decisions. Rather,
store choice decisions seem to be consistent with a model
where consumers optimize their total shopping costs,
effort to access the store location being one component of
their fixed cost of shopping. That is not to say however,
that location is unimportant. Consumers store choice may
be based on different factors. It is based upon the nature
of trip. For instance, small basket, fill in trips are very
unlikely to be made to distant or inconvenient locations.
Schlosser (1998) argues that since store atmosphere has a
social identity appeal pleasing atmosphere in the store
should influence perceptions of socially communicative
products in the store, not so much intrinsically rewarding
products.
Monroe and Lee (1999) developed a product price saliency
framework to examine how consumers from an overall
store price image.
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Grewal (2003) provides a good review of this research
and categories the elements of in store atmosphere into
physical features like design, lighting, and layout, ambient
features like music and smell, and social features like type
of clientele, employee availability and friendliness. They
note that atmosphere can affect consumer's perceptions
ofthe economic and psychological costs of shopping in a
store and find that pleasing physical design lowers both
economic and psychological costs while music lowers the
latter. Store atmosphere mediates consumer perceptions
of other dimensions of store image.
Large scale retailing is changing the way suppliers work,
and store brands are threatening established producers of
durable goods according to Bain and company Ericschw
AIm, Jean-Pierre Felenbok and Ashis Singh, Winning with
the Big Boxpetailers, Indian Management, P.No.28,
Jan.2007. Manufacturer ofconsumer goods have had little
choice in recent years but to adapt to the rapid growth of
hyper store retailers, the so-called big box chains. Stores
that push the limits of scale and selection have remade
their markets from France's decathlon in sporting goods,
to Britain's B&Q in do it yourself, to Germany's media
mart in electro domestics.
As per the survey reports of Bain and company
"indicating that two thirds of companies believe a strong
competitive cost position is more important than it once
was in order to achieve growth targets. European
companies showed an even higher level of concern about
JIMS 8M, January-March, 2008
achieving competItIve cost and pncmg than North
American firms an indication that executives expect the
European market place to become more prices
competitive in the future.
The entry into retail market is not an easy task. The
survival is the most important factor. The business
transactions in the malls depend upon local requirements.
Local knowledge is the most important and influencing
factor in survival of the business. India is a country with
many traditions and culture and different tastes. The
important constituents in the retail management is food,
beverage and tobacco account for 65% of the total
business followed by personal care products at 5% and
apparels at 7% , footwear, furnishings, consumer durables
and IT furniture, jeweler and watches, medical care and
recreation are the next most sought after items according
to a study by Technopak.
Geographical location is another important and
influencing factor in successful ofretail management. Retail
management is not only India but also throughout the world
they exist. The establishment of shopping mall location is
more important because the world wide experience
exposes much realty. For ex: in Malaysia, a hypermarket
is normally built about 3.5 km away from housing estates
or a city centre. In Indonesia, it is 2.5 kms from for
hypermarkets with a floor area of 40,000 sq.ft. Similarly
in Thailand, the distance is about 15 kms for stores that
are 10,000 square feet or more in area.
The following table 1indicates about various projects being
implementing in India in retail management. Entry into
business and retention of customer is also influencing
factor.
Impact of Shopping Malls on Small Shops and
Hawkers
Several studies have been conducted to study the impact
of shopping malls on small shops and street vendors. A
small sample survey of the impact of malls on small and
hawkers in Mumbai points to a decline in sales of
groceries, fruits and vegetables, processed foods, garments,
shoes, electronic and electrical goods in these retail
outlets, ultimately threatening 50% of them with closure
or a major decline in business. Only 14% ofthe sample of
small shops and hawkers has so far been able to respond
to the competitive threat ofthe malls with the institution of
fresh sales promotion initiative (Anuradha Kalhan, 2007).
The survey explored several facts about retail management.
Hawkers had been harassed by mall agents.
Hawkers have been selling goods at lower prices because
they have no overheads in selling goods. Small shops sales
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that sales had been increased due to availability of goods
where the malls failed to provide them. The main
drawback of the malls is not providing stationery,
photocopying, courier services, and mobile phone and
computer accessories. Unbranded garment shops, shoe
shops and electrical retailers, all seem to have suffered.
With the establishment ofshopping malls, the small shops
have retrenched their staff due to low sales of turnover.
The family owned shops never go for retrench but their
sales had been affected with low turnover. The research
further exposes that the malls are opening in mass areas of
city of population. Any interruption in factories like
lockout, strike, closure of mills, will show adversely
effect on shopping malls. Therefore any disturbance in
income of suburban people is greatly show impact on
shopping malls. Therefore localization factors greatly
influence the survival of malls business.
Lubell (1991) found that hawkers are at the bottom of
retail pyramid on the streets, readily available and handy
for customers. They are future of all urban spaces
globally. Municipal authorities have fought battles to evict
them, but with little success, street trading is one of the
points of entry of migrants into the working life of the
city: it is also one of the traditional supplementary
activities of the families of the working poor, particularly
for women. The number of hawkers in Mumbai is
estimated at 2, 50,000 (Government of India 2004). But
the number of hawkers had been increased even though
the corporation stopped issuing licenses. Mall promoters
have joined the conflict to evict hawkers and revamp their
precincts. Majority of the hawkers were experiencing a
fall in sales.
Downloaded From IP - 115.248.73.67 on dated 29-Nov-2010 were declined marginally. Some shops have been reported
A war has been started between shopping malls and street
vendors, hawkers and small shops. However in this
competition, the consumer will ultimately get benefit in
the form of low price with high quality goods. A war
between malls and small shops and another war between
shopping malls exist in the market. Market is a reflection
of consumer desires and dreams.The customer will
decide the future of retail management where the
multinationals entering the unknown tastes of Indian
customers.
Small retailers no longer remain the basic sources for the
monthly sopping basket. The salary earners will buy goods
at monthly basis at malls and at the end of the month, the
needy merchandise may be bought from the nearby their
residence. Therefore there is no chance of close down of
small stores exists. The daily needs goods are always
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commanding demand for the livelihood ofthe population.
However the emerging of shopping malls will bring good
cheerful movements to the farmers. They buy goods
directly from factories in case of consumer goods and
food components are directly procured from the farmers
without any middle men. Hence the organized retail
management will change the agriculture sector also. The
agriculture sector can also be brought under organized
markets.
References
Anuradha, K. (2007, June 2) Impact ofmalls on small shops
and hawkers, economic and political weekly, pp2063.
Baker, R. (2006) Dynamic trip Modelling from shopping
centres to the internet, springer, Newyork.
Blaike, P. (2000) Development post anti and populist: Environment
and Planning, vo1.32, no.6 ppl033-50.
Christopherson, S. (1994) the fortress city in an amin (ed) post
fordism. Blackwell, oxford pp.409-427.
Grewal, D., Baker, J. L. & Vose, G.B.(2003) The effects ofwait
expectations and store atmosphere evaluations on
Patronage intentions in service Intensive retail
stores- journal ofretailing pp 11-15. (3460)
Guy, C. (2006) Planning for Retail Development Taylor and
Francis London.
Holmes; D. (2001) Virtual globalisation an introduction in D
holmes, virtual spaces tourist spaces Routledge
London, 1-64.
Kohli, A. (1989) The Politics of Economic liberalisation in
India, world development, vol. 17, no.3 pp 305-28.
Kunmar, S. (2005) Brand equity, the economic times, 2005.
Lowe, M.S. (2000) Britain's regional shopping centres new
urban reforms? Urban studies vo1.37 no.2.pp 261-274
Reddy, B. (2005) Wal-mart assault: India may be forced to open
its retail sector, but walmart for the first time will face
real communist in India, India today, July 12.
Sridhar, V. (2007) Wall mart walks in frontline, January 12, p.37.
Voyce, M. (2006) "Shopping malls inAustralia: the end of public
space and the rise of consumerist Citizenship"
sociology, vo1.42, no.3 pp269-87.
Williams, D. (2004) The strategic implications ofwal-mart's
Rfid mandate directions magazine, July 20.
Sandercock, L. (1997) From main street to fortress just policy,
Vol.9 no. I pp 27-34.
Sandikci, O. (2004) & holt D.B. (1998) Malling society: mall
consumption practices and the future of public sp
ace. www.answer.com.
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Table I
S.No Retailer Brands Plans Strength Challenges
1. K. RAHEJA SHOPPERS STOP, -310 Vast local retailing Keeping up brand
CROSSWORD, INORBIT 70 experience loyalty
MALL, HYPERCITY, 100
CAEBRJOIDESI CAFE
2. FUTURE PANTALOON, BIGBAZAR 3300 Vast customer experience Expanding
GROUP FOOD BAZAR by customer base, out
FASHION 2010 sourcing products at
STATION, cheaper prices
BLUE SKY
3. TATA GROUP TRENT 21 Already established Sprucing up
customer Base,
opening More
outlets Introducing
New retail Formats
4. LANDMARK LANDMARK Pioneered the Concept of Experimenting with
Family centric Multiproduct, newer products
Leisure store Strong online
Presence
5. R.P.G. SPENCER'S MUSIC WORLD Expansion into other major Successful formats
Cities at prime Locations, B- diversified
cities next On the list prescience
6. RELIANCE RELIANCE FRESH Plans to set Up range of Strong back end
different Store formats nationwide fuel
retailing platform
7. BHARATI FILED FRESH Pan Indian operations Bharati local
WALMART expected expertise Wal-Mart
technology
8. ADlTYBIRLA MADURA GARMENTS BIRLA Delhi operations started Extensive local
SUN LIFE IDEA PLANET experience
F ASmON TROUSER TOWN
9. HERO GROUP EASY BILL Announcing foray Into retail Strong background
in serval
manufacturing
Sectors and sound
fin Ncial base
10. CARREFOURJ MULTI FORMAT RETAILERS Still open their cards Successful
TESCO
worldwide
operations
Sources: Beyond Retail Hype, An 1m Report Indian Management, P. No. 12, Jan. 2007
JIMS 8M, January-March, 2008
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