EMERGENCE OF CORPORATE RETAIL IN INDIA -FUTURE IMPLICATIONS

INTRODUCTION:
Retail comes from the French word retailer 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
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. 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. Retailers are at the end of the supply chain.
BEGINNINGS OF RETAIL TRADE:
Early Trade: When man started to cultivate and harvest the land, he would occasionally find himself with a surplus of goods. Once the needs of his family and local community were met, he would attempt to trade his goods for different goods produced elsewhere.
Thus markets were formed. These early efforts to swap goods developed into more formal gatherings. When a producer who had a surplus could not find another producer with suitable products to swap, he may have allowed others to owe him goods. Thus early credit terms would have been developed. This would have led to symbolic representations of such debts in the form of valuable items (such as gemstones or beads), and eventually money.
The First Shops: Eventually, markets would become permanent fixtures i.e. shops. These shops along with the logistics required to get the goods to them were, the start of the Retail Trade.
HOW RETAIL DEVELOPED???
Peddlers and Producers: The Retail Trade is rooted in two groups, the peddlers and producers. Peddlers tended to be opportunistic in their choice of stock and customer. They would purchase any goods that they thought they could sell for a profit. Producers were interested in selling goods that they had produced
CLIMBING THE GREASED POLE:
Moving up the evolutionary ladder wont be easy for Indias retailers. Especially given the large number of potential spoilers. Availability of quality retail space will be a key determinant for the growth of the sector. With most Indian cities undergoing rapid urbanization, spiraling rental costs has most retailers worried already.
Hitherto, most retailers have preferred to go in for long-term leases. But with real estate prices in most top tier cities hitting the roof in the past two years, lease rental increases are making business unviable for organized retail.
Within hours of making his deal with Wal-Mart public, Sunil Mittal, the chairman of Bharti Group, said his top priority would be real estate acquisition, whether through leasing or buying.
Biyani already has a successful retail model in place and Bharti will look to cut corners with some help from Wal-Mart, players like Reliance and the AV Birla group would have to go through a longer learning curve.
A vital logistical link in most retailers plans happens to be the cold chain. And many of them like Reliance Retail and Future Group are reported to be investing Rs 6,000 crore and Rs 400-500 crore (Rs 4-5 billion), respectively, on setting up logistics.
The other big issue for retailers is people. Analysts agree that the manpower shortage will get acute as retail spreads beyond the metros. Says Sanjiv Goenka, Chairman, RPG Group: The biggest challenge for us and, for that matter, any retailer will be getting trained personnel.
GETTING IT RIGHT:
Retailers ranging from Pantaloon to RPG to Piramals or the Tatas are working towards exploiting this model, perceived by consumers as more value-enhancing. But in the long run, what is most likely to succeed is a more balanced multi-format strategy.
Finally, while in the first flush of the retail boom, the elimination of traditional intermediaries may bring windfall gains (as well as bring welcome and much-needed relief to the producers), this source will increasingly dry out as competition intensifies and margins come under pressure a few years down the line.
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 unorganized property market resulted in a dearth of quality retail space in the country.
Another factor that accelerated the growth of organized 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?
Implementation of Value Added Tax will streamline the complexities in the tax structure and narrow the cost disadvantage between organized and unorganized retailers.
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.
RETAIL SPACE:
Retailers in India are the most aggressive in Asia in expanding their businesses, thus creating a huge demand for real estate. Their preferred means of expansion is to increase the number of outlets in a city, and also expand to other regions, revealed the Jones Lang LaSalle third annual Retailer Sentiment Survey-Asia.
Driven by changing lifestyles, strong income growth and favourable demographic patterns, Indian retail is expanding at a rapid pace. The country may have 600 new shopping centres by 2010. Mall space, from a meagre one million square feet in 2002, is expected to touch 40 million square feet by end-2007 and an estimated 60 million square feet by end-2008.
India has topped the AT KearneyÃ¢ï¿½ï¿½s annual Global Retail Development Index (GRDI) for the third consecutive year, maintaining its position as the most attractive market for retail investment.
The Indian retail market -- one of Indias fastest growing industries -- is expected to grow from US$ 350 billion to US$ 427 billion by 2010. According to Euromonitor International, the Indian Retail market will grow in value terms by a total of 39.6 per cent between 2006 and 2011, averaging growth of almost 7 per cent a year.
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. The prospect for growth of the branded segment is huge, as nearly 60 per cent of the average Indian grocery basket still comprises non-branded items.
Of the 12 million retail outlets (which is the largest in the world), over 5 million sell food and related products. Some of the large players in this market are Kishore BiyaniÃ¢ï¿½ï¿½s Food Bazaar, Mukesh AmbaniÃ¢ï¿½ï¿½s Reliance Fresh, Godrej Agrovet, the Aditya Birla Group, and the Tata Group (which acquired 70 per cent stake in Innovative Foods from the Amalgam Group) among others.
THE MOBILE REVOLUTION:
The retail market for mobile phones - handset, accessories and airtime - is already an over US$ 17.33-billion market growing at the rate of 15-20 per cent. With the number of mobile users expected to cross 220 million by the year end (and 550 million by 2010), many players have been chalking out aggressive plans.
Ã¢ï¿½Â¢ Spice Group plans to invest US$ 123.8 million in the next two years in its telecom retail venture, HotSpot Retail.
Ã¢ï¿½Â¢ Essar Group plans to invest US$ 278.56 - 334.24 million over the next three years in its telecom retail venture.
LUXURY BRANDS:
With consumers for luxury goods more in numbers than adult population of several countries, many luxury brands have been attracted to set up shops in India to tap the growing market. Many companies such as Bang

Article Source: http://www.rightbiz.com

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Retail is India\'s largest industry, accounting for over 10 per cent of the country\'s GDP and around eight per cent of the employment. Retail industry in India is at in India.

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