The Indian retail market is valued at around $ 400 billion and is growing at a rate of 30% per annum. From 10% of Indian GDP in 2007, it became 12% of GDP in 2009. The organized retail sector accounts for around 5% of the total retail market.
The share of organized sales also varies largely from product to product. On the one hand in footwear, it is about 32%, on the other hand in food and beverages it is less than 1%. Organized sales have a good share (from 17% to 18%) in the clothing and consumer durables sectors. Furniture and home furnishings have 9% share, Jewelery has 7% and Books, music, gifts dominate 13% of organized retail. The growth rate also varies between the different sectors. Sectors such as beauty services (65%), mobile phones, accessories (55%) have recorded very high growth rates while sectors like watch (19%) and books (30%) have a lower growth rate
2. Types of retail formats
2.1 shopping centers
Shopping centers are the most commo retail format with a variety of players under one roof. Malls vary widely in size from 60,000 to 7,000, 000 square feet. In addition to commercial activities, shopping centers offer a platform for eating out, entertainment etc. Self-service restaurants and movie theaters are very common in Indian shopping malls, particularly in the Io city level. In addition to the normal shops, small kiosks (both permanent and short-lived) are available in a number of shopping centers.
2.2 Special shops
The specialized stores are the points of sale of companies that focus on specific market segments. Examples of specialized shops are
i) Pharmacy: Apollo Pharmacy, MedPlus, Trust, etc.
ii) Music: PlanetM, Music World etc.
iii) Books: crosswords etc.
2.3 Discounted shops
These are the stores that offer large discounts on products and depend on wholesale activity (ie economies of scale) to achieve profitability. Product categories can include both perishable and non-perishable items. A good portion of the revenue (sometimes up to 30%) of these stores comes from food and food products. Big Bazaar is an example of a discount store.
2.4 Department stores
These are department stores (20,000 to 50,000 square feet) serving a variety of consumer needs. These stores have secondary areas designated for different items such as fabric, home furnishings, toys, etc. Shopper’s Stop, Westside are examples of department stores.
2.5 convenience stores
These are relatively small shops (400 – 2000 square feet) located near residential areas. They store a limited number of high-turnover convenience products (such as food, groceries, personal care items) and charge a small premium for convenience. Spencer, Reliance Fresh are important examples of convenience stores.
3. SWOT analysis
The largest income available and an increase in the number of earnings are the main reason for the high growth rate of the Indian retail sector. Furthermore, exposure to the global environment has made many Indians aware of and organized retail trade. As a result they are adopting sales habits very quickly. Also the availability of low-cost specialized labor, especially for shop floor activities, is another key factor that helps Indian retailers to expand their operations very quickly. Real estate developers are also developing quality sales space and are coming out with different earning options suitable for retailers. The increasing use of plastic money (credit card, debit card, etc.) has also contributed to the easy adoption of organized retail.
Although Indians are very aware of retail formats, the conversion ratio (percentage of people actually buying for people visiting the store) is still quite low, particularly for shopping centers. Typical conversion ratios of 20% – 30% were noted in shopping centers. Moreover, some old policies hinder the rapid development of retail sales in India.
Up to now, a good number of permits, licenses and registration are necessary for the creation of retail stores. Some states have not yet amended the APMC law, which prevents large retailer chains or food industries from buying agricultural products directly from farmers. The infrastructure of modern distribution is not yet mature in India. Supply chains, especially for perishable items, are still in a nascent phase in India. The rentals for commercial spaces are very high compared to global standards and also some other infrastructures like energy, transport etc. Very little.
Organized trade is still around 5% of total retail businesses in India, and in itself indicates the great opportunity that the Indian retail industry must capitalize on. In addition, over 60% of organized retail is concentrated in Tier-I cities. Tier II, Tier III cities and rural India are still waiting to witness the retail boom.
The political and social bloc against organized selling is still present in India. Even a good percentage of people are still not comfortable with the organized retail structure. Unorganized retailers are starting new commercial initiatives such as credit offerings, home delivery to fight against organized retailers.
India currently allows 51% FDI (through the approval path) in single-brand retail, but does not allow FDI in multi-brand retailing directly (even if multiple brands belong to the same manufacturer). The foreign company must take the approval of the government before starting the business in India specifying the product and the categories of products that it wants to sell with the brand. Furthermore, any further addition of products / product categories under the brand name for sale in India requires government approval. The product must also be branded during production itself.
But in multi-brand wholesale, 100% of FDI (through the automatic route) is allowed in cash-and-carry format. In the cash and carry model, goods (imported or purchased in India) can be sold to distributors / institutional clients / retailers for further sales, but the sale of valuable assets to retail customers is not permitted. Goods must also be kept in a private non-tied warehouse of an Indian company. Discussions are under way to allow 66% or 49% of foreign direct investment in multi-brand retail.
Even the Ide can get through franchisees and license paths for the retail industry. In this case, franchising operations for foreign companies are permitted as long as the trademark / technology related royalty does not exceed 5% of domestic sales or 8% of exports. In addition, the lump sum payment should not exceed $ 2 million per technology. Furthermore, payment for technology transfer is only possible for production operations.
5. Retail management courses
A retail management course, is specifically geared to providing knowledge related only to the management of retail sales. These courses come in the form of diplomas. Armed with such a diploma in the management of retail sales, it can be applied to various positions in the retail sector. Many of these sales management institutions also provide placement assistance. These are less expensive and much more focused on course content.