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CHAPTER-1
INTRODUCTION
1.1 Conceptual Framework of Retailing
Retailing is the magic wand which can give anything, anywhere, at any
time. Retailer is the ‘Genie’ of the present day to offer the consumers the right
product, in the right quantity, at the right price, at the right place and at the right
time. The last link which connects the consumer and manufacturers in the
distribution channel is the retailer who facilitates the movement of products
from point of production to point of purchase.
“Breaking the bulk” has become the successful business concept. The
‘retallier’ of the French is omnipresent in the entire world to do the distribution
and selling of goods and services to customers for their personal, family or
household use. The term “retailing” is derived from the French word “retallier”
which means “a piece off” or “to break the bulk”. This implies the breaking of
bulk function of the retailer. The retailer breaks the bulk of the manufacturer or
wholesaler and makes it in to pieces of required quantity and delivers it to the
customer.
Retailer offers variety of products of best quality in required quantity at
convenient location for reasonable price. They sell in small quantities and offer
selection-an assortment of merchandise. According to Philip Kotler, ‘Retailing
includes all the activities involved in selling goods or services to the final
consumers for personal, non business use.
A retailer or retail store is any business enterprise whose sales volume
comes primarily from retailing. Any organization selling to final consumers
whether it is a manufacturer, wholesaler or retailer-is doing retailing. The major
functions performed by retailer are breaking the bulk, holding stock, creating
time and place utility, providing assortment, creating new demand for
merchandise.
2
1.2 History of Retailing
The origins of retail are as old as the trade itself. Barter was the oldest
form of trade. For centuries, most merchandise was sold in market place or by
peddlers. Medieval markets were dependent on local sources for supplies of
perishable food because Journey was far too slow to allow for long distance
transportation. However, customer did travel considerable distance for specialty
items. The peddler, who provided people with the basic goods and necessities
that they could not be self sufficient in, followed one of the earliest forms of
retail trade.
Even in prehistoric time, the peddler traveled long distances to bring
products to locations which were in short supply. Later retailers opened small
shops, stocking them with such produce. As towns and cities grew, these retail
stores began stocking a mix of convenience merchandise, enabling the formation
of high-street bazaars that become the hub retail activity in every city.
1.3 Evolution of Organized Retail in India
While barter would be considered to be the oldest form of retail trade,
since Independence, retail in India has evolved to support the unique needs of
our country, given its size and complexity. Haats, mandis and melas have been a
part of India landscape. They will continue to be present in most part of the
country and form an essential part of life and trade in various areas. Retailing in
its initial period was witnessed at the weekly Haats or Gathering in a market
place where vendors put on displays their produce.
Of course, this practice is still prevalent in many towns and cities in
India: then the market saw the emergence of the Local banias and his
neighborhood Kirana shop. In fact these were the common local mom-pop
multipurpose departmental store located in the residential areas such shops
stocked goods and multipurpose utility and were with the vision of providing
convenience at the door step of the consumer.
3
Chart 1.1 Phases of evolution of organized retailing in India
The emergence of Kirana stores and mom-and-pop stores is the origin of
retail business in India. Later with the help of Khadi&Village Industries
commission by government indigenous franchise stores came up. After 1980 the
economy began to open up and it was the reason for the changes in retailing
sector. Textile was the first sector to come up in retailing with Bombay Dyeing,
S Kumar's, Raymonds, etc. New retail formats such as exclusive brand outlets,
hypermarkets and supermarkets, department stores and shopping malls have
evolved as the retail industry started to grow rapidly.
1.3.1 Major Retail Players in India
The organised retail market in the country is poised for an enviable
growth across all sectors which not only excite the foreign retail majors to invest
but also some of the major corporate houses in India. Tatas, Ambanis, Birlas,
Rahejas all are already there with significant investments into some of the major
retail categories. In the past few years, Indian Retail sector has seen tremendous
growth in the organised segment. Major domestic players have stepped into the
retail arena with long term, ambitious plans to expand their business across
verticals, cities and formats. Companies like Tata, Reliance, and Bharti have
been investing considerably in the booming Indian Retail market. Along with
these giant retailers, a number of transnational brands have also entered into the
market to set up retail chains in close association with bigger Indian companies.
Source of
Entertainment
and Commercial
Exchange
Neighborhood
Convenience,
Traditional/
Pervasive
Approach
Government
Supported,
Availability / Low-
cost Distribution
Modern Formats
/ Shopping
Experience
4
Given the industry’s changing landscape and emerging challenges, the
focus of industry players too is changing; with a strong emphasis on profitable
growth in the current scenario. Hence, retail companies are increasingly
concentrating on strengthening existing operations and assessing options for
growth through consolidation, while continuing to innovate.
Online retail business is the next gen format which has high potential for
growth in the near future. After conquering physical stores, retailers are now
foraying into the domain of e-retailing. The retail industry is all set to test waters
over the online medium, by selling products through websites. The following
table discusses the activities of major players in the Indian retail terrain:
Table 1.1 Major Retail Players in India
Future Group
Big Bazaar - Hypermarket chain
17 million square feet of
retail space
102 Cities across the
Country
300 million customers
Mega Food Park at
Tumkur Karnataka
Food Bazaar - Supermarket chain
Ezone - Electronics superstore
HomeTown - Home improvement and building
materials store
Foodhall - a premium lifestyle food destination
Planet Sports - Sportswear retailer
Central - Seamless department store
Aadhaar - Rural retail chain
KB’s Conveniently Yours - An urban convenience
store with exotic range of food products.
Futurebazaar.com - Shopping portal
all - The plus size store
I Am In - caters to the enthusiastic Gen Next crowd
Brand Factory - India's largest fashion discount
store chain
Nilgiris.-Supermarket chain
Reliance Retail Limited
Reliance Fresh - Retail outlets of fruits, vegetables
& groceries
2000 retail stores(as of
October 2014)
9 million square feet
across 155 cities
Turnover of Rs.
168 billion in the
financial year 2013-14.
Quarterly profit of Rs.
189 Crore (for July -
September 2014)
Reliance Digital - Consumer Electronics
Reliance Jewels – Jewellery
Reliance Trends, Reliance Footprint and Reliance
Living - Apparel and Clothing.
Reliance Time Out - Lifestyle store of Books,
Music, Movies, Toys, Gaming, Fragrances, and
Stationery.
Reliance Market, - Cash n Carry
5
Compiled from online sources
1.3.2 Sector wise contribution
The sector can be broadly divided into two segments: Value retailing,
which is typically a low margin-high volume business (primarily food and
groceries) and Lifestyle retailing, a high margin-low volume business (apparel,
footwear, etc). The sector is further divided into various categories, depending
on the types of products offered. Food dominates market consumption with 60%
Bharti Retail
Easyday- standard neighborhood stores
currently operates in 13
states over 110 towns and cities
The number of stores functional
is 228 across three different
formats[
76,000 customers everyday
Easyday Market- compact hypermarkets
Easyday Hyper- large hypermarket style
stores
Aditya Birla group
Aditya Birla Retail Limited
more- supermarket
494 supermarkets and 16
hypermarkets around the country
more.MEGASTORE- Hypermarket
Pantaloons Fashion &
Retail Limited- lifestyle apparel
company
(Pantaloon Retail, was demerged by Future
Group)
86outlets spread across the
country in 40 cities
spans a retail space of 1.7 million
square feet
Tata group- Trent
Westside- Lifestyle Fashion wear-Specialty
store
82stores in the metros of India.
consolidated revenues pegged at
over Rs.17000 Crores
Landmark- bookstore chain
Star Bazaar- hypermarket
Infiniti Retail- multi-brand electronics
stores
Coma.- electronics retail chain, online store
Raheja Group
Shoppers' Stop- Department store, e-store
74 stores across 35 cities in India.
Crossword – Life style book store-
specialty store
Inorbit Mall- Mall
Home Stop -Home solutions-concept store
Hypercity- hypermarket
6
share followed by fashion. The relatively low contribution of other categories
indicates opportunity for organised retail growth in these segments, especially
with India being one of the world's youngest markets.
Chart 1.2 Sector wise contribution of Indian Retail Market
Transition from traditional retail to organised retail is taking place due to
changing consumer expectations, growing middle class, higher disposable
income, preference for luxury goods, and change in the demographic mix, etc.
The convenience of shopping with multiplicity of choice under one roof (Shop-
in-Shop), and the increase of mall culture etc. are factors appreciated by the new
generation. These factors are expected to drive organized retail growth in India
over the long run.
1.3.3 Growth of organized retailing
The Indian Retail sector has come off age and has gone through major
transformation over the last decade with a noticeable shift towards organised
retailing. A T Kearney, a US Based global management consulting firm has
ranked India as the fourth most attractive nation for retail investment among 30
7
flourishing markets. Consumerism in India is witnessing unprecedented
growth driven by favorable demographics, a young and working population,
rising income levels, urbanization and growing brand orientation. This, in turn,
is reflected in India’s retail market, which in 2013, was estimated at US$520
billion and is expected to grow at a CAGR of 13% to reach around US$950
billion by 2018. Organized retail penetration, currently estimated at 7.5%, is
expected to clock a 19-20% p.a. growth to reach 10% by 2018. Penetration in
tier-II and III cities, improvement in business models and operations, coupled
with movement from unorganized to organized trade are expected to play an
integral role in driving this growth.
1.4 Opportunities and challenges in Indian retailing
High operating costs, low bargaining power with vendors, and heavy
discounting to improve sales have affected profits and expansion plans. Real
estate cost and space availability also remain important issues. Retail growth of
14 to 15 percent per year is expected through 2015. Modern retail remains
limited (7 percent in 2012), but it is expected to grow as the country urbanizes
and retailers make new investments.
As Tier I cities become saturated, retailers are likely to move to Tier II,
Tier III cities where profits are higher due to lower rentals and operating costs.
Online shopping is in the early stages, with e-commerce sales equal to less than
1 percent of all retail sales, but growth is expected as more people access the
Internet. Mobile phones, electronic appliances, apparel, movies, music, and
books are the fastest-growing categories.
The retail market, (including organised and unorganised retail), was at
Rs. 23 lakhs crore in 2011-12. According to the study1, organised retail, that
comprised just seven per cent of the overall retail market in 2011-12, is expected
to grow at a CAGR of 24 per cent and attain 10.2 per cent share of the total retail
sector by 2016-17.In terms of sheer space, the organised retail supply in 2013
was about 4.7 million square feet (sq ft). This showed a 78 per cent increase
over the total mall supply of just 2.5 million sq ft in 2012. Although the growth
potential in the sector is immense, there are obstacles too, that could slow the
1 AT Kearney Global Retail Development Index 2013
8
pace of growth for new entrants. Rigid regulations, high personnel costs, real
estate costs, lack of basic infrastructure, and highly competitive domestic retailer
groups are some such challenges.
1.4.1 Organised Retail- The Emergence
In the past few years, Indian Retail sector has seen tremendous growth in
the organised segment. Major domestic players have stepped into the retail arena
with long term, ambitious plans to expand their business across verticals, cities
and formats. Companies like Tata, Reliance, Adani Enterprise and Bharti have
been investing considerably in the booming Indian Retail market. Along with
these giant retailers, a number of transnational brands have also entered into the
market to set up retail chains in close association with bigger Indian companies.
Even Tier I & Tier II cities and towns are witnessing a major shift in
consumer preferences and lifestyles, the result of which, they have emerged as
attractive markets for retailers to expand their presence. The food market for
India is vast and the amount of scope that retail chains would be exposed to is
phenomenal, taking into consideration the demographics and raise in standards
of living. Social trends of a country have impact on the scheme of growth of
food retailing in a country. India is the country that is geographically vast and
culturally diverse. This has taken its toll on food retailing with retailers having to
adapt to the local cultures of the area in which they have established or plan to
establish. This is a major reason for most retailing chains restricting their
operations to a certain part of the country. But current trends show that they are
now slowly moving towards cultural integration where people of all states and
diametrically opposite cultures tend to try out foods and materials of other states
and communities. This movement towards social integration would make it very
feasible in the near future for retailing chains and erstwhile local chains to
spread across the country.
According to the Tata Strategic Management Group (TSMG)’s
projection, organized Food & Grocery (F&G) retail in India could grow to Rs.
1750 Billion (at current prices) by 2015 representing ~11% of overall Food &
9
Grocery sales. As the organized food retail market matures in India, there would
be an increased need for players to differentiate through innovation. Innovations
would largely come under two heads namely store based and technology based.
Store based retailers have been categorized into Food retailers and non-
food retailers. Food retailers sell general merchandise also but proportion of
revenue from food items is quite significant. Thus it becomes meaningful to take
food as separate category .The percentage of food and grocery in overall retail is
60% .Indians have variety of food habits due to cultural , religious and lifestyle
diversity that is a challenge for retailer.
1.4.2 Unorganized Vs Organized Retailing in India
Retail industry can be broadly classified into two categories namely-
organised and unorganised retail .Organized retail - Organised traders/retailers,
who are licensed for trading activities and registered to pay taxes to the
government. Unorganized retail – It consists of unauthorized small shops -
conventional Kirana shops, general stores, corner shops among various other
small retail outlets - but remain as the radiating force of Indian retail industry. In
the developed countries, the organised retail industry accounts for almost 80% of
the total retail trade. In contrast, in India organised retail trade accounts for
merely 8-10% of the total retail trade. This highlights a lot of scope for further
penetration of organized retail in India.
Modern format of Indian retailing, suffers from few disadvantages such
as lack of differentiation strategies, lack of trained man power, huge real estate
investments, lack of ample research in the area of retailing in India, soaring
overhead costs and very importantly, the inclination of masses towards
traditional retail formats especially in the suburban and rural areas. For the
traditional retailers, there are few accrued advantages from factors such as
familiarity of being at the consumer neighborhood, availability of credit to the
consumers, absence of labor costs as mostly the shops are owner-operated, total
exclusion of advertising expenses, limited inventory with low to moderate
working capital.
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It is evident that both traditional and modern retail formats will coexist
and will not mutually threaten the existence of the other. As long as the
consumers see certain conveniences, in both these formats, it is good for the
industry in terms of huge employment opportunities and contribution to the
GDP. It can be assumed that while stock-up purchases (buying the month's
groceries/ week-end vegetable purchases, for instance) are likely to move to the
supermarkets and hypermarkets, top-ups (when you run out of, say,
shampoo/oil/consumer staples, in the middle of the month) will continue at local
stores.
1.4.3 FDI in Indian Retail
Larger FDI will generate larger employment, incomes and better
technology and inventory management. Organized retail requires large
investments and the domestic capital generation is not easy. Retail operations are
more efficiently managed by foreign players who have experience. The
consumers would be glad to welcome larger and hopefully affordable range of
products in the market. The flip side is that the players in the unorganized sector
fear that allowing FDI in retail will kill their livelihood and render many people
jobless. There is a possibility that global retailers would consider global sourcing
which would in turn affect local producers. There might be chances of major
players having a monopoly on the prices. There might be asymmetric growth in
the cities leading to discontent elsewhere. The political implications of backlash
of the stakeholders in unorganized retail are too large for the Government to
ignore. Current global and domestic economic and political scenario is not too
conducive for large investments in the retail sector. Though FDI in multi-brand
retailing was allowed by the previous government, the decision was left to
respective state governments whether to allow foreign retailers into their state or
not.
1.5 Food Retail-Concept
Food retailing has come of age from a period when food items were sold
in small road side grocery shops and mandis, haats and bazzars by vendors to a
stage when food products (processed and groceries) are retailed through modern
11
retail stores. In these modern retail stores consumers can inspect, select and pick
up the products they like in a comfortable ambience and still pay a fair price for
the merchandise. Shopping for food is no longer a strenuous and uncomfortable
affair for the Indian consumer.
A recent analysis shows that countries go through a distinct and
evolutionary pattern of food consumption. In the first stage the focus is on
obtaining basic dietary inputs. The second stage focuses on improving and
building basic foods before moving to the third stage of adding premium food to
the diet. Most of urban India has already moved to the third stage and it is
proving to be a great focus area for food retailers. The future would witness
creation of specific models or formats – one for the upwardly mobile urbanite
and the other for the rural markets.
1.5.1 Growth of Organized Food Retail in India
Integration of food industry
India is world’s second largest grower of fruits and vegetables after
Brazil and China. While the agriculture sector has witnessed several leaps of
innovation and technological advancements, the processing sector is still in its
infancy. Even with less than 4 percent processing of fruits and vegetables, the
Food Processing Industry sector in India is one of the largest in terms of
production, consumption within India, export and growth prospects. The
processed food market for India is vast and the amount of scope that retail chains
would be exposed to is phenomenal, taking into consideration the demographics
and raise in standards of living. Retailers could throng the market with all these
processed and packaged foods with their private labels.
Growing economic status of women
The rise in Indian women's literacy and their increased representation in
the labour force have led to their growing economic independence. This has
resulted in an increase in double income families who have higher disposable
income. In the case of double-income families with no kids, a greater proportion
of disposable income is spent on leisure and recreation, eating out and health and
12
fitness. In case of double income families with kids, a greater proportion of
disposable income is spent on children's education, educational toys, nutrition,
and books (Euromonitor International, 2010).
A woman in India spends most of her shopping time buying grocery
items for her home, because she does spend a lot of time making sure her family
gets a good meal. Women’s role as caregiver persists even as women's
professional responsibilities mount. This responsibility contributes to women's
more acute shopping awareness and higher expectations. Women clearly
dedicate a lot of time to make sure that they find the best deals and the most
suitable items for their needs. Given such an important emerging role of women,
it is so significant for the retail firms to identify, analyse and aggregate their
shopping behaviour across various categories especially in food.
Social Trends
Social trends of a country have impact on the scheme of growth of food
retailing in a country. Increased income levels and more women willing to make
use of their education by joining work has increasingly affected the shopping
patterns that are moving towards fulfilling the need of convenience shopping
through modern retail formats. Indian consumer is quality and price conscious
and this awareness would drive the retailers to rework their supply chain
relationships. Further, it is widely felt that the key differentiator between the
successful and not so successful retailers is primarily in the area of technology.
Simultaneously, it will be technology that will help the organized retailer score
over the unorganized players, giving both cost and service advantages.
1.5.2 Food retail formats
With the changing food consumption patterns and changing consumer
need for convenience, choice and value for money, the set-up of retail formats in
the country are also changing. The Indian consumers do visit about eight to ten
outlets to purchase various food products, which make up their daily
consumption basket. This includes visiting neighborhood kirana stores, bakeries,
fruit and vegetable outlets, dairy booths and chakkies (small flour mills), which
13
is very time-consuming and unproductive way of shopping for food. With
changing lifestyle there is growing scarcity of time, and convenience in food
shopping is emerging as an important driver of growth of one-stop retail formats
that can offer consumer 'value for time' in addition to 'value for money'. These
are giving an opportunity to various other retail formats like:
Neighborhood or Convenience store
In India, about 90 percent of food purchases are made within a distance
of 1.5 km from the customer's home. This means that organized retailers should
have a format based on the customer’s basic need of locational convenience in
order to capture the share of wallet that the customer spent on food. These stores
cater to the consumer's daily and weekly needs.
A convenience store is a well located, food oriented retailer that is open
for long hours and carries limited number of items.
Average to limited variety and assortment, above average prices, average
atmospherics and customer services.
Situated within residential areas thus reducing consumer travelling time
and customers can pay multiple visits during the week.
Few examples of convenience retail formats in organized food retail sector are
Table 1.2 Convenience retail formats in organized food retail
Retail Organization Convenience Formats
Spencer’s Retail (RPG Group) Spencer’s Daily, Express
Reliance Retail Reliance Delight
Bharti Retail Ltd., Easy Day
Supermarkets
This retail format caters to the consumer’s need for choice and variety.
These needs translate into ‘more width’ and ‘more depth’ in each category. Most
Indian Supermarkets (which are basically large grocery stores) are located in and
around major cities. They follow centralized purchasing system and are supplied
by distribution centers of the parent organization.
The supermarket typically comprises fresh fruits and vegetables, dairy
products and baked food products, canned and packaged food, a variety
of household goods.
14
Usually situated near a residential area in order to be easily accessible
and open for long hours and offer average variety and assortment of
merchandise
Large super markets with an area of 3500-5000 sq ft; Mini
Supermarkets with an area of 1000-2000 sq ft.
Table 1.3 Supermarket retail formats in organized food retail
Retail organization Supermarket formats
Reliance Retail Reliance Fresh
The Nilgiris Dairy Farm Pvt. Ltd Nilgiris
Aditya Birla Retail Ltd., More
Foodworld Supermarkets Ltd Food world
Hypermarket
Hypermarkets are essentially destination stores catering to the
consumers' bulk shopping needs in both food and non-food categories.
Hypermarkets (above 10,000 sq. ft.) have come up across major metropolitan
cities, offering a range of value-added products and services to price-conscious
middle income consumers. The hypermarket retail concept has three basic
percepts:
A large floor space, varying between 40,000 sq. ft to 2, 00,000 sq .ft, so
that it can have the widest assortment of products. It is associated to a
large parking lot.
It aims to sell products at a discount in comparison to market prices thus
offer low price points.
It deploys self-service techniques based on effective merchandising and
sales promotion methods.
Many hypermarkets choose sub-urban or out-of-town, stand-alone locations as
they need huge space for merchandise and parking and other facilities.
Table 1.4 Hypermarket retail formats in organized food retail
Retail organization Hypermarket Format
Spencer’s Spencer’s Hyper
Reliance Retail Reliance mart
Future Group Big Bazaar
Trent(Tata group) Star India Bazaar
Auchan Hypermarket India Auchan
15
Cash and Carry (C & C) stores
Cash and Carry (C & C) stores sell their products to their members only.
The typical area of a C & C store is 70,000 to 100,000 sq. ft. and both food and
non-food products are stocked. The members are typically retailers and
institutions. The key added value is a wide range of products under one roof,
available at wholesale prices. So far, only four (three foreign and one domestic)
companies operate in this space: Metro (German), Shoprite (South African), and
SPAR (Dutch) are the foreign players while Wal-Mart has recently set up a joint
venture with Bharti retail with Cash and Carry stores. However, there is a large
variance in the categorization of these stores by area as retailers have different
definitions for various patterns of stores.
Online grocery outlets:
Increasing shortage of time of urban Indians is fuelling the growth of
online grocery formats. Grocery is a standardized category which doesn’t
require much touch and feel like apparel. Hence online grocery purchase is
growing and it is considered as a convenient format. Selling perishable goods
online is far more difficult than selling non-perishables. Selling groceries online
requires expensive investments to build high-end IT infrastructure, an efficient
supply chain, quality warehousing and storage facilities, and an efficient
delivery system.
According to retail consultancy Technopak, the online grocery retail
market is growing at 25 to 30 percent in the metros and other large cities in the
country. With a large customer base and increasing penetration of Internet
connectivity (partly through smart phones) and growing popularity of online
shopping, there is huge potential in for online groceries. Online grocery stores
are experimenting with different business and delivery models. They are still
evolving with a right format.
Famous online grocers in India
veggibazaar.com
fresh n daily.com
farm2kitchen.com
aaramshop.com,
ekstop.com,
bigbasket.com
atmydoorsteps.com
mygrahak.com,
rationhut.com
seatohome.com
zopnow.com localbanya.com
Compiled from online retail directory
16
Famous online grocers in Tamil Nadu Chennai chennaionlinegrocery.com chennaibasket.com
angaadi.com veggibazaar.com
ordervegetableonline.com frrutto.com
Coimbatore clickmart.co.in
groceryraja.com
purebasket.com dhoolmart.com
fastcovai.com
kovaimaligai.com
Tiruchirapalli
www.maligai.net
Madurai ekadai.in
rajkumaronlineshopping.com
sbuyer.com
getmarche.com
Compiled from online retail directory
Most of the online grocers are functioning within a geographical area or
delivering to a particular region.
1.5.3 Top Food Retailers in India
A brief profile of some of the leading food retail chains operating in the country
are:
Reliance Fresh
Reliance Fresh was launched by the opening of new retail stores in
Hyderabad on November 3, 2006. Later in 2007, 12 Reliance Fresh outlets were
opened in Chennai increasing the total store count to 40. Reliance tested its retail
concepts by controlled entry, beginning in the southern states. The stores
stocked their own private label in staples and food under the ‘Reliance Select’
label. The company already has 1691 Reliance Fresh outlets across the country.
These stores sell fresh fruits and vegetables, staples, groceries, fresh juice, bars,
and dairy products.
Big Bazaar
Big Bazaar was launched in September, 2001 with the opening of its first
four stores in Calcutta, Indore, Bangalore and Hyderabad. Within a span of 13
years, there are now 214 Big Bazaar stores in 80 cities and towns across India.
Big Bazaar is designed as an agglomeration of bazaars or Indian markets with
clusters offering a wide range of merchandise including fashion and apparels,
food products, general merchandise, furniture, electronics, books, fast food,
17
leisure and entertainment section. Big Bazaar is part of Future Group and is
owned through a wholly owned subsidiary of Pantaloon Retail India Limited.
More
ABRL’s (Aditya Birla Retail Limited) foray into the retail sector began
in December 2006 when it acquired Trinethra, the chain of stores based in South
India. In May 2007, ABRL launched its own brand of stores called ‘More’. The
company had set up more than 500 Supermarkets and 16 Hypermarkets. All the
Supermarkets are branded ‘More’ and the Hypermarkets are branded ‘More
Megastore’. Supermarkets branded as ‘More’ are averaging 2,500 sq. ft. area
with the core proposition of offering value, convenience and trust to the
customers. ABRL plans to open 100 supermarkets and 6-8 hypermarkets in the
near future.
6-TEN
The 6-Ten neighborhood Convenience store chain is a division of REI
Agro Ltd, India’s leading producer and exporter of basmati rice. Launched on
March 27, 2007, neighborhood convenience store chain 6Ten’s retail network
has already spread to over 344 stores across NCR, Chandigarh, Mohali,
Panchkula, Amritsar, Ludhiana, Ambala, and Nagpur with 3,10,000 sq.ft of
retail space on investment of Rs.150 crore. It offers products such as grocery
items, FMCG, and fruit and vegetables. Targeting middle class consumers, the
Convenience stores are typically located close to consumers.
Easy Day
Easyday is an Indian retail brand that runs chains of consumer retail
department. The brand is wholly owned by Bharti Enterprises Limited and is
operated by its subsidiary, Bharti Retail Limited, which is headquartered in New
Delhi. The technical and management support for the brand is provided
by Arkansas, United States based Wal-Mart Stores, Inc,. Bharti Enterprises
announced its foray into retail in February 2007and the first store was opened
in Punjab, India in April 2008. Easy day presently has 220 stores across 13 states
and in over 110 towns and cities. Easyday has aggressive plans for expansion
and is aiming to have 638 stores by December 2018.
18
Spencer's
Owned by the RPG Group, Spencer's Retail Limited is one of India's
largest and fastest growing multi-format retailers with 400 stores, including 30
large format stores across 60 cities in India. Spencer's focuses on verticals like
fresh fruits and vegetables, Food and Grocery, personal care, garments and
fashion accessories, home and office essentials, and electrical and electronics
items. Established in 1996, Spencer's has become a popular destination for
shoppers in India with Hypermarkets and Convenient stores catering to various
shopping needs of its large consumer base.
Nature’s Basket
It was started in 2005 as a single fresh food store. It is a venture of
Godrej Agrovet. The company started its fruits, vegetables, dairy and poultry
retail business through its Nature’s Basket stores in the urban areas. 32-store
chain of premium gourmet stores strategically located at high street locations in
Mumbai, Delhi/NCR, Pune, Hyderabad and Bangalore.
ITC Choupal Fresh
These stores were started in the cities of Chandigarh, Hyderabad, and
Pune, with their own cold chain supply to wholesale and retail clients. ITC had
designed the supply chain in collaboration with Ingersoll Rand and Mitsubishi's
Snowman. Ingersoll Rand had designed the climate-control shelves, the freezer
trucks in which farmers send produce, the pre-coolers, and Snowman managed
the logistics of the produce. It is expected that the organized retail market for
fresh produce would touch US$12.4 billion (Rs. 500 billion) in the three years.
The e-choupal project was empowering farmers and in turn, helping create new
businesses for the company.
Heritage Fresh
The Heritage Group, founded in 1992 by Nara Chandrababu Naidu, with
three-business divisions viz. Dairy, Retail and Agri under its flagship companies
– Heritage Foods (India) Limited (HFIL), one infrastructure subsidiary –
Heritage Infra Developers Limited and other associate Companies viz. Heritage
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Finlease Limited, Heritage International Limited and Heritage Agro Merine
Private Limited. Presently Heritage’s milk products have market presence in
Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Maharashtra and in its
retail stores across Bangalore, Chennai and Hyderabad. Heritage Fresh today has
a total of 91 stores across three cities. 50 stored in Hyderabad, 14 in Bangalore,
and 27 stores in Chennai.
Nilgiri’s
Nilgiri’s is South India’s leading chain of retail stores providing
consumers with a shopping experience that hinges around freshness of produce,
superior quality and better value. From humble beginning in the hills around
Ooty and Coonoor, Nilgiris has grown from being a Dairy Farm to a
Supermarket chain of over 90 stores spread across India’s southern states. On
November 21, 2014, Future Consumer Enterprises Ltd. acquired the 98% from
Actis Capital and other promoters and thus becoming fully owned subsidiary
under Future Consumer Enterprises Ltd (FCEL), which is a Future Group
Company.
Table 1.5 Top Food Retailers in India
Company Food &Grocery Retailers Number of Stores
Reliance Industries Reliance Fresh 1691 Future Group Big Bazaar, Food Bazaar, Food Hall,
KB’sFair Price 530
Aditya Birla Group More 504 REI Agro Group 6Ten 344 Bharti Group Easy Day 220
RP- Sanjiv Goenka Group
Spencer’s 400
Avenue Supermarkets
D-Mart 79
Godrej Group Nature’s Basket 32 Tata Sons Star Bazaar 11
Source: Company Reports, NewsReports.2014
1.5.4 Categories of food retailing in India
Food as a sector can be defined as food &grocery and food services
which include catering services and restaurants, fast food centers, etc. Food
&grocery sector consists of as Vegetables, Fruits, Egg, Meat, Fish and other
categories such as Dairy products, Staples, Eatables, Ready to eat and Ready to
cook.
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Categories of food retailing
Vegetables Fruits Egg Meat Fish
Dairy
Products Staples Eatables Ready to Eat
Ready to
Cook
Table 1.6 Food category other than Vegetables, Fruits, Egg, Fish & Meat
Food Category Items included
Dairy products Milk, Curd, Butter, Cheese, Paneer
Staples Cereals, Pulses, Flour, Spices, Sugar, Salt, edible oils
Eatables Biscuits, Sweets, Savouries, ice creams and beverages
like cola and fruit drinks
Ready to Eat Cornflakes, Cereals, Pickles, Bread, Cooked
Chapattis, Parottas, Desserts
Ready to cook Canned Veg/Non-Veg, Noodles, pasta, instant mixes
Compiled from various sources
1.6 Food Retailing in Tamil Nadu
Retail grocery business is one of the most profitable businesses in
Tamilnadu. Consumers purchase all grocery items which are useful for day to
day life like rice, Pulses, soaps, brushes, toothpaste, breads etc from the grocery
shops near their houses. Generally these grocery shops are owned by a specific
community in Tamilnadu called ‘Nadars’. Grocery shops are the part of
Tamilnadu market since 18th century; every street or lane in Tamilnadu will
have at least 2 or 3 grocery shops and every one of them will be successful as
they have their own market to make profits.
Tamil Nadu is one of the largest retail markets in the country2. It is also
the preferred test market for most of the FMCG players as the state is renowned
for its penchant to try out new products. In case, a product fails to live up to its
expectations, the people do not purchase it again. On the other hand, the
customers from Tamil Nadu are loyal to their brands. Therefore, if a company
captures and gets well-entrenched in the market and continues to provide the
customers with quality products, its market share will remain intact.
2 ‘The Indian Kaleidoscope-Emerging trends in retail’ PwC report, September 2012, pp 45.
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The food retail activities in the state of Tamilnadu is on par with the
overall retail scenario of the country. Most of the national players in this
segment operate their stores across the state and are successfully doing their
business. Some of the major organized food retailers in the state are, Reliance
fresh, Nilgiris, Spencer’s, More and food bazaar. Competing with them is one of
the household names – the vegetable and fruit retail chain ‘Pazhamudhir
Nilayam’ based in Coimbatore. Thus the food retail market environment is
highly competitive and with more choices for the customers.
Food Retail in the Major Cities of Tamilnadu
This research covers the four major cities in Tamilnadu viz., Chennai,
Madurai, Coimbatore and Tiruchirapalli. These are the cities which are
populous, commercially vibrant and industrially developed. By and large these
cities are witnessing tremendous developments in the area of retailing.
Chennai
Chennai being a metro it has its own importance in the retail map of the
country. Being the capital of the state, by virtue of its significance and
development, almost all the national food retailers have their stores across the
city. The city also has a mix of population exhibiting widely varying food
culture and shopping behaviour.
The following is the list of major food retailers operating in and around Chennai:
1.7 Major food retailers operating in and around Chennai
Name of the store No. of stores
More Supermarket 25 stores
Spencer’s Retail More than 50 stores (all formats)
Reliance Fresh More than 25 stores
Food World Limited number of stores – less than 10
Nilgiris Around 25 stores
Food Bazaar 4 stores (as a part of Big bazaar)
Tata’s Star bazaar 1 store
Compiled from online retail directory
Apart from these there are several local chain of stores across variety of
food categories such as are also doing a sizeable business of which
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‘Pazhamudhir’ (name used as prefix & suffix by many such vegetable and fruit
retail chains across the city).
Madurai
Madurai -the second largest city in the state has its own preference when
it comes to food and food shopping in particular. Though the obvious choice for
the food shoppers in this temple city is the local markets and weekly markets,
still there are lots of organized retailers operating here. The following is the list
of organized food retailers in Madurai:
Table 1.8 List of organized food retailers in Madurai
Name of the store No. of stores
More Supermarket -
Spencer’s Retail 2 stores
Reliance Fresh 5 stores
Food World -
Nilgiris 4 stores
Food Bazaar 1 store (as a part of Big bazaar)
Compiled from online retail directory
The details mentioned above indicate the nascent stage of organized food
retail market in Madurai. Though this list represents only national food retailers,
there are other local stores that are into food retailing here. These are kannan
departmental store, femina super daily home needs, Remuki supermarket and
quite a few pazhamudhir nilayam.
Coimbatore
The Southern Manchester as it is popularly known, this textile city has
developed quite dynamically in recent times. Next to Chennai, Coimbatore hosts
lot of industrial activities across various categories. This city has a mixed
population from across the country and quiet understandably has a good number
of upper middle class populations. Higher purchasing power, growing working
class and attractive social indicators are driving the growth of organized retail
activities in this city. The city has a good number of organized retailers
operating various formats. The city also houses two malls with a good number of
foot falls. The following is the list of organized retailers in the city:
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Table 1.9 List of organized food retailers in Coimbatore
Name of the store No. of stores
More Supermarket 2
Spencer’s Retail 3
Reliance Fresh 5 stores
Food World -
Nilgiris 2 stores
Food Bazaar 1 store (as a part of Big bazaar)
Spar 1 store (in a mall)
Reliance Hyper 1 store
Compiled from online retail directory
Apart from the above, there are other local food retail chains across
various food categories are quiet popular in this region. They are kannan
departmental store, Kovai Pazhamudhir, Krishna sweets, K.R Bakery and so on.
Tiruchirapalli
Of all the four cities selected for the study, Tiruchirapalli has relatively
less number of organized retail stores. Apart from them mentioned below, there
are other local modern food retailers such as chain of pazhamudhir stores,
popular bakery outlets and fast food outlets too. Interestingly, the city has a
growing preference for new-age retailers across the categories and definitely it is
a fast developing retail market in the tier II category in the state.
Table 1.10 List of organized food retailers in Tiruchirapalli
Name of the store No. of stores
Reliance Fresh 2
Spencer’s Retail 1
Reliance Hyper 1
Nilgiris 1
Compiled from online retail directory
1.7 Shopping Behaviour-Conceptual Introduction
1.7.1 Women Shopping Behaviour-Conceptual Introduction
A woman in India spends most of her shopping time buying grocery
items for her home, because she does spend a lot of time making sure her family
gets a good meal. Women’s role as caregiver persists even as women's
professional responsibilities mount. This responsibility contributes to women's
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more acute shopping awareness and higher expectations. Women think of
shopping in an inter-personal, human fashion and men treat it as more
instrumental. Women clearly dedicate a lot of time to making sure they find the
best deals and the most suitable items for their needs. Shopper typologies
address a number of different variables, but what seems to be missing is the
gender variable.
Shopping is very much a gendered activity, meaning that men and
women have very different roles to play, and that they would make very
different decisions. The actual act of shopping seemed to be much more part of
the woman’s domain, while the man’s role was to take care of monetary issues.
Women are much more interested in the activity than men are, and that they also
much more likely to have a positive attitude to the activity than men do. If the
retailers treat men and women differently, then they are going to be more
successful. It’s important for retailers to remember it's not only what they're
purchasing, but also how they're doing it.
1.7.2 Factors influencing Women Shopping Behaviour
Consumer related factors
Age, Gender, Education, Family lifecycle, Family size, Occupation,
Family Income, Food preference, Life style, Food budget, Shopping Ideologies
and orientation, Shopping companion, and Location, are the consumer related
factors which are considered for the study. The Food shopping behaviour of the
consumer is influenced by these factors to larger extent. As age increases the
lifecycle changes happen and it brings lot of changes in food preference.
Lifestyle of the consumer decides the place of purchase and frequency of
purchase of food items. During these changes consumer’s health related
concerns, fitness requirements also warrant the changes in their food shopping
behaviour. It also affects the distance travelled and time spent on food shopping.
Occupation of the person has an effect on food preparation time which results in
bulk stocking, eating out and inclination towards ready to eat and ready to cook
food items.
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The extent of food retail penetration in the location may have an impact
on the perception of the consumers in that area. Family size is the indicator of
amount of food requirement and the need for different variety of food. Food
preference such as vegetarian, Non-vegetarian and Eggitarian has direct
influence on the food budget and the frequency of purchase. Family income and
the Food budget may influence the impulsive shopping behaviour. Shopping
companion who accompanies the shopper may influence on decision making on
place of purchase and choice of product. Shopping Ideologies and orientation
towards food shopping may have an impact on food shopping behaviour.
Consumption related factors
Consumption of food has the following factors which decide the overall
food shopping behaviour of consumers. They are Money spent and Time spent
on food shopping, Frequency of food purchase & Distance travelled for food
shopping across various categories, mode of payment and Choice of store. It is
all about how much time and money spent for food shopping, the distance
consumer is willing to travel to procure the food items, and the frequency in
which they are shopping these food categories and in which store format. Mode
of payment such as cash, debit card, credit card is also an important factor which
influences the food shopping behaviour.
Store related factors:
The selection of the store by the consumers may be influenced by the
location of the store, parking facility available in the store, store ambience and
price of the products, offers and discounts available in the store, quality of the
products available in the store, merchandise availability and availability of all
brands and products, assortment and variety of products, quick billing and
checkout, image and popularity of the store and customer friendly layout of the
store.
Though the traditional retail formats are dominant in food retail in India,
the emergence of packaged and semi processed food categories coupled with
modern store ambience have resulted in the preference for organised retail stores
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in metros and cities. The rise in Indian women's literacy and their increased
representation in the labour force have led to their growing economic
independence. Indian consumer is quality and price conscious and this awareness
would drive the retailers to rework their supply chain relationships.
Being familiar with the Age, Gender, Marital status, Address, Religion,
Occupation and Income of consumer is just not enough and retailers need to
explore more about Attitude, Interest, Opinion and lifestyle of consumers to build
up a much more stronger relationship . As ‘Psychographics’ go beyond the basic
information and analyze the personal details of the consumer such as their
hobbies, personality traits, values, opinions, and behaviours, this understanding
can help the retailers to learn what consumers prefer and how they make the
purchase decisions. To be precise demographics helps to identify who is our
consumer; Psychographics helps to understand his internal attributes and
attitudes. Demographics help you understand who buys your product or service,
while psychographics helps you understand why they buy. Further, the knowledge
of consumers’ demographics and psychographics will enable the retailer to
advertise, market, and sell to them more effectively. Together, demographics and
psychographics can give retailers a critical winning edge.
1.8 Organization of thesis
The thesis is organized in a sequential manner with details of observations and
analysis under five chapters as follows:
Chapter I - Introduction
The concepts of retailing with specific reference to its evolution, birth of
organized retailing in India are reviewed. Growth of Organized Food retail in
India with various formats is discussed. Evolution of food retail in Tamilnadu
and the major food retailers are reviewed. Concept of Market segmentation is
reviewed with a focus to understand the consumers better. The influence of
women consumers in food shopping and the factors affecting their decision are
discussed.
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Chapter II - Review of Literature
Studies conducted at both abroad and India are reviewed and discussed
in this chapter. Publication in national international Journals, Books, Industrial
Reports, Articles from Magazines and Newspapers, Company websites; Papers
presented in Conferences and previous research studies from various libraries
were reviewed. Literature on food retailing, shopping behaviour, Studies relating
to the influence of Demographic and psychographic profile on shopping
behaviour and Studies relating to women shopping behaviour were the topics
reviewed by the researcher.
Chapter III – Methodology
The research methodology used for the study is described in this chapter
with details about sources of data, sample design, tools of analysis and research
model. Further need for the study, objectives, research questions, scope and
limitations of the study are stated.
Chapter IV - Results and Discussion
The results of the analysis are tabulated and discussed with appropriate
charts and diagrams to meet the research objectives of the study. The related
interpretations are also discussed.
Chapter V - Findings, Recommendations & Conclusion
A summary of findings with related recommendations are presented in
this chapter. The chapter is concluded with directions for future research.