THE INDIA RETAIL STORY - Only Downloads

THE INDIA RETAIL STORYBy IMAGES F&R Research

74-83_1_3_RETAIL IN INDIA.indd 7474-83_1_3_RETAIL IN INDIA.indd 74 2008-09-13 20:082008-09-13 20:08

OPPORTUNITY INDIA Retailing In India

INDIA RETAIL REPORT 2009 75

through these years of learning nearly all stake holders in the industry are re-considering their retail plans. A need for consolidation in retail business is evident and to give it effect, many have hit the drawing boards again – not necessarily meaning thereby that there is any downturn in effect. Despite the fast growth of the retail industry, India is also still undergoing through the initial development phase of modern retail.

Private Consumption & RetailThe country’s dynamic retail

landscape presents a grand opportunity to investors from across the globe, to use India as a strategic business hub. With the changing face of retail, the Indian consumer is in for a rapid transformation. With retail spending growing at double digit, Private Final Consumption Expenditure (PFCE) at current prices was estimated at Rs.26,07,584 crore in 2007-08 as against Rs.23,12,105 crore in 2006-07.

As per the Images F&R Research estimates for India Retail, the Indian Retail market stood at Rs.1,330,000 crore in 2007 with annual growth

SLOWDOWN IN INDIAN ECONOMY – MYTH OR REALITY FOR RETAIL PLAYERS?

The current slowdown in the Indian economy notwithstanding, the retail segment in the country seems to be in for a big time expansion led by most Indian business majors and global players. Even though the CB Richard Ellis report released in April 2008, placed India at a dismal number 44 in the list of preferred destinations for global retailers looking to expand, fresh announcements in the media belie this assumption. However, going

Liberalisation of the Indian economy and rationalisation of business procedures have already ensured a high economic growth with a rapidly expanding base for the manufacturing and high-end services sectors. Fresh avenues for gainful employment to a predominantly young and talented population have created high disposable incomes that translate in to higher consumption and thus better opportunities for all verticals of retail to flourish.

of about 10.8 per cent. Of this, the share of organised Retail in 2007 was estimated to be only 5.9 per cent, which was Rs.78,300 crore. But the modern retail segment grew at the rate of 42.4 per cent in 2007, and is expected to maintain a faster growth rate over the next three years, especially in view of the fact that major global players and Indian corporate houses are seen entering the fray in a big way. Even at the going rate, organised retail is expected to touch Rs.2,30,000 crore (at constant prices) by 2010, constituting roughly 13 per cent of the total retail market.

The consumer spending is ultimately pushing the economy into a growth-and-liberalisation mode. The Indian market is becoming bolder by the day, with the economy now expected to maintain its growth at over 8-9 per cent and average salaries being hiked by about 15 per cent, there will be lot more consumption.

HEALTHY INVESTMENT CLIMATEA vibrant economy, India topped A

T Kearney’s list of emerging markets for retail investments for three consecutive


INDIA RETAIL REPORT 200976

years and stood second only behind Vietnam this year. The second fastest growing economy in the world, the 3rd largest economy in terms of GDP in the next five years and the 4th largest economy in PPP terms after USA, China & Japan, India is rated among the top 10 FDI destinations.

Barring recent political disturbances, India has been sailing smooth with second stage reforms in place. We can be reasonably proud of having put in place some of the most widely accepted corporate ethics (Labour Laws, Child Labour Regulations, Environmental Protection Lobby, Intellectual Property Rights, and Social Responsibility) and major tax reforms including implementation of VAT.

The economy has been growing at about 9 per cent a year, which shows that India’s growth rate can actually exceed that of China by 2015. The Indian economy is expected to grow larger than Britain’s by 2022 and Japan’s by 2032, to become the third-largest economy in the world after China and US, and finally become the second largest economy after China by 2050, so the global economic forecasts say.

A report by investment banker Goldman Sachs, credits India with the potential to deliver the fastest growth

over the next 50 years with an average rate of more than five per cent a year for the entire period. All these are clear portends in terms of investments and returns. Total FDI (foreign direct investment) inflow in 2007-08, was to the tune of USD25 billion – up 56% over previous year – with investments in infrastructure development and capital market continuing to flow in at a rapid pace.

To sustain an ambitious GDP growth target of 9 per cent, India

needs to invest around USD 500 billion in infrastructure over the next five years. Of this, about USD150 billion is expected to come from foreign investment. Indian retail itself has attracted total investment of over Rs.20,000 crore in creating infrastructure, systems & shop-fit.

At the heart of the India growth story is its population, the generators of wealth, both as producers and consumers. With the largest young population in the world – over 890 million people below 45 years of age – India makes for a resplendent market. The country has more English speaking people than in the whole of Europe taken together. Its 300 million odd middle class, the “Real” consumers, has attracted the attention of the world It is estimated that 70 million Indians earn salariwa of over USD 19,500 a year, a figure set to rise to 140 million by 2011. The number of effective consumers is expected to swell to over 600 million by then – sufficient to establish India as one of the largest consumer markets of the world.

INDIA RETAIL MARKET (at prevailing market prices)

Retail SegmentsINDIAN RETAIL MARKET (Rs. Crore) ORGANISED RETAIL (Rs. Crore)

2006 2007Growth 2007 > 2006 (%)

2006 2007 Growth 2007 > 2006 (%)

Clothing, Textiles & Fashion Accessories

113,500 131,300 15.7 21,400 29,800 39.3

Jewellery 60,200 69,400 15.3 1,680 2,300 36.9 Watches 3,950 4,400 11.4 1,800 2,150 19.4 Footwear 13,750 16,000 16.4 5,200 7,750 49.0 Health & Beauty Care Services

3,800 4,600 21.1 400 660 65.0

Pharmaceuticals 42,200 48,800 15.6 1,100 1,540 40.0 Consumer Durables, Home Appliances/equipments

48,100 57,500 19.5 5,000 7,100 42.0

Mobile handsets. Accessories & Services

21,650 27,200 25.6 1,740 2,700 55.2

Furnishings, Utensils, Furniture-Home & Offi ce

40,650 45,500 11.9 3,700 5,000 35.1

Food & Grocery 743,900 792,000 6.5 5,800 9,000 55.2 Out-of-Home Food (Catering) Services

57,000 71,300 25.1 3,940 5,700 44.7

Books, Music & Gifts 13,300 16,400 23.3 1,680 2,200 30.9 Entertainment 38,000 45,600 20.0 1,560 2,400 53.8 TOTAL 1,200,000 1,330,000 10.8 55,000 78,300 42.4




THE RETAIL REVOLUTIONIn this land of 15 million retailers,

most of them owning small mom & pop outlets, we also have modern retail flourishing like never before. There is little room for conflict as evidenced from the fact that India presents a unique case of consumption-driven economy; while the US reels under recession, where supply clearly outstrips demand, India confronts inflation, where industry and retailers are as yet unable to provide what the consumer demands.

Over the last few years, Indian retail has witnessed rapid transformation in many areas of the business by setting scalable and profitable retail models across categories. New and indigenised formats such as department stores, hypermarkets, supermarkets, specialty and convenience stores, and malls, multiplexes and fun zones are fast dotting the retail landscape.

THE INDIAN RETAIL MARKET SEGMENTS

The Indian retail market has been gaining strength, riding on the sound vibes generated by a robust economy that has given more disposable incomes in the hand of the consumer who will keep demanding better products and services, and a better shopping environment.

In the overall Retail pie, Food and Grocery was the dominant category with 59.5 per cent share, valued at Rs.7,92,000 crore, followed by Clothing and Accessories with a 9.9 per cent share at Rs.1,31,300 crore. Interestingly, out-of-home food (catering) services (Rs.71,300 crore) has overtaken Jewellery (Rs.69,400 crore) to become the third largest retail category, with a 5.4 per cent market share – this largely reflects the massive employment opportunities to youngsters in the services sector and accompanying changes in consumer lifestyles.

Consumer durables (Rs.57,500 crore) is the fifth largest retail category followed by Health & Pharmaceuticals (Rs.48,800 crore), Entertainment

(Rs.45,600 crore), Furniture, Furnishings & Kitchenware (Rs.45,500 crore), Mobiles & Accessories (Rs.27,200 crore), Leisure retail (Rs.16,400 crore), Footwear (Rs.16,000 crore), Health & Beauty Care services (Rs.4,600 crore) and Watches & Eyewear (Rs.4,400 crore) in that order.

In the Organised retail segment, the picture is quite different: Clothing & Fashion Accessories is the largest category with 38.1 per cent of the market share, valued at Rs.29,800 crore, followed by Food & Grocery accounting for 11.5 per cent of the organised retail market at Rs.9,000 crore, Footwear with 9.9 per cent of the organised retail market share at Rs.7,750 crore, Consumer Durables with

9.1 per cent market share at the fourth place (Rs.7,100 crore), and Out-of-home food (catering) services andFurniture, Furnishings & Kitchenware retail in that order.

The mobile & accessories retail market has shown fastest growth in 2007 (25.6%) over the previous year, the other two prominent categories being out-of-home food (catering) services where growth was 25.1 per cent and books, music & gifts leisure category which achieved 23.3 per cent growth.

India’s biggest USP and asset base is its youthful population, whose appetite for leisure and entertainment is galloping at 14 per cent p.a. With the rapid addition of malls with multiplexes there is a coming together



of leisure retail, cinema and gaming.It is indeed difficult to analyze each of these components in isolation.All players are after all trying to get to capture a share of consumer’s mind – his time and money.As the consumer spend on leisure and entertainment increases, the mix of his spends is going through a churn like never before. Leisure and entertainment are recession proof.The affluence across the country has touched a large part of the population and there is no looking back.Multiplexes, leisure retailers across books, music, gaming all form a shared existence and whilst the shares of the pie keep shifting, the overall leisure and entertainment business is well on its way to a Rs. 60,000 Crore mark by 2010-11.

In the organised retail segment, however, the fastest growth was recorded in the tiny health& beauty care services category (Rs.660 crore), which grew at the rate of 65 per cent in 2007 over the previous year – again a reflection of rise in services sector employment that demands proper grooming. The second fastest growing organised retail category is that of Entertainment (53.8%), followed by the mobile phones & accessories and the food & grocery retail categories, both of which achieved 55.2 per cent growth in 2007.

Much of the stupendous growth opportunity in Catering services (25.1%) and leisure retail (23.3%) categories was utilised by the unorganised retailers because organised players could not keep up to the desired growth momentum. A closer study of the retail

growth story at constant prices shows that in both these categories growth of organised retail was higher in 2006 (41.7% and 26.1% respectively) as compared to 2007 (37% and 25%).

At constant prices, growth in the fashion & accessories retail category, both in the overall market and the organised retail segment, have been consistently positive since 2004: while the overall market grew 12.8 per cent in 2007, the organised segment grew 35.5 per cent.

In jewellery retail, the overall market growth was higher in 2007 (9.6%) as compared to the previous year (9.2%) but growth in organised retail was slightly at a lower pace in 2007 (31%) as compared to the previous year.

The overall market growth in the timewear category has declined from 10.7 per cent in 2005 to 9.7 per cent in 2006 and further down to 8.9 per cent in 2007. However, growth in organised retail was higher in 2007 (16.6%) as compared to 2006 (14.8%). Popularity of mobile phones is to a large extent responsible for the dampening of the overall market growth in this category while the renewed enthusiasm in the organised segment is on account

of the fillip from luxury brands and offerings that are positioned more as a hi-end lifestyle statement than on the functionality aspect of the product.

In Footwear retail, the overall market as well as its organised segment, has grown faster year after year but growth in 2007 was especially remarkable: the overall market grew 12 per cent in 2007 as against a 9.2 per cent growth in 2006 while the organised segment grew 42.3 per cent and 36.4 per cent respectively for the two years. The global brands have actually turned the heat on, and the domestic brands too appear to have accepted the challenge in the true spirit.

Growth in the health and beauty care category has been remarkable in 2007, though the organised segment growth in 2007 (57.5%) was slightly lower as compared to 2006 (59.1%). The demand is stupendous but organised players have hardly much to boast of in terms of innovative concepts and global standards when it comes to providing the customers with an experience that is superior and radically different from what the unorganised segment offers. This category needs to be positioned as a “wellness” category that provides individualised services to customers with synergies of health & beauty care, pharmaceuticals and specialised clinical services – all at one place.

Another category that merits special mention is Furnishings and Furniture retail, where the overall market grew at

TOTAL RETAIL AND ORGANISED RETAIL PROJECTIONS

2004 2005 2006 2007 2008 2009 2010Organised retail 28,000 35,600 47,500 66,500 96,500 140,000 203,000Retail Market 930,000 980,500 1,036,000 1,098,000 1,164,000 1,234,000 1,308,000

3.0% 3.6% 4.6% 6.1% 8.3% 11.3% 15.5%




seven per cent in 2007 as compared to just 3.2 per cent in 2006 – thanks to the housing sector boom. The organised segment also grew faster at 29.7 per cent in 2007 as compared to 23.1 per cent the previous year, but this Rs.45,500 crore category calls for better attention from organised players.Is India ready for ready-to assemble furniture? May be not but surely the market will change in next couple of years. Global players need to understand that Indian homes are different and so are the Indian environments, maintenance standards. At present most large players entering this segment are busy experimenting and in the process have lost some funds too.

Consumer durables and the mobile phone & accessories categories have both grown faster in 2007 as compared to 2006. At constant prices, the overall food & grocery retail market grew slightly higher at 2.3 per cent in 2007 as compared to a 2.2 per cent annual growth in the previous two years. But the organised retail segment in this category is simmering in the true sense – a 50 per cent growth in 2007 as compared to 42.9 per cent in 2006, and lot more fireworks can be expected this year and the years ahead. Valued at Rs.9,000 crore, this organised market constitutes barely 1.1 per cent of the total food & grocery retail market.

Timewear (48.9%) and Footwear (48.4%) are the most organised of all retail categories. Clothing & fashion accessories retail comes next with the organised segment controlling 22.7 per cent of the market.

Indian consumers are in a state of metamorphosis. As spending powers and habits change in India, these voices are becoming more defined, more demanding and more adventurous. The retail boom in India is driving three categories of retail product investment, namely consumer brands, retail formats and shopping centers. Each of these product categories is undergoing massive attention.

With the given rapid pace of retail growth, it is expected that Indian retail market (estimated at current prices) will be in excess of Rs.18,10,000 croreby year 2010; Organised retail will expectedly exceed Rs.2,30,000 crore, accounting for nearly 13 per cent of the total market in 2010. This growth will call for a greater availability of quality retail space in the country.

SPACE – AND THE FREEDOM TO GROW

Each time one takes stock of the country’s real estate scenario, one invariably comes across statistics to show that every city in the country is bursting at its seams with shopping centre activity. If mall space were to be taken as an indication of the level of activity, we find that the country has witnessed nearly 12-fold growth in the last five years, with total mall space having increased from just about 3.7 million square feet in 2002 to over 47 million square feet in 2007. Also, the

opening up of the real estate sector to FDI has brought India in the international investment spotlight. FDI inflow in to the sector has propelled the realty sector growth at over 30 per cent per annum. There is yet a lot more to unfold on India’s retail landscape in the years ahead.

Currently, there are about 280 operational shopping centres in various formats and sizes (including some partly operational), and this number is expected to rise to almost 500 by end-2010. Of the new malls coming up, 40 per cent are concentrated in the smaller cities. Shopping centre business alone is estimated to become a Rs 40,000 crore business by 2010-11.

By 2011 India will have an additional 280 hypermarkets, 3,200 supermarkets, 400 department stores, and approximately 1,200 mega speciality stores and category killers and 20,000 exclusive brand outlets across the

Consumer durables and the mobile phone & accessories categories have both grown

faster in 2007 as compared to 2006.

SHARE OF ORGANISED RETAIL TO TOTAL MARKETRetail Segments % Organised

2004 2005 2006 2007Clothing, Textiles & Fashion Accessories

13.6% 15.8% 18.9% 22.7%

Jewellery 2.0% 2.3% 2.8% 3.3%Watches 39.6% 43.5% 45.6% 48.9%Footwear 25.0% 30.3% 37.8% 48.4%Health & Beauty Care Services

6.0% 7.6% 10.6% 14.3%

Pharmaceuticals 1.8% 2.2% 2.6% 3.2%Consumer Durables, Home Appliances/equipments

7.8% 8.8% 10.4% 12.3%

Mobile handsets. Accessories & Services

6.5% 7.0% 8.0% 9.9%

Furnishings, Utensils, Furniture-Home & Offi ce

6.7% 7.6% 9.1% 11.0%

Food & Grocery 0.5% 0.6% 0.8% 1.1%Out-of-Home Food (Catering) Services

5.7% 5.8% 6.9% 8.0%

Books, Music & Gifts 9.8% 11.7% 12.6% 13.4%Entertainment 2.6% 3.3% 4.1% 5.3%TOTAL 3.0% 3.6% 4.6% 5.9%© IMAGES F&R Research



various retail categories. Malls alone will provide an additional 200 million square feet of gross leasable quality retail space (GLA) by year 2011.

The emergence of shopping centres is already beginning to define a new lifestyle for India. There is no doubt a huge demand exists for clean, contemporary shopping and entertainment complexes that will house India’s brands and retail formats and offer New India an exciting and rewarding shopping experience for the whole family. A number of winning solutions will doubtless emerge over the next few years but the dominant centres for the long term will be those that are designed around the Indian consumer and cater to the long term specific needs of a particular location. A shopping centre doesn’t serve all India. It serves consumers living largely within a five to fifteen kilometre radius of that centre. So a successful shopping centre in Trivandrum will be designed differently to one in Ludhiana. The tenant mix will be different. The food court will have a different menu offer and local services such as transport and logistics will be tailored to the needs of the local community.

Organised retailing in small-town India is already growing at over 50-60 per cent a year, compared to 35-40 per cent growth in the large cities. About 200 tier-III cities with population of less than 2 million and another 500 rural towns have the potential to be the hub for rural markets, where organised retailing can effectively set base – each of these 700 centres will, on an average be catering to about 1,000 villages.

Supply Chain & LogisticsOrganised retail is a function of

strong supply chain and robust physical infrastructure. Basic supply chain framework takes care of operational

performance at each nodal point – from order to delivery. In view of this, major retailers will have to continuously upgrade their back-end, front-end and supply chain dynamics in order to provide a standard of value and services to their customers.

Corporate bigwigs such as Reliance, AV Birla, Tata, Godrej, Bharti, Mahindra, ITC, RPG, Pantaloon, Raheja and Wadia Group are expected to invest close to Rs.1 trillion in the business of retail over the next five years. Reliance Retail is investing Rs.30,000 crore in setting up multiple retail formats backed by a 68-strong distribution network, with expected sales of over Rs.100,000 crore by 2010. The Future Group’s Pantaloon Retail and RPG’s Spencer’s are also going all out to maintain their dominant position on India’s retail horizon. Subhiksha has earned global accolades for its fast-track growth. Lifestyle, Indiabulls, Wadhawan Group, Vishal Retail, petroleum majors IOCL, BPCL and HPCL, and others are firming up more and more ambitious retail expansion plans by the day. While global retailers Metro AG and Shoprite Holdings increase their presence on the Indian retail landscape, the Bharti – Wal-Mart combine is scouting locations for their joint retail venture. The recent tie-up

between Tata and Tesco further adds to the action in retail.

Even as multinational retailers are firming up their India strategies, franchising is emerging as the preferred option. Franchisee activity is expected to pick up in tier-II cities as well. According to a Frost & Sullivan research, the overall Indian third-party logistics (3PL) market, estimated at about USD 890.3 billion in 2005, is expected to grow at a compound annual growth rate of 21.9 per cent to reach USD 3,556.7 million in 2012. Shop-fit and Technology are the other sunrise retail support sectors that offer immense opportunity for investment and growth.

NEED TO GIVE INDIAN RETAIL – A FACE OF INDIA

The India Brand Story can travel across the globe with ‘Delhi Haat’ type shopping cum entertainment centres opening not only across India but all over the world. Public private partnership can revitalise the formats like KVIC run Khadi Bhawans, one of the largest retail networks in the world, and also state-run emporia.

As India emerges as one of the most potential markets for global brands and retailers and retail reinvents the way modern Indians celebrate their spending




power, India that takes pride in its rich culture, heritage, art, craft and variety of wares must capitalise on this ever escalating consumerism and channelise the spending towards healthy consumption for overall development of the country.

Retail FormatsThere is strong emergence of India

specific retail formats irrespective of the size. For example, hypermarkets, supermarkets or convenience stores that are emerging in India today are specifically designed for the Indian consumer. A store in India will have non-vegetarian section sealed-off from the rest of the store out of respect for a group of consumers. Spices, vegetables and grains are seen stacked high in a special section. Retailers in India have realised the relevance of designing and executing world-class hypermarket formats in India, specifically catering to the Indian consumer yet offering world-class

products at prices that India can afford. Indian department stores stock

brands that Indian consumers want and design their store layouts based on their years of experience. But this experience is unique to them alone. A new entrant has all those lessons to learn. The existing players are developing a sophisticated knowledge base on consumption patterns and preferences that are a critical tool in defining competitive positioning going forward.

Public Private Partnership (PPP)As there is not much scope in

creating more high streets within cities, Govt. needs to explore public private partnerships for regenerating district centres, office complexes, railway spare land, post offices etc.

There should be restriction of developing multi-storeyed malls in new cities and new city planning needs to create spaces for more high street concepts for future developments.

PPP can effectively work for revitalising:

Co-operatives with facelift and ●

vendor management (Example: Reliance and Sahakari Bhandar) Khadi Bhawans and State Emporia ●

Neighbourhood Markets Corporation and state authorities ●

owned/ managed district centres & office complexes Collaboration to use spaces and ●

resources of post offices, banks, railways (railway land, platforms, in-train shopping marts, restaurants, entertainment)

JUST THE RIGHT TIME TO THINK RETAIL

Developments indicate that this is just the right time to think retail. Fuel and passenger vehicles are two of the mega businesses that can tremendously gain in the evolving scenario.

ENTERING THE RETAIL DRIVEWAY

The auto sector needs to explore innovative collaborative opportunities with the retail sector to add value to the shopping experience of passenger vehicles. So far operating through dealership network with showrooms mostly in not-so-happening premises, auto showrooms are now beginning to move to retail centres to grab attention of new generation upwardly mobile customers. With increasing income, easy credit facilities and ‘change every year’ new found attitude (initially started with mobile handsets) Indian consumers are likely to make spontaneous decisions on automobile buys as well.

Oil companies – unable to raise prices of transportation fuels in line with rising global crude oil prices – are now looking at alternate revenue streams; a major reason why added emphasis is being placed on forecourt retailing.



Fuel forecourts with 24x7 convenience retail concepts (merchandise & service retailing) within cities and on the highways offer huge scope for expansion of retail. Oil stations scattered through out the country’s landscape can ensure that smaller towns are also exposed to modern retailing formats.

An emerging trend in the global retail petroleum industry is the growing entry of retail formats such as supermarkets, large discount stores and mass merchandisers who are placing fuel dispensers in their parking lots to provide added value and convenience to consumers. Hypermarkets that have ventured into the petroleum retail business have met with considerable success due to competitive fuel pricing, discounted prices linked to loyalty programmes and cross-merchandising.

India’s oil majors can certainly take the lead to fuel the retail growth collaborating with real estate developers, auto companies, consumer brands, retailers and service providers. This will also facilitate travel & tourism in no small measure. This has happened across the globe and is now happening in India.

Travel and tourism are two other sectors that will immensely benefit connecting with retail. Railways worldwide offer a plethora of opportunities for the consumer products, brands, retailers, services, leisure and entertainment majors to connect with a large number of passengers – both locals and tourists. Not only the stations, platforms and subways that railways

own and operate but also thousands of trains – passenger or goods – offer huge scope as the largest moving media for brand and public messages, in-rail retailing besides of course providing the logistics & real estate support to the retail industry.

RURAL RETAILINGWith several states in the country

permitting retailers to purchase produce directly from farmers, the farmers too are adapting to the new opportunity to cultivate assigned crops and take special care of the same. This gets them instant credit at higher prices than what they received from the erstwhile traders/middlemen. Corporate retailers like ITC, Godrej, Reliance, AV Birla and many others have already established the farm linkages.

India’s rural markets offer a sea of an opportunity. The urban-rural split in consumer spending stands at 9:11, with rural India accounting for 55 per cent of private retail consumption. Indeed the marketcan be tapped with focused attention and strategy.

According to National Council of Applied Economic Research (NCAER) reports, rural India is home to 720 million consumers across 627,000 villages. Seventeen per cent of these villages account for 50 per cent of the rural population as well as 60 per cent of rural wealth. This implies that reaching out to just a lakh-plus villages will ensure access to most of the rural opportunity.

The urban market undoubtedly continues to grow but with most of

the retail initiatives concentrated in the metropolitan and tier I and tier II cities, these markets are fast getting saturated. Realising this, most of the big retail companies have started targeting the Tier-III cities and the rural towns to spur their growth. The ‘bottom of the pyramid’ market is for sure now looking attractive for companies wanting to explore new turf. Hariyali Kisan Bazaars (DCM) and Aadhars (Pantaloon-Godrej JV) have already set up rural retail hubs, Choupal Sagars (ITC) has done the same and so have Kisan Sansars (Tata) and Reliance Fresh.

THE OPPORTUNITY Favourable demographic and

psychographic changes relating to India’s consumer class, international exposure, availability of quality retail space, wider availability of products and brand communication are some of the factors that are driving the retail in India. Over the last few years, many international retailers have entered the Indian market on the strength of rising affluence levels of the young Indian population along with the heightened awareness of global brands, international shopping experiences and the increased availability of retail real estate space.

Development of India as a sourcing hub shall further make India an attractive retail opportunity for the global retailers. Retailers like Wal-Mart, GAP, Tesco, JC Penney, H&M, Karstadt-Quelle, Sears (Kmart), etc steppingup their sourcing requirements from India and moving from third-party buying offices to establishing their own sourcing and buying offices will further make India an attractive retail opportunity for global players.

Manufacturers in industries such as FMCG, consumer durables, paints etc are waking up to the growing clout




of the retailers as a shift in bargaining power from the former to the latter becomes more discernible. Already, a number of manufacturers in India, in line with trends in developed markets, have set up dedicated units to service the retail channel. Also, instead of viewing retailers with suspicion, or as a ‘necessary evil’ as was the case earlier, manufacturers are beginning to acknowledge them as channel members to be partnered with for providing solutions to the end-consumer more effectively.

Though lucrative opportunities exist across product categories, food and grocery, nevertheless, presents the most significant potential in the Indian context as consumer spending is highest on food. Further, ‘wet groceries’ –. fresh fruits and vegetables is the most promising segment within food and grocery though initially all retailers foraying in to this segment had to face wide spread protest from traders, small shop keepers.

The next level of opportunities in terms of retail expansion lies in categories such as apparel, jewellery and accessories, consumer durables, catering services and

home improvement. Some of the niche categories like Leisure and entertainment (Books, Music and Gifts in particular) offer interesting opportunities for the retail players.

Currently the fashion sector in India commands a lion’s share in the organised retail pie. This is in line with the retail evolution in other parts of the world, where fashion led the retail development in the early stages of evolution and was followed by other categories like Food & Grocery, Durables etc. Fashion across lifestyle categories makes up for over 50 per cent of organised retail and with the kind of retail space growth that India is witnessing we can certainly foresee a very healthy prospect for the fashion industry.

As nations become richer, their people start appreciating luxury goods and fine dining. India has over one million such people and this number is expected to triple by 2010. A recent report divides consumers for luxury goods into four categories – luxuriated: source of affluence is largely traditional and inherited; New rich: adequate spending power and are acquiring orientation to luxury; Getting there: acquiring spending power and spend mainly on education, housing and large automobiles; Mid-affluent: are also acquiring orientation to luxury but

unlikely to indulge beyond a limit. The most important categories

for luxury goods consumers are housing, travel, education, higher end automobiles, electronics and other home improvement products besides fashion, lifestyle and fine dining. The most important reason for luxury retail not taking off in India so far has been the lack of luxury retail environment. Their presence has been primarily confined to luxury hotels’ with shopping plazas.

FDI or No FDI, India needs more retailers & increased retail

Government’s favourable talks on Foreign Direct Investment (FDI) last year ignited ambitions in many of the global players to be among the first movers into a virgin retail territory i.e. India. The issue of FDI has been debated time and again as the Indian Government has been under pressure to open up further. The policy makers continue to explore areas where FDI can be invited without hurting the interest of local retail community. The Government of India allows FDI only in the cash and carry formats and to the extent of 51 per cent in single brand retail. This brings an opportunity for Indian enterprise to collaborate with global majors and bring in global best practices in the business of retailing.

Pro-active policy making for retail industry would be welcome to ensure that the consumers benefit from choice, availability, better quality & beneficial pricing. All the current talk of retail industry growth has been buoyed by the growth of Indian macro economy over the last few years. Once the industry growth rate stabilizes, this “comfort factor” would need attention & all futuristic growth plans would need to be rational about this.

Identifying growth areas, crossing barriers, creating new markets - satisfying classes as well as serving the masses, Indian enterprises need to expand the horizon of Indian retail. �


The past year has thrown up many challenges and opportunities for Indian retailers. While grappling with issues of rising cost of operations and tightening bottom-lines, most have nevertheless continued to set an aggressive pace of evolution into new formats, while attempting to consolidate existing ones. With major corporates entering the fray with significant investments across verticals, the retail landscape is definitely richer than it was a year ago. Here’s a look – in two parts – at India’s retail majors, including business conglomerates venturing into retail, as well as pure-play retailers.

TATA GROUPFounded by Jamsetji Tata in 1868,

the Tata Group’s early years were inspired by the spirit of nationalism. The Group pioneered several industries of national importance in India: steel, power, hospitality and airlines. In more recent times, the Tata Group’s pioneering spirit has been showcased by companies like Tata Consultancy Services, India’s first software company, and Tata Motors, which made India’s first indigenously developed car, the Indica, in 1998 and recently unveiled the world’s lowest-cost car, the Tata Nano, for commercial launch by end of 2008.

Tata is a rapidly growing business group based in India with significant international operations. Revenues in 2007-08 are estimated at $62.5 billion. The Group employs around 320,000 people worldwide. The business operations of the Tata Group currently

encompass seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products and chemicals.

Retail is part of the consumer products business sector of the Tata Group: A part of the Tata Group’s Consumer Products division, Trent Ltd is a retail operations company that owns

INDIA’S RETAIL MAJORS – I

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OPPORTUNITY INDIA Retailing in India

produce. It was set up in 2007 as a 50:50 JV between Tata Chemicals and Total Produce of Ireland Khet Se’s objective is to create state-of-the-art distribution facilities for fresh vegetables and fruits across India and play an important role by bringing the Indian farmer closer to consumers and thus help in raising farm incomes.

Titan Industries: Titan Industries produces India’s largest and best-known range of personal accessories: watches, jewellery, sunglasses and prescription eye wear. The company was established in 1984 as a joint venture

between the Tata Group and Tamil Nadu Industrial Development Corporation. It has, since then, grown to become the largest watch manufacturer in India and the fifth largest manufacturer brand in the world. Its brands are Titan, tanishq, and Titan Eye Plus

FUTURE GROUP Future Group is one of India’s

leading business groups having a presence in retail, asset management, consumer finance, insurance, retail media, retail spaces and logistics. The group’s flagship company, Pantaloon Retail (India) Limited operates over 10 million square feet of retail space, has over 1,000 stores and employs over 30,000 people.

Future Group is present in 63 cities and 65 rural locations in India. Some of its leading retail formats include, Pantaloons, Big Bazaar, Central, Food Bazaar, Home Town, eZone, Depot, Future Money and online retail format, futurebazaar.com. The group has recently acquired a controlling stake in Aadhar Retailing, which operates rural retail.

Pantaloon Retail (India) Ltd. is India’s leading retail chain that operates multiple retail formats in both the value and lifestyle segments of the Indian

and manages a number of retail chains in India. Established in 1998, Trent runs lifestyle chain Westside - one of India’s largest and fastest growing chain of lifestyle retail stores, Star Bazaar - a hypermarket chain, and Landmark - a books and music chain. The company is planning a foray into value apparel retailing with company owned stores across tier I and tier II cities.

Tie up with Tesco: Trent recently entered into an exclusive franchise agreement with Tesco Plc, which plans to invest in the Cash & Carry business in India. The new wholesale outlets, wholly owned by Tesco, will source directly from farmers and manufacturers and supply to small retailers, restaurants, and hypermarkets like Trent’s Star Bazaar.

Infiniti Retail: A wholly owned subsidiary of Tata Sons, the holding company of the Tata Group, Infiniti Retail operates a national chain of multi-brand electronics stores under the brand name Croma.

Khet Se Agriproduce: Khet Se Agriproduce India is a supply and distribution company for fresh farm



consumer market. The company operates over 10 million square feet of retail space, has over 1,000 stores across 61 cities in India and employs over 30,000 people. Revenue for the year ending June 2007 was Rs.3,236 crore with net profit of Rs.120 crore.

The company’s leading formats include: Pantaloons, Big Bazaar, Food Bazaar, Depot, Central, Shoe Factory, Brand Factory, Blue Sky, Futurebazaar.com, KB Fair Price Shop.

Recently, the Group subsidiary, ConvergeM signed a 50:50 joint venture with UAE’s Axiom Telecom to roll out a new mobile retail chain under the brand name Axiom. ConvergeM operates 140 stores under mBazaar, GenM and mPort formats. In six months, company plans to set up 500 stores, 80 of which will be high-end Axiom Stores; plus all GenM and mPort stores will also be converted to Axiom. Axiom stores will be large format – catering to high-end customers, while mBazaar format will take care of the mid-market segment. The stores will be in two formats – standalone as well as shop-in-shop.

Home Solutions Retail (India) Limited (HSRIL) offers complete retailing solutions for all products and services related to home building and home improvement. HSRIL operates retail formats - Collection-i, Furniture Bazaar, Electronics Bazaar, Home Town and e-zone.

Staples - Staples Future Office Products Private Limited (SFOPPL) was incorporated in January 2007 as a JV between the company and Staples Asia Investment Limited (a subsidiary of Staples Inc USA).

RPG GROUP RPG Enterprises, established in

1979, is one of India’s fastest growing business groups with a turnover touching US$ 3.25 billion. The group has more than twenty companies managing diverse business interests in the areas of Power, Transmission, Technology, Retail and Entertainment.

The RPG Group was the first to get into the organised retailing business

in India starting from the South and expanding to other parts of the country. It started various formats through joint ventures with Dairy Farm International (DFI) of the Jardine Matheson Group, like the successful ‘Foodworld’ – chain of supermarkets, ‘Health & Glow’ – chain of pharmacy cum Beauty stores and the ‘Great Wholesale Club’ (GWCL).

RPG decided to set up a new hypermarket model with the ‘Giant’ brand, which was later renamed as Spencer Hypermarket and GWCL announced new formats – Spencer’s hyper ( 25,000+ sq ft), Spencer’s Super (8,000 to 15,000 sq ft), Spencer’s Daily (4,000 to 7,000 sq ft) and Spencer’s Fresh (2,000 sq ft) - as part of the restructuring and expansion plan for the 49 of the 93 Foodworld outlets that remained with RPG. The Health & Glow stores and the remaining Foodworld stores went to DFI. GWCL was rechristened as ‘Spencer’s Retail Ltd’.

Today, the retail arm of the RPG Group runs: Spencer’s Retail, Music World, Books & Beyond and RPG Cellular.




Spencer’s has retail footage of over 1 million square feet with about 400 stores in 66 cities, servicing the needs of over a lakh of customers every day. The company has so far operated through the following formats (although restructuring is currently under progress to cut down the formats to two):

ITC GROUPITC is one of India’s foremost

private sector companies with a market capitalisation of nearly US $ 18 billion and a turnover of over US $ 5.1 billion. ITC is rated among the World’s Best Big Companies, Asia’s ‘Fab 50’ and the World’s Most Reputable Companies by Forbes magazine. ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products. The company’s ‘e-Choupal’ initiative has enabled Indian agriculture to enhance its

competitiveness as well as create for ITC, a huge rural sourcing infrastructure to feed its urban formats. ITC’s FMCG initiatives include the Wills Lifestyle, John Players and the Miss Players brand stores.

Wills LifestyleITC’s Lifestyle Retailing Business

Division (LRBD) has established a nationwide specialty retail presence through its Wills Lifestyle chain of exclusive specialty stores. John Players,

launched in December 2002, is available pan-India through a network of over 250 exclusive stores and over 1300 multi-brand outlets. The launch of Miss Players has added to ITC’s youthful portfolio with its range of fashion wear for young women. Miss Players is currently available at select exclusive stores, select John Players stores and multi-brand outlets.

ITC’s Rural Initiative: e-ChoupalLaunched in June 2000, ITC’s

‘e-Choupal’ has already become the largest retail initiative in rural India. ‘e-Choupal’ services today reach out to over 4 million farmers growing a range of crops - soyabean, coffee, wheat, rice, pulses and shrimp in over 40,000 villages through nearly 6,500 kiosks across Madhya Pradesh, Haryana, Uttarakhand, Karnataka, Andhra Pradesh, Uttar Pradesh, Maharashtra, Rajasthan, Kerala and Tamil Nadu

ITC Choupal Sagars: The Farmer Facility centres are integrated with the e-Choupal model offering a one-stop solution for farmers.

Choupal Fresh: Choupal Fresh outlets are situated in mini metros offering Fresh Fruits and vegetables sourced directly from farmers.



RELIANCE INDUSTRIES LIMITEDThe Reliance Group, founded

by Dhirubhai H. Ambani, is India’s largest private sector enterprise, with businesses in the energy and materials value chain. Reliance Industries Limited (RIL) is India’s largest private sector company on all major financial parameters with a turnover of Rs.1,39,269 Crores (US$ 34.71 billion), cash profit of Rs.25,205 crore (US$ 6.3 billion), net profit (excluding exceptional income) of Rs. 15,261 Crores (US$ 3.8 billion) and net worth of Rs.81,449 Crores (US$ 20.3 billion) as of March 31, 2008.

The Group’s activities span exploration and production of oil and gas, petroleum refining and marketing, petrochemicals (polyester, fibre intermediates, plastics and chemicals), textiles and retail.

Reliance Retail Limited (RRL), a subsidiary of Reliance Industries Limited opened its first retail store in November 2006 and today operates over 750 stores in over 73 cities,

spanning across 14 states with over 3.6 million Sq ft. RRL is a multi-format retailer that operates the following concepts: Reliance Fresh, Reliance Super, Reliance Mart, Reliance Digital, Reliance Trends, Reliance Wellness, Reliance iStore, Reliance Footprint, Reliance Jewels, Reliance TimeOut, and Reliance AutoZone.

Reliance Living Homeware: Reliance Retail’s subsidiary ‘Reliance Home Store Ltd’, launched its first speciality format, under the brand name of “Reliance Living Homeware”, in Aurangabad on 5th September 2008

Reliance has now grown to nearly 700 stores, comprising fourteen distinct formats, across 60 towns and cities.

Reliance Retail has key partnerships with select world-class players namely: Marks and Spencer, UK, Hamleys, Pearle, Europe for Optical stores, Apple Inc. USA, Office Depot, and Vornado for retail real estate

BHARTI GROUPBharti Enterprises is one of India’s

leading business groups with interests in telecom, agri business, insurance and retail. Bharti Airtel, India’s leading integrated telecom company has been at the forefront of the telecom revolution in India. Bharti has grown successfully over the years, establishing partnership with various leading companies of the world – Singapore Telecom, Vodafone, Warburg Pincus, and British Telecom, to name a few.

Bharti has recently forayed into the retail sector with its wholly owned subsidiary, Bharti Retail Pvt Ltd. The company has launched neighbourhood stores in Punjab called Easyday and is expanding the chain with multiple consumer friendly format stores in India.

Bharti Wal-Mart Private LtdBharti Wal-Mart Private Limited is a

business-to-business (B2B) joint venture between Bharti Enterprises and Wal-Mart for wholesale cash-and-carry and back-end supply chain management operations in India to serve small retailers, manufacturers and farmers. The joint venture (JV) has already set up




a Distribution Centre in Punjab, which will partly service the merchandise needs of the JV’s cash-and-carry stores as well as retail stores around the area, including Bharti Retail’s wholly owned Easy Day stores. The JV is scheduled to launch its first B2B wholesale cash-and-carry store in north India in the first quarter of 2009. A typical cash-and-carry store will stand between 50,000 and 100,000 square feet and sell a wide range of fruits and vegetables, groceries, footwear, clothing and other general merchandise items. The JV is expected to open 10 to 15 wholesale cash-and-carry facilities and employ approximately 5,000 people over the next seven years.

K RAHEJA CORP GROUPK Raheja Corp’s story spans over

five decades and the journey started as real estate developers. Today they are a corporate house with over 6,000 employees and businesses spanning across real estate (residential as well as commercial), retail, malls, hospitality,

logistics and warehousing as well as serviced offices.

In 1991, K Raheja Corp pioneered the retail revolution in the country, with the vision of providing the Indian consumer an international shopping experience. The launch of Shoppers Stop (Andheri) was the first step towards this. Over the last 17 years, Shoppers Stop has grown and maintained its leadership status and strengthened its position in the department store category

by continuing to be relevant to the changing consumer aspirations.

Shoppers Stop Limited is the group’s retail company which got listed in 2005. Bringing in new technologies, innovations and change in this sector, today they have grown their retail formats to include the famous HyperCity, Crossword, Home Stop and the much awarded Inorbit mall. Foreign tie-ups with Mothercare, MAC, Clinique, Argos etc have further strengthened their position as one of the foremost retail groups in India.

LANDMARK GROUPThe Landmark Group, founded in

1973 with a single store in Bahrain, has grown into one of the largest retail conglomerates in the Middle East and is expanding rapidly in India and China. It currently operates over 825 stores across these regions with a total retail space of over 10 million sq ft and a turnover in excess of US $2.3bn. In addition to its retail sector, the Group has also diversified into leisure, food, hotels and electronics and has created a comprehensive infrastructure including its own logistics and distribution division, to support its retail operations and other businesses.

The Group entered India in 1998 with the opening of its first Lifestyle store



in Chennai, a year later. As of today, the Group operates 110 stores across India, in the form of Lifestyle, Home Centre, Max, Baby Shop, Fun City and international franchise brand stores. The Group has also forayed into the hypermarket business with the opening of SPAR hypermarkets in India; 2008 will also see the launch of “Splash” the international fashion retailer from the Middle East. With total retail space in India of over 1.3 million sq ft and a turnover in excess of US $250 million, the group has established a pan India presence in the last decade, employing 6,000 personnel.

The group has recently tied up with Gloria Jean’s Coffees to launch its chain of outlets in India.

Videocon RetailStarted in 1985, Videocon has

grown to become one of the leading manufacturers in India of consumer electronics and home appliances such as air conditioners, microwaves, refrigerators etc. Over the years it has diversified into other areas like Oil and Gas and today the group has stepped into the booming retail sector as well with its NEXT, BOLLD and Planet M formats. The company plans to make an investment of Rs.4,000 crore towards expansion of its retail businesses in the next five years. Company also has plans to enter the global retail markets in the

future, as well as develop malls in the country.

Videocon acquired Planet M, the mobile, music, entertainment and lifestyle chain from Bennett Coleman and Co in November 2007 and after revamping has relaunched the existing 80 Planet M stores and has further opened 200. Plans are to increase the number to 1500 in the next 3 years.

Videocon acquired the consumer durable chain NEXT from Raymond. Revenue from NEXT was Rs.800 crore last year, with Rs.1,500 crore expected this year. Recently, Videocon entered into a joint venture agreement with

Japanese company Mitsin and Hitachi to provide back-end support to their retail ventures NEXT and Planet M in warehousing, transportation, IT and inventory control.

Videocon Retail launched its first in-store café – Café Earth, at its Planet M stores in Hyderabad recently, with plans to open 250 cafes in the next 3 years.

Videocon has entered the Cash & Carry segment with its ‘Bolld Cash & Carry’ B2B format. The company plans to set up 40 Bolld Stores by 2012. The store size planned is 1,00,000 to 1,500,00 sq ft. The stores will deal in all categories, ranging from apparel, food, consumer durables, electronics to general merchandise, with private label goods along with branded merchandise, across all categories.

ADITYA BIRLA RETAIL LIMITEDAditya Birla Retail Ltd. is the retail

arm of the Aditya Birla Group, a US$ 24 billion corporation with a market capital of US$ 31.5 billion and in the league of




Fortune 500 companies. It entered the food and grocery retail sector with the acquisition of south based Trinethra Super Retail in ‘07. In May ‘07, Aditya Birla launched its operations with the MORE chain of supermarkets, with the first one being in Pune. Today there are over 600 supermarkets and two hypermarkets (by the name of MORE Megastore).

The retail offerings in the Indian market from the stable of ABRL currently comprises the following two formats:

Supermarkets: MORE supermarkets have a minimum size of 2000 sq.ft. Product offerings include a wide range across fresh fruits &vegetables, groceries, personal care, home care, general merchandise & a basic range of apparel; and Hypermarkets: MORE MEGASTORE spread over 75,000 sq.ft. (avg.) is a one-stop shop destination for the entire family. Besides a large range of offerings of over 60,000 products across fruits & vegetables, groceries, FMCG products,

the hypermarkets also have a strong emphasis on general merchandise, apparels & CDIT.

MORE offers customers a wide choice of products under its own labels. Currently, Aditya Birla Retail Limited has 6 brands within the Home and Personal Care category: MORE, Enriche, 110%, Pestex, Paradise and Germex, and 4 brands in the Food category: MORE, Feasters, Kitchens Promise and Best of India

Vishal RetailFrom a single store establishment

in 1986, to become one of the fastest growing hypermarket chains in India today– Vishal Retail, the apparel, FMCG and home products discount retailer has come a long way! With a turnover of Rs 1,013 crore in 2007-08, the company achieved a 67 per cent increase over previous year’s turnover of Rs 605 crore and earned a net profit of Rs 40.6 crore. Presently, there are 137 Vishal Mega Mart stores spread across 89 cities in 20 states, with an employee strength of 13,423. The company plans to open 70 new stores by the end of current fiscal at an investment of Rs 700 crore (to be raised via debt and equity). Recently, the company made an investment of Rs. 7.5 crore on IT, for development of the backend infrastructure in retail and production.

Vishal is making a foray into the small convenient store format – Vishal Daily Mart, with stores of sizes - 1,000 to 3,000 sq ft. These stores would be run on the franchise model. The company plans to open 2000 such stores across the country by 2009-10. The first of these has already been launched in Indore recently, with plans to open 250 stores in metros and towns by 2008-09.



Vishal recently tied up with Hindustan Petroleum Corporation Ltd (HPCL) to start forecourt retailing at the HPCL outlets. These outlets would be called Vishal Corner Mart and they would be in convenient store format. Specialty formats based on the franchise model is another format the company is considering for its growth plans.

Subhiksha Trading Services LtdSubhiksha is among India’s largest

discout supermarket, pharmacy and telecom chain. Started in 1997 as a single store entity in South Chennai, it is now present nationally with 1530 outlets and spread across more than 100 cities. Derived from the Sanskrit word, Subhiksham or “giver of all things good”, Subhiksha was founded by Mr. R. Subramanian, an IIT-Chennai & IIM-A alumni. Subhiksha has a retail presence of 230,000 sq ft, which is estimated

to reach 350,000 sq ft by end of fiscal 2009. Subhiksha now has a pan Indian presence with stores across Delhi, UP, Punjab, Haryana, Gujarat, Maharashtra, AP, Karnataka and TN. Recently, IT czar Azim Premji bought a 10 per cent stake in Subhiksha through his personal investment arm for nearly Rs 230 crore, valuing the retailer at Rs 2,300 crore. Premji’s firm purchased this stake from ICICI Venture. Subhiksha has plans to retail in consumer durables and electronics, mainly in Tier-II and III towns in the country, covering an estimated 2 million sq ft of space.

Wadhawan Holdings Private LtdWith a clutch of neighbourhood

stores, Wadhawan Holdings has expanded its business interests in recent times to include food& beverages, fashion, and lifestyle and hospitality. Its current business portfolio includes housing finance (Dewan Housing Finance Ltd); Venture Capital (DHFL Venture Capital); Real estate (Large infrastructure projects through SEZ’s in India ; food & grocery—convenience store formats (Spinach, Sangam, Sabka Bazaar, S*Mart), food & beverages (brands including Aurus Fine Dine, Noodle House, Dish Central, Sanchos, Nashta Chai); education (RK Wadhawan Institute); Lifestyle retail (globally licenced brands such as ED Hardy, Christian Audigier, Kitson, Phillipe Plein); and hospitality (Luxury Hotels, Business Hotels, Spa’s and Resorts).

The second part of this article details information on formats and growth plans for each of these companies. For extended information on all these companies, please refer to India’s Retail Majors II on page 529. ■


INDIA’S RETAIL PIONEERSBy Gurpreet Wasi

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as Sumaria, Sony Mony and Kohinoor in Mumbai, Shah’s and TMC in Hyderabad and Shubham in Bangalore.

Some of the larger regional players such as Vivek’s and Vijay Sales are looking to tie up with international retailers such as Dickson or Best Buy. At the recent Gudi Padwa festival consumers showed a marked preference for organised formats, such as Croma, Next and Vijay Sales, where sales were much higher than small consumer durable stores.

Although multi-national and large Indian retailers clearly have the advantage of size and power, local companies have survived by adapting. The big players, in what has traditionally been a fragmented market, make existing food retailers look tiny – even in the case of large regional chains that have been around for years. South India particularly has a large concentration of such businesses, which are giving MNCs and corporate retailers a run for their money.

Will the big fish eat the small fish? There is no way you can tell, yet. Last year Wadhawan Retail went shopping

for their Spinach convenience store brand, and bought a variety of regional retailers such as Sabka Bazaar and Home Store from Delhi, S-mart from Bangalore, Maratha Stores co-operative, and is still out shopping for more!

Consumer durable retail chains such as Croma and Next are also looking to buyout small retail chains across India in an effort to consolidate their business. Both companies are holding talks with smaller regional players such

The dynamics of the Indian retail fish bazaar are intriguing to say the least. Regional retail businesses are going great guns despite the MNCs and Indian corporate bigwigs jumping into the ring. But the match has only just begun and promises to be a show stealer.

SOUTHMargin Free: For example, Margin

Free, a 12-year-old cooperative venture, is currently India’s largest food retailer with an annual turnover of $133million. It was started by the citizens of the southwestern city of Trivandrum through a NGO called Consumer Protection & Guidance Society. Today its franchisees operate more than 350 stores selling food and household items in southern India, mostly in the state of Kerala.

Foodworld: Foodworld, which has been operating in southern India since 1996, owns 89 stores across 12 major cities in southern and western India – mainly in Chennai, Bangalore, Hyderabad and Pune selling fruits, vegetables, jams, squash, and bakery items – with 22 per cent of its sales coming from its own-branded products. With sales of over $100 million, its stores are approximately 300 sq mt in size on average and it employs 2,500 people across India.




Sarvana: Chennai-based chain, Saravana Stores is synonymous with people jostling each other, despite of which the chain is phenomenally so successful. Kishore Biyani in his book ‘It happened in India’, mentions that he started the Big Bazaar outlets in line with the Saravana stores and its merchandising strategy. As Biyani observes, “At Saravana Stores you can sell utensils and fashion together!”

Owned by Yogarathinam and Rajarathinam, the chain has a legacy of 60 years beginning with a small textile showroom in erstwhile Madras. Today, Saravana Stores is the one stop shop for all kinds of clothes – churidars, silk sarees, ghagras, designer sarees, readymades, menswear, kidswear, footwear or perfumes.

The retailing philosophy that rules the Saravana Stores’ businesses is: low margin, high turnover. In fact, it is a known fact that most articles at Sarvana are sold at 20-30 per cent below their MRP. Even for consumer durables and electronics, one is bound to get a product cheaper by at least one per cent at Sarvana compared to anywhere else.

The 1 lakh sq ft Saravana Stores landmark showroom in T.Nagar, spread across five floors, caters to shoppers from India and abroad. In 2004 Saravana Stores set up a 30,000-litre-a-day ice-cream production unit to

launch their own ice-cream brand called ‘jamai’. Saravana Stores, a Rs.250 crore regional retail brand, retails stainless steel utensils, jewelery, textiles, consumer durables, and provisions and also runs eateries called ‘Sarvana Bhavan’. Their online jewellery retail initiative is a raging success with NRIs the world over.

Pothys: Weavers to the maharajas of yore, ‘Pothys’ was established 90 years back by K.V.Pothy Moopanar under the brand name ‘Pothy Moopanar’ to sell cotton sarees, dhoties and Towels woven in his own loom. In 1977, his son K V.P.Sadayandi Moopanar established the name and expanded the outfit with a self-styled retail showroom at Srivilliputtur, branded as ‘Pothys’. The next generation ventured to newer pastures and opened a showroom in Tirunelveli in 1986.

Today, Pothy’s is indisputably the most popular silk sarees showroom in Chennai – a fact corroborated by a survey conducted by Sun TV and AC Neilsen Survey. The store successfully entered the Guinness Book of World Records for world’s longest silk saree at 1276 ft, endowed with images that trace the rich and varied heritage of India through five millennia.

Pothys opened their largest showroom in Panagal Park, Chennai in 1999.This imposing six-storeyed showroom is popularly known as an

‘Aalayam’. Pothys offers variety of silk sarees and has a full floor dedicated to dressing up boys and girls, from tiny tots to teens.

Witco: Witco aims to be India’s leading retailer in travel requisites in the premium segment. The store chain provides the best luggage and travel accessories brands under one roof. Witco was founded in 1951 by late M P C Mohamed, the pioneer of the plastic industry in Chennai. Today, Witco has 17 outlets in Chennai, Bangalore, Kochi and Calicut and is the numero uno retailer for Samsonite in India and for VIP luggage in South India. The store houses internationally renowned premium travel brands such as Samsonite, VIP, Delsey, American Tourister and Giordano. Witco is also the founder member of RAI (Retailers Association of India). Witco has a total of 17 outlets in Chennai, Bangalore, Kochi and Calicut.

Nilgiri’s: Ten decades old and family run, Nilgiri’s Dairy Farm, operates 100 supermarkets in the southern cities of Chennai, Erode, Coimbatore, Bangalore and Ernakulam. UK based Actis, along with Singapore-based GIC Investments, affected a management buyout of an established brand in the south, in October 2006. The group had a topline



of around Rs 120 crore at the time. Actis brought professional management and has attempted to modernise the retail processes at Nilgiris.

Nilgiri’s products include dairy products, bakery, chocolates and a variety of other local foods and snacks. All of its products are sold under the brand Nilgiri’s 1905.

Ever since the takeover, Nilgiri’s has been aggressive in expanding its retail presence, which consisted of 30 stores at the time of Actis entry. In addition to this, the new investors have been strengthening the group’s manufacturing operations in dairy, bakery and food segments. The retail chain currently has 100 outlets with a large presence in Karnataka and Tamil Nadu, and has made a recent entry into Kochi, Kerala. The plan for the next two years is to take the number of retail outlets to 240 by March 2009 and to about 400 by March 2010. Nilgiri’s now offers about 1,200 private labels, which are particularly strong in the bakery and dairy segments.

The company is in the process of setting up two hi-tech distribution centres of one lakh sq ft each at Bangalore and Chennai, which would be functional in October this year.

UniverCell: Moving on from Supermarkets, there is interesting activity happening in the mobile phone retailing category. A Eureka

Forbes sales head in Karnatka, Satish Babu followed his instincts to launch UniverCell in 1997. He had no idea then that he was sowing the seeds of the mobile retail revolution in India. Today UniverCell is a Rs.600 crore with 160 outlets across South India.

Sangeetha: The same year, Sangeetha, a family-owned company dealing in consumer durables, started offering mobile handsets in their showrooms. By the huge initial success, the company started selling mobiles exclusively in 1999. The company has clocked a turnover of Rs.300 crore in FY08. Sangeetha operated only two stores till 2002 but has now grown to 47 outlets across cities such as Bangalore, Chennai, Hyderabad, Mangalore, Mysore and Vishakapatnam.

Global Access & Big C: Siraj & Mohsin Fulara’s Global Access, has about 20 stores in Bangalore and Balu Chowdary’s Big C has 48 showrooms across Andhra Pradesh and Karnataka. It’s inspiring to note that Global Access clocked a turnover of Rs.98 crore last fiscal and expects to touch Rs.160 crore in fiscal 2008-09. Big C expects turnover to swell to Rs.300 crore from Rs.200 crore last fiscal. So being ‘regional’ no longer a small game anymore.

The entry of corporate retailers such as The MobileStore and HotSpot and their aggressive expansion has made the regional chains insecure. The MD of Sangeetha Mobiles, Subhash Chandra, says that his chain was the topmost mobile retailer until 2005 but has lost out since. Similarly Sathish Babu of UniverCell also believes that if a regional retailer has to grow, it has to scale up fast, else it would get marginalised.

To make up for lost time, these players have firmed up their expansion plans across India. Sangeetha is in talks with investment bankers such as Edelweiss and PwC for funding. It aims

Sangeetha Mobile is in talks with investment bankers such as Edelweiss

and PwC for funding. It aims to reach 100 outlets by year-end.




to reach 100 outlets by year-end. Big C plans to double the number of its outlets to 100 by March 2009 from 48 currently but has no plans to tap private equity for at least another year.

Viveks: Vivek Ltd is the largest consumer electronics and a home appliance retail chain in India and operates in the south. Lakshmi Narayana Setty influenced by the lofty ideals of Swami Vivekananda set up a small shop of 200 sq ft, at Mylapore, Chennai, with an investment of only $230 to sell folding chairs. Slowly he added radios, fans, mixers, irons, heaters and other household equipments. He named his business Vivek & Co inspired by his Guru Swami Vivekananda. After his demise, B.A Kodandaraman took over the reins of Viveks and increased the turnover of $3,840 in the first year to a stunning figure of $643,680 by 1980.

Viveks grew from three stores to more than 53 stores and turnover increased to over $80 million. It also became a public limited company from a family run enterprise. In this process, 14-store chain Jainsons was bought over in 1999, two-store Premier in 2001 and Spencers in 2002 and have recently absorbed Spencers into the Premier brand. Viveks group has a 42-year legacy and today operates out of 52 stores in South India in a total

area of 1,75,000 sq ft with an overall turnover of Rs.400 crores ($100 million). Landmarks achieved, traced from the year of inception, leave an impression of sustenance and growth at a rapid pace.

CII and Mckinsey have raved about Viveks – ‘More trusted than the brands it sells’. This proves to be enough testimony to the acclaim enjoyed by Viveks as a household name.

Digital Shoppy: Digital Shoppy is a retail chain of showrooms for consumer electronics and home appliances founded by A Mahesh Raju in 2000. He is a gold medalist in Engineering from Andhra University and M.Tech from IIT Delhi. In 1996, he established Indias first ‘Sony World’, an exclusive Sony Product Showroom, in Hyderabad. Thereafter he set up Digital Shoppy, India’s first click-and-mortar consumer retail store brand located in Hyderabad and in cyber space with first consumer electronics portal www.digitalshoppy.com.

The portal enables users to compare brands, features and prices online and see the product at Digital Shoppy. Even at the retail store, the customer can get details of the product in an easy to use digital data, he can use any of the four units to look up the portal for more information and also take help from the staff to facilitate his purchase.

The showroom and portal has CTVs, refrigerators, washing machines,

microwave ovens, AC’s, floppies, music cassettes, CD’s and internet products. A highly flexible and customer centric approach to retailing has made Digital Shoppy a very popular name in Hyderabad.

Today, Digital Shoppy is India’s fastest growing consumer electronics and home appliances retail chain, spread across 36 centers in Andhra Pradesh, Karnataka, Kerala and Tamil Nadu. Digital Shoppy is focused on creating an unparalleled customer experience driven by passion, honesty, innovation, excellence and empathy.

Vasanth & Co: Vasanth & Co, a Rs.2.5 billion turnover company, is a leading Chennai-based chain store dealing in consumer electronics and home appliances. The company was established in 1978, and currently has a network of 39 showrooms operating in almost all towns of Tamilnadu and one each in Bangalore and Pondicherry.

Vasanth & Co. enjoy tremendous brand loyalty amongst its customers so much so that those who purchased black & white TV sets from Vasanth & Co. way back in 1978 when TVs were launched in India, continue to be Vasanth & Co. customers.

The owner, H. Vasanthakumar enoys an exceptional reputation as an ardent social servant, philanthropist, editor & publisher, who contributes in a big way to promote education and sports among the poor and offers relief and remedies to the affected people.

WESTAdani: Adani’s is the biggest

operators in western India with the Adani’s supermarket chain. Adani Retail operates a total of 56 supermarkets and hypermarkets in western India.



The Rs.16,000-crore Adani group forayed into retail by acquiring a leading supermarket store V Ravjis in 2000. Adani Retail was bought out lock-stock and barrel by Reliance Retail in 2006. Reliance Retail plans to transform Adani Retail’s general purpose outlets into specialty stores such as jewellery, medicines, specs, home furnishing, telecom and even consumer electronic outlets.

Adani has presence in Ahmedabad, Vadodara, Jamnagar, Surat, Rajkot, Anand, Nadiad, Mundra, Gandhinagar and Navsari. Adani’s neighbourhood stores are typically 1,500-3,000 sq ft and sells food and grocery.

The supermarkets, around 3,500-4,000 sq ft each, sell plastic items, crockery, cosmetics, imported products and the hypermarkets, around 8,000-25,000 sq ft, have dedicated sections for grocery, fast food, fresh fruits and vegetables and apparel among others. The company has plans to reach 19 cities with 60 plus stores in the state of Gujarat. They also plan to expand its operation in the neighboring states of Rajasthan, Madhya Pradesh, Maharashtra and Chhattisgarh.

Vijay Sales: From a small TV showroom in Mahim in 1967, Vijay Sales has since evolved into one of the India’s leading chain of electronic superstores, now expanding to major cities across

the country. Together with his two sons Nilesh Gupta and Ashish Gupta, Nanu Gupta, remains the driving force behind the Vijay Sales enterprise. Vijay Sales caters to customers of all budgets and preferences. Through an intuitive understanding of emerging markets, today after more than four decades of successful operations, Vijay Sales has become a trusted name synonymous with quality electronics and consumer durables.

Akbarally: Akbarally’s has been an iconic brand name in Mumbai. It is a little known fact that they were pioneers of the department Store concept in India after the British owned department Stores such as Whiteway Laidlow, Evan Fraser, Hall & Anderson, Army Navy Stores closed down. The company is owned by F T Khorakiwala, who is instrumental transforming a small retail shop into one of the most famous department store in Mumbai. Today the brand has two full line department stores in Mumbai.

Dhiraj Sons: Dhiraj Sons Mega Store Pvt. Ltd in Surat operates well known stores chains: Mega Store, Super Store, Music Shop, Card Shop, Toy Shop and now Fashion World.

Dhiraj Sons has been in the retail business since the last 62 years, starting off with a small kirana shop in the up market Athwalines area in Surat. It pioneered the family general

store concept in Gujarat in 1947 called ‘R. Dhiraj Modi’ which became an instant success. In 1984, it launched a departmental store called ‘Dhiraj Sons’ and introduced many modern retailing techniques like the self service system and online computerised billing. It also added a greeting card shop, a music shop, plastic corner and a stationery corner in 1995.

In the year 2000, the 15,000 sq ft ‘Dhiraj Sons Mega Store’ was launched at Chowpatty. Buoyed on by these successes in 2002, the company launched a 15,000 sq ft Dhiraj Sons Super Market, at Parle Point in Surat. From a small grocery store in 1947 to super store, mega store and Fashion World in 2002 traces the ambitious history of a traditional retailer with big dreams.

NORTHMother Dairy: In New Delhi and

neighbouring areas, the central government-controlled Mother Dairy Foods, operates 279 outlets under the Safal brand and sells fresh and frozen fruit and vegetables with an annual




turnover of $10million. Launched in 1988, it is trying to increase the availability of its branded fruit juices, jams and pickles in local outlets.

D’Mart Exclusif: Dolphin Mart Limited, founded in 1992 is best known for importing rare collectibles ranging from home décor, art pieces, corporate gifts, furniture and furniture accessories under the brands namely D’Mart Exclusif and Woodmart Exclusif. With six outlets in Delhi NCR, one in Ludhiana and eight others spread across in several cities pan India, Dolphin has ambitions to make D’Mart a strong national brand though it primarily remains largely a north Indian brand at the moment.

Ebony: Ebony Retail Holdings was among the first to step into the space of modern retail in 1994 with a natty departmental store in Delhi’s South Extension called Ebony, which son became the fashion shopping mecca of the city. Ebony has, ever since, successfully opened seven stores across seven Indian cities, introduced a private label ETC and launched their own bookshop concept called Wordsworth. With over two lakh sq ft of retail outlet space, Ebony is today among the largest retail players in India. It was the first large format modern retailer to enter Chandigarh and Noida with two large stores each spread across 35,000 sq ft. It also has stores in Ludhiana, Jalandhar and Amritsar in Punjab.

Ritu Wears: Ritu Wears is a well-known and reputed family store chain in northern India. Currently, there are six RW stores sized 5,000-30,000 sq ft. each in Delhi/NCR, and Punjab. Ritu wears was started in 1965 by J.D. Sahni

with a 200 sq. ft. children’s wear store in New Delhi.

V Mart : A value-retailer owned by the New Delhi-based Lalit Agarwal, V Mart is a Rs.100 crore retail chain with 26 stores in northern India across 17 cities including Delhi, Punjab, Ajmer, Mumbai, Bhopal, Rajkot, Vadodara, Kohlapur and covers 3.25 lakh sq ft of the retail space. V Mart operates a chain of mid-size hypermarket value retail stores ranging from 6,000-12,000 sq ft. Its specific focus is on tier II/ III cities. It covers 250,000 sq. ft. retail space. It recently launched V Galz stores, a fashion studio for ladies garments and accessories.

Birla Retail picked up 25 per cent stake in the company in July 2008 in V Mart.

EASTK.C. Das: Kolkatta’s best known

sweets shop with a legendary reputation among Bengali sweets lovers all over the world. Nobin Das, founder of the sweets business invented the ‘rossogolla’ in the 1860s and introduced the world to what may well be regarded as the national sweet of India.

Nobin Chandra left his legacy to his son Krishna Chandra Das who enlarged his inheritance of his father’s genius in the art of Bengali sweetmeats. In 1930, Krishna Chandra started his first shop, Krishna Chandra Das Confectioner, with his youngest son Sarada Charan. Krishna Chandra also created the ‘rossomalai’, another perennial favourite

and to popularise the ‘rossomalai’, Krishna Chandra opened a new sweet shop at Jorasanko in 1930. From there he also introduced the canned rossogolla, which was the first and only canned dessert manufactured in the country at that time.

Currently there are 17 K. C. Das outlets in West Bengal and Karrnataka.

Starmark & Frank Ross: Starmark is the retail venture of Emami and it specialises in books, music, toys and stationery items. Starmark has four stores in Kolkatta and is planning to foray into speciality retailing, selling Disney merchandise, in every store. The company plans to set up 10 more Starmark stores in neighbouring Guwahati, Jamshedpur and Bhubaneswar manning a total area of 80,000 sq ft. Frank Ross is the pharmacy retail chain owned by Emami with 30 stores in Kolkatta.

Khadim: Khadim India Ltd is one of the country’s largest footwear manufacturers and retailers based out of West Bengal. It recently announced its initial public offering in mid-August 2008.

The company also plans to invest around Rs 96.7 crore to open around 151 exclusive stores, of which 45 will be company-owned. It also plans to launch a lifestyle retail store and central distribution centre in Kolkata. Khadim presently operates around 11 across the country and plans to set up around 22 this fiscal. ■

In New Delhi and neighbouring areas, the central government-controlled Mother

Dairy Foods, operates 279 outlets under the Safal brand and sells fresh and frozen

fruit and vegetables with an annual turnover of $10million.


By Kodandaraman Setty

REASONS TO EXPAND

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retail poses various challenges for a local player to go regional and then national. Some of the factors that the retailer would have to contend with are discussed below:-

The market environment and the regulatory environment including taxation laws differ widely across the states of the country. Even within a state, there are regulatory provisions differing from city to city. Often the retailer has to obtain a large number of permissions and approvals from local authorities. These factors place considerable strain on a regional retailer to quickly move into the national level at any acceptable pace.

Our country has major cultural diversity including diverse traditions and practices, apart from language problems. Retail involves dealing with the local consumers in a manner appropriate to their culture and traditions, and invariably in the local languages. Local competitors who have strong hold in their respective markets have to be reckoned with. Winning over their loyal customers will be necessary to build a market share in each market.

In a similar way, it would be necessary to build a rapport with the local authorities and the powers that be. Their support and co-operation is important for successfully entering and developing business in the new market.

For a national level retailer, it is easier to expand into other verticals as the brand is already established across the country. However, a regional retailer who has a strong brand image within his operating territory would still need to build his brand image in every new territory he forays into, as there are established local retail brands, even if

Consumer purchasing power in the country has moved up sharply and so have their aspirations and expectations in terms of

products and shopping experience. This per se is a clear indicator of the huge opportunities for modern retail and, very specifically, regional players who have established well in their respective geographies, can capitalise on these opportunities by foraying into the national level.

This would, however, call for, apart from high investments, also the ability to build size and scale of operations, and effectively manage a national level retail enterprise. Unlike other businesses,

he is moving in the same vertical. This is one of the major challenges for the regional retailer aspiring to go national.

Above all, the regional retailer has to build an organisation appropriate to taking the business to the national level in terms of size and scale and in terms of the capabilities needed for managing the widely spread enterprise. This involves significant width and depth in the management on the one hand and tackling successfully the obstacles posed by the severe inadequacy in trained and qualified manpower.

Traditionally, any retail business invariably started at home, meaning the place where the entrepreneur is located, and expanded locally by creating additional outlets. At the next stage the retailer moved into neighbouring cities and towns within the state, moving thence into adjoining states and thus becoming a regional player. Having established a strong regional presence, the retailer progressively forayed into other states, becoming a national player in course of time.

It is obvious that growing in retail is clearly a matter of building the retail enterprise brick by brick. It is not just the financial investment but even building an organisation to encompass a wide geographical territory has to be a step by step process. This is what International leaders in retail, like Wal Mart, have done in growing their enterprise from local to state to national level and then progressively moving into other countries in a planned manner to emerge as multinational players. This is a clearly proven model and is equally applicable to the Indian retailer aspiring to move the local or regional level into the national level. ■

Indian Retail market has been dominated by the unorganised segment since long, and while modern retail has been growing at a fast pace, its share of the market continues to be dismally low in comparison to even countries in this part of the hemisphere like Thailand, China, Malaysia etc.

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