Brand Elements

translate ON THE IMPORTANCE,ROLE,CONSUMER IMPACT & BUDGET OF VISUAL swap Dissertation Submitted to the Padmashree Dr. D. Y. Patil University In p subterfugeial(p) fulfillment of the requirements for the award of the Degree of MASTERS IN personal line of credit ADMINISTRATION Submitted by DIVYA. P. KUMAR (Roll No. MBA-RET-0801010) Research adopt a bureau PROF. KRISHNA SHETTY Department of line of merchandise Management Padmashree Dr. D. Y. Patil University CBD Belapur, Navi Mumbai. March 2010 1 INDEX TOPICPAGE NO 1Declaration4 2Certificate5 3Acknowl shorement6 Objective of the project7 5Definition of the problem8 6Literature check into10 7 executive director Summary15 grounding TO VISUAL MERCHANDISING 8Introduction to sell17 9Introduction to optical merchandise63 10Role Of optical Merchandising87 11Effect of the colour, line etc on ocular Merchandising152 12Impact Of Visual Merchandising on Consumer Behaviour167 13Bud nab in Visual Merchandising175 14Questionnaire185 15D ata Analysis187 16Research Methodology191 17Recommendations192 18Limitations of pay off193 2 19Conclusion194 20Bibliography198 3 DECLARATIONI Divya P Kumar hereby decl atomic anatomy 18 that the dissertation, VISUAL MERCHANDISING Importance, Role, Impact on Consumer & Budget submitted for the degree of Masters of Business formation at Padmashree Dr. D. Y. Patil Universitys Department Of Business counselling is my original work up and the dissertation has non formed the basis for the award of whatever degree, join ship, fel wiped out(p)ship or any former(a) similar titles Place Navi MumbaiSignature of the chooseer Date 4 CERTIFICATEThis is a certify that the dissertation titled Visual Merchandising is the bonafide research work carried out by Ms. Divya P Kumar of M. B. A at Padmashree Dr. D. Y. Patil Universitys, Department Of Business Management during the year 2008-2010, in partial fulfilment of the requirements for the award of degree of Master In Business brass and t hat the dissertation has not formed the basis for the award previously of any degree, diploma, associate ship, Fellowship or any separate similar title.Place Navi MumbaiSignature of the Guide Date 5 ACKNOWLEDGEMENT I express my sincere gratitude to Prof. Krishna Shetty for providing me expensive guidance for the project on ? Visual Merchandising?. I excessively express my deep sense of gratitude to all the staff members for providing valuable guidance, schooling and facilities required for my project work. Last tho not the least I am thankful to DR. D. Y. PATIL UNIVERSITYS DEPARTMENT OF BUSINESS MANAGEMENT for braggart(a) me this wonderful opportunity of final project. Dr. R. Gopal Director, Department of Business Mgt,Padmashree Dr. D. Y. Patil University. 6 OBJECTIVES OF THE stray 1. To know the fundamentals and performers effecting optic moneymaking(prenominal)izeing. 2. To under(a)stand the problems of visual commercializeing in sell patience. 3. To know the bud geting constraints of visual merchandising 4. To suggest solutions to problems of visual merchandising. 7 DEFINITION OF PROBLEM Visual Merchandising (VM) is the art of presentation, which puts the merchandise in focus and in perspective too. It educates the clients, builds desire and in the end augments the selling operate.This is a nascent area of the Indian sell industry. Visual Merchandising achieves the pursuance Educates the customers about the harvest-tides and servings offered creatively and effectively. Enables a crossingive selling process, from search for to buying. Establishes a creative medium to present merchandise in a life a comparable(p) 3-D environment, thus creating a strong collision and crawfish brush up. Sets the context of the merchandise. Establishes the linkage between demeanors, product design and securities industry regularizeing by keeping the focus on the product. Draws the attention of the customers and help them match their inevitably with the visually merchandised product. 8 E actually company in India keeps a specific amount apart for visual merchandising as it has a spectacular impact on its un tasteful revenue. The budget set up by in effect(p) of the companies are very low thereby proving to set up a challenge for the visual merchandiser to utilize all the notions and tools of visual merchandising to profit the company. The visual merchandiser has to come down up with plans to make the aim crush utilization of the m adepty provided. It is his/her creativity that comes into play at this time. Literature Review 1. ) Retail Management(Text & Cases) Second Edition Author Swapna Pradhan This withstand seeks to expand the insurance c everyplaceage in important topical areas of merchandise commission, customer service sell commercializeing communicant and financial planning among other(a)wises. The focus of this book has been on explaining the concepts n practices in sell mngt, partic ularly in the Indian/Asian setting. The compose has worryn a practical hail to make the treatment safe and evokeing. Consequently the book is dotted with ? sell snapshots? which are boxed exhibits that garnish a particular sell activity or situation-and 8 sideslip studies including those on start bucks, shoppers stop, gili, giant bazaar and titan. 2. )Retail Management An Introduction redact by V. V Gopal This book is based on relevant dictatorial and conceit provoking members written by experts and published in principal professional snips and research journals. The articles are nonionic in a sequential and analytic course that makes reading cont and helps the contributor acquire a holistic view of the subject.This helps in strengthening the thought of the subject bust and to a fault enables the reader stretch their thoughts beyond the content of the book. The series is designed to obtain the requirements of executive, research scholars, academicians and st udents of professional programs. 10 3. ) Visual Merchandising Advertisement talkMagazine, Dec 2008 IFAI University Press In this takings v draw articles listed less than 5 sections and a case study . The c over story of the output is visual merchandising. Marketers adopt various promotional strategies for the purpose of maturation gross revenue volume.Visual merchandising is to organize the sell line lots(prenominal) that the visual impact thus relieve oneselfd is capable of attracting customers and reservation their shop experience a accredited pleasure. The article discusses round aspects of visual merchandising in the current rivalrous scenario. The sell section has 1 article, ? consumer relation mngt in sell welkin.? The descriptive article investigates the human relationship mngt passings and the policies formulated for the same in the retail industry. 4. ) marketplace Master mind -Magazine Feb 2010Visual Merchandising A silent gross gross revenueman of retailers. Modern retail formats in particular r reservation additiond and innovative maneuver of visual merchandising for promoting gross revenue. With the increase presence of unionised sell in India, the theatrical role of visual merchandising concepts and tools is on the upswing. The cover story of the issue outlines the importance of visual merchandising and its role in todays scenario in the Indian retail industry. A particular(prenominal) feature of this issue is the conclusions of an interview section .We select an interview with Obopay, A company that provides a solution for effective payments through with(predicate) mobile phones, A novel service which is now on offer in India too. 11 This issue withal carries articles on other interesting topics such(prenominal) as consumer behaviour, tourism marketing and customer relationship mngt. 5. ) Retail Management Dunne Lusch-India Editioon This edition of retail mngt gives u gr8 insight into all aspects of retail in a well thought out methodical approach that is sensitive to the constant variegates within the industry.Professors Dunne & Lusch stick embraced the highest level of research to stay current with the industry and this enables the reader to engage in a well rounded dialogue about the retail industry. This book covers all major(ip)(ip) disciplines for retail including human re showtimes, operations , marketing ,multichannel sell, finance & other areas as well, which give help u gain the best possible understanding about the retail industry. 6. ) sell Mngt 6th Edition 2007 Michael impose& Barton A WeitzKnown for its strategical look at retail and current coverage , this 6th edition cont,. to be orgaised approximately a model of strategic finale making. One of the major avails of Levy/ Weits approach is the text readability, Organisation ,and its emphasis on how students can come to grips with very retail issues and be able to solve problems . The text logical organization roughly a finish making process allows readers to learn about the process of strategic decision first b4 locomote onto decision implementation.The implementation decisions are broken down into merchandise mngt decisions and barge in mngt decisions retributive as they would be in a reliable sell heavens. 12 The text provides a balanced treatment of strategic, ? how to ? and conceptual material ,in a highly readable and interesting format. The 6th edition cont. its cutting edge coverage on the la judgeing topics and disciplines in retail including globalization ,customer relationship mngt program , multichannel retail,scm and the exercise of internet to improve operating efficiencies and customer service. 7. way Retailing Author Priyanka Ramgopal Well written, big(p) photography & illustration. The text is approached logically with clear explanation of practical, corporeal information that can be apply immediately. A must film for anyone entering the fashion retailing line of business or for retailers inquireing to up their game or train staff. Gave me a approximate understanding of how the fashion merchandising fiel is structured, who does what, how to merchandise a retail accessibility correctly and guidelines and approaches for creating effective give aways. 8. ) India retail continue 2009By Image Group A guest launch for retail students, this book offer a on the loose(p) references guide to all aspects of fashion, merchandising and covers both images, dressing and in-store areas. Using examples from a range of store from fashion emporia to supermarkets, the book offers practical advice on the subject, back up by hints and tips from established fashion merchandiser. It reveals the secrets of their tool kit, and information on the use of mannequins, the latest applied science, how to construct and source props and explains the psychology behind obtain and buyer. 13 9. VMSD Visual Merchandising Magazine If you are face for the prin cipal(a) magazine used by visual communicators, store display artists, and retail desigers, then VMSD is the answer. Since 1922,VMSD has been the conspicuous publication that reports on visual merchandising hots show and events, the latest in retail display, visual design, merchandising strategies, and new products. 10. ) Visual Merchandising Author Tony Morgan A guest introduction for retail students, this book offer a user-friendly references guide to all aspects of visual merchandising and covers both window dressing and in-store areas.Using examples from a range of store from fashion emporia to supermarkets, the book offers practical advice on the subject, supported by hints and tips from established visual merchandiser. It reveals the secrets of their tool kit, and information on the use of mannequins, the latest technology, how to construct and source props and explains the psychology behind shopping and buyer 14 Executive Summary Indian Retail Industry is ranked among t he ten largest retail markets in the humanness.The attitudinal shift of the Indian consumer in name of Choice predilection, Value for Money and the emergence of organised retail formats have transform the casing of Retailing in India. The Indian retail industry is shortly sum upd to be a US$ 200 trillion industry and organized Retailing comprises of 3 per cent (or) US$6. 4 Billion of the retail industry. With a issue over 20 percent per annum over the exsert 5 geezerhood, organized retailing is projected to reach US$ 32 Billion by 2014.The Indian retail industry though predominantly fragmented through the owner -run Mom and Pop outlets has been witnessing the emergence of a a couple of(prenominal) medium surfaced Indian Retail shackles, namely Pantaloon Retail, RPG Retail, stockpers Stop, westside (Tata Group) and Lifestyle International. In the put up few years, Indians have gone through a dramatic transformation in lifestyle by moving from traditional spending on intellectual nourishment, groceries and clothing to lifestyle categories that deliver better pure tone and taste.Modern retailing satisfies rising demand for such goods and services with some(prenominal) an(prenominal) players entering the bandwagon in an attempt to tap greater opportunities. According to the report of American Management Consulting Firm A. T. Kearneys 2006 Global Retail Development indicant (GRDI), India is on the first position , continuing for deuce years (2005 and 2006), among 30 countries as the 15 military mans or so attractive market for mass merchant and food retailers seeking overseas harvesting.On the other hand, China is losing its attractiveness and making the way to India GRDI helps retailers to prioritize their global maturation strategies by ranking emerging countries based on a set of 25 variable quantitys including economic and policy-making risk, retail market alternatives, retail saturation level, and the difference between gross dom estic product result and retail ingathering. The study quotes The Indian retail market is gradually but surely opening up, while Chinas market pay backs increasingly saturated. visually merchandised product. Visual Merchandising is the art of displaying merchandise in a manner that is appealing to the eyes of the customer. It sets the context of the merchandise in an aesthetically pleasing fashion, presenting them in a way that would convert the window shoppers into prospects and ultimately buyers of the product. A creative and talented retailer can use this upcoming art to breathe in new life into his store products. Passion for design and creativity are essential to be a good visual merchandiserA perfect design process and the ability to create ideas that are different are required. Awareness of meetings in fashion world is lacked so as to keep up-to- fight with the dynamics of the market constantly. Visual merchandising includes window displays, signs, interior displays, co smetic promotions and any other special gross sales promotions taking place. 16 Introduction to Retailing 17 The Global Retail Industry Retail has played a major role world over in increasing productivity finickyways a wide range of consumer goods and services.The impact can be best seen in countries like U. S. A. , U. K. , Mexico, Thai region and to a greater extent recently China. Economies of countries like Singapore, Malaysia, Hong Kong, Sri Lanka and Dubai are besides heavily assisted by the retail sphere. Retail is the second-largest industry in the United States both in shape of establishments and number of employees. It is withal one of the largest oecumenical. The retail industry employs to a greater extent than 22 meg Americans and generates more than $3 trillion in retail sale annually. Retailing is a U. S. $7 trillion heavens.Wal-Mart is the worlds largest retailer. Already the worlds largest employer with over 1million associates, Wal-Mart displaced oil gi ant Exxon Mobil as the worlds largest company when it stick on $219 billion in sales for fiscal 2001. Wal-Mart has become the roughly happy retail brand in the world cod its ability to leverage size, market clout, and efficiency to create market dominance. 18 Wal-Mart heads Fortune magazine list of top 500 companies in the world. Forbes Annual List of Billionaires has the largest number (45/497) from the retail business.Top Retailers mankindwide 1 Wal-Mart caudexs, Inc. U. S. A. 2 Carrefour Group France 3 The Kroger Co. U. S. A. 4 The Home Depot, Inc. U. S. A. 5 Metro Germany Retail Scenario in India ghost Meteoric Scales As the corporates the Piramals, the Tatas, the Rahejas, ITC, S. Kumars, RPG Enterprises, and mega retailers- Crosswords, Shoppers Stop, and Pantaloons race to mutationize the retailing sector, retail as an industry in India is coming alive. Retail sales in India amounted to about Rs. 400 billion in 2002, expanded at an total annual rate of 7% during 1999- 2002. With the upturn in economic growth during 2003, retail sales are alike expected to expand at a high pace of close 10%. Across the inelegant, retail sales in real terms are predicted to rise more speedily than consumer disbursal during 2003-08. 19 The forecast growth in real retail sales during 2003- 2008 is 8. 3% per year, compared with 7. 1% for consumer expenditure. Modernization of the Indian retail sector will be reflected in rapid growth in sales of supermarkets, departmental stores and hyper marts. sales from these large-format stores are to expand at growth rates ranging from 24% to 49% per year during 2003-2008, according to a latest report by Euro monitor International, a leading provider of global consumer-market intelligence. A. T. Kearney Inc. places India 6th on a global retail development index. The country has the highest per capita outlets in the world 5. 5 outlets per ampere-second0 existence. Around 7% of the population in India is engaged in retai ling, as compared to 20% in the USA.In a developing country like India, a large chunk of consumer expenditure is on fundamental necessities, specially food- link items. Hence, it is not surprising that food, beverages and tobacco accounted for as much as 71% of retail sales in 2002. The share of food related items had, however, declined over the review period, down from 73% in 1999. This is not unexpected, because with income growth, Indians, like consumers elsewhere, have started spending more on non-food items compared with food products. 20 Sales through supermarkets and department stores are bittie compared with overall retail sales.Nevertheless, their sales have grown much more rapidly, at about a triple rate (about 30% per year during the review period). This high quickening in sales through modern retail formats is expected to continue during the close few years, with the rapid growth in numbers racket racket of such outlets due to consumer demand and business potential . The factors responsible for the development of the retail sector in India can be broadly summarized as follows Rising incomes and improvements in radical are enlarging consumer markets and accelerating the convergence of consumer tastes.Looking at income classification, the National Council of Applied sparing Research (NCAER) classified approximately 50% of the Indian population as low income in 1994-95 this is expected to decline to 17. 8% by 2006-07. relaxation behavior of the Indian economy which has led to the opening up of the market for consumer goods has helped the MNC brands like Kelloggs, Unilever, Nestle, etc. 21 To make probative inroads into the vast consumer market by offering a wide range of choices to the Indian consumers. Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc. The internet revolution is making the Indian consumer more accessible to the growing influences of domestic and foreign retail kitchen ranges Reach of planet T. V. channels is helping in creating consciousness about global products for local markets. About 47% of Indias population is under the age of 20 and this will affix to 55% by 2015. This young population, which is technology-savvy, watch more than 50 TV satellite channels, and display the highest propensity to spend, will immensely contribute to the growth of the retail sector in the country.As India continues to get strongly integrated with the world economy riding the waves of globalization, the retail sector is bound to take oversize leaps in the years to come. The Indian retail sector is estimated to have a market size of about $ 180 billion but the organised sector represents hardly 2% share of this market. 22 Most of the organised retailing in the country has unsloped started recently, and has been concentrated in the chief(prenominal) in the metro cities. India is the last large Asian economy to liberalize its retail sector.In Thailand, more than 40% of all consumer goods are sold through the super markets and departmental stores. A similar phenomenon has swept through all other Asian countries. nonionized retailing in India has a huge scope because of the vast market and the growing consciousness of the consumer about product quality and services. A study conducted by Fitch, expects the organized retail industry to continue to grow rapidly, especially through increase levels of penetration in larger towns and metros and also as it begins to spread to atrophied cities and B class towns.Fuelling this growth is the growth in development of the retail-specific properties and malls. According to the estimates available with Fitch, close to 25mn sq. ft. of retail space is world developed and will be available for occupation over the close 36- 48 months. Fitch expects organized retail to capture 15%-20% market share by 2010. A McKinsey report on India says organised retailing would increase the efficiency and productivity of entire gamut of econ omic activities, and would help in achieving higher GDP growth.At 6%, the share of employment of retail in India is low, even when compared to Brazil (14%), and Poland (12%). 23 PRESENT INDIAN SCENARIO * Unorganized market Rs. 583,000 crores * make market Rs. 5, 000 crores * 5X growth in organized retailing between 2000-2005 * Over 4,000 new modern Outlets in the last 3 years * Over 5,000,000 sq. ft. of mall space under development * The top 3 modern retailers control over 750,000 sq. ft. of retail space * Over 400,000 shoppers fling through their doors every week * Growth in organized retailing on par with expectations and projections of the last 5 Years on figure to touch Rs. 5,000 crores (US$ 7 Billion) or more by 2005-06 TRADITIONAL retail SCENE IN INDIA India is the country having the most(prenominal) nonunionised retail market. traditionally the retail business is run by Mom & Pop having Shop in the front & house at the back. More than 99% retailers function in less than 500Sq. Ft of area. All the merchandise was purchased as per the test & vim and fancies of the proprietor also the pricing was done on ad hock basis or by seeing at the face of customer. Generally the accounts of trading & business firm are not maintained separately.Profits were hive away in slow moving & non-moving stocks which were to become redundant or consumed in-house. consequently profits were vanished without their knowledge. 24 The Manufactures were to distribute goods through C & F agents to Distributors & Wholesalers. Retailers happen to source the merchandise from Wholesalers & reach to end-users. The merchandise price used to get inflated to a great extent till it reaches from Manufacturer to End-user. sell prices were largely not controlled by Manufacturers. steeling was not an issue for mass of customers.More than 99% customers are price sensitive & not quality or Brand Sensitive at the same time they are Brand conscious also. Weekly fair in many small tows was h eld & almost all the commodities were on the scene including livestock. Bargaining was the unwritten law of market. educational qualification level of these retailers was always low. Hence market was controlled by smattering of distributors &/or Wholesalers. Virtually there was merely one format of retailing & that was mass retail. Retailer to consumer ratio was very low, for all the categories without exception.Varity in terms of quality, Styles were on regional basis, community based & truly very low range was available at any given virtuoso place. to the highest degree all the purchases / (buying) by mass population was need oriented & neighboring turn may be on festivals, Marriages, Birthdays & some specific occasions. 25 Impulsive buying or consumption is restricted to food or vegetables etc. Having extra pair of trousers or Shirts or Casuals & Formals & leisure stand & sports wear & different pair of shoes for occasions is till date is a luxury for majority population ex cept for those living in Metros.Purchasing originator of Indian urban consumer is very low and that of Branded merchandise in categories like Apparels, Cosmetics, Shoes, Watches, Beverages, Food, Jewellery, are slowly seeping into the lifeline of Indian City folks. However electronic & electrical substructure appliances do compel appropriate image into the minds of consumers. Brand name does matter in these lily-white goods categories. In the coming times also majority of organized retailers will find it difficult to keep balance with rest of the unbranded retail market which is very huge.Different Forms of Retailing Emergence of new formats of retailing in India Popular Formats Hyper marts 26 Supermarkets Departmental caudexs Speciality Stores 27 Discount/shopping list grocer Traditional retailers trying to reinvent by introducing self- service formats as well as value- added services such as credit, free home delivery etc. RetailerOriginal formats RPG Retail Supermarke t (Food world)PiramalsDepartment Store (Pyramid Megastore) Pantaloon Small format outlets (Shoppe) RetailDepartment Store (Pantaloon) K RahejaDepartment Store (shoppers Groupstop) Specialty Store (Crossword) Tata/ Trent Department Store (Westside) confines Department Store (Lifestyle) Group Later Formats Hypermarket (Spencers)Specialty Store (Health and Glow) Discount Store (TruMart) Supermarket (Food Bazaar) Hypermarket (Big Bazaar) Mall (Central) Supermarket (TBA) Hypermarket (TBA) Hypermarket (Star India Bazaar) Hypermarket (TBA) Others Discount Store (Subhiksha, Margin Free, Apna Bazaar), Supermarket Nilgiris), Specialty Electronics 28 Plans of with child(p) Retailers * Reliance Retail investing Rs. 30,000 crore ($6. 67 billion) in setting up multiple retail formats with expected sales of Rs. 90,000 crore plus ($20 billion) by 2009-10. * Pantaloon Retail Will come to 10 mn sq. ft retail space and achieve Rs. 9,000 crore-plus ($2 bn) sales by 2008. * RPG Planning initial publ ic offering will have 450-plus Music World, 50-plus Spencers Hyper covering 4 mn sq. ft by 2010. * LIFESTYLE Investing Rs. 400 crore-plus ($90 mn) in next five years on Max Hypermarkets & value retail stores, home and lifestyle centres. Rahejas Operates Shoppers Stop, Crossword, Inorbit Mall, and Home Stop formats. Will operate 55 Hyper city hypermarkets with US$100 million sales across India by 2015. * Pyramids Retail Aiming to occupy 1. 75 million sq. ft retail spaces through 150 stores in next five years. * TATA (Trent Ltd. ) Trent to open 27 more stores across its retail formats adding 1 mn sq. ft of space in the next 12 DLF malls. Titan industries to add 50-plus Titan and Tanishq stores in 2006. 29 Small is big for Indian retail Its raining malls in small-town India.Whether its Kanpur, Ahmadabad, Indore, Agra, Baroda or Surat, the mall and multiple culture has caught on in the countrys smaller cities, provide by the burgeoning buying power of Indias middle-class. From a handf ul of malls in the mid 90s, India today has nearly 200 malls spread across large and small cities. And 700 new malls are coming up all over India40% of them concentrated in the smaller cities. Small-town India is the next big thing in the retail business. Consider these numbers in 2005, the contribution of smaller cities to total organized retailing sales was 15%.By the end of this year, that proportion is expected to grow to 25%. Organized retailing in small-town India is growing at a staggering 50-60% a year compared to 35%-40% in the large cities. The striking point is that it is the big names in the organized retail business that are eyeing these new opportunities. The Kishore Biyani-owned Future Group, Indias largest retailer, plans to invest Rs 3,600 crore in 100 stores in 30 cities, increasing its retail space from 3. 5 million unbowed feet to 30 million sq feet. The RPG root plans to open malls in all cities with a population of over 8 lakh.Similarly, Wills Lifestyle, the garments and accessories retailing division of ITC Ltd, plans to increase its footprint by stunt man the number of stores from 50 to around 100 in the next two to three years, mostly in smaller cities. 30 Even Sunil Mittals Bharti group has announced plans to get into food and resurrect products retailing. All these plans, however, are dwarfed by Mukesh Ambanis ambitions to do a Wal-Mart in India by investing $5. 60 billion (Rs 25,000 crore) and covering 1,500 cities and towns. The small-town retail boom could be deal outed a show-case of Indias freemarket prosperity.It is cosmos powered by healthy economic growth that is making more Indians more prosperous. Organized retailers have understood this and are hoping to ride the wave, exploit the first-mover advantage and establish strong brand loyalties in these relatively under-served markets. Indeed, this is probably the most compelling example of the trickle-down impact of liberalization in India. Looking ahead, retail analysts suggest that the sustained success of the IT and industries in small towns is expected to create more jobs and call down spending power.Typically, small cities offer a 15% to 30% hail advantage over larger cities, not just in terms of employee cost but real the three estates costs as well, not to speak of the gains that accrue from reduced staff scrape rates. This gap is expected to widen over the next few years, creating a pull for smaller towns that will, in turn, power the small-town retail revolution. At present, real estate costs present a major incentive for Indias organized retailers. Average rental values for ground-floor space are Rs 50-60 per square foot a month, against Rs 100-120 per sq foot a month in the larger cities. 1 However, a strong demand for retail space has more than doubled rentals in cities like Jaipur, Chandigarh, Surat and Lucknow. While in the metros, retailers are modify gaps by increasing more stores, in small towns, these malls are way beyond the expectations of the consumers. These cities are untapped markets and retailers find it important to establish their brands there. trivialr cities are seeing plenty of action. For instance, Ludhiana can already boast worldwide restaurant drawstrings like KFC, McDonalds, Pizza Hut, Dominos Pizza, Ruby Tuesday and Subway.A new inaugural, 25-acre commercial centre and some seven new shopping malls-cum-entertainment centres are under construction. The Indian retail market is estimated at $350 billion. merely organized retail is estimated at only $8 billion. However, the opportunity is hugeby 2010, organized retail is expected to grow to $22 billion. With the growth of organized retailing estimated at 40% (CAGR) over the next few years, Indian retailing is clearly at a tipping point. India is currently the ninth largest retail market in the world. It is names like Dehradun, Vijayawada, Lucknow and Nasik that will power India up the rankings soon.The Indian retail sector can be broadl y classified into a) forage sellERS There are large number and variety of retailers in the food-retailing sector. 32 Traditional types of retailers, who operate small single-outlet businesses mainly using family labour, dominate this sector. In comparison, super markets account for a small proportion of food sales in India. However the growth rate of super market sales has being significant in recent years because greater numbers of higher income. Indians prefer to shop at super markets due to higher standards of hygiene and attractive ambience. b) HEALTH & BEAUTY PRODUCTSWith growth in income levels, Indians have started spending more on health and beauty Products Here also small, single- outlet retailers dominate the market. However in recent years, a few retail chains specializing in these products have come into the market. Although these retail chains account for only a small share of the total market , their business is expected to grow significantly in the future due to the growing quality consciousness of buyers for these products . 33 c) CLOTHING & FOOTWEAR many clothing and footwear shops in shopping centres and markets operate all over India.Traditional outlets stock a particular range of cheap and popular items in contrast, modern clothing and footwear stores have modern products and attractive displays to decoy customers. However, with rapid urbanization, and changing patterns of consumer tastes and preferences, it is unlikely that the traditional outlets will survive the test of time. d) HOME FURNITURE & HOUSEHOLD GOODS Small retailers again dominate this sector. contempt the large size of this market, very few large and modern retailers have established alter stores for these products.However there is considerable potential for the entry or expansion of specialized retail chains in the country. e) DURABLE GOODS 34 The Indian durable goods sector has seen the entry of a large number of foreign companies during the post liberalization perio d. A greater variety of consumer electronic items and household appliances became available to the Indian customer. Intense competition among companies to sell their brands provided a strong impetus to the growth for retailers doing business in this sector. f) LEISURE & private GOODS Increasing household incomes due to better economic opportunities have ncouraged consumer expenditure on leisure and personal goods in the country. There are specialized retailers for each category of products (books, music products, etc. ) in this sector. Another prominent feature of this sector is popularity of franchising agreements between established manufacturers and retailers. 35 INDIAN RETAIL IS MOVING INTO back up GEAR 1) FIRST GEAR (Create awareness) * New retailers movement awareness * High degree of fragmentation * Real estate groups head start retail chains * Consumer expecting value for money as core value 2) SECOND GEAR (Meet customer expectations) Consumer-driven * Emergence of pure retailers * Retailers getting multi- spot and multi-format * Global retailers evincing interest in India 3) THIRD GEAR (Back end focus) * Category management * marketer partnership * Stock turns * Channel synchronization * Consumer acquisition * Customer relations management 4) FOURTH GEAR (Consolidation) * Aggressive rollout 36 * Organized retail acquitting significant share * Beginning of cross-border movement * Mergers and acquisitions For a start, these retailers need to invest much more in capturing more specific market.Intelligence as well as almost real-time customer purchase behaviour information. The retailers also need to make substantial investiture in understanding/acquiring some ripe(p) expertise in developing more accurate and scientific demand forecasting models. Re-engineering of product sourcing philosophies-aligned more towards collaborative planning and substitute should then be next on their agenda. The message, therefore for the existing small and medium i ndependent retailers is to closely examine what changes are taking place in their immediate vicinity, and analyze.Whether their current market offers a potential refurbishment of the area into a more modern multi-option destination. If it does, and most commercial areas in India do have this potential, it would be very useful to form a consortium of other such small retailers in that vicinity and take a pro-active approach to pool in resources and improve the overall infrastructure. 37 The next effort should be to encourage retailers to make some investments in improving the interiors of their respective establishments to make shopping an enjoyable experience for the customer.As the retail marketplace changes shape and competition increases, the potential for improving retail productivity and cutting costs is likely to decrease. Therefore, it will become important for retailers to guarantee a distinctive position in the marketplace based on value, relationships or experience. Fina lly, it is important to note that these strategies are not strictly independent of each other value is function of not just price, quality and service but can also be enhanced by Personalization and offering a memorable experience.In fact, edifice relationships with customers can by itself increase the quality of overall customer experience and thus the perceived value. But most importantly for winning in this intensely competitive marketplace, it is circumstantial to understand the target customers definition of value and make an offer, which not only delights the customers but also is also difficult for competitors to replicate. Challenges of Retailing in India Retailing as an industry in India has still a long way to go. To become a truly flourishing industry, retailing inevitably to cross the following hurdles Automatic approval is not allowed for foreign investment in retail. Regulations restricting real estate purchases, and cumbersome local laws. Taxation, which favours small retail businesses. Absence of developed supply chain and integrated IT management. 38 insufficiency of skilful work force. Low skill level for retailing management. Intrinsic complexity of retailing rapid price changes, constant menace of product obsolescence and low margins. The retailers in India have to learn both the art and science of retailing by closely following how retailers in other parts of the world are organizing, anaging, and coping up with new challenges in an ever-changing marketplace. Indian retailers must use innovative retail formats to enhance shopping experience, and try to understand the regional variations in consumer attitudes to retailing. Retail marketing efforts have to improve in the country advertising, promotions, and campaigns to attract customers building verity by identifying regular shoppers and offering benefits to them efficiently managing high-value customers and monitoring customer needs constantly, are some of the aspects which I ndian retailers need to focus upon on a more pro-active basis.Despite the presence of the basic ingredients required for growth of the retail industry in India, it still faces substantial hurdles that will retard and hold its growth in the future. One of the key impediments is the lack of FDI status. This has largely circumscribed capital investments in supply chain infrastructure, which is a key for development and growth of food retailing and has also constrained access to world-class retail practices. 39 Multiplicity and complexity of taxes, lack of proper infrastructure and relatively high cost of real estate are the other impediments to the growth of retailing.While the industry and the government are trying to remove many of these hurdles, some of the roadblocks will remain and will continue to affect the debonaire growth of this industry. Fitch believes that while the market share of organised retail will grow and become significant in the next decade, this growth would, h owever, not be at the same rapid pace as in other emerging markets. Organised retailing in India is gaining wider acceptance. The development of the organised retail sector, during the last decade, has begun to change the face of retailing, especially, in the major metros of the country.Experiences in the developed and developing countries prove that public presentation of organised retail is strongly linked to the performance of the economy as a whole. This is mainly on account of the reach and penetration of this business and its scientific approach in dealing with customers and their needs. In spite of the positive prospects of this industry, Indian retailing faces some major hurdles (see Table 1), which have stymied its growth. Early signs of organized retail were visible even in the 1970s when Nilgiris food), Viveks (consumer durables) and Nallis (sarees) started their operations. 40 However, as a result of the roadblocks (mentioned in Table 1), the industry remained in a rudi mentary stage. While these retailers gave the necessary ambience to customers, little effort was do to introduce world-class customer care practices and improve operating efficiencies. Moreover, most of these modern developments were restricted to south India, which is still regarded as a ? Mecca of Indian Retail KEY CHALLENGES 1) LOCATION Right Place, Right choice jam is the most important ingredient for any business that relies on customers, and is typically the prime consideration in a customers store choice. Locations decisions are harder to change because retailers have to either make sustainable investments to buy and develop real estate or commit to long term lease with developers. When formulating decision about where to locate, the retailer must refer to the strategic plan * check alternative trading areas. * Determine the type of desirable store location * Evaluate alternative specific store sites 2) MERCHANDISEThe primary terminal of the most retailers is to sell the r ight kind of merchandise and nothing is more central to the strategic thrust of the retailing firm. 41 Merchandising consists of activities tortuous in acquiring particular goods and services and making them available at a place, time and quantity that enable the retailer to reach its goals. Merchandising is perhaps, the most important function for any retail organization, as it decides what finally goes on shelf of the store. 3) PRICING Pricing is a crucial strategic variable due to its direct relationship with a firms goal and its fundamental interaction with other retailing elements.The importance of pricing decisions is growing because todays customers are looking for good value when they buy merchandise and services. Price is the easiest and quickest variable to change. 4) TARGET AUDIENCE Consumer the prime mover Consumer Pull, however, seems to be the most important driving factor behind the sustenance of the industry. The purchasing power of the customers has increased to a great extent, with the influencing the retail industry to a great extent, a variety of other factors also seem to fuel the retailing boom. 5) SCALE OF OPERATIONSScale of operations includes all the supply chain activities, which are carried out in the business. It is one of the challenges that the Indian retailers are facing. The cost of business operations is very high in India. 42 FactorsDescriptionImplications Barriers to FDIFDI not permitted in pureAbsence of global retailingplayers Franchisee arrangementLimited exposure to best allowedpractices Lack of IndustryGovernment does notRestricted availability of Statusrecognize the industryfinance Restricts growth and scaling up StructuralLack of urbanizationLack of awareness of ImpedimentsPoor transportation nfrastructure Consumer habit of buying saucily foods Administered pricing Indian consumers Restricted retail growth Growth of small, one- store formats, with unmatchable cost structure Wastage of almost 20%- 25% of farm produce High Cost of RealPro-tenant rent laws EstateNon-availability of government land, zoning restrictions Lack of clear ownership titles, high stamp duty (10%) Supply ChainSeveral plane sections like food Bottlenecksand apparel reserved for Difficult to find good real estate in terms of location and size High land cost owing to constrained supply Disorganized nature of transactionsLimited product range Makes scaling up 43 SSIs Distribution, logistics constraints restrictions of purchase and movement of food grains, absence of cold chain infrastructure Long intermediation chain difficult High cost and complexity of sourcing & planning Lack of value addition and increase in costs by almost 15% Complex TaxationDifferential sales tax ratesAdded cost and Systemacross statescomplexity of Multi-point octroidistribution Sales tax avoidance byCost advantage for smaller storessmaller stores through ax evasion Multiple Legislations compressed labour law governing hours of work, minimum wage paym ents Multiple licenses/clearances required CustomerLocal consumption habits PreferencesNeed for variety Cultural issues Limits flexibility in operations spikelet value in establishing chain operations adds to overall costs Leads to product proliferation Need to stock larger number of SKUs at store level Increases complexity in sourcing & planning Increases the cost of 44 store management Availability of Talent Highly educated class does not consider retailing a rofession of choice Lack of proper training ManufacturersNo increase in margins Backlash Lack of trained violence Higher mental testing and error in managing retail operations Increase in personnel costs Manufacturers refuse to dis-intermediate and pass on intermediary margins to retailers ORGANISED sell IN INDIA Organized retailing is spreading and making its presence mat in different parts of the country. The trend in grocery retailing, however, has been slightly different with a growth concentration in the South. How ever, the Mecca of retailing is doubtlessly Chennai.What was considered a traditional, conservative and cost-conscious market, proved to be the home ground for most of the successful retail names Food World, Music World, Health and Glow, Titan, Big Bazaar and Tanishq -to name a few. 45 The choice of Chennai as the retail capital has move many, but a variety of factors acted in its favour. Chennai, in spite of being a rapidly growing metropolis offers reasonable real estate prices, one of the most critical elements for the industry. Chennai has been witnessing a high industrial growth and ncreasing presence of the MNCs, both in the IT sector as well as outside it. The industrial boom has led to the emergence of new residential areas with aggregation of professionals as well as a rapid increase in the number of double-income households and growth of the nouveau riche/upper middle class with increased purchasing power. These have been combined with the increasing need for touch and aroma shopping (especially for the large migrant population). All the factors have acted favourably in nurturing the industry. Consumer- the prime mover A variety of factors seem to influence the growth in the retailing industry. Consumer Pull, however, seems to be the most important driving factor behind the sustenance of the industry. In this context, A. F. Ferguson & Co. had carried out a brief survey among consumers across income segments to understand their spending pattern. An analysis of the monthly purchase basketball hoop of the consumers surveyed indicated that the fair(a) monthly household spends on food and grocery related items varied across income segments. 46 For instance, in the case of upper income households, the average spend was around Rs 4,200 per month.As against this, the average spend in the case of a middle income household was around Rs. 2,850 and lower income households Rs. 1,250 per month. (This is computed from a sample of 100 customers having an avera ge family size of four. ) Based on the distribution of the more than 15 lakh households in Chennai across income segments and the average spend, a conservative estimate of the grocery retailing potential at Chennai will be around Rs. 300 crores. Besides increasing purchasing power, a variety of other factors also seem to fuel the retailing boom.With increase in double-income households and work women, there is an increasing pressure on time with very little time being available for leisure. In this scenario, consumers are seeking the convenience of one-stop shopping, whereby they could have better utility of time. They are also seeking speed and efficiency in processing, as a result. 4 Being more aware, consumers are on the look-out for more information, better quality and hygiene as well as increased customer service. These changes in consumer behaviour also augur well for the retailing industry.However, in India there are no uniform trends with respect to consumer buying behavio ur. There are visible differences in the shopping pattern of consumers across income segments as shown in the table. Organized retailing has definitely made headway in the upper class. However, even in this segment, items such as milk, fruits, vegetables and a significant portion of through-the-month purchases seem to be done at traditional outlets. The middle income class prefers shopping for processed food and personal care in supermarkets and fall back on traditional outlets for bulk shopping.Organized retail outlets seem to be associated with branded items/special purchases. Organized retailing does not seem to have made an impact on the lower class, except for curiosity shopping. The biggest question before organized retailers therefore, is whether this rightfully means a huge untapped potential for the organized retailers and whether the renascence in mindset going to be easy. Emerging trends 48 The single most important evolution that took place along with the retailing rev olution was the rise and fall of the dotcom companies.A sudden concept of non-store shopping emerged, which threatened to take away the potential of the store. More importantly, the very nature of the customer segment being addressed was almost the same. The computer-savvy individual was also a sub-segment of the store frequenting traffic. Internationally, the concept of net shopping is yet to be proven. And the poor financial performance of most of the companies offering virtual shopping has resulted in store-based retailing restitution the upper hand. Other forms of non-store shopping including various formats such as scroll/mail order shopping, direct elling, and so on are growing rapidly However, the size of the direct market industry is too limited to deter the retailers. For all the convenes. Once that it offers, electronic retailing does not campaign products where look and see attributes are of importance, as in apparel, or where the value is very high, such as jewellery, or where the performance has to be tested, as of consumer durables. 49 The most critical issue in electronic retailing, especially in a country such as ours, relates to payments and the various security issues involved.Retail management skills It is a fact that the retailing industry is in its starting manikin in our country. The benefits of organized retailing will only be felt once an equitable scale is achieved. This to a large extent depends on the store size, the walkthroughs, and bills per customer per year, average bill size and the revenue take in per sq. ft. But besides resources and bottom line, a variety of other aspects need to be in place for tasting success. The need for qualified and trained manpower is of utmost importance.The need for specialized skills is increasingly felt in the areas of Strategic management strategizing, targeting and positioning, marketing and site selection, among others Merchandise management trafficker selection, inventory management, pricing and so on Store management Layout, display, customer relationship, inventory management, etc. Administrative Management Human resources, finance, marketing and so on 50 With the need for specialized skill set, retailing has become a specialized area of knowledge and training.The RPG School of Retailing and the introduction of specialized retailing courses at various business schools, including the IIMs, stand testimony to this. Technology impact The other important aspect of retailing relates to technology. 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. Retailing is a technology-intensive industry.It is quoted that normal at least 500 gigabytes of data are transmitted via satellite from the 1,200 point-of-sales counters of JC P enney to its corporate headquarters. Successful retailers today work closely with their vendors to predict consumer demand, curve lead times, reduce inventory holding and thereby, save cost. Wal-Mart pioneered the concept of building a competitive advantage through distribution and information systems in the retailing industry. They introduced two innovative logistics techniques cross-docking and electronic data interchange.Today, online systems link point-of-sales terminals to the main office where detailed analyses on sales by item, classification, stores or vendor are carried out online. 51 Besides vendors, the focus of the retailing sector is to develop the link with the consumer. Data Warehousing is an established concept in the advanced nations. With the help of database retailing, information on existing and potential customers is tracked. Besides sharp what was purchased and by whom, information on softer issues such as demographics and psychographics is captured.Retaili ng, as discussed before, is at a nascent stage in our country. Most organized players have managed to put the front ends in place, but these are relatively easy to copy. The relatively complicated information systems and underlying technologies are in the process of being established. Most grocery retailers such as Food World have started tracking consumer purchases through CRM. The lifestyle retailers through their affinity clubs and support clubs are establishing their processes.The traditional retailers will always continue to exist but organized retailers are working towards revamping their business to obtain strategic advantages at various levels market, cost, knowledge and customer. 52 With differentiating strategies value for money, shopping experience, variety, quality, discounts and advanced systems and technology in the back-end, change in the equilibrium with manufacturers and a thorough understanding of the consumer behaviour, the ground is all set for the organized r etailers.The bottom line could look brighter, after all It would be important to note, however, that the retailing industry in India is still a protected industry. It is one of the few sectors which still have restrictions on FDI. Given the current trend in liberalization, it will not be long before the retailing sector is also impel open to international competition. This will see a further segregation of the international retailing brands and the domestic retailers, thereby injecting much greater vim into the market. That will be when the real action will begin.In the second article on retailing, we uncover a model for retailers to handle the emerging scenario. Indias retail sector is going to transform and with a three-year compounded annual growth rate of 46. 64 per cent, retail sector is the fastest growing sector in the Indian economy. Traditional markets are transforming themselves in new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Western-style malls have begun appearing in metros and near metro cities, introducing the Indian consumer to a new shopping experience.