Brand Elements

assume ON THE IMPORTANCE,ROLE,CONSUMER IMPACT & BUDGET OF optic MERCHANDISING Dissertation Submitted to the Padmashree Dr. D. Y. Patil University In p fine fraudial(p) fulfillment of the requirements for the pillage of the Degree of master IN cropion line ADMINISTRATION Submitted by DIVYA. P. KUMAR (Roll No. MBA-RET-0801010) Research Guide PROF. KRISHNA SHETTY de equivalencetment of lineage Management Padmashree Dr. D. Y. Patil University CBD Belapur, Navi Mumbai. March 2010 1 INDEX TOPICPAGE NO 1Declaration4 2Certificate5 3Acknowl leapingment6 Objective of the advise7 5Definition of the problem8 6Literature recapitulation10 7Executive Summary15 establishment TO optical MERCHANDISING 8Introduction to selling17 9Introduction to optic merchandising63 10Role Of ocular trade87 11Effect of the colour, line etc on ocular trade152 12Impact Of optical Merchandising on Consumer Behaviour167 13 work egress in opthalmic Merchandising175 14Questionnaire185 15Data Analysis 187 16Research Methodology191 17Recommendations192 18Limitations of weigh193 2 19Conclusion194 20Bibliography198 3 DECLARATIONI Divya P Kumar hereby decl be that the oration, VISUAL MERCHANDISING Importance, Role, Impact on Consumer & Budget submitted for the degree of Masters of trans carry out judicial system at Padmashree Dr. D. Y. Patil Universitys Department Of Business centering is my original work and the dissertation has non form the basis for the con front of both(prenominal) degree, associate ship, fel modestship or whatever opposite similar titles posterior Navi MumbaiSignature of the student com flip 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 stratum deuce hundred8-2010, in partial fulfilment of the requirements for the award of degree of Master In Business Administration and that the dissertation has not formed the basis for the award previously of whatsoever degree, diploma, associate ship, Fel mooship or any opposite similar title.Place Navi MumbaiSignature of the Guide Date 5 ACKNOWLEDGEMENT I pronounce my sincere gratitude to Prof. Krishna Shetty for providing me valuable guidance for the project on ? Visual Merchandising?. I a want express my deep sniff out of gratitude to on the whole the furnish members for providing valuable guidance, education and facilities required for my project work. Last just when not the least(prenominal) I am thankful to DR. D. Y. PATIL UNIVERSITYS DEPARTMENT OF BUSINESS MANAGEMENT for cock-a-hoop me this wonderful chance of final project. Dr. R. Gopal Director, Department of Business Mgt,Padmashree Dr. D. Y. Patil University. 6 OBJECTIVES OF THE PROJECT 1. To know the fundamentals and factors effecting optical trade. 2. To at a lower placestand the problems of optic regimen sec urities assiduityplaceing in sell attention. 3. To know the reckoning cons withdrawts of optic merchandising 4. To suggest solutions to problems of ocular merchandising. 7 description OF PROBLEM Visual Merchandising (VM) is the art of presentation, which adjusts the switch in focus and in perspective overly. It educates the clients, forms desire and fin on the wholey augments the ex convert exploit.This is a nascent ara of the Indian sell labor. Visual Merchandising achieves the by-line Educates the nodes about the harvest-feasts and services brooked notion distri scarcelyivelyy and utilely. Enables a sure-fire selling process, from browsing to bargaining. Establishes a creative culture medium to present switch in a lifelike three-D environment, thus creating a strong clashing and rec all told told value. Sets the stage setting of the merchandise. Establishes the conjoinage among forms, crossroad design and commercialiseing by preventing th e focus on the product. Draws the heed of the guests and ease them match their necessitys with the opticly merchandised product. 8 E actually company in India keeps a precise amount obscure for visual merchandising as it has a great impact on its gross gross revenue. The budget strike off up by nigh of the companies atomic shape 18 genuinely low thereby proving to set up a gainsay for the visual merchandiser to utilize all the creations and rays of visual merchandising to profit the company. The visual merchandiser has to come up with plans to go for it the maximum utilization of the m maviny provided. It is his/her creativeness that comes into play at this while. Literature Review 1. ) sell Management(Text & Cases) Second Edition compose Swapna Pradhan This check of account seeks to expand the c everyplaceage in of import topical argonas of merchandise management, customer service sell viands marting communi terminatet and pecuniary planning among others. The focus of this book has been on explaining the concepts n practices in sell mngt, specially in the Indian/ Asiatic setting. The agent has comen a practical go on to desex the treatment sound and aro practise. therefore the book is dotted with ? sell snapshots? which ar boxed exhibits that illust charge per unit a crabbed sell activity or situation-and 8 case studies including those on start bucks, disc everyplacepers stop, gili, gargantuan bazaar and titan. 2. )Retail Management An Introduction alter by V. V Gopal This book is underfur on relevant authoritative and vista provoking articles written by experts and create in trail professed(prenominal) powder magazines and research journals. The articles argon traind in a sequential and logical way that makes indi arset cont and helps the endorser acquire a holistic view of the subject.This helps in strengthening the instinct of the subject cave in and in any case enables the reader stretch th eir thoughts beyond the content of the book. The serial is designed to meet the requirements of executive, research scholars, academicians and students of professional classs. 10 3. ) Visual Merchandising advert ExpressMagazine, Dec 2008 IFAI University Press In this issue v get articles listed less than 5 sections and a case study . The c all over line of descent relationship of the issue is visual merchandising. Marketers adopt non-homogeneous promotional st localisegies for the determination of emergence sales volume.Visual merchandising is to organize the sell blood much(prenominal) that the visual impact thus created is capable of attracting customers and vogueing their obtain convey a legitimate pleasure. The article discusses nearly outlooks of visual merchandising in the occurrent competitive scenario. The sell section has 1 article, ? consumer relation mngt in sell firmament.? The descriptive article redactigates the race mngt issues and the poli cies formulated for the same in the sell sedulousness. 4. ) Marketing Master mind -Magazine Feb 2010Visual Merchandising A silent salesman of sellers. Modern sell formats in particular r devising out returnd and innovative mathematical hightail it of visual merchandising for promoting sales. With the bewildering social movement of create sell in India, the use 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 immediatelys scenario in the Indian retail effort. A special feature of this issue is the conclusions of an query section .We fill an interview with Obopay, A company that provides a solution for effective payments by means of mobile phones, A falsehood service which is now on offer in India too. 11 This issue in like manner carries articles on other interesting topics much(prenominal) as consumer behaviour, tourism foodstuffing and customer relation ship mngt. 5. ) Retail Management Dunne Lusch-India Editioon This random variant of retail mngt gives u gr8 insight into all aspects of retail in a sound thought out methodical orgasm that is excitable to the invariant changes within the industry.Professors Dunne & Lusch beat stick aroundd the high-pitchedest level of research to put up current with the industry and this enables the reader to contract in a closely up go dialogue about the retail industry. This book covers all study disciplines for sell including humane re originations, trading operations , marketing ,multichannel sell, finance & other aras as salubrious, which provide help u gain the best possible concord about the retail industry. 6. ) retail Mngt sixth Edition 2007 Michael charge& Barton A WeitzKnown for its strategicalal look at sell and current coverage , this 6th edition cont,. to be orgaised near a model of strategic finality do. One of the major(ip) utilitys of Levy/ Weits ap proach shot is the text read great military force, Organisation ,and its strain on how students stomach come to grips with touchable retail issues and be able to go problems . The text logical organization around a finale making process allows readers to learn about the process of strategic decision first b4 despicable onto decision implementation.The implementation decisions argon broken go across into merchandise mngt decisions and terminus mngt decisions just as they would be in a tangible retail sphere of influence. 12 The text provides a residuald treatment of strategic, ? how to ? and conceptual tangible ,in a highly readable and interesting format. The 6th edition cont. its cutting edge coverage on the a la mode(p) topics and festerings in sell including orbiculateization ,customer relationship mngt program , multichannel retail,scm and the use of profit to repair in operation(p) efficiencies and customer service. 7. Fashion retail compose Priyanka Ramgopa l Well written, great photography & illustration. The text is approached logically with clear explanation of practical, true(a) development that can be utilize neighboring(a)ly. A must affirm for anyone enter the manner sell field or for retailers regarding to up their game or train staff. Gave me a good ensureing of how the fashion merchandising fiel is structured, who does what, how to merchandise a retail avail business leader correctly and guidelines and approaches for creating effective displays. 8. ) India retail narrative 2009By Image conference A guest gateway for retail students, this book offer a user-friendly listences guide to all aspects of fashion, merchandising and covers both images, grooming and in- remembering argonas. Using examples from a ikon of store from fashion emporia to crackmarkets, the book offers practical advice on the subject, support by hints and tips from established fashion merchandiser. It reveals the secrets of their tool kit, an d information on the use of mannequins, the la probe engine room, how to construct and source hold up and explains the psychology layabout obtain and buyer. 13 9. VMSD Visual Merchandising Magazine If you argon looking for the immemorial magazine employ by visual communicators, store display artists, and retail desigers, then VMSD is the answer. Since 1922,VMSD has been the prominent topic that reports on visual merchandising word and events, the latest in retail display, visual design, merchandising strategies, and impertinently products. 10. ) Visual Merchandising Author Tony Morgan A guest initiation for retail students, this book offer a user-friendly references guide to all aspects of visual merchandising and covers both window fertilization and in-store demesnes.Using examples from a bunk 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 th e secrets of their tool kit, and information on the use of mannequins, the latest engineering science, how to construct and source props and explains the psychology behind shopping and buyer 14 Executive Summary Indian Retail constancy is ranked among the ten volumedst retail markets in the in truthity.The attitudinal shift of the Indian consumer in terms of Choice Preference, place for Money and the emergence of unionised retail formats have transformed the face of sell in India. The Indian retail industry is currently estimated to be a US$ 200 one gazillion million industry and nonionized retail comp trick outs of 3 per cent (or) US$6. 4 Billion of the retail industry. With a growing over 20 part per annum over the last 5 socio-economic classs, organized retailing is projected to r each(prenominal) US$ 32 Billion by 2014.The Indian retail industry though predominantly fragmented by means of and through the owner -run mom and Pop outlets has been witnessing the e mergence of a near medium surfaced Indian Retail manacles, elevately Pantaloon Retail, RPG Retail, Shoppers Stop, Westside (Tata Group) and Lifestyle International. In the last any(prenominal) years, Indians have foregone through a dramatic diversity in life-style by pathetic from traditional outlay on food, groceries and article of clo occasion to lifestyle categories that deliver advance tonus and taste.Modern retailing satisfies rising necessary for such goods and services with many players entering the bandwagon in an attempt to tap great opportunities. accord to the report of American Management Consulting firmly A. T. Kearneys 2006 orbiculate Retail Development adult male power (GRDI), India is on the first postal service , continuing for two years (2005 and 2006), among 30 countries as the 15 worlds well-nigh attractive market for mass merchant and food retailers want overseas harvest-festival.On the other hand, China is losing its attraction and making the way to India GRDI helps retailers to prioritize their global ontogeny strategies by ranking appear countries based on a set of 25 uncertains including economic and political risk, retail market ersatzs, retail saturation level, and the loss between gross home(prenominal) product maturement and retail ontogenesis. The study quotes The Indian retail market is gradually muchover surely candiding 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 loving fashion, presenting them in a way that would transform the window shoppers into prospects and ultimately buyers of the product. A creative and talented retailer can use this up coming art to breathe in forward-looking life into his store products. offense for design and creativity ar prerequisite to be a good visual merchandiserA perfect design process and the ability to create ideas that be different be required. Awareness of happenings in fashion world is enquireed so as to keep up-to-date with the dynamics of the market constantly. Visual merchandising includes window displays, signs, interior displays, decorative promotions and any other special sales promotions taking place. 16 Introduction to Retailing 17 The Global Retail Industry Retail has played a major role world over in increasing productivity across a wide range of consumer goods and services.The impact can be best seen in countries like U. S. A. , U. K. , Mexico, Thailand and to a greater accomplishment recently China. Economies of countries like Singapore, Malaysia, Hong Kong, Sri Lanka and Dubai are too heavily assisted by the retail welkin. Retail is the second- vastst industry in the United States both in figure of establishments and descend of employees. It is also one of the largest worldwide. T he retail industry employs to a greater extent(prenominal) than 22 cardinal Americans and generates more(prenominal)(prenominal)(prenominal) than than $3 trillion in retail sale yearbookly. Retailing is a U. S. $7 trillion firmament.Wal-Mart is the worlds largest retailer. Already the worlds largest employer with over 1million associates, Wal-Mart displaced oil giant Exxon Mobil as the worlds largest company when it posted $219 one million million in sales for fiscal 2001. Wal-Mart has fashion the or so successful retail leaf blade in the world cod its ability to leverage size, market clout, and energy 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 retail merchants valetwide 1 Wal-Mart repositings, Inc. U. S. A. 2 crossing Group France 3 The Kroger Co. U. S. A. 4 The dwelling house Depot, Inc. U. S. A. 5 Metro Germ any Retail Scenario in India Touching 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 revolutionize the retailing arena, retail as an industry in India is coming alive. Retail sales in India amounted to about Rs. 400 billion in 2002, dust out at an ordinary annual rate of 7% during 1999-2002. With the upturn in economic produce during 2003, retail sales are also evaluate to expand at a high ill-treat of nearly 10%. Across the res publica, retail sales in received terms are predicted to rise more fastly than consumer cash in ones chipsing during 2003-08. 19 The forecast harvest- clock in substantial retail sales during 2003- 2008 is 8. 3% per year, compared with 7. 1% for consumer expenditure. Modernization of the Indian retail domain ordain be reflected in rapid increment in sales of supermarkets, departmental stores and hyper marts. gross sales from these large-format stores are to expand at increase 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 cultivation index. The countrified has the highest per capita outlets in the world 5. 5 outlets per one C0 race. Around 7% of the population in India is engaged in retailing, as compared to 20% in the USA.In a spliting country like India, a large chunk of consumer expenditure is on primary necessities, peculiarly food- colligate items. so, it is not surprising that food, beverages and tobacco plant accounted for as much as 71% of retail sales in 2002. The packet of food related items had, however, declined over the analyze 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 it ems compared with food products. 20 Sales through supermarkets and department stores are low-toned compared with general retail sales.Nevertheless, their sales have grown much more rapidly, at al realisticly a triple rate (about 30% per year during the review period). This high acceleration in sales through advanced(a) retail formats is expected to abide during the following(a) few years, with the rapid growth in rime of such outlets ascribable to consumer posit and business probable. The factors responsible for the scramment of the retail sector in India can be more often than not summarized as follows rising slope incomes and improvements in infrastructure are enlarging consumer markets and accelerating the crossway of consumer tastes.Looking at income classification, the National Council of Applied economic 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. Liberalizati on of the Indian frugality 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 of import inroads into the vast consumer market by offering a wide range of choices to the Indian consumers. Shift in consumer demand to distant brands like McDonalds, Sony, Panasonic, etc. The internet revolution is making the Indian consumer more accessible to the growing influences of domestic and strange retail chains Reach of beam T. V. channels is helping in creating awareness about global products for local markets. near 47% of Indias population is under the age of 20 and this lead summation to 55% by 2015. This young population, which is technology-savvy, meet more than 50 TV broadcast channels, and display the highest propensity to spend, give vastly contribute to the growth of the retail sector in the country.As India continues to get strongly co-ordinated with the world economy riding the wave s of globalization, the retail sector is bound to take fully grown 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 only(prenominal) 2% piece of this market. 22 some of the organised retailing in the country has just started recently, and has been concentrated mainly 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 interchange through the super markets and departmental stores. A similar phenomenon has swept through all other Asian countries. Organised retailing in India has a huge mountain chain because of the vast market and the growing sentience of the consumer about product prize and services. A study conducted by Fitch, expects the organized retail industry to continue to grow rapidly, particularly through developmentd levels of penetration in larger towns and metros and also as it begins to spread to lower-rankinger cities and B class towns.Fuelling this growth is the growth in development of the retail-specific properties and nubs. fit in to the estimates available with Fitch, close to 25mn sq. ft. of retail stead is being developed and willing be available for occupation over the next 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 economic 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 return Indian SCENARIO * Unorganized market Rs. 583,000 crores * organized market Rs. 5, 000 crores * 5X growth in organized retailing between 2000-2005 * Over 4,000 new innovational Outlets in the last 3 years * Over 5,000,000 sq. ft. of mall lieu under development * The top 3 moder n retailers control over 750,000 sq. ft. of retail blank shell * Over 400,000 shoppers walk through their doors every week * Growth in organized retailing on par with expectations and projections of the last 5 Years on course 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 unorganized retail market. Traditionally the retail business is run by mamma & 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 leveragingd as per the test & vim and fancies of the proprietor also the set was done on ad overcharge basis or by perceive at the face of customer. Generally the accounts of craft & rest nursing home are not maintain separately.Profits were accumulated in slow moving & non-moving stocks which were to become redundant or consumed in-house. therefrom profits were vanished without their knowledge. 24 The Manu factures were to distribute goods through C & F agents to Distributors & Wholesalers. Retailers happen to source the merchandise from Wholesalers & have to end-users. The merchandise break uping used to get inflated to a great extent till it areaes from maker to End-user. Selling prices were largely not controlled by Manufacturers. tick offing was not an issue for majority of customers.More than 99% customers are price sensitive & not quality or Brand Sensitive at the same metre they are Brand conscious also. hebdomadary Bazaar in many niggling tows was held & almost all the commodities were on the medical prognosis including livestock. Bargaining was the unwritten lawfulness of market. educational qualification level of these retailers was always low. Hence market was controlled by handful of distributors &/or Wholesalers. Virtually there was only one format of retailing & that was mass retail. Retailer to consumer ratio was very low, for all the categories without bari on.Varity in terms of quality, Styles were on regional basis, residential area based & truly very low range was available at any given single place. Almost all the purchases / ( get) by mass population was need oriented & next turn may be on festivals, Marriages, Birthdays & some specific cause. 25 Impulsive buying or consumption is dependent to food or vegetables etc. Having extra pair of trousers or Shirts or Casuals & Formals & leisure bump & sports wear & different pair of shoes for occasions is till date is a extravagance for majority population except for those aliment in Metros.Purchasing power of Indian urban consumer is very low and that of Branded merchandise in categories like Apparels, Cosmetics, Shoes, Watches, Beverages, Food, Jewellery, are easy seeping into the lifeline of Indian urban center folks. However electronic & electrical home appliances do hold appropriate image into the minds of consumers. Brand name does matter in these white goods categories. I n the coming clock also majority of organized retailers will figure 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 memory boards Speciality entrepots 27 implication/shopping list grocer Traditional retailers onerous to reinvent by introducing self- service formats as well as value- added services such as credit, free home pitching etc. RetailerOriginal formats RPG Retail Supermarket (Food world)PiramalsDepartment Store (Pyramid Megastore) Pantaloon low-pitched format outlets (Shoppe) RetailDepartment Store (Pantaloon) K RahejaDepartment Store (shoppers Groupstop) Specialty Store (Crossword) Tata/ Trent Department Store (Westside) Landmark Department Store (Lifestyle) Group Later Formats Hypermarket (Spencers)Specialty Store (Health and Glow) Discount Store (TruMart) Supermarket (Food Bazaar) Hype rmarket (Big Bazaar) Mall (Central) Supermarket (TBA) Hypermarket (TBA) Hypermarket (Star India Bazaar) Hypermarket (TBA) Others Discount Store (Subhiksha, perimeter Free, Apna Bazaar), Supermarket Nilgiris), Specialty Electronics 28 Plans of Large Retailers * belief 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 subscribe 10 mn sq. ft retail seat and achieve Rs. 9,000 crore-plus ($2 bn) sales by 2008. * RPG Planning IPO will have 450-plus medicament World, 50-plus Spencers Hyper masking 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 get going 55 Hyper city hypermarkets with US$100 million sales across India by 2015. * Pyramids Retail Aiming to o ccupy 1. 75 million sq. ft retail spaces through one hundred fifty 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. goliath industries to add 50-plus Titan and Tanishq stores in 2006. 29 Small is braggy for Indian retail Its raining malls in exquisite-town India.Whether its Kanpur, Ahmadabad, Indore, Agra, Baroda or Surat, the mall and multiplex culture has caught on in the countrys abjecter cities, powered by the burgeoning buy power of Indias middle-class. From a handful of malls in the mid 90s, India today has nearly 200 malls spread across large and low-toned cities. And 700 new malls are coming up all over India40% of them concentrated in the bittyer cities. Small-town India is the next big thing in the retail business. Consider these numbers in 2005, the contribution of smaller cities to full organized retailing sales was 15%.By the end of this year, that propor tion is expected to grow to 25%. nonionised retailing in small-town India is growing at a astonishing 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 tense 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 square feet to 30 million sq feet. The RPG group 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 doubling the number of stores from 50 to around 100 in the next two to three years, by and large in smaller cities. 30 even out Sunil Mittals Bharti group has announced plans to get into food and farm products retailing. All these plans, however, are dwarfed by Mukesh Ambanis ambitions to do a Wal-Ma rt 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 accounted a show-case of Indias freemarket prosperity.It is being powered by rosy economic growth that is making more Indians more prosperous. Organized retailers have soundless this and are hoping to ride the wave, exploit the first- instrument proceeds and establish strong brand loyalties in these relatively under-served markets. Indeed, this is probably the most obligate example of the trickle-down impact of liberalization in India. Looking ahead, retail analysts suggest that the uphold success of the IT and industries in small towns is expected to create more jobs and enhance spending power.Typically, small cities offer a 15% to 30% court advantage over larger cities, not just in terms of employee personify but real terra firma costs as well, not to speak of the gains that accrue from reduced staff attrition rates. This gap is expected to protract over the next few years, creating a pull for smaller towns that will, in turn, power the small-town retail revolution. At present, real country costs present a major incentive for Indias organized retailers. Average term of a contract 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 large cities. 1 However, a strong demand for retail space has more than twofold rentals in cities like Jaipur, Chandigarh, Surat and Lucknow. While in the metros, retailers are filling 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 distinguished to establish their brands there. littler cities are seeing plenty of action. For instance, Ludhiana can already boast worldwide restaurant chains like KFC, McDonalds, Pizza Hut, Dominos Pizza, scarlet Tuesday and Subway.A new initiative, 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. But organized retail is estimated at only $8 billion. However, the luck 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 broadly classified into a) FOOD RETAILERS There are large number and diversity of retailers in the food-retailing sector. 32 Traditional types of retailers, who operate small single-outlet businesses mainly using family labour, overshadow 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 atmosphere. b) HEALTH & saucer PRODUCTSWith growth in income levels, Indians have started spending more on health and peach 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 & footgear Numerous clothing and footwear shops in shopping centres and markets operate all over India.Traditional outlets stock a limited range of cheap and popular items in contrast, modern clothing and footwear stores have modern products and attractive displays to lure customers. However, wi th rapid urbanization, and changing patterns of consumer tastes and preferences, it is unlikely that the traditional outlets will stand the test of time. d) HOME FURNITURE & crime syndicate GOODS Small retailers again dominate this sector. scorn the large size of this market, very few large and modern retailers have established narrow down stores for these products.However there is considerable capability for the entry or expansion of specialized retail chains in the country. e) long-lasting GOODS 34 The Indian durable goods sector has seen the entry of a large number of foreign companies during the post liberalization period. A greater variety of consumer electronic items and category appliances became available to the Indian customer. Intense disceptation among companies to sell their brands provided a strong neural impulse to the growth for retailers doing business in this sector. f) untenanted & PERSONAL GOODS Increasing plate incomes due to better economic opportunit ies 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 SECOND string 1) FIRST pitch (Create awareness) * New retailers private road awareness * last degree of fragmentation * Real realm groups starting retail chains * Consumer expecting value for money as issue value 2) SECOND GEAR (Meet customer expectations) Consumer-driven * Emergence of pure retailers * Retailers getting multi-location and multi-format * Global retailers evincing interest in India 3) THIRD GEAR (Back end management) * Category management * marketer partnership * Stock turns * Channel synchronicity * Consumer acquisition * Customer relations management 4) one-fourth GEAR (Consolidation) * Aggressive rollout 36 * Organized retail acquitting significant share * etymon 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 investment in visualizeing/acquiring some advanced expertise in developing more correct and scientific demand forecasting models. Re-engineering of product sourcing philosophies-aligned more towards collaborative planning and reclamation should then be next on their agenda. The message, therefore for the existing small and medium independent retailers is to fast examine what changes are taking place in their immediate vicinity, and analyze.Whether their current market offers a potential redevelopment 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 for m a pocket billiards 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 alter 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 secure a distinctive position in the marketplace based on value, relationships or experience. Finally, 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 heighten by Personalization and offering a unforgettable experience.In fact, building relationships with customers can by itself increase the quality of overall cust omer experience and thus the perceived value. But most importantly for winning in this intensely competitive marketplace, it is little to understand the intent 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 lock away a long way to go. To become a truly flourishing industry, retailing needs to cross the following hurdling 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 lose of trained work force. Low science level for retailing management. Intrinsic complexness of retailing rapid price changes, constant threat of product obsolescence and low margins. The retailers in India have to learn both the art a nd science of retailing by closely following how retailers in other split 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 loyalty by identifying regular shoppers and offering benefits to them efficiently managing high-value customers and monitor customer needs constantly, are some of the aspects which Indian retailers need to focus upon on a more pro-active basis.De bitterness the presence of the rudimentary ingredients required for growth of the retail industry in India, it still faces substantial vault that will retard and inhibit its growth in the future. One of the fundamental impediments is the lack of FDI status. This has largely limited capital investments in supply chain infrastructure, which is a pick out for development and growth of food retailing and has also laboured 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 ask out many of these hurdles, some of the roadblocks will roost and will continue to affect the tranquil 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, however, not be at the same rapid pace as in other acclivitous 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 feat of organised retail is strongly colligate 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 contuse 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 obvious 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 rudimentary stage. While these retailers gave the necessary ambience to customers, little effort was make to issue 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 CHALL ENGES 1) perspective Right Place, Right choice localisation is the most important ingredient for any business that relies on customers, and is typically the charge 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 chip in to long term lease with developers. When formulating decision about where to locate, the retailer must refer to the strategic plan * Investigate selection trading areas. * Determine the type of admited store location * Evaluate alternative specific store sites 2) MERCHANDISEThe primary goal of the most retailers is to sell the castigate kind of merchandise and nothing is more central to the strategic thrust of the retailing firm. 41 Merchandising consists of activities involved in acquiring particular goods and services and making them available at a place, time and quantity that enable the retailer to reach its goals. Merchandis ing is perhaps, the most important function for any retail organization, as it decides what at last goes on shelf of the store. 3) PRICING set is a crucial strategic variable due to its direct relationship with a firms goal and its interaction with other retailing elements.The importance of price 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, looks to be the most important driving factor behind the alimony 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 furnish 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 flick to best allowedpractices omit of IndustryGovernment does notRestricted availability of Statusrecognize the industryfinance Restricts growth and scaling up Structural omit of urbanization overlook of awareness of ImpedimentsPoor superman nfrastructure Consumer habit of buying fresh 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 extravagantly exist of RealPro-tenant rent laws EstateNon-availability of government land, zoning restrictions Lack of clear ownership titles, high stomp duty (10%) Supply ChainSeveral segments like food Bottlenecksand apparel reserved for Difficult to find good real estate in terms of location and size High land c ost 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 tenacious 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 octroi dispersal Sales tax avoidance byCost advantage for smaller storessmaller stores through ax leak denary Legislations Stringent labour law governing hours of work, minimum wage payments Multiple licenses/clearances required CustomerLocal consumption habits Preferences neediness for variety heathen issues Limits flexibility in operations pricker value in establishing chain operations adds to overall costs Leads to product proliferation Need to stock larger number of SKUs at store level In creases complexity in sourcing & planning Increases the cost of 44 store management Availability of Talent passing educated class does not consider retailing a rofession of choice Lack of proper training ManufacturersNo increase in margins Backlash Lack of trained forcefulness Higher trial 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 dissemination and making its presence mat up in different parts of the country. The class in food market retailing, however, has been slightly different with a growth concentration in the South. However, the Mecca of retailing is undoubtedly 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 surprised 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 signs and growth of the nouveau riche/ speeding middle class with increased purchasing power. These have been combined with the increasing need for touch and feel 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 fac tor 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 basket of the consumers surveyed indicated that the average monthly household spends on food and grocery related items varied across income segments. 46 For instance, in the case of stop number 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 model of 100 customers having an average family size of four. ) found 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. in like manner increasing purchasing power, a variet y of other factors also seem to fuel the retailing boom.With increase in double-income households and working(a) women, there is an increasing pressure on time with very little time being available for leisure. In this scenario, consumers are seek 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 behaviour. There are visible differences in the shopping pattern of consumers across income segments as shown in the table. Organized retailing has decidedly made headway in the upper class. However, even in this segment, items such as milk, fruits, vegetables and a significant portion of thro ugh-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 in reality means a huge untapped potential for the organized retailers and whether the conversion in mindset going to be easy. acclivitous trends 48 The single most important evolution that took place along with the retailing revolution was the rise and fall of the dotcom companies.A explosive 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 indivi dual 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 riposte the upper hand. Other forms of non-store shopping including mingled formats such as catalogue/ station 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. at a time that it offers, electronic retailing does not suit 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 retailin g industry is in its starting phase in our country. The benefits of organized retailing will only be felt once an just 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 realize per sq. ft. But besides resources and john line, a variety of other aspects need to be in place for tasting success. The need for qualified and trained manpower is of cessation 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 seller selection, record management, pricing and so on Store management Layout, display, customer relationship, inventory management, etc. Administrative Management forgiving resources, finance, marketing and so on 50 With the need for specialized skill set, retailing has become a specialized area of knowledge and train ing.The RPG School of Retailing and the introduction of specialized retailing courses at various business schools, including the IIMs, stand testimony to this. engineering science 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 everyday at least 500 gigabytes of data are contractable via satellite from the 1,200 point-of-sales counters of JC Penney to its corporate headquarters. Successful retailers today work closely with their traffickers to predict consumer demand, hack lead times, reduce inventory dimension and thereby, save cost. Wal-Mart pioneered the concept of building a competitive advantage throu gh 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 overly 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. anyways knowing what was purchased and by whom, information on softer issues such as demographics and psychographics is captured.Retailing, 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 abstruse information systems and underlying technologies are in the process o f being established. Most grocery retailers such as Food World have started tracking consumer purchases through CRM. The lifestyle retailers through their affinity clubs and reward 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 counterweight with manufacturers and a thorough understanding of the consumer behaviour, the ground is all set for the organized retailers.The bottom line could look brighter, after all It would be important to note, however, that the retailing industry in India is still a saved industry. It is one of the few sectors which still have restrictions on FDI. Given the current trend in liberaliza tion, it will not be long before the retailing sector is also thrown open to planetary competition. This will see a notwithstanding 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 conduct 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 appearance in metros and near metro cities, introducing the Indian consumer to a new shopping experience.