INTR?DU?TI?N we talk ab?ut the retail industry in

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Last updated: March 23, 2019

INTR?DU?TI?NRetailing as we ?an say is the sale ?fg??ds ?r assets fr?m a fixed ?r parti?ular pla?e, su?h as a department st?re,in small quantities f?r dire?t ??nsumpti?n by the pur?haser. Retailers are atthe end ?f the supply ?hain. Vend?rs ?f pr?du?ti?n pr?du?ts ??nsider the retailpr??ess a ne?essary part ?f their ?verall distributi?n strategy as retailing pr?videsthem a rea?h t? the market with?ut whi?h the ??mpany ?r pr?du?t has n? life. Gl?bally,the ??ntributi?n ?f retail se?t?r t? the w?rld’s GDP is alm?st ab?ut 27%. N?w, if we talk ab?ut the retailindustry in India, we ?an say that it is und?ubtedly ?ne ?f the fastest gr?wingretail industries in the w?rld. Being the largest ?f all industries and a???untingab?ut 10% ?f the ??untry’s GDP, it empl?ys ab?ut 8% ?f the w?rkf?r?e. In India,there has been seen a drasti? ??mmer?ial rev?luti?n in terms ?f pur?hasing behavi?ur?f ??nsumers that is a m?dernizati?n and devel?pment fr?m sh?pping malls t?multi-st?rey sh?pping malls that ?ffer sh?pping, entertainment and f??d under ?ner??f. It is be?ause ?f this trend that the retail se?t?r is witnessing a rev?luti?nlike many new f?rmats markets su?h as hypermarkets, supermarkets and departmentst?res.

India was als? the main supply destinati?n in the w?rld in 2016-17 andparti?ipati?n in this ?ateg?ry is 55 per?ent. In India, mu?h ?f the middle ?lassand even the untapped retail market is an attra?tive f?r?e f?r all retailgiants w?rldwide. ?ur a?tive p?pulati?n with an average age ?f bel?w 25 years,al?ng with emerging ?pp?rtunities in the retail se?t?r, is ?ne ?f the main gr?wthfa?t?rs in the Indian retail se?t?r. Gr?wth in the retail se?t?r is p?sitively expe?ted,as many new entrepreneurs are entering the retail se?t?r. The t?tal retail industryis estimated at 9 lakh ?r?re, ?f whi?h the ?rganized se?t?r represents ?nly 9 per?ent,indi?ating a large p?tential market ?pp?rtunity. India’s retail se?t?r is experien?inga??elerated gr?wth and retail devel?pment is ???urring als? in Tier-II and Tier-III?ities and n?t ?nly in large ?ities and metr?p?litan areas, whi?h pe?ple presumeit t? be gr?wing.

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The pur?hasing p?wer ?f the ??nsumer plays an imp?rtant r?lein the de?isi?n making ?r the lifestyle ?f the pe?ple and here we ?an see thatthe pur?hasing p?wer ?f the Indian ??nsumer is gr?wing in ?ateg?ries su?h as ?l?thing,??smeti?s, f??twear, wat?hes, drinks, f??d and even jewellery. Due t? the expansi?n?f the middle men f?ll?wing their pur?hasing p?wer and the ease ?f d?ing businesswhere there is a simplified tax stru?ture after the intr?du?ti?n ?f the G??dsand Servi?e Tax, India ?an f?resee and expe?t gr?wth in the Retail Industry. MARKET SIZE AND ?HARA?TERISTI?S MARKET SIZE ?F THE INDUSTRY The Indian retail industry is ?ne ?f the fastest gr?wingindustry in the w?rld. India’s retail se?t?r is expe?ted t? gr?w t? $ 1,100billi?n in 2020, fr?m $ 672 billi?n in 2017.

 India is the fifth fav?rite retail destinati?n inthe w?rld. The ??untry is am?ng the highest in the w?rld in terms ?favailability ?f st?res per ?apita. The Indian retail se?t?r is experien?ing an exp?nentialgr?wth and retail devel?pment is ???urring n?t ?nly in large ?ities and metr?p?litanareas, but als? in level II and III ?ities. This gr?wth and devel?pment pr?p?rti?nallyin?reases the size ?f the retail market as well. Healthy e??n?mi? gr?wth, an ev?lvingdem?graphi? pr?file, an in?rease in disp?sable in??me, urbanizati?n, tastes and?hanging ??nsumer preferen?es are ?ther fa?t?rs behind the gr?wth ?f the retailmarket ?rganized in India. Even the ?nline retail market is expe?ted t? in?reasefr?m $ 14.5 billi?n t? $ 60 billi?n between 2016 and 2020. Gl?bal retailers su?h as Walmart, GAP, Tes?? and J?Penney are in?reasing their pur?hases fr?m India and are m?ving fr?mthird-party pur?hasing ?ffi?es t? establish their fully-managed and fully managedpur?hasing and pur?hasing ?ffi?es.

 The Indian g?vernment has intr?du?ed ref?rms t?attra?t f?reign dire?t investment (FDI) in the retail se?t?r. The appr?val ?f G?vernmentf?r 51% FDI in multi-brand retailers and in?reasing the limit ?f f?reign dire?tinvestment t? 100% in the retail st?res ?f a single brand is a sign ?f b??st f?rin?reasing the market size ?f retail and attra?ting Gl?bal retailers. We ?an seethat gl?bal retailers su?h as Walmart, GAP, Tes?? and J? Penney are in?reasingtheir pur?hases fr?m India and are m?ving fr?m third-party pur?hasing ?ffi?es t?establish their fully-managed and fully managed pur?hasing and pur?hasing ?ffi?es. The retail se?t?r ??nsists ?f manyvari?us segments ?ut ?f whi?h s?me imp?rtant ?nes are F??d and Gr??ery, Apparel,Jewellery, ??nsumer durables and IT, Furniture and Furnishing, Pharma?y and f??twear.The year 2017 was fav?urable f?r the herbal-ayurvedi? brand and hen?e in up??mingyears there are pr?spe?ts f?r in?rease in the gr?wing herbal segment.    Key Drivers ?f Indian Retail Industry’sGr?wth are:·       Large w?rking p?pulati?ns·       M?re ?f nu?learfamilies·       D?uble In??mefamilies·       Luxury spending·       Easy ?ust?mer ?redit·       Brand ??ns?i?usness·       Lifestyle ?hangesand ??nsumer behavi?ur·       Liberati?ns inFDI p?li?ies·       In?reasingUrbanizati?n·       Reas?nable real estatepri?es The retail industry ?an be ?lassifiedint? tw? ?ateg?ries: ?rganized Retail – These types ?f retailst?res are st?res whi?h are li?ensed and are registered. They are usually l??atedin urban areas and are hard t? find in rural areas.

They usually have ?hains ?fst?res. Departmental st?re and Hypermarket are few types ?f ?rganized Retail St?res.?rganized Retail st?res ??ntribute t? as less as ar?und 8% in Indian RetailIndustry. Un?rganized Retail – These types ?f retailst?res are st?res whi?h are independent in themselves and la?k a ba?king ?f a ?entralentity. They are usually f?und in rural areas where pe?ple usually refer t? su?hsh?ps as kirana st?res.

They a???unt f?r ar?und 92% ?f the Indian RetailIndustry.         MARKET TRENDS As we say that the w?rld is n?t ??nstantand keeps ?hanging ?ver time. S? is the s?enari? with the retail industry wherethere has been drasti? ref?rmati?n and ?hanges ?ver time where the retailindustry has devel?ped a l?t in the past few de?ades and always m?ving t?wardsm?re enhan?ement and gr?wth. If we see the br?ader view first, we ?an see thatrelati?n industry was there in earlier time, th?ugh it wasn’t the way we see itt?day in f?rmats ?f malls and supermarkets. In earlier times, the retailindustry was in the f?rm ?f haats, mela, and mandi.

Later these traditi?nal f?rmatsstarted t? establish and with time these haats and mandis transf?rmed t? kirana?r ??nvenien?e sh?ps. And n?w we are witnessing the emerging f?rmats ?f the retailindustry where every?ne is m?ving t?wards the ?rganized retail, that is spe?ialitymalls, hypermarket, and multiplexes. Hen?e we ?an see that with time, there hasbeen a drasti? ev?luti?n in the way retail industry has transf?rmed.    N?w, if the trend is m?re ?learly underst??d,we ?an see that India was a ??untry ??mp?sed ?fhundreds ?f ?ities and t?wns, bef?re liberalizati?n.

India at the time was anati?n that strived f?r devel?pment. The effe?t ?f this hunger has been witnessed?n several levels and this has br?ught a w?nderful ?pp?rtunity f?r the retailindustry t? thrive. The ev?luti?n ?f the retail se?t?r began first in the metr?p?litanareas and in the main ?ities and then ended up filtering als? in the sub-urbanand rural markets. The retail trade in India was initially ??mpletely dis?rganizedand appeared in the f?rm ?f small sh?ps run by small and medium-sized entrepreneursin the f?rm ?f ??rner sh?ps. S?me internati?nal a?t?rs su?h as Levi’s, Pepe,Marks and Spen?er, et?., had entered the market, dire?ted t? the upper middle ?lasses?f the Indians.

H?wever, what is imp?rtant t? keep in mind, is that ?ver 50% ?fthe p?pulati?n ??mp?sed ?f pe?ple bel?nging t? the medium-l?w and l?w ?lass, thewh?le range ?f the market had n?t yet been ??vered. This shift between supplyand demand was subsequently ?aptured by brands su?h as Big Bazaar and Pantal??ns,whi?h made their pr?du?ts available t? all ?ateg?ries ?f pe?ple and t?day havethe first benefit ?f the m?t?r?y?list in the Indian retail market. An?ther phen?men?nthat pr?bably ??ntributed t? gr?wth in the Indian retail se?t?r was the expl?si?n?f sh?pping ?enters a?r?ss the ??untry. This ??mmer?ial ?ulture br?ught with ita retail f?rmat ?rganized in India that was previ?usly la?king. T?day these sh?pping?enters are ?hanging the way Indians buy.  In the present s?enari?, we ?an say that the retail industry is underg?ing a ?hange where retail has be??me b?th physi?al and digital.

Retail industry is d?ing very well in the market and as a matter ?f pr?je?ti?ns it ?an be said that the ?rganized retail in India will d? well and by 2020 will try t? grab 24% ?f the retail market. But presently, the retail se?t?r still needs t? ??me up with inn?vative ??n?epts and m?dels as presently retail se?t?r is a?tually fa?ing a threat fr?m dis??unts pr?vided by e-??mmer?e ??mpanies. But the use ?f analyti?s as well as having a keen understanding ?f the ?hanging demands ?f the ?ust?mers will help the retail industry. India is und?ubtedly ?ne ?f the fastest gr?wing retail industries in the w?rld. Being the largest ?f all industries and a???unting ab?ut 10% ?f the ??untry’s GDP, it empl?ys ab?ut 8% ?f the w?rkf?r?e. The future ?f retail industry sees a bright s??pe as there aremany present ?hanges in the system whi?h is dire?tly linked t? the benefit ?fthe retail industry. The all?wan?e ?f 100% FDI in single brand retail, the ease?f d?ing business be?ause ?f implementati?n ?f GST, the in?rease in the pur?hasingp?wer and the rapid in?rease in urbanizati?n, the ease ?f getting ?redits, ares?me ?f the ways whi?h make the Indian retailing se?t?r m?re attra?tive and hen?eeven in the year 2017, it ??uld be seen that the FDI infl?w was US$1098.

81milli?n during September.   It ?an als? beseen f?r the year 2017 that the India’s FDI’s ??nfiden?e Index ranked up a levelsurpassing Australia. And be?ause ?f the rising middle ?lass and the in?reasingm?ney supply with the ?ust?mers, India was als? ranked t?p in the Gl?bal RetailDevel?pment Index. The private label spa?e in the ?rganized Indian retailindustry has begun experien?ing an in?reased level ?f a?tivity. The share ?fprivate label strategy in the US and the UK markets is 19 per ?ent and 39 per ?ent,respe?tively, while its share in India is just 6 per?ent.

Thus this gives a tremend?us?pp?rtunity f?r the h?me gr?wn label t? expand its base. India’s pri?e ??mpetitivenessattra?ts large retail players t? use it as a s?ur?ing base. Many internati?nalretailers are in?reasing their s?ur?ing fr?m India and are m?ving fr?mthird-party buying ?ffi?es t? establishing their ?wn wh?lly-?wned/wh?lly-manageds?ur?ing and buying ?ffi?es.                                      MARKET STRUCTURE The change in market trend has also impacted the marketstructure of retail marketing over time. There were Kirana Stores in India in1970s to 1980s. They served the purpose of the retail industry.             Unorganized Retail SectorThese types ?f retail st?res arest?res whi?h are independent in themselves and la?k a ba?king ?f a ?entralentity.

They are usually f?und in rural areas where pe?ple usually refer t?su?h sh?ps as local kirana st?res, hand cart, etc. They a???unt f?r ar?und 92%?f the Indian Retail Industry. Foreign Direct Investmentin this retail sector is expected to shrink the employment in the unorganizedsector and expand that in the organized one.Organised Retail SectorThese types ?f retail st?res arest?res whi?h are li?ensed and are registered.

They are usually l??ated in urbanareas and are hard t? find in rural areas. They usually have ?hains ?f st?res.Departmental st?re and Hypermarket are few types ?f ?rganized Retail St?res.?rganized Retail st?res ??ntribute t? as less as ar?und 8% in Indian RetailIndustry.The organised retail sector canbe further subdivided into:Instore RetailersThey are also called as brickand mortar format. These retail stores are in the form of fixed point saleoutlets.

They are specially designed to lure the customers. There are differenttypes of stores through which the instore retailers operate.Branded Stores appear in theform of exquisite showrooms. Here the total range of a particular brand isavailable and the quality of the product is certified by the government.There are also multi brandspecialty stores that sell a series of brands so that the consumer can choosefrom the wide array of brands.Department stores have a largenumber of brands and products catering to all basic needs to luxurious items aswell.Supermarkets are basically selfservice retail stores.

Discount Stores offer commodities at reduced prices.InHyper Marts customers have wide variety of products to choose from and they arealso available at discounted rates.Convenient stores are locatedin prominent places within the reach of majority of the customers and do notoperate in stringent work hours.Shopping Malls are a storehouseof a large variety of retail shops situated close to each other.Retail Formats in IndiaThe retail formats in India canbe categorised into the traditional and the modern forms.

The traditionalformat includes Kiranas, street markets, kiosks and multiple brand stores.The modern format, on the otherhand includes supermarkets, hypermarkets, department stores and specialtychains.In discussing about thestructure of the retail sector in India we cannot forgo forecourt retailing andtrade parks.

Trade parksTrade parks are basicallybusiness complexes that promote international trade. The global players herehave access to the top Indian exporters. To the buyers this would prove to be aboon since they do not have travel to far off towns to enter into businessdeals with the exporters, especially in places where infrastructure is verypoor. By this the exporters not only enhance their visibility but they alsoenjoy a host of other advantages.

They can design libraries, studio etc, inorder to attract potential customers.Forecourt RetailingThis type of retailing is doneby the oil companies in order to increase their revenue. They not only deliverfuel but also offer other services to its customers. 

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