Introduction to Retail industry in India

INTRODUCTION
The India Retail Industry is the largest among all the industries, accounting for over 10 per cent of the countrys GDP and around 8 per cent of the employment. The Retail Industry in India has come forth as one of the most dynamic and fast paced industries with several players entering the market. But all of them have not yet tasted success because of the heavy initial investments that are required to break even with other companies and compete with them. The India Retail Industry is gradually inching its way towards becoming the next boom industry. The total concept and idea of shopping has undergone an attention drawing change in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. Modern retailing has entered into the Retail market in India as is observed in the form of bustling shopping centers, multi-storied malls and the huge complexes that offer shopping, entertainment and food all under one roof. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing workingwomen population and emerging opportunities in the services sector are going to be the key factors in the growth of the organized Retail sector in India. The growth pattern in organized retailing and in the consumption made by the Indian population will follow a rising graph helping the newer businessmen to enter the India Retail Industry. In India the vast middle class and its almost untapped retail industry are the key attractive forces for global retail giants wanting to enter into newer markets, which in turn will help the India Retail Industry to grow faster. Indian retail is expected to grow 25 per cent annually. Modern retail in India could be worth US$ 175-200 billion by 2016. The Food Retail Industry in India dominates the shopping basket. The Mobile phone Retail Industry in India is already a US$ 16.7 billion business, growing at over 20 per cent per year. The future of the India Retail Industry looks promising with the growing of the market, with the government policies becoming more favorable and the emerging technologies facilitating operations.

The Indian Retail Scene

India is the country having the most unorganized retail market. Traditionally it is a familys livelihood, with their shop in the front and house at the back, while they run the retail business. More than 99% retailers function in less than 500 square feet of shopping space. Global retail consultants KSA Technopak have estimated that organized retailing in India is expected to touch Rs 35,000 crore in the year 2005-06. The Indian retail sector is estimated at around Rs 900,000 crore, of which the organized sector accounts for a mere 2 per cent indicating a huge potential market opportunity that is lying in the waiting for the consumer-savvy organized retailer. Purchasing power of Indian urban consumer is growing and branded merchandise in categories like Apparels, Cosmetics, Shoes, Watches, Beverages, Food and even Jewellery, are slowly becoming lifestyle products that are widely accepted by the urban Indian consumer. Indian retailers need to advantage of this growth and aiming to grow, diversify and introduce new formats have to pay more attention to the brand building process. The emphasis here is on retail as a brand rather than retailers selling brands. The focus should be on branding the retail business itself. In their preparation to face fierce competitive pressure, Indian retailers must come to recognize the value of building their own stores as brands to reinforce their marketing positioning, to communicate quality as well as value for money. Sustainable competitive advantage will be dependent on translating core values combining products, image and reputation into a coherent retail brand strategy. There is no doubt that the Indian retail scene is booming. A number of large corporate houses Tatas, Rahejas, Piramalss, Goenkas have already made their foray into this arena, with beauty and health stores, supermarkets, self-service music stores, new age book stores, every-day-low-price stores, computers and peripherals stores, office equipment stores and home/building construction stores. Today the organized players have attacked every retail category. The Indian retail scene has witnessed too many players in too short a time, crowding several categories without looking at their core competencies, or having a well thought out branding strategy.

Growth Of Retail Companies In India.

Growth of Retail Companies in India exhibits the boom in the retail industry in India over the years. The increase in the purchasing power of the Indian middle classes and the influx of the foreign investments has been encouraging in the Growth of Retail Companies in India. Growth of Retail Companies in India is still not yet in a matured stage with great potentials within this sector still to be explored. Apart from the retail company like Nilgiri's of Bangalore, most of the retail companies are sections of other industries that have stepped in the retail sector for a better business. The Growth of Retail Companies in India is most pronounced in the metro cities of India; however the smaller towns are also not lagging behind in this. The retail companies are not only targeting the four metros in India but also is considering the second graded upcoming cities like Ahmedabad, Baroda, Chandigarh, Coimbatore, Cochin, Ludhiana, Pune, Trivandrum, Simla, Gurgaon, and others. The South Indian zone have adopted the process of shopping in the supermarkets for their daily requirements and this has also been influencing other cities as well where many hypermarkets are coming up day to day.

Reasons for the fast Growth of Retail Companies in India:

The retail companies are found to be rising in India at a remarkable speed with the years and this has brought a revolutionary change in the shopping attitude of the Indian customers. The Growth of Retail Companies in India is facilitated by certain factors like 1. 2. 3. 4. 5. Existing Indian middle classes with an increased purchasing power Rise of upcoming business sectors like the IT and engineering firms Change in the taste and attitude of the Indians Effect of globalization Heavy influx of FDI in the retail sectors in India

Growth Factors in Indian Organized Retail sector

The growth factors in Indian organized sector are various but it is mainly due to the fact that India's economy is booming. Also, the rise in the working population which is young, pay- packets which are hefty, more nuclear families in urban areas, rise in the number of women working, more disposable income and customer aspiration, western influences and growth in expenditure for luxury items. All these are the factors for the growth in Indian organized retail sector. In fact, India retail industry is the fastest growing industry in India and it accounts for 10% of the country's GDP. In 2006, the retail industry in India amounted to US$ 200 billion and out of this; the organized retail sector in India amounted to US$ 6.4 billion. By 2010, the Indian organized retail sector is expected to rise to US$ 23 billion. In 2003, the Indian organized retailing sector accounted for more than 4.5 million sq. ft of space absorption by malls. Many Indian companies have entered the retail industry in India and this is also a factor in the growth of Indian organized retail sector. Reliance Industries Limited is planning to invest US$ 6 billion in the organized retail sector in India by opening 1500 supermarkets and 1000 hypermarkets. Bharti Telecoms is planning a joint venture worth 750 million with Tesco a global retail giant. Pantaloons is planning to invest US$ 1 billion in order to increase its retail space to 30 million square feet. Such huge investments is also a factor in the growth of the organized retail sector in India. Global retail giants are also entering the retail industry in India and this is also one of the factors in the growth of the organized retail sector in India. The global retail giants who are entering the organized retail sector in India are: Wal- Mart Tesco Carrefour SA Metro AG

The factors for growth in Indian organized retail sector are many and thats the reason behind its massive growth. But for this to continue both the Indian retailers and the government will have to work together.

Growth Phase of Indian Retail Sector to Continue

The phase of high growth of Indian retail sector is expected to Continue due to huge amounts of investments and breaking up of traditional concepts in this sector. These are leading to various changes and are providing further boost to the growth of the Indian Retail Sector. The Indian Retail Sector that includes the traditional retail and the modern retail is estimated to grow at a very fast pace from US$ 336 billion, in 2006 to US$ 590 billion, by 2011. The traditional retail sector is expected to increase from US$ 324 billion, in 2006 to US$ 493 billion, by 2011. The share of the modern retail in the Indian Retail Sector is also estimated to increase from 4% in 2008, to 16% in the next five years. This exceptional growth is expected to take place in the retail sector due to large amounts of investment which is estimated to be about US$ 35 billion in the next five years. The "cash- and- carry" activities are expected to receive the majority of investments. The maximum amount of growth in the Indian Retail Sector will be registered in the topmost 50 to 60 markets that are located in the urban areas. These markets would be mostly supermarkets and hypermarkets. However, these supermarkets and hypermarkets will also witness fast erosions in their margins. Further, it is estimated that in the longer run, the convenient stores that are located in the local neighborhood will continue to survive. A major focus area in the Indian retail sector is the supply chain management. In the western countries, the retail sector has a highly developed system of supply chain. However developments in supply chain in Indian retail sector has been quite slow. Other areas that need attention for the growth of the Indian retail sector to continue includes duty and tax structures, infrastructure, rising land prices and effective trend forecasting. Trend forecasting needs to be done in the country especially in the segments of cosmetics, apparel and footwear for this will help the retail companies to curtail their expenses substantially. Also another area that requires attention is manpower for it is estimated that the Sector of Indian Retail will suffer from shortage of manpower by about a million people, by 2012. The chains in the Indian retail sector need to frequently change their stocks and also adopt concepts like home delivery. If all these areas are given immediate attention then the growth phase of Indian retail sector would continue at a very fast pace. The Indian retail sector would then witness the setting up of retail parks that are flourishing in Europe. Further, the growth of the Indian retail sector would help in making the country ready for big retailers by 2015- 2016.

Retailing Format In India (Major Retail Formats)

Traditional Format: 1. 2. 3. 4. Salesman Haats Mandies Company/Multi Brand store etc

Established Formats: 1. 2. Kirana stores The Indian Commerce Association 27-29 December, 2007, Hyderabad

3. 4. 5. 6.

Convenience/Departmental Store Pan/Beedi Shop Malls/Special Malls Company/Multi Brand Store

Emerging Format: 1. 2. 3. 4. 5. Exclusive Retail Outlet Hypermarket International Retailer Malls/Special Malls Multiplexes

The Importance Of Information Technology In Retail

The importance of information technology in retail stems from the importance of data. Data is nothing but information that aids decision making. The right data, in the right form to the right setoff people at the right time, is one of the greatest tools in the hands of the retailer. Information is always with reference to a particular time frame. Let us consider an example of a customer at a department store. After selecting some goods he proceeds towards the billing counter. Here the billing clerk scans each product at the POS (Point of sale) terminal the total number of items and the bill amount is added up. While doing so he has so checked with the customer if he is a member of the stores loyalty program. The customer confirms that he is, gives him the store card for entry makes the payment by way of credit card and exits the store with his purchases. While to the customer it is just a routine purchase, let us look at the information that the store has gathered from this transaction and how the information helps the retailer Efficient Stocking of merchandise The items purchased provide information on merchandise sold in the store; this is the basis of sales analysis and decisions on replenishment re-ordering and merchandise planning. If this information is passed on to the manufacturer; it can help reduce production time. This is particularly true in case of fashion items, which have a very short life cycle. For example data gathered in this manner may indicate youngsters buying certain styles in Jeans or colors, in the tee shirts from the store. To service this section of the audience the retailer may need replenishments faster. The use of technology aids the collection and transmission of information. The trends in sales can be analyzed. This helps avoid situations of stock out helps spot merchandise or products timely markdowns and higher inventory turns.

Collection of Data
The use of technology aids data collection. Data can be collected about consumers, their purchases the frequency of their buying and the typical basket size. This information helps the retailer distinguish the customers who shops at his store frequently and also reward them. For example information gathered about a customer may reveal preferences for certain brands; this may be used for further communication with the customer regarding promotional offers etc. The data on purchase made is also passed on to the credit card organization for payment to the merchant establishment and also for billing the customer.

Efficiency in Operations
The use of information technology serves as a basis for integrating the functioning of various departments. When a retailer decides to use the power of technology to aid business, the investment in terms of money is usually high. However the benefits of the use of information technology are many. As the process gets automated the time involved in particular task is reduced. For example, a person manually billing a customer for purchase made will take a longer time as compared to a person who is needed to scan in the items using the point of sale systems.

Helps Communication
Communication within the organization can be faster with the use of software like Lotus Notes. Retail stores can also communicate with each other and with the warehouses. This can be done 24 hours a day and seven days a week. Electronic Data Interchange (EDI) can also be used for communication with suppliers and vendors. The information needs of the retailer largely depend on the size and the spread of the organization. In most cases a small boutique operator or a small retailer like the baniya can do manual billing and gather a fair amount of information by making a phone cal or making a personal visit to the store. With an increase in the number of stores and /or an increase in the number of products sold in the store, gathering of information becomes crucial Technology plays a vital role in gathering this information and making it available to the right set of persons.

Applications of Information Technology in Retailing

The retail market is a state of exponential growth. Retailing includes all the activities involved in selling goods or services for the final consumer. These activities include demand and sales forecasting, inventory management, store management, transportation etc. This paper focused on how Information Technology may be beneficial in retailing? Information technology is the capability to electronically input process, store, and output, transmit, and receive data and information. It plays a very important role in today's business world. New technologies evolved in retailing are Radio Frequency Identification (RFID), Smart Operating Solution Smart Ops, and Point of Sale (POS) etc. The result indicates that, retail complexities may reduce with the help of Information Technology solutions. The right solution can result in improved productivity and major cost saving through key advantages such as more accurate supply chain, forecasting and better inventory management. Information Technology also help retailers to solve major problems related to customer services like customer loyalty and customer satisfaction. "Retailing includes all the activities involved in selling goods or services directly to final consumer for their personal, non-business use". Retail is all about selling, selling big and selling huge. It's all about ensuring that the customer first of all comes to the store and then buys. This also means that one should connect to the customer and should be able to hold him in one place and give him all that he desires from one location. One of the key factors in achieving an organized and efficient retail operation is the use of technology as an enabler . Information Technology is the key enabler to improving customer satisfaction, operational efficiencies and by extension, profitability. Technology has been the great enabler of business and especially retail enterprise. We are now wireless and seamless and cashless and everything less and can get any information we want and need. A typical pan national retail operation would have multiple regional warehouses, offices and retail outlets. In such an operation, how does the headquarters know the daily turnover at each of its outlets, how does it know which products are selling the most in which region at which outlet, how does one store know if a stock out item in its own inventory is available at another store location for whom it is slow moving item? Most of these issues can be solved by the appropriate use of technology.

Need of Information Technology in Retailing

Information Technology
Information technology, as defined by the Information Technology Association of America (ITAA), is the study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware." Encompassing the computer and information systems industries, information technology is the capability to electronically input, process, store, output, transmit, and receive data and information, including text, graphics, sound, and video, as well as the ability to control machines of all kinds electronically.

Information Technology's Role Today

Every day, people use computers in new ways. Computers are increasingly affordable; they continue to be more powerful as information-processing tools as well as easier to use. Computers in Business one of the first and largest applications of computers is keeping and managing business and financial records. Most large companies keep the employment records of all their workers in large databases that are managed by computer programs. Similar programs and databases are used in such business functions as billing customers, tracking payments received and payments to be made, and tracking supplies needed and items produced, stored, shipped, and sold. In fact, practically all the information companies need to do business involves the use of computers and information technology.

How Information Technology involved in Retailing Operations

* Forecasting: Forecasting is the process of estimation in unknown situations. It's an essential and very important process in any business organization. Business leaders and economists are continually involved in the process of trying to forecast, or predict, the future of business in the economy. Business leaders engage in this process because much of what happens in businesses today depends on what is going to happen in the future.

1. Retail Demand Forecasting: Modern demand-forecasting systems provide new opportunities to improve retail performance. Although the art of the individual merchant may never be replaced, it can be augmented by an efficient, objective and scientific approach to forecasting demand. Large-scale systems are now capable of handling the mass of retail transaction data organizing it, mining it and projecting it into future customer behavior. This new approach to
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demand forecasting in retail will contribute to the accuracy of future plans, the satisfaction of future customers and the overall efficiency and profitability of retail operations. * Inventory Management: Inventory can be either raw materials, finished items already available for sale, or goods in the process of being manufactured. Inventory is recorded as an asset on a company's balance sheet. To optimize the deployment of inventory, retailers need to manage the uncertainties, constraints, and complexities across their global supply chain on continuous basis. This allows them to improve their inventory forecasting ability and accurately set inventory targets. An IT solution is a proven and market leading solution for determining optimal time-varying inventory targets for every item, at every location throughout supply chain. This allows retailers you to significantly reduce inventory without adversely affecting service levels. * Store Management: Another example where Information technology can be beneficial is a store management. That alerts out-of-place or stock-out items. A store, commonly a shop or stall for the retail sale of commodities, but also a place where wholesale supplies are kept, exhibited, or sold. A place where something is deposited for safekeeping is called store. The in-store system use magnetic strips or barcodes or RFID to monitor actual versus intended product location on the floor or in the stockroom. Retail's Complexity: the Information Technology Solution Much of the retail operations functionality is driven by customized point solutions in areas such as merchandizing, supply chain management, in-store operations, seasonality and promotions planning. This means the underlying IT systems to drive operations are equally complex. IT systems are at the heart of retail operations and hence play a central role in alleviating pressure points in the retail sector. The converse also holds trueretailers who do not manage their IT landscape effectively will find that, in time, the IT systems become part of the problem rather than components of the solution.

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There are two critical areas where IT can reduce

FUNCTIONAL RETAIL AREAS Merchandizing systems impact top-line revenues and need to be configured, customized and managed effectively for the retailer to improve its top line. To achieve this, retailers need to effectively mine large amounts of data and leverage this data to carry out effective forecasting, assortment planning, and collaboration with its suppliers so that promotions and other merchandizing activities are effective and efficient. Supply chain systems are key from a bottom line point of view as they play a key role in getting the right product to the right place at the right timewhich in turn impacts the inventory levels and the rate of flow of products through the retailer's stores, both of which are significant components of the retailer's cost of doing business. DATA CLEANSING AND ARCHITECTURE IMPROVEMENT Data cleansing, and thereafter, effective mining (via large data warehouses) is fundamentally important in the retail space because so much decision-making is based on data. If the data is bad, the effectiveness and efficiency of carrying out retail operations is hampered. This becomes particularly crucial when the retailer is implementing new systems and a large data conversion effort is requiredit becomes essential that the old data be effectively cleaned, rearchitect and made ready in the new system, so that the business functions can make decisions effectively. In challenges, place ever-greater demands on retailers. It systems are at the complexity of products, scale and processes, along with supply chain heart of retail operations and hence play a central role in alleviating pressure points in the retail sector. New Technologies Evolved in Retailing 1. Radio Frequency Identification (RFID) Radio Frequency Identification in the retail industry has solved major problems related to customer services. With the help of RFID it becomes easy for the sales staff to locate a particular item in the store and check its availability in less time. It's a data collection technology that uses electronic tags for storing data. The tag, also known as an "electronic label," "transponder" or "code plate," is made up of an RFID chip attached to an antenna. Transmitting in the kilohertz, megahertz and gigahertz ranges, tags may be battery-powered or derive their power from the RF waves coming from the reader. Like bar codes, RFID tags identify items. However, unlike bar codes, which must be in close proximity and line of sight to the scanner for reading, RFID tags do not require line of sight and can be embedded within packages. Depending on the type of tag and application, they can be
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read at a varying range of distances. In addition, RFID-tagged cartons rolling on a conveyer belt can be read many times faster than bar-coded boxes. RFID in retail helps in the following ways: (a) Improves the level of customer service (b) Increases customers loyalty (c) Better Inventory Management (d) Item level tracking The future of RFID is very bright in retail sector, as right from inventory management to product manufacturing, this system provides a more efficient and advanced retail experience to both the customer and the seller. 2. Smart Operating System Supply chains can look very different from industry to industry. But companies across industries share a common challenge -- finding ways to better manage growing uncertainty and complexity to improve supply chain performance. To improve their supply chains, companies across industries have made sizable investments in a range of technology solutions, yet significant profitability improvements have remained elusive. Largely unaddressed has been the opportunity to use enterprise and supply chain data to support key inventory planning decisions that fuel execution systems and activities -- something beyond a mere spreadsheet or desktop solution. SmartOps customers are proactively managing supply chain uncertainty across all stages to improve their total chain inventory planning, so that their customer service levels can be stabilized and even increased while overall costs to the business are minimized. SmartOps enterprise software solutions support many initiatives and challenges associated with different manufacturing and distribution industries from Lean Manufacturing, Just-In-Time (JIT), and Six Sigma initiatives, to postponement strategies, to Collaborative Planning, Forecasting, and Replenishment (CPFR), and Sales & Operations Planning (S&OP) activities. SmartOps inventory optimization algorithms manage uncertainties in the data and offer visibility into the drivers of inventory at the item-location-time period level of detail. SmartOps is able to do that because it looks at the right granularity of data to adequately manage safety stock levels and understand where the biggest ongoing opportunities for improvement are within their supply chains.
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3. Point of Sale Capturing data at the time and place of sale. Point of sale systems use computers or specialized terminals that are combined with cash registers, bar code readers, optical scanners and magnetic stripe readers for accurately and instantly capturing the transaction. Point of sale systems may be online to a central computer for credit checking and inventory updating, or they may be stand-alone machines that store the daily transactions until they can be delivered or transmitted to the main computer for processing. Point of sale (POS) systems is electronic systems that provide businesses with the capability to retain and analyze a wide variety of inventory and transaction data on a continuous basis. POS systems have been touted as valuable tools for a wide variety of business purposes, including refining target marketing strategies; tracking supplier purchases; determining customer purchasing patterns; analyzing sales (on a daily, monthly, or annual basis) of each inventory item, department, or supplier; and creating reports for use in making purchases, reorders, etc. Basic point of sale systems currently in use includes standalone electronic cash registers, also known as ECRs; ECR-based network systems; and controller-based systems. All function essentially as sales and cash management tools, but each has features that are unique.

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Conclusion
This result demonstrates the significant role of information technology in today's business world and in retail management. It indicates that a sound Information Technology system is imperative to success in large format retail. IT system can be leveraged to increase efficiencies in supply chain and vendor management as well as centralize their control. The findings from this study shows that with an efficient IT system a retailer can observe sales and consumer behavior more efficiently and accurately and thus plan its sourcing and customer promotions more effectively. This result also lead to the conclusion that use of new technologies in retailing helps to increase customer loyalty and customer satisfaction. An IT system is also beneficial for various retailing related operations. Retailers need to understand that technology is not a sunk cost but rather an investment to reduce heavy long-term costs. It is an investment to maintain competitive advantage for longterm growth.

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Webliography
* www.answers.com * www.syntelinc.com * www.raymark.com * www.vendor-showcase.com * www.indianmba.com/faculty-column/fc32/fc32.html

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