The Indian Kaleidoscope: Emerging Trends in Retail
The Indian Kaleidoscope: Emerging Trends in Retail
The Indian Kaleidoscope: Emerging Trends in Retail
September 2012
Foreword
Indias retail market is expected to cross 1.3 trillion USD by 2020 from the current market size of 500 billion USD. Modern retail with a penetration of only 5% is expected to grow about six times from the current 27 billion USD to 220 billion USD, across all categories and segments. The recently unveiled Vision 2023 by Chief Minister Selvi J Jayalalithaa will ensure that Tamil Nadu reaches the numero uno position in the next 11 years in all parameters enshrined in the Human Development Index (HDI) to make the state an ideal destination for foreign and domestic investments. The CMs emphasis on agriculture including cold storage and associated logistics, as well as terminal market complexes promises to collectively result in a booming retail market. This report aims to identify key issues and recommend possible solutions to directly and positively impact the growth of this sector. Based on the recommendations, FICCI is expected to interact with stakeholders including government bodies, and relevant institutions. We are privileged to have PwC as our knowledge partner. I thank them for their contribution and extend my hearty wishes to all those involved for their outstanding effort and immaculate execution. P Murari IAS (R) Advisor to President, FICCI, New Delhi
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Contents
08 Setting up shop 14 33 44 45
The extravaganza The high price Conclusion Retail success stories from Tamil Nadu
Executive summary
Though, the monsoon in India may be deficient but it is raining deals and discounts for the Indian consumers. To attract customers, retailers are sending personalised messages via sms or emails. The Indian retail landscape is evolving from from the brick-and-mortar model to adopt technology for connecting with consumers. The aim is to achieve a complete seamless customer experience. Its a new world for both retailers and the customers where the latter is the king. Indians spend 25.2% of their time on social networking websites. As we move from the world of skeptics to early adopters to ultimately the tacticians, online retailing and mobile retailing are the new modes of growth. Though the overall sentiment for the sector continues to be a cautious one, margins are subdued and revenue still under pressure. The June
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quarter results are reminiscent of this. The off-season sale and advent of festival season in the subsequent months will make the second half of the calendar year a more reasonable. As a strategy, retailers continue to focus on improving the operations machinery of the business, shifting to low cost channels, promoting private labels, emphasis on increasing customer base, improving in cost structure, discounts and offers and innovative strategies such as flat discounts, sale during wee hours of morning or late till midnight, are some of them. While it is business as usual for the retailers, the sector is holding its breath for the much anticipated FDI policy. Till then, to be or not to be is the million dollar question. This report aims to highlight the key areas to help global retailers entering the Indian market. Our sections deal with measures that impact the top and the bottom line.
Setting up shop
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countrys rural population of 700 million presents an opportunity for retail and consumer companies that cannot be ignored. The current estimated value of the Indian retail sector is about 500 billion USD and is pegged to reach 1.3 trillion USD by 2020. The penetration level of modern retail (currently 5%) will increase six-fold from the current 27 billion USD to 220 billion USD in 2020. The Indian retail sector is expected to grow at a CAGR of 15 to 20%. Factors driving the organised retail sector include the following: Higher incomes driving the purchase of essential and nonessential products Evolving consumption patterns of Indian customers New technology and lifestyle trends creating replacement demand
Indias large and aspiring middle class of 75 million households or 300 million individuals want products that are value-driven. The countrys 500 million people under the age of 25 have access to more money that has additionally resulted in independence, aspirations and a demand for products.
Reality check
The Indian retail sector accounts for over 20% of the countrys gross domestic product (GDP) and contributes 8% to total employment. The cumulative foreign direct investment (FDI) inflows in single-brand retail trading, during April 2000 to June 2011, stood at 69.26 million USD. Studies like the MasterCard Worldwide Index of Consumer Confidence have ranked Indian consumers as some of the most confident in the world. The more confident the consumers are about the strength of the economy, their personal finances, their career growth, etc., the more they tend to increase their consumption, purchase non-essential products, experiment with products, brands, categories, etc. Besides, the
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Increase in rural income as well as urbanisation Increase in easy access to credit and consumer awareness Growth of modern trade format across urban, Tier I, Tier II and Tier III cities and towns Rapid urbanisation and growing trend towards nuclear families
Country
US UK Malaysia Thailand China South Korea Indonesia Philippines India
Over 2 million sq ft of retail space spread over 35 cities with 65 stores and 21 factory outlets Over 3.21 million sq ft of retail space spread over 23 cities with 51 stores Retail footage of close to 1 million sq ft across 45 cities with 200 stores Approximately 15 lifestyle and eight Home Centre stores 74 Easyday stores with plans to invest about 2.5 billion USD over the next five years to add about 10 million sq ft of retail space in the country 700 stores with a revenue of 7,600 crore INR 575 stores with approximate revenue of 2,000 crore INR. Recently, purchased stake in Pantaloon Retail 59 Westside stores, 13 Starbazaar hypermarkets and 26 Landmark bookstores
Foreign entrants in the Indian segment are as follows: Germany-based Metro Cash & Carry opened six wholesale centres in the country. Walmart with Bharti Retail, owner of Easyday stores. British retailer Tesco Plc (TESCO), signed an agreement with Trent Ltd (Trent), the retail arm of Tata Group to set up cash-and-carry stores. Carrefour opened its first cash-andcarry store in New Delhi.
Inflationary effect
Indias growth has slowed to 6.5% in the current fiscal, dragged down by a nine-year low of 5.3% in the March quarter on account of poor performance of the manufacturing sector. This is due to the cascading effect of the global slowdown that originated from developed economies and has impacted both China and India, the major contributors to the world GDP. However, despite these short-term difficulties, the medium outlook is more positive, states an OPEC report. From the sectors perspective, both consumers and retailers are being negatively affected as currently inflation is supply-based, rather than demand-driven. Before the downturn, consumers subsidised their spending through credit or dipping into savings, but this is no longer achievable or sustainable. As a consequence both margins and sales are under pressure. A strong GDP growth, rising consumer confidence, consumption-based behaviour, increasing income, and a large pool of consumers provide windows of opportunities for global retailers to invest in the Indian market. Largely deals are happening in the online model whether it is pharmacy, apparel, baby care or books. Considering that we have the youngest population in the world, such companies are bound to see growth, making it inevitable for financial investors to be present in this segment.
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trend is sustainable although steps need to be taken towards improving the supply chain and long-term strategies. Some of the recently announced deals include the following: Investor
SAIF Ventures Tiger Capital, Helion Ventures, Accel India Fidelity Tiger Capital Sequoia Capital India Standard Chartered Private Equity
Source: Media reports
Investee
InkFruit Letsbuy.com Bigshoebazaar India CaratLane.com Lovable Lingerie Privi Organics
Sector
Online apparel site Online consumer durables site Online shoe site for wholesale purchases Online jewellery site Innerwear Indian aroma chemical products manufacturer
However, the existing restrictive FDI policy framework continues to pose a challenge and drive the M&A activity. Ever since the policy on single brand retail policy was announced in 2006, more than 60 brands have set up retail operations in India in strategic joint ventures with Indian partners. Some of these include: Marks & Spencer with Reliance Retail Georgia Armani with DLF Fendi with Chordia Fashions
Ferragamo with DLF Damas with Gitanjali Lifestyle Inditex (Zara) with Trent Burberrey with Genesis Color S Oliver with Orient Craft The current FDI Policy on single brand specifically require the foreign investor to be the brand owner, and therefore, it closes doors for any direct investment by an international private equity player in this segment.
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In January 2012, the government further liberalised the policy on single brand retail trading by increasing the FDI cap from 51 to 100%, subject to certain conditions. This policy has opened doors for further M&A activity, especially for the following: Existing joint ventures, where foreign investor may wish to acquire the Indian partners stake Existing licenced or franchise arrangements, where the foreign principal may now wish to set up stores under 100% ownership and acquire the existing business of such licencee or franchisee in India. On account of certain ambiguities in the policy, M&A on these have been relatively slow, but it is expected to pick up as and when these uncertainties are ironed-out with further liberalisation in the policy. The multi-brand retail sector is witnessing calibrated liberalisation, while currently under prohibition. The trading sector was first opened for FDI with a formal policy on wholesale trading in the
year 1997 (requiring government approval for 100% FDI). This was further liberalised in 2006 by placing the segment under automatic route. Since 2006, the FDI in wholesale trading has been freely permitted. In April 2010, the government issued certain operational guidelines for Indian companies with FDI engaged in wholesale trading activities. Some of the operational guidelines have substantive impact on the M&A activities in this space. The key ones are as follows: Business customers need to have a government licence or registration to act as such Group company sales are to be restricted to 25% of wholesale turnover Currently, most e-commerce companies and multi-brand retail trading companies have adopted B2B route for raising foreign capital or formed strategic joint ventures with foreign retailers. A typical structure is as follows:
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The primary advantage of this is that the foreign investor or retailer gets an early mover advantage combined with the hope that the businesses can be consolidated in the future as and when the policy is liberalised. Currently, 100% FDI is allowed in B2B trade. Therefore, the FDI in this segment helps in building up the back-end infrastructure and vendor relationships. Though, some of the challenges that fraught such commercial agreements include inability of foreign investor to participate in front-end retail business, supply chain inefficiencies, financing the roll-out of retail stores, etc. There is high expectation from the proposed policy initiatives whereby the government is contemplating permitting FDI in multi-brand retail trading, subject
to conditions. If the policy is announced, the following are some of the possible M&A activities: New joint ventures with Indian partners for new retail venture Acquisition of equity stake or new investments by foreign retailers in existing Indian retail companies Consolidation of the above B2B structures into a single entity. The current proposed policy framework in this segment, as announced in November 2011, contemplates conditions such as minimum investment of 100 million USD with 50% of foreign capital used to develop back-end infrastructure. Such conditions will be more amenable to large hyper-market formats and may not immediately benefit speciality retail such as pharmacy, electronic goods, etc.
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The extravaganza
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Success story
With over 32 categories, thousands of products from more than 100 FMCG companies to choose from, the AaramShop concept has been launched on a pilot basis in the Delhi and National Capital Region (NCR). Over 3,000 traditional grocers have partnered with it. Selling groceries online is not new in India. Just last year, over a dozen online portals mushroomed across the country selling a wide-range of products-from household items to food. The front-end for these e-grocers were websites and the back-end primarily warehouses. Traditional shopkeepers are now latching on to portals such as www.araamshop. com and www.kiranawalla.com. When a customer orders online through these portals, it is communicated to the closest shopkeeper partner near his or her house who in turn delivers the purchase order at home. This gives another point of sale to the customer and at the same time lower overheads for the seller who does not have to invest in a physical shop.
From General trade to Modern trade and now going virtual, Indian retail sector is going through its own lifecycle. However, important to note is that the emergence of one mode does not hamper the existence of the other. In this section, we explore how the kirana stores have reinvented themselves to beat the hype around modern trade. Then we talk about how much weightage does customer experience carry and then we move on to the multichannels of retailing.
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to be at the beck-and-call of many households. Their presence in the midst of a residential area is a big advantage. A small item, be it a loaf of bread or few eggs gets delivered at the doorstep. In India, kirana and traditional retailing still continues to be the single largest outlet for sale of FMCG goods. Even the product mix that the neighbourhood shop stocks varies from small cottage industries, especially ayurvedic and other healthcare products, a few FMCG products such as soaps and shampoos, and taste-driven products such as local biscuits and savouries, which cannot make it to a big retail supply chain. Modern retail has been in existence for sometime now and there have not been many cases where kirana shops had to shut down due to an organised player coming up in the neighbourhood. There have also been certain external environmental factors such as high rentals, demographic change in the consuming class and increased disposable income that led to a slower growth in the traditional retail. In fact, large retailers had to reinvent and evolve their business models to arrive at a format that could compete with a local mom-and-pop-shop.
To outdo the modern trade players, kirana shopkeepers conduct bulk purchases from organised players and avail volume discounts. This has helped them to stay relevant to customers needs and at the same time earn a higher margin for themselves. Private label is the cash-cow for most players in the developed markets. Similar phenomenon is visible in India as well. We see that the cash-and-carry players are pushing their private labels through the kirana store rather than the modern retailers. This poses serious threats to the FMCG players whose prime point of sales is the kirana outlet. The experience of China and Indonesia shows that traditional and modern retail can co-exist and grow, albeit at different rates. While kirana stores may be growing at 2 to 5%, organised retail may be growing at 20 to 40% CAGR or more. This is due to the fact that organised retail is growing at a low base. In Indonesia, even after the emergence of supermarkets, 90% of fresh food and 70% of entire food is still controlled by traditional retailers. In Japan, organised retailers co-opt several kirana stores and hawkers drawn from the pool of traditional retailers and are upgraded with capital infusion and trained to meet the demands of customers.
Future outlook
The one difference between the traditional kirana shops in India and the traditional mom-and-pop stores in the West is that the latter, historically, were relatively inefficient as compared to the modern trade. However, it is proved that the traditional kirana stores and outlets in India are ultra-efficient and have been able to compete very successfully with modern retail for a very long period of time. Modern trade has expanded dramatically, but the classical, traditional kirana and convenience outlets have grown, modernised and become self-service outlets to do remarkably well.
New initiatives
The political mayhem over fears of extinction of these shops seems misplaced. Such is the reach and power of these local shops that LIC, the biggest insurance company in India has proposed to include them as their agents for selling its micro insurance plans. Players such as the Future Group plan to expand their corner store format KBs Fair Price (received funding from Japans retail chain Lawsons) through the existing shops and help to revamp, refurnish and rebrand the outlets while providing back-end support. The idea is to promote inclusive retail growth.
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Kirana stores are rapidly adapting technology to remain in touch with their customers. Today, grocery retailers are going online. These players are particularly popular in the metros, catering to the Internet savvy customers, who have limited time. Dilligrocery.com services the Delhi NCR area and offer home delivery free-of-cost if the bill is over 2,000 INR or they charge a flat 50 INR (which in todays world is less than the cost of fuel one would incur to go to a modern format for shopping groceries) for delivery. They have a turnaround time of one to two days. They even have a clear return policy which is important for online retailers. Greenytails.com has a common website for India and the US. In India, they service Bangalore and Hyderabad and offer free home delivery with an extra service charge in a few areas. Their website is well-designed and user-friendly. The prices are also competitive with the regular grocery stores. They currently offer cash on delivery mode of payment which is actually a good way to get customers to try the website, since customers do not have to pay anything upfront and do not have to worry about
credit card fraud or the authenticity of the vendor. They also have reward points for building loyalty. Chennaionlinegrocery.com also has a sophisticated website. They accept credit cards payments and is very user-friendly. Pristine-nature.com is another online retailer who deals exclusively with delivery of organic grocery.
Our discussions with customers across various sectors provided some useful observations. Some of the customer responses are as follows:
I walked into a store where a sign was displayed: In case you do not find a product on shelf, let us know and we shall deliver it at your home. This, according to me, was an amazing shopping experience.
I had bought two shirts from a reputed brand, which were not used for about two years. There was some defect in the quality of the shirts. When I approached the retail store, I was surprised that they managed to retrieve purchase information with the limited information I provided. The retailer also allowed me to exchange the shirts. This was truly a wonderful customer experience.
Customer testimonials
Quality, price, discounts, availability of products across various categories and express checkouts are some of the few aspects of a complete customer experience.
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In the purchase phase, the customer takes the buying decision on the product and pays for it. Various touch points in this phase include the web, the physical store, sales associates, assortments, layouts, etc. In the service phase, the customer service and loyalty programmes are the key touch points that the retailer has with the customer. After sales customer service includes installation of an appliance or return and exchange of merchandise.
In the research phase, the customer analyses the information available from various touch points, such as word of mouth, newspaper advertisements, mailers or the web, etc. services. Todays consumer is looking for a personalised, seamless and distinctive experience from the retailers.
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Localised experience: Given the amount of information retailers have about the customer behaviour, buying habits, etc. the consumer expects the retailer to ensure that the goods and services are available in the stores when the customer walks in to shop. The retailers need to establish the relevance with the customer. Individual attention, personalised promotional offers, best utilisation of time and money are few other basic expectations that customers have from retailers. Seamless experience: Consumers want to traverse multiple channels easily and enjoy a seamless experience. This means the physical store, web, catalogue, call centre and kiosks have to be integrated to ensure a consistent customer experience across these channels. Best Buy in the US provides seamless experience online as well as in the store. Customers can research online and come to the store for a physical experience. It also offers same pricing, offers, to the customers online as well as in the store.
Distinctive experience: Apart from the competitive price, the customers seek a distinctive shopping experience driven by best customer service. Retailers have developed customer friendly return or exchange policies, loyalty programmes, customer appreciation days, etc. Retailer use better customer service to differentiate between retailers, generate customer loyalty, increase customer purchases and create positive brand image. Retailers have started giving promotional discounts via SMS to customers when they are in the store or in the mall where the retailer has the store. Apart from the above, various factors that affect the customer experience include the following: Customers in the do-it-yourself (DIY) segment (example IKEA) seek customisation and those in the do-it-for-me (DIFM) segment seek convenience. Customers expect quick service even at retail stores, not just in fastfood restaurants.
Stores should be conveniently located and have the right layout. Customers want to be entertained and even educated while they shop. Retail store staff members (sales persons as well as cashiers) are the brand ambassadors for the store. They are in direct contact with the customers at various touch points and deliver the experience. Continuous investment is required in the training and coaching of staff to deliver on customers expectations. It is important to stay connected with the customers today to remain the top-of-the-mind recall when they shop. There is a growing demand for customised products, be it cars, apparel, computers or music. Easy returns policy is a must in e-commerce. Retailers need to set up reverse logistics solutions to make returning products bought online easy.
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Retailers today know that customers have a wide variety of products and formats to choose from. It is important for the retailers to create bond with the customers by offering personalised experience and be of relevance to the customers. In today's environment, retailers need to have single view of the customer, understand their buying behaviour and yearning to engage, and demonstrate loyalty to the customer. The global customer requires retailers to be more connected, more empowered and more proactive than ever before.
Connected
Seamless and consistent experience across all channels
Empowered Proactive
Execute with insight by analysing information Continue to be relevant to customer Improved productivity and customer service across global workforce
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For example: Target in the US has been able to predict if a woman is pregnant five months before the delivery. This has helped the retail giant provide necessary products and services to the loyal customer and also run targeted promotions influencing buying behaviour, thus driving sales. One of the key performance indicators that measure the effectiveness of the loyalty program is the 'Loyalty Customer Sales vs. Total Sales'. This tells the retailer how much of total sales from a channel are from its loyalty customers. But it is important to analyse how many loyalty customers are redeeming the points earned, which shows the true picture of customer loyalty to the retailer. Answering the following questions will help retailers increase their loyal customer base and thus increase sales: Am I loyal to my customers? What value do I add to the customer? How am I different from others in the market? How do I continue to be relevant to customer?
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Level 3- Building the muscle: This level aims at building capabilities that give the organisation a competitive advantage in the market and help deliver products and services at a lower cost. These capabilities include lean operations, lean marketing, lean organisation, etc. The focus is on generating quantum benefits once the foundations are in place. Level 4- Develop competitive superiority: At this level, the company aims at becoming a benchmark in the industry to continuously increase the gap between itself and the competitors. We can help our retail clients customise these levels to their environment and enable them to objectively evaluate their progress
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Retailers across sectors have gained significantly from such programmes which have had an impact on their revenues, cost, quality and responsiveness
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Sector snapshot
Growth opportunities exist in Indias apparel market
PwCs thought leadership report Strong and Steady 2011 Outlook for the Retail and Consumer Products Sector in Asia indicates that the Indian apparel market is relatively untapped across all categories. Clothing sales have been rising steadily in recent years, supported by a large market of young consumers and an increasing interest in Western fashion. Apparel companies are using marketing strategies to build their brand, increase awareness and create a fashionable, lifestyle-oriented image. Efforts to raise funds from PEs are enabling apparel brands to grow their store networks, boost production capacity, offer new styles, hire design talent, develop larger format stores, establish shop-in- shops, etc.
Clothing: Market demand growth (% real change) pa Country China India Japan Taiwan 2010 10.9 6.1 1.6 3.9 2011 10.8 7.6 1.2 4.8 2012 10.3 8.4 1 4.2 2013 10.9 8.3 0.9 3.4 2014 11.4 8 0.8 3.8
Company profile
Max Retail: Fashion need not be expensive!
Maxs focus on providing fashion at keen prices is generating strong current growth Keenly priced apparel is priced lesser than affordably priced apparel even! Keenly priced apparel is especially important in developing markets since customers need to be educated about fashion, before making the purchase. Max uses its design strength to produce sharply-priced apparel that has a high fashion component. Designers in the Middle East along with those in India create and localise fashion for global and local markets, respectively. across men, women, children, value, premium, plus-size, etc. For many Indians, low prices are a key purchase driver. The following factors drive the growth of value fashion retail: Increasing incomes are enabling Indian consumers to spend more and experiment across products, brands and categories. Apparel is no longer a functional category but one that conveys
Source: Strong and Steady2011 Outlook for the Retail and Consumer Products Sector in Asia, PwC, 2010-14 are forecasts
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appearance, prestige and image. Consumers want to buy apparel that is both affordable and fashionable. The growth of modern trade has helped increase the demand for both branded and value apparel. This, coupled with the emergence of new sectors and professional job opportunities, has also helped drive demand for office wear.
Over 50% of Indias population is under 25. Young Indians are aspirational, demanding and focussed on apparel that is both Current penetration of apparel in the organised retail category is 10%. This is expected to increase to 30 to 35% by 2015. and presents long-term potential for its parent company, Landmark Group.
By March 2013, Max will operate 100 stores, doubling operations from the current 51 stores. Max is the Landmark Groups fastest growing offering in India, across its formats (food and grocery, department stores, apparel, etc.). Tier 2 cities like Coimbatore, Indore, Bhopal, etc. are showing strong growth. Consumers in these locations are aspirational and view Max as a strong fashion brand.
Four critical success factors help define the winners in Indias apparel market. Providing fashion at very competitive prices is a major driver of success for Max. Max does not compromise fashion for price or vice versa. Providing apparel that is beyond normal pricing levels has enabled the chain to grow rapidly both within the Landmark Group and within India. Part of offering good fashion is localising the styling (necklines, hemlines, colours, embroidery, etc.). Max localises one-third of its product range sourced from its global headquarters, enabling it to be global and connect local. Customer needs and expectations evolve given their exposure to international travel, media, the Internet, etc. Today, the Indian consumer expects a better experience overall: The customer experience Availability of apparel: The consumer wants sharply priced, fashionable apparel to expand their wardrobe both at the workplace and at home. Customers no longer want to dress up just for work, they also want to look good at home, implying access to choice and range. Store experience: From the time a customer enters the store to when she/he leaves, she/he must have a good experience across several touchpoints that include: Trial room | Interacting with staff | After-sales experience | Billing at the POS | Store ambience Freshness of category Freshness takes into account new product promotions, new designs, new colours, new styling, etc. Keeping fashion exciting helps engage and retain customers, results in sales, generates repeat traffic, etc. Participants need to build a sustainable business model given that the gestation period for success in the retail sector is long. Sustainable product pricing, offering products that imply longevity, expanding operations in a calibrated but determined manner, etc. are some of the ways in which retailers can convey their commitment to building a long-term presence.
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Commerce in e-commerce
Which movie featured the song Why this Kolaveri di? Few of us might know the correct answer (Tamil film 3), but the majority of 20 million fans of this song who viewed it on YouTube at least once were not interested in knowing which movie this song belonged to. The song almost started a cult. Now there are several versions of the song, adopted by young and old across the country, eventually making Dhanush a household name. Today, e-Commerce is about how an e-channel is used by a user to position the product. It helps create the right buzz, is available on more than one platform or device and delivers the product to the customer instantly. The payments can be made online or through cash on delivery. We will now look at how the new e-commerce models are emerging and helping both consumers and retailers.
The sceptics
Both the retailers and the consumers have used electronic media cautiously. Issues relating to the use of credit cards, debit cards and online banking have kept some consumers at bay. The legacy of using the touch and feel of the product is a critical attribute to the decision of buying. Internet or the electronic media is largely being used by consumers for search, research, price comparison and finally the store locater to buy the product. The retailers have adopted the internet channel to have a footprint to position them among search engines, bill boards and name tags. The idea has never been to integrate the store supply chain or inventory to create an electronic model. The benchmark has been to wait for the competitors act first and then understand how they are using the web to market products and then follow the lead.
The retailer and consumers can be in different stages in their approach to the market.
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shop online. This represents a 40% rise from the 627 million online shoppers recorded for 2009. The report confirms that 85% internet users in this period shopped online. The majority of e-shoppers were from South Korea, where a staggering 99% internet users were also e-shoppers. Japanese, German and UK consumers rank second while Indian shoppers rank third. E-shopping has gradually become the most favoured online activity after emailing and surfing. According to Google, India has more than 100 million internet users, half of whom make online purchases, and the number is growing every year. With such a large market size, retailers as well as consumer goods manufacturers are entering the web space to attract potential customers. Competing in a high-pressure business scenario has become a challenge for retailers. Retailers are looking at the internet as an effective alternative sales channel, which gives them direct access to target customers. Online retail (also known as e-tail) is a web-enabled interface between a retailer and its target consumers for selling products and services on the web with the facility of ecommerce. These kinds of retailers are also known as e-tailers. Almost all big retailers now have presence on the web.
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The tacticians
Global online shopping giant Amazon. com recently launched a new service for Indian consumers, claiming to offer 1.2 crore products from both local and international retailers. The company claimed that Junglee.com would offer options from hundreds of online and offline retailers, including Homeshop18, Hidesign, Gitanjali, Fabindia, Bata India, Dabur, Microsoft, Reebok, and Amazon.com. It will have more than 90 lakh books and 30 lakh products from more than 14,000 Indian and global brands across more than 25 product categories, including mobile phones, cameras, toys and games, baby products, books, music, movies and TV, clothing, and jewellery. This consumer is not only the buyer but also the seller. Websites like olx.com and quikr.com have made the quintessential Indian feel more in control and sense of ownership of doing the deal. Among Indian states, Maharashtra has the best IT infrastructure, both for retailers as well as consumers. Mumbai accounts for a 24% of Indias e-commerce transactions. Some of the popular Indian
online retailers are Staples Inc, Home Shop 18, Indiaplaza, eBay India, Future Bazaar, Indiatimes and Rediff. Easy availability of broadband services and increasing internet penetration is supporting the growth of online retailing. The increasing purchasing power of the Indian customers is set to bring an online shopping boom in India. One of the latest additions to online retail is advertising through social media websites like Facebook, Twitter, Google+, etc. Apart from website technologies, retail leaders are trying to adopt video, mobile and social media strategies with a view to provide richer, more engaging and user friendly experience. It is not only the private sector but also the government sector which has woken up to the possibilities that the internet has in store. This means that today people can not only purchase clothing, utensils, furniture, electronics, books, movies, flight tickets, rent cars and thousands other products online, but they can also book railway tickets and even pay their self assessment and advance taxes online through government websites. The days when people had to stand in long queues at the stores or spend the whole day to pay taxes or buy railway tickets are slowly becoming a thing of the past.
According to eBay, Indian online shoppers remain brand savvy, even when they are shopping online. The eBay India Census has found that brands such as Sony, Nokia, Samsung, Apple and Reebok continue to top buyers charts. Lifestyle products, such as cosmetics, jewellery, watches, fashion products and fitness equipment account for over 45% of eBays sales in India. According to industry leaders, portals offering daily deals and discount offers with good delivery services attract the largest number of online shoppers. The customer behaviour is changing dramatically. People are not only using the Web to book air tickets and movie tickets but also do not hesitate in placing orders for mobiles, laptops and other consumer electronics and home appliances, a senior marketing executive from Flipkart.com, an online shopping portal, told Mail Today. Seeing this bold consumer behaviour, more companies are collaborating with such daily deal and discount sites. All the top consumer electronics and home appliances companies are listed with us. In the growing competition space companies with good delivery services score points over others, the executive said.
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The tacticians have pushed the e-tail environment from being connected to virtual. E-tail stores are open 24x7. Discounts happen at midnight. Flash discount mailers and SMSes are sent out and sites see millions of concurrent users logged in for a few hours. This seems to be a social phenomenon. It is similar to the advent of supermarkets in the late 1990s when people used to queue up for hours to be able to touch and feel products which were earlier handed over to them across the counter by the salesperson. Retailers are trying to target the social media to be able to influence the decision of the buyer. However, monetising social media is still a nebulous topic. Several papers and researches have been done to be articulate the manner in which retailers or client at large should and are using social media to target customer. We would like to look at this topic from a multichannel approach and ask the question: What are people looking for online? Price is a big factor, but its not the only one: many shoppers are prepared to pay a bit more for a big item like a plasma TV if it means the retailer will also install it, remove the packaging, and take the old one away. The internet makes it easier to establish the real correlation between price and value, and what value for money really means for a particular product, and a particular person.
The various incentives of online shopping include competitive pricing, speed, convenience, variety of products, home delivery and ease of shopping from anywhere at any time. However, even though people are spending much time and money on the web, they havent abandoned physical stores. Theyre just using them for different things. Retailers should now focus on understanding, adopting and monetising multichannel retail.
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Develop a truly multichannel business: Online operations need to be treated like any other part of the company, and not as some sort of incubator venture, or an offshoot of the marketing or IT departments. Business development has to become business as usual, which demands new business practices, new roles and responsibilities, and new approaches to incentives and remuneration. E-commerce has to move into the
main organisational structure and be treated as an integral part of the brand proposition, rather than an independent business governed by its own rules. The state of play on multichannel retail is still evolving, but we believe there are five key factors that retailers should be addressing now, if theyre to stay ahead of the game.
favoured
With shoppers consolidating their spending on fewer retailers, the winners will be those who ensure they make it onto the most favored list for their large customers.
Valuable
Operating in a multi-channel world makes it even more important to understand your most valuable customers, and to be able to serve them when they want, and how they want.
The digital space provides a raft of new opportunities to engage consumers, and to learn from their behaviours from Twitter and Facebook, to online campaigns and consumer reviews.
4 Key
KPIs
New performance measures that reflect the realities of this new multi-channel world are the next essntial building block to making profitable decisions and choices.
5 Real
Winners
The real winners will be those who can deliver a sustainable advantage by developing new operating models, designed to handle the realities of multi-channel retailing.
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The last peg in this puzzle of commerce is the most critical and possibly the most important one that completes the discussion on commerce. Commerce in e-commerce is about money making its move from the wallets of the customers to the cash registers of the retailers. In the e-tail world, conventional payment methods continue to provide strong infrastructure support for commerce to exist. Cash on delivery (COD) has recently equipped the retailer to address a large number of Indian customers who do not use plastic money over the web. We would like to focus our attention on the future of how commerce would be done by 800 million subscribers in India. This opportunity is being debated by analysts, bankers and the masses in view of the changing form of money. Mobile commerce is the new avatar of e-commerce, bringing a revolutionary change in the retail space. A growing country like India, which has over 800 million mobile subscribers, provides huge opportunity to retailers. Tapping this medium will change the way we do business transactions, access
entertainment, conduct personal finances and much more. It is one of the most powerful mediums for one-to-one marketing. Opening up a new spectrum of branding and awareness, its reach is far better and larger. Advancement in technology and boom of 3G and wireless devices has added to the growth of e-tail. Even advertisers have bought this story. India is the top-performing mobile advertising region in Asia. The growth in global mobile advertising expenditure has been tremendous with a year-on-year growth of 139%. More than 126 billion ads were served in 2011, as compared to 52 billion in 2010. These numbers represent the scope of opportunity not only for marketing specialists but also the untapped potential for mobile transactions. In fact some brands have been successful in doing so with their advanced applications and proven credibility. As per a report by Buzzcity, it will be a great surprise to know that 35% of mobile subscribers are not even aware about the basic mobile transactions available on
their phone. Nearly the same number of women and men use internet services on mobile phones, which is fairly surprising and interesting to know. This is in contrast to mobile subscriber base, which comprises 70% men and 30% women. Transaction pattern for the past six months from the users aged over 35 years is given below: Particulars
Travel-related purchase Grocery purchase Household utility payments Entertainment and lifestyle books, music and movies Indias population on mobile viewing and booking travel through their handsets
Source:The BuzzCity report
Statistics
19% 23% 21% 28% 14%
With Flipkart, homeshop18 and new entrants like Jabong, m-commerce has achieved success in India as well. Travel is one of the fastest growing segments in m-commerce. People tend to buy tickets and source hotel accommodation through their mobile phones. About 14% of Indias population views and books travel tickets through their handsets.
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Flipkart
Pioneering Indias online commerce market
Sector snapshot
Online retail is nascent in India and will over time, evolve and more closely PwCs thought leadership report Strong and Steady 2011 Outlook for the Retail and Consumer Products Sector in Asia predicts online commerce to be the next major area for retail growth in Asia. Though nascent, Indias online retail market is growing at double-digit rates and is likely to be the next format that retailers will incorporate into their array of channels. Growth drivers include the following: Internet penetration, the use of broadband, etc. are making it easy (and quick!) for consumers to shop online at home, at the office, etc. Global and local E-commerce participants have launched websites that offer Indian consumers a range of products (apparel, baby products, electronics, etc.). The market has seen the emergence of a range of buying propositions, such as group buying sites, direct sales sites, etc. Consumers are more willing to experiment with new forms of retail purchase and feel confident to search for and buy goods online.
Convenience, speed and 24-hour accessibility in purchasing products is being valued increasingly.
Company profile
Flipkart: Offering new categories, reaching more customers, expanding operations
Indias E-commerce market is growing at 20 to 30% CAGR and Flipkart offers a range of goods online, including books, music, consumer electronics, etc. Several factors are driving the growth of Indias online retail market, including internet penetration, the convenience of purchasing products online, etc. Senior management at Flipkart believes that consumer behaviour is changing and in a few years, Everyone will be buying everything online, just like they buy only their tickets online today. As the market evolves, so will the consumer. resemble E-commerce markets in mature retail environments. Since 2007, PwC has been conducting surveys on online shopping, in the UK, examining new and emerging retail developments in the digital space. Since then, the value of online retail has
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increased to almost eight percent of the total retail market, with growth expectations of 10% per year. Interviews with more than 1,000 consumers in the last quarter of 2010 revealed that we are witnessing a new pattern in consumer behaviour. When PwC began this series in 2007, only 63% of the people we spoke to were actually using the internet regularly to shop. In 2010, things had changed. Nearly 20% of respondents were spending more than half their disposable income online. Fourteen percent were buying on the web every week. Fourteen percent were doing it more oftena figure that wasfour percent only two years ago
online retail players have aggressive growth plans. By 2013-14, Flipkart plans to: Offer new categories on its website Increase its footprint of warehouses Expand operations into new cities Increase staff size from 2000 to over 10,000 Grow revenues 10 to 30 times over
Social Media
As part of its efforts to enhance the customer experience, Flipkart manages its social media presence carefully. A part of Flipkarts customer support team manages the companys presence on Facebook and Twitter. Only five or six of the 200 tweets each day are negative. The groups SLA for responding to negative feedback on social media sites is one hour but on an average, customers are responded to within 15 minutes. Customer insights Indian consumers are generally perceived as price-driven and valueconscious. While that may be true, senior management at Flipkart believes that their online consumer is driven by both price as well as a minimum level of quality (in terms of the end-to-end experience). As the economy grows, incomes rise and aspirations increase, the Indian consumer will evolve into a more qualityconscious consumer.
Source: Pick n Mix - Meeting the Demands of the New Multi-channel Shopper, PwC
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or no taxes. Consumer familiarity that runs from generation to generation and easy access are big advantages for the traditional retailing sector. Most modern retailers find it hard to replicate this level of intimacy. Traditional retailers have also risen to the competition from organised retailers. The adoption of IT systems, surveillance systems, tracking the customer database, loyalty management, SMS marketing, credit purchase, and free home delivery have helped unorganised players retain customers.
The growth in organised retail faces unprecedented challenges, both on the regulatory front as well as at the operational level. In the below section we try to look at the operational, tax and regulatory issues and challenges.
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retailers manage the store as well as warehouse replenishment and lower inventory holding cost. An economy of scale for the procurement of goods is also another challenge faced by retailers. Few large retailers have been able to consolidate requirements and enjoy economies of scale. Poor infrastructure and the availability of only a few organised supply chain and logistics players further increases the problem for retailers leading to a delayed availability of stock and huge costs. With the government investing heavily in infrastructure, and with global logistics giants investing in India, we shall soon witness the consolidation in the supply chain and logistics sector. This will help retailers and consumers significantly.
Retail frauds
Retail frauds have been a concern for the Indian sector. According to the Global Retail Theft Barometer (GRTB) 2011 covering 45 nations, the shrinkage in India stood at 2.38%, the highest in the world. The average global shrinkage was estimated at 1.45%. The good news is that as per the GRTB, the retail shrinkage loss for India in 2011 is less than 2010. Shrinkages as a percentage of total retail sales
0 0.5 1
1.5 2
2.5 3
As per the GRTB, the key reasons for the retail shrinkage or pilferage in India include the following: Shoplifting (accounting for more than 50% of total shrinkage value) Internal administrative errors Employee theft
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Vendor frauds Retailers have started investing in loss prevention and security measures such as CCTV, surveillance cameras, RFID, etc. This will help them in scaling down the shrinkages but the investment in these areas is still at a nascent stage.
Skilled workforce
Availability of trained manpower both at the store and managerial level has been a major concern for the Indian retail sector. The problem is escalating with the rise in organised retail and large global players entering the country. The attrition rate in the industry stands at 25 to 35 %. While the paucity of skilled manpower is a challenge, it is important to ensure continuous learning for the existing staff. Large retailers have setup dedicated teams to conduct training workshops and coach the retail workforce both fresh as well as experienced on topics such as product information, customer service, customer complaint management, etc. Some of the large corporates have partnered with premium management institutes and designed retail-specific courses.
deliver its brand promise, quality, services and store ambiance, etc. Retailers in mature markets have used customer service as a tool to generate footfall and create a positive brand image.
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IT optimisation
With the evolution of retail sector, IT adaptation is increasing continuously. Modern retailers are relying on IT systems to manage the rapidly changing business scenarios and diverse customer needs. The sector is now focussing on IT optimisation and effectiveness. Large players are investing in the SCM, merchandise management, customer relationship management, business intelligence systems, etc. This is helping
retailers to become agile and responsive apart from being able to reduce inventory holding costs and thus be profitable in the long run. Small regional modern players in the retail sector have started investing in the point of sales, barcode software, etc. According to Cisco India, "Of the total investments made by the Indian retail companies, approximately 4 to 10% is invested in IT and within this approximately 30 to 40% is meant for networking infrastructure."
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Tax-related issues
Companies in the trading sector are facing several challenges that curtail the growth of the sector and prevent it from reaching its true potential and providing benefit to consumers. Some of the key challenges are set out below:
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assets and risk profiles of transacting entities and have well-drafted intercompany agreements that echo the group TP policy. Another issue faced by MNCs pertains to the disallowing by the tax authorities of royalty or franchisee fee payments. The taxpayer is required to justify the payment of royalty or franchisee fees, demonstrate the economic benefit realised and prove that services received from overseas associated enterprises are not in the nature of shareholder or stewardship services. The taxpayers are required to demonstrate the economic benefit by submitting documentary evidence for all services received and their utility to the Indian business. Apart from a TP analysis that benchmarks payments for services, it is critical for taxpayers to set up processes to ensure that documentary evidence to demonstrate economic benefit is readily available at the time of the TP audits. This is critical for defending payments of royalty or franchisee fees before the tax authorities.
Agriculture procurements
Several states and union territories have enacted the Agriculture Produce Marketing Committee (APMC) Act, regulating the procurement of different kinds of agricultural produce, fisheries, fresh fruits and vegetables. A few states permit direct procurement from farmers. Others require the agricultural produce to be brought into designated market yards and sold through an auction mechanism. With a view to streamline the procurement system, the central government has asked the various state governments to review their APMC Acts and enable direct procurement from farmers and also simplify the procedures. The government has also taken measures to improve the existing supply chain and facilitate farm-to-fork integration. For example, tax benefits have been provided and foreign currency loans are permissible for establishing cold chain storage facilities. Moderinsation of these laws for agricultural procurements by state governments will help in development of an efficient farm-to-fork supply chain infrastructure.
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Regulatory framework
Foreign direct investment (FDI) in retail trading business is currently not permitted, except in single-brand retail trading, which now allows up to 100% FDI subject to conditions. In addition, several FIIs and NRIs have invested in several large Indian retail companies under the portfolio investment route. In November 2011, the government had announced a policy permitting up to 51% FDI in multi-brand retail trading, which was subsequently put on hold due to political opposition, with the objective of holding further discussions with the stakeholders to achieve a consensus. This chapter outlines the existing FDI policy of the government in trading sector together with recent policy developments, especially highlighting some practical issues.
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government approval, except for a few sectors of strategic importance (such as banking, defence, media, telecom) where the policy prescribes equity caps or certain conditions for obtaining prior approval from the government. The FDI policy is framed by the Department of Industrial Policy & Promotion (DIPP), the Ministry of Commerce & Industry and implemented by the Reserve Bank of India (RBI) for cases falling under the automatic route (i.e. not requiring prior Government approval), while for cases falling under the government route, approval is granted by the Foreign Investment Promotion Board (FIPB), which includes representatives of various central government ministries and grants approval on a case-by-case basis. Apart from the sectors that are of strategic importance and require government approval, there is a small list of sectors in which FDI is currently prohibited. At present, this list includes retail trading (except single-brand retail trading). With the above background, we provide an overview of the FDI policy framework prevalent for the different segments of trading sector in India:
Wholesale trading
FDI up to 100% is permitted under the automatic route (i.e. without government approval), for wholesale trading and cashand-carry wholesale trading. This enables foreign retailers to engage in business-to business (B2B) trading activities in India, i.e. selling to other wholesalers, retailers, businesses, and institutions. However, such entities need to follow certain operational guidelines prescribed by the government. Some of the key principles emerging from this operational guideline are set out below: The type of customer to whom the sale is made, and not the size and/ or volume of sales, is the yardstick for determining whether a sale is wholesale or not. Licenses, registrations or permits, as specified under the laws, regulations, rules or orders of the Government, are required to be obtained for undertaking wholesale trading operations. Sales under wholesale trading can only be made to customers holding the following registrations or licences: Entities holding sales tax, VAT, service tax, or excise duty registration Entities holding trade licenses
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Entities holding permits or licenses for undertaking retail trade (like licenses for hawkers) from government authorities or local self-government bodies Institutions having certificates of incorporation or registration as a society or registration as public trusts for their self consumption Full records of sales need to be maintained by the wholesale trading company on a day-to-day basis. Wholesale trading of goods to companies within the same group should not exceed 25% of the total turnover of the wholesale venture
S.No
1 2 3 4 5 6 7
Categorisation
Apparels and accessories Jewellery Electronics and telecom Cosmetics Home furnishings Heath and fitness Others Auto, toys, hearing aids etc.
Approved brands
LVMH, Fendi, D&G, Hermes, Armani, s.Oliver, Crocs, Armani, Puma, Christian Dior, Marks & Spencer, Canali, Zara, Burberry, Tod, Matteo Basso, Gucci, Gas, Diesel, Cartier, Giordano, Ferragamo, Celio, Boggi, Paul & Shark Damas, Cartier Nokia, Socomec, CT Brand, LOccitane, Lladro, Damro, FabIndia, Signature Kitchen, Aran Power plate, Mothercare, Toyota, Toy Watch, Unitron, Sona and Connect hearing, FIAMM S.p.A , Verve Hearing Systems, Delsey
Test marketing
FDI up to 100% is permitted with prior government approval for test marketing of items for which a company has approval to manufacture. The test marketing facility will be for available for a period of two years and investment in setting up manufacturing facility should commence simultaneously with test marketing.
FIPB website
Under this policy, proposals worth 196 crore INR have so far been approved by the government of India. FDI up to 100% is permitted with prior government approval, for the retail trading of single brand products, subject to the following conditions: Products to be sold should be of a single brand only. Products should be sold under the same brand internationally. Single-brand product-retailing would cover only products that are branded during the manufacturing.
The foreign investor has to be the brand owner. In respect of proposals for FDI beyond 51%, the retail company would need to fulfil one additional condition of sourcing a minimum of 30% of the value of goods sold from Indian small industries/ village and cottage industries, artisians and craftsmen. Small industries for this purpose have been defined to mean industries in which the gross value of plant and machinery (i.e. without depreciation) does not exceed 1 million USD.
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One of the key challenges that need to be addressed with respect to single-brand retail trading policy is the condition relating to sourcing of 30% of the value of products sold from small industries. While it is a fact that large number of foreign retailers source products from Indian entrepreneurs, it is not necessary that all such sourcing is being done from small industries. A similar condition also exists in the proposed policy for FDI in multi-brand retail trading, which is more implementable as the multi-brand retailer will have a choice to source a wider array of products from small industries. On the contrary the retailers who typically fall under the single-brand window are luxury brands or niche-market players. Keeping in mind the nature of their products and target customers segment, it is practically not possible for single-brand retailers to source products from small industries having plant and machinery less than 1 million USD. Hence, keeping in view the business reality, it would be appropriate for the government to reconsider the limit imposed on the size of plant and machinery and provide the single-brand retailer a wider choice of small, medium and large enterprises to source goods from.
The existing policy allows only the brand owner to be the investor under the single-brand window. In other words, the government discourages FDI in retail sales of third-party products. The ownership of the brand by the foreign investor, therefore, becomes an important entry condition. It is quite possible that on account of business reasons, including the efficiency in tax costs, the brands may be housed in a separate entity being the overseas retailers group in an appropriate jurisdiction. Switzerland, the Netherlands and Singapore are some of the countries used frequently for this purpose. The brand need not be held in the investing company itself. Companies also try to keep their products insulated from their business, through a corporate veil. Such foreign investors do not cease to be the brand owners merely because they have segregated and structured their operations or functions in various wholly owned entities or subsidiaries for commercial reasons. There is a need to have a policy framework to allow foreign investors, as brand owners, to invest under this window in some and spirit notwithstanding the corporate structure.
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defined to mean enterprises having a total investment in plant and machinery not exceeding 1 million USD. It is possible that such small enterprises may become large organically on account of long-term contracts with the retailers in compliance with the said conditions. To encourage development of small enterprises that organically become large, they should also be considered as eligible suppliers to the Indian retail trading companies for meeting the said requirement. This principle is similar to the concept of the carry-on business licence, which historically applied to small-scale enterprises which grew large organically, to carry on their business and continue to avail benefits of the SSI sector.
E-commerce activities
E-commerce activities are also governed by the principles mentioned above i.e. companies can engage only in B2B e-commerce trading and not in retail trading (except single-brand retail trading).
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Conclusion
04
We believe that now is as good as a time to enter the Indian retail space as it has ever been. International chains that have entered India through their JV partners are starting to feel at home. The legislators are adopting more practical ways of dealing with difficult issues. The Indian customers today have several choices that they can make. The boundaries among cities are fading quickly. Infrastructure and connectivity are improving by the month and customer awareness is at an all-time high. The Indian customer is creating the new Indian Bazaar.
There is only one boss: the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else. As rightly observed by Sam Walton, retail is all about customer experience and taking it to the next level. In these changing times, price is no more the only differentiator; customer experience has emerged to be equally important. While retailers are doing everything to woo customers, the million dollar question is How do I increase customer stickiness to the brand? Customer loyalty has been shifting across all formatsbe it the kirana stores or the hypermarkets. Stores are reinventing themselves to stay relevant and convenient. Retailers are not necessarily adopting one-size-fits-all strategies. Thus, success lies in the fact that what can be measured can be managed.
Expanding the product offering, promotional strategies and offers to draw higher footfalls is pass. Innovation is a more tactical term now, and it is having positive effects. For the generation that works on laptops and mobile phones, quick turnaround time is utmost important. Thus, being present across multiple channels has become inevitable. The discussion point is when and how to monetise it. Growth is no more seen as a success measure. Profitable growth is the norm in the board rooms. Shedding all inhibition, letting go of formats that do not make business sense and closing unprofitable stores are some steps taken to send a clear message to the stakeholders, that profitability is the key to sustainable growth.
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continues to provide the customers with quality products, its market share will remain intact. Following is the list of retailers, who have managed to create a niche in the market and have contributed to the states retail success:
Aachi Masala
With product range comprising 170 variants, reaching consumers via 5,000 agents and 10 lakh retailers, the companys sales turnover during 2011-12 stands at 495 crore INR. It adopts a consumer-oriented approach and as per its quality guidance and specifications, products are made by its partner through an oriented programme. The companys model shops acts as franchisees and carry its entire range of products. This model is gaining momentum and another 10,000 model shops are planned by the end of this year in Tamil Nadu. In 2000, Australian Foods (I) Pvt Ltd, the makers of Cookie Man, commenced its business operations in India. The lack of recognised cookie players in the country motivated the company to enter the market and open its first store in Chennai.
Cookie Man
Currently, Cookie Man operates 43 outlets in 17 cities. The cookie dough, toppings and related materials are produced in the Cookie Man Commissary in Chennai. The company has developed an efficient and successful franchising model to increase operations in the country at a rapid pace. Based on a shared passion for food retail, effective communication, the company has forged successful partnerships with its franchisees across India. The company founded in 1964 gained a household name for its purity and design.
GRT
Such is the power, reputation and the goodwill of the brand that their venture into hotel business (started in 1998) has year-on-year clocked the fastest growth rate. The company has been in the business for over four decades. The pharmacy has 51 retail and 17 wholesale outlets and is known for its CSR initiatives. Established in 1928, the brand name is synonymous with silk and has been a leader in the textile and retail business for over eight decades. Attention to cultivating vendor and customer relations has been at the helm of the Nalli management. In a radical departure from convention, the company decided not to indulge in discount selling, an unheard prospect in the 1950s. Its product offering varies from sarees to fabrics, apparel and home furnishings. It also has a sizeable private label collection such as costume jewellery and accessories.
Muthu Pharmacy
Nalli
Based in Chennai, the company is dealer of consumer electronics, home appliances and mobile phones. Started in 1978, it has over 50 showrooms in almost every town in Tamil Nadu and some in Pondicherry and Bangalore as well. Right from the very beginning, the companys objective was to offer quality products and services to people at affordable costs. Founded by Sathish Babu in November 1997, it is an example of how innovation can bring success. It started as a Skycell Teleshop (now AirTel Connect) selling post paid mobile connections. After studying the buying behaviour of the customers and the market potential, he opened the first large format mobile retail store in 2000, the first of its kind in South India. It is recognised as the most successful matrimony brand in the world and has consistently topped traffic and usage ratings by ranking agencies. It has also been rated as the most visited matrimony portal in the world. A recent Juxt Consult study revealed that 80% of the countrys population use BharatMatrimony. It is the only matrimony brand to be featured in the Limca Book Of Records.
BharatMatrimony
Works cited
We referred to the following PwC thought leadership reports:
15th Annual Global CEO Survey Building warehousing competitiveness Strategic Issues for Retail CEOs Winning in Indias retail sector Pick n Mix - Meeting the demands of the new multi-channel shopper
Secondary research
www.zenithresearch.org.in Global Retail Theft Barometer (GRTB) 2011 http://www.dnb.co.in/IndianRetailIndustry/issues.asp Care Research Indian Retail Industry http://streetfightmag.com/2012/06/26/why-loyalty-programs-are-broken-and-how-to-fix-them/ http://www.g-cem.org/eng/content_details.jsp?contentid=2236&subjectid=107 http://blog.nrf.com/2011/01/11/9-retailers-who-get-customer-experience-right/ http://www.retailcustomerexperience.com/article/179500/Five-barriers-to-building-retail-customer-loyalty http://247wallst.com/2011/02/23/the-ten-industries-most-damaged-by-inflation/
TIME Magazine, April 16, 2012 Trying to Decode Future E-Shopping Trends in India, Preetam Kaushik - Daily Deal Media November 26, 2011 Future of Online Shopping In India, By Debrah Hoff on February 24, 2012 How online shops in India have evolved over the years, Wednesday, March 28, 2012 Evolution of Online Retail http://www.fibre2fashion.com/industry-article/37/3677/ evolution-of-online-retail1.asp http://EzineArticles.com http://articlegenerator.gratisrecursos.info/10230/online-shopping-in-india/ Ibnlive.in-Amazon.com launches India specific online shopping service Junglee.com Online Shopping in India The Changing Paradigm, http://articles.pubarticles.com/online-shopping-in-india-the-changing-paradigm-1323325351,574610.html http://retail-guru.com/fdi-in-retail-to-help-control-inflation-columbia-university-study http://business.wikinut.com/Foreign-Direct-Investment-FDI-in-retail/201dfqhr/ http://www.indiaretailnews.com Company Websites and Annual reports The BuzzCity report White paper Connected Experience for retail with Microsoft Dynamics- Jan 2010 (www.microsoft.com/dynamics)
About FICCI
Established in 1927, FICCI is the largest and oldest apex business organisation in India. Its history is closely interwoven with Indias struggle for independence and its subsequent emergence as one of the most rapidly growing economies globally. With a membership of over 500 chambers of commerce, trade associations, industry bodies, FICCI speaks directly and indirectly for over 2, 50,000 small, medium and large business units employing around 20 million people. FICCI is the rally point for free enterprise in India. It has empowered Indian businesses in the changing times to shore up their competitiveness and enhance their global reach. FICCI plays a leading role in policy debates that are at the forefront of social, economic and political change. FICCI works closely with the government on policy issues, enhancing efficiency, competitiveness and expanding business opportunities for industry through a range of specialised services and global linkages. It also provides a platform for sectorspecific consensus building and networking. FICCIs stand on policy issues is sought out by think tanks, governments and academia. Its publications are widely read for their in-depth research and policy prescriptions. Partnerships with countries across the world carry forward our initiatives in inclusive development, which encompass health, education, livelihood, governance, skill development, etc. The FICCI head office is located in Delhi. It has eight state offices and six international offices.
Contacts
Federation of Indian Chambers of Commerce and Industry (FICCI) S. Saravanan Deputy Director FICCI- Tamil Nadu State Council 5, Vivekananda Road, Off Spur Tank Road Chetpet, Chennai 600 031 Tel: +91-44-4284 9612 (Dir) | Gen +91-44-4284 96 13/9614/9615 Fax: +91-44-4284 9618 Email: saravanan.s@ficci.com / tnsc@ficci.com
Acknowledgements
We would like to thank the following individuals for their contribution towards the editorial, research and content team for this knowledge publication consisted of the following individuals:
About PwC
PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See pwc.com for more information. In India, PwC (www.pwc.com/India) offers a comprehensive portfolio of Advisory and Tax & Regulatory services; each, in turn, presents a basket of finely defined deliverables. Network firms of PwC in India also provide services in Assurance as per the relevant rules and regulations in India. Complementing our depth of industry expertise and breadth of skills is our sound knowledge of the local business environment in India. We are committed to working with our clients in India and beyond to deliver the solutions that help them take on the challenges of the everchanging business environment. PwC has offices in Ahmedabad, Bangalore, Bhubaneshwar, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai and Pune.
Contacts
Rachna Nath Executive Director, Leader, Retail & Consumer
PricewaterhouseCoopers (P) Limited 252, Veer Savarkar Marg, Shivaji Park, Dadar, Mumbai 400028, India Phone: +91 (0) 22 6669 1539 Mobile: +91 (0) 98 2086 5684 Email: rachna.nath@in.pwc.com
pwc.com/india
This document does not constitute professional advice. The information in this document has been obtained or derived from public domain and/or other sources mentioned herein and PricewaterhouseCoopers Pvt. Limited (PwCPL) did not independently verified the accuracy or completeness of the information. Any opinions or estimates contained in this document depends on multiple extraneous factors including economic, statutory and legal factors and are subject to change without any prior notice. The opinions expressed by the Authors/Sources of different articles/information are solely their own and not of PwCPL. Readers of this document are advised to seek their own professional advice before taking any course of action or decision, for which they are entirely responsible, based on the contents of this document. PwCPL neither accepts or assumes any responsibility or liability to any reader of this document in respect of the information contained within it or for any decisions readers may take or decide not to or fail to take. 2012 PricewaterhouseCoopers Private Limited. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers Private Limited (a limited liability company in India), which is a member firm of PricewaterhouseCoopers International Limited (PwCIL), each member firm of which is a separate legal entity. AK-376 August 2012 The Kaleidoscope: Emerging trends in Retail.indd Designed by: PwC Brand and Communications, India