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Unit 1: Introduction to Retail

shopping centers, multi-storied malls and the huge complexes that offer shopping, entertainment Notes
and food all under one roof.

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Caselet Industry Status for Retail Sector

arely recovering from the slump in the economy, organised retailers in the country
demand that the sector should be given industry status, besides easing foreign
Binvestment norms in the forthcoming Budget. “Industry status has been a long
standing demand of the retail sector. Besides we also want a relaxation in the foreign
direct investment (FDI) norms,” Retailers Association of India chief executive officer Kumar
Rajagopalan said. Sharing similar views, Koutons Retail India chairman D P S Kohli said:
“Industry status has been a recurring demand of the retail sector for many years since only
then will the retailers be able to fully enjoy the benefits of organised financing, insurance
and fiscal incentives.”
According to industry figures, only around five per cent of the estimated over USD 450
billion Indian retail sector is currently organised. Calling for easing of FDI norms,
Rajagopalan said, “No industry in India has grown without FDI participation and for
retail to emerge as a big player, more FDI should be allowed.” Besides, he said even if FDI
norms are not relaxed in the Budget, the government must give a clarification on FII and
foreign PE funding route as there is a lot of ambiguity.
Kohli said clarity on the issue will help Indian retailers raise funds from abroad as the
global liquidity condition is showing improvement. At present, the government allows
51 per cent FDI in single brand retailing and prohibits any foreign investments in the
multi-brand segment.
Source: indianrealitynews.com
A large young working population with median age of 24 years, nuclear families in urban areas,
along with increasing working women population and emerging opportunities in the services
sector are going to be the key factors in the growth of the organised Retail sector in India. The
growth pattern in organised 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.

1.5.1 The Indian Retail Scene

India is the country having the most unorganised retail market. Traditionally it is a family’s
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 organised retailing in India is expected to touch
` 35,000 crore in the year 2005-06. The Indian retail sector is estimated at around ` 900,000 crore,
of which the organised sector accounts for a mere 2 per cent indicating a huge potential market
opportunity that is lying in the waiting for the consumer-savvy organised 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

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