Page 21 - DMGT552_VISUAL_MERCHANDISING

Visual Merchandising

Notes 1.5.6 Opportunities in Indian Retailing

Another credible factor in the prospects of the retail sector in India is the increase in the young
working population. In India, hefty pay packets, nuclear families in urban areas, along with
increasing working-women population and emerging opportunities in the services sector. These
key factors have been the growth drivers of the organised retail sector in India which now boast
of retailing almost all the preferences of life - Apparel & Accessories, Appliances, Electronics,
Cosmetics and Toiletries, Home & Office Products, Travel and Leisure and many more.
With this the retail sector in India is witnessing rejuvenation as traditional markets make way
for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores.
The retailing configuration in India is fast developing as shopping malls are increasingly
becoming familiar in large cities. When it comes to development of retail space specially the
malls, the Tier II cities are no longer behind in the race. If development plans till 2007 is studied
it shows the projection of 220 shopping malls, with 139 malls in metros and the remaining 81 in
the Tier II cities. The government of states like Delhi and National Capital Region (NCR) are
very upbeat about permitting the use of land for commercial development.
Thus increasing the availability of land for retail space; thus making NCR render to 50% of the
malls in India.

1.6 Trends in Retailing

Indian retailing is undergoing a process of evolution and is poised to undergo dramatic
transformation. The traditional formats like hawkers, grocers and paan shops coexist with
modern formats like Super- markets and Non-store retailing channels such as multi level
marketing and tele-shopping. Modern stores trend to be large, carry more stock keeping units,
and have a self-service format and an experiential ambience. The modernisation in retail formats
is likely to happen quicker in categories like dry groceries, electronics, men’s apparel and
books.

Notes Some reshaping and adaptation may also happen in fresh groceries, fast food and
personal care products. In recent years there has been a slow spread of retail chains in
some formats like super markets, malls and discount stores. Factors facilitating the spread
of chains are the availability of quality products at lower prices, improved shopping
standards, convenient shopping and display and blending of shopping with entertainment
and the entry of Tatas into retailing. Foreign direct investment in the retail sector in India,
although not yet permitted by the Government is desirable, as it would improve
productivity and increase competitiveness. New stores will introduce efficiency. The
customers would also gain as prices in the new stores tend to be lover.

The consequences of recent modernisation in India may be somewhat different due to lower
purchasing power and the new stores may cater to only branded products aimed at upper
income segments.

The Indian retail environment has been witnessing several changes on the demand side due to
increased per capital income, changing lifestyle and increased product availability. In developed
markets, there has been a power shift with power moving from manufactures towards the
retailers. The strategies used by retailers to wrest power include the development of retailers
own brands and the introduction of slotting allowances which necessitate payments by
manufactures to retailers for providing shelf space for new products. The recent increased power

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