As India’s middle class grows and disposable incomes rise, “modern” retail is becoming the next hot sector of the Indian economy. Hundreds of millions of new consumers will join this retail revolution, venturing into supermarkets, department stores and air-conditioned shopping malls for the first time. But instead of just window-shopping, many of them will be serious buyers with money to spend. To cater for their needs, established players in the modern retail sector such as Biyani, Raheja and Goenka are being joined by the big names of Indian business - Reliance, Birla, Bharti, Tata, Future Group etc - who plan to spend billions over the next few years rolling out hypermarkets, big-box outlets and specialty stores. At the same time, property developers are getting on with the “malling” of India, and looking for high profile anchor tenants to lure customers.
Retail involves the distribution process of the product from manufacturer to ultimate consumers via short and convenient channels, i.e., retailers. Pantaloon, Big Bazaar, Wal-Mart, Subhiksha, Shoppers’ Stop, Pyramids, Bharti, Reliance Fresh, Food World, Heritage Fresh, etc. are some of the topmost retailers in India. Shopping complexes, malls, multiplexes are spreading not only in metropolis but in newly developing cities as well. To keep track of the marketing ethics involved in retail, it needs trained professionals to manage their outlets. Then there is the nature of the business itself. Retailing is a low-margin, high-volume, commodity business where profitability gets strained as competition intensifies. And if wrong choices are made regarding the location or the formatting of the store, woe betides the retailer. The catches are many and to make it big, a retailer would have to negotiate all the tricky turns most of the time.
Technology Impact:
The other important aspect of retailing relates to technology. It is widely felt that the key differentiator between the successful and not so successful retailers is primarily in the area of technology. Simultaneously, it will be technology that will help the organized retailer score over the unorganized players, giving both cost and service advantages.
Retailing is a ‘technology-intensive’ industry. It is quoted that everyday at least 500 gigabytes of data are transmitted via satellite from the 1,200 point-of-sales counters of JC Penney to its corporate headquarters. Successful retailers today work closely with their vendors to predict consumer demand, shorten lead times, reduce inventory holding and thereby, save cost. Wal-Mart pioneered the concept of building a competitive advantage through distribution and information systems in the retailing industry. They introduced two innovative logistics techniques - cross-docking and electronic data interchange.
Today, online systems link point-of-sales terminals to the main office where detailed analyses on sales by item, classification, stores or vendor are carried out online. Besides vendors, the focus of the retailing sector is to develop the link with the consumer. ‘Data Warehousing’ is an established concept in the advanced nations. With the help of ‘database retailing’, information on existing and potential customers is tracked. Besides knowing what was purchased and by whom, information on softer issues such as demographics and psychographics is captured.
With differentiating strategies - value for money, shopping experience, variety, quality, discounts and advanced systems and technology in the back-end, change in the equilibrium with manufacturers and a thorough understanding of the consumer behavior, the ground is all set for the organized retailers.
It would be important to note, however, that the retailing industry in India is still a ‘protected industry’. It is one of the few sectors which still have restrictions on FDI. Given the current trend in liberalization, it will not be long before the retailing sector is also thrown open to international competition. This will see a further segregation of the international retailing brands and the domestic retailers, thereby injecting much greater dynamism into the market. That will be when the real action will begin.
Retailing scenario - India
The retail scenario in India is unique. Much of it is in the unorganized sector, with over 12 million retail outlets of various sizes and formats. Almost 96% of these retail outlets are less than 500 sq.ft. in size, the per capita retail space in India being 2 sq.ft. Compared to the US figure of 16 sq.ft., India’s per capita retailing space is thus the lowest in the world. With more than 9 outlets per 1,000 people, India has the largest number in the world. Most of them are independent and contribute as much as 96% to total retail sales.
Because of the increasing number of nuclear families, working women, greater work pressure and increased commuting time, convenience has become a priority for Indian consumers. They want everything under one roof for easy access and multiplicity of choice. This offers an excellent opportunity for organized retailers in the country who account for just 2% (and modern stores 0.5%) of the estimated US $180 billion worth of goods that are retailed in India every year.
The growth and development of organized retailing in India is driven by two main factors: Lower prices and benefits the consumers can’t resist. According to experts, economies of scale drive down the cost of the supply chain, allowing retailers to offer more benefits offered to the customer.
Employment Opportunities in Retail
India is one of the top ten emerging retail markets all over the globe. There are approximately 4.3 million retail outlets spread over the nation. According to Retail Association of India (RAI), there is a demand for 1.25 million retail personnel which will go up to 3.25 million by the year 2009-10. While the retail industry offers professional opportunities in functions common to all other management functions like finance, information technology and human resource management, it offers two major professional paths unique to the industry, i.e., inventory planning and buying. Retail Industry has huge demand for quality managers to implement their marketing and sales strategies. It demands good time management skills, leadership qualities, good communication skills, decision making abilities, better team effort and strong marketing awareness with their personnel. Employers look for people who enjoy working with others and who have the tact and patience to deal with typical customers. Among other desirable characteristics are an interest in sales work, a smart personality and the ability to communicate clearly and effectively. The multilingual characteristic may be helpful for employment in communities where people from various cultures visit to shop. Marketing and Sales are the building blocks of retail industry. It offers career in the position of Retail Manager, Purchasing Manager, Store Manager, Customer Service Representative, Data Processing Executive, Floor Supervisor, and Retail Salespersons and so on. Majority of career opportunities are also emerging in Corporate Planning, Trend forecasting, Project Management-Store Construction and Customer Relationship Management (CRM) as well.
Institutes/Universities Offering Courses in Retail Management:
The emerging boom in retail industry has forced the academic institutions to offer programs in Retail Management. The Retail Management is a professional program which prepares a graduate to enter in the field of Retailing. Various Degree and Diploma Level programs are running in India by academic institutions to cater to the needs of the Retail Sector. MBA (Retail Management), Post Graduate Diploma Program in Retail Management (PGPRM), Post Graduate Program in Retail Communications Management (PGRCM), Post Graduate Program in Retail (PGPR) and Diploma in Retail Management (DRM) are some good options. It develops a broad and in-depth understanding of all aspects of retail management, not only retail outlets and the support activities, but also retailing sector in the broad context of the economy.
Course Contents
Indian Retailing Environment, Electronic Retailing, Marketing Research, Retail Selling, Mall Management, Merchandising Management, Retail Purchasing, Retail Pricing, Retail Organization, Retail Management, Consumer Behavior, Management Information System, Supply Chain Management (SCM) etc.
List of Universities/ Institutes
1. Andhra University - MBA (RM) Andhra University, Vishakhapatnam –530003,
Andhra Pradesh, India,
http://www.andhrauniversity.info
2. Anna University - MBA (RM) Anna University, Chennai – 600025.
http://www.annauniv.edu
3. Narsee Monjee Institute of Management (Deemed University) -MBA (RM) V. L. Mehta Road, Vile Parle (W), Mumbai-400056. India. http://www.nmims.edu
4. Birla Institute of Management Technology – PGDM, Plot No. 5, Knowledge Park II, Greater Noida -201306, UP, http://www.bimtech.ac.in
5. Institute of Chartered Financial Analysts of India - PGDRM ICFAI, 104 Nirmal Towers, Dwarkapuri Colony, Punjagutta, Hyderabad – 500082, http://www.icfai.org.
6. IMT Distance and Open Learning Institute – PGDRM, A 16, Site 3, UPSIDC Industrial Area, Meerut Road, Ghaziabad -201003,
http://www.imtcdl.ac.in
7. Indian School of Retail - PGDRM , Images Pearl Retail Solutions, Site 2, Pocket OCF, Sector C, Vasant Kunj, Nelson Mandela Road, Delhi-110070 http://www.indianretailschool.com
8. K.J. Somaiya Institute of Management – PGDM, Vidyanagar, Vidyavihar (E).
Mumbai - 400077.
http://www.simsr.somaiya.edu
9. Mudra Institute of Communications - PGRCM, Shela, Ahmedabad - 380058,
Gujarat, India, http://www.mica-india.net
10. Symbiosis Centre for Distance Learning – PGDRM, Symbiosis Bhavan, 1065 B Gokhale Cross Road Model Colony, Pune-411016, Maharashtra.
http://www.scdl.net
The significance of these remarks sinks in gradually. With planned investments of $22 billion over the next five years - excluding what might be brought in by new global and large local players henceforth — the retail sector is expected to grow 40% to $427 billion by 2013.
In their crosshairs are a host of retail-related activities such as cold chains, retail supply logistics, warehousing, sourcing and merchandising management. All of which are seen as absolutely essential if the front-end retail business is to take off on a meaningful scale across the country.
Climbing the Greased Pole
Moving up the evolutionary ladder will not be easy for India’s retailers, especially given the large number of potential spoilers. Availability of quality retail space will be a key determinant for the growth of the sector. With most Indian cities undergoing rapid urbanization, spiraling rental costs has most retailers worried already. Hitherto, most retailers have preferred to go in for long-term leases. But with real estate prices in most top tier cities hitting the roof in the past two years, lease rental increases are making business unviable for organized retail.
Conclusion:
Indian retailing, that enjoys many unique features, is still done in a primitive way. Barring a few exceptions, Indian retailers, particularly Fast Moving Consumer Group (FMCG) retailers, are not in a position to implement world-class practices of supply chain management. The concepts of Quick Response or Efficient Consumer Response are unheard of in Indian retailing. The two bases of modern retailing management, the Electronic Data Interface and a mutually respectable partnership among retailers and suppliers (the manufacturers) are missing to a great extent in Indian context. Also, Indian marketing channel members are performing some unnecessary tasks, which make the channel structure heavy and inefficient. Though these inefficiencies are observed in all retailing irrespective of industry, the symptoms are more evident in Indian FMCG retailing. Inefficiency in retailing leads to lower profitability of the retailers and lower service outputs for the consumers.
Ways and means to strengthen the position of the retailing industry, doing away with the causes for the inefficiencies, therefore, are to be taken up in an urgent manner. Such measures may include establishment of retailers’ co-operatives, merger and buy-out, use of technology to the greatest possible extent, setting up of non store retailing centers and increase in franchisee network.