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MACRO ANALYSIS OF RETAIL INDUSTRY

Management Research Project -I


Submitted
In the partial fulfillment of the Degree of
Master of Business Administration
Semester-III

By

Name Exam No.


Bhatiya Nirmal P. 13044311010
Dataniya vijendra m 13044311020
Joshi dixant 13044311030
Nayak kinal p 13044311042
Patel rajan d 13044311098
Patel saloni j. 13044311104

Under the Guidance of:


Prof. (Dr.) Mahendra Sharma
Prof. & Head,
V. M. Patel Institute of Management.
&
Dr. Harsha Jariwala
Dr. Abhishek Parikh
Faculty Members
V. M. Patel Institute of Management.

Submitted To:
V. M. Patel Institute of Management,
Ganpat University,
Kherva.

(December, 2014)

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CERTIFICATE BY THE GUIDE

This is to certify that the contents of this report entitled Macro Analysis Of Retail Industry by
Bhatiya Nirmal,Dataniya vijendar,Joshi dixant,Nayak kinal,patel rajan,patel saloni submitted
to V. M. Patel Institute of Management for the Award of Master of Business Administration
(MBA Semester -III) is original research work carried out by them under my supervision.

This report has not been submitted either partly or fully to any other University or Institute for
award of any degree or diploma.

Prof. (Dr.) Mahendra Sharma,


Professor & Head,
V.M.Patel Institute Of Management,
Ganpat University.
Kherva.
Date :
Place :

2
CANDIDATES STATEMENT

We hereby declare that the work incorporated in this report entitled Macro Analysis Of Retail
Industry in partial fulfillment of the requirements for the award of Master of Business
Administration (Semester - III) is the outcome of original study undertaken by me and it has not
been submitted earlier to any other University or Institution for the award of any Degree or
Diploma.
Bhatiya Nirmal P. 13044311010

Dataniya vijendra m 13044311020

Joshi dixant 13044311030

Nayak kinal p 13044311042

Patel rajan d 13044311098

Patel saloni j 13044311104

Date: 08/12/2014
Place: kherva ,Ganpat university

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PREFACE

Practical study plays a vital role in the field of education. It has been introduced for the student
to get practical knowledge along with theoretical knowledge only bookish knowledge is not
right way of learning anything especially for the management students. How management
principals are implemented in business can only be known through practical study, students can
be very well aware about industrial environment like problems, opportunity, different situation
etc. this helps the student to have better understanding and also give them a chance to show
their skills and ability.
The principal concern of this report is to reveal my learning of practical business scenario. In
writing this report I have drawn vast amount of the information from various senior people and
simultaneously supplemented by various other people, annual reports, letters, journals etc.
Here, I am presenting a project on the different concept that I saw, fill and experience, while the
work on the project report. I have tried my level best to do the proper justification with my
work in this project.

Bhatiya Nirmal P. 13044311010

Dataniya vijendra m 13044311020

Joshi dixant 13044311030

Nayak kinal p 13044311042

Patel rajan d 13044311098

Patel saloni j 13044311104

4
ACKNOWLEDGEMENT

It was really difficult for me to complete the management research project without getting co-
operation of certain people. In other words there are so many external people who directly or
indirectly help me in my management research project.
First of all, I am very grateful to our collage H.O.D. Prof. MAHENRA SHARMA for his able
leadership and our project Report who providing their valuable time and guideline to me
regarding the management Research project report.
I am also thankful to Dr.HarshaJariwala and Dr. Abhishek Parikh who gives guideline our
group to do management research report in their college and helped me by giving all the
required information for a period . I am also thankful to my friends who help me and guide me.

Bhatiya Nirmal P. 13044311010

Dataniya vijendra m 13044311020

Joshi dixant 13044311030

Nayak kinal p 13044311042

Patel rajan d 13044311098

Patel saloni j 13044311104

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CONTENTS

Sr. No Particular Page No.


Certificate by the guide II
Candidates statement III
Preface IV
Acknowledgement V
1 Introduction Of The Industry 1
1.1 Introduction 2
1.2 History Of Retail Industry 4
1.3 Type 5
1.4 Strategy for annual retail sales 13
2 Major Players Of The Industry
2.1 Arvin life style ltd industry 15
2.2 Future life style ltd industry 17
2.3 Future retail ltd industry 18
2.4 Shoppers-st ltd industry 21
2.5 Trent ltd industry 23
3 Strategic Analysis
3.1 Pest Analysis 26
3.2 Group Mapping 45
3.3 Competitive Profile Matrix 54
3.4 Efe Matrix 67
3.5 SWOT Analysis 82
3.6 Bcg Matrix 84
3.7 Porters Five Force Analysis 94
3.8 Space Matrix 98
4 Financial Analysis
4.1 Trade Analysis 100
4.2 Ratio Analysis 101

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5 Conclusion & Finding 116
6 B-Plan Of Retail Industries 125
7 Bibliography 144
8 Anuxe ry 148

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CHAPTER- 1

Introduction of industry
1.1 History of Retail

"Retail stores" redirects here. For the comic strip by Norm Fruit, see Retail (comic strip).
This article includes a list of references, but its sources remain unclear because it has
insufficient inline citations. Please help to improve this article by introducing more precise
citations.

Retail

Macy's Herald Square, New York City.

Retail is the sale of goods and services from individuals or businesses to the end-user. Retailers
are a part of an integrated system called the supply chain. A retailer purchases goods or
products in large quantities from manufacturers directly or through a wholesale, and then sells
smaller quantities to the consumer for a profit. Retailing can be done in either fixed locations
like stores or markets, door-to-door or by delivery. In the 2000s, an increasing amount of
retailing is done using online websites, electronic payment, and then delivery via a courier or
via other services.

Retailing includes subordinated services, such as delivery. The term "retailer" is also applied
where a service provider services the needs of a large number of individuals, such as for the
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public. Shops may be on residential streets, streets with few or no houses, or in a shopping mall.
Shopping streets may be for pedestrians only. Sometimes a shopping street has a partial or full
roof to protect customers from precipitation. Online retailing, a type of electronic commerce
used for business-to-consumer (B2C) transactions and mail order, are forms of non-shop
retailing.

Shopping generally refers to the act of buying products. Sometimes this is done to obtain
necessities such as food and clothing; sometimes it is done as a recreational activity.
Recreational shopping often involves window shopping (just looking, not buying) and browsing
and does not always result in a purchase.

Contents

1 Etymology
2 Types of retail outlets
o 2.1 Types by products
o 2.2 Types by marketing strategy
o 2.3 Other types
3 Global top ten retailers
4 Operations
o 4.1 Retail pricing
o 4.2 Competition
o 4.3 Staffing
o 4.4 Transfer mechanisms
5 Second-hand retail
6 Challenges
7 Sales techniques
8 Customer service
9 Statistics for national retail sales
o 9.1 United States
o 9.2 CE region
o 9.3 World
10 Consolidation
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11 See also
12 References
13 Further reading
14 External links

1.2Etymology

Retail comes from the Old French word tailler, which means "to cut off, clip, pare, divide" in
terms of tailoring (1365). It was first recorded as a noun with the meaning of a "sale in small
quantities" in 1433 (from the Middle French retail, "piece cut off, shred, scrap, paring").[1] Like
in French, the word retail in both Dutch and German also refers to the sale of small quantities
of items.

Types of retail outlets

San Juan de Dios Market in Guadalajara, Jalisco


Inside a supermarket in Russia

Walnut Market in Katra, Jammu & Kashmir, India

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A marketplace is a location where goods and services are exchanged. The traditional market
square is a city square where traders set up stalls and buyers browse the stores. This kind of
market is very old, and countless such markets are still in operation around the whole world.

In some parts of the world, the retail business is still dominated by small family- run stores, but
this market is increasingly being taken over by large retail chains. Most of these stores are
called high street stores. Gradually high street stores are being re-grouped at single locations
called malls. These are more defined and planned spaces for retail stores and brands.

1.3 Types by products

Retail is usually classified by type of products as follows:

Food products typically require cold storage facilities.


Hard goods or durable goods ("hardline retailers")[2] automobiles, appliances,
electronics, furniture, sporting goods, lumber, etc., and parts for them. Goods that do not
quickly wear out and provide utility over time.
Soft goods or consumables[3][4] clothing, other fabrics, footwear, cosmetics,
medicines and stationery. Goods that are consumed after one use or have a limited
period (typically under three years) in which you may use them.
Arts Contemporary art galleries, Bookstores, Handicrafts, Musical instruments, Gift
shops, and supplies for them.

1.4 Types by marketing strategy

There are the following types of retailers by marketing strategy:

Department store

Department stores are very large stores offering a huge assortment of "soft" and "hard goods;
often bear a resemblance to a collection of specialty stores. A retailer of such store carries
variety of categories and has broad assortment at average price. They offer considerable
customer service.

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Discount store

Discount stores tend to offer a wide array of products and services, but they compete mainly on
price offers extensive assortment of merchandise at affordable and cut-rate prices. Normally,
retailers sell less fashion-oriented brands.

Warehouse store

Warehouses that offer low-cost, often high-quantity goods piled on pallets or steel shelves;
warehouse clubs charge a membership fee.

Variety store

Variety stores offer extremely low-cost goods, with limited selection.

Demographic

Retailers that aim at one particular segment (e.g., high-end retailers focusing on wealthy
individuals).

Mom-And-Pop

A small retail outlet owned and operated by an individual or family. Focuses on a relatively
limited and selective set of products.

Specialty store

A specialty (BE: specialty) store has a narrow marketing focus - either specializing on specific
merchandise, such as toys, shoes, or clothing, or on a target audience, such as children, tourists,
or oversize women.[5] Size of store varies - some specialty stores might be retail giants such as
Toys "R" Us, Foot Locker, and The Body Shop, while others might be small, individual shops
such as Neuters of Savile Row.[5] Such stores, regardless of size, tend to have a greater depth of
the specialist stock than general stores, and generally offer specialist product knowledge valued
by the consumer. Pricing is usually not the priority when consumers are deciding upon a

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specialty store; factors such as branding image, selection choice, and purchasing assistance are
seen as important.[5] They differ from department stores and supermarkets which carry a wide
range of merchandise.[6]

Boutique

Boutique or concept stores are similar to specialty stores. Concept stores are very small in size,
and only ever stock one brand. They are run by the brand that controls them. An example of
brand that distributes largely through their own widely distributed concept stores is
L'OCCITANE en Provence. The limited size and offering of L'OCCITANE's stores are too
small to be considered a specialty store proper.

General store

A general store is a rural store that supplies the main needs for the local community;

Convenience store

A convenience store provides limited amount of merchandise at more than average prices with
a speedy checkout. This store is ideal for emergency and immediate purchases as it often works
with extended hours, stocking everyday;

Hype rmarkets

Provides variety and huge volumes of exclusive merchandise at low margins. The operating
cost is comparatively less than other retail formats.

Supermarket

A supermarket is a self-service store consisting mainly of grocery and limited products on non
food items. They may adopt a Hi-Lo or an EDLP strategy for pricing. The supermarkets can be
anywhere between 20,000 and 40,000 square feet (3,700 m2 ). Example: SPAR supermarket.

Mall

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A shopping mall has a range of retail shops at a single outlet. They can include products, food
and entertainment under one roof. Malls provide 7% of retail revenue in India, 10% in Vietnam,
25% in China, 28% in Indonesia, 39% in the Philippines, and 45% in Thailand.[7]

"Category killer" or specialist

By supplying wide assortment in a single category for lower prices a category killer retailer can
"kill" that category for other retailers. For few categories, such as electronics, the products are
displayed at the centre of the store and sales person will be available to address customer
queries and give suggestions when required. Other retail format stores are forced to reduce the
prices if a category specialist retail store is present in the vicinity.

E-tailor

The customer can shop and order through the internet and the merchandise is dropped at the
customer's doorstep or an e-tailor. Here the retailers use drop shipping technique. They accept
the payment for the product but the customer receives the product directly from the
manufacturer or a wholesaler. This format is ideal for customers who do not want to travel to
retail stores and are interested in home shopping. However, it is important for the customer to
be wary about defective products and non secure credit card transaction. Examples include
Amazon.com, Pennyful, and eBay.

Vending machine

A vending machine is an automated piece of equipment wherein customers can drop the money
in the machine and acquire the products. Some stores take a no frills approach, while others are
"mid-range" or "high end", depending on what income level they target.

Other types

Other types of retail store include:

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Automated Retail stores self-service, robotic kiosks located in airports, malls and
grocery stores. The stores accept credit cards and are usually open 24/7. Examples
include Zoom Shops and Red box.
Big-box stores encompass larger department, discount, general merchandise, and
warehouse stores.

Retailers can opt for a format as each provides different retail mix to its customers based on
their customer demographics, lifestyle and purchase behavior. A good format will lend a hand
to display products well and entice the target customers to spawn sales.

Ope rations

Retail pricing

The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup
amount (or percentage) to the retailer's cost. Another common technique is suggested retail
pricing. This simply involves charging the amount suggested by the manufacturer and usually
printed on the product by the manufacturer.

In Western countries, retail prices are often called psychological prices or odd prices. Often
prices are fixed and displayed on signs or labels. Alternatively, when prices are not clearly
displayed, there can be price discrimination, where the sale price is dependent upon who the
customer is. For example, a customer may have to pay more if the seller determines that he or
she is willing and/or able to. Another example would be the practice of discounting for youths,
students, or senior citizens.

Competition

Retail stores may or may not have competitors close enough to affect their pricing, product
availability, and other operations. A 2006 survey found that only 38% of retail stores in India
believed they faced more than slight competition.[10] Competition also affected less than half of
retail stores in Kazakhstan, Bulgaria, and Azerbaijan. In all countries the main competition was
domestic, not foreign.[11]

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Staffing

Because patronage at a retail outlet varies, flexibility in scheduling is desirable. Employee


scheduling software is sold, which, using known patterns of customer patronage, more or less
reliably predicts the need for staffing for various functions at times of the year, day of the
month or week, and time of day. Usually needs vary widely. Conforming staff utilization to
staffing needs requires a flexible workforce which is available when needed but does not have
to be paid when they are not, part-timeworkers; as of 2012 70% of retail workers in the United
States were part-time. This may result in financial problems for the workers, who while they are
required to be available at all times if their work hours are to be maximized, may not have
sufficient income to meet their family and other obligations.[12]

Transfer mechanis ms

There are several ways in which consumers can receive goods from a retailer:

Counter service, where goods are out of reach of buyers and must be obtained from the
seller. This type of retail is common for small expensive items (e.g. jewelry) and
controlled items like medicine and liquor. It was common before the 1900s in the United
States and is more common in certain countries like India.[which?]
Delivery, where goods are shipped directly to consumer's homes or workplaces. Mail
order from a printed catalog was invented in 1744 and was common in the late 19th and
early 20th centuries. Ordering by telephone was common in the 20th century, either
from a catalog, newspaper, television advertisement or a local restaurant menu, for
immediate service (especially for pizza delivery), remaining in common use for food
orders. Internet shopping - a form of delivery - has eclipsed phone-ordering, and, in
several sectors - such as books and music - all other forms of buying. Direct marketing,
including telemarketing and television shopping channels, are also used to generate
telephone orders. started gaining significant market share in developed countries in the
2000s.
Door-to-door sales, where the salesperson sometimes travels with the goods for sale.

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Self-service, where goods may be handled and examined prior to purchase.
Digital delivery or Download, where intangible goods, such as music, film, and
electronic books and subscriptions to magazines, are delivered directly to the consumer
in the form of information transmitted either over wires or air-waves, and is
reconstituted by a device which the consumer controls (such as an MP3 player; see
digital rights management). The digital sale of models for 3D printing also fits here, as
do the media leasing types of services, such as streaming.

Second-hand retail

See also: Charity shop

Some shops sell second-hand goods. In the case of a nonprofit shop, the public donates goods to
the shop to be sold. In give-away shops goods can be taken for free.

Another form is the pawnshop, in which goods are sold that were used as collateral for loans.
There are also "consignment" shops, which are where a person can place an item in a store and
if it sells, the person gives the shop owner a percentage of the sale price. The advantage of
selling an item this way is that the established shop gives the item exposure to more potential
buyers.E-tailers like OLX, Quikr etc. also working on second hand goods sales.

Challenges

To achieve and maintain a foothold in an existing market, a prospective retail establishment


must overcome the following hurdles:

Regulatory barriers including


o Restrictions on real estate purchases, especially as imposed by local
governments and against "big-box" chain retailers;
o Restrictions on foreign investment in retailers, in terms of both absolute amount
of financing provided and percentage share of voting stock (e.g., common stock)
purchased;

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Unfavorable taxation structures, especially those designed to penalize or keep out "big
box" retailers (see "Regulatory" above);
Absence of developed supply chain and integrated IT management;
High competitiveness among existing market participants and resulting low profit
margins, caused in part by
o Constant advances in product design resulting in constant threat of product
obsolescence and price declines for existing inventory; and
Lack of properly educated and/or trained work force, often including management,
caused in part by
o Lack of educational infrastructure enabling prospective market entrants to
respond to the above challenges.

Sales techniques

Behind the scenes at retail, there is another factor at work. Corporations and independent store
owners alike are always trying to get the edge on their competitors. One way to do this is to hire
a merchandising solutions company to design custom store displays that will attract more
customers in a certain demographic. The nation's largest retailers spend millions every year on
in-store marketing programs that correspond to seasonal and promotional changes. As products
change, so will a retail landscape. Retailers can also use facing techniques to create the look of
a perfectly stocked store, even when it is not.

A destination store is one that customers will initiate a trip specifically to visit, sometimes over
a large area. These stores are often used to "anchor" a shopping mall or plaza, generating foot
traffic, which is capitalized upon by smaller retailers.

Custome r service

Customer service is the "sum of acts and elements that allow consumers to receive what they
need or desire from your retail establishment." It is important for a sales associate to greet the
customer and make himself available to help the customer find whatever he needs. When a
customer enters the store, it is important that the sales associate does everything in his power to
make the customer feel welcomed, important, and make sure he leaves the store satisfied.

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Giving the customer full, undivided attention and helping him find what he is looking for will
contribute to the customer's satisfaction.[13] For retail store owners, it is extremely important to
train yourself and your staff to provide excellent customer service skills. By providing excellent
customer service, you build a good relationship with the customer and eventually will attract
more new customers and turn them into regular customers. Looking at long term perspectives,
excellent customer skills give your retail business a good ongoing reputation and competitive
advantage.

1.4 Statistics for national retail sales

United States

The United States retail sector features the largest number of large, lucrative retailers in the
world. A 2012 Deloitte report published in STORES magazine indicated that of the world's top
250 largest retailers by retail sales revenue in fiscal year 2010, 32% of those retailers were
based in the United States, and those 32% accounted for 41% of the total retail sales revenue of
the top 250.[15]

U.S. Monthly Retail Sales, 19922010

Since 1951, the U.S. Census Bureau has published the Retail Sales report every month. It is a
measure of consumer spending, an important indicator of the US GDP. Retail firms provide
data on the dollar value of their retail sales and inventories. A sample of 12,000 firms is
included in the final survey and 5,000 in the advanced one. The advanced estimated data is
based on a subsample from the US CB complete retail &food services sample.[16]

CE region

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In 2011 the grocery market in six Central European (CE) countries was worth nearly 107bn,
2.8% more than the previous year when expressed in local currencies. The increase was
generated foremost by the discount stores and supermarket segments, and was driven by the
skyrocketing prices of foodstuffs. This information is based on the latest PMR report entitled
Grocery retail in Central Europe 2012

World

National accounts show a combined total of retail and wholesale trade, with hotels and
restaurants. in 2012 the sector provides over a fifth of GDP in tourist-oriented island
economies, as well as in other major countries such as Brazil, Pakistan, Russia, and Spain. In all
four of the latter countries, this fraction is an increase over 1970, but there are other countries
where the sector has declined since 1970, sometimes in absolute terms, where other sectors
have replaced its role in the economy. In the United States the sector has declined from 19% of
GDP to 14%, though it has risen in absolute terms from $4,500 to $7,400 per capita per year. In
China the sector has grown from 7.3% to 11.5%, and in India even more, from 8.4% to 18.7%.

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CHAPTER-2

Major Player of the industry

2.1 Arvind life style


Industry :Retailing

165,000 ($55,000) in
1931 Arvind Mills Ltd is incorporated with share capital
Ahmedabad. Products manufactured are dhotiesareess, , mulls, dorias, crepes,
shirtings,lingerie, coatings, printed lawns and voiles cambrics, twills and gaberdine.
1987 The company took up a modernisation programme to triple the production of denim
cloth and to produce double yarn fabrics for exports. The new product groups identified
were the indigo dyed blue denim, high quality two-ply fabrics for exports, and products
such as buttasarees, full voils and dhoties.
1991 Arvind reached 100 million meters of denim per year, becoming the fourth largest
producer of denim in the world.
1992 The company increased the production of denim cloth by 23,000 tonnes per day by
modernising the plant at Khatraj of Ankur Textiles.
1994 The company operations were divided into Textile Division, Telecom division and
Garments division.
1995 Garment division launched ready to stitch jeans pack under the brand Ruf&Tuf.
1997 The marketing and distribution network of `Newport` brand was strengthened and
the relaunched Flying Machine and Ruggers brand were strengthened.
Arvind Mills set up an anti-piracy cell for the first time in India to curb large scale
counterfeiting of their brands Ruf&Tuf and Newport jeans.
Arvind Mills adopts the franchisee system for the manufacture and distribution of Ruf
and Tuf jeans.
Arvind Fashions doubles its capacity in the manufacturing facility in Bangalore to
produce Lee jeans.
1998 Arvind Mills emerges as the world's third largest manufacturer of denim.
Arvind Mills goes live with SAP R/3 ERP package in April 1997 in their new
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manufacturing units.
2003 For the fourth quarter, Arvind Mills witnesses 280% growth in the net profit
Arvind Mills Ltd is assigned a `P1+` rating by CRISIL, which indicates a very strong
rating for their commercial paper.
2005 For the fourth quarter in a row, Arvind Mills posted a profit growth in excess of 80
per cent.
Arvind Mills buys entire stake in Arvind Brands from ICICI Ventures.
2007 Arvind expands its presence in the brands and retail segment by establishing
MegaMart One of India's largest value retail chains.
2010 Arvind launches The Arvind Store, a concept putting the company's best fabrics,
brands and bespoke styling and tailoring solutions under one roof.
Arvind launches its first major Real Estate projects.
Arvind becomes one of India's largest producers of fire protection fabrics.
2012 Joint venture with PD Group, Germany, for manufacture of glass fabrics
2014 Joint venture with PVH Corp for Calvin Klein Businesses in India
Launches Formal suits with Goodhill Corporation Limited of Japan
2014 Joint venture with OG Corp, Japan, for manufacture and sale of non-woven fabrics,
project being spearheaded by Mr. Kunal Shah
2014 Forayed into the E-commerce segment with custom clothing brand 'Creyate' [7]

2.2 Future Retail Ltd


Industry :Retailing

Pantaloon Retail India Limited (PRIL), a retailer was incorporated in 12th October of the year
1987, headquartered in Mumbai, the company operates through primarily the Lifestyle' and
Value' formats through multiple delivery mechanisms and lines of business, some of them
being, fashion, food, general merchandise, home, leisure and entertainment, financial services,
communications and wellness. The Company has stores in 51 cities across the country,
constituting over 6 million square feet of retail space. It caters to the Lifestyle' segment through
its 35 Pantaloons Stores and 5 Central Malls, as well as its other concepts. In Value' retailing it
is present through 78 Big Bazaar hypermarkets, 113 Food Bazaars and other delivery formats.

In the year 1991, the company had launched BARE, the Indian jeans brand. Initial public offer
(IPO) was made in May of the year 1992. During the year 1994, the Pantaloon Shoppe, an
exclusive menswear store in franchisee format launched across the nation and also the company
starts the distribution of branded garments through multi-brand retail outlets across the nation.
In the year 1995, the John Miller, formal shirt brand of the company was launched in market.
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India's family store Pantaloons was launched in Kolkata during the year 1997. In the year 2001,
Big Bazaar, Is se sastaauracchakahinahin' India's first hypermarket chain was launched, after
this, a supermarket chain also launched in the period of 2002 under the name and style of Food
Bazaar. The Company had initiated India's first seamless mall in Bangalore in the name of
'Central' in the year 2004. During the year 2005, Fashion Station of the company was launched,
it was the popular fashion chain and also in the same year, a little larger' (aLL), an exclusive
store for plus-size individuals was launched. In 2006, Future Capital Holdings, the company's
financial arm launched its real estate funds Kshitij and Horizon and private equity fund
Indivision.

Multiple retail formats including Collection i, Furniture Bazaar, Shoe Factory, EZone, Depot
and futurebazaar.com are launched across the nation in the year 2006. The Company had signed
a Memorandum of Understanding (MOU) with Blue Foods Private Limited to form a 50-50
Joint Venture Company in July 31st of the year 2006 for setting up food courts and speciality
restaurants across the country. In January of the year 2008, the company had entered into joint
venture with US based Staples Indian office products business unit, Future Office. As at
February 2008, Pantaloon awarded a comprehensive USD 50 million 5- year IT outsourcing
contract to Wipro Infotech. The Company initiated its flagship hypermarket retail store 'Big
Bazaar' in Barrdhaman city during January of the year 2008. Pantaloons launched an exclusive
line of film merchandise 'TASHAN Collection' across all its 40 stores in April of the year 2008.

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2.3 future life style (Indi a) Ltd
Industry :Retailing

Future Lifestyle Fashions Limited [FLF] has been formed through the demerger of the lifestyle
fashion businesses of Future Retail Limited (formerly Pantaloon Retail (India) Limited) and
Future Ventures India Limited.

FLF brings together the four key components in the fashion industry a strong portfolio of
owned and licensed brands, a well established retail presence, a pan-India reach for its brands
through a strong distribution network and investments in fast growing fashion brands into a
single entity. It thus creates a unique player in the fashion industry that is primed to gain
leadership in building both fashion brands and fashion retailing in India. As an integrated
fashion company with presence across all key segments within the fashion industry, FLF will
benefit from operating mature businesses that have built its presence and strengths for well over
a decade. Now, as an integrated entity.

Live, Breathe & Think Fashion Fashion is ever-evolving and we will be sensitive, agile
and open to the rapidly evolving fashion market

Cons umers at our Core We create exceptional brands and experiences that reflect the
various identities and aspirations of Indian consumers and their spoken and unspoken needs,
wants and desires

Design is our Soul The spirit of our design-thinking lies not only in the brands and
experiences we create but also in building relationships, leading innovation, setting trends
and providing utmost fulfillment to consumers

Pursuit of Happiness Above all, we will collaborate and strive to bring smiles on the
faces and happiness in the lives of our co
The Company is an integrated fashion company with presence across key segments
within the fashion industry i.e. designs to distribution. Companys business has been
designed to capture the trend of consumers getting more attuned to fashion and brand
preferences. We have a portfolio of fashion brands that cover the entire gamut of sub-
categories including formal menswear, casual wear, active or sportswear, womens
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ethnic wear, womens denim wear, womens casual wear, footwear and accessories and
are present across various price points.
Our Company also focuses on investing in fast growing fashion companies and building
the portfolio of fashion brands. To further strengthen the fashion portfolio of our
Company, we have investments in companies, which owns/manages fashion brands like
Turtle, Clarks, Mother Earth, Tresmode, Mineral, etc.

2.4 Shoppers Stop Ltd


Industry :Retailing

An Indian retail sector major Shoppers Stop Limited (SS) opened its door in the year 1991, the
foundation was made by K Raheja Corp and it was incorporated on 16th June 1997 as a private
limited company. It started operations with the first store in suburban Mumbai and is now a
multi-channel retailer with 24 large format department stores and online presence. From its
inception, Shopper's Stop has progressed from being a single brand shop to becoming a Fashion
& Lifestyle store for the family. Today, Shopper's Stop is a household name, known for its
superior quality products, services and above all, for providing a complete shopping experience.
It provides retail range of branded and own label apparel, footwear, perfumes, cosmetics,
jewellery, leather products and accessories, home products, books, music and toys, operates in
the cities of Mumbai, Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Pune, Jaipur and
Gurgaon.

The first store was opened in the year 1991 at Andheri, a suburb in Mumbai, only with
Menswear and the Ladieswear was introduced in the year 1992. After a year, the company
added Children & non apparels to its list in 1993. Loyalty Program titled First Citizen was
launched by SS in the year 1994 and in 1995; the company had opened the second store in
Bangalore. The status of the company was changed to deemed public limited company in
December of the same incorporation year 1997. SS had opened its third store in Hyderabad
during the year 1998 and implemented JDA Retail ERP (a global leader in retail ERP packages)
in the year 1999. Also during the same year of 1999, the company's fourth & fifth stores in
Jaipur & Delhi were opened. During the year 2000, the company opened its sixth & seventh
store at Chennai &Chembur, Mumbai and also in the same year 2000, SS had acquired
Crossword, India's leading retail book chain.

25
The eight & ninth store in Pune &Bandra and tenth store in Kandivli, Mumbai were opened by
the company in 2001 and 2002 respectively. SS's status was further converted to a full- fledged
public limited company on 6th October 2003. The eleventh, twelfth & thirteenth store in
Mulund (Mumbai), Gurgaon and Kolkata were unlocked by the company in the 2003 itself.
During the year 2004, SS had opened its fourteen, fifteen & sixteenth store in Malad - Mumbai,
Kolkata & Bangalore. In 2005, SS had opened its seventeen, eighteen, nineteen & twentieth
store in Pune, Juhu - Mumbai, Bangalore & Ghaziabad. Also in the same year of 2005, the
company had launched M.A.C &Homestop, a home store. Mothercare in India and F & B
outlets Brio &Desi Cafe were launched by the company during the period of 2006.

SS made its release of twenty first (Mumbai) and twenty second store in Lucknow in the
identical year of 2006 and also acquired 45% of Timezone India. The Company had opened its
22nd Store at Noida in May 2007. During the same year 2007, the company had signed Joint
Venture (JV) (50:50) with the Nuance Group for Airport Retailing and also inked the
Memorandum of Understanding (MoU) with the Home Retail Group of UK to enter into a
franchise arrangement for the Argos formats of catalogue & internet retailing. In March 2008,
SS kicks its operation Kolkata, aggregating the 24 shops. The Company honored with
Emerging Market Retailer of the Year 2008 in April of the year 2008. In same April of the same
year 2008, SS had unveiled its new logo and introduced the new expression of the brand. SS
bagged Department Store of the Year award in November of the year 2008 for its reputation in
the industry.

26
CHAPTER-3
Strategic Analysis
Industry Analysis
Strategic analysis of Industry's external environment
To gain a deep understanding of Retail Industry's competitive environment we had used some
well-defined concepts and analytical tools to get a clear answers of the following questions:
1. What are the impact of Political environment, Economic environment, Social
environment and Technology on the Indian Retail Industry?
2. What are the Strength, Weaknesses, Opportunities and Threats of Indian Retail Industry?
3. What kind of Competitive forces are industry members facing?
4. What is the different type of driving forces that are acting on Indian Retail Industry and
what is the impact of these driving forces on Indian retail Industry?
5. What are the Barriers, Obstacles and the Weaknesses of Indian Retail Industry?
For getting the answers of the above questions we have used some of the analytical tools like
PEST Analysis, SWOT analysis, BOW analysis and Michael Porter's five force analysis.

3.1 PEST analysis


Now, in a particular geographic region, the environment there affects the retailers in the region in
various ways. We have studied the effects under the following heads:

1. Political Environment
2. Economic Environment
3. Social (Socio-Cultural) Environment
4. Technological Environment

27
Impact of Political Environment on Indian Retail Industry:
Government Intervention in Indian Retail
"India's government seems to be on a gradual but definite path toward allowing foreign retailers
into the country...." suggests the A.T. Kearney's Retail Development Index 2006. It is a common
knowledge that the Union government has to face a number of hurdles both from it's opponents
as well as it's allies before it could announce the final verdict. There have been demands from all
corners regarding framing of rules to safeguard interests of the so-called .small traders.
Simultaneously economists have the consensus that industrialization is imperative for the growth
of the economy and foreign investment has to play an inevitable role in it. With Lok Sabha
elections to come in 2009, the Union government too seems a bit confused regarding decision in
who's favor can provide it a political edge. So in this study let us compare the views for and
against liberalization as is held by Indian Bureaucrats.

Entry of large players: stiff opposition from Left Parties


The recent outburst of fury among the Kerala's LDF(Left Democratic Front) Government has
been noticeable. They have exacted for a three-pronged approach to prevent the retail giants
from serving the Keralians. At the first stage, not only MNCs but also the local retail giants like
Reliance will be shown the red signal. In fact a magnified CPI protest has compelled a Reliance
Fresh outlet in Kochi to take police protection. The draft of a bill has been finalized to amend the
Kerala Essential Commodities Act so that the state government can intervene in the retail
market.
As a second step, local councils (70% of which is controlled by the Left) will deny licenses, that
are mandatory to start a retail chain in the state. Kochi and Tiruvananthapuram corporations will
be in fact commanded to reconsider the licenses of outlets that are already operating in the
regions. This strategy grants more power to the state. However a ban on shopping in these outlets
is still not clear. The third and the most revolutionary judgment is actually an outcome of the
whole game. Government-controlled supermarkets and hypermarkets will be established in some
of the key cities in the state.

This rigid legal wall not only in Kerala but across the country has been born out of a traditional
mindset. Kerala claims to have a literacy rate of 90.92% and a sex ratio of 1058 females per 1000
males. The data speaks for the government's prudent commitment in the case of Kerala. So it is

28
high time that the government opens up avenues for its people to let them grow and become self
dependent.

But the government is still holding good, the conventional 'infant industry' outlook. The main
worry is the negative impact on the already gloomy condition of employment. Let's make an
attempt to understand the vicious circle of unorganized retailing and present employment
scenario. Unorganized retailing has a share of about 96% in the Indian retail sector. But why
should people work in such miserable situations if the manufacturing and services sector are
booming is the overwhelming question. There has been a trend to migrate to cities in search of
alluring bright city lights. But the consequences has been been even worse- earning lower than
expected wages(Harris Todaro model of migration). The illiterate and unskilled people
ultimately set up a grocery shop to earn a living. This gives birth to another unorganized retail
shop in India and thus enlarges its share. So the unorganized retail market in India has born out
of fate rather than selection.

The Actual Scene Those opposing the expansion of organized retail in India must
understand that the share of primary sector shrinks and that of the secondary and then the
tertiary sector expands as an economy grows. This is the basic structural adjustment in case of
any transforming economy. India is at a take off stage. A retardation in the agricultural sector is
not permissible but
inhibiting the growth of services on grounds of protection to agriculture is more irrational. A
proof of this has been seen in a small town of North Bengal. The opening of a Big Bazaar (brand
name for stores under Pantaloon) departmental store has seen a human deluge of about 7,000
people in the 35,000 sqft shopping mall by 3pm. This clearly indicates that people (even in
remote places) have become fed up of monotonous marketing practices and demand nowadays is
purely governed by choice.

The Ruling UPA government's outlook


The UPA government is rather clear in its aim of taking India to new highs. The commerce
minister has repeatedly asserted that FDI will kill two birds with the same stone. It will generate
substantial direct as well as indirect employment and at the same time will not tamper with the
present scope of the unorganized retail market. The indirect employment includes jobs in

29
transport, packaging and other logistic services. It will enhance competition in the country thus
giving a virtual chance to face global challenges while operating at home; Mr. Nath is clearly
focused on the utilization of FDI in acquiring benefits. It is true that such investments will bring
in huge imports but this may also help in the Indian products reaching the foreign consumers.
Foreign majors such as Wal-Mart, Tesco and Carrefour are ready to enter India. The UPA
government, has already permitted 51 percent FDI in Single-brand products without consulting its
allies and it is expected that slowly but steadily the government will achieve its goal.

Political impact of larger FDI in India


The political impact of larger FDI in India has transformed the Indian investment scenario in
various areas. The fact that more multinational corporations are investing in India signifies that
India is increasingly focusing on the industrial sector.

The increase in Foreign Direct Investments resulted in the Government of India making critical
reforms in 1991 and since then, the emphasis on Indian industry has been constantly on the rise.

The political impact of larger FDI is influencing the government to initialize and support
concepts like liberalization. The political climate is focusing on liberalization of banking,
telecom, infrastructure, and insurance sectors. The political scenario is changing gradually, and is
accepting the concept of Foreign Direct Investment widely within the country. The government
is looking forward to working on the rural areas and bringing about equality in terms of
investment and wealth distribution with the urban areas.

In November, 1991 there was tremendous activism against opening up the Indian market to
multinational corporations. But now, the situation is completely different since there has been an
increase in the investment of multinational corporations. The political scenario too is learning to
accept globalization and privatization with an open and progressive outlook. Reformation in this
regard is taking place in the public sector, financial services, and tax structures as well.

The political scenario of India is looking forward to Foreign Direct Investment as a mechanism
for development. In fact, there has been development in the fields of land use, water, power
generation, and roads. This points towards the great political impact of larger FDI.

30
The increase in FDI flow has strengthened the foreign political relations and now foreign
companies are trying to persuade the Indian Parliament to increase.

Impact of Economic Environment on Retail Industry


India has been one of the best performers in the world economy in recent years, but rapidly rising
inflation and the complexities of running the world's biggest democracy are proving challenging,

India's economy has been one of the stars of global economics in recent years, growing 9.2% in
2007 and 9.6% in 2006. Growth had been supported by markets reforms, huge inflows of FDI,
rising foreign exchange reserves, both an IT and real estate boom, and a flourishing capital
market.

Like most of the world, however, India is facing testing economic times in 2008. The Reserve
Bank of India had set an inflation target of 4%, but by the middle of the year it was running at
11%, the highest level seen for a decade. The rising costs of oil, food and the resources needed
for India's construction boom are all playing a part.
India has to compete ever harder in the energy market place in particular and has not been as
adept at securing new fossil fuel sources as the Chinese. The Indian Government is looking at
alternatives, and has signed a wide-ranging nuclear treaty with the US, in part to gain access to
nuclear power plant technology that can reduce its oil thirst. This has proved contentious though,
leading to leftist members of the ruling coalition pulling out of the government.

As part of the fight against inflation a tighter monetary policy is expected, but this will help slow
the growth of the Indian economy still further, as domestic demand will be dampened. External
demand is also slowing, further adding to the downside risks.

The Indian stock market has fallen more than 40% in six months from its January 2008 high. $6b
of foreign funds have flowed out of the country in that period, reacting both to slowing economic
growth and perceptions that the market was over-valued.

It is not all doom and gloom, however. A growing number of investors feel that the market may
now be undervalued and are seeing this as a buying opportunity. If their optimism about the long

31
term health of the Indian economy is correct, then this will be a needed correction rather than a
downtrend.

The Indian government certainly hopes that is the case. It views investment in the creaking
infrastructure of the country as being a key requirement, and has ear-marked 23.8 trillion rupees,
approximately $559 billion, for infrastructure upgrades during the 11th five year plan. It expects
to fund 70% of project costs, with the other 30% being supplied by the private sector. Ports,
airports, roads and railways are all seen as vital for the Indian Economy and have been targeted
for investment.

Further hope comes from the confidence of India's home bred companies. As well as taking over
the domestic reins, where they now account for most of the economic activity, they are also
increasingly expanding abroad. India has contributed more new members to the Forbes Global
2000 than any other country in the last four years.
Recent Growth Trends in Indian Economy
India's Economy has grown by more than 9% for three years running, and has seen a decade of
7%+ growth. This has reduced poverty by 10%, but with 60% of India's 1.1 billion
populationliving off agriculture and with droughts and floods increasing, poverty alleviation is
still a major challenge.

The structural transformation that has been adopted by the national government in recent times
has reduced growth constraints and contributed greatly to the overall growth and prosperity of
the country. However there are still major issues around federal vs state bureaucracy, corruption
and tariffs that require addressing. India's public debt is 58% of GDP according to the CIA
World Fact book, and this represents another challenge.

During this period of stable growth, the performance of the Indian service sector has been
particularly significant. The growth rate of the service sector was 11.18% in 2007 and now
contributes 53% of GDP. The industrial sector grew 10.63% in the same period and is now 29%
of GDP. Agriculture is 17% of the Indian economy.

32
Growth in the manufacturing sector has also complemented the country's excellent growth
momentum. The growth rate of the manufacturing sector rose steadily from 8.98% in 2005, to
12% in 2006. The storage and communication sector also registered a significant growth rate of
16.64% in the same year.

Additional factors that have contributed to this robust environment are sustained in investment
and high savings rates. As far as the percentage of gross capital formation in GDP is concerned,
there has been a significant rise from 22.8% in the fiscal year 2001, to 35.9% in the fiscal year
2006. Further, the gross rate of savings as a proportion to GDP registered solid growth from
23.5% to 34.8% for the same period.
Impact of Social(Socio-Cultural) Environment on Indian Retail Industry
The demographic trend and lifestyle patterns, of the society that a retailer intends to serve, decide
the retailer's strategy. Traditionally, children seldom accompanied their parents while grocery
food shopping. Shopping for children was confined to that during festivals when dresses were
brought for them. But, in the present day, due to scarcity of time, working parents prefer to spend
as much time as possible with their children and this includes their shopping hours also. As the
organization retail sector offers the option of entertainment along with shopping, the younger
couples opt for these retail outlets for shopping.

The results of this study conducted by KSA Techno Park clearly reflect that the buying patterns
do vary according to the customs and lifestyle of a region. In the south approximately seven
hours are spent on shopping per week. This figure is the highest amongst the four zones, which
probably explains the more spurt of new malls and supermarkets in the south than in the other
zones.

Further, the study has attempted to find out what a customer expects out of a store. Here, the six
attributes desired by most number of people (65% and above) are polite and courteous
salespeople, quality of products, non intrusive sales persons, value for money, attractive displays
and range of products.

Although desired by a very low percentage of people (only 10%) yet the attribute of an
entertainment centre for children has also figured in. That is to say, apart from quality and range

33
of products, value for money and attractive displays, the human touch has a vital role to play.
Smart, polite and courteous sales people might make all the difference for a store, which is like
any other in terms of its Product offerings. There is also emphasis on schemes and promotions,
which, as the study ratifies, do pull customers. Further the trend is towards more convenience
and flexibility in terms of exchange/ return policies, which play a vital role in encouraging the
purchase.

34
The social Impact of FDI
The social impact of larger FDI include the product market as well because many new products
come into the market as a consequence of FDIs. As a result, the people of India enjoy
unprecedented exposure to branded and quality goods. In fact, various training methods,
personality grooming, and soft skills are given by multinational corporations which impart value
to human resources.

Owing to social impact of larger FDI, India also enhance its educational system. Since 2003, the
Indian government has been allowing 100% FDIs in education, which means that foreign
schools, colleges, and universities can set up wholly owned subsidiaries in India. Students
passing out of these institutes will be awarded foreign degrees and certificates. The social impact
of larger FDI in education is such that the number of foreign students pursuing higher education
in India has increased by a large margin. Also, the 'brain-drain' issue has also been checked to a
significant extent since the number of students going out of India has also reduced.

Even the civil society can work with the government and help in reducing bureaucratic hassles
and interferences. The increase in FDI in India is also helping in the liberalization of labor
through which the inequality in wage earnings will be reduced.

There is implementation of higher education and training for the laborers. The health facilities
also increase with better and sophisticated products and processes. India is definitely developing
in a much faster pace now than before but in spite of that, it can be identified that developments
have taken place unevenly. This means that while the more urban areas have been tapped, the
poorer sections are inadequately reached out to. To get the complete picture of growth, it is
essential to make sure that the rural section has equal amount of development as the urbanized
ones. FDI helps to focus in this area thus, fostering social equality and at the same time a
balanced economic growth. The social impact of larger FDI brings about a more broadminded
outlook in the Indian society, leaving alone a few who would be a bit conservative. However, the
condition of the Indian urban sector has improved drastically thereafter, which we still await the
developments from other areas of the Indian economy.

35
Impact of Technology on Indian Retail Industry

Over the years as the consumer demand increased and the retailers geared up to meet this
increase, technology evolved rapidly to support this growth. The hardware and software tools
that have now become almost essential for retailing can be into 3 broad categories.

Customer Interfacing Systems


Bar Coding and Scanners
Point of sale systems use scanners and bar coding to identify an item, use pre-stored data to
calculate the cost and generate the total bill for a client. Tunnel Scanning is a new concept where
the consumer pushes the full shopping cart through an electronic gate to the point of sale. In a
matter of seconds, the items in the cart are hit with laser beams and scanned. All that the
consumer has to do is to pay for the goods.

Payment
Payment through credit cards has become quite widespread and this enables a fast and easy
payment process. Electronic cheque conversion, a recent development in this area, processes a
cheque electronically by transmitting transaction information to the retailer and consumer's bank.
Rather than manually process a cheque, the retailer voids it and hands it back to the consumer
along with a receipt, having digitally captured and stored the image of the cheque, which makes
the process very fast.

Internet
Internet is also rapidly evolving as a customer interface, removing the need of a consumer
physically visiting the store.

36
Operation Support Systems

ERP System
Various ERP vendors have developed retail- specific systems which help in integrating all the
functions from warehousing to distribution, front and back office store systems and
merchandising. An integrated supply chain helps the retailer in maintaining his stocks, getting
his supplies on time, preventing stock-outs and thus reducing his costs, while servicing the
customer better.

CRM Systems
The rise of loyalty programs, mail order and the Internet has provided retailers with real access
to consumer data. Data warehousing & mining technologies offers retailers the tools they need to
make sense of their consumer data and apply it to business. This, along with the various available
CRM (Customer Relationship Management) Systems, allows the retailers to study the purchase
behavior of consumers in detail and grow the value of individual consumers to their businesses.

Advanced Planning and Scheduling Systems


APS systems can provide improved control across the supply chain, all the way from raw
material suppliers right through to the retail shelf. These APS packages complement existing (but
often limited) ERP packages. They enable consolidation of activities such as long term
budgeting, monthly forecasting, weekly factory scheduling and daily distribution scheduling into
one overall planning process using a single set of data.

Leading manufactures, distributors and retailers and considering APS packages such as those
from i2, Manugistics, Bann, MerciaLincs and Stirling- Douglas.

37
Strategic Decision Support Systems

Store Site Location


Demographics and buying patterns of residents of an area can be used to compare various
possible sites for opening new stores. Today, software packages are helping retailers not only in
their locational decisions but in decisions regarding store sizing and floor-spaces as well.

Visual Merchandising
The decision on how to place & stack items in a store is no more taken on the gut feel of the
store manager. A larger number of visual merchandising tools are available to him to evaluate
the impact of his stacking options. The SPACEMAN Store Suit from AC Neilsen and
ModaCADare example of products helping in modeling a retail store design.

38
3.2 SWOT Analysis

Strength of Indian Retail Industry

Retailing is a "technology-intensive" industry

It is technology that will help the organized retailers to score over the unorganized retailers.
Successful organized retailers today work closely with their vendors to predict consumer
demand, shorten lead times, reduce inventory holding and ultimately save cost. Today all the
organized Retailers are using ERP i.e., Enterprise Resource planning for their retail business.
The development of IT in Retailing sector became one of the major reason for Indian Retail
Industry to be the most cost competitive and hence it helps the retailers to adopt the low cost
provider strategy.

Size of organized retail stores over unorganized retail stores

Due to the large size of the stores, Retailers are able to offer more and more variety of products
to the customers. In Indian Retail Industry the size of the stores varies from 1500 sqft to
upto50,000 sp ft. This is much larger in compare to other unorganized stores. Thus organized
retail stores will be able to stock more product in the stores. And thus they becomes more
efficient to purchase the products in a bulk quantity from the suppliers and hence it reduces the
bargaining power of the supplier and helps the retailer to offer product at the lower prices.

Concept of "everything under one roof.

Before one or two decades customers were buying different products from different stores, this
concept was quite inconvenient for the customers. But due to the development of the
organisedretail stores customers got a new experience of shopping where they are getting all the
products under the same roof. This had increased the popularity of Indian Retail Industry.

39
Weakness

Less Conversion level:


Despite high footfalls, the conversion ratio has been very low in the retail outlets in a mall as
compared to the standalone counter parts. It is seen that actual conversions of footfall into sales
for a mall outlet is approximately 20-25%. On the other hand, a high street store of retail chain
has an average conversion of about 50-60%. As a result, a stand-alone store has a ROI (return on
investment) of 25-30%; in contrast the retail majors are experiencing a ROI of 8T 10%.

Customer Loyalty:
Retail chains are yet to settle down with the proper merchandise mix for the mall outlets. Since
the stand-alone outlets were established long time back, so they have stabilized in terms of
footfalls & merchandise mix and thus have a higher customer loyalty base.

Opportunity

Growth of middle class


The Indian middle class is already 30 Crore & is projected to grow to over 60 Crore by 2010
making India one of the largest consumer markets of the world. The projections indicate that by
2015, India will have over 55 Crore people under the age of 20 - reflecting the enormous
opportunities possible in the kids and teens retailing segment.

Growth of total retail market:


Organized retail is only 3% of the total retailing market in India. It is estimated to grow at the
rate of 25-30% p.a. and reach INR 1,00,000 Crore by 2010.

Percolating down:
In India it has been found out that the top 6 cities, contribute for 66% of total organized retailing.
While the metros have already been exploited, the focus has now been shifted towards the tier-II
cities. The 'retail boom', 85% of which has sofar been concentrated in the metros is beginning to

40
percolate down to these smaller cities and towns. The contribution of these tier-II cities to total
organized retailing sales is expected to grow to 20-25%.

Rural Retailing:
India's huge rural population has caught the eye of the retailers looking for new areas of growth.
ITC launched India's first rural mall"Chaupal Saga" offering a diverse range of products from
FMCG to electronic goods to automobiles, attempting to provide farmers a one-stop destination
for all their needs." Hariyali Bazar" is started by DCM Sriram group which provides farm related
inputs & services. The Godrej group has launched the concept of 'agri-stores' named "Adhaar"
which offers agricultural products such as fertilizers & animal feed along with the required
knowledge for effective use of the same to the farmers. Pepsi on the other hand is experimenting
with the farmers of Punjab for growing the right quality of tomato for its tomato purees & pastes.

Low cost of operations:


The most attractive component of India's value proposition is its cost attractiveness. Existing
players are increasingly turning to Tier II and Tier III cities for retail establishments and for
manpower sourcing. These cities offer significant cost advantage in the form of availability of
low-cost skilled human resources. With well-educated small town graduates turning to the urban
cities for employment, these graduates are ideal candidates for sales and marketing executive
roles in modern organised retail formats.

Consumer Behavior:
Indian consumers behavior pattern has changed. Now the Indian consumer gets more hefty pay-
packages, is younger, a large number of women are working, western influences, and more
disposable income have opened a lot of opportunities in Indian organized retail sector. The
Indian consumer wants to shop, eat and get entertainment in one place and is have also given
Indian organized retail sector an opportunity to grow.

41
Investment Opportunities

Potential For Investment:


The total estimated Investment Opportunity in the retail sector is around US$ 5-6 Billion in the
Next five years.

Supply Chain Infrastructure:


Supply chain infrastructure in terms of cold chain and Logistics.

Wholesale Trading:
Wholesale trading also holds huge potential for growth. German giant Metro AG and South
African Shoprite Holdings have already made headway in this segment by setting up stores
selling merchandise on a wholesale basis in Bangalore and Mumbai respectively. These new-
format cash-and-carry stores attract large volumes from a sizeable number of retailers who do
not have to maintain relationships with multiple suppliers for all their need.

Threat

Unorganized retailers:
If the unorganized retailers are put together, they are parallel to a large supermarket with no or
little overheads, high degree of flexibility in merchandise, display, prices and turnover.

Shopping Culture:
Shopping culture has not developed in India as yet. Even now malls are just a place to hang
around with family and friends and largely confined to window-shopping.

Divergent food habits:


India is consisting of many different states and many different cultures. Peoples belonging to
different cultures are having different patterns of the consumption of food. Customizing the
products and services of the retail stores according to the tastes and preferences of different

42
customers is a very difficult task and hence it is becoming a threat for the organised retailers that
their customers are luring away from their stores to the local traditional stores.

Preference for fresh products and traditional foods:


Peoples in India are having the liking towards the fresh fruits and vegetables and they always
likes to purchase the fruits and vegetables from the places where they feel that the products
available are fresh then other organised stores. So many of the consumers are buying fruits and
vegetables from the traditional markets like "mandi" instead of other organised retail outlets.
Difficulties in accessing vast untapped rural markets:
The peoples who are living in the rural areas are more conservative in nature, they are less
educated in compare to the urban peoples and they are much more price sensitive. They are
having less exposure to the media sources, so the marketers are facing a huge trouble in
marketing and promotion of organised stores in the rural areas. Rural peoples believe in the
traditional aspects more than the modern aspects, they always prefer traditional local stores more
over organised retail stores and they are also having a perception that organised retail stores are
much more costlier than that of unorganised retail stores.

Poor infrastructure:
MNC's are attracted to different countries because of their well developed infrastructure, but
India is lagging behind in the case of Infrastructure. Due to the poorly developed infrastructure
retail industry is not able to exploit the market that are available in the tier II and tier III cities of
India. The major chunk of the business lies in this cities in which still organised retailing is not
been started and hence a big market is remained unused, the major reason for this is poor
infrastructure.

43
3.3Porter's Five Force Analysis
As yet, we have been analyzing the retailing industry in the context of the macro-environment -
consisting of Political laws, Economic regulations, Social customs and Technical standards, in
the land of a particular retailer.

Now we move on to the analysis of the industry in the contest of competition prevalent within
the players of the industry. This addresses the need to identify those factors in the environment,
which influence the capability of a firm to achieve a competitive advantage and to position itself
to such advantage.

Players at different levels of scale of operations have to confront different levels of competition
posed collectively by the five forces- threats of new entrants, rivalry amongst the existing firms,
and pressure from the substitutes and the bargaining power of buyers and suppliers. Different
forces take on prominence in shaping the competition at and also across different levels.

Substitute Products
(of firms in
other ^ < )

Suppliers of
Key Rivalry
Inputs Among /L
Competing Buyers
Sellers V

*
Potential
New
Entrants
44
The Rivalry among the sellers
Here, we can say that the rivalry among the sellers is very strong. The reasons for the strong
rivalry are as follows:

Buyer demand is growing slowly


Retailing in Indian market is at the stage where the growth of the market is sluggish. In the
Indian Retail Industry recently many giants have entered who are financially very much strong
and have the capacity to expand their firms with excess capacity and they are using many tactics
like sudden price cut strategy for increasing the sales. By doing so they are igniting a battle for
market share.

So to increase the market share players of the industry are having only one alternative and that
alternative is just to get the customers of competitors and for getting those customers competitors
are using many weapons like price cut and different sales promotion schemes.

The number of rivals increases and rivals are of roughly equal size and competitive
capability.
Indian Retail Industry comprises of many major players like TATA, Reliance, Aditya Birla,
RPG, Pantaloons, etc., all this players are financially very strong and thus they always try to take
offensive strategy to enhance their marketing standing and it thereby heat up the competition
and put new pressures on rivals to respond with offensive or defensive moves of their own. So all
the players tries to move ahead over others and thus they makes the competition very hot.

The products of rival sellers are commodities or else weekly differentiated.


Retail is a sector where all the revals are offering almost same products and services. Thus we
can say that the products of rival sellers are standardized, this gives buyers very less reasons to
be brand loyal.

45
Buyers costs to switch brands are low.
In the Indian Retail Industry, switching cost is very negligible for the buyers but it is very high
for the seller. Normally customers switches from one type of the store to some other type of the
store just for the sake of getting new experience, and they are avoiding the negligible cost of
transportation (i.e., the distance of the store from the house).

Thus it becomes very important for the sellers to give unique and special experience to the
customers so that they can not lure away from their store to the store of the rivalry.

Thus we can say that for Indian Retail Industry the competitive force between the rivalry is very
strong.

The Potential Entry of Ne w Competitors

The pool of entry candidates is large and some of the candidates have resources that
would make the m formidable market contende rs.
New players who have entered in the Indian Retail Industry comprises of the players like Aditya
Birla Retail Limited, RPG group, Reliance, etc. which are financially very strong and they have
enough capital to invest to become a market contender.

Entry barriers are low or can be readily hurdled by the likely entry candidates.
There are many barriers which becomes the hurdles for the firms to enter into the market.
Some of the factors which becomes hurdles for Indian Retail Industry are as follows:
> Capital Requirements: To enter and contend in the Indian Retail Industry a firm should
be financially very strong because it requires an investment of crores of rupees to start
an organized retail business.
> Access to distribution Channel: In the Indian Retail Industry a network of retail dealers
may have to be set up from scratch. Retailers have to be convinced to give a new brand
ample display space and an adequate trial period. Entry is difficult when existing
producershave.strong, well- functioning distributor-dealer-networks and a newcomer
must struggle to squeeze its way into existing distribution channel. Thus access to

46
distribution channel in Indian Retail Industry is also a barrier because all the existing
player are having a well established distribution network. >Regulatory Policies: Many
foreign companies were trying to enter into Indian market but due to government policies
they were not able to enter into Indian market. But now government had allowed 51 %
foreign direct investment for the MNC's to work in Indian market. That is the reason why
Walmart is entering into Indian Retail Industry in collaboration with Bharti.

Existing industry me mbers are looking to expand their market reach by entering
products segment or geographic areas where they currently do not have a presence.
In the Indian Retail Industry different players are entering into the market with different formats
of stores like Hypermarkets, supermarkets, factory outlets, etc.

Depending on the target customers and to penetrate into different market different players are
using different store formats and thus by using different formats they are expanding their size by
offering different formats for different target customers.

* Newcomers can expect to earn attractive profits.


Foreign companies are finding a very good market potential in Indian Retail Industry. So to
access into the untapped Indian market, specially rural areas they are trying to enter into Indian
Retail Industry.

Thus we can say that the potential entry of New Competitors is very high for Indian Retail
Industry.

47
Competitive Pressures from the sellers of substitute products

Competitive pressures from substitute emerges from mainly two factors:


1. Switching costs for customers to the substitute.
2. Buyer willingness to search out for substitutes.

Product-for-product substitution
The growing popularity of traditional non-store retailing base of catalog mail orders, direct
mailers, telephone sales, door-to-door selling, supplemented by recent innovations like vending
machines, in- home video tape infomercials, on-line CD ROM systems, tele-shopping and net
shopping poses a threat to store retailers. These media do provide the customers with ease of
shopping, some entertainment and even more information about range of products. But still it
according to Indian consumer psyche it will take time to apply in Indian market. E-tailing
transactions are less than a quarter of a percent of the total retail business in India. Even in
western countries, it accounted only for 20% of the total retail spending.

Substitution of need
We take switching from one store or one type of store (e.g. small neighborhood retail outlet) to
another (e.g. a big department store) as an example of this type of retailing. In this case, the
buyers might be looking out for new experiences and might not mind the nominal switching
costs (like longer distance to be covered)

Retailing will definitely remain, in one form or the other, as long as the manufacturers
manufacture and consumers consume. Retailing does not seem to become extinct even in the
future. The issue that remains to be addressed is just - what forms it keeps evolving into. One
most prominent form visible today is e~tailing.

In India still the use of internet technology for the purchase of products is at the infant stage and
it is not still well developed, so we can say that competitive pressures from the sellers of
substitute products is low.

48
Competitive pressures from the supplie r
There is high supplier concentration (i.e. few number of suppliers for the industry). In
case of the retailing business, large numbers of manufacturers are competing for shelf
space, resulting into low bargaining power of suppliers in this context.

There are other substitute products for sale to the industry. With large numbers of firms
manufacturing similar goods or providing similar services, differentiation is what gives a
competitive edge to some suppliers over others. But again due to spade of brands in the
market bargaining power of suppliers is low even in this context. But in one specific case
of exclusive distribution or dealership bargaining power of suppliers may be high.

The industry is not an important customer of the supplier group. This is not at all the case
here. Today, apart from probably factory outlets, retailing is the only interface between
manufacturers and consumers. The suppliers' product is an important input to the buyer's
business. Generally, this is not the case with individual suppliers, hence affecting their
bargaining powers adversely.

Switching costs from one supplier to another are high. This again is not the case in most
of the categories of retail sales expect for the exclusive dealership of some firms.

There is threat of forward integration by suppliers. This might be a threat in the long run.
Signs are visible in the form of direct mailers, door-to-door selling, tele-shopping and e-
tailing.

Marketers across the FMCG category and the durable sector feel that the retailer is going
to be a powerful influence on buyers. A primary reason for this is trust. Many families
take goods on credit from the retailer and moreover, spoilt goods are taken back by him.
With all these facilities thrown in, when he recommends a product, the consumer has no
reason to doubt him.
Thus we can say that the competitors pressures from the supplier is high, for Indian Retail
Industry.

49
Competitive pressures from the Buyers bargaining powe r:

Buyers cost of switching to competing brands or substitutes are relatively low


In the Indian Retail Industry, switching cost is very negligible for the buyers but it is very high
for the seller. Normally customers switches from one type of the store to some other type of the
store just for the sake of getting new experience, and they are avoiding the negligible cost of
transportation (i.e., the distance of the store from the house).

Thus it becomes very important for the sellers to give unique and special experience to the
customers so that they can not lure away from their store to the store of the rivalry.

Buyers demand is weak and sellers are scrambling to secure additional sales of their
products
Retailing in Indian market is at the stage where the growth of the market is sluggish. In the
Indian Retail Industry recently many giants have entered who are financially very much strong
and have the capacity to expand their firms with excess capacity and they are using many tactics
like sudden price cut strategy for increasing the sales. By doing so they are igniting a battle for
market share.

So to increase the market share players of the industry are having only one alternative and that
alternative is just to get the customers of competitors and for getting those customers competitors
are using many weapons like price cut and different sales promotion schemes.

50
Strategic Implication of Porters five force analysis:

Competitive environment is unattractive from the standpoint of earning good profits


when the Rivalry among the competitors are strong, Entry barriers are low and entry is
big, Competition from the substitutes are strong, and Suppliers and Customers are
having considerable bargaining powers

Competitive environment is ideal from a profit- making standpoint when the Rivalry
among the competitors are moderate, Entry barriers are high and no firm is likely to
enter, good substitutes do not exist, and Suppliers and Customers are weak in bargaining
position.

But in the case of Indian Retail Industry the situation is something diffenent from this.
Here the competitive forces are like:
1. Rivalry among the competitors are very high
2. Entry barriers are moderate so many firms are trying to enter into Indian Retail Industry
3. Competition from the substitute is moderate
4. Suppliers have moderate bargaining power
5. Customers switching cost is low for the customer and it is very high for the retailer, so
customers bargaining power is very high.

So, from the porter's five forces analysis we can say that Indian Retail Industry is neither ideal
industry nor Unattractive industry. We can consider Indian Retail Industry as somewhat
attractive Industry which is having a good opportunity in the untapped market.

Firms which are having good financial pockets and having good innovative marketing and
technological skills are having a good opportunity in Indian Retail Industry.

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3.4 Driving forces for Indian Retail Industry
Industry and competitive conditions change because certain forces are enticing or pressuring
industry participants to alter their actions.

Driving forces are those that have the biggest influence on what kinds of changes will take place
in the industry's structure and competitive environment.

Growing use of the Internet and emerging ne w Internet technology applications:


> The Internet revolution is making the Indian consumer more accessible to the growing
influences of domestic and foreign retail chains.
> Reach of satellite T.V. channels is helping in creating awareness about global products for
local markets.
> About 47% of India's population is under the age of 20; and this will increase to 55% by
2015. This young population, which is technology-sawy, watch more than 50 TV satellite
channels, and display the highest propensity to spend, will immensely contribute to the
growth of the retail sector in the country.

IT as the growth factor


> The IT sector has contributed greatly to the growth of the retail sector in India.
> The retail firms have made lumpy investments in Enterprise Resource Planning System
as a strategy for their growth and development.
> SAP has also assumed a significant role in the growth and development of the
organisedretail industry.

Increasing Globalization:
Due to Globalization, Capital inflow into India has increased and so have the exports from the
country. Thanks to the economic boom India is experiencing, some Indian companies are doing
better than even the multinational corporations.

52
Due to Globalization Indian Retail Industry got so many benefits like:

>Improved human capital: Indian industries are predominantly labor based but there is
also a significant number of capital based companies. A capital intensive set up is indeed
an expensive proposition but with the existing as well as potential labor intensive
industries, India can look forward to more professional and sophisticated number of
workers and employees at every level. Human capital, in terms of quantity was never a
big problem in India, thanks to its huge population and quality and efficiency in work has
been ushered in by the MNCs.

> Competition Effect: The benefits of globalization will include the launching and
marketing of new products and brands in the Indian market. New products are used by
the multinational corporations and then demonstrated in the Indian market. The processes
followed by MNCs in India serve to have a demonstration effect on Indian companies
which in turn improves market competition and the standard of products. This had started
in the 1980s due to Japanese firms and as a result, Indian firms started inculcating the
practices of QC, JIT, and QA.

> Manufacturing Employment: larger MNC's will definitely generate more and more
employment opportunities. The opportunities are highly experienced in the
manufacturing area. This not only includes the quality human resource but also provides
for quick and efficient work and effective outcomes.

> New Technology: Technological advancements take place as larger FDIs come in. In
fact, three-fifths of the FDIs result in new and advanced technologies. The local industry
is benefiting from this to a large extent. This as a result, would encourage more and more
foreign firms for investment.

53
Changes in long term industry growth rate:

S&wv&s: amm'$tl7t$'$&m&&fMz&ntftAT. ffeasmwma^mst 'iKafi* fw:^0S^-M6&m bm&mit<m4i3$fj!m$8&-

Figure 3.1 Industry Growth Rate


The graph mentioned above explains that the sales of Indian Retail Industry was growing at
the constant rate at the initial stage but afterwards Indian retail Industry had shown a
tremendous growth and today Indian Retail Industry is growing at the rate of 25% per
annum.
Source: http://www.fibre2fashion.com/news/associationnews/assocham/newsdetails.asp
x?News__id*=47207

Here collectively the growth of Indian Retail Industry is 25% per annum, but due to severe
competition and entry of several big players in the market the growth of individual
companies in the industry is much lesser in compare to the industry taken as a whole.

54
Technology change and manufacturing process innovation:
> India has seen a retail boom in the last five years. This has helped the sector grow to
a size of Rs. 8,10,000 crores. IT can and has to play a substantial role in this
flourishing industry to keep up the vigour as well as .to make it globally competitive.

55
> Retailing in a large country like India is basically a multi-plant and multi- market
activity. It is almost if not actually impossible to handle the diversified operations.
Introduction of IT can make things easier and the node can be immensely useful in
managing the complexities.

> Advanced planning and scheduling and inventory management are inevitable to any
growing retail sector. Besides, merchandising and seasonality management systems
can drastically change the fortune of retail sector in India.

> To improve penetration and enhance quality of services, data mining and top-class
forecasting has no substitutes. Understanding consumer needs and collaborating
with suppliers are essential parts of merchandising activities. A logical
interpretation of data is fiindamentally important to make decision, specially when
one is looking forward to establish a new retail chain. These help in modifying
revenues and cutting down costs, the two dimensions of an upward-moving profit
curve. Data-cleansing and re-architecture also help in making effective decisions.

> It is fully justified that all the retail institutions as well as the manufacturer and all
distribution centers be linked Online to ensure EDI of the server installed in the
market with the EPOS (Electronic Point Of Sale). However the retailers should
carefully choose the IT service provider as global researches have shown that global
IT expenditure in the retail sector is growing at 13 percent whereas the revenues has
grown at a mere rate of 2 percent. The maintenance costs are also quite high owing
to the different technology platforms for fragmented point solutions.

56
Entry or Exit of major firms:

57
Most of the foreign companies are finding a good opportunity in the Indian untapped market. So
they are trying to enter into the industry. This will increase the competition among the organized
retailers because the foreign companies are very strong in the financial front and they can use
any kind of strategy to grab the market share. Thus entry of the foreign firms will make the
competition more intensed.
Many domestic players are entering into Indian Retail Industry which helps in the increase in the
profitability of the Industry but along with it, entry of the new firm also increases the
competition.

Entry of new firm results into the introduction of innovative technology and marketing efforts
which increases the quality of the product and the services offered by the retailiers and hence it
leads to the customer satisfaction.

Hence we can say that entry of major firms will be profitable for the industry and it makes the
competition more stiffer and intensed.
Regulatory influences and gove rnme nt policy changes:

> The Left parties have mooted a solution where both big retail chains and mom-and-
pop stores can co-exist. The government is considering the Left's proposal for levying a
cess on big retailers to provide cheaper credit to small retailers. The proposed model of
retail development would be offered to the states for adoption, depending on individual
states' policy preference.
> "One of the suggestions is to levy a cess on every products sold at big retail stores
and the fund should be used for giving cheaper credit to small retailers for working
capital," a government official said. Cheaper credit to unorganised retail has been of
prime concern before the government as well as the anti-organised retail lobby for
inclusive growth.
> A department of industrial policy & promotion (Dipp) official confirmed the move.
"We are working out the modalities. States will be consulted as they are the
implementing agencies,"

58
> India's buoyant growth had attracted international attention, but multinationals
wanting to enter the retail sector were "frustrated" by local laws, which limit the
ownership of foreign companies to 51 per cent
>* In this way government policies and regulations helps in the growth of Indian Retail
Industry by helping its stakeholders and by increasing the hurdles to the entry of the
foreign players to the industry, by doing so they are trying to preserve the domestic
players specially the local traditional kirana stores and other unorganized market.
Consumers Empowerment

According to Mr. Kishore Biyani, CEO of the Future Group, Empowering consumers with ready
credit is how they expects to build the retail business.

"The consumption boom will drive retail in India. We need to look at innovative ways of
making money available to the consumer," he said. With the intention of growing the consumer's
consumption basket.

Change in the concept of shopping:


Retail sector in India is reflected in sprawling shopping centers, multiplex- malls and huge
complexes offer shopping, entertainment and food all under one roof, the concept of shopping
has altered in terms of format and consumer buying behavior, ushering in a revolution in
shopping in India.

This has also contributed to large-scale investments in the real estate sector with major national
and global players investing in developing the infrastructure and construction of the retailing
business.

Increase in the young population in India:


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.

59
Booming economy of India:
India retail industry is the fastest growing industry in India and it accounts for 10% of the
country's GDP.

In 2006, the retail industry in India amounted to US$ 200 billion and out of this, the organized
retail sector in India amounted to US$ 6.4 billion.
By 2010, the Indian organized retail sector is expected to rise to US$ 23 billion. In 2003, the
Indian organized retailing sector accounted for more than 4.5 million sq. ft of space absorption
by malls.

Increase in the purchasing powe r of the Indian middle classes


The increase in the purchasing power of the Indian middle classes and the influx of the foreign
investments have been encouraging in the Growth of Retail Companies in India.

The retail companies are found to be rising in India at a remarkable speed with the years and this
have brought a revolutionary change in the shopping attitude of the Indian customers. The
Growth of Retail Companies in India is facilitated by certain factors like -
> existing Indian middle classes with an increased purchasing power
> rise of upcoming business sectors like the IT and engineering firms
> change in the taste and attitude of the Indians
> effect of globalization
> heavy influx of FDI in the retail sectors in India

Backward integeration with the farmers makes retailers cost effective


The prominent retail chains like Aditya Birla Retail Limited, Pantaloons, ITC, RPG group,
Raheja Group, etc. have adversely affected the farmers in some states.

The farmers have rather benefited since they were eager on the market intervention of the big
retailers for the purpose of marketing and processing of their output. Since the big retailers reap

60
the benefits of buying directly from the farmers , the consumers can purchase the products at
minimal price rates.

In places like Uttarakhand, the big retail chains are welcomed for the same purpose by the
farmers. They have helped in putting finances in the right channels of processing and packaging.
Source: P.G.Chengappa, LalithAchoth, Arpita Mukherjee, B.M.Ramachandra Reddy and
P.C.Ravi, Evolution of Food Retail Chains: The Indian Context, 5-6th Nov. 2003,
www.ficci.com Assessing the impact of Driving Forces

Driving forces are causing the demand for the industry


Most of the driving forces which are action on the Indian Retail Industry are indicating the
growth of Indian Retail Industry.

Thus after studying various driving forces we can say that Indian Retail Industry will have a
tremendous growth in the future and it will have a good opportunity for the New Entrants. And
we can say that Indian Retail Industry will be profitable in the future.

Driving forces are acting to make the competition more intense


Due to globalization and the increase in the use of internet technology, foreign companies are
trying to enter into Indian Retail Industry. This is becoming threat for the existing players
because it will create a very tough competition in the Indian Retail Industry.

Due to the Innovation in the Marketing and Technology, vertical integration and better
implementation of Enterprise Resource planning is applied to the Indian Retail Industry. This
will help the players of Indian Retail Industry to offer the product to the consumers' at the most
cost effective way and it will also help the competitors to adopt the Low cost Provider strategy.
Thus we can say that Driving forces are acting to make the competition more intended.

Driving forces will lead to higher industry profitability.


Due to the driving forces mentioned above many giants are entering into Indian Retail Industry.

61
All this Giants are having very good financial pockets, Retail Industry is the Industry where the
product differentiation is very negligible and hence the competitive differences among the rivalry
are very strong. Hence each and every competitor is trying to cut down their prices to grab the
customer from the competitors, and hence Retail Industry had became a Battlefield. Due to such
scenario Indian retail Industry is growing at the rate of 25% to 30% per annum and hence the
Industry as a whole is having a higher profitability but if we think about the players of the
industry then they are struggling to earn profit from the market due to severe competition.
3.5 BOW Analysis

Barrie rs
Supply chain for grocery and food.
General merchandise excluding apparel supply
chain - Needs consolidation.
Penetrating smaller towns may be difficult.
Execution risk.

Barriers for Modern Retail


The pace of growth in the organized retail sector will depend on how effectively leading players
can overcome potential roadblocks. The biggest hurdle is the lack of efficient supply chains to
meet the rapidly growing demands of evolving consumers.

Supply chain for food and grocery - a long way to go

One of the greatest barriers to the growth of modern retail formats are the supply chain
management issues.

The supply chain for the food and grocery business can be divided into three broad areas based on
product categories: 1. FMCG products; 2. Wet groceries and 3. Staples.

62
1. FMCG products
No major changes are needed in the supply chain for FMCG products, in our view, as it is quite
well developed and efficient. However, companies take different approaches. The supply chain
in the FMCG category is likely to be the first to be integrated further.

Over time manufacturers will probably improve their IT connectivity with organized retailers,
using real-time information to introduce supply chain efficiencies.

2. Wetgroceries
This system is too complex - the development of the supply chain for perishables is likely to be a
big challenge in India.

Government regulations, lack of adequate infrastructure and inadequate investments are the
possible bottlenecks for retail companies.

Organized retailers in the current circumstances compete mainly with neighborhood wet markets
and in view of the competitive advantage in the superior shopping ambience they offer
consumers; there is little incentive for them to focus on competitive pricing.

3, Staples - localization required


The relatively longer shelf life makes the supply chain for staples less complicated than that for
wet groceries. However, staples have a unique problem of non-standardization.

Due to the huge diversity in consumer tastes and preferences in the country, the varieties of such
staples as rice, wheat and pulses are so numerous that they are hard to manage and, because of
local preferences, make national economies of scale difficult to achieve. Most retailers source
staples directly from mills through aggregators.

63
General merchandise excluding apparel supply chain - Needs consolidation
Supply chain development for general merchandise needs to evolve as well as to consolidate. It
would be a challenge for domestic players to compete in standard product categories in general
merchandise retailing.

Lack of efficient supply chains in this business segment would also impede growth for the
industry.

Penetrating smaller towns may be difficult


India has over 5,000 towns and 600,000 villages. It is important for retailers to penetrate more
deeply to capture a larger consumer pie. However, the challenge in smaller towns is largely
related to income/affordability and, more importantly, poor infrastructure, which inhibits long
distance traveling. However, the big attraction of small towns for retailers is lower rentals and,
more significantly, little or no comparable competition.

Execution risk
Since organized retailing is relatively nascent business in India, companies have little experience
in managing their growth plans.

A few retail companies may not be able to achieve the requisite profitability because of lack of
funds, which would stall their growth plans. However, a number of inexperienced developers
have entered the business of mall development and hence could face delays in commissioning
schedules. This in turn may lead to delays in the execution of retail companies rollout plans.

Obstacles

Government regulation on FDI.


Lack of a uniform tax.
Lack of adequate infrastructure.
Dominance of the unorganized sector.
. Labour employment.

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Overall profitability could be under pressure
Differences between rural and urban customers

Government restrictions on FDI

100% Foreign Direct Investment (FDI) is not permitted in retailing in India. Ownership of retail
chains is allowed only to the extent of 49%.

The fear that the small-scale retailers will be displaced is delaying the FDI approvals. On the
other hand, without the FDI, the sector is deprived of access to foreign technologies that is
imperative for faster growth. The Government has allowed FDI in direct marketing, but has
reservations about extending it to the retail sector.

Lack of a uniform tax


The country requires a uniform tax system for the organized retailing. The lacunae on this part
stand as an obstacle to the setting up of a truly national chain.

The present chains, in spite of claiming to be national chains are restricted to certain regions of
the country. Players are confined to state barriers. Since retailing is essentially a business of
supplying commodities to locations far from production units, a differential tax system in
different states is surely turning to be a hindrance to faster development of this Industry.

A central tax system becomes more imperative in a country like India where, the regional
disparity in production of commodities is high.

Lack of adequate infrastructure


Inadequate infrastructure is likely to be an obstacle to growth in the retail sector.

First, consumers would probably not be prepared to travel distances to purchase daily necessities
as travel time due to traffic congestion can be significant. This would restrict the area/consumers
to which stores can cater.

65
Poor infrastructure would also hinder the efficient transportation of goods to stores and so force
retailers to maintain a larger buffer stock than required, increasing the inefficiency in operations.

Dominance of the unorganized sector


The unorganized sector has dominance over the organized sector in India, especially because of
the low investment needs.

In India, organized retailing is only 2% of total retailing of worth US$ 180 billion. This is
playing at multiple levels.
For instance, the reason for low number of discount stores in India is an effect of the dominance
of the unorganized sector. The lobbying by the unorganized sector is also the main reason for the
Government of India's restrictions on 100% FDI in retailing in the country.

Labour employment
Organized retailing is a 24 X 7 active business. However, this is much restricted currently in
India because of the labour rules and regulation.

The sector is unable to employ retail staff on contract basis. This makes it difficult to efficiently
manage employee schedules especially for 365-day operations. Not only is it difficult to find
trained manpower for the middle and top management but it will be increasingly hard to manage
the expectations and training of front-end staff.

Their costs, which are largely fixed, will become more difficult to control as the demands of staff
become more organized and greater with the potential development of labor unions and more
organized work forces.

More intense competition would further complicate matters affecting employee costs.

Overall profitability could be under pressure

66
Overall profitability in the retail sector may be quite thin considering the potential increase in
competitive activity.

The increase in real estate costs is also likely to compound the problems for retail companies.

Although some of the reason for the poor profitability is the rapid expansion in the industry, we
believe that a large part is attributable to the potential increase in competition in organized
retailing, i.e., supply outstripping demand, which will drive product prices down.

Successful retail companies will have to make requisite investments in supply chain efficiencies
to be able to protect their margins from price- led competition.
Differences between urban-rural consumers
The rural Indian consumer is economically, socially and psycho graphically very different from
his urban counterpart.

Urban growth in the CPG sector is spread over a diverse basket of goods like low priced mobiles,
cheap financed consumer goods and new entertainment options.

Cultural preferences and tastes that differ from the "global economy". Given the strong and
diverse cultures in India, multinational firms have to develop and customize products specifically
for the Indian market.

Weakness
Low operational size.
Managing rising rentals.
Less conversion level.
Extensive distribution network.

Low operational size

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The number of retail outlets in India is more than the number of outlets in most of the other
Countries.

Small size retail outlets dominate the Indian scene. 96% of the outlets are lesser than 500 sq ft.
The retail chains of India are also smaller than those in the developed countries.

India with second largest population in the World and a fast growing economy has huge
untapped potential of organized retailing, which is not given its due weightage by the
government.
Managing rising rentals
One of the reasons for the rapid development of the retail sector is the sharp improvement in the
availability of retail space. This has been due to the improving economic attractiveness of mall
development. However, in the current rally in property prices, retail real estate rentals have
increased remarkably, which may render a few retailing business models unviable.

In the urge for growth, retail companies may end up paying unsustainable rentals, struggling to
turn profitable.

Less Conversion level


Despite high footfalls, the conversion ratio has been very low in the retail outlets in a mall as
compared to the standalone counter parts.

It is seen that actual conversions of footfall into sales for a mall outlet is approximately 20-25%.
On the other hand, a high street store of retail chain has an average conversion of about 50-60%.
As a result, a stand-alone store has a ROI (return on investment) of 25-30%; in contrast the retail
majors are experiencing aROIof 8-10%.

Extensive distribution network


The Indian market is dominated by over 12-15 million small "mom and pop" retail outlets, of
Which about 65% are in rural areas.

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Accessing these outlets is one of the biggest challenges facing by the organized retailing
companies.

References:
Arthur A Thompson Jr, "Crafting and Executing Strategy", TATA McGraw-Hill, Fourteenth
Edition, p.g. no. 50-74
http ://www.ibef.org/industry/retail. aspx
http://company.monsterindia.com/shoppersin/
http://www.ife-india.com/ife2008/caseDet.asp?caseId=caseStdl21

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CHAPTER- 4
Financial Analysis

Financial analysis Introduction:

Financial analysis (also referred to as financial statement analysis or accounting analysis or


Analysis of finance) refers to an assessment of the viability, stability and profitability of a
business, sub-business or project.

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It is performed by professionals who prepare reports using ratios that make use of
information taken from financial statements and other reports. These reports are usually
presented to top management as one
of their bases in making business
No. Name of Company decisions.
1 ARVIND LIFE STYLE
2 FUTURE LIFE STYLE Continue or discontinue its
3 FUTURE RETAIL main operation or part of its business;
4 SHOPPERS Make or purchase certain
materials in the manufacture of its
product;
Acquire or rent/lease certain machineries and equipment in the production of its
goods;
Issue stocks or negotiate for a bank loan to increase its working capital;
Make decisions regarding investing or lending capital;
Other decisions that allow management to make an informed selection on various
alternatives in the conduct of its business.

Financial analysts often compare financial analysis (of solvency, profitability, growth,
etc.):

Past Performance - Across historical time periods for the same firm (the last 5 years
for example),
Future Performance - Using historical figures and certain mathematical and
statistical techniques, including present and future values, this extrapolation method
is the main source of errors in financial analysis as past statistics can be poor
predictors of future prospects.
Comparative Performance - Comparison between similar firms.

Objective of financial analysis


Provide objective, actionable analysis to support informed Recommendations and
decision making by both the WTOP and Town management.
Assess the cash flow implications of a range of operating scenarios.
Provide tools to support the discussion of restoring the projects financial integrity so that
funds are available when the need for repair arises.

Tabel: List of Company

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5 TRENT

Ratio analysis
A ratio is a relationship between two numbers of the same kind] (e.g., object, persons,
students, spoonfuls, units of whatever identical dimension), expressed as "a to b" or a:b,
sometimes expressed arithmetically as a dimensionless quotient of the two that explicitly
indicates how many times the first number contains the second (not necessarily an integer).

IMPORTANCE OF RATIO ANALYSIS

Importance of Ratio Analysis for financial analysis. Management paradise.com is bringing


some of the tool for financial analysis and report. Understand the term of Ratio Analysis
steps and process.

The ratio analysis is the most important tools of financial analysis. The various groups of
people having different interest are interested in analyzing the financial information.

These groups use the analysis to determine particular financial characteristics of which they
are interested. The importance of ratio analysis can be summarized for various groups of
peoples vested with the diversified interests are as under:

1. For short term creditors The short term creditors like bankers and suppliers of
materials can determine the firms ability to meet its current obligation with the help of
liquidity ratio and quick ratio.

2. For long term creditors The long term creditors like debenture holders and financial
institutions can determine the firms long term financial strength and survival with the help
of leverage or capital structure ratio as debt equity ratio.

They can know :


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a) what sources of long term are employed?

b) What is the relationship between various sources of finances?

c) Is there any risk to the solvency of the firm due to the employment of excessive long
term debts?

3. For the management The management can determine the operating


efficiency with the firm is utilizing its various in generating the sales revenues with the
help of activity ratio such as capital turnover ratio, stock turnover ratio, etc

4. For investors The investor can determine the magnitude and direction of the
movements in firms earning with the help of profitability ratio such as earning per share
etc

(1) Debt Equity Ratio


Debt-to-Equity ratio is the ratio of total liabilities of a business to its shareholders' equity. It
is a leverage ratio and it measures the degree to which the assets of the business are
financed by the debts and the shareholders' equity of a business.
Analysis
Lower values of debt-to-equity ratio are favorable indicating less risk. Higher debt-to-
equity ratio is unfavorable because it means that the business relies more on external
lenders thus it is at higher risk, especially at higher interest rates. A debt-to-equity ratio of

NAME OF COMPANY YEAR

1.00 means that half of the assets of a business are financed by debts and half by
shareholders' equity. A value higher than 1.00 means that more assets are financed by debt
that those financed by money of shareholders' and vice versa.
An increasing trend in of debt-to-equity ratio is also alarming because it means that the
percentage of assets of a business which are financed by the debts is increasing.

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2010 2011 2012 2013 2014
ARVIND LIFE STYLE 0.45 0.57 1.01 1.38 1.82
FUTURE LIFE STYLE 0 0 0 0 1.05
FUTURE RETAIL 0.84 0.61 0.89 0 1.49
SHOPPERS 0.75 0.38 0.32 0.44 0.55
TRENT 0.33 0.31 0.21 0.16 0.16
Total 2.37 1.87 2.43 1.98 5.07
Industry total 0.474 0.374 0.486 0.396 1.014

1.2

0.8

0.6

0.4

0.2

0
2010 2011 2012 2013 2014

(2). Current ratio


Curre nt ratio, also known as liquidity ratio and working capital ratio, shows the
proportion of current assets of a business in relation to its current liabilities.
Current ratio expresses the extent to which the current liabilities of a business (i.e.
liabilities due to be settled within 12 months) are covered by its current assets (i.e. assets
expected to be realized within 12 months). A current ratio of 2 would mean that current
assets are sufficient to cover for twice the amount of a company's short term liabilities.
Inte rpretation & Analysis
Current ratio is a measure of liquidity of a company at a certain date. It must be analyzed in
the context of the industry the company primarily relates to. The underlying trend of the
ratio must also be monitored over a period of time.
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Generally, companies would aim to maintain a current ratio of at least 1 to ensure that the
value of their current assets cover at least the amount of their short term obligations.
However, a current ratio of greater than 1 provides additional cushion against
unforeseeable contingencies that may arise in the short term.
Businesses must analyze their working capital requirements and the level of risk they are

NAME OF COMPANY YEAR


2010 2011 2012 2013 2014
ARVIND LIFE STYLE 1.22 1.05 1 0.96 0.97
FUTURE LIFE STYLE 0 0 0 481 1.68
FUTURE RETAIL 1.73 1.66 1.27 1.18 1.24
SHOPPERS 0.98 0.7 0.49 0.52 0.54
TRENT 2.08 2.21 2.89 2.69 2.21
Total 6.01 5.62 5.65 486.35 6.64
Industry total 1.202 1.124 1.13 97.27 1.328
willing to accept when determining the target current ratio for their organization. A current
ratio that is higher than industry standards may suggest inefficient use of the resources tied
up in working

capital of the organization that may instead be put into more profitable uses elsewhere.
Conversely, a current ratio that is lower than industry norms may be a risky strategy that
could entail liquidity problems for the company.
Current ratio must be analyzed over a period of time. Increase in current ratio over a period
of time may suggest improved liquidity of the company or a more conservative approach to
working capital management. A decreasing trend in the current ratio may suggest a
deteriorating liquidity position of the business or a leaner working capital cycle of the
company through the adoption of more efficient management practices. Time period
analyses of the current ratio must also consider seasonal fluctuations.

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120

100

80

60

40

20

0
2010 2011 2012 2013 2014

(3) Inventory turnover ratio:

In accounting, the Inventory turnover is a measure of the number of times inventory is


sold or used in a time period such as a year. The equation for inventory turnover equals the
Cost of goods sold divided by the average inventory. Inventory turnover is also known as
inventory turns, stockturn, stock turns, turns, and stock turnover.

Inventory turnover ratio= cost of goods sold

Average inventory

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NAME OF COMPANY YEAR
2010 2011 2012 2013 2014
ARVIND LIFE STYLE 8.03 4.27 5.01 5.79 4.95
FUTURE LIFE STYLE 0 0 0 0 5.68
FUTURE RETAIL 4.14 4.13 2.85 2.54 3.74
SHOPPERS 10.64 12.46 12.07 10.43 10.6
TRENT 6.26 6.31 5.62 5.44 5.91
Total 29.07 27.17 25.55 24.2 30.88
Industry total 5.814 5.434 5.11 4.84 6.176
7

0
2010 2011 2012 2013 2014

Inte rpretation
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From the above we can say that the industry is maintaining more than enough inventory
witch will make the incorrect in maintained cost as well as storage cost too.
In fact the high inventory ratio increase the problem for maintenance cost and as against the
lower will create a problem as far as the liquidity concerned.

YEAR
NAME OF COMPANY
2010 2011 2012 2013 2014
ARVIND LIFE STYLE 8.72 4.79 4.09 4.89 4.52
FUTURE LIFE STYLE 0 0 0 0 22.09
FUTURE RETAIL 45.88 42 28.69 28.44 41.06
SHOPPERS 141.23 139.37 124.64 120.24 123.36
TRENT 166.88 178.07 207.73 311.86 391.14
Total 362.71 364.23 365.15 465.43 582.67

(4) Debtors turnover ratio:


Debtor turnover ratio is the relationship between net sales and average debtors. It is also
called account receivable turnover ratio because we debtor and bill receivables'
Total is used for following formula

= Net Credit Sales / Average Debtors ( sundry debtors + bill receivables)


Average Debtors = Opening balance of debtors + closing balance of debtors / 2
Net Credit Sales = Total sales - sales return - cash sales

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Industry total 72.54 72.846 73.03 93.086 116.534

140

120

100

80

60

40

20

0
2010 2011 2012 2013 2014

Significance and interpretation:

Debtor turnover ratio or accounts receivable turnover ratio indicates the velocity of debt
collection of an industry. In simple words it indicates the number of times average debtors
(receivable) are turned over during a year. The graph show debtor turnover ratio in the year
2012-13 is decrease the reason is future life style ltd ratio is decrease. It is the benefit of the
industry. But in 2009-10 the ratio is increase the reason is all four company debtor turnover
ratio is increase.

(5)Return on Net Worth:


Return on net worth is also known as Return on Equity. The general formula of ROE,
expressed in percentage, is as follows:
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Return on Equity = Net Income/Shareholders Equity. Hence ROE is a good indicator of a
firms ability at generating profits.

NAME OF COMPANY YEAR


2010 2011 2012 2013 2014
ARVIND LIFE STYLE 2.95 6.94 8.4 0 0
FUTURE LIFE STYLE 0 0 0 0 -
42.73
FUTURE RETAIL 6.83 5.37 2.75 1.01 0.67
SHOPPERS 18.54 16.58 10.23 5.78 5.2
TRENT 5.05 4.42 3.3 3.05 1.81
Total 33.37 33.31 24.68 9.84 -
35.05
Industry total 6.67 6.662 4.936 1.968 -7.01
8

0
2010 2011 2012 2013 2014
-2

-4

-6

-8

Inte rpretation

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Hear from the above we can say that there is a huge fiuctution in the return of share holder
net worth it is a decrasing in 2011 than decline in 2012 and decrese in 2014 so we can say
that there is more flatution in net worth return.

YEAR
NAME OF COMPANY
2010 2011 2012 2013 2014
ARVIND LIFE STYLE 257.01 427.72 691.54 1337.22 1811.38
FUTURE LIFE STYLE 0 0 0 0 2907.47
FUTURE RETAIL 6316.66 4327.89 7420.52 0 12292.64
SHOPPERS 2859.39 2376.63 2166.67 1858.56 1560.84
TRENT 571.55 716.72 869.88 991.46 1329.86

Trend analysis

Net sales

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Total 10004.61 7848.96 11148.61 4187.24 19902.19
Industry total 2000.92 1569.792 2229.722 837.448 3980.438

Hear from the above we can say that there is a huge fiuctution in the Net sale it is a
decrasing in 2013 than increase 2014 so we can say that there is more flatution in net
sales.

YEAR

60000

50000

40000

30000 2014

20000 2013

10000 2012
2011
0
2010

Expenditure

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NAME OF COMPANY
2010 2011 2012 2013 2014
ARVIND LIFE STYLE 44.01 140.78 193.59 385.39 528.81
FUTURE LIFE STYLE 0 0 0 0.10 556.10
FUTURE RETAIL 867.12 1041.88 739.55 1325.47 1526.41
SHOPPERS 299.18 348.18 413.96 529.26 610.79
TRENT 168.59 202.53 261.93 269.30 369.20
Total 1378.9 1733.37 1609.03 2509.42 3591.31
Industry total 275.78 346.674 321.806 501.884 718.262

12000
10000
8000
6000
4000
2000
0
YEAR

Hear from the above we can say that there is a huge fluctuation in the expenditure it is a
decrasing in 2010 than increase in 2014 so we can say that there is more flotation in net
worth return.

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CHAPTER-5

Findings
Consumers purchase pattern is changing drastically which is increasing the opportunities
of Indian Retail Industry.
By using modern distribution channel retailers can eliminate the channel members. After
eliminating the channel members retailers can be able to churn a good profit margin and
hence they will be able to give the products at the discounted rate, which makes them
competitive over the traditional retailers who are using the traditional distribution

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channel.
Retail is a sector where the products offered by different retailers are standardized and
hence the switching cost is very low for the customers and it is becoming difficult for the
retailers to retain the customers.
The demographic trend and lifestyle patterns, of the society that a retailer intends to
serve, decide the retailer's strategy. Traditionally, children seldom accompanied their
parents while grocery food shopping. Shopping for children was confined to that during
festivals when dresses were brought for them. But, in the present day, due to scarcity of
time, working parents prefer to spend as much time as possible with their children and
this includes their shopping hours also. As the organization retail sector offers the option
of entertainment along with shopping, the younger couples opt for these retail outlets for
shopping.

The six attributes desired by most number of people (65% and above) are polite and
courteous salespeople, quality of products, non intrusive sales persons, value for money,
attractive displays and range of products.

It is technology that will help the organized retailers to score over the unorganized
retailers. Successful organized retailers today work closely with their vendors to predict
consumer demand, shorten lead times, reduce inventory holding and ultimately save cost.
That actual conversions of footfall into sales for a mall outlet is approximately 20-25%.
On the other hand, a high street store of retail chain has an average conversion of about

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50-60%. As a result, a stand-alone store has a ROI (return on investment) of 25-30%; in
contrast the retail majors are experiencing a ROI of 8-10%.

The focus has now been shifted towards the tier-II cities. The 'retail boom', 85% of which
has so far been concentrated in the metros is beginning to percolate down to these smaller
cities and towns. The contribution of these tier-II cities to total organized retailing sales is
expected to grow to 20-25%.
Indian consumers behavior pattern has changed. Now the Indian consumer gets more
hefty pay- packages, is younger, a large number of women are working, western
influences, and more disposable income have opened a lot of opportunities in Indian
organized retail sector.
Shopping culture has not developed in India as yet. Even now malls are just a place to
hang around with family and friends and largely confined to window-shopping.
The peoples who are living in the rural areas are more conservative in nature, they are
less educated in compare to the urban peoples and they are much more price sensitive.
They are having less exposure to the media sources, so the marketers are facing a huge
trouble in marketing and promotion of organized stores in the rural areas.
Due to the poorly developed infrastructure retail industry is not able to exploit the market
that are available in the tier II and tier III cities of India.
From the porters five forces analysis we can say that Indian Retail Industry is neither
ideal industry nor Unattractive industry. We can consider Indian Retail Industry as
somewhat attractive Industry which is having a good opportunity in the untapped market.
Firms which are having good financial pockets and having good innovative marketing
and technological skills are having a good opportunity in Indian Retail Industry.
Collectively the growth of Indian Retail Industry is 25% per annum, but due to severe
competition and entry of several big players in the market the growth of individual
companies in the industry is much lesser in compare to the industry taken as a whole.
Entry of major firms will be profitable for the industry and it makes the competition more
stiffer and intense.

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India's buoyant growth had attracted international attention, but multinationals
wanting to enter the retail sector were "frustrated" by local laws, which limit the
ownership of foreign companies to 51 per cent.
Government policies and regulations helps in the growth of Indian Retail Industry
by helping its stakeholders and by increasing the hurdles to the entry of the foreign
players to the industry, by doing so they are trying to preserve the domestic players
specially the local traditional kirana stores and other unorganized market.

India retail industry is the fastest growing industry in India and it accounts for 10%
of the country's GDP. In 2006, the retail industry in India amounted to US$ 200 billion
and out of this, the organized retail sector in India amounted to US$ 6.4 billion.
By 2010, the Indian organized retail sector is expected to rise to US$ 23 billion.

After studying various driving forces we can say that Indian Retail Industry will have a
tremendous growth in the future and it will have a good opportunity for the New
Entrants. And we can say that Indian Retail Industry will be profitable in the future.

Due to the Innovation in the Marketing and Technology, vertical integration and better
implementation of Enterprise Resource planning is applied to the Indian Retail Industry.
This will help the players of Indian Retail Industry to offer the product to the
consumersat the most cost effective way and it will also help the competitors to adopt the
Low cost Provider strategy. Thus we can say that Driving forces are acting to make the
competition more intense.

Indian retail Industry is growing at the rate of 25% to 30% per annum and hence the
Industry as a whole is having a higher profitability

Cultural preferences and tastes that differ from the "global economy". Given the strong
and diverse cultures in India, multinational firms have to develop and customize products
specifically for the Indian market.

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One of the reasons for the rapid development of the retail sector is the sharp improvement in
the availability of retail space. This has been due to the improving economic attractiveness
of mall development. However, in the current rally in property prices, retail real estate rentals
have increased remarkably, which may render a few retailing business models unviable.

The Indian market is dominated by over 12-15 million small "mom and pop" retail outlets,
of Which about 65% are in rural areas.

Accessing these outlets is one of the biggest challenges facing by the organized retailing
companies.

Most Indian retail players are under serious pressure to make their supply chains more
efficient in order to deliver the levels of quality and service that consumers are demanding.
Long intermediation chains would increase the costs by 15%.

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Conclusion

For a start, these retailers need to invest much more in capturing more specific market.
Intelligence as well as almost real-time customer purchase behavior information. The retailers
also need to make substantial investment in understanding/acquiring some advanced expertise in
developing more accurate and scientific demand forecasting models. Re-engineering of product
sourcing philosophies-aligned more towards collaborative planning and replenishment should
then be next on their agenda. The message, therefore for the existing small and medium
independent retailers is to closely examine what changes are taking place in their immediate
vicinity, and analyze Whether their current market offers a potential redevelopment of the area
into a more modern multi-option destination. If it does, and most commercial areas in India do
have this potential, it would be very useful to form a consortium of other such small retailers in
that vicinity and take a pro-active approach to pool in resources and improve the overall
infrastructure. The next effort should be to encourage retailers to make some investments in
improving the interiors of their respective establishments to make shopping an enjoyable
experience for the customer.

As the retail marketplace changes shape and competition increases, the potential for improving
retail productivity and cutting costs is likely to decrease. Therefore, it will become important for
retailers to secure a distinctive position in the marketplace based on value, relationships or
experience.

Finally, it is important to note that these strategies are not strictly independent of each other;
value is function of not just price, quality and service but can also be enhanced by
Personalization and offering a memorable experience. In fact, building relationships with
customers can by itself increase the quality of overall customer experience and thus the
perceived value. But most importantly for winning in this intensely competitive marketplace, it is
critical to understand the target customer's definition of value and make an offer, which not only
delights the customers but also is also difficult for competitors to replicate.

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Retail sector is the most booming sector of India, Indian Retail Industry is growing at the
rate of 25 percent yearly, contribution of Indian retail industry to the country's GDP is 10%
and it is giving 7% of the total employment of India.

Indian Retail Industry is a profitable industry if we consider the industry as a whole but if we
talk about the individual companies then all the companies are struggling for churning the
profit and due to severe competition each and every company is using severe price cut
strategy and as a result of this weak retailers are not able to survive in the market and they
diversify their business. To attract and retain more and more customers Retailers have to
make the maximum use of innovative marketing techniques and Technology at large.

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CHAPTER-6

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Executive Summary

The Silver Bear Lodge is located three blocks from Crest Lake Village, mid- mountain at Bear
Valley Resort and on the free shuttle system. Located in the recently expanded Crest Canyon
area, Silver Bear Lodge will offer customers 12 two-bedroom units with underground parking,

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fully-equipped kitchens, laundry facilities and stone fireplaces. Silver Bear Lodge also will
offer a common-area outdoor hot tub as well as a on-site store and on-site front desk service.

Each year, over 150,000 skiers and nature lovers visit the Bear Valley Resort area. On average,
visitors spend over $250 million, annually, for lodging, food, and recreational activities at Bear
Valley Resort.

Marty Snyderman and Luke Roth, co-owners of the Silver Bear Lodge, will operate the lodge
as a ski resort during the months of November to April. During the Spring and Summer
months (May to August), the Silver Bear Lodge will operate as a summer resort. The lodge
will be closed during the months of September and October.

1.1 Objectives

The objectives of the Silver Bear Lodge for the first three years of operation include:

Exceeding customer's expectations for luxury apres ski accommodations.


Maintaining an 90% occupancy rate during the peak periods.
Assembling an experienced and effective staff.

1.2 Mission

The mission of Silver Bear Lodge is to become the number one lodge of choice with visitors to
Bear Valley Resort.

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Company Summary

The Silver Bear Lodge, located in the recently opened Crest Canyon area, has 12 two-bedroom
units with underground parking, fully-equipped kitchens, laundry facilities and stone
fireplaces. Silver Bear Lodge also has a common-area outdoor hot tub as well as an on-
site store and on-site front desk service.

2.1 Company Ownership

Marty Snyderman and Luke Roth are co-owners of the Silver Bear Lodge.

2.2 Start-up Summary

Marty Snyderman and Luke Roth will each invest $100,000. They will also secure a mortgage
to purchase the property for $250,000 and an SBA loan for $100,000.

Start-up Funding
Start- up Expenses to Fund $185,400
Start- up Assets to Fund $364,600
Total Funding Required $550,000
Assets
Non-cash Assets from Start-up $350,000
Cash Requirements from Start- $14,600
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up
Additional Cash Raised $0
Cash Balance on Starting Date $14,600
Total Assets $364,600
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $350,000
Accounts Payable (Outstanding
$0
Bills)
Other Current Liabilities
$0
(interest- free)
Total Liabilities $350,000
Capital
Planned Investment
Marty Snyderman $100,000
Luke Roth $100,000
Additional Investment
$0
Requirement
Total Planned Investment $200,000
Loss at Start-up (Start-up
($185,400)
Expenses)
Total Capital $14,600
Total Capital and Liabilities $364,600
Total Funding $550,000
Start-up
Requirements
Start-up Expenses
Legal $5,000
Stationery etc. $400
Brochures $6,000
Rental Shop Setup $50,000
Property
$50,000
Downpayment
Lodge Setup $20,000
Store Setup $50,000
Insurance $4,000
Total Start-up $185,40
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Expenses 0
Start-up Assets
Cash Required $14,600
Other Current Assets $0
$350,00
Long-term Assets
0
$364,60
Total Assets
0
$550,00
Total Requirements
0

2.3 Company Locations and Facilities

The charm and solitude of Bear Valley's secluded mountain setting is found just 36 miles from
the Richmond International Airport.

Products

Silver Bear Lodge will offer customers 12 two-bedroom units, fully-equipped


kitchens, laundry facilities and stone fireplaces. Silver Bear Lodge will offer a common-area
outdoor hot tub as well as the following services on-site:

Food store
Ski rental/clothing shop
Front desk service

Market Analysis Summary

Resort hotel development and operation in the Bear Valley Resort area has been very
profitable and successful due to the economic upturn experienced in the early and mid 90's.
Time-share / resort hotel development and investments into ski resorts nationwide are currently
going strong. In the past two years, sales of time-shares in the Bear Valley Resort area have
increased by over 35 percent. There are forty condominiums, lodges, inns and hotels within
two miles of the resort. Each year, room occupancy is close to 100% during the peak skiing
season. New construction is planned in the spring for two condo complexes and a hotel.

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4.1 Market Segmentation

Our customers can be broadly divided into two groups:

Skiers. The Bear Valley Resort area is quickly becoming one of the best ski resorts in
the U.S. The resort is located 36 miles from Richmond International Airport and is
easily accessible.

Summe r Visitors. During the summer months, the Bear Valley Resort area is a
beautiful wilderness retreat with over 50 hiking trails and other outdoor recreational
activities.

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Skiers 15% 90,000 103,500 119,025 136,879 157,411 15.00%
Summer Visitors 15% 60,000 69,000 79,350 91,253 104,941 15.00%
Total 15.00% 150,000 172,500 198,375 228,132 262,352 15.00%
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Strategy and Implementation Summary

Silver Bear Lodge will aggressively market to both winter and summer visitors of the Bear
Valley Resort area. The Bear Valley Resort has activities occuring year round. During the
winter there is skiing but in the summer months, the resort has hot-air balloon trips, white
water adventures, day hikes into Bear Valley, and other recreational activities that take
advantage of valley's spectacular beauty.

There are only thirteen lodges and inns in the Bear Valley Resort. These facilities represent
only 580 room units of the total of 4,000 room units in the resort area. The majority of room
units in the area are condos.

Our customers are looking for a different lodging experience that cannot be found in any of the
area's condo complexes or hotels. We will offer our customers a comfortable, congenial
environment that will assure return visits to the Silver Bear Lodge.

5.1 Competitive Edge

The competitive edge of Silver Bear Lodge is the service, first and foremost. Marty
Snyderman and Luke Roth, co-owners of the Silver Bear Lodge, have over twenty years
experience in managing ski lodging facilities.

Marty is the manager-owner of the Crest Lake Inn. He has owned the inn for ten years.

Luke recently was the manager of the Village Resort Hotel. He held that position for the last
five years. Before this position, Luke was the manager of The Ridge, a 60 unit condo complex
in Silver Lake Village.

Another significant advantage for the Silver Bear Lodge is its location. Being located in the
recently opened Crest Canyon area, Silver Bear Lodge is uniquely positioned to be centrally
located to both Crest Lake Village (.5 miles) and the Bear Valley Resort ski area (.5 miles).

5.2 Sales Strategy

The Silver Bear Lodge's sales strategy is to harness the existing Bear Valley Resort booking
system that has been critical to the success of all of the area's lodges and inns. Room rates for
the lodge will range from $150 - $250 per night in peak season. In the off season prices will
range from $100 to $175 per night.

5.2.1 Sales Forecast

The following is the sales forecast for three years.

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Sales Forecast
Year 1 Year 2 Year 3
Sales
Rooms $430,000 $560,000 $600,000
Food $121,000 $140,000 $180,000
Ski Rentals $132,000 $145,000 $160,000
Clothing $58,000 $70,000 $82,000

Total Sales $741,000 $915,000 $1,022,000


Direct Cost of Sales Year 1 Year 2 Year 3
Rooms $0 $0 $0
Food $59,500 $71,000 $90,000
Ski Rentals $0 $0 $0
Clothing $23,700 $30,000 $38,000
Subtotal Direct Cost of Sales $83,200 $101,000 $128,000

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5.3 Marketing Strategy

The Bear Valley Resort area has its own website and advertising/promotion program
that promotes the area's lodging. Currently, 70% of the area's visitors use the website to
identify lodging and service options.

The Silver Bear Lodge is positioned as a new upscale facility that is focused on the high-
income visitors to Bear Valley Resort. The area's lodges and inns receive approximately 80%
of their guests from the Bear Valley Resort booking system. Since the total number of room
units are few with the area's lodges and inns, these lodging units fill up quickly.

In addition, the Silver Bear Lodge will be highlighted in a promotional piece for Bear Valley
Resort in the December issue of Ski Magazine

Management Summary

Luke Roth will be the manager of the daily operations of the Silver Bear Lodge.

6.1 Personnel Plan

The personnel needed for the Silver Bear Lodge are the following:

Manager.
Assistant manager.
Lodge staff (7).
Food store staff (3).
Ski rental/clothing store (3).
Maintenance staff (3).
Cleaning staff (4).

Personnel Plan
Year 1 Year 2 Year 3
Manager $36,000 $39,000 $42,000
Assistant Manager $42,000 $45,000 $48,000
Lodge Staff $110,000 $120,000 $126,000
Food Store Staff $39,000 $43,000 $46,000
Ski Rental/Clothing Store Staff $35,000 $39,000 $42,000
Maintenance Staff $48,000 $52,000 $55,000
Cleaning Staff $72,000 $76,000 $79,000
Total People 9 22 22
101
Total Payroll $382,000 $414,000 $438,000

Financial Plan

The following is the financial plan for the Silver Bear Lodge.

7.1 Break-even Analysis

The monthly break-even point is approximately $52,900.

Break-even Analysis
Monthly Revenue Break-even $52,905
Assumptions:
Average Percent Variable Cost 11%
Estimated Monthly Fixed Cost $46,965

7.2 Projected Profit and Loss

The following is the projected profit and loss for three years.

102
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $741,000 $915,000 $1,022,000
Direct Cost of Sales $83,200 $101,000 $128,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $83,200 $101,000 $128,000
Gross Margin $657,800 $814,000 $894,000
Gross Margin % 88.77% 88.96% 87.48%
Expenses
Payroll $382,000 $414,000 $438,000
Sales and Marketing and Other
$60,000 $80,000 $100,000
Expenses
Depreciation $14,280 $14,280 $14,280
Leased Equipment $0 $0 $0
Utilities $26,000 $26,000 $26,000
Insurance $24,000 $24,000 $24,000
Lease $0 $0 $0
Payroll Taxes $57,300 $62,100 $65,700
Other $0 $0 $0
Total Operating Expenses $563,580 $620,380 $667,980
Profit Before Interest and Taxes $94,220 $193,620 $226,020
EBITDA $108,500 $207,900 $240,300
103
Interest Expense $33,375 $30,500 $27,500
Taxes Incurred $18,254 $48,936 $59,556
Net Profit $42,592 $114,184 $138,964
Net Profit/Sales 5.75% 12.48% 13.60%

7.3 Projected Balance Sheet

The following is the projected balance sheet for three years.

Pro Forma Balance Sheet


Year 1 Year 2 Year 3
Assets
Current Assets
Cash $31,437 $118,555 $165,584
Other Current Assets $14,000 $32,000 $53,000
Total Current Assets $45,437 $150,555 $218,584
Long-term Assets
Long-term Assets $350,000 $370,000 $430,000
Accumulated Depreciation $14,280 $28,560 $42,840
Total Long-term Assets $335,720 $341,440 $387,160
Total Assets $381,157 $491,995 $605,744
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $3,965 $30,619 $35,405
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $3,965 $30,619 $35,405
Long-term Liabilities $320,000 $290,000 $260,000
Total Liabilities $323,965 $320,619 $295,405
Paid- in Capital $200,000 $200,000 $200,000
Retained Earnings ($185,400) ($142,809) ($28,625)
Earnings $42,592 $114,184 $138,964
Total Capital $57,192 $171,376 $310,340
Total Liabilities and Capital $381,157 $491,995 $605,744
Net Worth $57,192 $171,376 $310,340

104
7.4 Projected Cash Flow

The following is the projected cash flow for three years.

Pro Forma Cash Flow


Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $741,000 $915,000 $1,022,000
Subtotal Cash from Operations $741,000 $915,000 $1,022,000
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest- free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $741,000 $915,000 $1,022,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $382,000 $414,000 $438,000
105
Bill Payments $298,163 $345,882 $425,971
Subtotal Spent on Operations $680,163 $759,882 $863,971
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $30,000 $30,000 $30,000
Purchase Other Current Assets $14,000 $18,000 $21,000
Purchase Long-term Assets $0 $20,000 $60,000
Dividends $0 $0 $0
Subtotal Cash Spent $724,163 $827,882 $974,971
Net Cash Flow $16,837 $87,118 $47,029
Cash Balance $31,437 $118,555 $165,584

7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the
Standard Industrial Classification (SIC) code 7011, Hotels and Motels, are shown for
comparison.

Ratio Analysis
Industry
Year 1 Year 2 Year 3
Profile
Sales Growth 0.00% 23.48% 11.69% 5.90%
Percent of Total Assets
Other Current Assets 3.67% 6.50% 8.75% 26.00%
Total Current Assets 11.92% 30.60% 36.09% 32.00%
Long-term Assets 88.08% 69.40% 63.91% 68.00%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 1.04% 6.22% 5.84% 19.40%
Long-term Liabilities 83.95% 58.94% 42.92% 34.60%
Total Liabilities 85.00% 65.17% 48.77% 54.00%
Net Worth 15.00% 34.83% 51.23% 46.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 88.77% 88.96% 87.48% 0.00%
Selling, General & Administrative 83.02% 76.48% 73.88% 75.10%
106
Expenses
Advertising Expenses 8.10% 8.74% 9.78% 1.90%
Profit Before Interest and Taxes 12.72% 21.16% 22.12% 2.50%
Main Ratios
Current 11.46 4.92 6.17 1.45
Quick 11.46 4.92 6.17 1.05
Total Debt to Total Assets 85.00% 65.17% 48.77% 54.00%
Pre-tax Return on Net Worth 106.39% 95.18% 63.97% 1.70%
Pre-tax Return on Assets 15.96% 33.15% 32.77% 3.70%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 5.75% 12.48% 13.60% n.a
Return on Equity 74.47% 66.63% 44.78% n.a
Activity Ratios
Accounts Payable Turnover 76.19 12.17 12.17 n.a
Payment Days 27 17 28 n.a
Total Asset Turnover 1.94 1.86 1.69 n.a
Debt Ratios
Debt to Net Worth 5.66 1.87 0.95 n.a
Current Liab. toLiab. 0.01 0.10 0.12 n.a
Liquidity Ratios
Net Working Capital $41,472 $119,936 $183,180 n.a
Interest Coverage 2.82 6.35 8.22 n.a
Additional Ratios
Assets to Sales 0.51 0.54 0.59 n.a
Current Debt/Total Assets 1% 6% 6% n.a
Acid Test 11.46 4.92 6.17 n.a
Sales/Net Worth 12.96 5.34 3.29 n.a
Dividend Payout 0.00 0.00 0.00 n.a

107
CHAPTER-7

Bibliography
108
Books:
Philip Kotier, "Marketing Management", Pearson Education, Twelfth Edition, p.g. no.
48-50, 68-79,422-429
Arthur A Thompson Jr, "Crafting and Executing Strategy", TATA McGraw-Hill,
Fourteenth Edition, p.g. no. 50-74
Chandra Prasanna(2001), Financial Management: Theory and Practice, Tata McGraw
Hill Publicating Company Limited, p.g. 265-295

Websites:
http://abodesindia.wordpressxom/2008/09/24/315-hypermarkets--Iikely-in-tier--i-ii-cities-
by-2011-assocham/
http://www.adityabirla.conVour_companies/indian_companies/retail.htm
http://www.bharti.eom/l 32.0.html?&txJtnews%5Btt_news%5D=218&tx_ttnews%5Bba
ckPid%5D=131 &cHash=2c3824ace2
http://www.pantaloon.com/index.asp
http://www.brc.org.uk/latestdata04.asp?iCat=52&sCat=RETAIL+KEY+FACTS
http://company.monsterindia.com/shoppersin/
http://www.commodityonIine.com/news/India-to-witness-hypermarkets-boomI-11836-3-
l.html
http://economictimes.indiatimes.com/News/News_By_Industry/Services/Retailing/V-
Mart_Retail_to_open_24_new_stores__in_this_fiscal_/rssarticleshow/2996061.cms
http://en.wikipedia.org/wiki/Big_Bazaar
http://www.fibre2fashion.corn/industry-article/fr^ industryits-growth-challenges-
and-opportunities/indian-retail- industry-its-growth-challenges-and-opportunities2.asp
http://www.financialexpress.com/news/big-bazaar-plans-300-stores-by-201011/367821
http://www.futuregroup.in/our_companies.asp

109
http://www.globalretailbusiness.com/
http://www.ife-india.com/ife2008/caseDet.asp?caseId=caseStdl21
http://www.ibef.org/industry/retail.aspx
http://indiaretailbiz. wordpress.com/2006/ll/12/trinethra-expanding-network-from-155-to-230-stores-
to-launch- new- hypermarket-in- mysore/
http://www.morestore.com/index.html
http://www.rpggroup.com/sretaiI.html
http://www.spencersretail.com/spencers_retail.php
http://www.subhiksha.in/index.html
http://www.vmart.co.in/index.html
http://www.censusindia.gov.in/default.aspx
http://www.censusindia.gov.in/Census_Data_2007/Census_data_flnder/C__Series/populati on by
education.htm;
http://www.censusindia.gov.in/Census_Data_2001/Census_Data_Online/Social_and_cult
ural/Age_and__Marital_status.aspx
www.moneycontrol.com/annual report/balance sheet
www.moneycontrol.com/annual report/profit and loss account

110
CHAPTER-8

ANAXURE
Arvind life style ltd industry

Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 258.17 258.04 254.63 254.40 231.98
Equity Share Capital 258.17 258.04 254.63 254.40 231.98
Share Application Money 0.00 0.00 3.41 0.00 7.57
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 2,377.98 2,041.47 1,762.15 1,236.00 1,107.31
Revaluation Reserves 0.00 0.00 0.00 305.86 73.14
Networth 2,636.15 2,299.51 2,020.19 1,796.26 1,420.00
Secured Loans 2,157.69 1,908.07 1,560.73 1,763.23 1,728.73
Unsecured Loans 91.49 54.57 42.57 48.89 141.85
Total Debt 2,249.18 1,962.64 1,603.30 1,812.12 1,870.58
Total Liabilities 4,885.33 4,262.15 3,623.49 3,608.38 3,290.58
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds
Gross Block 4,061.55 3,806.43 3,557.55 3,172.22 3,002.45
Less: Accum. Depreciation 1,565.35 1,466.77 1,288.49 1,170.26 1,084.34
Net Block 2,496.20 2,339.66 2,269.06 2,001.96 1,918.11

111
Capital Work in Progress 72.32 200.32 179.10 142.28 46.86
Investments 700.33 492.86 337.11 309.40 300.29
Inventories 942.61 877.96 728.42 699.16 432.00
Sundry Debtors 518.93 442.42 405.55 563.63 424.16
Cash and Bank Balance 123.82 150.60 39.37 14.20 33.35
Total Current Assets 1,585.36 1,470.98 1,173.34 1,276.99 889.51
Loans and Advances 1,179.30 779.90 666.36 514.19 579.64
Fixed Deposits 0.00 0.00 0.00 14.89 9.79
Total CA, Loans & Advances 2,764.66 2,250.88 1,839.70 1,806.07 1,478.94
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 1,053.58 922.63 857.40 640.51 446.24
Provisions 94.60 98.94 144.08 10.82 7.38
Total CL & Provisions 1,148.18 1,021.57 1,001.48 651.33 453.62
Net Current Assets 1,616.48 1,229.31 838.22 1,154.74 1,025.32
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 4,885.33 4,262.15 3,623.49 3,608.38 3,290.58

Contingent Liabilities 924.40 674.27 598.67 682.29 301.99


Book Value (Rs) 102.11 89.11 79.20 58.59 57.73

Future life style


Mar '14 Mar '13

12 mths 12 mths

Sources Of Funds
112
Total Share Capital 30.89 5.15
Equity Share Capital 30.89 5.15
Share Application Money 0.00 0.00
Preference Share Capital 0.00 0.00
Reserves 1,260.43 -0.34
Revaluation Reserves 0.00 0.00
Networth 1,291.32 4.81
Secured Loans 1,341.92 0.00
Unsecured Loans 0.00 0.00
Total Debt 1,341.92 0.00
Total Liabilities 2,633.24 4.81
Mar '14 Mar '13

12 mths 12 mths

Application Of Funds
Gross Block 1,545.68 0.00
Less: Accum. Depreciation 395.82 0.00
Net Block 1,149.86 0.00
Capital Work in Progress 189.54 0.00
Investments 378.53 0.00
Inventories 1,023.97 0.00
Sundry Debtors 263.20 0.00
Cash and Bank Balance 271.08 0.17
Total Current Assets 1,558.25 0.17
Loans and Advances 664.15 4.64
Fixed Deposits 0.00 0.00
Total CA, Loans & Advances 2,222.40 4.81
Deffered Credit 0.00 0.00
Current Liabilities 1,293.35 0.01
Provisions 13.74 0.00
Total CL & Provisions 1,307.09 0.01
Net Current Assets 915.31 4.80
Miscellaneous Expenses 0.00 0.00
Total Assets 2,633.24 4.80

Contingent Liabilities 27.19 0.00


Book Value (Rs) 83.60 1.87

113
Future retail
Mar '14 Dec '12 Jun '11 Jun '10 Jun '09

15 mths 18 mths 12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 46.32 46.32 106.90 41.23 38.06
Equity Share Capital 46.32 46.32 43.42 41.23 38.06
Share Application Money 0.00 0.00 100.00 187.54 22.88
Preference Share Capital 0.00 0.00 63.48 0.00 0.00
Reserves 3,205.33 3,276.23 2,671.23 2,527.48 2,211.48
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 3,251.65 3,322.55 2,878.13 2,756.25 2,272.42
Secured Loans 5,421.05 3,159.35 1,675.89 1,236.03 2,525.53
Unsecured Loans 82.75 46.25 497.23 150.19 324.86
Total Debt 5,503.80 3,205.60 2,173.12 1,386.22 2,850.39
Total Liabilities 8,755.45 6,528.15 5,051.25 4,142.47 5,122.81
Mar '14 Dec '12 Jun '11 Jun '10 Jun '09

15 mths 18 mths 12 mths 12 mths 12 mths

Application Of Funds
Gross Block 4,846.25 2,790.89 1,877.66 1,417.04 1,876.45
Less: Accum. Depreciation 506.00 507.58 410.64 294.89 307.69
Net Block 4,340.25 2,283.31 1,467.02 1,122.15 1,568.76
Capital Work in Progress 363.82 209.73 100.13 59.68 345.23
Investments 1,349.52 2,280.23 2,255.41 2,002.91 954.03
Inventories 3,113.29 2,140.24 1,762.20 1,270.67 1,787.84
Sundry Debtors 313.98 165.01 185.24 123.57 177.25
Cash and Bank Balance 102.48 55.53 76.38 84.80 105.19
Total Current Assets 3,529.75 2,360.78 2,023.82 1,479.04 2,070.28
Loans and Advances 1,766.25 1,468.87 497.96 452.89 1,211.08
Fixed Deposits 0.00 0.00 9.39 15.74 4.15
114
Total CA, Loans & Advances 5,296.00 3,829.65 2,531.17 1,947.67 3,285.51
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 2,558.27 2,035.92 1,272.56 965.72 1,010.26
Provisions 35.87 38.85 29.92 24.22 20.46
Total CL & Provisions 2,594.14 2,074.77 1,302.48 989.94 1,030.72
Net Current Assets 2,701.86 1,754.88 1,228.69 957.73 2,254.79
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 8,755.45 6,528.15 5,051.25 4,142.47 5,122.81

Contingent Liabilities 445.75 386.55 934.45 3,554.23 139.94


Book Value (Rs) 140.41 143.47 125.06 124.61 118.20

115
Mar '14 Dec '12 Jun '11 Jun '10 Jun '09

15 mths 18 mths 12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 46.32 46.32 106.90 41.23 38.06
Equity Share Capital 46.32 46.32 43.42 41.23 38.06
Share Application Money 0.00 0.00 100.00 187.54 22.88
Preference Share Capital 0.00 0.00 63.48 0.00 0.00
Reserves 3,205.33 3,276.23 2,671.23 2,527.48 2,211.48
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 3,251.65 3,322.55 2,878.13 2,756.25 2,272.42
Secured Loans 5,421.05 3,159.35 1,675.89 1,236.03 2,525.53
Unsecured Loans 82.75 46.25 497.23 150.19 324.86
Total Debt 5,503.80 3,205.60 2,173.12 1,386.22 2,850.39
Total Liabilities 8,755.45 6,528.15 5,051.25 4,142.47 5,122.81
Mar '14 Dec '12 Jun '11 Jun '10 Jun '09

15 mths 18 mths 12 mths 12 mths 12 mths

Application Of Funds
Gross Block 4,846.25 2,790.89 1,877.66 1,417.04 1,876.45
Less: Accum. Depreciation 506.00 507.58 410.64 294.89 307.69
Net Block 4,340.25 2,283.31 1,467.02 1,122.15 1,568.76
Capital Work in Progress 363.82 209.73 100.13 59.68 345.23
Investments 1,349.52 2,280.23 2,255.41 2,002.91 954.03
Inventories 3,113.29 2,140.24 1,762.20 1,270.67 1,787.84
Sundry Debtors 313.98 165.01 185.24 123.57 177.25
Cash and Bank Balance 102.48 55.53 76.38 84.80 105.19
Total Current Assets 3,529.75 2,360.78 2,023.82 1,479.04 2,070.28
Loans and Advances 1,766.25 1,468.87 497.96 452.89 1,211.08
Fixed Deposits 0.00 0.00 9.39 15.74 4.15
Total CA, Loans & Advances 5,296.00 3,829.65 2,531.17 1,947.67 3,285.51
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 2,558.27 2,035.92 1,272.56 965.72 1,010.26
Provisions 35.87 38.85 29.92 24.22 20.46
Total CL & Provisions 2,594.14 2,074.77 1,302.48 989.94 1,030.72
Net Current Assets 2,701.86 1,754.88 1,228.69 957.73 2,254.79
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 8,755.45 6,528.15 5,051.25 4,142.47 5,122.81

Contingent Liabilities 445.75 386.55 934.45 3,554.23 139.94


Book Value (Rs) 140.41 143.47 125.06 124.61 118.20
116
Shoppers st
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 41.61 41.49 41.28 41.08 34.91

Equity Share Capital 41.61 41.49 41.28 41.08 34.91


Share Application Money 0.00 0.00 0.00 0.00 30.72
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 687.06 652.33 617.22 557.02 243.26
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 728.67 693.82 658.50 598.10 308.89
Secured Loans 364.74 277.51 179.07 128.72 176.41
Unsecured Loans 9.90 29.32 40.00 20.00 15.00
Total Debt 374.64 306.83 219.07 148.72 191.41

117
Total Liabilities 1,103.31 1,000.65 877.57 746.82 500.30
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds
Gross Block 816.93 696.26 624.24 505.64 457.66
Less: Accum. Depreciation 267.90 240.34 207.42 193.50 186.66
Net Block 549.03 455.92 416.82 312.14 271.00
Capital Work in Progress 31.87 27.45 39.33 44.65 27.68
Investments 387.60 330.95 284.21 237.19 119.67
Inventories 295.54 243.82 212.04 151.14 149.89
Sundry Debtors 26.00 20.36 19.17 16.01 10.91
Cash and Bank Balance 8.73 11.72 5.91 2.36 2.81
Total Current Assets 330.27 275.90 237.12 169.51 163.61
Loans and Advances 360.08 347.75 291.19 284.32 222.58
Fixed Deposits 0.00 0.00 1.24 0.25 0.23
Total CA, Loans & Advances 690.35 623.65 529.55 454.08 386.42
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 544.87 427.03 383.06 291.69 269.66
Provisions 10.66 10.28 9.28 9.55 34.80
Total CL & Provisions 555.53 437.31 392.34 301.24 304.46
Net Current Assets 134.82 186.34 137.21 152.84 81.96
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 1,103.32 1,000.66 877.57 746.82 500.31

Contingent Liabilities 278.34 176.33 115.43 53.91 77.69


Book Value (Rs) 87.56 83.61 79.76 72.79 79.67

118
Trent

Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 33.23 40.23 38.70 35.96 27.04
Equity Share Capital 33.23 33.23 27.25 20.06 20.04
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 7.00 11.45 15.90 7.00
Reserves 1,283.19 1,498.80 1,315.48 1,045.99 613.47
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 1,316.42 1,539.03 1,354.18 1,081.95 640.51
Secured Loans 100.00 100.00 100.00 100.00 115.50
Unsecured Loans 125.00 125.00 140.00 175.00 135.02
Total Debt 225.00 225.00 240.00 275.00 250.52
Total Liabilities 1,541.42 1,764.03 1,594.18 1,356.95 891.03
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds
Gross Block 469.94 370.80 358.68 330.19 260.14
Less: Accum. Depreciation 127.00 88.08 74.96 66.27 53.59
Net Block 342.94 282.72 283.72 263.92 206.55
Capital Work in Progress 36.36 26.01 20.99 27.83 16.90
Investments 862.40 1,040.44 705.15 424.97 395.18
Inventories 264.53 185.23 179.23 130.57 96.48
Sundry Debtors 3.86 2.94 3.42 6.66 4.23
Cash and Bank Balance 32.85 143.33 269.61 13.41 6.62
Total Current Assets 301.24 331.50 452.26 150.64 107.33
Loans and Advances 359.55 396.46 424.48 495.14 347.70
Fixed Deposits 0.00 0.00 0.00 286.94 2.50
Total CA, Loans & Advances 660.79 727.96 876.74 932.72 457.53
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 220.26 173.96 154.67 153.71 125.14
Provisions 140.81 139.14 137.75 138.77 59.99
Total CL & Provisions 361.07 313.10 292.42 292.48 185.13
Net Current Assets 299.72 414.86 584.32 640.24 272.40
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 1,541.42 1,764.03 1,594.18 1,356.96 891.03

Contingent Liabilities 179.67 193.82 62.25 55.84 53.16


Book Value (Rs) 396.14 461.02 492.75 531.51 316.

119

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