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RETAILING IN INDIA-THE IMPACT OF HYPERMARKETS

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Mehwish Mazhar

on 12 January 2014

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Transcript of RETAILING IN INDIA-THE IMPACT OF HYPERMARKETS

Retailing in INDIA:
The Impact Of HyPERMARKETS

By
SAMIA AMIR
MEHWISH MAZHAR
ZAINAB ASHRAF
indian retail sector
1.34%
expected to rise from $353 billion in 2010 to $547 billion in 2014,out of which 27 % accounts for modern retailing
UNorganised (Kiranas & street vendors etc)
Organised(super markets,hypermarkets etc)
Evolution of INDIAN retail sector
before 2000 most Indian buyers perchased from local mon n pop stores
Shopping at kiranas is easy,convenient & customers could establish personal relationships with owners
Now the scene is quite changed
Infusion of HYPERMARKETS due to changing consumer need threatens to rob local store owners of there customer base
today there are over 300 HYPERMARKETS & 6800 SUPERMARKETS
INDIA is experiencing 20 % annual growth in RETAIL MARKET
HYPERMARKET sales were expected to rise fivefold from 2009-2013 n the results are quite similar
each new store may draw customers from 20-25 kiranas & fruit n vegetable stands affecting 100,000 vendors
Major hyper markets in INDIA
• Auchan
• Big bazar
• Carrefour
• Reliance fresh
• Metro cash n carry
• Spencer’s hyper
• Best price
• Lulu hypermarket
• Star bazar
• V mart

FOREIGN RETAILERS
BHARTI WALMART
JV of Bharti Enterprises & Walmart as Bharti Walmart Private Ltd
CARREFOUR
Carrefour operates cash and carry stores in India under the name "Carrefour Wholesale Cash&Carry
TESCO
In 2008, tesco a UK based retailer signed a franchise agreement with Trent Ltd, part of the Tata group, to supply Star Bazaar with exclusive access to their retail expertise. TESCO also provide 80% of the stock sold by Star Bazaar, both food and non-food, sourced through their state-of-the-art distribution centre in Mumbai.
CHALLENGES IN INDIAN RETAIL SECTOR:
Legal Restrictions
Lack of INFRASTRUCTURE:
Lack of AMENITIES
CULTURAL restraints
LEGAL RESTRICTIONS
Untill 2011 Until 2011, Indian central government denied foreign direct
investment (FDI) in multi-brand Indian retail,
India will allow foreign groups to own up to 51 per cent in "multi-brand retailers"
Single brand retailers, can own 100 percent of their Indian stores, up from the
previous cap of 51 percent;
both multi-brand and single brand stores in India will have to source nearly a third
of their goods from small and medium-sized Indian suppliers;
All multi-brand and single brand stores will confine their operations in cities with
a population over one million
multi-brand retailers must have a minimum investment of US$100 million with
at least half of the amount invested in back end
LACK OF INFRASTRUCTURE AND EMENITIES:
lack of road network makes it difficult for people to reach far of places
Unreliable electric power increase cost
Lack of transport facilities cause waste
Expensive real estate is impacting expansion plans
lack of cold chain and storage infrastructure hampers the development of food retail
Supply-chain inefficiencies pose serious hurdles

CULTURAL RESTRAINTS
India has a century old culture of unorganized retailing which is dear to many,particularly the older segment of population
Shops and markets were closed and traders stopped trains in parts of India in protests against federal reforms to open the nation's $500 billion retail sector to global supermarket chains.
SHIFTING AGE DEMOGRAPHICS
More than half of India's population is younger than 25 years of age
With this large percentage it seems difficult for India's cultural taste to evolve
younger generation are exposed to innovative products that were unknown to there parents
CONCLUSION
Indian consumer is very quickly moving from local mom n pop stores to much organized retail outlets,despite the cultural and legal considerations associated with it.this is mainly because hypermarkets offer potential benefits for both the economy and infrastructure

DISCUSSION QUESTIONS
1:HOW MIGHT A HYPERMARKET IN INDIA APPEAL TO CUSTOMERS AND ORIENT THEM TO SHOPPING IN LARGER STORES?
A CAMPARISON BTW KIRANAS AND HYPERMARKETS
PROS AND CONS OF BOTH TYPES
REACHING A CONCLUSION
KIRANAS VS HYPERMARKETS
pros
cons
location
Home delivery
Rates n prces
Difference btw credit
card n credit system
buy as much as u
want not as much as
they want
personalized treatment
small n conjested
lack of variety
lack of assortment
high prices
cannot get everything under one roof
shopping doesnot become an experience
kiranas
pros
cons
hypermarkets
large store layouts
variety n assortment
competition in market
everything under
one roof
brands and quality
changing age
demographics
turns shopping into
an experience
not easily accessible
freshness
fixed prices
cannot give frequent visits for petty needs
people with no personal conveyance
no home delivery
conclusion
YES hypermarkets surely appeal to consumers n orrient them to shopping in larger stores because of all the advantages they bring, Still there is a segment of population that prefer local stores over larger hypermarkets,and that might stay forever.
DISCUSSION QUESTION # 2
Is the Indian government's willingness to spend
$ 500 billion to improve nation's infrastructure
good news for international retailers?
WHY or WHY NOT?
It is certainly good news for foreign retailers as it will help them reduce their cost and improve profit in the following ways
it will help reduce wastage of perishable goods lihe milk and vegetables
It can save real estate cost by opening stores in the outskirts of cities
Help reduce
transportation cost
will provide a healthy competition from local mom n pop shops
IT infrastructure will help make market forecasting and trend analysis more eficient
DISCUSSION QUESTION # 3
identify the main changes that mark Indian consumers.How can International retailers learn more about India's youthful demographics
More than half of Indian population is less than 25 years of age
EVER GROWING EDUCATION
SCENARIO AND URBANIZATION
NUCLEAR WORKING FAMILIES
All these changes contributes to changing consumer behavior in INDIA.The ultimate target market is the
CONSUMERS
and just as in any country at any time,the challenges for retailers in INDIA lies in understanding what those consumers want and how to get it to them
INDIAS CHANGING CONSUMER
This young population is exposed to innovative products as well as new retail formats for selling those products,that were unknown to their parents n so are more receptive to such changes n ideas.
MORE DISPOSABLE INCOME
Due to jobs created by IT ,and services boom,consumers in general and young consumer in particular have more disposible income
The educated Middle class of India is the main focus of retailers .They know what they are paying for and if it realy is worth spending their most precious commodity (i.e money) on.
In India their is an increasing trend of nuclear working families.These people are contributing in changing consumer behaviour as they have less time to shop
HOW CAN FOREIGN RETAILERS LEARN ABOUT INDIA"S YOUTHFUL DEMOGRAPHICS?
by doing a trend analysis of changing consumer behavior in India
how and why people are shifting from conventional retail formats to big box stores
by introducing youth oriented products i.e bringing innovation in their product lines as well as selling mechanisms.
as youth constitutes for more than half of India's population ,the response of consumers towards each initiative taken by large foreign retailers will help them learn more about India's youthful demographic.
The trick lies in differentiating themselves from local kirana stores
understanding the shopping basket of consumers in an area
introducing new products along with the old ones
having products catering latest fashions
sales people helping and assisting buyers at every step of purchase
promotions and discounts alligned with holidays and festivals
introduction of a credit policy
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