19-08-2013, 04:16 PM
Retail industry overview
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Performance
In today’s dynamic and shaky business world, the retail industry is constantly upgrading itself. With an endless array of customer choices, fierce competitors, pervasive use of the internet, and a complex global economy, retailers need to focus on finding ways to sustain and grow their businesses. Traditional growth models that focused on rolling out more stores and adding more product lines, no longer enjoy the return on investment they once did. Successful retailers are those who are able to adapt and change to the environment and develop new ways of serving customers, respecting the dynamics of current trends and adapting accordingly.
The retail industry in India is hailed as a sunrise sector, and is estimated to double in value from US$ 330 billion in 2007 to $640 billion by 2015. In fact, India has topped AT Kearney's annual Global Retail Development Index (GRDI) for the third year in a row as the most attractive market for retail investment.
The bad news is, despite the fact that India has one of the largest number of retail outlets in the World, organized retail accounts for only 4% of the total market. This makes it especially difficult to apply sophisticated merchandising and sales tools, enhance consumer interaction and also, make very accurate analysis. That said, analysts believe the sector is likely to show significant growth of over 9 % p.a over the next 10 years and also see rapid development in organized retail formats, with the proportion likely to reach a more respectable 25% by 2018.
Growth Potential
The key growth areas include the urban, luxury segment on one end of the spectrum and serving the rural sector on the other. In addition, government policy encouraging FDI in the segment has resulted in a plethora of international retailers keen on entering the market; American retail giant Wal-Mart has tied-up with Bharti Enterprises and global coffee giant Starbucks' has tied up with PVR Limited. In addition, Carrefour, Boots and others are also expected to come in.
With so much action, it is natural that there is a huge scope for employment opportunities, and experts estimate that the sector will generate employment for ~ 2.5 million people in 2010. The top retail companies in India include the Raheja Group, Reliance Retail, Tata Trent, Future Group, RPG Retail, and Ebony Retail Holdings.
Future Prospects
There are many opportunities for those seeking to enter this sector, and entry level positions such as sales executives don’t even require a degree. Naturally, the higher order jobs for graduates with relevant degrees and work experience, involve more responsibility, challenges and remuneration. MBAs are increasingly being recruited, which marks a change of HR policy, from the traditional preference to hire those from the FMCG and hospitality sectors. In fact, senior executives in retail such as operations heads are extremely well looked after, and HR consultants believe they are paid in excess of Rs. 60 lakhs.
The good news for graduates is that since the sector is so young and vibrant, career growth happens very rapidly, and these positions are very achievable in a compressed time period. Successful candidates across all levels are those who are dynamic, able to multi-task and are equipped with great communication skills.
THE INDIAN RETAIL SCENE
India is the country having the most unorganized retail market. Traditionally it is a family�s livelihood, with their shop in the front and house at the back, while they run the retail business. More than 99% retailer�s function in less than 500 square feet of shopping space. Global retail consultants KSA Technopak have estimated that organized retailing in India is expected to touch Rs 35,000 crore in the year 2005-06. The Indian retail sector is estimated at around Rs 900,000 crore, of which the organized sector accounts for a mere 2 per cent indicating a huge potential market opportunity that is lying in the waiting for the consumer-savvy organized retailer.
Purchasing power of Indian urban consumer is growing and branded merchandise in categories like Apparels, Cosmetics, Shoes, Watches, Beverages, Food and even Jewellery, are slowly becoming lifestyle products that are widely accepted by the urban Indian consumer. Indian retailers need to advantage of this growth and aiming to grow, diversify and introduce new formats have to pay more attention to the brand building process. The emphasis here is on retail as a brand rather than retailers selling brands. The focus should be on branding the retail business itself. In their preparation to face fierce competitive pressure, Indian retailers must come to recognize the value of building their own stores as brands to reinforce their marketing positioning, to communicate quality as well as value for money. Sustainable competitive advantage will be dependent on translating core values combining products, image and reputation into a coherent retail brand strategy.
STRATEGIES, TRENDS AND OPPORTUNITIES 2007
Retailing in India is gradually inching its way toward becoming the next boom industry. The whole concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. Modern retail has entered India as seen in sprawling shopping centres, multi-storied malls and huge complexes offer shopping, entertainment and food all under one roof. The Indian retailing sector is at an inflexion point where the growth of organized retailing and growth in the consumption by the Indian population is going to take a higher growth trajectory. The Indian population is witnessing a significant change in its demographics. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing workingwomen population and emerging opportunities in the services sector are going to be the key growth drivers of the organized retail sector in India.
GROWTH OF RETAIL SECTOR IN INDIA
Retail and real estate are the two booming sectors of India in the present times. And if industry experts are to be believed, the prospects of both the sectors are mutually dependent on each other. Retail, one of India�s largest industries, has presently emerged as one of the most dynamic and fast paced industries of our times with several players entering the market. Accounting for over 10 per cent of the country�s GDP and around eight per cent of the employment retailing in India is gradually inching its way toward becoming the next boom industry.