Case Study:

What Lies in the Store for the Retailing Industry in India

Book Page No.: 103

Q 1. Identify the opportunities & threats that the retailing industry in India offers to local and foreign companies.

Ans. Opportunities:

Economic growth Positive growth rate Growing size of consuming class

International market awareness More exposure to international markets through TV & Internet

Growing market Consumers from larger area are getting reached

Socio-cultural change Increasing number of youths & increment in income level

Advancing technology Software support to operations Better supply chain management

Threats:

Political ambiguity Organized retailers are often resisted in order to maintain support from

unorganized vendors

Regulatory issues Direct foreign investment not permitted Real estate laws for setting up infrastructure Restructuring of tax

Weak supply system Difficulty in covering such a large area Traditional, fragmented distribution & retail networks Erratic logistics

Buyers’ psychology

Misconception among middle-class consumers that the modern retail formats is more expensive and not affordable for them.

Q 2.Prepare an ETOP for a company interested in entering the retailing industry in India.Ans. Environment threat and opportunity profile (ETOP) for Wal-Mart:

Environmental

Sectors

Nature of Impact Impact of each Sector

Economic Favourable The Indianconsumer’sbehaviour pattern haschanged.

Now theIndian consumergets more hefty pay

packages,isyounger, a largenumber of womenare

working,western influences,and more disposableincome

have openeda lot of opportunities in Indian

organizedretail sector. The

Indian consumerwants to shop.

Political Unfavourable The IndianGovernment haveAllowed 51%Foreign

direct Investment (FDI)In the India retail

Sector to oneBrand shops only.This have made

The entry of globalRetail giants toOrganized

retailSector in IndiaDifficult. This is aChallenge being

Faced by the Wal-Mart in IndianRetail sector.Being a

globalRetailer meansThat you are

Exposed toPolitical problems.

Market Unfavourable Being number oneMeans that youAre the target

ofCompetition,Locally andGlobally.

CutthroatCompetition fromThe 12 millionMom-and-

popStores. These areEasily accessible.

Regulatory Unfavourable The biggestChallenge facingWal-Mart in Indiais the

lack ofRetail space. WithReal estate pricesEscalating

due toIncrease inDemand from theIndian

organizedRetail sector, it is posing a challenge.