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Retail Management

SKILL LINKED IMMERSION PROJECT (SLIP)

Project Report

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD

OF

POST GRADUATE DIPLOMA IN MANAGEMENT (PGDM)

(Approved by AICTE)

on

Retail Management

Submitted to

SIES COLLEGE OF MANAGEMENT STUDIES

Submitted by

Sumit Kumar Chakraborty

Roll No. 054

Batch 2014-16

SIES COLLEGE OF MANAGEMENT STUDIES

NERUL, NAVI MUMBAI

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DECLARATION

I, Sumit Kumar Chakraborty, student of POST GRADUATE DIPLOMA IN MANAGEMENT

(PGDM) at SIES College of Management Studies, Nerul, Navi Mumbai, hereby declare that I

have completed the SKILL LINKED IMMERSION PROJECT (SLIP) titled “RETAIL

MANAGEMENT” as a part of the course requirements for POST GRADUATE DIPLOMA IN

MANAGEMENT (PGDM) Program.

I further declare that the information presented in this project is true and original to be best of my

knowledge

Date: 8th March, 2015

Place: Mumbai, Maharashtra

Signature of the Student:

Sumit Kumar Chakraborty

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CERTIFICATE

This is to certify that Mr. Sumit Kumar Chakraborty, studying in the first year of POST

GRADUATE DIPLOMA IN MANAGEMENT (PGDM) at SIES College of Management

Studies, Nerul, Navi Mumbai, has completed the SKILL LINKED IMMERSION PROJECT

(SLIP) titled “RETAIL MANAGEMENT” as a part of the course requirements for POST

GRADUATE DIPLOMA IN MANAGEMENT (PGDM) Program.

Date:

Place:

Signature of the Faculty Mentor

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Index

1. Introduction………………………………………………………………………..01

2. Scope of Project…………………………………………………………………..09

3. Literature Review…………………………………………………………………11

4. Learning from Project………………………………………………………….12

5. Interaction with industry mentors…………………………………………….17

6. Conclusion………………………………………………………………………17

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Introduction

India is a growing economy, one of the fastest growing retail markets in recent years.

There are mainly two parts of retailers, Organized and Unorganized. Unorganized

retailers still hold the largest chunk of retail market; meanwhile organized retailers are

growing steadily. Retail industry has a huge potential growth in the Mobile Retail

section. Indian Government allowed the FDI in 1997 for cash and wholesales. Between

2000-2010 Indian retail market gained 1.18 Billion dollars into the country.

Single brand retailing attracted 94 proposals between 2006 and 2010, of which 57 were

approved and implemented. For a country of 1.2 billion people, this is a very small

number. Some claim one of the primary restraints inhibiting better participation was that

India required single brand retailers to limit their ownership in Indian outlets to 51%.

China in contrast allows 100% ownership by foreign companies in both single brand and

multi-brand retail presence.

Until 2010, intermediaries and middlemen in India have dominated the value chain. Due

to a number of intermediaries involved in the traditional Indian retail chain, norms are

flouted and pricing lacks transparency. Small Indian farmers realize only 1/3rd of the

total price paid by the final Indian consumer, as against 2/3rd by farmers in nations with a

higher share of organized retail. The 60%+ margins for middlemen and traditional retail

shops have limited growth and prevented innovation in Indian retail industry.

Before 2011, India had prevented innovation and organized competition in its consumer

retail industry. Several studies claim that the lack of infrastructure and competitive retail

industry is a key cause of India's persistently high inflation. Furthermore, because of

unorganized retail, in a nation where malnutrition remains a serious problem, food waste

is rife. Well over 30% of food staples and perishable goods produced in India spoils

because poor infrastructure and small retail outlets prevent hygienic storage and

movement of the goods from the farmer to the consumer.

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The Pie chart shows a rough presentation of make share of Unorganized and Organized

retail sector in India, and further division of organized retail market in India. The

unorganized retail sector is still covering more than 90% of Indian market share.

Organized market share has failed to provide the personalized experience the

convenience stores provide. Indian unorganized sector provides credit to the customers

and special treatments at the time of the festivals and other special occasions. Sales

through the unorganized retail sector are predominant in India with the organized retail

sector being a lot smaller. It is estimated that over 95% of retail in India is done through

the unorganized channel. However, as the employment rate and disposable income levels

have risen over the years, consumers in India have begun to turn increasingly towards

branded products and there has been a shift towards the organized retail channel.

The entry of multinational companies and other organized retailers is impacting the

structure of the retail industry in the country. There are various extremes of retail outlet

with small local kirana stores being located in convenient locations, offering local

produce and merchandise and a personalized service. At the other end of the spectrum

there are large hypermarkets and megastores offering a range of products, often at a

lower price, with a less personalized service.

Total Market Size: $.600+ Billion.

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Projected Retail Market growth till 2018

Reforms:

Until 2011, Indian central government denied foreign direct investment (FDI) in multi-

brand Indian retail, forbidding foreign groups from any ownership in supermarkets,

convenience stores or any retail outlets, to sell multiple products from different brands

directly to Indian consumers..

The government of Manmohan Singh, prime minister, announced on 24 November 2011

the following:

India will allow foreign groups to own up to 51 per cent in "multi-brand retailers", as

supermarkets are known in India, in the most radical pro-liberalisation reform passed

by an Indian cabinet in years;

Single brand retailers, such as Apple and IKEA, can own 100 percent of their Indian

stores, up from the previous cap of 51 percent;

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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 in India must confine their operations to 53-

odd cities with a population over one million, out of some 7935 towns and cities in

India. It is expected that these stores will now have full access to over 200 million

urban consumers in India;

Multi-brand retailers must have a minimum investment of US$100 million with at

least half of the amount invested in back end infrastructure, including cold chains,

refrigeration, transportation, packing, sorting and processing to considerably reduce

the post harvest losses and bring remunerative prices to farmers;

The opening of retail competition will be within India's federal structure of

government. In other words, the policy is an enabling legal framework for India. The

states of India have the prerogative to accept it and implement it, or they can decide to

not implement it if they so choose. Actual implementation of policy will be within the

parameters of state laws and regulations.

The opening of retail industry to global competition is expected to spur a retail rush to

India. It has the potential to transform not only the retailing landscape but also the

nation's ailing infrastructure.,

A Wall Street Journal article claims that fresh investments in Indian organized retail will

generate 10 million new jobs between 2012–2014, and about five to six million of them

in logistics alone; even though the retail market is being opened to just 53 cities out of

about 8000 towns and cities in India.

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Scope of project:

In the research I am trying to focus on 4 basic things of Retail market:

Planogram of Organized and unorganized retailers.

Customer Complaints and needs.

Competition between Organized and Unorganized.

Improvement in customer service and customer complaint redressed.

Location of Studies: Vashi, Nerul, Khargarh, Nerul West Navi Mumbai.

Places planned to visit: Reliance Fresh Outlets, DMart Outlets, Inorbit Mall, Little world

Mall, and Unorganized Retailers like Kirana and Sabji Markets of Navi Mumbai.

Activities covered:

Visit to local unorganized retail stores.

Visit Sabji Mandis and Small Retail outlets.

Visit Reliance Fresh, taking permission of manager taking to the customers.

Visit D-mart studying Plano gram and talking to customers.

Visiting various malls, study the buying pattern and crowd accumulation pattern

in different parts of market.

Visiting the stores, finding out what, why and when people actually make a

purchase.

Visiting convenience stores in different areas of Navi Mumbai, learning how they

cater to the customer needs.

Talking to managers of retail stores and understanding the problem areas and

finding out solutions to the problems.

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Carefully analyzing the data collected and providing solutions to the problems of

the managers.

Limitations:

1. Study was basically conducted in Navi Mumbai area only.

2. There was limited budget because there was no amount allocated for the project.

3. Since a small area was taken into consideration, the buying pattern of the customer

may differ from customers of other areas.

4. The economic conditions more or less uniform in all the areas we have taken into

consideration.

5. The study focused only on urban area retailing.

6. Rural market was not taken into consideration.

7. 3 days time allotted for the project is very less to study the vast retail market in

India.

8. Plano gram of the retail stores in Northern India differs from those in Cental,

Eastern Western and Southern India.

9. Customer buying behavior changes with the areas and since we only focus into

Navi Mumbai area, the Customer buying behavior cannot be predicted for other

parts of India.

10. Unorganized retailers are not very comfortable about the research and study being

done; they are reluctant to tell us details maybe because they think we were going

to help the organized retailers with the data they provide.

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Literature Review:

February 11, 2014; The Hindu Article: Indian Retail Market Study 2016-17 states that

“India’s retail market is likely to touch a whopping Rs. 47 lakh crore by 2016-17,

expanding at a compounded annual growth rate of 15 per cent, a Yes Bank-

ASSOCHAM study says. The retail market, which comprises both organised and

unorganised segments, stood at Rs. 23 lakh crore in 2011-12. “Favourable

demographics, increasing urbanisation, nuclearisation of families, rising affluence

amid consumers, growing preference for branded products and higher aspirations are

other factors which will drive retail consumption in India,” Assocham Secretary

General D.S.Rawat said.”

December, 2014; Indian Brand Equity foundation article says “The organised retail

sector in India, although dominated by those players who have been in this space for

almost a decade, is expected to observe some notable changes in the times to come.

Some of the factors which are expected to affect this trend are higher incomes, young

shoppers, urbanisation and the increased use of credit cards. Furthermore, e-

commerce and online delivery modes are expected to be some of the most popular

trends in the retail industry in India in the near future. According to the study,

organised retail, which comprised a meagre seven per cent of overall retail market in

2011-12 is estimated to grow at a CAGR of 24 per cent and attain 10.2 per cent share

of total retail by 2016-17.”

February 10, 2015: Live Mint article states “India’s retail market expected to

double in next 5 years: report While the overall retail market will grow at 12% per

annum, modern trade will grow twice as fast at 20% per annum, and traditional

trade at 10%. By 2020, average household income will increase three times to

$18,448 from $6393 in 2010. Moreover, urbanization will increase to 40% from

31% and over 200 million households will be nuclear, representing a 25-50%

higher consumption per capita spends. Also, attitudinal shifts will be seen as 75%

of the population will belong to generation I, that is they were below 14 years of

age when the economy started opening and hence will have higher consumption

levels, said the report.”

February 28, 2015: Budget 2015 Economic Times Stated: Retail sector wants

more FDI, less taxes “India Inc has lot of hope from the government and

specifically from this budget to have an attractive business environment by

creating feasibility and reforming the tax regime.”While FDI is crucial for retail,

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insurance and banking, startups, e-commerce and IT companies will also be

looking for straight compliances to create vibrancy in the market for the industry

as well as consumers," said Sunil Goel, MD, GlobalHunt. Tax relaxation at

industry levels will increase buying power which will boost the consumer goods

and services industry. "In general, the industry is not looking for subsidies from

the government. It wants a hassle-free environment to start, operate and expand

the business," explained Goel.

February 28, 2015: India Today Article stated The survey highlighted that

58.3 per cent of the Indian population was below 30 years. Around 31 per

cent of this population living in urban areas with rising disposable income

makes one of the key positives for the future of the retail sector.The survey

said the industry has been up against several challenges in the past few

years. The sector was affected in 2013 by high consumer price inflation,

currency fluctuations, and strict FDI policies, it said.Noting the changes

taking place in the sector, the Economic Survey said: "Migration from

traditional stores to modern retail continues, though the latter accounts for

only 8 per cent of the total market." In order to boost growth in the sector,

India had allowed 100 per cent single-brand retail in 2012 with a

requirement of 30 per cent of items sold to be sourced from India in all

sectors.

Learning from the project:

Consumer Buying Behaviour:

Consumer focus on Brand, Cost and quality combined. The Brands

providing optimum level of quality with reasonable cost sell more than

products with good brand image and high cost and low brand image and low

quality.

Consumers visit organised customers due to convenience: Most of the

customers who visit the organised retailers go there due to convenience and

ease of product purchase.

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Customers rated the average food products in organised retail stores to be

2.5/5 which is not good looking at the scale they want to grow in future.

Customers rated the Vegetables and other perishable products available in

organised retailers a mere 1.5/5 which is pretty bad.

Consumers rated the same vegetables and perishable goods higher for

convenience stores and other unorganized retailers.

Consumers also said that the cost of the vegetables and fruits are higher in

organised retailers compared to unorganised retailers.

Consumers said that the perishable products are very fresh and better in

quality.

People returning from jobs (Working class) complained that the vegetables

in organised stores do not provide good quality material at the end of the day

after 7:00PM in the evening hence they buy from outside.

According to customers Reliance Fresh should concentrate on the products

which are poor like cosmetics.

D-Mart Stores are comparatively less costly than Reliance Fresh Stores and

the effective quality of the products are same.

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Reliance has better ambience, D-Mart on other hand lacks space and is too

much congested for older people.

D-Mart has less product visibility in the shelves as the products are kept too

crowded and close to each other.

Reliance has good number of variants of products like Aata and other edible

products.

“Reliance Select” brands which provides spices and other similar things is

highly preferred due to good quality and comparatively less price. Reliance

Select is highly preferred by student section of customers.

Both Reliance and D-mart have crowded point of purchase counters,

therefore the customers prefer to buy outside if they are in hurry.

Lack of Flashy price tags on special offers specially in Reliance fresh stores

which lacks the attention of the customers.

Lack of customers buying less amount of products. People have to wait for

15 minutes in an average even if they want to buy a chocolate bar.

7/10 times a general customer visits a local Kiranaor Mandi for buying their

product.

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Consumer demands are never ending and the workers have to work hard to

keep up with their expections.

Consumers want quick check out and less waiting time at the point of

purchase.

The customers buying behaviour is very sophisticated as they see the

cheapest thing with high quality.

Customers follow the same route for buying products: Understanding

problem and Need, Information search, Looking for alternatives, Selection

of alternative and Decision of purchase.

Customers tend to be brand loyal and repurchase same products rather

buying any new product.

Planogram: (Products along the line are in the order they can be seen at the

stores)

Namkeen:

Reliance Fresh: Haldiram-Bikaner-Reliance Brand-Peanuts- Chiwda-

Chakli.

The products are arranged according to the demand of the product and visibility in

the market.

DMart- Maharashtian Namkeen-Haldirams-Bikaner-Dmart-Local Brands

Big Bazaar- Brands are kept in accordance to the discount rates.

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Biscuits:

Parle G-Britannia-Sunfeast-Parle Cream-Hide&Seek-Oreo-KrackJack-Bourbon-Dark Fantasy

Products are kept according to their categories.

Cold Drinks:

Reliance: Thumsup-CocaCola-Pepsi-7UP-Fanta

Big Bazaar : According to discount- Coca Cola- Pepsi- Sprite- Thumps Up- 7up- Fanta

Chocolate:

Reliance Fresh, DMart AND Big Bazaar- All are same according to the

demand that is 5 Star- Dairy Milk Brands- Kitkat- Munch-Perk- Jems- Bounty-Galaxy

Soaps and Shampoo:

Bathing soaps-Bathing Gels-Shampoo-Conditioners-Cloth Washing Soaps-Detergent Powders-Liquid Detergents.

Health Drinks:

Reliance, D Mart And Big Bazaar- According to demand- Bournvita- Horlicks- Boost- Complan- Amul Pro

Tea:

Reliance, D Mart And Big Bazaar: All same according to the demand that

is: Tata tea- Red label- Reliance-Tata Tea Premium-Taj mahal

Flour:

Reliance- Low price: Reliance-Ashirwaad-Nature :

DMart- According to the demand: Ashirwaad-Nature Fresh- Pilsburry

Big Bazaar- According to demand- Ashirwaad-Nature Fresh- Pilsburry.

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Interaction with the Industry mentor:

We talked to the manager of Reliance Fresh Nerul branch, we took his permission

and then interacted with the customers tried to find out what happens in the store

and how things are done. What they prefer to buy, what they buy and when they

buy. What kind of products they would like to buy and which ones are not

available at the store. According to our studies we recommended few things that

needed to be changed at the store for better customer experience.

Special attention needed for vegetables because the quality of the vegetables

is not up to the mark especially during evening when the working people

come to the store.

Flashy price tags should be introduced to get the attention towards special

offers and discounts.

Old Price tags should be removed which creates confusion in the minds of

the customers.

Opening of a small counter for customers buying less than five products to

reduce waiting time for those who have to buy fewer things.

Keeping an eye on the local sabji mandi and Kirana store prices to be in the

competition.

Assure quality of the products which are bought in bulk, like potatoes.

Assure gentle handling of products prone to damage like vegetables.

Maintain a general quality level of products during day and evening to

ensure uniform sales during the whole day.

Train the staff to be more attentive and be ready to assist customers in need.

Demand book for customers to register their specific demand of a product.

Feedback from the customers to know where they need to improve at regular intervals.

Conclusion:

Retail market in India has huge growth potential, especially the Organised Retail

industry. The Unorganised retail industry still dominates the Retail market in India.

There are many loop holes which creates problems for Organised Retail growth.

Penetration of Unorganised stores is far more than organised. We can conclude that

though organised sector has potential to grow they have to correct some basic

flaws (mentioned above) so that they can improve their market share and venture

into Rural India.