Executive Summary: Prof. Govardhan Jayanthi

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A task or project cannot be completed alone.

It requires the effort of many


individuals. I take this opportunity to thank all those who helped me complete this
project.
I express my sincere gratitude to Prof. Govardhan Jayanthi for giving us the
opportunity to undergo this project. I further thank his for lending a helping hand
when it came to solving my problems related to the project. This project would not
have been possible without his valuable time and support
I also thank IFIM Business School for an opportunity to undertake a Soft skills project at the
start of our MBA course which helped us to understand deeply for those topics which are
untouched.

This project is an attempt to talk about the Scenario of Retailing and its Operations
in India
Any suggestions to improve are always welcome

Executive Summary
Demographics continue to show a positive report to spur retailing growth. Consumers aged
20-45 years is emerging as the fastest growing consumer group and the mean age of
Indians is now pegged at 27, a mean age that reinforces spending across all the retailing
channels of grocery, non-grocery and non-store

The government stance of protecting local retailers and prohibiting 100% foreign direct
investment in retailing continued in 2005, restraining international retailers' entry. However,
there was gradual economic reform, giving way to easier and faster franchising agreements
as well as the loosening of zonal regulations on retail expansion, thus stimulating retailing.

Non-store retailing is expected to continue its fast-paced growth from a miniscule


base.
Across all channels, growth in retailing is expected to be boosted heightened
competition during the forecast period due to the growing

Introduction
India’s retail market which is seen as THE GOLDMINE by global players has grabbed attention

of the most developed nations. This is no wonder to the one who knows that the total Indian retail

market is US $350bn. (16, 00,000 crore INR approx.) of which organized retailing is only around

3 percent i.e. US $8bn (36,000 crore INR approx

“Retailing includes all activities involved in selling goods or services directly to final consumers
for personal, non-business use. A retailer or retail store is any business enterprise whose sales
volume comes primarily from retailing.” Retail is India's largest industry, accounting for over 10
per cent of the country's GDP and around eight per cent of the employment. Retail industry in
India is at the crossroads. It has emerged as one of the most dynamic and fast paced industries
with several players entering the market.

The presence of 15million kirana stores brings into light the very fact that the Indian retail
industry is highly fragmented/ unorganized. Retailing in India is gradually inching its way toward
becoming the next boom industry, organized retailing in particular. 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 centers,
multi-storeyed malls and huge complexes offer shopping, entertainment and food all under one
roof.

The future of Indian retailing may even witness the concept of 24 hour retailing. Even though this
concept has been in existence in few retail segments like pharmaceuticals and fuel, it still
remains to be a challenge for other segments like food and groceries, apparel etc to adopt this
trend.

Although the organized retailing in India is coming up in a big way, it cannot simply ignore the
competition from the conventional stores because of various factors like reach, extending credit
facility and other intangible factors like the human touch which are provided only by the
conventional stores.

The urban retail market has been embracing various new formats and the malls turned out to be
the trend setters by promising the concept of shoppertainment. The trends in the rural market
also have been changing from the old Haats and Melas to the rural malls like ‘Chaupal Sagar’
launched by ITC, DCM Shriram Groups one-stop shopping destination called ‘Hariyali Bazaar’,
Godrej groups agri store ‘Adhar’ etc.

Introduction to Operation
Management
Study of Operations at Retail Industry

Operations management is an area of business that is concerned with the production of good
quality goods and services, and involves the responsibility of ensuring that business operations
are efficient and effective. It is the management of resources, the distribution of goods and
services to customers.

APICS The Association for Operations Management also defines operations management as

"the field of study that focuses on the effectively planning, scheduling, use, and control of a

manufacturing or service organization through the study of concepts from design engineering,

industrial engineering, management information systems, quality management, production

management, inventory management, accounting, and other functions as they affect the

organization
Additionally, The Operations Management Body of Knowledge (OMBOK) Framework defines the

scope of operations management and the activities and techniques that are a part of the

operations management profession.

Operations also refer to the production of goods and services, the set of value-added activities

that transform inputs into many outputs. Fundamentally, these value-adding creative activities

should be aligned with market opportunity for optimal enterprise performance.

Operations as a Transformation Process


Inputs⇒ Transformation⇒ Output

Operations management is about the way organizations produce goods and services. Everything
you wear, eat, sit on, use, read or knock about on the sports field comes to you courtesy of the
operations managers who organized its production. Every book you borrow from the library,
every treatment you receive at the hospital, every service you expect in the shops and every
lecture you attend at university all have been produced.

This definition reflects the essential nature of Operations Management; it is a central activity in
organizing things. Another way of looking at an operation is to consider it as a transformation
process.
Operations are a transformation process; they convert a set of resources (INPUTS) into services
and goods (OUTPUTS). These resources may be raw materials, information, or the customer
itself.

 Raw Materials

An obvious example is a cabinet maker, who takes some wood, cuts and planes it, and

then polishes it until a piece of furniture is produced

 Information
A tourist office gathers and provides information to holiday makers, and assists in
advising on places to stay or visit

 Customers

At an airport, you are one of the many resources being processed. The operation you are

involved in is about processing your ticket and baggage, moving from ticket desk through the

customs and duty-free areas, to deliver you to the awaiting plane.

Extending the process...

If we add a few more parts to the transformation process, we can see the key elements that

operations managers need to consider. Operations is about designing services, products and

delivery systems

1.Managing and controlling the operations system.


2.Finding ways to improve operations

1.Managing and controlling the operations system.


2.Finding ways to improve operations

Operations Management is all about providing customers with products and services.
You survive by giving customers with what they want

 Every Product or Service is really a bundle of different attributes.

 Product, place, price, performance, quality, timing, service, etc.

 Customers are looking for a bundle of characteristics

 Total bundle provides the level of value customers deem appropriate

 Buying products with the attributes they want at the lowest price possible

Attributes

Price

Quality

Image

Performance

Safety

Place – distribution

Time – delivery, availability

 How do you decide which product to produce?

 How do you find out what attributes your product should have?

 How do you get those attributes into your product?



What process?

What resources do you need?

Where do you get those resources

Examples of Operations Decisions


Operations managers must make decisions on three levels
 Strategic

 Tactical

 Operating
STRATEGIC DECISIONS:

 Longer term decisions

 Usually made at the senior management level

 Product and service strategy

 Competitive priorities

 Positioning strategy

 Location, capacity

 Long term partnerships


 Quality system and overall approach to qua

TACTICAL DECISIONS

 Medium term decisions

 Tactical in nature

 Made by middle and senior managers

 Process design

 Technology management

 Job design and workforce management

 Capacity management

 Facility location

 Facility layout

OPERATING DECISIONS

 Shorter term decisions


 Made at middle and lower management levels
 Forecasting
 Materials management
 Inventory management
 Aggregate planning
 Master production scheduling
 Production control
 Scheduling

What is Retail?
The word 'retail' is derived from the French word 'retaillier' meaning 'to cut a piece off' or 'to break bulk'.
In simple terms it involves activities whereby product or services are sold to final consumers in small
quantities. Although retailing in its various formats has been around our country for many decades, it has
been confined for along time to family owned corner shops.

Englishmen are great soccer enthusiasts, and they strongly think that one should never give Indians a
corner. It stems from the belief that, if you give an Indian a corner he would end up setting a shop. That is
how great Indians retail management skill is considered.

The Facts

Retailing in more developed countries is big business and better organized that what it is in India. Report
published by McKinsey & Co. in partnership with Confederation of Indian Industry (CII) states that the
global retail business is worth a staggering US $ 7 trillion. The ratio of organized

retailing to unorganized in US is around 80 to 20, in Europe it is 70 to 30, while in Asia it comes


to around 20 to 80.

In India the scenario is quiet unique, organized retailing accounts for a mere 5% of the total

retail sector. Although there are around 5 million retail stores in India, 90% of these have a floor

space area of 500 sq.ft. or less. The emergence of organised retailing in India is a recent

phenomenon and is concentrated in the top 20 urban towns and cities.

The Reason
This emergence of organized retailing has been due to the demographic and psychographic
changes taking place in the life of urban consumers

Growing number of nuclear families, working women, greater work pressure, changing values and
Lifestyles, increased commuting time, influence of western way of life etc. have meant that the needs
and wants of consumers have shifted from just being Cost and Relationship drive to Brand and
Experience driven, while the Value element still dominating the buying decisions.

Global Scenario
Retail stores constitute 20% of US GDP & are the 3rd largest employer segment in USA.
China on the other hand has attracted several global retailers in recent times. Retail sector

employs 7% of the population in China. Major retailers like Wal-Mart & Carrefour have already

entered the Chinese market. In the year 2003, Wal-Mart & Carrefour had sales of US $ 70.4

Crore & US $ 160 Crore respectively.

The global retail industry has traveled a long way from a small beginning to an industry where

the world wide retail sales is valued at $ 7 x 10 5 Crore. The top 200 retailers alone accounts for

30 % of the worldwide demand. Retail turnover in the EU is approximately Euros 2,00,000 Crore

and the sector average growth is showing an upward pattern. The Asian economies (excluding

Japan) are expected to grow at 6% consistently till 2005-06

On the global Retail stage, little has remained same over the last decade. One of the few
similarities with today is that Wal-Mart was ranked the top retailer in the world then and still

holds that distinction. Other than Wal-Mart's dominance, there's a little about today's environment that
looks like the mid-1990s. The global economy has changed, consumer demand has shifted & retailers'
operating systems today are infused with far more technology than was the case six years ago.

Scenario of Retailing in India


Retailing is the most active and attractive sector of last decade. While the retailing industry itself has
been present since ages in our country, it is only the recent past that it has witnessed so much dynamism.
The emergence of retailing in India has more to do with the increased purchasing power of buyers,
especially post-liberalization, increase in product variety, and increase in economies of scale, with the aid
of modern supply and distributions solution.

Indian retailing today is at an interesting crossroads. The retail sales are at the highest point in

history and new technologies are improving retail productivity. though there are many

opportunities to start a new retail business, retailers are facing numerous challenges.

KEY CHALLENGES:
1) LOCATION:
"Right Place, Right choice"

Location is the most important ingredient for any business that relies on customers, and is

typically the prime consideration in a customer’s store choice. Locations decisions are harder to

change because retailers have to either make sustainable investments to buy and develop real

estate or commit to long term lease with developers. When formulating decision about where to

locate, the retailer must refer to the strategic plan


* Investigate alternative trading areas.
* Determine the type of desirable store location
* Evaluate alternative specific store sites

2) MERCHANDISE:

The primary goal of the most retailers is to sell the right kind of merchandise and nothing is

more

central to the strategic thrust of the retailing firm. Merchandising consists of activities involved

in acquiring particular goods and services and making them available at a place, time and

quantity that enable the retailer to reach its goals. Merchandising is perhaps, the most important

function for any retail organization, as it decides what finally goes on shelf of the store.

3) PRICING:

Pricing is a crucial strategic variable due to its direct relationship with a firm's goal and its

interaction with other retailing elements. The importance of pricing decisions is growing because

today's customers are looking for good value when they buy merchandise and services. Price is

the easiest and quickest variable to change.

4) TARGET AUDIENCE

"Consumer the prime mover"

"Consumer Pull", however, seems to be the most important driving factor behind the sustenance

of the industry. The purchasing power of the customers has increased to a great extent, with the

influencing the retail industry to a great extent, a variety of other factors also seem to fuel the

retailing boom.

5) SCALE OF OPERATIONS:

Scale of operations includes all the supply chain activities, which are carried out in the business.

It is one of the challenges that the Indian retailers are facing. The cost of business operations is

very high in India

PRESENT INDIAN SCENARIO

* Unorganized market: Rs. 583,000 crores

* Organized market: Rs.5, 000 crores


* 5X growth in organized retailing between 2000-2005

* Over 4,000 new modern Outlets in the last 3 years

* Over 5,000,000 sq. ft. of mall space under development

* The top 3 modern retailers control over 750,000 sq. ft. of retail space

* Over 400,000 shoppers walk through their doors every week

* Growth in organized retailing on par with expectations and projections of the last 5 Years: on

course to touch Rs. 35,000 crores (US$ 7 Billion) or more by 2005-0

Major players

- Food and grocery

- Fashion

- Others

- Food world

- Shoppers' Stop

- Vivek's

- Subhiks

Westside

- Planet M

- Nilgris

- Lifestyle

- Music World

- Adani- Rajiv's

- Pyramid

- Crossword

- Nirma-Radhey

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