Apparel Retailing Challenges and Prospects

APPAREL RETAILING: CHALLENGES
AND PROSPECTS IN INDIA

With Special Reference to Lucknow Division
THESIS
SUBMITTED TO THE UNIVERSITY OF LUCKNOW
FOR THE DEGREE OF
Doctor Of Philosophy
IN
COMMERCE
By
SAUKAT ANSARI
Under the Supervision of

Prof. Somesh Kumar Shukla
M.Com., Ph.D., D.Lit.
DEPARTMENT OF COMMERCE
UNIVERSITY OF LUCKNOW
LUCKNOW
2013
Prof. S.K. Shukla Department of Commerce
University of Lucknow
Lucknow
CERTIFICATE
Certified that Mr.Saukat Ansari has completed the thesis titled
APPAREL RETAILING: CHALLENGES AND PROSPECTS
IN INDIA-WITH SPECIAL REFERENCE TO LUCKNOW
DIVISION for the award of Ph.D. degree in Commerce at
University of Lucknow, Lucknow under my supervision. To the best
of my knowledge and belief the thesis under reference is based on
original research work done by Mr.Saukat Ansari. He fulfills the
conditions laid down in relevant ordinances.
(Prof. S. K. Shukla)
Supervisor
i
PREFACE
It was great experience writing this thesis. I got an opportunity
through this work to conduct a comprehensive study of the subject
that is still in evolutionary phase in the country in all the respects.
Going by the contribution of retail in the GDP of the country, it is the
single biggest source of employment and income for the people of
India.
The business of apparel retail in India has seen significant changes in

the last few years. We have seen the emergence of new formats and
application of global concepts and constructs albeit with
modifications to suit the Indian environment. It not only provides the
Indian consumers a wide choice, but also represents a very large
employment opportunity for people with diverse skill sets.
Despite the presence of the basic requirements for the growth of the
retail industry in India, it faces substantial hurdles that will retard and
inhibit its growth in future if not addressed sincerely. One of the key
impediments is the partial permission of FDI in MBOs. This has
largely resulted in limited capital investments in supply chain
infrastructure, which is a key for the development and growth of
apparel retailing and has also constrained access to world class retail
practices. Lack of adequate infrastructure and relatively high cost of
real estate are the other impediments to the growth of retailing. While
the industry and the government is trying to remove many of these
hurdles, some of roadblocks like lack of training required to fashion
retailers and setting up a body to keep a close watch on fast changing
ii
fashion trends still a concern and may continue to affect the smooth
growth of fashion industry-if it is not taken seriously.
The mindset of the retailers especially those involved in organized

part of retail needs to understand the role of customers that will be
helpful in the development of the business. Customers are confronted
umpteen numbers of alternatives in front of them. Sensing the
importance of matter at hand, it was taken by me as a subject of study
in the present thesis.
The study is focusing on apparel retailers perception about

challenges and prospects in the industry. Subject like apparel retailing
is broad in scope and nature. For the sake simplicity and readers
convenience, thesis has been developed chapter wise. There are eight
chapters. First chapter deals with introduction of apparel retailing.
Second chapter is concerned with retail formats. Content of third
chapter is related with emerging trends in apparel retailing. Fourth
chapter deals with challenges and prospects in apparel retailing. Fifth
chapter is concerned with analytical study. Chapter seven is related
with bibliography. And finally chapter eight deals with appendices.
As a researcher, I hope that the present work shall prove to be highly
effective one for an in-depth study of the subject which is yet to get
an industry status in India.
In the present research, I find utter lack of words to express my

indebtedness to my supervisor Prof. Somesh Kumar Shukla,
Department of Commerce, University of Lucknow, Lucknow whose
continuous guidance and help encouraged me a lot in completing the
study in time. Further, I am thankful to the Almighty for keeping me
iii
healthier and happier which play a decisive role in any assignment a
person undertakes and completes. I am thankful to all the faculty
members of Department of Commerce, University of Lucknow,
Lucknow for giving me inputs and suggestions to commence the
thesis in first instance; access to departmental library, Central Library
(Tagore Library), Gyanodaya, library of IIM, Lucknow, Giri Institute
of Development Studies, Lucknow, great place to learn. The help of
non-teaching members at the Department of Commerce at the
University too deserves my thankfulness.
At the end, I cannot forget the blessings of my parents and assistance

from my friends for constantly motivating me to culminate the hard
works into a thesis.
Happy and thoughtful reading ahead.
Date: (SAUKAT ANSARI)
iv
CONTENTS
Page No.
Certificate i
Preface ii
List of Tables xiv
List of Figures xvi
Glossary of Terms and Abbreviations xviii
1. Introduction 1-52
1.1 Apparel
1.1.1 Features of Apparel
1.1.2 Functions of Apparel
1.2 Retailing
1.2.1 Retail and Retailing
1.2.2 Place of Retailing in a Distribution Channel
1.2.3 Organized and Unorganized Retailing
1.2.4 Significance of Retail Industry
1.2.5 Characteristics of Retailing
1.2.6 Activities Performed by Retailers
1.2.7 Challenges in Retail Business
1.2.8 Evolution of Retail in India
1.3 Apparel Retailers
1.3.1 Departmental Stores in the Apparel Category
1.3.2 Apparel Retailing in India
1.3.3 Indian Apparel Retail Scenario
v
1.3.4 Characteristics of Apparel Retail Sector
1.3.5 Classification of Apparel
1.3.6 Key Menswear Brands
1.4 Lucknow Division
1.4.1 Lucknow District
1.4.2 Sitapur District
1.4.3 Lakhimpur Kheri District
1.4.4 Raebareli District
1.4.5 Unnao District
1.4.6 Hardoi District
1.5 Literature Review
1.6 Purpose of the Study
1.6.1 Objectives
1.6.2 Hypothesis
1.6.3 Limitations of the Study
1.7 Research Methodology
1.7.1 Research Level
1.7.2 Approach to Research
1.7.3Data Collection
1.7.4 Primary Data Techniques
1.7.5 Secondary Data and Material Collection
1.7.6 Sampling Unit
2. Retail Formats and Retailers 53-79
2.1 The Evolution of Retail Formats
2.2 Unorganized Retail Formats
vi
2.2.1 Mom and Pop Stores
2.2.2 Street Vendors
2.2.3 Kiosks
2.3 Modern Retail Formats
2.4 Classification of Retailers
2.4.1 Legal Forms
2.4.2 Operational Structure
2.4.3 Range of Merchandise
2.4.4 Degree of Services
2.4.5 Pricing Policy
2.4.6 Location
2.4.7 Size of Outlet
2.4.8 Based on Customer Contact
2.5 Types of Retailers Based on Merchandise and Pricing
2.5.1 Departmental Stores
2.5.2 Specialty Stores
2.5.3 Discount Stores
2.5.4 Super Markets, Superstores and Hypermarkets
2.6 Types of Retailers Based on Operational Structure
2.6.1 Independent Traders
2.6.2 Multiple or Retail Chain Stores
2.6.3 Co-operative Societies
2.6.4 Concessionaire
2.6.5 Franchising
2.7 Non-Store Retailing
vii
2.7.1 Mail Order
2.7.2 Mail Order Catalogues
2.7.3 Direct Response Advertising
2.7.4 Direct Mail
2.7.5 Direct Selling
2.7.6 Door-to-Door Trading
2.7.7 Mobile Shops
2.7.8 Markets (Haats)
2.7.9 Automatic Vending
2.7.10 Electronic Retailing
2.7.11 Retailing through Television
2.7.12 Retailing through Internet
3. Emerging Trends in Apparel Retailing 80-133
3.1 Influence of Fashion
3.1.1 Indias Fast-Growing Apparel Market
3.1.2 Increase in Disposable Income
3.1.3 New Occasions
3.1.4 Growth in Womens Segment
3.1.5 Fashion Increasing a Form of Self- expression
3.1.6 Further Urbanization and the Comparative Youth
of Indias Population
3.1.7 Continued Rise of Organized Retail
3.1.8 Shape the Category
3.1.9 Focus on Inventory and Markdown Management
3.1.10 Take a Segmented View of the Market
viii
3.2 The Changing Face of Fashion Industry
3.2.1 Emergence of Mall Culture
3.2.2 Boutiques
3.2.3 Advent of Brands
3.2.4 Fashion on the Ramp
3.2.5 Beauty Pageants
3.2.6 Budding Designers
3.3 The Rising Mall Culture
3.3.1 Impulse Buying at Malls
3.3.2 Factors Affecting the Success of Malls
3.4 Application of Information Technology (IT) in Apparel
Retailing
3.4.1 Areas where it will have Most Impact
3.4.2 Inventory Control
3.4.3 Point of Sales (POS)
3.4.4 Sales Analysis
3.4.5 Planning and Forecasting
3.4.6 Collaborative Planning, Forecasting and
Replenishment (CPFR)
3.4.7 Other Areas of Development
3.5 Essential Requirement of an Information System
3.5.1 Be Simple for Clerks to Operate
3.5.2 Monitor Sales and Inventory Levels Daily
3.5.3 Monthly
3.5.4 Ease of Creation of New or Computer
ix
Recommended Purchase Orders
3.5.5 Electronic Data Interchange (EDI)
3.5.6 Comprehensive Information Receiving
3.6 Enterprise Resource Planning (ERP)
3.7 New Trends in IT Applications in Retailing
3.7.1 Web Enabled System
3.7.2 Data Mining Tools
3.7.3 New LAN/WAN Tools and Strategies
3.7.4 Interactive Kiosks
3.7.5 Self-Scanning for Faster Processing
3.8 The Need for Product Identification
3.9 Radio Frequency Identification (RFID)
3.10 E-Commerce or E-Tailing
3.11 Prevailing Trends in Indian Readymade Garment Industry
3.11.1 Overview-Indian Apparel Market
3.11.2 Indian Fashion Retail Poised for Big Times
3.12 Entry Options for Foreign Players Prior to FDI Policy
3.12.1 Franchise Agreements
3.12.2 Cash and Carry Wholesale Trading
3.12.3 Strategic Licensing Agreements
3.12.4 Manufacturing and Wholly Owned Subsidiaries
3.13 FDI Policy in India
3.13.1 FDI Policy with Regard to Retailing in India
3.13.2 Prospected Changes in FDI Policy for Retail
Sector
x
3.14 Single and Multi-Brand Retailing
3.14.1 FDI in Single-Brand Retail
3.14.2 FDI in Multi-Brand Retail
4. Challenges and Prospects in Apparel Retailing 134-183
4.1 Challenges to Retail Development in India
4.1.1 Retail in India-Getting Organized to Drive Growth
4.1.2 Market Overview
4.1.3 Market Segments
4.2 Investment Opportunities in the Retail Sector
4.2.1 Reasons Why Retail is Booming?
4.2.2 Reasons Why Indian Organized Retail is on the
Brink of Revolution?
4.2.3 Disturbing Trends
4.3 Focus on India: How Competitive is its Textile and
Clothing Industry?
4.3.1 SWOT Analysis for India
4.3.2 Investment in Textile Machinery
4.3.3 Competitive Position of Pakistan
4.3.4 Competitive Position of Bangladesh and Sri Lanka
4.4 Production of Fibres
4.5 Indian Retail Reforms
4.5.1 Indian Retail Reforms on Hold
4.5.2 Single-Brand Retail Reforms Approved
4.5.3 Social Impact and Controversy with Retail
Reforms
xi
4.5.4 Controversy over Indian Retail Reforms
4.5.5 Opposition to Retail Reforms
4.5.6 Support for Retail Reforms
4.5.7 Farmer Groups
4.5.8 Economists and Entrepreneurs
4.5.9 Chief Ministers of Indian States
4.5.10 Current Supermarkets
5. Analytical Study 184-233
5.1 Sample Size
5.2 Observations, Findings and Interpretations
5.2.1 Types of Retailers
5.2.2 Amount invested initially?
5.2.3 Dou you deal in?
5.2.4 Do you deal in branded apparel?
5.2.5 Do you face competition from?
5.2.6 How do your competitors affect you?
5.2.7 What do you think about your employees?
5.2.8 Do you have the problems because of location?
5.2.9 If yes, what kinds of problems?
5.2.10What do you think about foreign players/
Companies?
5.2.11 What prospects do you perceive in apparel
retailing?
5.2.12 Is high consuming class helping retailing growth?
5.2.13 If yes, who are your main customers?
xii
5.2.14 What age groups do often shop from your outlets?
5.2.15 What role does fashion play in apparel retailing?
5.2.16 What do you perceive about Mall Culture?
6. Conclusions and Suggestions 234-245
7. Bibliography 246-250
8. Appendices 251-253
8.1 Questionnaire Used in the Survey
***
xiii
LIST OF TABLES
Table No. Title Page No.
1.1 Key Menswear Brands 26
3.1 Apparel is the most profitable segment of the
Indian retail market today 86
4.1 Major textile production clusters in India 141
5.1 No. of Respondents in Districts 184
5.2 Types of Retailers 186
5.3 Amount invested initially? 189
5.4 Dou you deal in? 192
5.5 Do you deal in branded apparel? 195
5.6 Do you face competition from? 198
5.7 How do your competitors affect you? 201
5.8 What do you think about your employees? 204
5.9 Do you have the problems because of location? 207
5.10 If yes, what kinds of problems? 210
5.11 What do you think about foreign players/
companies? 213
5.12 What prospects do you perceive in apparel
retailing? 217
5.13 Is high consuming class helping retailing growth? 220
5.14 If yes, who are your main customers? 223
xiv
5.15 What age groups do often shop from your
outlets? 226
5.16 What role does fashion play in apparel retailing? 229
5.17 What do you perceive about Mall Culture? 232
***
xv
LIST OF FIGURES
Figure No. Title Page No.
1.1 Typical Marketing Channels 4
1.2 Organized and Unorganized Retailing 5
1.3 Activities of Retailers 8
1.4 Evolution of Retail in India 14
1.5 Classification of Apparel 25
2.1 Forces Affecting Modern Retail Formats 57
2.2 Classification of Retailers based on Legal Form 58
2.3 Classification of Retailers based on Operational

Structure 59
2.4 Classification of Retailers based on Range of

Merchandise 59
2.5 Classification of Retailers based on Degree of
Services 60
2.6 Classification of Retailers based on Pricing Policy 61
2.7 Classification of Retailers based on Size of Outlet 62
4.1 Key Segments of the Textile Industry 139
5.1 Types of Retailers 187
5.2 Amount invested initially? 190
xvi
5.3 Dou you deal in? 193
5.4 Do you deal in branded apparel? 196
5.5 Do you face competition from? 199
5.6 How do your competitors affect you? 202
5.7 What do you think about your employees? 205
5.8 Do you have the problems because of location? 208
5.9 If yes, what kinds of problems? 211
5.10 What do you think about foreign players/
companies? 214
5.11 What prospects do you perceive in apparel
retailing? 218
5.12 Is high consuming class helping retailing growth? 221
5.13 If yes, who are your main customers? 224
5.14 What age groups do often shop from your outlets? 227
5.15 What role does fashion play in apparel retailing? 230
5.16 What do you perceive about Mall Culture? 233
***
xvii
GLOSSARY OF TERMS AND ABBREVIATIONS
ATM Asynchronous Transfer Mode

ATM Automatic Teller Machine
BPO Business Process Outsourcing
CAGR Compound Annual Growth Rate
CIFA Consortium of Indian Farmers Association
CII Confederation of Indian Industry
CPRF Collaborative Planning, Forecasting and Replenishment
DIPP Department of Industrial Policy and Promotion
ECR Efficient Customer Responce
EDI Electronic Data Interchange
EDLP Every Day Low Price
ERR Enterprise Resource Planning
EU European Union
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act
FIPB Foreign Investment Promotion Board
FPSs Fair Price Shops
GDP Gross Domestic Product
GRDI Global Retail Development Index
IBEF Indian Brand Equity Fund
IT Information Technology
ITMF International Textile Manufacturers Federation
LAN Local Area Network
LSM Local Store Marketing
xviii
MBOs Multi Brand Outlets
PDS Public Distribution System
PO Purchase Order
POS Point of Sale
PSS Portable Shopping System
QR Quick Response
RBI Reserve Bank of India
RMDs Ready Made Garments
RFID Radio Frequency Identification
SIA Secretariat for Industrial Assistance
SKNL S.Kumars Nationwide Limited
TMC Technology Mission on Cotton
TUFS Technology Upgradation Fund Scheme
UPC Universal Product Code
VAT Value Added Tax
WAN Wide Area Network
***
xix
Chapter-1
INTRODUCTION
1.1 Apparel
Apparel means clothing, especially outerwear; garments and attire.

Apparel is a term that refers to a covering for the human body that is
worn. The working of clothing is exclusively a human characteristic
and is a feature of nearly all human societies. The amount and type of
clothing worn depends on physical, social and geographical
considerations.1
1.1.1 Features of Apparel
Physically, clothing serves many purposes; it can serve as protection

from the elements, can enhance safety during hazardous activities
such as hiking and cooking. It protects human from rough surfaces by
providing a barrier between the skin and the environment. Clothes can
protect humans from insect bites. Clothes can regulate temperature in
the cold or heat. Further, it can provide a hygienic barrier, keeping
toxins away from the body and limiting the transmission of germs,
clothing also provides protection from harmful ultra violet radiation.
1.1.2 Functions of Apparel
The primary function of clothing is to improve the comfort of the

wearer. In hot climates, clothing provides protection from sunburn or
wind damage, while in cold climates its thermal insulation properties
are generally more important. Shelter usually reduces the functional
need for clothing.
Clothing performs a range of social and cultural functions, such as

individual, occupational and sexual differentiation, and social status.
1
In many societies, norms about clothing reflect standards of modesty,
religion, gender, and social status. Clothing may also function as a
form of adornment and an expression of personal taste or style.
Humans have shown extreme inventiveness in devising clothing

solutions to environmental hazards. Some examples include: space
suits, armor, diving suits, swim suits, beekeeper gear, and other
protective clothing.
The wearing of clothes also has social implications. They are worn to
cover those parts of the body which social norms require to be
covered, and act as a form of adornment, as well as other social
purposes.
In most cultures, gender differentiation of clothing is considered

appropriate for men and women. The differences are in styles, colours
and fabrics.
1.2 Retailing
Retailing is the final connection in the marketing channel that brings

goods from manufacturers to consumers. In other words, retailing is
the combination of activities involved in selling or renting consumer
goods and services directly to ultimate consumers for their personal
and household use. In addition to selling retailing includes different
and diverse activities like buying, advertising, data processing and
maintaining inventory.
Retailing includes all the activities involved in selling goods or

services directly to finals consumers for their personal, non-business
2
use. Any organization that does this selling-whether a manufacturer,
wholesaler, on retailer-is doing retailing. It does not matter how the
goods or services are sold (by person, mail, telephone, or vending
machine) or where they are sold (in a store, on the street, or in the
consumer home). On the other hand, a retailer or retail store is any
business enterprise whose sales volume comes primarily from
retailing.
1.2.1. Retail and Retailing
The word retail is derived from the French word retaillier, which
means to cut a piece off or to break bulk. Retail is any business
that directs it marketing efforts towards satisfying the final consumer
based upon the organization of selling goods and services as means of
distribution.
The term retailing is derived from the old French word retailer
meaning a piece of or to cut up. This can be applied to the
functions carried out by the retailer-acquiring whole stock of goods
which they divide into smaller amounts which are sold to individual
consumers. Retailing can be referred to all activities involved in
marketing and distribution of goods and service.
1.2.2 Place of Retailing in a Distribution Channel
When you buy a product, you rarely buy it directly from the
manufacturer. Most products of the goods and service do not sell
their products directly to end or final users. Between you (the final
user) and the manufacturers are a number of intermediaries. These
3
intermediaries constitute a distribution channel or marketing channel.
Some of the most common marketing channels are:
(1) (2) (3)
Manufacturer Manufacturer Manufacturer
Wholesaler
Feef back
Retailer
Retailer
Consumer Consumer Consumer
Fig.1.1 Typical Marketing Channels
1.2.3 Organized and Unorganized Retailing
Indian retail industry is divided into two sectors organized and

unorganized.
Organized retail sector refers to the sectors undertaken by licensed

retailers, that is, those who are registered for tax on moveable
commodities at times of sales under VAT system. At present the
name of the tax is commerce tax. These include the corporate retail
formats of the exclusive brand outlets, hypermarkets, departmental
stores and shopping malls.
4
Unorganized retailing on the other hand, refers to the traditional
formats of low cost retailing, for example, hand cart and pavement
vendors, the local kirana shops, owner-manned general stores,
paan/beedi shops, convenience stores, hardware shop at the corner of
your street selling everything from bathroom fittings to paints and
small construction tools; or slightly more organized medical store and
a host of other small retail businesses in apparel, electronics, etc.
Retailing
Unorganised Retailing Organised Retailing
Kirana Hand Cart &

Shops Pavement Vendors
Corporate Backed Retail

Owner Manned Hypermarket Chains
Convenience General Stores
Stores
Paan/Beedi Privately Owned Large
Shops Retail Businesses
Fig.1.2Organized and Unorganized Retailing
1.2.4 Significance of Retail Industry
Consumer money drives the economy, and retail is where consumers

spend that money. Boutiques, restaurants, discount superstores, mail-
order companies and e-tailers-these establishments where consumers
spend their hard-earned money. When goods are put in the hands or
shopping bags of consumers, retailers realize revenue-and so do the
wholesalers, distributors, and manufacturers that make up the rest of
the consumer goods distribution chain. In addition, retail transactions
5
serve as a means for collecting sales taxes, which support public
services of all kinds.
Retails goods are traditionally divided into durable goods, such as

furniture, cars, and large appliances, which are expected to last at
least five years and non-durable goods, which include food, clothing,
and other categories far too numerous to mention but which
eventually form the bulk of the stuff you see on make shift tables at
garage sales.
Retail industry provides immense opportunities to entrepreneurs and

workforce as sales people and clerks, the industry has also
opportunities for people interested in determining what goods will be
sold, getting these goods to the right place at the right time, and
managing the operations, finance, and administration of retail
companies.
Retailing is the dynamic industry-constantly changing due to shift in

the needs of the consumers and the growth of technology. Retail
formats and companies that were unknown three decades ago are now
major forces in the economy. Therefore, the challenges for retail
manager the world over are increasing-they must take decision raging
from setting the price of a bag of rice to setting up multimillion dollar
stores in malls. Selecting target markets, determining what
merchandise and services to offer, negotiating with suppliers, training
sales people - these are just a few of the many functions that retail
manager has to perform on a perpetual basis.
6
1.2.5 Characteristics of Retailing
Retailing can be distinguished in various ways from other businesses

such as manufacturing. Retailing differs from manufacturing in the
following ways:
There is direct end-user interaction in retailing.

It is the only point in the value chain to provide a platform for
promotions.
Sales of the retail level are generally in smaller unit sizes.
Location is a critical factor in retail business.
In most retail businesses, services are as important as core
products.
There are a large number of retail units compared to other
members of the value chain. This occurs primarily to meet the
requirements of geographical coverage and population density.
1.2.6 Activities Performed by Retailers
Retailers undertake various business activities and perform functions

that add value to the offerings they make to their target segments.
Retailers provide convenient location, stock, and appropriate mix of
merchandise in suitable packages in accordance with the needs and
wants of customers.
The four major activities carried out by retailers are: arranging

assortment, breaking bulk, holding stock and providing services.
7
Fig.1.3 Activities of Retailers
The retailer industry in India is largely unorganized

unorgani and
predominantly
minantly consists of small, independent, owner-
own -managed shops.
Retailing is India's
India largest industry
try in terms of contribution to GDP
and constitutes 13% of the GDP. There are around 5 million retail
India.2 There are also an unaccounted number of low cost
outlets in India
kiosks (tea stalls, snack centres , etc.) and pushcarts / mobile vendors.
Food sales constitute a high proportion of the retail sales.
Modern retail formats are showing robust growth as several retail

chains have established a base in metropolitan
metropolitan cities, especially in
South India, and are spreading all over India at a rapid pace.
However, space and rentals are proving to be the biggest constraints
to the development of large formats in metropolitan cities since
retailers are aiming at prime location.
lo
In urban India, families are experiencing growth in income but dearth

of time. More and more women are taking up corporate jobs, which is
adding to the family's income and leading to better lifestyles. Rising
8
incomes has led to an increased demand for better quality products
while lack of time had led to a demand for convenience and services.
The demand for frozen, instant, ready-to-cook, ready-to-eat food has

been on rise, especially in the metropolitan and large cities in India.
There is also a strong trend in favour of one stop shops like super-
markets and department stores.
The Mc Kinsey Report 2010 predicts that FDI will help the retail
business to grow to US $ 460-470 billion (Rs.21811.633 billion-
22285.802 billion) by 2010. There has been a strong resistance to
Foreign Direct Investment (DFI) in retailing from small traders who
fear that foreign companies would take away their business, lead to
the closure of many small trading businesses, and result in large-scale
un-employment. Therefore, government has discouraged FDI in the
retail sector. At present, foreign retailers can enter the retailing sector
only through restricted modes.
1.2.4 Challenges in Retail Business
To become a truly flourishing industry, retailing needs to cross the

following hurdles:
Automatic approval is not allowed for foreign investment in

retail.
Regulations restricting real estate purchases, and cumbersome
local laws.
Taxation which favours small retail businesses.
Lack of trained work force.
9
Absence of developed supply chain and integrated IT
management.
Low skill level for retailing management.
Intrinsic complexity of retailing - rapid price changes, constant
threat of product obsolescence and low margins.
1.2.5 Evolution of Retail in India
While barter would be considered to be the oldest from of retail trade,

since Independence, retail in India has evolved to support the unique
needs of our country given its size and complexity. Haats, Mandis
and Melas have always been a part of the Indian landscape. They still
continue to be present in most parts of the country and from an
essential part of life and trade in various areas.
The PDS or the Public Distribution System would easily emerge as

the single largest has its origin in the retaining system introduced by
the British during the World War II. The system was started in 1939
in Bombay and subsequently extended to other cities and towns. By
the year 1946, as many as 771 cities/towns were covered. The system
was abolished post war; however, on attaining Independence, India
was forced to reintroduce it in the face of renewed inflationary
pressure in the economy.
The Green Revolution and food self-sufficiency brought about a new

dimension in the food grains management. The focus was on fair
procurement price for farmers to insulate them from market
anomalies, buffer stocking, and control of market prices and public
distribution of essential commodities. Food Corporation of India was
10
established in 1965, to function as an autonomous organization,
working on commercial lines, to undertake purchase, storage,
movement, transport, distribution and sale of food grains and other
food stuff.
In 1984, Government of India created the Ministry of Food and Civil

Supplies with two departments namely Department of Food and
Department of Civil Supplies; the letter bring in charge of PDS.
The PDS as is understood today is a means for distribution of

essential commodities to a large number of people through a network
of Fair Price Shops (FPSs) on a recurring basis. The commodities
are as follows.
Wheat
Rice
Sugar
Kerosene
PDS evolved as a major instrument of the governments economic

policy for ensuring availability of food grains to the public at
affordable prices as well as for enhancing the food security for the
poor. It is an important constituent of the strategy for poverty
eradication and is intended to serve as a safety net for the poor whose
number is more than 330 million and are nutritionally at risk. PDS
with a network of about 4.78lakh Fair Price Shops (FPS) is perhaps
the largest distribution network of its type in the world.3 PDS is a
crucial part of life in many parts of India. PDS is operated under the
joint responsibility of the Central and the State Government. The
11
Central Government has the responsibility for procurement, storage,
transportation and bulk allocation of food grains, etc. The
responsibility for distributing the same to the consumers through the
network of FPSs rests with the State Governments. The operational
responsibilities including allocation within the State, identification of
families below poverty line, issue of ration cards, supervision and
monitoring the functioning of FPSs rests with the State
Governments.4
The Khadi &Village Industries (KVIC) was also set up post

Independence. Today there are more than 7,050 KVIC stores across
the country.5
The cooperative movement in India owes its origin to agriculture and

allied sectors. Towards the end of the19th century, the problems of
rural indebtedness and the consequent conditions of farmers created
an environment for the chit funds and cooperative societies. The
farmers generally found the cooperative movement an attractive
mechanism for pooling the meagre resources for solving common
problems relating to credit, supplies of inputs and marketing of
agricultural produce. The experience gained in the working of
cooperatives led to the enactment of Cooperative Credit Societies
Act, 1904. Subsequently more comprehensive legislation called the
Cooperative Societies Act was enacted. This Act, inter alia, provided
for the creation of the post of registrar of cooperative societies and
registration of cooperative societies for various purposes and audit.
12
The co-operative movement in India is amongst the largest in the
world, with strong links across the countrys vast geographical
expanses and varied cultural traditions. The co-operative sector plays
a crucial role in agro-processing, fertilizer and cash crop production
in the country. In fact, operations of dairy co-operatives have
propelled India to attain the top position in milk production in the
world. Additionally, edible oil marketed through co-operatives and
handloom co-operatives are being recognized around the world now
for their efficiency and social empowerment.6
The National Cooperative Consumers Federation of India Limited

NCCF) is the apex federation of the consumer cooperatives in the
country. NCCF was set on 16 October, 1965 and is administered
under the Multi State Cooperative Societies Act, 2002. The present
membership of the NCCF is 136 comprising of Primary Cooperative
Stores. Wholesale Societies, State level Consumer Cooperative
Federations, National Cooperative Development Corporation and the
Government of India. The commercial operations of the NCCF are
handled through its headquarters at New Delhi and 34 branches/sub-
branches located in the State Capitals and other important procuring
centers in different parts of the country.
In the past decade the Indian market place has transformed

dramatically. However, from the 1950s to the 80s investments in
various industries was limited due to low purchasing power in the
hands of the consumer and the governments policies favoring of the
small scale sector. Initial steps towards liberalization were taken in
the period of 1985-90. It was at this time that many restrictions on
13
private companies were lifted, and in the 1990sthe Indian economy
slowly progressed from being state led to becoming market
friendly/market oriented.
While independent retail stores like Viveks and Nallis have existed
in India for a long time, the first attempts at organized retailing were
noticed in the textiles sector. One of the pioneers in this field was
Raymonds, which set up stores to retail fabric. It also developed a
dealer network to retail its fabric. These dealers sold a mix of fabrics
of various textile companies. Other textile manufacturers who also
set up their own retail chains were Reliance-which set up Vimal
showrooms and Garden Silk Mills with Garden Vareli. It was but
natural that with the growth of textile retail, readymade branded
apparel could not be far behind and the next wave of organized retail
in India saw the likes of Madura Garments, Arvind Mills, etc set up
showrooms for branded menswear. With the success of the branded
menswear store the New Age Departmental Store arrived in India in
the early nineties.
Fig.1.4 Evolution of Retail in India
14
This was in a sense the beginning of a new era for retail in India. The
fact that post liberalization the economy had opened up and a new
large middle class with spending power had emerged, helped shape
this sector. The vast middle class market demanded value for money
products. The emergence of the modern Indian housewife, who
managed her home and work led to a demand for more products, a
better shopping ambience, convenience and one stop shopping. This
has fuelled the growth of departmental stores, super markets, and
other specialty stores. The concept of retail as entertainment came to
India with the advent of malls. The development of malls is now
visible not only in the major metros but also in the other parts/other
districts of the country.
1.3 Apparel Retailers
Numerous clothing shops are to be found in Indian cities and towns,

especially in shopping centres and markets. Industry experts estimate
the total apparel market in India to be to the tune of Rs. 48,000 -
50,000 crore. Of this, branded apparel is only to the extent of Rs.
9000-10,000 crore.7
Overall, analysts expect the market to grow at 10% to 15% per

annum. The market is over crowed with small and major players.
There are mixes of traditional and modern stores. Traditional outlets
are family-owned business units, generally small in size and cramped,
with little emphasis on alluring displays, and advertising depends on
word-of-mouth or only on their strong customer relationship. They
basically stock a limited range of unbranded or local and popular
15
items. These sets of retailers depend on local wholesalers or traders
from manufacturing centers such as Ludhiana, Surat, Ahmedabad,
Kanchipuram and Lucknow for specific kind of clothing. Retailers
usually position their stores on the basis of pricing, quality, and
variety of merchandise and extend various services to their customers
such as credit, home delivery, selection of products at home, tailoring
facility, alteration, returns, and adjustments.
Retailers prefer to attend to their regular and loyal customers

themselves rather than letting the salespeople to attend them. A large
number of such retailers are located in the central business districts or
main markets of the cities, and only a limited number of independent
retailers own massive retail units with designer decor and impassive
layout, known as 'showroom'.
These outlets deal in unstitched or ready-to-wear or both kinds of
offerings. With time, few of the leading independent retail stores from
the unorganized sector have established themselves as successful
retail chains such as Nalli, Kumarans from Chennai, and Bombay
Selection, Meena Bazar from Delhi, Sant Footwear from Ludhiana,
and Delco and Metro from Delhi.
Small townships and social areas of India have a large numbers of

retail stores selling clothes, basically unstitched stuff for the entire
family. These outlets are very small in size, have provisions for
customer to sit inside the shop with retailers and select the
merchandise. The traditional retail set up has been distinctively
classified on account of occasion-specific dressing (formal, casual,
and party/wedding), sex (menswear and women's wear) etc. Because
16
of their rock-bottom prices, which are much lower than prices of
branded products, they attract a large number of customers.
In contrast, modern clothing stores are auspicious with attractive

window displays. Most of the manufacturing companies in order to
achieve maximum level of retail penetration to drive bargain, are
using all possible retails formats in the organized sector such as
franchise, retail chain company- owned outlet, etc.
Apparel has identified various types of retail formats within the

organized retail sector such as retail chain, franchise, company owned
stores and department store etc. In the branched clothing segment,
leading company are going for exclusive show-room with trendy and
at ambience to enhance the shopping experience of their shoppers; for
example, Raymonds has 263 outlets, Madura Coats has 100 stores
while Grasim has 106 stores.8
In apparel retailing, a retailer has two choices: either create his own
brand or sell other brands. Own brand definitely offers higher margins
over non-store brands. Margins in apparel retailing covered anywhere
between 40% and 50%. Independent retailers usually prefer to sell
multiple brands rather than specific brand.
1.3.1 Departmental Stores in the Apparel Category
For many foreign and private brands, department stores offer the ideal
retail format for apparel product category. Given the relatively high
prices of leading brands, traditional retailers are reluctant to stock
premium goods. Until now department stores have been few and far
17
between in India. But department store chains are now growing,
reflecting the fast pace of modernization in the Indian retailing
industry as a whole.
Prior to economic reforms that began in 1991, department stores did

not seem a viable business in India because of the relative lack of
branded consumer goods available in the market. While a few cutlets
that called themselves department stores did exist, these were
nowhere close to international standards.
Customer patronizing department stores in India are predominantly

from upper-middle and high-income classes since such stores mainly
stock premium brands. To cater to their customers' growing appetite
to foreign brands most department stores stock a range of these.
Indeed, because of their late development in India, department stores

are still considered by most Indians as exclusive shopping outlets that
stock premium, high quality and fashionable products.
1.3.2 Apparel Retailing in India
A new focus on the apparel retail sector has attracted attention in

recent days. Top exporters have introduced their own brands and are
aggressively positioning themselves within segments of the domestic
markets. The rising importance of brand segments in the domestic
market combined with the pressure of competition is blurring the
boundaries between exports and domestic production in countries
with large home markets, such as India. With the changing lifestyle,
organized retail is playing a key role in structuring the Indian
18
domestic market, reinforced in particular by rising incomes and
growing purchasing power among consumers in rapidly growing
sectors of the economy such as information technology and Business
Process Outsourcing (BPO).
Retail sector in India is witnessing a huge exercise as traditional

markets make way for new formats such as departmental stores,
hypermarkets, supermarkets and specialty stores. The branded apparel
market represents the largest source of growth. The mens branded
apparel market is growing at a rate of 21.8% and branded women
apparel segments represents 35% of the total branded apparel market
and is growing at an incredible 23% annually.9
Leading domestic retailers are becoming more firmly entrenched,

increasing their scale of operations and stabilizing their scale of
operations and stabilizing their logistics and technology initiatives. A
few significant foreign players have been selling their branded
apparel in India for number of years. But, now, just like their India
counterparts, global apparel brands are setting up their own apparel
outlets, instead of just selling through departmental stores. Though
local retailers generally enjoy higher margins, they wont be able to
keep global retailers at bay for long because of international
experience, buying power, IT systems and cash flow to tolerate lower
profits. Presence of these brands will make the Indian consumer
become more aware of the international fashion and lifestyle trends
leading to a move up of the industry in the value chain.
19
1.3.3 Indian Apparel Retail Scenario
In its market research report, Indian Retail Sector An Outlook

[2005-2010] RNCOS (market research consulting company)
estimated the Indian apparel retail industry generated revenue of $2.0
billion(Rs.89.863 billion) in 2004 with a growth rate of 8.2% during
2000-04. As a result, this industry in India is second largest in the
world after china. The Indian apparel retail industry varies within
even short distances as the designs of the outfits are based on the
regions fashion trends.
According to Global Retail Development Index (GRDI) 2013 India is

positioned as the leading destination for retail investment. This
followed from the saturation in western retail markets and we find big
retailers like Wal-Mart and Tesco entering into Indian market. AT
Kearney has estimated Indias total retail market at US$ 202.6 billion
(Rs.9606.603 billion) which is expected to grow at a compounded 30
percent over the next five years. With the organized retail segment
growing at the rate of 25-30 percent per annum, revenues from the
sector are expected to triple from the current US$ 24 billion
(Rs.1137.9984 billion) by 2010.
Niche foreign are making a beeline for the Indian market. In fact,
despite the FDI policy pertaining to retail being unclear, over 10
foreign niche segment retailers have recently set up or announced
their intention to set up shop in India using the franchisee route, with
several others waiting in the wings.
20
International brands such as Benetton, Lacoste, Levi Strauss,
Crocodile, Lee, Wrangler, Nike, Reebok, Adidas, Guess, Esprit,
Mango, Hugo Boss, Mark & Spencers and Tommy Hilfiger have
already built a retail presence in the country, while market watchers
point out that several more such as Versace, FCUK, Zara, Mother
Care, IKEA, Fendi, NEXT, Debenhams, Trussardi, and DKNY have
charted out a strategy to enter the Indian market. Most of the brands
entering the market are targeted at the premium end. According to
estimates, the premium apparel segment in India is valued at about
Rs.1900 crore and growing at 20 percent.10
In addition to the patterns above, four additional factors which are

transforming supplier capacities in ways that are blurring the
boundaries between firms producing for the domestic market and
those producing for exports are as follow:
1. Enchantment of local capabilities in the area of logistics i.e.

ware housing and customized tracking systems.
2. Interesting emergence of design as a source of competitive
advantage in Indian apparel.
3. Growing importance of local investment by Indian firms as a
way to counter the exclusion of Indian from all major regional
trade agreements and advantage of tariff free entry into major
markets that many of Indias competitors enjoy i.e. Mexico in
the US markets, turkey and Bangladesh in EU markets.
4. Increasing focus on domestic brands.
5. Renowned exporters in the country such as Reliance,
Raymond, Orient Craft etc. are developing their supplies
21
networks and distribution systems, seeking distinctive niches
and generally staking out their terrain in the domestic market to
consolidate their first mover advantage. Success story has
emerged in the domestic apparel garment segments for the
local brands and not limited to Pantaloon, Lifestyle and
Westside only. No wonder a heavy weight like the Reliance
group is planning to do a Wal-Mart in India.
Now there is an increasing demand of branded apparel segment in the

domestic retail market for same features that are valued in demanding
export markets. These shifts in retail are fuelling the demand for good
quality and trendy apparel, which in turn deepening the importance of
aesthetics and design in the domestic market. It is worthwhile to
mention that the rise of younger class of middle-class consumers,
spawned by the booming BPO and IT sector, has led to burgeoning
demand for locally designed, ready to wear clothing in Indian
mentors. As many surveys have established, with good salaries,
strong peer pressure and the growing availability of brands across
product categories, spending in retail is being driven by the segment
in large and mid-sized metros.
In India, clothing retail accounts for 36% of organized retail business.

It is the largest sector. Ready-made apparel accounted for an
estimated 20% domestic clothing sales in 2005.11 With growing
working women wearing western wear to work, and pressed for time,
market for good readymade clothes is likely to grow. India is a film-
crazy nation, and the largest producer of films, with more than 1,000
every year. They provide entertainment and an escape from reality for
22
Indias masses, and set the popular fashion trend. Bollywood fashions
have become pan Indian. They affect various sectors of the market
including clothing, weddings and fashion accessories.
With the advent of modern format retailers and the growth of plastic
cards, affluent urban Indian women are shopping like never before.
They spend morning browsing in stores looking for deals or latest
styles. Upper income urban women are adopting ethnic chic. These
are designer clothes that incorporate Indian motifs, ethnic fabric and
are a fusion of western and Indian styles.
In the large urban centres, apparel retailers, like Shoppers Stop,

Westside and Pantaloon have popularized their private labels, which
have attracted urban shoppers. Westside carries only its own private
labels, while for other stores, 20% to 30% of their apparel turnover is
from private labels. Customers have loyalty to a store rather than any
particular garment brand. This has led to thriving unbranded or local
brand market for ready-to-wear clothes leading to serve competition.
Hence organized retailers like Lifestyle, for instance, has loyalty
program called ` The Inner Circle`, while Pantaloons offers a` Green
Card` Rewards programmes, Westside has `Club West` to woo
customers. Customers look to design and fit of the clothes, and use
the shops name as a quality standard.
12
According to a report by Data Monitor (2006) , global apparel,
accessories & luxuries market is likely to grow by 4.5% annually and
Asia pacific region is anticipated to acquire leadership position by
2011. Apparel sector in India poses a lot of challenges to a marketer.
23
So far India`s share in the world apparel trade has been
insignificant(less than 3%). World garment trade is estimated at
around US$125 billion (Rs.5534.1875 billion) annually. The Biggest
manufacturer & supplier is China producing over US$ 50
billion(Rs.2213.675 billion) , followed by Mexico which produces
over 8 billion and followed by many countries like India, Sri Lanka
and Bangladesh, being the third place countries making and exporting
garments worth $ 5-6 billion(Rs.221.3675-265.641 billion) annually.
1.3.4 Characteristics of Apparel Retail Sector
As apparel retail is led by fashion, a player needs to keep a close

watch on fashion amongst teenagers as they are the trend setters. Role
of Bollywood in spreading fashion needs to be understood. Seasonal
variation on stocking pattern and need to clear inventory at the end of
season should be understood by apparel retailer. Typically once an
item is sold from the outlet, retailers ensure that there is no repetition
of same. It gets replaced by different design, style, and colour.
Importance of store layout, decor is very critical. A browser visiting
the store frequently likes to see changes in the layout otherwise he
may carry the impression that stocks are not moving out of store.
Category management becomes very crucial function as transforming
of design into production and delivery has to be completed before
fashion or fad changes in the market.
This highlights the importance of sales promotions- short term

activities which induces trade or consumer to buy now rather than in
future as the value of apparel after the season goes down substantially
24
and inventory carrying burden turns out to be very high. Apparel
retailer needs to understand critical role of sales promotions.
Attractive promotions induces purchase acceleration, stock piling and
brand switching on the part of a consumer which substantially
reduces retailer`s financial and inventory risk and consumer`s
financial and psychological risk.
1.3.5 Classification of Apparel
The textile manufacturers were among the first to get into branded
menswear in the Indian market. This sector is perhaps the most
developed in terms of supply chain sophistication in the branded
clothing market. The apparel sector can be broadly classified into
Mens apparel, Womens apparel and childrens wear. Each of them
can be further classified into Formal, Casual, Indian wear, Sports
Wear and Accessories.
Apparel
Menswear Womens wear Childrens

wear
Shirts T-shirts Kurta Track Belts

Trousers Shirts Pyjama suits Ties
Blazers/ Jeans Dhoti Shorts Socks
Jackets Casual Kurta T-shirts Handker-
Suits Trousers Sherwani chiefs
Fig.1.5 Classification of Apparel
25
The same classification can be reworked for womens wear and
childrens wear. Thus we can see that this sector has many
classifications and sub-classifications adding to the complexity and
the competitiveness of this sector. Apparel Retail in India is
characterised by the existence of a large number of regional, national
and international brands.
Another important characteristic is that retail occurs through multiple

formats, for example an Arrow shirt would be retailed through stores
like Shoppers Stop, Pantaloon, etc and also through the companys
own retail outlets.
In menswear, the key players are Arvind Brands, Madura Garments,

Raymonds/ Park Avenue.
1.3.6 Key Menswear Brands
Formal wear Casual wear Denims Sports wear

Arrow Allen Solly Levis Reebok
Louis Philippe Color Plus Lee Nike
Van Heusen Dockers Wrangler Adidas
Park Avenue Benetton Pepe
Wills Sports Ruf n Tuf
Table 1.1
26
In India, a national brand in womens wears is virtually non-existent.
Most branding that is visible in womens wear is only in the western
casual clothing segment. However, this is a growing segment where
sizeable opportunities exist in the womens ethnic wear. Allen Solly,
a leading brand in menswear, has entered the womens western wear.
Local manufactures again rule a large section of the childrens

clothing market though a few national brands line Gini & Jony and
Ruff kids have emerged in the market. Invariably, these brands started
by retailing within larger department stores before setting up their
own and franchised retail outlets.
Apparel retail occurs through a companys own outlets or through the

multi brand outlets. Over the past few years, this sector has seen the
development of private labels by many department stores.
1.4 Lucknow Division
Lucknow Division is an administrative geographical unit of Uttar

Pradesh of India. Lucknow is the administrative headquarters of the
division. As of 2005, the division consists of Lucknow district,
Hardoi district, Lakhimpur Kheri district, Raebareli district, Sitapur
district and Unnao district.
Uttar Pradesh is now divided into seventy one districts under eighteen
divisions. Districts are administered by District Magistrates and
divisions are administered by Divisional Commissioners.Lucknow,
the capital of the state, constitutes the Lucknow district.
27
The Indian state of Uttar Pradesh borders with Nepal and the Indian
states of Bihar, Jharkhand, Madhya Pradesh, Chhattisgarh, Rajasthan,
Haryana, Uttarakhand and National Capital Territory of Delhi.
1.4.2 Lucknow District
Lucknow District is a district located in the Uttar Pradesh state in

northern India. The city of Lucknow is the district headquarters and
the district is part of Lucknow Division and also is the capital of Uttar
Pradesh. The City was established in 1775 as the nawab of Awadh
moved his capital from Faizabad to Lucknow and made it one of the
most prosperous and glittering cities in all India.
28
1.4.3 Economy
The economy of Lucknow city was earlier based on the tertiary sector
with about majority of the workforce being employed as government
servants. Large-scale industrial establishments are low compared to
other north Indian state capitals like New Delhi and Chandigarh.
Currently the economy is growing with the contributions from more
professionals in the fields of IT, Manufacturing and processing and
Medical/Bio-Technology. Business-promoting institutions viz. CII
and EDII have a presence in city. On October 2010, Lucknow ranked
6th among all the cities in India for fastest job-creation, City has
steadily grown into a competitive IT centre.
Lucknow has a great potential in handicraft sector and it accounts for

60% of the total exports from the state. The state has emerged as a
hub for IT and ITES industries including software, BPOs and
electronics. The major export items from are marble products,
textiles, handicrafts, art pieces, gems and jewellery, textiles,
electronics, software, computer, hardware & software, apparel, brass
work, silk, leather and leather goods, glass items, art metal,
chemicals. City has promoted PublicPrivate Partnerships in big way
in various sectors such as power, roads, expressways, education.
1.4.4 Demographics
According to the 2011 Census Lucknow district has a population of

45,88,455. This gives it a ranking of 31st in India (out of a total of
640). The district has a population density of 1,815 inhabitants per
29
square kilometer. Its population growth rate over the decade 2001-
2011 was 25.79 %. Lucknow has a sex ratio of 906 females for every
1000 males and a literacy rate of 79.33 %.
1.4.5 Chikan industry of Lucknow - Pride of India
The chikan work of Lucknow is one of the most popular embroidery

works in India. It has a certain grace and elegance which ensures that
it never goes out of style. It is said to have been originally introduced
by Nur Jahan, the beautiful wife of Mughal emperor, Jahangir. The
work became popular in a number of important cities of indo-
gangatic plain.
The designs depend for its effect on the variety of stitches and
different grades of threads used to form the patterns which includes
the lace like jali, the opaque fillings and the delicacy or boldness of
outline and details. Tiny raised flowers done in what seem to be
French knots are balanced by the flat stem stitch and large areas of
open work to prevent either a crowded or too scattered appearance.
The stitches employed are back-stitch, chain stitch, and hemstitch
forming an open work pattern.
Individual floral motifs may embellish the entire garment or just one
corner. Among the floral motifs embroidered, the jasmine, rose,
flowering stems, lotus and the paisley motif are the most popular.
Chikan work has very light, gossamer - like quality. This makes it
very suitable for the seemingly hot climate.
30
Some of the popular motifs are Kairi; dhaniya patti; phanda; dhum
patti; ghas, patti; murri; kangan; joda murri; maharaki; sadi-maharaki;
daraz/ katub; pechani; tanire; gitti; phanda; keel; kangira.
A Chikan suit is a regal treasure in any fashion connoisseur's

wardrobe. Really the great thing about this form of embroidery is that
it never goes out of fashion and it suits women/ men of all ages. If
you are going to invest in a few pairs of elegant wear, try adding
chikan to your wardrobe. If you wear chikan you really are wearing a
piece of history, as it is a form of embroidery that has been art part of
India for centuries.
Chikan embroidery in Lucknow is the biggest artisan cluster of India.

There are about 5 lakhs artisans of hand embroidery associated with
this cluster. Apart from this, the artisans from other fields such as
cutting, stitching, Hand Block Textile Printing, jali work and washer
men are also a part of this cluster. The total number of artisans
associated with Chikan Embroidery, Cluster, other than Chikankari
artisans, is about 5000.
There are about 4000 manufacturing units in Lucknow having

individual turnover of Rs.10 crore to 10 lakhs. The total turnover of
industry is about Rs.1000 crore including export out of India of about
Rs.200 crore.
31
1.4.6 Sitapur District
Sitapur District is one of the districts of Uttar Pradesh state of India,

with Sitapur town as the district headquarters. Sitapur district is a part
of Lucknow Division. This district covers an area of 5,7432 km.
1.4.7 Economy
In 2006 the Ministry of Panchayati Raj named Sitapur one of the

country's 250 most backward districts (out of a total of 640). It is one
of the 34 districts in Uttar Pradesh currently receiving funds from the
Backward Regions Grant Fund Programme (BRGF).
Agriculture is the main occupation of the district. The important crops
are wheat, Rice, Urad, Sugarcane, Musturd and Groundnuts. The
district was very famous for its textile industries during 17th and 18th
century, but now it is not famous from industrial point of view. There
are five sugar mills, flour mills and rice mills in the district. It is
mainly famous for its cotton and woolen mates.
1.4.8 Demographics
According to the 2011 Census Sitapur district has a population of

4474446. This gives it a ranking of 38th in India (out of a total of
640).The district has a population density of 779 inhabitants per
square kilometer. Its population growth rate over the decade 2001-
2011 was 23.62 %. Sitapur has a sex ratio of 879 females for every
32
1.4.9 Lakhimpur Kheri District
Lakhimpur Kheri is a district of Uttar Pradesh in the Lucknow

Division. It is located in India along the border with Nepal. The
headquarters of the Lakhimpur Kheri District are situated in the city
of Lakhimpur. Lakhimpur Kheri district is a part of Lucknow
Division and is the largest district in terms of area in the state (Total
Area = 7680 square km).
Lakhimpur Kheri is famous for Dudhwa National Park, the only
National Park in Uttar Pradesh.It is home to a large number of rare
and endangered species including tiger, leopard, swamp deer, hispid
hare, Bengal florican, etc. Being a Terai district it is rich in natural
resources with lush green scenery and many rivers.
1.4.10 Economy
In 2006 the Ministry of Panchayati Raj named Lakhimpur Kheri one

of the country's 250 most backward districts (out of a total of 640). It
is one of the 34 districts in Uttar Pradesh currently receiving funds
from the Backward Regions Grant Fund Programme (BRGF).
Known for its sugar cane industry, it satisfies a huge part of the
world's sugar demands. Some of the biggest sugar mills are in the
district Bajaj sugar mill in Gola Gokarnath and Bajaj sugar mill in
Palia Kalan and DSCL sugar mills (Ajbapur), Kumbhi sugar mills
Kumbhi, (Mohammdi) are the four largest sugar mills in Asia.
Balrampur Industries also runs its sugar mills from Lakhimpur.
Lakhimpur is also famous for cottage industries of incense sticks.
33
The main industry which dominates Lakhimpur Kheri is the sugar
industry. It houses various sugar industries ranging from small plants
to big integrated sugar mills.There are many private, government and
co-operative sugar mills in the region. Steel Authority of India
Limited (SAIL) is setting up a steel processing unit in Behjam,
Lakhimpur at an estimated cost of Rs 85 crore. The processing unit
will have an installed capacity of 100,000 tonnes per annum and
produce TMT (Thermo Mechanically Treated) bars from input
material sourced from SAILs integrated steel plants.
1.4.11 Demographics
According to the 2011 Census Lakhimpur Kheri District has a

population of 4013634. This gives it a ranking of 56th in India (out of
a total of 640). The district has a population density of 523
inhabitants per square kilometre. Its population growth rate over the
decade 20012011 was 25.14 %. Kheri has a sex ratio of 887 females
for every 1000 males and a literacy rate of 62.71 %.
1.4.12 Raebareli District
Raebareli is a city and a municipal board in the Indian state of Uttar

Pradesh. It is the administrative headquarters of Raebareli District.
1.4.13 Economy
In 2006 the Ministry of Panchayati Raj named Raebareli one of the

34
1.4.14 Demographics
According to the 2011 census Raebareli district has a population of

640). The district has a population density of 739 inhabitants per
square kilometre .Its population growth rate over the decade 2001-
2011 was 18.51 %. Rae Bareli has a sex ratio of 941 females for
every 1000 males, and a literacy rate of 69.04 %.
1.4.15 Unnao District
The town of Unnao is the headquarters of Unnao District in Uttar

Pradesh, India between Kanpur and Lucknow. It is approximately
18 km from Kanpur & 60 km from Lucknow . It is connected to these
two cities by roadway as well as by railway. The nearest airport is at
Amausi about 50 km from Unnao. Unnao district is a part of Central
Ganges Plain of the state covering an area of 4558 square km.
1.4.16 Economy
In 2006 the Ministry of Panchayati Raj named Unnao one of the

1.4.17 Demographics
According to the 2011 Census Unnao district has a population of

640). The district has a population density of 682 inhabitants per
35
square kilometre.Its population growth rate over the decade 2001-
2011 was 15.19 %. Unnao has a sex ratio of 901 females for every
1.4.18 Hardoi District
Hardoi is a riyasat and a municipal board in Hardoi district in the

Indian state of Uttar Pradesh. It is the administrative headquarters of
Hardoi District.
1.4.19 Economy
In 1901, the main activities were wood-carving industry, saltpetre

works and grain trade. The district exported grain, sugar, hides,
tobacco and saltpetre.
Agriculture is the main activity in the district and many people

depend on it. 3980.45 square km. of Hardoi district are devoted to
agriculture. The main crops are paddy, sugarcane, wheat, vegetables,
pulses and oilseeds. A small proportion of the total cultivated area is
used for horticulture: guava, mangos, some herbs, etc. Irrigation is
made possible by the presence of the Hardoi and Lucknow branches
of the Sarda Canal.Generally people of the district depend upon the
Agriculture based economy.
1.4.19 Demographics
As of 2011 India Census, Hardoi district had a population of

4,091,380. Males constitute 54% of the population and females 46%.
Average literacy rate of Hardoi in 2011 were 68.89% compared to
36
51.88 of 2001, lower than the national average of 74.9%: male
literacy is 77%, and female literacy is 59%. In Hardoi, 13% of the
population is under 6 years of age.
1.5 Literature Review
There are many authors and researchers who have worked in this area
but the contributions of some of them have been included in this
study to make it more comprehensive and valuable.
According to Koshy (1997),13 fashion garments are differentiated by

innovative fabrics and / or substantial use of trims, embellishments
and / or presence of high degree of craftsmanship in the form of bead,
sequin work and / or sophisticated design, colour and styling inputs.
14
Bagchi (1997) critically examined the removal of quota between
1995 and 2005 in four phases is not as beneficial as it is projected by
developed world. The first two phases are composed of goods which
are not of high importance and already almost free. These two phases
are not of high importance. The other two phases are of high
importance.
Chandra (1998) 15 in his article wrote on challenges ahead of Indian

textile and clothing industry in post quota regime. It put special
emphasis on production capabilities and efficiencies as most essential
elements to fight global competition. It suggests various strategic
decisions Indian textile manufacturers have to make to survive the
competitiveness in post quota regime.
37
Bhamra, Heeley and Tyler (1998)16 describe conventional
approaches to product development in textile and clothing industry
have been characterized by functional independence. Each participant
contributes to the process sequentially.
Verma (2001)17 in his article emphasized on the impact on the Indian

textile and clothing industry after quota elimination. It says that
Indian textile and clothing exporters have to bring in necessary
changes in their methods of production, management style, capacities,
marketing skills and productivity level in order to remain competitive
in international market. Also it put special emphasis on the size of
Indian textile units when compared to its counterpart in China.
Simpson and Shetty (2001)18 did a vast study on Indias textile

industry. The purpose of study is to analyze Indias textile and
apparel industry, its structural problems, market access barriers, and
measurements taken by government of India to enhance the industrys
competitiveness in the post Multi Fibre Agreement (MFA) era. The
study also assesses Indias textile and apparel market potential and
trade and investment opportunities for U.S. firms as India steps into a
more free and transparent trade regime.
Verma (2002)19 did a comprehensive study with objective to evaluate

the export competitiveness of Indian textile and clothing sector.
Because Indian textile and clothing sector is predominantly cotton
based, the study is focused on cotton textile and clothing and look at
the entire value chain from fiber to garment and retail distribution.
38
20
Leung and Taylor (2002) in a study on fashion buying criteria of
X generation consumers in Hong Kong found that consumers of this
category are attracted by a good interior store layout; and feel good
service is essential when buying fashionable clothing.
21
In the Indian context, a study was done by Sinha et al. (2002) on
store choice behavior that indicated Indian shoppers on an overall
basis give importance to proximity of the store, merchandise and
service provided by the store and stores dealing in apparels are also
chosen based on ambience.
Kincade, Doris H; Woodard, Ginger A; Park, Haesun (2002)22

studied Buyer-seller relationship for promotional support in the
apparel sector which is critical for success.
Willans (2002)23 says several fashion retailers have adopted a

concept known as edited retailing whereby the customer is offered a
limited though changing choice of merchandise that is highly co-
ordinated, offering a high degree of product range compatibility.
As per Moye and Kincade (2003),24 the occasion for which an

apparel item is bought does influence the consumers importance
rating of the store environment and there were higher expectations for
the environment of a store offering formal merchandize than a store
offering casual merchandize.
Meenakshi (2003) 25 did a comprehensive study on the opportunities

that would be provided by WTO to Indian Textile industry. This
paper gives a lot emphasis on new capacity installation to take the
39
benefits to the fullest extent in India has to be a true gainer in
competition to other nations. Since Indias own consumption per
capita is also on the rise with the rise of income and consumption
habits, the profit margins available to Indian textile and clothing
producers will be more. But in export market, the prices will be
driven by international factors and profits will be under pressure. So
the exporters might have to go for strategy of partial exports and
partial domestic sale.
26
Pandey (2003) in his article expected that Indian textile exporter
would be benefited with quota elimination. It discusses on various
sectors of textile and clothing. Also he expects that hosiery industry
will be one of the gainer and small scale exporters will be more
competitive due to small size and controlled cost and lower
overheads.
27
Vivek (2004) in his article had said that JC Penny a leading retail
chain of US looks India for sourcing its garments in woven and
hosiery. He is of opinion that India will be fulfilling its major need of
Hosiery and woven garments in cotton while China will be good for
synthetic fabrics and its garments.
Chugan (2005)28 emphasized that Indian textile Industry has to

change to be more competitive in the long run. This paper emphasizes
that merely cost competence is not enough to maintain the lead while
Indian companied has to have a global competitive view.
Trivedi (2005) 29 in his article concluded that the textile is one sector
where India has high ambitions and can achieve robust growth
40
through moderate human skills. India has skilled labour and does
better in this sector as compared to others. This will also increase the
employment and the social structure will be better off.
To quote Panthaki (2005),30 the textile industry in India is vital to the

economy of the country as it contributes to over 6% of the gross
domestic product to India and earns 18% of the total foreign exchange
earnings of the country.
The present garment segment of the textile industry provides

employment to around seven million people (Apparel Talk, 2005).31
Fashion as part of history repeats itself and is defined as the

prevailing style in clothing at any given period of time write Amaden
and Crawford (2005).32
Paromita Goswami (2007)33 conducted a study on how college

students in urban areas shopped for apparels. The factors investigated
for the study were brand conscious and needed variety and best
quality for their apparel purchase. Furthermore, parents influence
their purchase behavior the most, followed by peer store approval,
friends influence and peer product influence.
According to Kunz and Garner (2007), 34 the textile and the apparel
business provides employment for more than any other business
segment, directly providing a livelihood for many millions of people,
including 37 million individuals in India alone.
Dr.Biradar et.al. (2008)35 in their article pointed out that the

organized retail sector is registering tremendous growth fuelled by
41
the unleashed spending power of new age customers who have
considerable disposable income and willingness to have new
shopping experience. It is emphasized that Indias top retailers are
largely lifestyle, clothing and apparel stores followed by grocery
stores. The paper further mentions that increasing number of nuclear
families, working women, greater work pressure and increased
commuting time; convenience has become a priority for Indian
consumers. All these aspects offer an excellent business opportunity
for organized retailers in the country.
Designers have acknowledged that they alone cannot decide what

their customers want and they are offering as more of fashion to
consumers attention, opine Diamond and Diamond (2008).36
37
According to Kumar and Sunderesan (2010), textiles are among
the leading sectors in the Indian economy in terms of production,
exports, employment and contribution to the exchequer.
India earns around 27% of the foreign exchange from exports of

textiles and related products remark Gopalakrishnan et-al (2010).38
As competition and pressure on profit margin grow, fashion

manufacturers are looking wider for inspiration on how to maintain a
competitive business (The Indian Textile Journal, 2010).39
Fashion today is not restricted to grown-ups, but kids too are

becoming fashion conscious these days especially when it comes to
dressing (Apparel Online, 2010).40
42
Fashion has truly become a serious business in India, according to
(Textile Trends, 2010).41
As per Amsamani and Punna (2010),42 there is now a buzz in the

fashion and high tech industries about integration of technical and
smart intelligent functionality into fabrics for clothing.
With fashion rapidly becoming a must have for the masses and
technology playing an important role in making it viable to
incorporate fashion elements at reasonable prices, the retailers around
the world are also embracing this change. Leggings seen as a
fashion forward statement in the 80s is now a universal trend that has
become mainstream fashion and these versatile fashions are the
fashion worlds latest obsession (Apparel Online, 2011).43
Considered as one of the largest employment generator, the Indian

textile industry provides employment not only to people involved in it
but also to various ancillary sectors like agriculture and recent survey
has revealed that the textile industry contributed twelve million jobs
in the year 2010 (Indian Textile Journal, 2011).44
In this contemporary world of fashion, where dressing is a powerful

form of expression, more and more youngsters are adopting
character inspired merchandise by wearing their favorites cartoon
and comic characters on their T-shirts (Apparel Online, 2011).45
1.6 Purpose of the Study
Retailing is a new emerging section of the economy having a lot of

potential to contribute maximum to the GDP. In the days ahead,
43
competition is bound to be stiff. In this way all players of the
industry, that is, buyers, sellers and competitors, should keep
themselves updated with current happenings and trends of the
industry. It is only possible with the help of Research and
Development (R&D) because by using this mean, anybody can have a
clear cut knowledge about the real scene of the industry (apparel
industry).In this regard, the present study will be proved as a very
useful and vital tool for all concerned users and it will provide
approximately all the pertinent facts about apparel retailing.
1.6.1 Objectives
Every study is based on certain problems and in the whole various

alternatives (solutions) regarding these are researched and evaluated.
In this way, every study has some specific motives to be achieved by
using various tools of research. In case of present study, the industry
of apparel retailing is facing a lot of problems in the form of
following questions. What to do, how to do, are certain questions,
which are looking out for answers. But, no qualitative work has been
done to address these problems, the present study will make an
endeavor to find suitable answers. The present study will:
1. Analyze the key trends that are taking place in apparel retailing.
2. Assist in creating awareness of the developments in apparel

retailing with respect to various product categories.
3. Help to know the drivers responsible for the growth of organized

apparel retailing and new retail formats.
44
4. Evaluate Indias preparedness in these fast emerging changes in
retail marketing.
5. Evaluate the extent and impact of FDI in apparel retailing.
6. Enlighten the strengths and weaknesses of the industry.
These solutions will give the apparel retailing a facelift, so that, they
can march ahead to generate revenue, employment and thereby could
contribute to the nation building.
1.6.2 Hypothesis
On the basis of literatures, following hypotheses are framed:
H 1: Emergence of modern retail formats has created the problems of

parking, high price of real estate, requirement of skilled personnel.
H 2: Income of consumers is positively related with shopping from

modern retail formats.
H 3: Young consumers prefer to shop from modern retail formats.
H 4: People have started preferring branded products and readymade

garments (RMGs).
1.6.3 Limitation of the Study
All efforts have been made to ensure that the research is designed and
conducted to optimize the ability to achieve the research objectives.
However there are some constrains that do not validate the research
but made to be acknowledge.
45
1. This study is restricted to the Lucknow Division only.
2. This evaluation is based on primary data generated through
questionnaire and collected from the apparel retailers of different
districts of Lucknow Division and as such its findings depend on
accuracy of data.
3. The sample consists of 350 apparel retailers from different districts
of Lucknow Division of Uttar Pradesh. The sample is selected
conveniently and in single phase so as the opinion suggested by the
retailers is situation based. Also study is limited to the apparel
retailers and does not depend on the respondents who deal in different
products.
4. As the primary data and observational method of research has its
own limitations and based on the respondent the study is limited to
Lucknow Division only and it cannot be applicable to the retailers of
the other states of India or at International Level.
5. The study is based on the responses of the retailers who are highly
subjective in nature and hence generalization made may not be totally
true /accurate.
1.7 Research Methodology
1.7.1 Research Level
Since the objective of the study is to find out challenges and prospects
inherent in apparel retailing, exploratory research will prove handy in
collecting data. The exploratory research attempts to discover general
information about a topic. The research follows a format that is less
structured and more flexible than descriptive research. The
46
descriptive method of research is to gather information about the
present existing condition. The emphasis is on describing rather than
on judging or interpreting. Along with this, the types of retailers will
be studied to establish the relationship between invested amount and
the location of outlets. Therefore, the level of research will have both
of the following:
Exploratory
Descriptive
1.7.2 Approach to Research
Quantitative
A research technique in which scientific, concrete, and projectable

numerical data that can be statistically analyzed is gathered, often
from large samples; also called hard data. To give the study a
concrete statistical shape, the use of quantitative approach in the
collection of data has been attempted. Here it will be pertinent to
write that no quantitative technique for data analysis has been used.
The analysis of the data in finding and interpretation part is purely
descriptive in a manner taking cognizance of different dimensions of
the matter at hand.
Qualitative
Qualitative approach generates verbal information rather than

numerical values. Instead of using statistical analysis, the qualitative
approach utilizes content or holistic analysis; to explain and
comprehend the research findings, inductive and not deductive
47
reasoning is used. The main point of the qualitative research method
is that measurement is valid, reliable and can be generalized with its
clear anticipation of cause and effect.
1.7.3 Data Collection
To select a data collection instrument, there are several factors to be

considered:
1. Technical adequacy: reliability, validity, freedom from bias, etc.
2. Practicality: cost, duration, personnel needs, etc.
3. Ethics: protection of human nights, privacy, legality, etc.
The research employed for collection of data involves both primary

and secondary basis. However the following techniques of Data
Collection shall be used:
1.7.4 Primary Data Techniques
Questionnaire
Sampling and Sampling Units
While the focus is to study the retailers challenges and prospects

what exactly they perceive and experience. Retailers will be taken
into confidence that they will reveal the desired information. A
sample is a subset of a unit or a population collected as a
representation. In sampling, a researcher decides as to who will be
surveyed. The portion of the population that researcher needs to target
48
and that represents entire population is known as the sampling unit. It
will be a non- probability sampling.
The method of random sampling is the best one suited for the present
study in order to avoid biasness in approaches.
1.7.5 Secondary Data and Material Collection
Inputs available on Internet

Books, Magazines and other periodicals existing on marketing
and retailing.
With the use of survey questionnaire and published literatures, this

study takes on the combined quantitative and qualitative approach. By
means of employing this combined approach, the researcher is able to
obtain the advantages of both quantitative and qualitative approaches
and overcome their limitations.
1.7.6 Sampling Unit
Apparel Retailers of Lucknow Division.
49
References
1. dictionary.reference.com/Apparel
2. Mc Kinsey & Company
3. http:/fcamin.nic.in
4. http:/fcamin.nic.in
5. www.kvic.org.in
6. http:/india.gov.in/citizen/cooperatives/cooperatives
7. www.indiaretailing.com
8. www.indiaretailing.com
9. AT Kearney.com
10. Global Retail Development Index (GRDI) 2013
11. Consumer Lifestyles in India, EuromonitorInternationalConsumer

Lifestyles Database (2005)
12. Global Apparel, accessories and luxury goods, Data Monitor,

(2006)
13. www. darliekoshy.com/publication/htm
14. shodhganga.inflibnet.ac.in/jspui
15. www.iimb.ernet.in/chandra
50
16. www.emeraldinsight.com/journals
17. www.esocialsciences.org
18. shodhganga.inflibnet.ac.in/jspui/bitstream
19. www.eu.ldc.org
22. onlinelibrary.wiley.com
23. www.ibm.com./businesscenter/au
24. www.ijsrp.org/research-paper
32. www.amazon.com
51
33. shaktipublication.org
34. www.abeebooks.com
35. shaktipublication.org
37. www.indiantextilejournal.com/articles
39. www.indiantextilejournal.com/content/viewpoint/articles
40. www.emarketer.com/apparel
41. www.textileintelligence.com
44. www.indiantextilejournal.com/content/viewpoint/articles
-----:o:-----
52
Chapter-2
RETAIL FORMATS AND

RETAILERS
2.1 The Evolution of Retail Formats
The origins of retail are as old as trade itself. Barter was the oldest
form of trade. For centuries, most merchandise was sold in market
places by peddlers. Medieval markets were dependent on local
sources of supplies of perishable goods because journeys were far too
slow to allow for long distance transportation. However, customers
did travel considerable distances for specialty items. The peddlers
who provided people with the basic goods and necessities that they
could not be self-sufficient in, followed one of the earliest forms of
retail trade. Even in prehistoric times, the peddler travelled long
distances to bring products to locations which were in short supply.
They could be termed as early entrepreneurs who saw the opportunity
in serving the needs of the consumers at a profit.
For centuries now, India has been operating within her own unique
concept of retailing. Retailing in its initial period was witnessed at the
weekly haats or gathering in a market place where vendors put on
display their produce (goods).Of course, this practice is still prevalent
in many towns and cities in India. Then the market saw the
emergence of the local baniya and his neighbourhood Kirana shop.
These were the common local mummy-daddy or multipurpose
departmental stores, located in residential areas. Such shops stocked
goods with multipurpose utility and were built with the vision of
providing convenience at the doorstep of the consumer.
53
2.2 Unorganized Retail Formats
Unorganized retailing refers to the traditional format of low-cost

retailing, for example, hand cart and pavement vendors and mobile
vendors, the local kirana shops, owner- managed general stores,
paan/beedi shops, convenience stores, hardware shop at the corner of
your street selling everything from bathroom fittings to paints and
small construction tools; or the slightly more organized medical store
and a host of other small retail business in apparel, electronics,etc.
2.2.1 Mom-and-Pop Stores
These are small family-owned businesses, which sell a small

collection of goods to the customers. They are individually run and
cater to small sections of the society. These stores are known for their
high standards of customer service.
2.2.2 Street Vendors
Street vendors, or hawkers who sell goods on the streets, are quite
popular in India. Through shouting out their wares, they draw the
attention of customers. Street vendors are found in almost every city
in India, and the business capital, Mumbai, the number of shopping
areas comprised solely of street vendors. These hawkers sell not just
clothes and accessories, but also local food.
54
2.2.3 Kiosks
Kiosks are box-like shops which sell small and expensive items like
cigarettes, toffees, newspapers and magazines, water packets and
sometimes, tea and coffee. These are most commonly found on every
street in a city and cater primarily to local residents.
2.3 Modern Retail Formats
The retail business operates in a dynamic environment, the changing

customer demand, opening up of markets, technological
developments and ever increasing competition- all affect the retail
business. New retail formats are constantly evolving. The customer,
who needed to go to withdraw cash, may just find an ATM of the
bank at the gas station. Whats more, he can also purchase groceries
and other essential items at the convenience store located there.
The departmental stores may be a comparatively recent phenomenon

in India, with a specially created ambience making shopping an
experimental affair. Indeed, we are even beginning to demand places
where we can avail the luxuries of spending the whole day in one
place, taking advantage of a bouquet of services in which shopping is
only a part. Therefore, you can browse window shop, make
purchases, break off for a meal, take in some entertainment.
This concept of organized retail marketing has caught on like

lightning. It creates a distribution network that cuts out various
intermediary costs and creates a whole smoothen interface between
manufacturer and customer. This organized network which bridges
55
the distance between the manufacturer and the consumer has seen
many of the worlds leading entrepreneurs successfully walk down a
particularly profitable road.
The retail industry is the worlds largest private industry and accounts
for over 8 percent of the GDP in western countries. Now, it is Indias
turn. Today, we stand at the crossroads of a retail revolution. After 50
years of unorganized retailing and fragmented kirana stores with very
basic offerings, fixed prices, zero usage of technology and little or no
ambience the industry has finally begun to move towards
modernization, systematization and consolidation.
Retailers in India like abroad are diverse in forms such as street

vendors to large groups line ABRL, Bharati, Trent, Reliance Retail,
Shoppers, Life style, Future Group, RPG to multiplex chains like
Adlabs, Cinemax, PVR, Inox, FR, or food courts i.e., Blue foods,
SRS, Gigabytes, Spices and vices are few names in long list and
different formats.
The new formats give the customer the choice of picking up a

product, comparing it with others and then taking a decision on
buying. This requires that the products are displayed and packaged
attractively. It also becomes necessary to provide all the information
with respect to price, date of manufacture, weight, expiry, etc on the
product itself to aid decision-making. The world of retail changed,
when in 1995, Amazon.com opened its doors to a worldwide market
on the Web.1
56
Forces Affecting Modern Retail Formats
Dynamic consumers behaviour, consumers demography, retail

attributes and retail marketing strategies affect modern retail formats.2
Dynamic
ccc Consumer
Behaviour
Consumers
Demography
Modern Retail
Formats
Retail
Attributes
Retail Marketing
Strategies
Fig. 2.1: Forces Affecting Modern Retail Formats
Source: Middle-East Journal of Scientific Research 11(4): 482, 2012.
57
2.4 Classification of Retailers
Because there are so many different kinds of retail firms, classifying

them all into one neat system becomes difficult. We can use different
bases for classifying retail firms. Different types of classifications are:
2.4.1 Legal Form
The three basic legal forms of ownership are sole proprietorship,

partnership and limited liability companies (private or public).
Classification of Retailers Based on Legal Form
Limited Company
Proprietorship Partnership (Private or Public)
Fig. 2.2: Classification of Retailers based on Legal Form
2.4.2 Operational Structure
There are three operational structures:
The independent trader (usually operating only one outlet);

The multiple or chain stores;
The co-operatives.
58
Classification of Retailers Based on Operational
Structure
Independent Chain Stores Co-operatives

Traders (Multiples)
Fig.2.3Classification of Retailers based on Operational Structure
2.4.3 Range of Merchandise
Some retail businesses offer a wide range of goods. Examples of

these include variety stores like Marks & Spencer or department
stores like Harrods. Others concentrate on narrow ranges like health
foods; leather goods, greeting cards and these are called specialty
stores or niche-retailers.
Classification of Retailers Based on

Range of Merchandise
Variety Stores Specialty Stores

(Departmental (Niche Retailers)
Stores)
Fig. 2.4 Classification of Retailers based on Range of merchandise
59
2.4.4 Degree of Service
Although many retail outlets have been converted or built to self-

service or self-standards, there are others which offer their consumers
services such as delivery, credit, gift wrapping, repairs, etc. It is
interesting to note that many former self-service retailers are now
looking at ways of gaining competitive advantage by adding new
customer services.
Classification of Retailers Based on Degree

of Services
(Low) (High)
Self Service & Self Large No. of Consumer Services
such as high credit, home delivery,
Selection high involvement of sales staff in
attending customer needs such as
help in selection etc.
Fig. 2.5 Classification of Retailers based on Degree of Services
2.4.5 Pricing Policy
Some retailers choose to emphasize low price rather than the service
element of their retailing mix. Aldi, the German food retailer,
expanded very rapidly in the late 1980s by pricing below the
competition. Others choose to price above competition knowing that
60
they will generate business on the basis of some other attribute such
as convenient location or exclusive image.
Classification of Retailers Based on Pricing
Lower Price High Price

(Discount Stores) (Convenience Stores)
Fig. 2.6 Classification of Retailers based on Pricing Policy
2.4.6 Location
Another way to classify retailers is according to geographic location.

With the increasing cost of town centre sites and traffic congestion,
many retailers have sought edge-of-town locations, whilst others have
preferred to stay in cluster locations in town centres as shown here.
Stand alone stores, Shopping Centres or Complex, Destination stores
and Convenience stores are based on location.
2.4.7 Size of Outlet
The average size of many multiples branches has increased quite

markedly over the past few years as more and more firms become
large and medium-space users. The term superstore has been used to
define outlets between 25,000 and 50,000 square feet and
hypermarkets are those stores over 50,000 square feet. Many outlets
are now being built in the 50,000-100,000 square feet range. The
61
number of superstores and hypermarkets increased from two in 1963
to 400 in 1986 and reached 1000 in 1995.3
Classification of Retailers Based on Size of Outlet
Small Stores Surplus Stores Hyper Markets

(0-25000 Sq. Feet) (25000-50000 Sq. Feet) (Over 50000 Sq. Feet)
Fig. 2.7 Classification of Retailers Based on Size of Outlet
2.4.8 Based on Customer Contact
Most retail transactions are conducted by face-to face contact in retail

stores. However, a significant proportion of retail sales is generated
by non-store retailing operations such as mail order catalogues,
telephone selling, e-retailing, vending machines, door-to-door to
selling or mobile shops.
Some of these categories overlap but they are all important in

specific marketing situations. The conventional and most common
classification of retail organizations based primarily on operational
structure and range of merchandise.
2.5 Types of Retailers Based on Merchandise and Pricing
The earlier classification was based on the range of operation, and

physical characteristics of the stores. Now we can classify stores
62
based on merchandise and pricing mechanism. In Indian context,
these classifications may be new or developing in the form and hence
you cannot distinctly identify a store by these typical classifications.
These are departmental stores, specialty stores and discount stores.
2.5.1 Department Store
A department store is defined as a large store selling:
A broad variety and deep assortment.

Offer considerable customer services and organized into
physically separate departments.
Large department stores have started appearing in Indian scenario like

Shoppers Stop, Vivek & Co. THS, and Globus to name a few. But
they cannot be compared to the departmental stores worldwide. Some
of the US large department stores chains are Sears, J C penny, etc.
Some large departmental store groups own many branches and these
chains are called multiple department stores.
A departmental store is organized into departments selling clothing

and accessories, home furnishings and furniture, toys and games,
consumer durables, and kitchenware.
Some of the characteristics of Department Store are:
Located in central market area of major shopping centre,

locations supported by potentially large catchments.
Availability of parking space.
Freedom for the customer to move around the store and view.
63
Relatively high prices with margins large enough to cover
heavy staffing, the range of services offered and high
accommodation costs.
Provision of a large number of specialized goods in one
location, which allows associated sales.
Availability of personal assistance in shopping, added customer
services and amenities.
Special staff expertise in particular products demonstration.
Wide range of customer services such as delivery, credit, the
making-up of soft furnishing and the provision restaurants,
cloakrooms, telephones, etc.
2.5.2 Specialty Stores
A Specially Store has narrow product line with deep assortment (i.e.,
has more in the same product category) and provides a high degree of
customer service. You will notice that in complete contrast to
Department stores, specialty stores have narrow product line or
narrow variety but deep assortment. It means there are a few products
with a wide variety of range, quality and colour for customers to
choose. This offers customers after selection along with assistance in
selections by stores sales people. Examples of this kind of Indian
context are: Planet M, Music World and many apparel and shoe
stores. Zodiac and Park Avenue (Raymond) are mens specialty store.
A retail store selling a great variety of a particular characteristic group

of merchandise is known as an Emporium (saree emporium, art
emporium, etc).
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2.5.3 Discount Stores
A discount store is a general merchandise retailer that offers broad

variety of merchandise, shallow assortment, limited service and low
price. Discount stores tend to have characteristics such as:
Very low prices (value of money)

Low gross margins.
High degree of self-service (no frills attached)
Low-cost fittings.
No free services, such as delivery
Reliance on heavy advertising in nearby large population
centres.
Relative isolation of locations from conventional shopping
areas with consequently low rents predominantly in edge-of-
town sites (highways).
The dependence is therefore on shoppers requiring:
Good communications
Plenty of parking space
Visibility of the site from some distance.
The examples of discount store chains are Wal-Mart and K-Mart. In

India, so far discount stores have not appeared on retail scene in a big
way. The reasons are three fold. Unlike most western countries,
Indian manufactures have much higher bargaining power with their
retailers. As there are very large number of small retailers and no
retail association with the influence to negotiate with manufacturers.
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The other reason is that retailers themselves do not have economies of
scale to offer discount on their own. In general, merchandise retailing,
factors like MRP-prescribed pricing and single countrywide pricing
policies adopted by most organized vendors deter the growth of
discount stores in the country.
Subhiksha of Chennai was the first chain to adopt discounting as key

strategy. Other food chains and super markets have started offering
discounts but in a limited manner.
Some other forms of discount formats found predominantly in west:
There are discount specialty formats as well they specialize in

a given type of merchandise lines.
There are discount stores (found in the large numbers)
adopting an everyday low pricing strategy and they are known
as an Every Day Low Price (EDLP) format.
A category killer format is a large specialty store featuring an
enormous selection of its product category at relatively lower
prices.
The factory outlet format is owned and operated by the
manufacturer selling their discontinued merchandise, factory
seconds, cancelled orders, etc., at very low prices located in the
adjacency of the factory itself. Some of the textile mills in
Mumbai like Bombay Dyeing and Morarjee have their factory
outlets in the precincts of their factories.
The warehouse format is a large sale of discounted
merchandise by an individual or an organization in the free
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access ambience of a warehouse. This format has a large width
and depth of the multi categories in retails.
A single price denomination format store retails scrambled
merchandise lines at just one price point, which is generally a
low price point. Such retail outlets are famous in the US and
the best example of this format is the Dollar stores spread
across the country. Similar to this are some Indian stores where
every item is Rs. 5 or 15 mainly having plastic toys or hair
clips/bands etc.
2.5.4 Super Markets, Superstores and Hypermarkets
A super market is a self-service food store offering groceries along

with other merchandise for household maintenance and laundry, etc.
and size of under 25,000 square feet. They are relatively large, low-
cost, low-margin, high volume, and self-service stores. Number of
supermarkets has come up in most cities in last few years. A typical
Indian Super Market is about 3000 square feet.
Superstores are large supermarkets of 25,000 plus square feet. A

superstore has space for offering known traditional goods and
services like a pharmacy, a flower shop, a bookstore, a salad bar, a
bakery, etc. under one roof (Nilgiris, Banglore).
A shopping mall is an arrangement of retail stores and other places

for leisure time activities such as dining, entertainment, etc, selected
on their contribution to an overall merchandising plan. A mall is
spread over a large area of more than 200000 square feet and runs as
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an integrated business by an individual or an organization, to which
independent retailers pay for opportunities to participate.
A shopping centre or a plaza is a configuration of five or more tenant

spaces of approximately, 1,000 square feet, each used for retailing
developed under one building plan in such a way to have a unified
character. (Kannaiya shopping centre in Linking Road, Mumbai,
Fountain Plaza, Egmore, Chennai, Basant Lok in Vasant Vihar, ND.
The term hypermarket is reserved for units over 50,000 square feet
selling area or more, retailing groceries, general merchandise goods,
pharmacy, flower shop, photo shop, other concessions, etc. with a
wide variety of merchandise offering in large quantities in each
category selling huge volume at less margins (Ansal Plaza, ND.4
Characteristics of above type of retail formats are:
Substantial surface car parking spaces under the control of the

superstore retailer and serving the superstore largely or
exclusively.
A range of 25,000-30,000 individual items, covering most
foods and many non-foods (the latter may take up 40 per cent
of the total selling area).
A broadly similar pricing, service and general marketing
strategy to the discount store.
The comprehensive in-store use of information technology
such as electronic point-of-sale equipment, and advanced food
preparation equipment, e.g. for in-store bakeries.
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2.6 Types of Retailers Based on Operational Structure
These are types of retailers which include independent traders,

multiple chain stores, cooperative societies, concessionaires, and
franchising. They are different from the merchandise-based store
because they have independent supply mechanisms and hence price
variations are high.
2.6.1 Independent Traders
A single individual or sole trader owns the majority of shops in India.

Even in US more than 90 % of retailers own and operate single stores.
Independents are defined as retail organizations (other than co-
operative societies) with less than ten branches or no branches. The
usual number of branches controlled by the sole trader is one or at the
most two. A family mostly owns this type of retail format with high
dependence on the owner. Kirana shops, drug stores, STD/PCO
outlets etc. are very good examples of such retailers.
As most of retail sales come from unorganized retail (organized retail

being only 2 % of total retail sales), almost 98 % retail sales is
generated by Independents. However, in developed economies,
though there are large numbers of independent traders (over 90 % in
US), their market share is less than 50%.5
Advantages of the Independent Traders
As the owner (management) has direct contact with the

customers and therefore can quickly respond to their needs.
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Independent traders can be very flexible owing to their small
size/small operations.
They are not bound by any bureaucratic rules that may restrict
retail chains or cooperative society managed stores. So, they
can free to locate their store wherever they want and the type of
merchandise they sell.
Disadvantages of the sole trader
Price competition from retail multiples who can reduce their

costs through bulk buying and other economies of scale.
Lack of specialist expertise in retail functions, e.g. buying, in
store merchandising, accounting, or possibly lack of time to
carry them out adequately. Single store retailers have to rely on
owner-managers capabilities to make broad range of retail
decisions.
The cost of advertisement and promotion is very high for a
single store.
Lack of capital to expand and improve the business. Especially
in case of networking and use of IT for development of
business, the expenditures are too high for a single store.
Inertia-the small trader may not wish to expand because of the
extra problems expansion brings.
Due to high accommodation costs the independent often lacks
the advantage of being in a large shopping centre with heavy
pedestrian traffic generation.
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Changing shopping habits brought about by increased car usage
has concentrated purchase in large well-located one-stop
stores in cities.
2.6.2 Multiple or Retail Chain Stores
The large multiple retail organization is invariably of the join-stock

company type (either private or public) and therefore in common
ownership with a degree of centralized control. A large multiple is
defined as an organization (other than co-operative) with ten or more
branches. This form is strongest in department stores, specialty stores,
variety stores, food stores, drug stores etc. Their size allows them to
buy in large quantities at lower prices, and they can afford to hire
specialists to deal with pricing, promotion, merchandising, inventory
control, etc.
Most chains have well defined management philosophies. Consistent

strategies with reference to store hours, product assortment, prices,
sales personnel, promotion and other policies must be maintained
throughout all branches in order to project a particular image of the
chain. This call for centralized decision making which in turn result in
difficulties for individual units in adapting to local needs of the target
markets. These also limit innovation of individual units.
In India many manufacturer own retail chains, which then sell their
products only. Examples of this kind of are Videocon Plazas, BPL
Gallery, Raymond, Titan Watches, etc.
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Another form of multiple chains is Voluntary Chain. A Wholesaler
sponsored group of independent retailers engaged in bulk buying and
common merchandising is called Voluntary chain.
2.6.3 Co-operative Societies
The Co-operative Movement began in Rochdale in 1844. A co-

operative society is defined as a co-operative retailing organization
trading on co-operative principles, affiliated to the National Co-
operative Movement (through the Cooperative Union) and registered
under the Cooperative Societies Acts. Because many retail co-
operative societies operate branches they are in this respect similar to
multiple chains, but in the form of organization and control they are
in many ways quite different.
The principles of the Movement applicable to retailing are:
Voluntary and open membership

Democratic control; one member one vote
Payment of limited interest on capital
Sahakari Bhandar and Bazar are two leading Mumbai based

cooperative chains. Delhi has couple of large cooperatives. Mother
Dairy of Delhi even distributes fresh vegetable from its milk
distribution centres. Milk cooperatives are believed to have a
substantial 10 percent share of the all India market which is about Rs.
60,000-70,000 crores.
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Another form of cooperative is a Consumer Cooperative, which is a
retail firm owned customer. Such societies can be seen in the
educational campuses etc.
In contrast to cooperative, independent retailers who set up a central

buying organization is called a Retailer Cooperative.
2.6.4 Concessionaire
The stopover store format it one that rides piggyback on another retail
outlet, say a petrol pump. This stopover format is a concession that
offers instant use or ready to eat categories of merchandise.
A Kiosk is one such concessionaire format placed in a mall or a

shopping centre or a bus station, airport, etc. A kiosk is a small
freestanding open pavilion often open on one or more sides used for
information, sales and promotion.
Partnership and alliances for concessions offer a great deal of

opportunity for increasing customer contact, share of mind and share
of heart especially in large formats such as department stores, mall
and hypermarkets. By striking trust, or with complementary
marketers who are concessionaires, a retailer can add convenience,
and broaden his relationship with customers.
In addition to alliances such as McDonalds with Crossroads, Qwikys

with Lifestyle, Ritazza with Shoppers stop, retail ventures are trying
to link with such concessions as travel, information, entertainment,
communication, etc. in order to hit upon that winning signature
configuration.
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2.6.5 Franchising
Franchising is the granting of sole selling rights within a given

geographical area. The franchising company (the franchiser) supplies
equipment and/ or raw materials for a license who either pays a
franchise fee or a percentage of turnover, or contracts to buy supplies
from the franchiser( or a mixture of these methods of payment). The
licensee is also helped in finding a location and is trained in all
aspects of the business. Generally, franchises are distinguished by
three characteristics:
The franchiser owns a trade or service and licenses it to

franchises in return for royalty payments.
The franchiser pays for a part of the system. This is normally in
two parts, one initial fee, which is only a small part of the total
amount. Second, service fee on turnover on monthly or
quarterly basis.
The franchiser provides its franchisee with marketing and
operations systems for doing business.
Franchising is beneficial to both franchiser and franchisee. Benefits

to franchiser are:
Covering new territory.

The franchisees familiarity with community and conditio ns.
Hard work of persons who are entrepreneurs rather than
employees.
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Benefits to franchisee are:
Buying into a proven business with a well known and accepted

brand name,
Receiving support in areas of marketing, advertising, site
selection, training /staffing.
Borrowing money from banks becomes easier.
The most common problems in franchising business are:
Franchiser encroaching on franchises territory by bringing in

another franchisee same locality,
Exaggerated claim of support by franchiser, and
High failure rate.
Franchising is most frequently found in service retailing such as, car

maintenance (Maruti), education (NIIT, APTECH computer centres)
etc.; retail catering (Kentucky Fried Chicken, McDonald), etc.
2.7 Non-store Retailing
2.7.1 Mail Order
Mail order retailing- using the mail to get orders and/or facilitate
delivery- takes several forms as follows:
2.7.2 Mail Order Catalogues
These are mainly of two types- the general merchandise catalogue,

and the specialist catalogue. Much of the selling is done through a
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network of part-time agents who are paid a commission to give on the
things they sell.
The advantages of the general merchandise mail order catalogue to

the customer are:
Free credit
Price stability over the lifetime of the catalogue
Savings in transport fares and petrol
Wide selection of merchandise
2.7.3 Direct Response Advertising
This is the use of advertising in newspapers or magazines to describe

a product and stimulate the customer to write or telephone for it. Most
national newspapers have a Saturday bargain squares section
advertising all manner of postal bargains.
2.7.4 Direct mail
This is the use of advertising literature sent directly to the potential

customer for the purpose of selling goods or services. The Readers
Digest have been particularly successful in selling books in this
manner and records, tapes and collectors pieces are also sold via
direct mail.
2.7.5 Direct Selling
Direct selling that is direct selling of the product by salesman to you

takes several forms as follows:
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2.7.6 Door-to-door Trading
Selling by sales persons is being done to launch new products. A

variety of foodstuffs are also regularly delivered to the doorstep, e.g.
milk, bread, eggs, vegetables. Avon cosmetics are sold in this manner.
2.7.7 Mobile Shops
These are travelling shops and are distinct from which milk, bread,
news papers etc. are delivered. Vegetables, plastic toys and other
small goods of house hold use are sold by hand driven carts.
2.7.8 Markets (Haats)
Haats or rural markets remain the traditional way of retailing in rural

and semi-urban India. In these markets, sellers bring their
merchandise on particular day (s) to particular place. Vegetables,
groceries and housed items are sold in this type of markets. Name of
many localities were derived because on a particular day a Haat
would be organised there. For example: Itwara, Budhwara,
Mangalwara etc.
2.7.9 Automatic Vending
Selling out of machines has been part of the retail scene for many
years (particularly for making a local telephone call) and there has
been something of a recent boom in auto-vending, notably in closed,
relatively vandal-proof areas such as sports centres and airports. This
possible limitation reduces the main advantage of the machine in that
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they can be in operation for twenty-four hours a day, seven days a
week. Banks are providing this type of service through ATMs.
2.7.10 Electronic Retailing
Electronic retailing has two formats, namely, television shopping and

on-line computer shopping services.
2.7.11 Retailing through Television
In this retail format customers watch aTV programme demonstrating

merchandise and then place an order over telephone. Major players in
India are Asian Sky Shop, TSN, TVC, Tale brands etc.
2.7.12 Retailing through Internet
In this retail format customers and retailer communicate through an

interactive electronic system (internet). After browsing through and
satisfying himself customer places an order through internet, phone or
by mail. Major retailer in India using this format is Jaldi.com,
Indiainfo.com, and Rediff.com. Amazon.com has established itself as
a major no-store book retailer.
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REFERENCES
1. Amazon.com
2. Middle-East Journal of Scientfic Research
3. Global Retail Development Index
4. retailyatra.com
5. retailindia/asia.com
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Chapter-3
EMERGING TRENDS
IN APPAREL RETAILING
3.1 Influence of Fashion
Fashion has played a key role in shaping apparel consumerism. With

the change in lifestyle, fashion in India is becoming more stratified, as
in the West. Technology, ideas and lifestyles are moving concurrently
and speedily. Companies and brands that offered monotonous,
mundane products for years have now tripled their product ranges and
new appealing shapes and forms are being launched each season. Top
notch professional bodies in fashion trade are now working towards
developing the fashion supply chain through backward linkages with
suppliers and mills, and forward linkages with the retail and
distribution network. In the minds of apparel customers, where they
shop and what they wear are cultural touchstones. Customers define
their identities by the stores where they shop and the brands they
endorse or reject. They project their affinities, their societal status and
their tastes via the clothes they purchase.
However, apparel retailers are confronting the increased pace and

complexity impacting their industry and are challenged to emerge
with a value proposition for their customers. A great deal is changing.
The focus on fast-fashion and constantly rotating styles makes
accurate, timely category and merchandise planning an imperative.
Missing key fashion trends means losing relevancy with consumers.
3.1.1 Indias Fast-Growing Apparel Market
Indias apparel market is in the process of change. Rapid growth and
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rising urbanization have spawned a new class of consumers with
more money to spend, and a growing passion for fashion. In Indias
high-growth, fast-changing retail clothing market, we see significant
new growth opportunities for foreign and domestic players. Indian
apparel sales are expected to reach an estimated $25 billion in 2010,
having grown in excess of 10 percent over the past 5 yearsa growth
rate faster than that of the overall India retail marketand the
trajectory is expected to continue. In India, apparel is the second
largest retail category (behind food and groceries), representing
approximately 10 percent of the total market.1 This growth is being
driven by a number of factors:
3.1.2 Increase in Disposable Income
By 2005, 21 million of Indias 210 million households already

earned more than $4,000 a year, qualifying them for membership in
what we call the consuming class. Based on McKinsey Research
2005, by 2015 the number of consuming class households will likely
triple to 64 million.
3.1.3 New Occasions
As the lifestyles of Indias prospering urban consumers have evolved,

their clothing needs have broadened, reflecting more varied usage
occasions. For men, clothing choices once came primarily in three
basic categories: home-wear, work clothes, and special occasion
wear. Now, with more socializing opportunities, men are buying
more sophisticated combinations of outfits:
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1) Party wear
2) Sports wear
3) Clothes for hanging out at the mall.
Not long ago, for example, men from Indias northern regions only
required a good dark suit or Sherwani, the traditional long coat, to
cover big occasions and important celebrations. But over the past
several years, men have begun to supplement those staples with
expensive Western style jackets, and collared shirtssome in
funky patterns and cut for a night on the town, others in stripes or
checks for casual meetings with important business associates. Today,
Indians are more inclined than consumers in other markets to buy
apparel for a specific purpose. Indeed, 38 percent of Indian
respondents to a recent McKinsey Study2012 said they were highly
likely to buy apparel for special eventsa significantly higher
proportion than in Brazil (5 percent), Russia (3 percent) or China (6
percent). Family celebrations and weddings continue to eat up an
enormous share of Indian consumers clothing budgets.2
3.1.4 Growth in the Womens Segment
Historically, the mens apparel market in India has been significantly

larger than the womens apparel market. With only 20 percent of
Indias urban women in the workforce, womens wardrobes have
traditionally been limited to home wear and items for special
occasions. Now, women are more willing to dress differently when
they venture beyond the hometo shop, for example, or visit a
school or office.
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3.1.5 Fashion Increasingly a Form of Self-Expression
Increasingly, Indian consumers are embracing the idea of fashion for

its own sake, as a means of self-expression, and not merely as a
functional purchase. Television, movies, advertising & Internet
bombard todays Indian consumer with new ideas about style, even as
American-style shopping malls lure them away from traditional
marketplaces. Traditional clothing remains central to the way
consumers dress, and the quality and craftsmanship of classic Indian
clothing have drawn rave reviews in recent years from some of the
worlds leading designers, style magazines, and fashion blogs. In a
recent McKinsey survey of Indian consumers, 62 percent said they
thought it was important to keep up with trends. More than ever,
Indian consumers are experimenting with combining styles, as seen in
the recent Indo-fusion, boom, which mixes the silhouettes of the
East with the comfort cut of the West. Over the next five years, we
expect this growth to continue and the size of the market to nearly
double. The increase will come partly from continued gains in
disposable income, but its not just that Indians have more to spend.
As they prosper, Indian consumers will naturally continue to spend
more of what they earn on what they wear. Our experience suggests
consumers worldwide typically spend an average of 5-6 percent of
total income on apparel, but the figure is often significantly higher in
emerging markets. Consumers in Chinas larger cities, for example,
spend 10 percent of their income on clothing, nearly double what
their counterparts in Indian cities spend. That higher propensity to
spend on clothes has helped to make Chinas apparel market 4-6
times larger than Indias. Brazils consumers similarly spend more
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per capita on clothing than either Indias or Chinas. Besides
continued momentum from the trends mentioned above, we see two
additional forces that will inject further growth into Indias apparel
sector:
3.1.6 Further Urbanization and the Comparative Youth of Indias

Population
At present, just 29 percent of Indias population resides in cities,

among the lowest urbanization rates of any nation in the world.3 But
that has been changing. Over the next 20 years, we expect the number
of Indians living in cities to grow by 300 million, where they will don
new styles and fashions to match new lifestyles. A large percentage of
these new city dwellers will be in their twenties, and making first-
time choices for whole categories of clothing items including denims,
shirts, and even shoes.
3.1.7 Continued Rise of Organized Retail
Large, branded store chains where products are systematically

stocked and displayed, will speed the transformation of consumer
preferences. For now, organized retail accounts for less than 20
percent of all Indian apparel purchases; the rest takes place in tiny,
family-run shops. But over the past five years, scores of shopping
malls have opened on the outskirts of Indias largest cities and the
trend is sure to accelerate. New formats on the scene include export
overrun discounters, international franchises, hypermarkets, and
luxury European boutiques.
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These changes will have far-reaching implications for designers,
manufacturers, and retailers targeting the Indian apparel market.
Spanish fashion giant Inditex (Zara) has announced plans to enter
India. Fast Retailing (Uniqlo) has pegged 2012 for market entry.
But as in the fashion industry everywhere, success in India will

depend on getting many things right at once: figuring out what
consumers want, developing a profitable retail concept, and building a
solid team. How, then, to compete in this promising but fast-changing
market? We see three success factors:
3.1.8 Shape the Category
Winners will innovate occasions, looks, and wardrobes; the focus will
therefore be broader than just building brands. This is already being
done in some areas: over the past three years, for instance, major
jewellery brands have revived a 5,000 year-old sacred day known
as Akshay Tritha, which now accounts for the largest single-day
jewellery sales in India. Similarly, the Friday dressing concept,
introduced by one apparel brand, asked young professionals to buy
brighter colours for Fridays, expanding the wardrobe in the process.
Equally critical will be innovating styles: saree-suits, for example,

and other fusion approaches that simplify otherwise difficult -to-wear
apparel have thus far proven more successful than typical Western
suits and evening dresses.
There is even a place for more cutting-edge trends such as organic

clothing: apparel retailers Van Heusen and Arrow recently launched
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100 percent organic lines made of cotton, linen, and natural dyes.
3.1.9 Focus on Inventory and Markdown Management
Today, apparel is one of Indias most attractive business segments

due to its high margins. Looking at an index based on the cost of a
basic white shirt, we have found that Indian apparel prices have
doubled over the last decade, and tend to be 25 to 30 percent higher
than in China as a result of supply chain inefficiencies and restricted
competition.
Apparel is the most profitable segment of the Indian retail

market today
Category Typical Description

retailer
margins
Food 15-20% More than 80% organized retail in India
is food-however margins are not as high
Apparel 35-50% Highest retailer margins through apparel
The more organized segments like mens
formals provide the highest returns
Electronics 5-10% Household appliances may provide as
much as 8-10%, however categories like
cell phones may be as low as 5-6 %
Table 3.1
Source : McKinsey Research 2012
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We expect that situation to change as Indias fashion industry draws
new players and capital in years to come. For one thing, apparel retail
in India relies heavily on sales promotions and special events.
Tempting as it will be to bring Western concepts like fast fashion
and large assortments to India out of the gate, innovation has its risks,
including higher markdowns and lower sell-through if the new offer
or collection is not a hit. And uncertainty on inventory management
and ordering in the absence of historical sales data is likely to be the
norm. Winners will need to get the back-end operations right much
earlier than the scale of the market suggests: managing margin
through smarter in-season markdowns, a disciplined balance between
core fashion and high fashion, managing inventory through a proper
mix of made-to-order and later engagement rates, and keeping 50 to
60 percent of regularly restocked items at the core have become part
of a winning retail formula. Though optimum margins on these pieces
of clothing may not be as much as the more expensive, high-impact
fashion pieces, they keep customers coming back regularly. The high
fashion range should be advertised and showcased, but kept only to
10 to 15 percent of inventory to reduce the impact of markdowns.
3.1.10 Take a Segmented View of the Market
As in many other emerging markets, not all consumer segments or

geographies are the same. Research, for example, shows that some
segments of apparel shoppers spent 20 times more than others-driven
not only by income, but also by lifestyle. For example, consumers in
the north tend to spend more than in other regions due to cooler
climates and different approaches to social occasions. Similarly,
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retailers cannot ignore the smaller cities, which will drive apparel
growth opportunities, even for more expensive brands. Benetton, for
example, recently hit $100 million in sales in India, and is targeting
$250 million within the next 3-4 years, largely by targeting smaller
cities, which are already contributing about 20 percent to the
companys growth and growing much more quickly than in the larger
markets.4 Winners who want to build real scale in India will be those
who understand the market in a granular manner, and then own the
customer throughout their lifecycle with a portfolio of brands, price
points, and formats.
3.2 The Changing Face of Fashion Industry
India is a country with diversified customs and cultures. People

following various traditions live here, their way of dressing also differ
from each other. The traces of Indians being fashionable can be found
out from the ancient remains of Harappa and Mohenjodaro
civilizations. After the independence, globalization is being witnessed
in the Indian fashion industry, due to which changes have occurred in
the style of Indian dressing.
Styles of wearing saris and salwar-kameez have changed. The look is

more cosmopolitan than region-specific. Different styles of blouses
like, halter neck, back button blouses, high neck blouses, puffed
sleeve blouses, etc. have become the hot favourite among women.
The average lengths of the blouses have decreased. Saris are draped
mostly in traditional back pallo style or gujarati style. Indian fashion
scene is greatly influenced by its films. For example Mumtaz style
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sari draping inspired by yester-year heroine Mumtaz. Here sari is
tightly draped around the body.
As far as salwar-kameez is concerned numerous styles and patterns

can be given to this garment. For instance the kameez can be long,
short, A-line, skin tight, etc. Such variations can be done to salwar as
well as dupattas. Modern version of kameez is known as kurti, it
could be coupled with jeans, pants or churidar. It has taken the form
of Indo-western outfit. People in western countries too have started
wearing kurtis.
3.2.1 Emergence of Mall Culture
Mall culture is slowly and steadily growing in India. Many brands

and private labels are launched in the Indian market. The first such
retail outlet was Shoppers Stop which launched Indias first multi-
brand store in the year 1993.
The specialty of such malls is that they offer a wide range of varied
branded stuff, all under single roof. Some of the famous malls of
India are Pantaloons, Westside, Lifestyle, Globus, etc. These retail
outlets have also launched clothing line under private labels,
manufactured and sold by them. For example- Pantaloons has many
private labels under its brand like All, Fashion station and Mela.
Some of the major private labels even operate as exclusive stores. The
buyer gets an international shopping experience in such retail outlets.
There are no nagging sales persons pressurizing the customers to
buy/purchase.
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Family stores are becoming hot favorite shopping hub for the middle-
class and upper middle class shoppers. These stores sell garments of
nearly all age groups and sexes. Apparels of various brands can be
found in family stores. They are being considered as one-stop
shopping destination. Roopam, Big Bazaar, Fashion station, V-mart,
Maxx, etc are examples of some family stores.
3.2.2 Boutiques
Another aspect seen in the changing face of Indian garment industry

is the increasing popularity of 'Boutiques'. A boutique is a small shop
or departmental store selling designer, unique and trendy products. A
wide range of items can be displayed in a boutique like watches,
eveningwear, sportswear, t-shirts, tuxedos, etc. Boutiques are
generally specialty stores. Exclusive designer items can be purchased
from such stores. High profile designers of India mainly merchandise
through their personal boutiques. However it is not mandatory that
only famous designer open a boutique. Even common person could
do it and make it big in this field. It could be started even with small
investment of money. More and more Indians are inclining towards
designer wear outfits due to increase in income of the people. India's
first boutique was opened in Mumbai in 1965 named 'Dagina' by Mr.
Chandu Morarjee. Boutiques are operated both online and offline, this
concept is yielding positive outcome for the retailers.
The emergence of fashion boutiques started from Mumbai, them

spreading onto Delhi, Chennai and other metropolitan and big cities
of India. Also to support this concept, art galleries came up which
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usually showcase either ready-to-wear or ready-to-stitch garments.
India's first art gallery was opened by Gunvanti Vilji in Mumbai in
1972 under the name 'Aakar art gallery'.
These fashion stores or designer boutiques display items which

cannot be found in common retail malls or shops. These specialty
stores even make customized garments that are made to order. Some
time back only rich and famous people were customers of such
boutiques, but now due to increasing demand of designer outfits more
and more fashions stores are opening up.
A new genre of talented housewife developed who used to design

designer outfits under their own private labels. These are the
designers whose clientele ranges from a common Indians to the
affluent class people.
The next step in retail concept was the surfacing of 'Fashion Houses',
which are headed by eminent designers. Ensemble was the first
fashion house of India founded in 1987. The collections available in
these outlets have very high price tag which could be afforded by the
rich customers only.5
3.2.3 Advent of Brands
The market of branded garments is growing up in India. More and

more people are switching on to branded apparel than non-branded
ones as it provides quality assurance. Liberty shirts were the first
company to sell shirts under its brand name in India during 1950's.
Then there was no looking back for the branded apparel market.
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Many national as well as international brands have established
themselves in Indian garment industry. Allen Solly, Van Heusen,
Louis Philipe, Charagh Din, Raymonds, Arrow, etc. are some leading
national brands. The branded apparel market saw a boost due to
growing denim demand. Many international brands entered the denim
industry in India like- Lee, Levi's, Seven Jeans, Pepe Jeans, etc. But
these foreign brands get a tough competition from Indian branded
denim manufacturers like Flying Machine, Wrangler, Killer, Numero
Uno, etc. Branded clothes have captivated the market of both
menswear and women's wear and slowly catching up in childrenwear
segment. The Indian consumer has become brand conscious which is
a sign of globalization of Indian apparel industry.
3.2.4 Fashion on the Ramp
Displaying clothes through fashion shows is a western concept but

now have become a common fashion event in India. In fashion
catwalk the models display the collection of designers on ramp. In
1932 the first fashion catwalk was organized in India at Taj Mahal
hotel by Catherine Courtney. Fashion catwalk in India was started by
Sylla and Nergish, the Spencer sisters. Now many conceptual, theme
based fashion shows are being held in contrast to simpler forms of
catwalk of yester years.
3.2.5 Beauty Pageants
In India the popularity of beauty pageants have increased, especially

Miss India contests. It has widely influenced the Indian fashion
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scenario. These contests are sponsored by leading companies related
to textile, apparel, fashion and media.
Miss India contest was first held in 1964 which was organized by
Femina group. Reita Faria was the first Miss India to won
international title of Miss World in 1966. She was followed by Zeenat
Amaan winning the crown of Miss Asia-Pacific in 1970. Further the
beauties who made it to the international beauty titles were Sushmita
Sen ( Miss Universe 1994), Aishwarya Rai (Miss World 1994), Diana
Hayden (Miss World 1997), Yukta Mookhey (Miss World 1999),
Lara Dutta (Miss Universe 2000), Priyanka Chopra ( Miss World
2000) and Dia Mirza ( Miss Asia-Pacific 2000). Eminent designers
display their collection through the stunning outfits worn by these
beauties. Indian fashion got international exposure and acclamation
through the medium of such beauty contests.
3.2.6 Budding Designers
Indians have started experimenting with fashion trends and styles;

they are all geared up for the international exposure. This fact can be
proved by the existence of 80 plus odd small and big fashion schools
in India. Thousands of designers are produced every year by these
institutes. Designers are getting exposure through fashion weeks, here
they can show their talent to Indian and foreign audience.
These fashion weeks have contributed to the change in style

preference especially in womens wear. Indo-western or fusion wear
is the most preferred manner of dressing gaining popularity globally.
Pure traditional outfits are worn on special occasions only. Earlier
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buying designer wear outfit was a very costly affair and upper class
people could only afford them. But now it is possible for the common
people to wear designer clothes, this change occurred due to
popularity of diffusion of fashion.
3.3 The Rising Mall Culture
Organized retail in India has undergone sea changes in the post-

liberation era. Malls, a trend pioneered in the west is solely catching
up in the Indian scenario. There are many factors which have spurred
this development. The two more important factors are:
Severe dearth of organized retail.

The necessity to replicate the mall experience of shopping in
countries other than India.
During the initial stages, malls were providing the image benchmarks
for communities. Then the people moving to new suburbs started to
view the emergence of malls in the vicinity of their residences as very
essential for improving the quality of their life and convenience. This
was possible through malls as they provided retail and entertainment
in a controlled internal environment. In fact it can be said that it is
the quality of life factor which has led to the emergence of the mall
culture in India. For instance, in Mumbai one of the largest real estate
developers, C.L.Raheja group, pioneered the mall scene with
Shoppers Stop chain of departmental stores. Hiranandanis is another
example, where they as a real estate developer run the Haiko
Supermarket and The Loft, a shoe shop chain in Powai (Mumbai).
This is in keeping with the global trend where Wal-Mart, the Worlds
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largest retailer is also the largest real estate developer, as they own
most of their stores across the world. This implies that a well
integrated real estate strategy forms a critical part of the Wal-Marts
success story.
The success of Indias first three malls namely, Spenders Plaza in

Chennai, The Asnal Plaza in Delhi and The Crossroads Malls in
Mumbai has given a boost to the market. Simultaneously, Indian
consumers especially the cash rich middle class have changed the
face of retailing, with malls becoming the norm for shopping.
In fact, it is said that organized retail growth is at 35 percent

compared to a 6 percent growth of unorganized retail. On the basis of
a white paper prepared by KSA Technopak, India needs to create at
least 110 million square foot of additional retail space per year on the
prediction of a sustained GDP growth rate of about 6 percent. The
following reasons can be attributed to the growth of malls in India:
A fast growing middle class with higher discretionary income.

It is estimated that the middle class of 300 million will increase
to 520 million in 5 years.
The Indian economy is growing at 6.5 percent per annum
while the population is growing at 1.7 percent per annum.
There will be an increase in the number of double income
households.
Focus on the youth as a target market.
Researchers reveal that consumer spending grew at a rate of 6
percent per annum in the last 10 years.
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Influence of media and marketing communication resulting in
changing aspirations, lifestyle orientation and change in
consumer perceptions about shopping.
Ability of mall developers to make shopping an enjoyable
experience through cost effectiveness, added convenience
along with the fun element put in.
Organized retailers are working at adding value to consumers

shopping experience through malls which provide the right mix of
shopping, eating joints and entertainment. Thus, the end result is a
great and complete shopping experience for the entire family in an
environment, where there is variety and choice. Malls, through value
addition in terms of customer care initiatives, special offer, events and
promotions are able to add to the shopping customers delight.6
3.3.1 Impulse Buying at Malls
It is said that with the rise of the mall format the incidence of impulse
buying has also increased among customers. Academicians define
impulse buying as a form of customer behaviour characterized by
buying goods which are not planned purchases. For example, one
may walk into a mall to buy a pair of high heeled shoes and may
come back with a dress, matching handbag and other unnecessary
accessories but without the high heeled shoes.
It is estimated that a major proportion of sales for malls is through

the impulse purchase account. In a study conducted by J. Jeffrey
Inman of the U.W. Madison A.C. Nielson Center for Marketing
Research and Russell S. Winter of the University of California at
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Berkeley, it was found that unplanned purchase accounted for 68
percent of items bought during major shopping trips and 54 percent of
smaller trips. The study involved studying the shopping behaviour of
4,200 consumers in 14 cities and taking into account 30,000
purchases. This study also indicated that impulse purchase to a great
extent depended upon the in-store display within a store, especially
near the cash counter.
According to retailers, impulse buying does not occur in all product

categories. More often than not impulse purchases get restricted to
purchases of low priced products such as CDs, apparel, and
cosmetics. But, according to Kris lyer, CEO Crossroads, the
definition of inexpensive may also vary from one person to another.
Hence, the products purchased on impulse may also vary from one
person to another. He continues One person may consider an Rs
5,000 CD inexpensive and buy it on impulse, whereas, another person
might consider an Rs 500 CD inexpensive and buy that. According
to Mehul Choksi,Chairman, Gitanjali Group (parent company for Gili
and Ddamas) impulse purchases of branded jewellery especially at
malls, have been at prices ranging anywhere between Rs 5,000 and Rs
50,000. He adds that in the past few years sales of diamond jewellery
have increased from Rs 5000 crores to Rs 20,000 crores. As much of
Rs 2,500 corers can be attributed to impulse purchases.7
Another example is of the Arvind brands, which are available at malls

as well as at standalone stores. This aspect is asserted by Darshan
Mehta, CEO Arvind Brands, who says There is a greater incidence
of our product being picked up at malls as an impulse purchase.Mall
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and brand management calls for employing various strategies to lure
customers to go for impulse purchases.
These strategies include:
Design malls with attractors or anchor tenants and interceptors.

Attractors refer to the large department stores or popular food
chains, strategically located at the four corners of the mall
which draws a lot of footfalls, encourages widow shopping and
can result in impulse buying behavior among consumers.
Use attractive visual merchandise, make point of sale areas and
service covers as focal points, and provide a high level of
service showing concern for customers. Such concerns will
enable the customer to experience carefree shopping, enjoy
quick and efficient customer service, home delivery, gift
wrapping services etc.- all of which can not only include
impulse buying but in the long run even translate into brand
loyalty.
Since impulse buying and unplanned purchases constitute a
large part of sales at malls, many retailers are attempting at
trying innovative methods to increase the incidence of impulse
buying. Moreover, many major brands are opting to include
malls in their distribution network to take advantage of
impulse purchases. In the words of Mehul Choksi, Chairman,
Gitanjali group, Malls have so many footfalls that there is a
greater chance that a shopper who has come to buy a perfume
wanders over to a jewellery booth next door and ends up
buying some jewellery instead. He also believes that since
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malls have major brands, consumers feel confident that the
products available at malls will be of high quality and such
consumer confidence facilitates impulse sales.
3.3.2 Factors Affecting the Success of Malls
Malls are here to stay and with time, they will need to differentiate
themselves and work towards building long lasting relationship with
customers, ensuring repeatability of visit and purchases. Having a
proper mall management system calls for looking into the following:
Manage customers more efficiently by working out retention

programmes.
Use information technology to develop the right information
base on keeping a track of where money is flowing, what is
being sold (i.e. which and brand of goods are selling fast) etc.
to work towards creating a specialty mall. For instance, the
Wedding Mall at Gurgaon.
Install a mall planning software to take care of planning and
analysis of revenue to provide and support proper management.
Retail space in mall is much more than just a commodity
because of its varied mix, distinct identity and tenant mix. This
differentiating factor providing value propositions to the
consumer can be achieved through proper mall management
and the anchors in the mall. For instance, the same mall is
house for competitors like Shoppers Stop and Lifestyle.
Make shopping in mall a pleasurable experience by providing
tangible as well as intangible benefits to customers. For
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example, The Forum provides tangible and intangible benefits
to its shoppers. Tangible benefits are in the form of parking
space for vehicles, air-conditioning, seating, activities and in
house promotions and mall management. Intangible benefits
include continued service, assistance to consumers and
maintenance of a good tenant mix.
The success of a mall party depends on the presence of other
stores within the mall and especially on the malls anchor
stores. The agglomeration of such stores helps consumers is
attracted to reduce their search costs. Retailers across the globe
agree that consumers are attracted to malls because of the
presence of well known anchor stores. Thus, a large number of
footfalls can result in more sales. Moreover, the anchor stores
not only help to generate mall traffic by increasing sales but
can also help to reduce the cost towards promotions and other
overhead costs for a smaller store. Customers are attracted
toward large stores with established reputations to purchases
products. While, the mall developers can bank on the long
standing reputation of such stores and the benefits it would
create for them in the long run.
Malls need to provide the right mix of organized shopping
stores (in terms of categories and formats), food courts (or
eating joints) and entertainment (games, movies etc.). The
retail space at the mall should be properly planned so that the
end result will be a great and complete shopping experience for
the family in an environment, where there is variety and choice.
The value addition provided at the mall must clearly be
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defined to include customer care initiative, special offers,
events and promotion- to add convenience along with a fun
element to the shopping experience.
Many of the retailers are locating themselves in mall as the latter have
an Advantage of attracting footfalls which helps in reducing their
marketing costs. For, while a retailer on a standalone location may
take about five years to earn good returns, in a mall the retailer is
likely to take only half of that period. Thus, in spite of having to pay a
bit more on rental/lease, the high footfalls in the mall would enable
them to earn higher revenues. Nevertheless, ultimately, the true
success of a mall largely depends on a critical mix of retail, food and
entertainment in an appropriate proposition. For, while shopping at
malls, consumers are seeking variety, convenience and quality.
3.4 Application of Information Technology (IT) In

Apparel Retailing
Information technology has revolutionized every business. It has

entered in every aspect of doing business and retailing is no exception
to it. Even very small retailers use computers for some sort of
information management. Today, retailers need for more information
and that too very fast and better tool to analyse the information
available to make quick and better decisions. Information technology
promises to deliver all these three things that are providing data, as
soon as it is required and tools to process data.
Information Technology is crucial for modern organized retailing.

Without the application of information technology, various core-
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retailing elements like store operations, merchandising, inventory
control simply cannot function in an effective and efficient manner.
IT is also the basis of some key innovations like Supply Chain
Management (SCM), Quick Response (QR) or Efficient Customer
Response (ECR) and Collaborative Planning and Forecasting (CPFR).
3.4.1 Areas Where It Will Have Most Impact
For retailers, main operational areas that can be computerized are:

inventory control, point of sale and analysis, planning and
forecasting, and administration, accounts, and database of customers,
suppliers, etc.
3.4.2 Inventory Control
The basic function of any information system is inventory

classification. For example, a mens clothes specialty store may sell
mens shirts, trousers, suits, ties, socks and other accessories, each
item within a category type carries a barcode that identifies the SKU.
That code or description makes it easier to purchase, receive and
distribute goods. Inventory control begins with ordering the item than
tracking merchandise form the time it is received to the time it is sold.
Inventory control also avoids out of stock and overstocking situations.
Thus always having the merchandise that customers want and not
losing sales. Information system should have these inventory-control
features/characterics.
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3.4.3 Point Of Sale (POS)
Point of sale is a place where computerizing retail business can have

its greatest advantages. Rapid and secure checkout is the first priority
of any retail operation. POS terminals capture the most important
data, the actual sale. This data come handy for leading retailers in
managing merchandise and inventory in a more efficient manner.
3.4.4 Sales Analysis
Sales analysis for retail means, viz., what are the fast mover stocks;
what is not selling; what is your stock position, how many units are
on order and what has been delivered; how many days supplies you
are left with based on past performance or projected sales; do you
need to make any adjustments or corrections etc. Answers to such
questions and many more can be given by a computerized
information system in an instant and many times by depicting graphs,
visuals and statistics.
3.4.5 Planning and Forecasting
Computer with relevant software can assist greatly in planning and

forecasting merchandise with the availability of voluminous data on
past sales, analysis with different variables on micro and macro level
becomes easier. For example, a retailer would like to analyse price
sensitivity of customers or what colours design had been best selling
in the past etc. Such data can be helpful in planning, forecasting,
budgeting and controlling, etc.
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3.4.6 Collaborative Planning, Forecasting and Replenishment
(CPFR)
By aligning forecasts of a retailer and a vendor, CPFR offers the

opportunity to increase in stock positions, gross margins and sales,
while reducing inventory investments and stock-outs. CPFR is based
on managing forecasts and inventory levels on an exception basis,
alerting participating organizations to potential problems, the excess
stock or nearing stock outs, while allowing them to concentrate on
further developing their businesses.
CPFR collaboration requires specific software that will enable data

analysis by exception. CPFR software must allow each company to
set its own exception rules, in order to manage exceptions that have
importance within its organization. The software should be internet-
based to give both retailers and vendors easy access to the data. In
addition, the software must have proven security in order to maintain
information confidentiality throughout the supply chain. Integrity
must be maintained so retailers have access to only their vendors
information. In addition, vendors must be prevented from viewing
other vendors information.
3.4.7 Other Areas of Development
Other areas where most retailers have computerized are; payroll,

accounts, Database of customers, suppliers, return goods details, etc.
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3.5 Essential Requirement of an Information System
3.5.1 Be Simple for Clerks to Operate
The operating system should be simple to understand and easy to

operate by the clerks. Workstations are most commonly used at the
Point of Sale (POS). At the point of sale, the customers bring the item
with a barcode or other inventory label to the POS workstation and
the clerk either types in the product details or scans the barcode; the
correct price is displayed for that item for customer, on that day,
including any promotions like discounts. The transaction is stored and
posted the inventory, customer and vendors and the sales data is
stored and tabulated to be used for summary reports. In this case the
clerk has simply to enter the correct data or use credit card readers,
use bar code readers, cash drawers or receipt printers. These are all
simple tasks and can be learnt with a little training.
3.5.2 Monitor Sales & Inventory Levels Daily
After end-of-day has been posted, a sales summary/restocking report

should be printed, monitoring level of sales and inventory in the store.
This report can be used to re-stock shelves to their stocking levels so
that you know the merchandise is on the floor ready to be sold. It
helps you to spot, if there is a problem with missing merchandise; and
looks for demand, requisitions and sold data, critical items reaching
their critical level and special orders.
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3.5.3 Monthly
At the end-of-month, the system should produce a snapshot of the

month, reporting on: sales, including real sales and costs of sales,
ending inventory levels, number of items received during the month,
zero sold items, etc.
3.5.4 Ease of Creation of New or Computer Recommended

Purchase Orders
While building a Purchase Order (PO) you would like the ability to
add new inventory, view receiving and sales history and view
previous Pos for a given item, the software should have capacity to
allow this. Your computer should offer auto-generated POs based on
pre-determined model stock levels or using seasonal sales data,
critical levels, special order data and average vendor fill time etc.
3.5.5 Electronic Data Interchange (EDI)
Once your purchase order has been created, you may be able to
transfer it directly into your vendors computers through electronic
data interchange. This provides quicker turnaround and vendors
chance of errors (nobody at the vendor location has to type in your
data). EDI is becoming increasingly important as businesses are
embracing new technology.
3.5.6 Comprehensive Information Receiving
One can expect comprehensive information and data transfer through

the network; such as update the inventory, send information to
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accounts payable and print the price tags for the merchandise, co-
relate with the PO, etc.
3.6 Enterprise Resource Planning (ERP)
Most leading retailers internationally have adopted ERP solutions.

These are of two types: packaged solutions like SAP and People Soft
that run a suite of integrated applications and the more specialised
retail software providers which partner other leading edge software
vendors to offer suite applications. These include JDA; Retek and
Essentus.These players cover the vertical aspect and all the functions
in a chain, from warehouse to distribution, front and back office store
system and merchandising. Broadly, the goals of an ERP
implementation include reducing the cost of operation, closing books
faster, improving cash management, global financial management and
better decision making for national and global operations. In the
entire ERP scenario, the organizations no longer feeds in the data
required to process the information. SAP, JDA and Baan are the key
international players in India, in application software for retail. While
SAP and Baan are ERP software, JDA is specialized ERP software.
India is yet to develop to accommodate such packages in its system of
retail business today.
3.7 New Trends in IT Applications in Retailing
New developments have taken place with number of software

available for effective and efficient management of retail business.
These software and system designed for large retail outlets, chain
stores and firms. They need to be suitably customized to our
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demands, in addition to training of employees in use of these software
and system.
3.7.1 Web Enabled System
The Internet has had an impact on virtually all businesses. Therefore,

this could be hottest trend of them all. Web enabled system can
provide suppliers access to Point of Sale (POS) data. This is the basis
of CPFR, a development that is on top of management focus charts
for global majors.
3.7.2 Data Mining Tools
Retailing business is data intensive. Large retailers carry huge variety

of merchandise and cater to millions of customers. The reams of data
generated, if analyzed effectively, can result in significant turnaround
in customer demand analysis, assortment optimization, demand
forecasting. Leading retailers will increasingly use data mining
software to make sense software to make sense of the mountain of
data their system generates.
3.7.3 New LAN/ WAN Tools and Strategies
Retailing is a classic example of hub and spoke operation. Such

business needs networking. Using Asynchronous Transfer Mode
(ATM) networking technology, retailers can create proprietary
networks for high-speed data, voice and video transfer. Over these
networks, they can send graphic advertising files, Lotus Notes, e-
mails large volume of POS data, and ad hoc SQL data requests.
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3.7.4 Interactive Kiosks
At Florsheim Express, a customer can use an interactive kiosk to

make his choice. The kiosk has a database of all the designs the store
can supply. It also has a search facility based on price or type of shoe.
The customer can place his order from this selection. The orders are
sent by the local store to Florsheim, which ships the merchandise
directly to the customer. End result: Florsheim can effectively reduce
inventory at retail point.
At Circuit City, leading consumers durables chains in the USA,

interactive kiosks provide assemble to order facility to computer
customers. Customers can also specify whether they would like to
have the computer delivered to their home or to the stores.
3.7.5 Self-Scanning for Faster Processing
Symbol Technologies Portable Shopping System (PSS) is being used

by Sams Club, Kroger and Costco in the USA and Sainburys and
Safeway in the UK.The customer first unlock the scanner by inserting
a store card or credit card into the scanner to remove it from it locked
position. The items can now be scanned. A receipt is printed after the
scanning is over. The customer then takes the receipt to the cashier
and pays for his purchases. Self-scanning increased customer loyalty,
though there can be issues about shrinkage.
3.8 The Need for Product Identification
A typical retail store offers at least a few hundred units of products to

the consumer. In order to keep track of what has been sold and to be
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able to re-order products, the retailer needs to know the quantities, the
types, colours, sizes and other characteristics of the product sold. It is
not humanly possible to remember all these varieties over a period of
time. Even if attempted, it is a time consuming exercise and could be
error ridden. Thus, a need was felt for developing a machine readable
system which could help identify the product across various retail
locations and provide all information associated with it quickly.
The Universal Product Code (UPS) or Barcode as it is popularly

known was developed from this need. While the first barcode patent
was issued in 1952, the retail industry adopted it much later, since to
implement a barcode system, hardware to produce the codes and
software to interpret the information contained in them was required.
Once this was developed, the grocery retailers were the first to adopt
the barcode(UPS).
Barcode is one of the IT tools used for automatic data capture. As

opposed to manual data entry, which is tedious and prone to in
accuracies and errors, bar coding enable data capture with 100%
accuracy and in micro-seconds. Barcodes can be used to represent
information related to product attributes, other supplementary
information like batch number, manufacturing / expiry dates,
consigner/ consignee, etc.
3.9 Radio Frequency Identification (RFID)
Radio Frequency Identification or RFID is fast transforming the way

business is being conducted and monitored across the supply chain.
RFID was invented in 1948, by Harry Stockman, yet it had to wait its
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turn before emerging onto the common market. The interest in RFID
picked up due to initiatives of the retail giant, Wal-Mart, who has
made it mandatory for its suppliers to tag shipments and goods
coming into distribution centres and stores with RFID tags by 2005,
with an extension into 2006. Metro Group, the worlds fifth largest
retailing firm, is also following the lead of Wal-Mart.
Radio Frequency Identification (RFID) can be described as a wireless

bare code which provides wireless communication between objects
and readers. RFID uses tags or transponders that collect data and
manage it in a portable, chargeable database. It has the ability to
identify and track products and equipment real-time, without contact
or line-of-sight. These tags, unlike bar codes, offer the possibility of
reading, writing, transmitting, storing and updating information.
While there are a great of similarities between the barcode and RFID
tag, the chief differentiation is the level of technology used. Bar
coding scans a printed label with either optical laser or imaging
technology, while RFID scans or interrogates a semiconductor tag
using radio frequency (wireless) technology.
Apart from inventory tracking, this technology enables the retailer to

track the task being performed by the employees within the store and
also enables them to be more productive and responsive to customers
needs by enabling the tracking of customer profiles, transaction
histories, levels of stocks and other data which may affect the actual
sale from taking place. For example, a customer selects the last of a
particular item on the store shelf; a restock notice instantly on a sales
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associate work pad; a nearby digital display promotes a likely
substitute purchase to the customer; and the customers profile is
updated to include the new purchase. This new data then impacts
future actions and reactions.
3.10 E- Commerce or E- Tailing
The rise of the Internet has led to some phenomenal changes in the
way business is conducted in various industries. In retail, it has
opened up a new avenue for retailers to reach out to customers and
suppliers in markets where they do not have a physical presence. It
has presented opportunities for deepening customer relations,
streamlining operations, cutting costs and discovering new sources of
revenue. Electronic commerce includes the online trading of goods
and services and encompasses various trading steps such as online
marketing, ordering, payment and delivery. E-commerce has been
termed as a generic title that describes a range of technologies and
practices that are available to potentially improve the efficiencies of
trading relationships. In the more mature retail markets of the world,
the websites of most of the retailers enable business to be conducted
online. The reasons for the emergence of e-tailing as a viable source
of business, stems from the fact that it can offer a larger basket to the
consumer. For example, the largest book and mortar book store chain-
Barnes and Noble offers 20,000 books at any point of time.
Amazon.com on the other hand, offers 4 million books. It is also one
of the few businesses that allow the consumer to shop at a time and
day suited to him. He can shop 365 days a year, 24 hours a day and 7
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days a week. Electronic retailing may also be looked as a case of
reverse marketing, where consumers seek out products.8
3.11Prevailing Trends in Indian Readymade Garment

Industry
Textile industry in India is widely comprehensive, integrating whole

range of raw material to finished product that includes fiber
manufacturing, spinning, knitting and weaving, and garment
manufacture. Industry provides almost every single aspect:
Raw Material: Cotton, linen, wool, silk and manmade fibers
like viscose, polyester, polypropylene and acrylic. Indian
companies have marked presence in even non-traditional
segments.
Fabric Production: Suiting-shirting, dress material, fabrics for
shorts and trousers, denim, hosiery, fleeces flats and woolen
knits, technical fabrics and so on.
Apparel Production Formalwear, casual wear, active
sportswear, traditional wear, under garments, outerwear, kids
wear, and you name - it produces.
Marie-ups Production: A wide range of bedding, towels, bath,
table mats/linens, kitchen accessories and more.
Additionally, to aid above all there are well established infrastructure,

multi-benefited governmental, political and regulatory system that
would lure foreign investors.
113
In recent years, the readymade garment segment has seen vertical
growth. Accounting nearly Rs. 20,000 cores, this industry is growing
at the rate of 20 percent, with massive visibility and consideration
margins. The largest segment for the readymade garment segment
includes the age-group of 16-35 that is very brand conscious and
gives priority to high quality. Branded readymade garments account
over 21 percent of the readymade garment industry.9
3.11.1 Overview- Indian Readymade Apparel Market
Despite substantial growth comparing to the international

readymade garment market of nearly 183mn USD, the Indian
readymade garment market is still in a budding phase. Due to the
higher introduction cost of brand in India for the foreign players,
domestic players have no fear of any outside competition. The main
obstacle to the organized players is the huge unorganized scenario
of the market. In a move to compete, the organized players have
rolled out their own strategy of standardizing the goods.10
The brands introduced by these major textile players hold much

intrinsic power and high on quality and pricing factors. They present
the inheritance and constancy in the garment piece.
Shiyaram's is venturing into readymade garment to grip the

continuously changing fashion trends. It is becoming a prominent
designer of men's readymade garments and accessories from fabric
manufacturer. The two major unique selling points of the recently
launched Siyaram's brand, Monday to Sunday Dressing would be the
widespread 30,000 retail outlets, where it is selling fabrics and
114
second, the fabric quality that Siyaram's has, which guarantees that
the buyer gets the high quality at a cheaper price.
In accordance of its venture into men's readymade clothing line,

Siyaram's Monday to Sunday Dressing would include casuals, semi-
formals, formals, club wear in the middle and premium segments,
targeting the youth. At first the Monday to Sunday Dressing line
would be introduced in Southern and Western India, and would be
sold through its retail outlets.
The leader in the suiting segment, S. Kumars Nationwide Limited

(SKNL) is the newest to join the rat race. It has launched a brand;
"Belmonte" the exclusivity of the brand is that it is only brand in the
economy section, which brings both fabric and readymade garments
under single label. The brand has been targeted towards the young
group. The brand offers a wide range style with perfect fitting.
The other growing strategy major textile players adapted is

'Acquisition'. Many of companies have used this strategy to dive into
readymade garment segment. Raymond's acquired Colorplus to jump
in casual-wear, adding brands like Raymond's, Parx and Park Avenue.
Opting the similar strategy, Indian Rayon acquired garments division
of Madura Coats, "Madura Garments" and entered the luring apparels
market with the successful brands like Van Heusen, Allen Solly, Peter
England and Louis Philippe. Textile leader, Bombay Dyeing also gets
hold of Proline to dive in the sportswear segment as well as adding
Vivaldi range to its formal menswear.
115
The above initiatives taken by the major brands depicts that the textile
players now started opting strategies to mark their presence in the
readymade garment segment. Their sheer benefits laze in substantial
production capacities, which can launch new products in minimum
lead-time, offering high quality.
Despite the smaller players in the unorganized market are in much

more advantageous situation, in the long run they might lose out. The
following are few problems faced by smaller players:
Smaller Market: There few cities and towns that they can concentrate
on, since these cities holds about 50 percent of the Sec A&B of
population that have a disposable income. As a result, very few
opportunities are there for smaller players.
Limited Capacities: The restriction that these smaller players have is

that they cannot emerge beyond a definite level. Additionally,
inadequate logistics and improper supply chain managements created
huge problems for the smaller players.
Inadequate Logistic & Strength: For advertising and brand building,

these smaller players are forced to extend their reach geographically,
which makes supply chain management more complex. To match
with increasing demand in competitive markets, stress on producing
volumes also increases. To sustain existence these players will have
to inject in more investments to their businesses in the areas of
designing capabilities, brand making and retailing.
116
Insufficient Funds: Funds will be a key restraint for the smaller
players. Funds have to be spawned rapidly in a massively capital
demanding market that is seeing huge volumes of growth.
As per the industry forecasters, the textile majors are planning to take
hold on the readymade garment market by entering into complete
entire value chain. Players that are not making fabrics for kids wear
and sportswear may start producing the same to enter this segment.
The suiting brands are also picking up the trend, with the integrating
fabric and readymade garment under the single brand. S Kumar's
Nationwide Limited takes lead with introducing Belmonte brand in
both fabric and readymade garment apparel. Other players like Mayur
Suitings and Donear are also planning to enter in the readymade
garment market. Arvind Mills is planning with the usual fabric and
Ready Made Garments (RMGs) apparel strategy in the men's casual
wear segment.
Apart from the above-mentioned strategies, there is one more

initiative to rule out in the readymade market that is "foreign
collaborations". Textile Company based in Rajasthan, Banswara
Syntex shake hands with French readymade apparels major
Carreman. It is a joint venture initiative with Carreman Michel
Thierry. The joint venture company is called "Carreman Fabrics.
Mr. Dwarka Das Agarwal ventured in the luring exclusive menswear

segment in 1998, with casual brand TNG. He sensed the global trend
of relaxed cotton casuals was in fashion ever then. Many brands, such
as Black berrys, Freelook, Biba, Stori, Essence, Moustache, Natalia,
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Shapes, Ruff Kids, Koutons, LFC, Upper Class etc. are performing
well in cut throat competition in the readymade garment. A
Hyderabad based player, Priyadarshini Spinning foray the readymade
garment segment by establishing a shirt manufacturing unit at the
Garment Park in Hyderabad. It is also collaborating with local and
international players for marketing its shirts range.
Creation and focusing in the value chain strengthens the smaller

players. The main factors where the brands need more concentration
are designing, production, quality and merchandising. But, the
designing is the most significant of the value chain, which requires
maximum focus. The merchandising is noteworthy factor stage for
the smaller players, as involvement, creation and fabric selection adds
value to the creation. The retailing is also an important factor for the
smaller players. They may face problem if their merchandize remain
for long on retail shelves, since the value of the fashion drops,
resulting increase in inventory costs.
Today, the buyers of readymade garment segment are aware of the

running trends, and demand the newest in fashion and products at a
reasonable cost. At the front position of this evolution are the smaller
players, which private labels that are thoroughly transforming the
dressing way of men, women and children. With the supply chain
limitations eased, organization in real estate markets, and rationale tax
structure, the readymade garment segment has become more lucrative
and it is anticipated that the readymade garment segment will be the
main segment in the next five years.
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3.11.2 Indian Fashion Retail Poised for Big Times
With organized retail developing in India, the fashion apparel

industry is booming with international and domestic brands making
their presence felt not only in the metros but also in smaller towns.
With a dominant presence in malls, markets, stand-alone stores and
other retail outlets, the apparel and textiles industry is one of the
largest selling segments in the retailing sector. With every player
aiming to become a lifestyle brand with the addition of related
segments such as jewelry, cosmetics, watches and health and beauty
among others, the fashion segment as a whole would account nearly
60 per cent of the total retail sector. According to a Technopak
Indian Textile & Apparel Compendium 2010 the total textile and
apparel industry was valued at Rs 327000 crores in 2009 and is
estimated to grow at 11% Compound Annual Growth Rate(CAGR) to
reach Rs 10,32,000 crores by 2020.
With fashion apparels and lifestyle products accounting for around 95

per cent of total sales in department stores, and 70 per cent in
hypermarkets such as Big Bazaar or Spencer's Retail, this segment is
rapidly growing with increasing incomes of the urban population.
Brands in apparel, textiles, jewelry, accessories, footwear, cosmetics
and salons have raised the Indian business parameters higher than
ever before. With a population touching one-and-a-half billion and a
massive consumer class, India is considered as the most preferred
destinations for foreign investments. The Technopak study shows
that men's wear is the biggest segment in apparels estimated at around
Rs 66,300 crores compared to women's wear at Rs 57,745 crores.
119
However, women's wear is growing faster at a CAGR of 12 per cent
and is expected to gain majority share in future. Kids-wear is also
growing rapidly with higher growth in girlswear.11
There are many factors that have helped the fashion industry thrive
over the last decade. The massive spread-out of malls, hyper markets
and supermarkets, mergers and acquisitions that have allowed
international brands to step in, expansion of domestic brands and
retailers along with a boom in premium luxury retail segment have all
helped in the growth story. Indian fashion designers having made a
mark in international ramp shows, improved merchandising and
customer relations by apparel brands have also helped this segment.
Companies such as Madura Garments, Raymond, Levi's, Arvind
Brands etc have all achieved their targets while adding more EBOs,
MBOs and LFS to their retail chains. Having created a strong brand
identity in all their related segments, they have all expanded their
product assortment mix while also increasing their production
capacity year-on-year.
However, if the retail boom is to continue, retailers and brands should

take some factors into account such as collaborative tie-ups with non-
competent services providers and brands, uniform sizing and
personalized services throughout the country. At the same time they
have to concentrate on certain lucrative market segments. Also
organized merchandising format, trained sales personnel, improved
customer relations and EBO's and shop-in-shop system for high-
profile brands is also on the cards. As regards selling techniques, the
brands should offer value-added products and not cash discounts.
120
Women's western wear and children wear is a lucrative segment that
has been booming over the last few years. Many domestic and
international brands are now cashing in on this segment. With women
rapidly taking to western wear even in the smaller cities and increase
of working women with more disposable incomes, this segment is
one of the fastest growing in India today. From economy to premium
players, both domestic and international brands are now realizing the
enormous potential of penetrating deep into the Indian markets and
are reaping in the harvest while it lasts.
3.12 Entry Options for Foreign Players Prior to FDI

Policy
Although prior to Jan 24, 2006, FDI was not authorized in retailing,
most general players had been operating in the country. Some of
entrance routes used by them are:
3.12.1 Franchise Agreements
It is an easiest track to come in the Indian market. In franchising and

commission agents' services, FDI (unless otherwise prohibited) is
allowed with the approval of the Reserve Bank of India (RBI) under
the Foreign Exchange Management Act. This is a most usual mode
for entrance of quick food bondage opposite a world. Apart from
quick food bondage identical to Pizza Hut, players such as Lacoste,
Mango, Nike as good as Marks as good as Spencer, have entered
Indian marketplace by this route.
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3.12.2 Cash and Carry Wholesale Trading
100% FDI is allowed in wholesale trading which involves building of

a large distribution infrastructure to assist local manufacturers. The
wholesaler deals only with smaller retailers and not Consumers.
Metro AG of Germany was the first significant global player to enter
India through this route.
3.12.3 Strategic Licensing agreements
Some foreign brands give exclusive licenses and distribution rights to

Indian companies. Through these rights, Indian companies can either
sell it through their own stores, or enter into shop-in-shop
arrangements or distribute the brands to franchisees. Mango, the
Spanish apparel brand has entered India through this route with an
agreement with Piramyd, Mumbai, SPAR entered into a similar
agreement with Radhakrishna Foodlands Pvt. Ltd
3.12.4Manufacturing and Wholly Owned Subsidiaries.
The foreign brands such as Nike, Reebok, Adidas, etc. that have
wholly-owned subsidiaries in manufacturing are treated as Indian
companies and are, therefore, allowed to do retail. These companies
have been authorized to sell products to Indian consumers by
franchising, internal distributors, existent Indian retailers, own
outlets, etc. For instance, Nike entered through an exclusive licensing
agreement with Sierra Enterprises but now has a wholly owned
subsidiary, Nike India Private Limited.
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3.13 FDI Policy in India
FDI as defined in Dictionary of Economics (Graham Bannock et.al) is

investment in a foreign country through the acquisition of a local
company or the establishment there of an operation on a new
(Greenfield) site. To put in simple words, FDI refers to capital
inflows from abroad that is invested in or to enhance the production
capacity of the economy.12
Foreign Investment in India is governed by the FDI policy announced

by the Government of India and the provision of the Foreign
Exchange Management Act (FEMA) 1999. The Reserve Bank of
India (RBI) in this regard had issued a notification13, which contains
the Foreign Exchange Management (Transfer or issue of security by a
person resident outside India) Regulations, 2000. This notification has
been amended from time to time. The Ministry of Commerce and
Industry, Government of India is the nodal agency for motoring and
reviewing the FDI policy on continued basis and changes in sectoral
policy/ sectoral equity cap. The FDI policy is notified through Press
Notes by the Secretariat for Industrial Assistance (SIA), Department
of Industrial Policy and Promotion (DIPP). The foreign investors are
free to invest in India, except few sectors/activities, where prior
approval from the RBI or Foreign Investment Promotion Board
(FIPB) would be required.
3.13.1 FDI Policy with Regard to Retailing in India
It will be prudent to look into Press Note 4 of 2006 issued by

Department of Industrial Policy and Promotion (DIPP) and
123
consolidated FDI Policy issued in October 201014 which provide the
sector specific guidelines for FDI with regard to the conduct of
trading activities.
a) FDI up to 100% for cash and carry wholesale trading and

export trading allowed under the automatic route.
b) FDI up to 51 % with prior Government approval (i.e. FIPB) for

retail trade of 'Single Brand' products, subject to Press Note 3
(2006 Series)15
c) FDI up is not permitted in Multi Brand Retailing in India.
3.13.2 Prospected Changes in FDI Policy for Retail Sector in

India
The government (led by Dr. Manmohan Singh, announced

following prospective reforms in Indian Retail Sector :
1. India will allow FDI of up to 51 % in "multi-brand" sector.
2. Single brand retailers such as Apple and Ikea, can own 100%
of their Indian stores, up from previous cap of 51 %.
3. The retailers (both single and multi-brand) will have to source

at least 30% of their goods from small and medium sized
Indian suppliers.
4. All retail stores can open up their operations in population

having over 1 million. Out of approximately 7935 towns and
cities in India, 55 suffice such criteria.
124
5. Multi-brand retailers must bring minimum investment of US$
100 million. Half of this must be invested in back-end
infrastructure facilities such as cold chains, refrigeration,
transportation, packaging etc. to reduce post-harvest losses and
provide remunerative prices to farmers.
6. The opening of retail competition (policy) will be within

parameters of state laws and regulations.
7. Finally FDI up to 51% is permitted in multi brand retailing by

the Parliament since December, 2012.
3.14 Single and Multi-Brand Retailing
3.14.1 FDI in Single-Brand Retail
The Government has not categorically defined the meaning of "Single

Brand" anywhere neither in any of its circulars nor any notifications.
In single-brand retail, FDI up to 51 per cent is allowed, subject to
Foreign Investment Promotion Board (FIPB) approval and subject to
the conditions mentioned in Press Note No.316 that (a) only single
brand products would be sold (i.e., retail of goods of multi-brand even
if produced by the same manufacturer would not be allowed), (b)
products should be sold under the same brand internationally, (c)
single-brand product retail would only cover products which are
branded during manufacturing and (d) any addition to product
categories to be sold under "single-brand" would require fresh
approval from the government. While the phrase 'single brand' has not
been defined, it implies that foreign companies would be allowed to
125
sell goods sold internationally under a 'single brand', viz., Reebok,
Nokia, and Adidas. Retailing of goods of multiple brands, even if
such products were produced by the same manufacturer, would not be
allowed / permitted.
Going a step further, we examine the concept of 'single brand' and the
associated conditions:
FDI in 'Single brand' retail implies that a retail store with foreign
investment can only sell one brand. For example, if Adidas were to
obtain permission to retail its flagship brand in India, those retail
outlets could only sell products under the Adidas brand and not the
Reebok brand, for which separate permission is required. If granted
permission, Adidas could sell products under the Reebok brand in
separate outlets.
3.14.2 FDI in Multi-Brand Retail
The government has also not defined the term Multi Brand. FDI in
Multi Brand retail implies that a retail store with a foreign investment
can sell multiple brands under one roof.
In July 2010, Department of Industrial Policy and Promotion (DIPP),

Ministry of Commerce circulated a discussion paper17 on allowing
FDI in multi-brand retail. The paper doesn't suggest any upper limit
on FDI in multi-brand retail. If implemented, it would open the doors
for global retail giants to enter and establish their footprints on the
retail landscape of India. Opening up FDI in multi-brand retail will
mean that global retailers including Wal-Mart, Carrefour and Tesco
126
can open stores offering a range of household items and grocery
directly to consumers in the same way as the ubiquitous 'kirana' store.
The Indian retail sector has predominantly comprised of unorganized

players in the form of locally owned, Mom and Pop stores or the'
kirana' stores as they are known in common parlance, single owner
general stores, paan-shops, convenience stores, hand cart and
pavement vendors, etc. On the other hand, organized retailing
involves trading activities undertaken by licensed retailers, that is,
those who are registered for sales tax, income tax, etc. basically
involving the corporate-backed hypermarkets and retail chains, and
also the privately owned large retail businesses.
However, the tremendous growth prospect of the sector coupled with

successfully established models of organized retail in other Asian
markets such as China has paved the way for the establishment of
organized retail in India as well. In addition to this, a number of
homegrown corporate giants such as Future Group and Aditya Birla
retail have furthered the cause of organized retail by setting up
exclusive outlets across India. Nevertheless, there is still a long way
to go before Foreign Direct Investment (FDI) in Indian Retail can be
realized in its entirety.
The Indian retail is a robust pillar of the economy with a 13 %

contribution to the GDP and employs 6% of the nation's workforce.
According to Indian Brand Equity Foundation (IBEF), the Indian
retail is valued at about US$ 450 billion, expected to grow by 10.2%
in 2011-12. Of this, organized retail only forms 6.5% of the total.
127
Hence, there is enormous scope for expansion through infrastructure
and investment support. Furthermore, while unorganized retail has
been pegged at a rate of 6% annually, organized retail has been
booming at a stupendous growth rate of 35%. In fact, it is expected to
reach 16% to 18% of the total market within the next five years.18
A recent A.T. Kearney annual Global Retail Development Index

(GRDI) 2013 confirmed India as the most attractive market for retail
investment for a third consecutive year. Despite this, the entry for
global retail giants in the form of FDI's has remained more or less
restricted and the government has maintained a tight leash over the
FDI policy in retail, primarily owing to perceived threat posed by
organized retailers on the small scale kirana shop owners.
Though the voices have been growing louder for Multi-Brand FDI to
be permitted for retail, there is still a long way to go before all the
pieces of the jigsaw are put together. For the moment though, the
Indian government aims to take up this case gradually as suggested
by the 2010-11 Economic Survey(Ministry of Finance) report which
states "Permitting FDI (foreign direct investment) in retail in a
phased manner beginning with metros and incentivizing the existing
retail shops to modernize could help address the concerns of farmers
and consumers. FDI in retail may also help to bring in technical
know-how to set up efficient supply chains which could act as
models of development.
There are a multitude of reasons being floated around to prevent the

liberalization of the FDI norms for Indian retail:
128
Primary among these is the concern regarding the kirana stores
as well other locally operated Mom and Pop stores being
adversely affected by the entry of global retail giants such as
Wal-Mart, Carrefour and Tesco. As these brands would come
with advanced capabilities of scale and infrastructure in
addition to having deep pockets, it is argued that this would
result in the loss of jobs for lakhs of people absorbed in the
unorganized sector.
There has also been a debate over the kind of employment that
would be generated as it is assumed that semi-skilled people
would not be absorbed into the system. As majority of the
workforce in India falls in this category, doubts have been
parlayed about the value that would be generated by opening
up the sector.
Fears have also been raised over the lowering of prices of
products owing to better operational efficiencies of the
organized players that would affect the profit margins of the
unorganized players.
Instability surrounding the political arena with a number of
scams of varying magnitudes doing the rounds has also led to a
sense of uncertainty among foreign investors.
Many industry experts though, feel that the reservations against the
introduction of Multi-Brand retail are mostly misplaced. The
successful deployment of 100% FDI in China is a case in point.
Partial FDI in retail was introduced in 1992 in China. Subsequently,
in December 2004, the Chinese retail market was fully opened up to
129
utilize the enormous manpower and wide customer base available that
has led to a rapid growth of the sector. Today, its retail sector is the
second largest (in value) in the world with global retailers such as
Wal-Mart, 7-Eleven and Carrefour comprising 10% of the total
merchandise/goods.
Multi-brand retail, if allowed, is expected to transform the retail

landscape in a significant way:
Firstly, the organized players would bring in the much needed

investment that would spur the further growth of the sector.
This would be particularly important for sustenance of some
of the domestic retailers that don't have the resources to ride
out the storm during an economic slump such as the case with
Vishal, Subhiksha and Koutons, which couldn't arrange for
funds to sustain their growth.
The technical know-how, global best practices, quality
standards and cost competitiveness brought forth through FDI
would augur well for the domestic players to garner the
necessary support to sustain their growth.
Indian has also been crippled by rising inflation rates that have
refused to come within accepted levels. A key reason for this
has been attributed to the vastly avoidable supply chain costs
in the Indian food and grocery sales which has been estimated
to be a whopping US$ 24 billion. The infrastructure support
extended to improve the backend processes of the supply
chain would enable to eliminate such wastages and enhance
the operational efficiency.
130
FDI in multi-brand retail would in no way endanger the jobs
of people employed in the unorganized retail sector. On the
contrary, it would lead to the creation of millions of jobs as
massive infrastructure capabilities would be needed to cater to
the changing lifestyle needs of the urban Indian who is keen
on allocating the disposable income towards organized
retailing in addition to the local kirana stores. These stores
would be able to retain their importance owing to their unique
characteristics of convenience, proximity and skills in
retaining customers. Also, these would be more prominent in
the Tier-II and Tier-III cities where the organized
supermarkets would find it harder to establish themselves.
The numerous intermediaries would be restricted and
therefore, the farmers would get to enjoy a bigger share of the
total market.
FDI in multi-brand retail is therefore a necessary step that needs to be

taken to propel further growth in the sector. This would not only
prove to be fruitful for the economy as a whole but will also integrate
the Indian retail sector with the global retail market. It is not a
question of 'how' it will be done but 'when'.
Amidst opposition from its own allies, government went ahead

implementing its decision to allow FDI in multi-brand retail. Under
the notification relating to FDI in multi-brand retail, multinational
companies can invest up to 51 per cent to open stores in 10 states and
UTs which have so far agreed to implement the decision. The
131
decision to allow Multi brand retailers to open stores rests with the
state governments.
Minimum amount to be brought in by the foreign investor would be

$100 million and outlets may be set up only in cities with a
population of more than 10 lakhs.
India Inc. hailed the government's decision to implement FDI in multi

brand retail and voiced that it will give a strong message to investors
that the government means business and stands firm on its initiatives.
This decision is a right step and will go a long way in capital infusion
and is expected to strengthen the farmer's community.
132
References
1. Ministry of Textile
2. McKinsey&Company
3. Census of India, 2011
4. Economic Times,April 15,2010 Benetton India revenue likely to

touchUS$250m in 4 years
5. www.Fibre2Fashion.com
6. KSA Technopak
7. A.C.Nielson Centre for Marketing Research

8. Data Monitor Global Internet Report
11. Technopak Indian Textile&Apparel Compendium,2010
12. Hemant Batra, Retailing Sector in India Pros Cons 9Nov 30,
2010) http://www.legallyindia.com
13. Notification No. FEMA 20/2000-RB dated May 3, 2000
14. FDI_Circular_02/2010,DIPP
15. http:/siadipp.nic.in/policy/changes/pn3 2006
16. http:/siadipp.nic.in/policy/changes/pn3 2006
17. Discussion Paper on FDI in Multi Brand Retail Trading,

http//dipp.nic.in/discussion Papers/DP FDI Multi Brand Retail
Trading_06July2010
18. India Brand Equity Foundation
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133
Chapter-4
CHALLENGES AND
PROSPECTS
IN
APPAREL RETAILING
4.1 Challenges to Retail Development in India
The retail industry in India is growing at a significant pace. However,

there are several problems faced by the industry. The major
challenges for the sector include:
Retail not being recognized as an industry in India
Lack of recognition as an industry hampers the availability of finance

to the existing and new players. This affects growth and expansion
plans of the industry.
The high costs of real estate
Real estate prices in some cities in India are among the highest in the
world. The lease or sent of the property is one of the major areas of
expenditure, high lease rentals eat into the profitability of a project.
High stamp duties
In addition to high cost of real estate, the sector also faces very high
stamp duties on transfer of property, which varies from state to state.
The presence of strong pro-tenancy laws makes it difficult to evict
tenants. The problem is compounded by problems of clear titles to
ownership, while at the same time as are the legal processes for
settling of property disputes.
Lack of infrastructure
Poor roads, unreliable power supply, lack of adequate warehouses,

etc. hamper the growth of retail industry.
134
Multiple and complex taxation system
The sales tax rates vary from state to state, while organized players
have to face a multiple point control and tax system, there is
considerable sales tax evasion by small stores. In many locations,
retailers have to face a multi point octroi. With the introduction of
Value Added Tax (VAT) in 2005, certain anomalies in the existing
sales tax system causing disruption in the supply chain are likely to
get corrected over a period of time.
The industry is facing a severe shortage of talented professionals,

especially at the middle-management level.
Most Indian retail players are under serious pressure to make their
supply chains more efficient in order to deliver the levels of quality
and service that consumers are demanding.
Lack of adequate infrastructure with respect to roads, electricity and

ports has further led to the impediment of a pan-India network of
suppliers. Due to these constraints, retail chains have to resort to
multiple vendors for their requirements, thereby, raising costs of
products and prices of the products.
The available talent pool does not back retail sector as the sector has
only recently emerged from its nascent phase. Further, retailing is yet
to become a preferred career option for most of India's educated class
that has chosen sectors like IT, BPO and financial services.
Even though the Government is attempting to implement a uniform

value-added tax across states, the system is currently plagued with
135
differential tax rates for various states leading to increased costs and
complexities in establishing an effective distribution network.
Stringent labor laws govern the number of hours worked and

minimum wages to be paid leading to limited f1exibility of operations
and employment of part-time employees. Further, multiple clearances
are required by the same company for opening new outlets adding to
the costs incurred and time taken to expand presence in the country.
The retail sector does not have 'industry' status yet making it difficult
for retailers to raise finance from banks to fund their expansion plans.
Government restrictions on the FDI are leading to an absence of

foreign players resulting into limited exposure to best practices.
Non-availability of Government land and zonal restrictions has made

it difficult to find a good real estate in terms of location and size. Also
lack of clear ownership titles and high stamp duty has resulted in
disorganized nature of transactions.
4.1.1Retail in India - Getting Organized to Drive Growth
Although India has emerged as one of the worlds most attractive

markets, the country is grappling with critical infrastructure and
policy issues. The Confederation of Indian Industry (CII) engaged
A.T. Kearney to conduct research to better understand the challenges
facing organized retail in India today, and to develop specific,
actionable recommendations.
136
The research identified ten over-arching issues, which are widely
experienced by retailers in India:
Underdeveloped supply chain capabilities

Inadequate utilities
IT infrastructure hurdles
Supply base (vendor) hurdles
Inadequate human resources
Limited consumer insights
Taxation challenges
Real Estate hurdles
Insufficient government incentives
Policy challenges
The research also examined these issues across geographies,

specifically for seven states and union territories. Additionally, the
report discusses potential actions that the government and the retail
industry can take to improve the retail climate.
1
4.1.2 Market Overview
The textiles industry accounts for 14 percent of the total

industrial production in India.
At current prices, it accounts for 4 percent of the GDP US$
51.36 billion.
The textiles segment, comprising cotton, wool, silk, manmade
and jute textiles and textile products, has grown by 7.5 percent
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between April and November 2009, as compared to 1 percent
in the same period in 2008.
The industry provides direct employment to more than 35
million people and is the second-largest employment generator
after agriculture.
4.1.3 Market Segments
The textiles and apparel industry can be broadly segmented as:
Yarn and Fibre
Natural fibre and yarn

Manmade fiber and yarn
Processed Fabrics
Woolen textiles
Silk textiles
Jute textiles
Cotton textiles
Readymade Garments (RMGs)
Apparel
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Key Segments of the Textiles Industry2
Process Output
Raw material Cotton, Jute, Silk, Wool
Ginning Fibre
Spinning Yarn
Weaving/Knitting Fabric
Processing Processed Fabric
Garments/ Final Garment/ apparel
Apparel Production
Fig. 4.1
139
Advantage India
Raw Material Production
India has the largest area under cotton cultivation-9 million hectares-
constituting 25 per cent of the worlds total cultivation area. India is
the second-largest producer of silk in the world.
Sourcing Hub
Several international retail giants such as Marks & Spencer are

leveraging India as a key global sourcing destination.
Availability of Skilled Workforce
The industry is the second- largest employment generator after

agriculture. Several centres of excellence are available for
providing an impetus to academics and research in textiles
Favourable Government Policies
Initiatives such as the Technology Upgradation Fund Scheme

(TUFS) and Technology Mission on Cotton (TMC), among
several others, aid the development of the domestic industry
and attract potential investors.
Favourable Climatic Conditions
Coastal regions favour growing and processing because of

availability of optimum humidity. Necessary humidity reduces
shrinkage and rupture in fabrics hence reduces wastage.
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Processed Fabric, RMG and Apparel
Major textile production clusters in India 3
Product State
Woolen knitwear Punjab (Ludhiana)
Handloom, made-ups Haryana (Panipat)
Handblock printing, apparel
Rajasthan (Sanganer)
manufacturing
Hand processing Rajasthan (Jodhpur)
Defence-related textiles Uttar Pradesh (Kanpur)
Powerloom weaving and
Gujarat (Surat)
processing
Cotton hosiery West Bengal (Kolkata)
Powerloom towels and blankets Maharashtra (Sholapur)
Cotton ginning Andhra Pradesh (Guntur)
Home furnishings Kerala (Kannur)
Cotton knitwear Tamil Nadu (Tirupur)
Powerloom, hand loom, home
Tamil Nadu (Coimbatore)
Furnishing
Surgical textiles Tamil Nadu (Madurai)
Table 4.1
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4.2 Investment Opportunities in the Retail Sector
AT Kearney's study on global retailing trends found that India is the least
competitive as well as least saturated of all major global markets. This
implies that there are significantly low entry barriers for players trying to
setup base in India, in terms of the competitive landscape. The report
further stated that global retailers such as Wal-Mart, Carrefour, Tesco and
Casino would take advantage of the more favourable FDI rules that are
likely in India and enter the country through partnerships with local
retailers. Other retailers such as Marks & Spencer and the Benetton
Group, who operate through a franchisee model, would most likely switch
to a hybrid ownership structure.
A good talent pool, unlimited opportunities, huge markets and

availability of quality raw materials at cheaper costs is expected to
make India overtake the world's best retail economies by 2042,
according to industry players.
The retail industry in India, according to experts, will be a major

employment generator in the future. Currently, the market share of
organized modern retail is just over 4 per cent of the total retail
industry, thereby leaving a huge untapped opportunity.
The sector is expected to see an investment of over $30 billion within

the next 4-5 years, catapulting modern retail in the country to $175-
200 billion by 2016, according to Technopak 2012 estimates.
142
On the total organized retail market of Rs 550 billion, the business of
fashion accounts for Rs 300.80 billion, which translates in to nearly
55 per cent of the organized retail segment in the country.
Total fashion sector was estimated at Rs 1,914 billion and forms

about 15 percent of the country's retail market of Rs.12,000 billion.
Commanding such a large chunk of the organized retail business in

India, fashion retailing has indeed been responsible for single-
handedly driving the business of retail in India.4
4.2.1 Reasons Why Retail is Booming?
It has been a two decades since India embarked on an ambitious

economic liberalization programme. Over the last five years, many of
its benefits have manifested themselves and one of the areas where
growth is clearly reflected is retailing.
The latest pronouncements of Finance Minister P Chidambaram about

the sector have fuelled interest in stocks from the segment. Let's turn
the spotlight on the factors that triggered the exponential growth in
the sector.
Primary Reasons
The prime reasons that fuelled this boom include favorable

demographics, rising customer incomes, real estate developments,
especially the emergence of new shopping malls, availability of better
sourcing options - both from within India and overseas and
changing lifestyle.
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These factors have transformed hitherto savings-oriented and
conservative Indian consumers and made them akin to those in
developed markets.
Organized Versus Unorganized
In a sharp contrast to the retail sector in developed economies,

retailing in India - though large in terms of size - is highly fragmented
and unorganized. With close to 12 million retail outlets the country
has one of the highest retail densities worldwide.
Retailers include street vendors, supermarkets, and department stores.

Counter stores, kiosks, street markets and vendors, where the
ownership and management rest with one person are classified as
traditional or unorganized retail outlets.
These formats typically require employees with low skills and

account for around two-thirds of the sector's output. These are highly
competitive outlets, with minimal rental costs (unregistered kiosks or
traditional property), cheap labour (work is shared by family
members) and negligible overheads and taxes.
However, unorganized retailers suffer due to poor shopping

experience and inability to offer a wide range of products and value-
addition due to lack of sourcing capabilities.
The modern Indian consumer is seeking more value in terms of

improved availability and quality, pleasant shopping environment,
financing options, trial rooms for clothing products, return and
exchange policies and competitive prices. This has created a rapidly
144
growing opportunity for organized, modern retail formats to emerge
in recent years and grow at a fast pace.
Inefficiency in the existing supply chains presents further opportunity

for organized players to draw on this large market even as lack of
consumer culture and low purchasing power restricted the
development of modern formats. Migration from unorganized to
organized retail has been visible with economic development in most
countries(including India).
Changing Age Profile and Disintegration of Joint Family
India is witnessing a change in the age and income profiles of its over
1 billion population, which is likely to fuel accelerated consumption
in the years to come. The country is believed to have an average age
of 24 years for its population as against 36 years for the USA and 30
years for China. A younger population tends to have higher
aspirations and spends more as it enters the earning phase. Besides,
the gradual disintegration of the traditional Indian joint family system
has led to nuclearisation of families, which in turn has led to
enhanced demand. Add to this an increasing population of working
women and new job opportunities in emerging service sectors such as
IT-enabled services, retail, entertainment and financial services.
With declining interest rates, the aversion of domestic consumers to

taking loans is also fast disappearing. Growing media penetration is
leading to a convergence of aspirations of various classes of
consumers, bridging the rural-urban divide.
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Growing Disposable Income
More Indian households are getting added to the consuming class

with the growth in income levels. The number of households with
income of over Rs 45,000 per annum is expected to grow from 58
million in 1999-2000 to 81 million by 2005-06.
This large base of households with growing disposable income is

expected to drive demand for organized retail. Of this, 56 per cent
(44. 8 million households) are expected to be concentrated in urban
and sub-urban India.5
Changing income demographics, age profile and macro environment

are visible in the growth in consumption of durables. To cite live
examples, the installed base of cars, cable TV subscribers and cellular
subscribers has increased significantly over the last five years.
In line with predictions made in 2002, organized retailing in India is

well on its way to become a Rs. 35,000 crore market by 2005.
The retailing industry in India estimated at Rs. 930,000 crore (2003-

04) is expected to grow at 5% p.a. In line with predictions made in
2002, organized retailing is well on its way to become a Rs 35,000
crore market by 2005. The size of organized retailing market stands at
RS 28,000 crore in 2004, thereby, making up a mere 3% of the total
retailing market. Moving forward, organized retailing is projected to
grow at the rate of 25-30% p.a. and is estimated to reach over an
astounding Rs 100,000 crore by 2010. Its contribution to total
retailing sales is likely to rise to 9% by the end of the decade.6
146
Currently the fashion sector in India commands a lion's share in the
country's organized retail pie. This is in line with the retail evolution
in other parts of the world, where fashion led the retail development
in the early stages of evolution and was followed by other categories
like food & grocery, durables, etc.
4.2.2 Reasons Why Indian Organized Retail is on the Brink of a

Revolution?
The last few years have seen rapid transformation in many areas like:
Scalable and profitable retail models are well established for

most of the categories
Indian consumers are rapidly evolving and accepting modern
formats overwhelmingly
Retail space is no more a constraint for growth
India is on the radar of global retailers
Suppliers/brands are willing to partner with retailers
Scalable and profitable retail models are well established for
most of the categories
Last few years have seen development of the scalable and

profitable retail models across categories. Large Indian corporate
groups like Tata, Reliance, Raheja, lTC, Bombay Dyeing,
Murugappa Group, Piramal Group, etc have expressed serious
interest in investing in retailing. In addition, foreign investors
and private equity players are also firming up plans to identify
investment opportunities in the Indian retail sector. Investments
into the sector are estimated at Rs. 2,000-2,500 crore in the next
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2-3 years, and over Rs. 20,000 crore by the end of 2010. Stocks
in the retail sector are also becoming increasingly attractive from
an investor's point of view. On the strength of the strong industry
dynamics, listed retail companies like Pantaloon and Trent are
trading at twice the levels than what they were at the beginning
of the year. These stocks also enjoy price-earnings ratios (P/E
ratios) and market capitalization-to sales ratios that are
significantly higher than those of even international retailers
indicating the positive investor expectations from these
companies. Successful development of value based concepts
such as Big Bazaar, Giant and Vishal Mega Mart as well as
development of retail space in smaller cities and towns will drive
organized retail into the next level of cities. Small towns with a
population of 5-10 lakh are witnessing a defined increase in
disposable income coupled with high aspirational levels leading
to enhanced spending on consumer goods along with lesser
aversion to credit.
Thus, the 'retail boom', 85% of which has so far been concentrated in
the metros is beginning to percolate down to smaller cities and towns.
The contribution of these tier-II cities to total organized retailing sales
is expected to grow to 20-25%.
Rapid evolution of new-age young Indian consumers
This continuously evolving consumer segment is the youngest in the

world with a median age of 24 as compared to other developed
economies like the USA where the 'baby boom' generation is now
148
nearing retirement. The young Indian consumer is willing to spend on
lifestyle-oriented products and services and aversion to credit is now
a thing of the past. Further, consumers are spending on a wider range
of products and services because of which non-conventional product
categories like cell phone ringtones (estimated at Rs 400 crore) and
Valentine's Day gifts (Rs. 1,500 crore) have evolved in very low time
spans. The promotion of India as a tourist destination has led to
foreign brands wanting to establish presence here. 7
Retail space no longer a constraint
Mall developers across the country are creating superior real estate
options at a frenzied pace. From 35-40 operational malls currently
occupying approximately 6 million sq ft of retail space, India is
expected to have over 200 new malls by 2006-end, thereby adding
retail space to the tune of35-40 million sq ft. Further, by 2010,500-
600 malls occupying approx 120 million sq ft are at various stage of
planning. Of the 200 malls expected to be launched by 2006-end,
about 50% are estimated to come up in 6 metros - NCR, Mumbai,
Bangalore, Kolkata, Hyderabad & Chennai with NCR & Mumbai
alone accounting for almost 60 of these new malls. However, by
2010, mall developments are anticipated to spread across 60 cities in
the country. The fast-paced growth of mall development has been
further fuelled by government authorities like the Delhi Development
Authority (DDA) beginning to release real estate space for retail
development in prime retail areas like Vasant Kunj and Saket in New
Delhi. In fact, DDA made a whopping Rs. 740 crore from the sale of
three plots in Vasant Kunj.
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Many mall developers, in a bid to offer distinctive value propositions,
are planning 'specialty malls'. These niche developments will emerge
as one-stop destinations in their chosen product categories. The
Delhi-based Aerens Group is one such exclusive jewellery mall.
Further, a number of analogous developments like a 'Wedding Mall'
by Omaxe Group, 'Automobile Mall' etc. is also in the offing. In line
with international trends, 'Home Malls' offering the entire range of
building and interior decor solutions are also coming up in various
parts of the country including Gurgaon & Kolkata. Concepts like a
'Toys Mall' exclusively for kids and a 'Factory Outlet Mall' offering
branded apparel at throw-away prices are also popular in developed
economies and are likely to crop up in India.
4.2.3 Disturbing Trends
A disturbing trend is the 'clustering' of a large number of malls in a

relatively small geographical area. A chief example is Gurgaon where
over 20 new malls are likely to become operational in the next two
years. This unhealthy concentration of supply in a suburban zone with
a limited catchment population will lead to mall developers burning
their fingers as their plans are not backed by the requisite planning
and market research.
Malls are likely to be the prime drivers of organized retailing

revolution in the country. This is especially true in the Indian context
as 'destination' high street locations like Fifth Avenue in New York,
Champs Elysees in Paris, Oxford Street in London and Causeway
Bay in Hong Kong are not likely to develop in India due to the lack of
150
appropriate planning of high street shopping centers. High street
locations in India are fraught with problems such as lack of
maintenance of common areas, encumbrances on property, absence of
single ownership and management, parking hassles, general lack of
civic sense, etc. However, as mall developers offer a wide variety of
real estate options to retailers with the assurance of guaranteed
footfalls, retailers are likely to introspect the viability of stores in high
street locations. Further, with the increase in supply, prices are likely
to fall. This will, in effect, induce retailers who had hitherto avoided
high street shopping centers due to the prohibitive lease rentals, to
evaluate establishing presence in these locations. In the long run, both
high street retailing and malls are expected to flourish, each
complementing the other.
4.3 Focus on India: How Competitive is its Textile and

Clothing Industry?
Labour Costs
Hourly labour costs in India are among the lowest in the world. At
only US$0.67 in 2004, they were significantly lower than competitors
in the EU and US markets such as Taiwan (US$7.58), South Korea
(US$7.10), Czech Republic (US$3.94), Turkey (US$2.88), Morocco
(US$2.56), Mexico (US$2.l9), Tunisia (US$2.05), Thailand
(US$1.29), and the Philippines (US$1.12). They were also lower than
in China's coastal region (US$0.76). Admittedly they were higher
than in Indonesia (US$0.55), inland China (US$0.48), Sri Lanka
(US$0.46), Pakistan (US$0.37), Vietnam (US$0.28), and Bangladesh
151
(US$0.28). However, such differences are easily overshadowed by
differences in other costs and productivity levels.8
4.3.1 SWOT Analysis for India: Strengths, Weakness,

Opportunities and Threats
Strengths
India has an abundant domestic raw material supply. It is

number three among the world's raw cotton producers, and is a
significant manufacturer of manmade fibres.
It has a strong and diversified textile manufacturing base.
The country has a large domestic market as well as a large and
rapidly growing consumer market, enabling its manufacturers
to achieve economies of scale labour costs are minimal.
India has a large and growing economy, and one which ranks
as the world's number four in terms of purchasing power parity.
India has a vibrant capital market.
The country has a good strategic location, being close to the
vast South Asian market.
India has a large pool of skilled manpower and one of the
world's largest pools of professionals.
The industry is exempt from customs duty on industrial inputs,
and benefits from corporate tax holidays for 100% EOUs
(export oriented units) and EPZs (export processing zones).
India has a stable parliamentary democracy, unlike many other
low cost suppliers around the world.
The availability of cloth per head in India is growing.
152
The development of IT and communications in India has been
rapid.
India's foreign currency reserves are growing.
Gradual progress is being made on structural reforms.
Industrial cluster formation is taking place in certain cities.
The first fully operational apparel park has opened in Netaji-
Tirupur and more on follow.
India has a number of well recognized textile and fashion
training institutes.
Weaknesses
Much of India's infrastructure is in need of improvement,

including ports, airports, roads, and power.
The garment export industry has a relatively narrow product
base: four products account for over half of exports.
High technology in India is limited to only a few factories.
Too much of the decentralized garment sector is still based on
traditional tailoring.
There are too many small garment units.
India is distant from its two main markets, the United States
and the European Union.
The industry suffers from low productivity and inconsistent
quality.
The industry tends to be inward-looking and resistant to
change, especially in the case of small units.
153
In a survey by the International Textile Manufacturers
Federation (ITMF), India's power costs were found to be the
second highest of seven countries.
Human resources development in the industry has been
neglected.
Textile plants tend to be small in size and low-tech; in
particular, there are insufficient numbers of shuttle-less looms.
The cotton yield in India is low and contamination, high.
Foreign direct investment is discouraged by low labour
productivity, restrictive labour laws, rising costs of imports,
and power and infrastructure bottlenecks.
Labour laws are often weighted towards employees.
Opportunities
India has great potential to vastly increase its exports now that
quotas have been eliminated.
With its low labour costs, India is well-placed to capitalize on
the shift of production to Asia.
The imposition of safeguard quotas against China will provide
India with more scope to expand its share in restricted (and
unrestricted) categories.
The Indian domestic market provides opportunities for
economies of scale.
World fibre consumption continues to increase.
India has the capabilities and infrastructure needed to capture a
slice of the global expansion in technical textiles.
154
According to the ITMF, the Indian industry has a competitive
advantage in raw material and labour cost in yarn and fabric
manufacture.
Threats
India is at risk of being squeezed out of major markets by

Chinese export growth.
Following the end of quotas, the major importing countries are
likely to step up the use of non-tariff barriers by, for example,
insisting that factories comply with environmental and labour
standards.
An increase in anti-dumping and anti-subsidy measures is
likely.
India could face growing competition from regional trade
blocks and preferential trade deals which are designed to
benefit other countries.
The dispute with Pakistan over Kashmir will limit the
opportunities for intra-regional trade between the two countries
and hence opportunities for production synergies.
Chinese government support to exporters makes India's exports
less competitive. Falling prices in the quota-free era could hit
margins.
155
4.3.2 Investment in Textile Machinery
Shuttleless Looms
In the case of shuttleless weaving machinery - the more advanced

technology than shuttle looms- India fares badly. With only 9,210
looms installed at the beginning of 2004, India was dwarfed by
China's 2,11,900 looms, Thailand's 53,500 looms, Indonesia's 29,000
looms and Turkey's 18,000 looms.On the other hand, India acquired
8,586 looms during the ten years to 2004, which was almost as many
as the number installed at the beginning of 2004. This demonstrates
that almost all of its installed capacity is less than ten years old.
4.3.3 Competitive Position of Pakistan
Pakistan has a competitive industry with very low costs, a plentiful

labour supply, and a plentiful raw material supply-including an
indigenos supply of cotton and a vertically integrated industry. It has
established good positions in developed country markets, and has
benefited from government subsidies. In addition, it has received
other government support and is favoured politically by the USA for
its cooperation in the war on terrorism. However, in common with
other countries in South Asia, it suffers from the problems which
arise from being relatively distant from EU markets in comparison
with countries in Eastern Europe and the Mediterranean Rim.
4.3.4 Competitive Position of Bangladesh and Sri Lanka
Bangladesh and Sri Lanka developed as a result of their very low

costs and quota-free and duty-free access to the EU market.
156
Bangladesh also has an indigenous supply of raw cotton. Both have
achieved a strong market position and Sri Lankan exporters have built
up particularly good relationships with European and US buyers. But
neither has special locational advantages and both suffer from a lack
of backward linkages. As a result, lead times and costs are higher than
those achieved by many of their competitors. And since the abolition
of quotas, quota-free access has ceased to be a benefit.
The global textile & apparel industry generated total revenue of USD
1467.5 Billion. The global apparel and accessories industry generated
total revenues of USD 1,098.6 Billion in 2005; equivalent to 74.9% of
the overall industry value. The global textile sector was worth USD
214.7 Billion in 2005, which represented 14.6% of the Industry value
share. The global textile & apparel industry is expected to reach a
value of USD 1,781.7 Billion by the end of 2010.9
India contributes to about 25% share in the world trade of cotton yarn.
India, the world's third-largest producer of cotton and second-largest
producer of cotton yams and textiles, IS poised to play an
increasingly important role in global cotton and textile markets as a
result domestic and multilateral policy reform. Indian textile industry
contributes about 22% to the world spindleage and about 6 % to the
world rotor capacity installed. India has second highest spindle age in
the world after China with an installed capacity of 38.60 Million.
Textile industry contributes about 61 % of the world loomage. Indian

textile industry has the highest loomage (including hand looms) in the
world and contributes about 61 % of the world loomage. It
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contributes about 12% to the world production of textile fibers and
yams. India is one of the largest consumers of cotton in the world,
ranking second to China in production of cotton yam and fabrics and
first in installed spinning and weaving capacity Total consumption of
cotton/ man-made fibers and filament yams is 5,155 Million Kg
(2004-05).
Through export friendly government policies and positive efforts by

the exporting community, textile exports increased substantially from
USD 7.55 Billion in 1993-94 to USD 17 Billion in 2005-06. The
readymade garment sector is the biggest segment in the India's textile
export basket contributing over 46% of the total textile exports.
Exports of cotton based items continue to pre-dominate which is
natural in view that India is the world's third-largest producer of
cotton Exports have grown at an average of 9.47% p.a. over the last
decade. Textiles exports (including Jute, Coir & handicraft): USD
13,065.24 Million (2004-05).10
4.4 Production of Fibres
Strength Post 2005, removal of quota restrictions to give a major

boost. Export target in textile at USD 50 billion by 2010. Low per
capita consumption in India (2.8 vs. Global average of 6.8). Cost
competitiveness.11
Indian companies need to focus on Product Development; Increased

use of CAD to develop designing capabilities; Investing in Trend
Forecasting to enable the growth of industry. The growth
opportunities exist in following areas:
158
Competition in domestic market need to improve the working
conditions of the people who are involved in this profession; Need to
revamp Consumer Consciousness; Tackle Chinese Aggression over
the International Market.12
Setting up Textile lndustries oriented SEZs starting up new courses

like Textile Manufacturing and Textile Technology at ITIs and
Engineering Institutes Liberalized labour laws, tax and other benefits
of a Special Economic Zone need to be implemented ;Access to high
quality and cost-effective manpower; Excellent connectivity by road,
rail, air and ports Single-window clearance.
A Mckinsey study claims retail productivity in India is very low

compared to international peer measures. For example, the labour
productivity in Indian retail was just 6% of the labour productivity in
United States in 2010. India's labour productivity in food retailing is
about 5% compared to Brazil's 14%; while India's labor productivity
in non-food retailing is about 8% compared to Poland's 25%.
Total retail employment in India, both organized and unorganized,

account for about 6% of Indian labor work force currently - most of
which is unorganized, this about a third of levels in United States and
Europe; and about half of levels in other emerging economies. A
complete expansion of retail sector to levels and productivity similar
to other emerging economies and developed economies such as the
United States would create over 50 million jobs in India. Training and
development of labor and management for higher retail productivity
is expected to be a challenge.
159
To become a truly flourishing industry, retailing in India needs to
cross the following hurdles: 13
Automatic approval is not allowed for foreign investment in

retail.
Regulations restricting real estate purchases, and cumbersome
local laws.
Taxation, which favours small retail businesses.
Absence of developed supply chain and integrated IT
management.
Lack of trained work force.
Low skill level for retailing management.
Lack of Retailing Courses and study options
Intrinsic complexity of retailing - rapid price changes, constant
threat of product obsolescence and low margins.
In November 2011, the Indian government announced relaxation of

some rules and the opening of retail market to competition.
4.5 Indian Retail 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:
160
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-liberalization 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;
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 53odd 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$l00 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
161
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.
It is expected to help tame stubbornly high inflation but is likely to be

vehemently opposed by millions of small retailers, who see large
foreign chains as a threat. The need to control food price inflation-
averaging double-digit rises over several years-prompted the
government to open the sector, analysts claims. Hitherto India's food
supplies have been controlled by tens of millions of middlemen (less
than 5% of Indian population). Traders add huge mark-ups to farm
prices, while offering little by way of technical support to help
farmers boost their productivity, packaging technology, pushing up
retail prices significantly. Analysts said allowing in big foreign
retailers would provide an impetus for them to set up modern supply
chains, with refrigerated vans, cold storage and more efficient
logistics.
162
4.5.1 Indian Retail Reforms on Hold
According to Bloomberg, on 3 December 2011, the Chief Minister of

the Indian state of West Bengal, Mamata Banerjee, who is against the
policy and whose Trinamool Congress brings 19 votes to the ruling
Congress party-led coalition, claimed that India's government may
put the FDI retail reforms on hold until it reaches consensus within
the ruling coalition. Reuters reports that this risked a possible dilution
of the policy rather than a change of heart."
India Today claimed that the resistance to Indian retail reforms is

primarily because it has been badly sold, even though it can help fix
the exploitation of Indian farmers by the decades-old "arhtiya" and
"mandi" monopoly system. India Today claims the policy is good for
the small Indian farmer and the Indian consumer.14
Pratap Mehta, president of the Centre for Policy Research, claimed

any U-turn or postponement of retail reforms will cause an immense
loss of face to the Congress-led central government of Manmohan
Singh. The mom-and-pop farmers of India support these reforms. The
consumers of India want the reforms. The government has already
annoyed those who oppose change and innovation in retail. By
putting retail reforms on hold, the government will additionally
alienate much larger segment of Indian population supporting FDI. So
they will now have the worst of both worlds, claims Mehta.
Deepak Parekh, Ashok Ganguly and other economic policy leaders of

India, on 4 December 2011, called placing investment and innovation
in retail on hold for the sake of vested interests as unfair and
163
detrimental to vast majority in India. They urged farmers, consumers
and the common people to raise their voice against this false drama of
apprehension against investment and modernizing trade in organized
retailing. They called upon Indians to come out and strongly support
progressive measures and reforms with the same spirit and gusto with
which we take the liberties to criticize policies we do not appreciate.
Several newspapers claimed on 6 December 2011 that India

parliament is expected to shelve retail reforms while the ruling
Congress party seeks consensus from the opposition and the Congress
party's own coalition partners. Suspension of retail reforms on 7
December 2011 would be, the reports claimed, an embarrassing
defeat or the Indian government, suggesting it is weak and ineffective
in implementing its ideas.
Anand Sharma, India's Commerce and Industry Minister, after a

meeting of all political parties on 7 December, 2011 said, "The
decision to allow foreign direct investment in retail is suspended till
consensus is reached with all stakeholders.
4.5.2 Single-Brand Retail Reforms Approved
On January11, 2012, India approved increased competition and

innovation in single-brand retail. The reform seeks to attract
investments in production and marketing, improve the availability of
goods for the consumer, encourage increased sourcing of goods from
India, and enhance competitiveness of Indian enterprises through
access to global designs, technologies and management practices. In
this announcement, India requires single-brand retailer, with greater
164
than 51 % foreign ownership, to source at least 30% of the value of
products from Indian small industries, village and cottage industries,
artisans and craftsmen.
4.5.3 Social Impact and Controversy with Retail Reforms
The November 2011 retail reforms in India have sparked intense

activism, both in opposition and in support of the reforms.
4.5.4 Controversy over Indian Retail Reforms
A horticultural produce retail market in Kolkata, India; produce loss

in these retail formats is very high for perishables.
Critics of the Indian retail reforms announcement are making one or

more of the following points14:
Independent stores will close, leading to massive job losses.

Wal-Mart employs very few people in the United States. If
allowed to expand in India as much as Wal-Mart has expanded
in the United States, few thousand jobs may be created but
millions will be lost.
Wal-Mart will lower prices to dump goods, get competition out
of the way, become a monopoly, and then raise prices. We have
seen this in the case of the soft drinks industry. Pepsi and Coke
came in and wiped out all the domestic brands.
India doesn't need foreign retailers, since homegrown
companies and traditional markets may be able to do the job.
Work will be done by Indians, profits will go to foreigners.
165
Remember East India Company. It entered India as a trader and
then took over politically.
There will be sterile homogeneity and Indian cities will look
like cities anywhere else. The government hasn't built
consensus.
Supporters claim none of these objections has merit. They claim:16
Organized retail will need workers. Wal-Mart employs 1.4

million people in United States alone. With United States
population of about 300 million, and India's population of
about 1200 million, if Wal-Mart-like retail companies were to
expand in India as much as their presence in the United States,
and the staffing level in Indian stores kept at the same level as
in the United States stores, Wal-Mart alone would employ 5.6
million Indian citizens. Wal-Mart has a 6.5% market share of
the total United States retail. Adjusted for this market share, the
expected jobs in future Indian organized retail would total over
85 million. In addition, millions of additional jobs will be
created during the building of and the maintenance of retail
stores, roads, cold storage centers, software industry, electronic
cash registers and other retail supporting organizations. Instead
of job losses, retail reforms are likely to be massive boost to
Indian job availability.
KPMG - one of the world's largest audit companies - finds that
in China, the employment in both retail and wholesale trade
increased from 4% in 1992 to about 7% in 2001, post China
opening its retail to foreign and domestic innovation and
166
competition. In absolute terms, China experienced the creation
of 26 million new jobs within 9 years; post China announcing
FDI retail reforms. Additionally, contrary to some concerns in
China, post retail reforms, the number of traditional small
retailers also grew by 30% over 5 years.17
India needs trillions of dollars to build its infrastructure,
hospitals, housing and schools for its growing population.
Indian economy is small, with limited surplus capital. Indian
government is already operating on budget deficits. It is simply
not possible for Indian investors or Indian government to fund
this expansion, job creation and growth at the rate India needs.
Global investment capital through FDI is necessary. Beyond
capital, Indian retail industry needs knowledge and global
integration. Global retail leaders, some of which are partly
owned by people of Indian origin, can bring this knowledge.
Global integration can potentially open export markets for
Indian farmers and producers. Wal-Mart, for example, expects
to source and export some $1 billion worth of goods from India
every year, since it came into Indian wholesale retail market.
Wal-Mart, Carrefour, Tesco, Target, Metro, Coop are some of
over 350 global retail companies with annual sales over $1
billion. These retail companies have operated for over 30 years
in numerous countries. They have not become monopolies.
Competition between Wal-Mart-like retailers has kept food
prices in check. Canada credits their very low inflation rates to
Wal-Mart-effect. Anti-trust laws and state regulations, such as
those in Indian legal code, have prevented food monopolies
167
from forming anywhere in the world. Price inflation in these
countries has been 5 to 10 times lower than price inflation in
India. The current consumer price inflation in Europe and the
United States is less than 2%, compared to India's double digit
inflation/price rise.
The Pepsi and Coke example is meaningless in the context of
Indian beverage market. More competition is lacking because
of limited demand. Indian consumer has limited interest in soft
drinks. Soft drinks represent less than 5% of Indian beverage
market, Indian consumer prefers milk-based, tea and coffee and
these account for 90% of Indian beverage market. In these
markets, Coca Cola and Pepsi have plenty of competition. The
next most important market in India is bottled water that
outsells combined soft drink sales of the Pepsi and Coca Cola.
Bottled water, milk, coffee and tea market in India are big
markets, and have plenty of domestic brands, European brands
like Nestle, as well as Pepsi and Coca Cola. Organized retail
too will have numerous brands and strong competition.
Comparing 21st century to 18th century is inappropriate.
Conditions today are not same as in the 18th century. India
wasn't a democracy then, it is today. Global awareness and
news media were not the same in 18th century as today.
Consider China today. It has over 57 million square feet of
retail space owned by foreigners, employing millions of
Chinese citizens. Yet, China hasn't become a vassal of
imperialists. It enjoys respect from all global powers. Other
Asian countries like Malaysia, Taiwan, Thailand and Indonesia
168
see foreign retailers as catalysts of new technology and price
reduction; and they have benefitted immensely by welcoming
FDI in retail. India too will benefit by integrating with the
world, rather than isolating itself.
With 51 % FDI limit in multi-brand retailers, nearly half of any
profits will remain in India. Any profits will be subject to taxes,
and such taxes will reduce Indian government budget deficit.
Many years ago, China adopted the retail reform policy India
has announced; China allowed FOI in its retail sector. It has
taken FOI-financed retailers in China between 5 to 10 years to
post profits, in large part because of huge investments they had
to make initially. Like China, it is unlikely foreign retailers will
earn any profits in India for the first 5 to 1 0 years. Ultimately,
retail companies must earn profits with hard work and by
creating value.
States have a right to say no to retail FOI within their
jurisdiction. States have the right to add restrictions to the retail
policy announced before they implement them. Thus, they can
place limits on number, market share, style, diversity,
homogeneity and other factors to suit their cultural preferences.
Finally, in future, states can always introduce regulations and
India can change the law to ensure the benefits of retail reforms
reach the poorest and weakest segments of Indian society, free
and fair retail competition does indeed lead to sharply lower
inflation than current levels, small farmers get better prices,
jobs created by organized retail pay well, and healthier food
becomes available to more households.
169
Inbuilt inefficiencies and wastage in distribution and storage
account for why, according to some estimates, as much as 40%
of food product doesn't reach consumers. Fifty million children
in India are malnourished. Food often rots at farms, in transit,
or in antiquated state-run warehouses. Cost-conscious
organized retail companies will avoid waste and loss, making
food available to the weakest and poorest segment of Indian
society, while increasing the income of small farmers. Wal-
Mart, for example, since its arrival in Indian wholesale retail
market, has successfully introduced "Direct Farm Project" at
Haider Nagar near Malerkotla in Punjab, where 110 farmers
have been connected with Bharti Wal-Mart for sourcing fresh
vegetables directly, thereby reducing waste and bringing
fresher produce to Indian consumers. Indian small shops
employ workers without proper contracts, making them work
long hours. Many unorganized small shops depend on child
labour. A well-regulated retail sector will help curtail some of
these abuses.
Organized retail has enabled a wide range of companies to start
and flourish in other countries. For example, in the United
States, an organized retailer named Whole Foods has rapidly
grown to annual revenues of $9 billion by working closely with
farmers, delighting customers and caring about the
communities it has stores in.
The claims that there is no consensus are without merit. About
10 years ago, when opposition formed the central government,
they had proposed retail reforms and suggested India consider
170
FDI in retail. Retail reforms discussions are not new. More
recently, retail reforms announced evolved after a process of
intense consultations and consensus building initiative. In
2010, the Indian government circulated a discussion paper on
FDI retail reforms. On July 6, 2011, another version of the
discussion paper was circulated by the central government of
India. Comments from a wide cross-section of Indian society
including farmers' associations, industry bodies, consumer
forums, academics, traders' associations, investors, economists
were analyzed in depth before the matter was discussed by the
Committee of Secretaries. By early August 2011, the consensus
from various segments of Indian society was overwhelming in
favor of retail reforms. The reform outline was presented in
India's Rajya Sabha in August 2011. The announced reforms
are the result of this consensus process. The current opposition
is not helping the consensus process, since consensus is not
built by threats and disruption. Those who oppose current retail
reforms should help build consensus with ideas and proposals,
if they have any. The opposition parties currently disrupting the
Indian Parliament on retail reforms have not offered even one
idea or a single proposal on how India can eliminate food
spoilage, reduce inflation, improve food security, feed the poor,
improve the incomes of small farmers.
171
4.5.5 Opposition to Retail Reforms
Within a week of retail reform announcement, Indian government has

faced a political backlash against its decision to allow competition
and 51 % ownership of multi-brand organized retail in India.
Despite the fact that Salman Khurshid, India's law minister, claiming
that many opposition parties, including the Bharatiya Janta Party, had
privately encouraged the government to push through the retail
reform, the intense criticism now targets Congress-led coalition
government, and its decision to push through one of the biggest
economic reforms in years for India. Opposition parties claim
supermarket chains are ill-advised, unilateral and unwelcome.
The opposition claims the entry of organized retailers would lead to

their dominance that would decimate local retailers and force millions
of people out of work.
Mamata Banerjee, the chief minister of West Bengal and the leader of
the Trinamool Congress, announced her opposition to retail reform,
claiming "Some people might support it, but I do not support it. You
see America is America. . and India is India. One has to see what
one's capacity is."
Other states whose Chief Ministers have either personally announced

opposition or announced reluctance to implement the retail reforms:
Tamil Nadu, Uttar Pradesh, Bihar and Madhya Pradesh.
Chief Ministers of many states have not made a personal statement in

opposition or support of India needing retail reforms. Gujarat, Kerala,
172
Karnataka and Rajasthan are examples of these states. Both sides
have made conflicting claims about the position of chief ministers
from these states.
A Wall Street Journal article reports that in Uttar Pradesh, Uma

Bharti, a senior leader of the opposition Bharatiya Janta Party (BJP),
threatened to "set fire to the first Wal-Mart store whenever it opens;"
with her colleague Sushma Swaraj busy tweeting up a storm of
misinformation about how Wal-Mart allegedly ruined the U.S.
economy and economic system.
On 1 December 2011, an India-wide "bandh" (close all business in

protest) was called by political parties opposite the retail reform.
While many organizations responded, the reach of the protest was
mixed. The Times of India, a national newspaper of India, claimed
people appeared divided over the bandh call and internal rivalry
among trade associations led to a mixed response, leaving many
stores open day-long and others opening for business as usual in the
second half of the day. Even Purti Group, a network of stores owned
and operated by Nitin Gadkari were open for business, ignoring the
call for bandh. Gadkari is the president of BJP, the key party currently
organizing opposition to retail reform.
The Hindu, another widely circulated newspaper in India, claimed the

opposition's call for a nationwide shutdown on 1 December 2011, in
protest of retail reform received a mixed response. Some states had
strong support, while most did not. Even in states where opposition
political parties are in power, many ignored the call for the shutdown.
173
In Gujarat, Bihar, Delhi, Andhra Pradesh, Haryana, Punjab and
Assam the call evoked a partial response. While a number of
wholesale markets observed the shutdown, the newspaper claimed a
majority of kirana stores and neighborhood small shops - for whom
apparently the trade bandh had been called - remained open, ignoring
the shutdown call. Conflicting claims were made by the organizers of
the nationwide shutdown. Contrary to eyewitness reports, one Trader
union's secretary general claimed traders across the country
participated wholeheartedly in the strike.
The political parties opposing the retail reforms physically disrupted

and forced India's Parliament to adjourn again on Friday 2 December,
2011. The Indian government refused to cave in, in its attempt to
convince through dialogue that retail reforms are necessary to protect
the farmers and consumers. Indian Parliament has been dysfunctional
for the entire week of November 28, 2011 over the opposition to retail
reforms especially in multi-brand.
4.5.6 Support for Retail Reforms
In a pan-Indian survey conducted over the weekend of 3 December,

2011, overwhelming majority of consumers and farmers in and
around ten major cities across the country support the retail reforms.
Over 90 per cent of consumers said FDI in retail will bring down
prices and offer a wider choice of goods. Nearly 78 per cent of
farmers said they will get better prices for their produce from multi-
format stores. Over 75 per cent of the traders claimed their marketing
resources will continue to be needed to push sales through multiple
174
channels, but they may have to accept lower margins for greater
volumes /large scale.
4.5.7 Farmer Groups
Various farmer associations in India have announced their support for

the retail reforms. For example:
Shriram Gadhve of All India Vegetable Growers Association

(AIVGA) claims his organization supports retail reform. He
claimed that currently, it is the middlemen commission agents who
benefit at the cost of farmers. He urged that the retail reform must
focus on rural areas and that farmers receive benefits. Gadhve
claimed, "A better cold storage would help since this could help
prevent the existing loss of 34% of fruits and vegetables due to
inefficient, systems in place." AIVGA operates in nine states
including Maharashtra, Andhra Pradesh, West Bengal, Bihar,
Punjab and Haryana with 2,200 farmer outfits as its members.
Bharat Krishak Samaj, a farmer association with more than 75,000
members says it supports retail reform. Ajay Vir Jakhar, the
chairman of Bharat Krishak Samaj, claimed a monopoly exists
between the private guilds of middlemen, commission agents at
the sabzi mandis (India's wholesale markets for vegetables and
farm produce) and the small shop keepers in the unorganized retail
market. Given the perishable nature of food like fruit and
vegetables, without the option of safe and reliable cold storage, the
farmer is compelled to sell his crop at whatever price he can get.
He cannot wait for a better price and is thus exploited by the
175
current monopoly of middlemen. Jakhar asked that the
government make it mandatory for organized retailers to buy 75%
of their produce directly from farmers, bypassing the middlemen
monopoly and India's sabzi mandi auction system.
Consortium of Indian Farmers Associations (CIFA) announced its
support for retail reform. Chengal Reddy, secretary general of
(CIFA) claimed retail reform could do lots for Indian farmers.
Reddy commented, "India has 600 million farmers, 1,200 million
consumers and 5 million traders. I fail to understand why political
parties are taking an anti-farmer stand and worried about half a
million brokers and small shopkeepers." CIF A mainly operates in
Andhra Pradesh, Karnataka and Tamil Nadu; but has a growing
members from rest of India, including Shetkari Sanghatana in
Maharashtra, Rajasthan Kisan Union and Himachal Farmer
Organizations.
Prakash Thakur, the chairman of the People for Environment
Horticulture & Livelihood of Himachal Pradesh, announcing his
support for retail reforms claimed FDI is expected to roll out
produce storage centers that will increase market access, reduce
the number of middlemen and enhance returns to farmers. Highly
perishable fruits like cherry, apricot, peaches and plums have a
huge demand but are unable to tap the market fully because of lack
of cold storage and transport infrastructure. Sales will boost with
the opening up of retail. Even though India is the second-largest
producer of fruits and vegetables in the world, its storage
infrastructure is grossly inadequate, claimed Thakur.
176
Sharad Joshi, founder of Shetkari Sangathana (farmers
association), has announced his support for retail reforms. Joshi
claims FDI will help the farm sector improve critical infrastructure
and integrate farmer-consumer relationship. Today, the existing
retail has not been able to supply fresh vegetables to the
consumers because they have not invested in the backward
integration. When the farmers' produce reaches the end consumer
directly, the farmers will naturally be benefited. Joshi feels retail
reform is just a first step of needed agricultural reforms in India,
and that the government should pursue additional reforms.
Suryamurthy, in an article in The Telegraph, claims farmer groups

across India do not support status quo and seek retail reforms,
because with the current retail system the farmer is being exploited.
For example, the article claims:
Indian farmers get only one third of the price consumers pay
for food staples, the rest is taken as commissions and markups
by middlemen and shopkeepers.
For perishable horticulture produce, average price farmers
receive is barely 12 to 15% of the final price consumer pays.
Indian potato farmers sell their crop for Rs. 2 to 3 a kilogram,
while the Indian consumer buys the same potato for Rs. 12 to
20 a kilogram.
177
4.5.8 Economists and Entrepreneurs
Many business groups in India are welcoming the transformation of a

long-protected sector that has left Indian shoppers bereft of the scale
and variety of their counterparts in more developed markets.
B. Muthuraman, the president of the Confederation of Indian

Industry, claimed the retail reform would open enormous
opportunities and lead to much-needed investment in cold chain,
warehousing and contract farming.
Organized retailers will reduce waste by improving logistics, creating

cold storage to prevent food spoilage, improve hygiene and product
safety, reduce counterfeit trade and tax evasion on expensive item
purchases, and create dependable supply chains for secure supply of
food staples, fruits and vegetables. They will increase choice and
reduce India's rampant inflation by reducing waste, spoilage and
cutting out middlemen. Fresh investment in organized retail, the
supporters of retail reform claim will generate 10 million new jobs by
2014, about five to six million of them in logistics alone.
Organized retail will offer the small Indian farmer more competing
venues to sell his or her products, and increase income from less
spoilage and waste. A Food and Agricultural Organization report
claims that currently, in India, the small farmer faces significant
losses post-harvest at the farm and because of poor roads, inadequate
storage technologies, inefficient supply chains and farmer's inability
to bring the produce into retail markets dominated by small
178
shopkeepers. These experts claim India's post-harvest losses to
exceed 25%, on average, every year for each farmer.
Unlike the current monopoly of middlemen buyer, retail reforms offer

farmers access to more buyers from organized retail. More buyers
will compete for farmers produce leading to better support for farmers
and to better bids. With less spoilage of staples and agricultural
produce, global retail companies can find and provide additional
markets to Indian farmers. Wal-Mart, since its arrival in India's
wholesale retail market, already sources and exports about $1 billion
worth of Indian goods for its global customers.
Not only do these losses reduce food security in India, the study
claims that poor farmers and others loose income because of the
waste and inefficient retail. Over US$50 billion of additional income
can become available to Indian farmers by preventing post-harvest
farm losses, improving transport, proper storage and retail. Organized
retail is also expected to initiate infrastructure development creating
millions of rural and urban jobs for India's growing population. One
study claims that if these post-harvest food staple losses could be
eliminated with better infrastructure and retail network in India,
enough food would be saved every year to feed 70 to 100 million
people over the year.17
Supporters of retail reform, The Economist claims, say it will increase

competition and quality while reducing prices helping to reduce
India's rampant inflation that is close to the double digits. These
supporters claim that unorganized small shopkeepers will continue to
179
exist alongside large organized supermarkets, because for many
Indians they will remain the most accessible and most convenient
place to shop.
Amartya Sen, the Indian born Nobel Prize winning economist, in a

December, 2011 interview claims foreign direct investment in multi
brand retail can be good thing or bad thing depending on the nature of
the investment. Quite often, claims Professor Sen, FDI is a good thing
for India.
4.5.9 Chief Ministers of Indian States
Supporters of retail reform who have voiced the need to promote

organized retail include Chief Ministers of several states of India,
several belonging to political parties that have no affiliation with
Congress-led central government of India. The list includes the Chief
Ministers of Maharashtra, Andhra Pradesh, Tamil Nadu and Gujarat.
In a report submitted earlier in 2011, these Chief Ministers urged the
Prime Minister to prioritize reforms to help promote organized retail,
shorten the retail path from farm to consumer, allow organized retail
to buy direct from farmers at remunerative produce prices, and reduce
farm to retail costs. Similarly, the Chief Minister of Delhi has come
out in support of the retail reform, as have the Chief Ministers of the
two farming states of Haryana and Punjab in north India. The Chief
Ministers of Haryana and Punjab claim that the announced retail
reforms will immensely benefit farmers in their states.
180
The Chief Minister of the state of Maharashtra - the state with the
highest GDP in India and home to its financial capital Mumbai - has
also welcomed the retail reform.
Tarun Gogoi, the Chief Minister of Assam, an eastern state in India,

announcing his support to the retail reform, claimed "this will go a
long way in bringing about a sea change in rural economy. The
decision will boost agriculture and allied sectors, manufacturing,
logistics, integrated cold chains, refrigerated transportation and food
processing facilities in a big way." Criticizing the BJP-organized
opposition, Gogoi claimed that these parties, who had just a few years
ago dubbed opening up retail as good for India, are now singing a
different tune.
4.5.10 Current Supermarkets
Existing Indian retail firms such as Spencer's, Foodworld

Supermarkets Ltd, Nilgiri's and ShopRite support retail reform and
consider international competition as a blessing in disguise. They
expect a flurry of joint ventures with global majors for expansion
capital and opportunity to gain expertise in supply chain management.
Spencer's Retail with 200 stores in India, and with retail of fresh
vegetables and fruits accounting for 55 per cent of its business claims
retail reform to be a win-win situation, as they already procure the
farm products directly from the growers without the involvement of
middlemen or traders. Spencer's claims that there is scope for it to
expand its footprint in terms of store location as well as procuring
farm products. Food world, which operates over 60 stores, plans to
181
ramp up its presence to more than 200 locations. It has already tied up
with Hong Kong-based Dairy Farm International. With the relaxation
in international investments in Indian retail, India's Food world
expects its global relationship will only get stronger. Competition and
investment in retail will provide more benefits to consumers through
lower prices, wider availability and significant improvement in supply
chain logistics.
182
References
1. Ministry of Textile 2008-09 Annual Report.
2. Ernst & Young Research
3. India in the Global Textile Ecosystem 2007 Ernst & Young, CII
4. Technopak Reports, 2012
5. Business Standard
6. KSA Technopak India Retail Report 2005.
7. Technopak Reports, 2012
8. Textile Intelligence Limited(U.K.)
9. Ernst & Young India
10. Compendium of Textile Statistics, 2006.
12. KPMG India.
13. Mc Kinsey & Company.
14. FDI in Multi Brand Retail, Ministry of Commerce.
15. A good retail decision badly sold India Today, 3Dec. 2011.
16. Singh criticism mounts after retail U-turns The Financial Times
4 Dec. 2011.
17. Ministry of Commerce & Industry, GOI.
18. Enter, Farmer with an FDI in retail query Calcutta, India
The Telegraph.
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Chapter-5
ANALYTICAL STUDY
5.1 Sample Size
For the purpose of consistency and accuracy in response the number

of retailers surveyed has been kept 350 across the Lucknow Division
consisting Lucknow District, Hardoi District, Lakhimpur Kheri,
Raebareli, Sitapur and Unnao District.
It is good to have large number of respondents to generate huge

response, but possibility of erring by the data analyst and thereby at
wrong interpretation cannot be ruled out.
The sample has been chosen randomly at the place where retailers
were located. The following table is all about the sample size of
respondents and districts:
Table 5.1
No. of Respondents in Districts
Name of the District Sample Size

Lucknow 100
Hardoi 50
Lakhimpur Kheri 50
Raebareli 50
Sitapur 50
Unnao 50
Total Sample 350
184
5.2 Observations, Findings and Interpretations
5.2.1 Types of Retailers?
A marketplace is a location where goods and services are exchanged.

The traditional market square is a city square where traders set up
stalls and buyers browse the merchandise. This kind of market is very
old, and countless such markets are still in operation around the
whole world.
In some parts of the world, the retail business is still dominated by

small family-run stores, but this market is increasingly being taken
over by large retail chains.
Apparel retailers are basically of two types: local retailers and market
retailers. Local retailers are those who are serving the local
customers. They do their business based on their personal relations
and familiarity among customers.
They have started business with low investment. They employ very
few persons or no persons at all. They act solely to run their business.
Market retailers have made heavy investment. They have
competition with other competitors. They spent a handsome amount
to make their presence in the market.
Observation1. Local retailers are less in numbers as compared to

market retailers. Local retailers are 63 against 287 market retailers.
There is a tendency that they want to move from a particular locality
to market place.
185
Observation2. Local retailers will get winder base to serve by
moving from particular locality to market place. With the growth of
retailing, retail is adopting very innovative retail formats such as
malls, supermarkets, hypermarkets, etc. Apparel marketers are the
linking pin between the designers and their customers. Successful
marketers understand that identifying consumer needs, sturdy
branding, and product image are all essential elements for building an
effective and meaningful marketing campaign. Local Store Marketing
(LSM), also known as neighbourhood marketing, is a marketing that
refers to the application of different variables in a businesss
marketing mix dependent on localized specifications including the
consumer, competition and store characteristics.
Table 5.2
Types of Retailers
District Local Retailer Market Retailer Total

Lucknow 13 87 100
Hardoi 06 44 50
Lakhimpur 11 39 50
Raebareli 13 37 50
Sitapur 16 34 50
Unnao 04 46 50
Total 63 287 350
Source: Primary Data
186
350
300
250
200
Local Retailer
150
Market Retailer
100
50 Total
Market Retailer Local Retailer

Lucnkow
Lucknow
16% 6% 21% Hardoi
12% Hardoi Lakhimpur
30% 25%
Lakhimpur Raebareli
21% 17%
Raebareli Sitapur
13%
15% Unnao
14% Sitapur
10%
Unnao
Figure 5.1
Under present study, 63 local apparel

appa retailers have been surveyed.
287 market
arket retailers have been surveyed.
Local retailers do not have enough resources and aspirations

aspiratio to move
to market places where
wher there is larger scope. They
The have various
constraints
ints such as capital, their scale
scal off operations, high rent, etc.
Local retailerss are doing their business on small scale and content.
They are using
sing their
their infrastructure and family labour
labo to run their
187
outlets. They are operating in the locating where there is no direct
competition.
5.2.2 Amount invested initially?
Investment is essential for any business activity. Small apparel

retailers have started business with small investment.
Every new business owner needs to know the fundamentals. Even the
smallest of shops will require a Rs.1,00,000 initial investment to
cover renovations and that first batch of inventory.
A Vibrant Economy, India topped the list of emerging markets for

retail investments. The apparel industry is fragmented and highly
competitive. There are a number of major players, but there are also
countless niche stores and private companies that cater to specific
demographics. Too, general merchandisers and foreign companies
bring more competition to the sector. Consequently, apparel
companies need to be highly efficient to survive in this cut throat
industry.
Observation1. Small places/ districts need small amount of

investment initilly.
Observation2. Retailers started business with up to Rs. 5 lakhs and 6

to 10 lakhs. They outnumber Rs. 11-50 lakhs and above 50 lakhs.
They are 288 against 62.
Having the right product is also essential. Fashion trends change

frequently, and companies need to adapt to varying consumer tastes
188
quickly. If you love fashion, and are good with people, you can open
up a retail clothing store. Opening your own retail business may look
like an expensive project.
Table 5.3
Amount invested initially?

(Rs. Lakhs)
District Up to 5L 6-10 L 11-50 L Above 50 Total

Lucknow 04 35 54 07 100
Hardoi 11 39 00 00 50
Lakhimpur 15 35 00 00 50
Raebareli 25 25 00 00 50
Sitapur 33 17 00 00 50
Unnao 22 27 01 00 50
Total 110 178 55 07 350
350
300
250
Up to 5L
200
6-10 L
150
11-50 L
100
Above 50
50
Total
0
189
Upto 5 10
6 -10
Lucknow Lucknow
20% 3% 10% 15% 20%
14% Hardoi 9% Hardoi
Lakhimpur Lakhimpur
30% 22%
23% 20%
Raebareli Raebareli
14%
Sitapur Sitapur
Unnao Unnao
11
11-50 Above 50
Lucknow Lucknow
0% 2% 0%
0%
Hardoi Hardoi
Lakhimpur Lakhimpur
98% 100%
Raebareli Raebareli
Sitapur Sitapur
Unnao Unnao
Figure 5.2
Amount of investment depends upon scale of operations,

operations, location of
outlets, etc.
Lucknow Division
ivision has six districts
dis namely-Luc
Lucknow, Hardoi,
Lakhimpur,
akhimpur, Raebareli, Sitapur and Unnao.
Lucknow district is comparatively more

more developed. Here retailers
retailer
need higher amount of capital to start business.
Surveyed data reveal that 110 retailers started business with investing
up to Rs. 5 Lakkhs, 178 opened outlets by investing 6--10 Lakhs which
is highest. Retailers who opened shops by investing 11-50Lakhs are
190
77. Only 7 retailers said that they opened shops by investing above 50
Lakhs.
5.2.3 Dou you deal in?
Apparel is classified into three categories-
Menswear
Womens wear
Kids wear
Some retailers specialize in particular categories. But offering all

categories prove profitable and it helps in promotion as a complete
shop selling everything for everyone.
There are many types of womens apparel, including depresses, social

apparel, suits, outerwear, sportswear and active wear. There are also
specialty categories, such as bridal gowns and maternity clothes.
Observation 1.Most of the sample surveyed sell/deal in all categories

of apparel. 244 outlets sell menswear, womens wear and kids wear.
Observation2. Kids wear does not have many outlets. They are sold
with menswear, womens wear. They are just 12 in sample survey.
Thus we can classify womens wear on the following bases:
Size ranges
Age
Economic status/price
Season
191
Style
Occasion
Garments for children in the commonly acknowledged size ranges

include styling and construction features specifically dedicated to the
clothing needs of that wearer population.
Mens apparel continues to be the largest segment in apparel retail in

India. It has the presence of a large number of international brands.
The childrens wear market is growing rapidly and has seen many
international brands entering India.
Table 5.4
Do you deal in?
District Menswear Womenswear Kidswear All Total
Lucknow 19 37 11 33 100
Hardoi 03 01 00 46 50
Lakhimpur 00 00 00 50 50
Raebareli 06 03 00 41 50
Sitapur 02 02 00 46 50
Unnao 12 09 01 28 50
Total 42 52 12 244 350
192
350
300
250
Menswear
200
Womenswear
150
Kidswear
100
All
50
Total
0
Menswear Womenswear
Lucknow Lucknow
Hardoi 4% 17% Hardoi
29% 45%
Lakhimpur 6% Lakhimpur
0% 71%
5% Raebareli Raebareli
2%
14% Sitapur Sitapur
0% 7%
Unnao Unnao
Kidswear All
0% Lucknow Lucknow
0% 0%
0%
8%
Hardoi
11% 14%
Hardoi
19%
92% 20%
Raebareli Raebareli
Sitapur 17% Sitapur
Unnao Unnao
Figure 5.3
193
Indian shoppers often like to shop at one place. Keeping this in mind
Indian apparel retailers try to sell all categories at one place. In this
study, they are 244 who are selling all categories. There are 42
outlets that are exclusively selling menswear. 52 outlets are selling
womens wear only. There are 12 outlets selling kids wear. There is
tendency to focus specialization as marketing tool. They like to
promote themselves as only for men, ladies or kids, sariwala,
suitwala, etc.
5.2.4 Do you deal in branded apparel?
Use of readymade garments (RMG) has been increasing. This has

also brought the use of branded apparel. Indian companies and
foreign companies are in process bringing more and more brands in
the market.
Economic growth and high disposable income have created

favourable conditions for readymade garments and hence branded
cloths. Apparel tags, labels and specialty trim play an essential role in
todays supply chain. Not only do they promote brand recognition,
communicate important consumer information such as size and price
or point of sale data like the barcode, but they also help protect
against theft and counterfeiting. These elements even can be
combined into one single tag or label as a carrier of a complete
solution.
Observation1.Most of the retail outlets are selling branded apparel.

Those who are selling branded apparel are 327 against 23 of not
selling branded apparel.
194
Observation2. There is an apparent tendency among retailer to sell
branded items.
With the fashion industry moving and changing at lightning speed, it

is most critical than ever for retailers, brand owners and contract
manufacturers to be able to reliably and quickly process the large
amounts of information necessary for apparel labeling.
Today, every product is branded. There is presence of almost all

kinds of global brands in the present market situation. The launches
of more and more brands into the market have increased the demand
of shelf space and hence demand for retail outlets.
Table 5.5
Do you deal is branded apparel?
District Yes No Total
Lucknow 97 03 100
Hardoi 41 09 50
Lakhimpur 50 00 50
Raebareli 49 01 50
Sitapur 40 10 50
Unnao 50 00 50
Total 327 23 350
195
350
300
250
200
Yes
150
No
100
Total
50
0
Yes No
Lucknow Lucknow
15% 0% 13%
12% Hardoi Hardoi
30% 44%
Lakhimpur Lakhimpur
39%
Raebareli Raebareli
15% 13%
15% Sitapur Sitapur
4% 0%
Unnao Unnao
Figure 5.4
There are forces which have increased

increased the use of branded apparel.
apparel
These include high economic
economic growth, high disposable income, high
urbanization, cloth as means of self-expression etc.
327 respondents said that they sell

sell branded apparel against 23 of
those who sell non-branded
non apparel. Readymade
eadymade garments (RMGs))
have been becoming popular day-by-day.
day Theree are big Indian and
foreign players in this segment.
196
Companies manufacturing readymade garments and ready- to- wear
are promoting themselves comprehensively. They have created
awareness among consumers.
5.2.5 Do you face competition from?
Unorganized apparel retailers are those retailers who are not

registered; they do not maintain account; they do not pay taxes etc.
They are operated and managed by family members, say, it is a
family business. As against this, organized retailers are those who are
big in operations and dealings. They are registered and they pay
taxes. They include the corporate backed hypermarkets and retail
chains and also the privately owned large retail businesses. The
emerging trends in fashion retailing help the economic growth in
India. Indian organized retail is increasing with high pace in very
short span of time. Ultimately fashion retailing has a scope of
tremendous economic growth both in India and abroad.
Observation1. Apparel retailers face competition from both

organized and unorganized retailers.
Observation2. There is a move from unorganized to organized

retailing.
The relaxation by the Government on regulatory controls on FDI has

added to the growth of the fashion retail industry. The emergence of
shopping malls is also increasing rapidly in all over India. Change in
consumers behavior towards shopping and lifestyle. Growth in
income levels and emerging new generation customers are supporting
197
the growth of fashion retailing in India. The apparel and textile
industry is Indias largest selling segments of the retailing sector.
Apparel industry has become a lifestyle brand having segments not
only clothing but also fashion
fash accessories jewelries,, watches, etc.
Table 5.6
Do you face competition from?
District Unorganized Organized Both Total

Lucknow 01 54 45 100
Hardoi 00 14 36 50
Lakhimpur 00 08 42 50
Raebareli 00 06 44 50
Sitapur 01 03 46 50
Unnao 00 09 41 50
Total 02 94 254 350
350
300
250
200 Unorganized
150 Organized
100 Both
50 Total
198
Unorganized Organized
Lucknow Lucknow
0% 10%
Hardoi 6% 3% Hardoi
50% 50% Lakhimpur 9% Lakhimpur
57%
Raebareli Raebareli
15%
0% 0% Sitapur Sitapur
Unnao Unnao
0%
Both
Lucknow
16% 18% Hardoi
18% 14%
Lakhimpur
17% 17% Raebareli

Sitapur
Unnao
Figure 5.5
Healthy competition is necessary for

for growth of any industry. Large
part of the apparel retailing is done in unorganized sector.
As far as competition is concerned, respondents replied that they face

competition from both organized and organized sectors. The number
is 254 who said they have competition from both. Emerging
organized retail formats in apparel is giving stiff competition to
unorganized retailers. They, in fact, exist to serve different sets of
customers but in reality they are competitors of each other.
Unorganized retailers
retailers prepare themselves to face competitions and
stand strong in the market.
199
5.2.6 How do your competitors affect you?
Apparel retailers perceive that they have competition from organized

and unorganized retailers. Fashion retailing is flourishing, new
formats of retailing are emerging, etc, and these have reduced the
sales of traditional retailers. To cope up the high competition, they are
also forced to decrease their profit margins. High movement and
connectivity of customers have increased competition among retailers
to sale their products to existing and new customers.
Apparel industry has tremendous product variety, short product life

cycles, explosive and changeable demand, long and stiff distribution
network. The fashion industry has been undergoing transitional shift
over the last 20 years.
To cope with a highly competitive and challenging environment,

retailers are hiring and promoting people with a wide range of skills
and interests. At a first glance, identifying competitors appear easy. A
retailers primary competitors are other retailers using the same
format. Thus, department stores compete against other department
stores and supermarkets against other supermarkets. This competition
between the same types of retailers is called intratype competition.
Observation1.Due to competitors, apparel retailers are forced to

decrease their profit margins. 151 respondents gave this view.
Observation2. They are falling competition other then loss of sale

and decrease in margins. 125 out of 350 have this opinion.
Observation3. Due to competition, their sales have been decreased.
200
Table 5.7
How do your competitors affect you?
District By decreasing By decreasing By increasing Total

sales margins competition
Lucknow 10 24 66 100
Hardoi 11 18 21 50
Sitapur 14 31 05 50
Unnao 12 32 06 50
Total 74 151 125 350
Source:
ource: Primary Data
350
300
250
200 By decreasing sales
150 By decreasing margins
100 By increasing competition
50 Total
0
201
By decreasing sales By decreasing
Lucknow
margins
14% Lucknow
16% Hardoi
15% 21% 16%
Hardoi
Lakhimpur
20% 12%
Raebareli 21% Lakhimpu
20%
19% 10% r
16% Sitapur
Raebareli
Unnao
By increasing competition
4% 5%
5% Lucknow
Hardoi
16%
53% Lakhimpur
17% Raebareli
Sitapur
Unnao
Figure 5.6
Competition is manifested by respondents in different forms.74

respondents said that due to competition, their sales have been
decreased. They are struggling for their survival. A large number of
respondents agree that they have reduced their profit margins to
remain in the market. They are 151 in number.
125 respondents said that they face competition in one form or

another due to changing markets and consumer buying habits.
Increasing urbanization and mobility of consumers have changed the
shopping behaviour.
202
5.2.7 What do you think about your employees?
Employees are very important for successful functioning of any retail

outlet. The industry is facing a severe shortage of talented
professional, especially at the middle management level. Most Indian
retail players are under serious pressure to make their supply chains
more efficient in order to deliver the levels of quality and service that
consumers are demanding.
The available talent pool does not back retail sector as the sector has
only recently emerged from its nascent phase. Retailing is yet to
become preferred career option for most of Indians educated class
that has chosen sectors like IT, BOP and financial services.
Observation1. Employees do not have formal training to be manned

in retail outlets. They are taking training on job itself. 187
respondents said that their employees are taking on job.
Observation2. Personnel at franchisee outlets, outlets in

supermarkets, hyper markets, etc., are highly trained they have
undergone training before joining the job. Even the employer gives
the sort training before joining. They are 106 against 187 of training
on job and 57 of unskilled.
Lack of trained personnel has emerged as a major area of concern for

the Indian retail sector. This is mostly because there is hardly any
proper training institution for retail technologies. The demand for
better trained labour force has led several players mulling over the
possibility of setting up their own training institutions.
203
Table 5.8
What do you think about your employees?
District Unskilled Training on Job Highly Skilled Total

Luck now 02 49 49 100
Hardoi 07 27 16 50
Sitapur 14 30 06 50
Unnao 03 33 14 50
Total 57 187 106 350
350
300
250
200 Unskilled
150 Training on Job
100 Highly Skilled
50 Total
204
Unskilled Training on Job
Luck now Luck now
5% 3% 12% 18%
Hardoi Hardoi
25% 26%
23% Lakhimpur Lakhimpur
32%
Raebareli Raebareli
14%
Sitapur 16% Sitapur
14%
Unnao 12% Unnao
Highly Skilled
Luck now
6%
13% Hardoi
10% 46%
Lakhimpur
10%
15% Raebareli
Sitapur
Unnao
Figure 5.7
Apparel retailing is facing problems due to shortage of skilled

manpower.
There are institutional

institutional and organizational problems thereby not
producing skilled and trained personnel. There are lacks of adequate
technical and professional institutions in India.
57 respondents said that their employees are unskilled. Data reveal

that 187 outlets having personnel
personnel who are taking training on job itself.
Only 106 agree that their employees are highly skilled.
205
Problem of untrained personnel can be solved by opening more and
more institutions that provide training in retailing. There may be
another way to solve this problem if big players open their own
training institutes to train their staff according to their requirements.
5.2.8 Do you have the problems because of locations?
Location is very important in case of apparel retail outlets. Shopping

centers began to be established from 1995 onwards. A unique
example was the establishment of margin free markets in Kerala. The
millennium year saw the emergence of supermarkets and
hypermarkets.
Lack of adequate infrastructure with respect to roods, electricity and

ports has led to the impediment of a pan India network of suppliers.
Due to these constraints, retail chains have to resort to multiple
vendors for their requirements, thereby raising costs and prices.
Observation1. 250 respondents said yes they have problems because

of their locality.
Observation2. Before opening the shop, location should be studied

properly.
Observation3. After opening the shop, locational shortcomings

should be minimized.
Retailers want to be located where there are many shoppers but only
if that shopper meets the definition for their target market. Small
retail stores may benefit from the traffic of nearby large stores.
206
How many people walk or drive past the location?
Is the area served by public transportation?
Can customers and delivery trucks easily get in and out of
parking lot?
Is there adequate parking?
Table 5.9
Do you have the problems because of locations?

Luck now 54 46 100
Hardoi 36 14 50
Lakhimpur 36 14 50
Raebareli 46 04 50
Sitapur 41 09 50
Unnao 37 13 50
Total 250 100 350
207
350
300
250
200
Yes
150
No
100
Total
50
0
Yes No
Luck now Luck now
13%
Hardoi Hardoi
16% 22% Lakhimpur 9% 46% Lakhimpur
15% 4% Raebareli
Raebareli 14%
Sitapur 14% Sitapur
18%
Unnao Unnao
14% 15%
Figure 5.8
Location is very important in retailing. There may be advantages and

disadvantages of a particular location. 250 retailers responded that
they have problems because of their location.
location. Against this, 100
responded that they have no problems because of their location.
In India, outlets are opened without proper study. Availability of

shops is taken into consideration on top priority. Shops are developed
without fulfilling basic requirements.
requ
208
The traditional inclination of Indian retailers to own property further
increases capital investment, and this along with their penchant to
continue their business at the same place makes the location decision
even more important.
5.2.9 If yes, what kind of problems?
There are problems because of location. Other area businesses in your

location can actually help or hurt your retail shop. Determine if the
types of businesses nearby are compatible you or your store. For
example, a high end fashion boutique may not be successful next door
to discount variety store. Place it next to a hair salon and it may do
much more business.
Besides the base rent, consider all costs involved when:
Who pays for lawn care, building maintenance, utilities and

security?
Who pays for the upkeep and repair of the heating air units?
If the location is remote, now much additional marketing will it
take for customers to find you?
How much is the average utility bill?
Observation1. Most of the respondents said that they have to pay

high rent. They are 118 out of 350.
Observation2. Problem of parking is also high among retailers.

Adequate parking facility helps in increasing sales. Parking problem
stands next to high rent.
209
Will you need to make any repair, do any painting or
remodeling to have the location fit your need?
Will the retailer be responsible for property taxes?
The location you can afford now and what you can afford in the
future should vary. It is difficult to create sales projects on a new
business, but one way to get help in determining how much rent you
can pay is to find out what sales similar retail businesses are making
and now much rent they are paying.
Everywhere we turn today we are faced with parking problems, from

office parks, to retail centres. Shop till you drop. That is what real
estate developers in the country world have people to do in the
months to come. The major problem that upcoming malls are going
to face is of parking.
Table 5.10
If yes, what kind of problems?
District High High Parking High cost if Total
rent maintenance problems shop is
charge owned
Lucknow 12 01 38 03 54
Hardoi 17 02 14 03 36
Lakhimpur 12 05 14 05 36
Raebareli 24 02 19 01 46
Sitapur 30 00 11 00 41
Unnao 23 00 14 00 37
Total 118 10 110 12 250
210
250
High rent
200
High maintenance
150
charge
100 Parking problems
50 High cost
0
Total
High rent 10%

High maintenance
14%
Lucknow change
Lucknow
20% 10% 0%
Hardio 0% 10% Hardio
20%
26% Raebareli
20%
Raebareli 50% Sitapur
Sitapur Unnao
Unnao
Parking problems High cost if shop is

owned
Lucknow
13% 0% Lucknow
10% Hardio 8% 0%
34% Hardio
Lakhimpur 25%
Lakhimpur
Raebareli 42% 25%
17% Raebareli
13% Sitapur
13% Sitapur
Unnao
Unnao
Figure 5.9
211
Problems due to locations are evident. Al problems cannot be taken
into consideration. Problems taken into account are high rent, high
maintenance charge, parking problems and high cost if shop is
owned.
118 respondents said that they attribute high rent as location problem.
There are only 10 respondents who said that they have to maintain
their shops because of their locations which prove costly to them.
Parking problem is well known in retailing. There are 110

respondents who said that they have problems because of parking.
High cost of real estate is also harming growth of retail sector.
5.2.10 What do you think about foreign players/companies?
Retailing is one of the world largest private industries. Liberalization

in FDI has caused a massive restructuring in retail industry. The
benefit of FDI is retail industry superimposes its cost factors.
Opening the retail industry of FDI will bring forth benefits in terms of
advance employment, organized retail stores, availability of quality
products at a better and cheaper price. It enables a countrys product
or service to enter into the global market. Foreign companies will
provide following advantages:
Cheaper production facilities

Availability of new technology
Long term cash liquidity
212
Observation1. Domestic/Indian retailers see presence of foreign
retailers as harmful. They are of the opinion that foreign companies
will reduce their share in total market share.
Observation2.Organized apparel retailers perceive that foreign

players are proving beneficial and will be helpful. They will promote
use of branded apparel. They are 46 against 185 o those who thought
them harmful.
Observation3. Indian apparel retailers to great extent have no idea

about the role of international apparel retailers. Indian apparel
retailing fear that foreign companies are capturing their markets and
harming is this way. They have better production facility and
efficient distribution system that will harm Indian players.
Table 5.11
What do you think about foreign players/companies?
District Helpful Harmful No Idea Total

Lucknow 31 25 44 100
Hardoi 01 34 15 50
Sitapur 03 36 11 50
Unnao 05 27 18 50
Total 46 185 119 350
213
350
300
250
200 Helpful
150 Harmful
100 No Idea
50 Total
Helpful Harmful
Lucknow
Lucknow
Hardoi 15% 14%
7% 11% Hardoi
7% 19%
Lakhimpu Lakhimpur
6% r 18%
67% 18% Raebareli
Raebareli
2%
16% Sitapur
Sitapur
Unnao
No Idea
Lucknow
15% Hardoi
9% 37% Lakhimpur
11% Raebareli
Sitapur
15% 13% Unnao
Figure 5.10
214
Indian economy has been opened. India has been following LPG
Model (Liberalization, Privatization and Globalization Model).
Government has opened the economy for foreign companies and
retail is not the exception.
46 respondents expressed that presence of foreign companies would

prove helpful. They have introduced and will introduce new formats
and marketing tools that will prove advantageous for apparel retail
and hence their own growth.
A large number of retailers perceive that foreign companies will harm

them in one way or another. 119 respondents have no idea about
effects of foreign companies.
In this globalized world, Indian retailers should learn how to do

business in presence foreign players. In fact, they are helping
organized retail growth and modernizing the apparel industry/sector.
5.2.11 What prospects do you perceive in apparel retailing?
Indian apparel business is anticipated to reach a growth rate faster

than that of the overall retail market. In Indian market, apparel is
second largest retail segment after food and groceries. The growth is
triggered by a number of influential factors:
Rise in average household income

Increasing trends of special occasions.
Growth of women empowerment
Self expression.
Rapid urbanization and modernization
215
Incessant growth of organized retail
Diffusion of fashion innovators
Observation1. 176 respondents said that prospect is good is

apparel retailing. Apparel retailing has high growth because of
various factors such as high disposable income, higher economic
growth, fashion consciousness etc.
Observation2. 94 respondents said that there is excellent scope in

apparel retailing. For men, clothing preference covers mainly three
basic categories such as casual wear, formals, and special occasion
wear. With more socializing opportunities, now men are
purchasing latest forms of apparels like party wear, sportswear,
gym wear, ethnic wear, etc. From the post few years, men have
started preferring western style jackets, and collared shirts, funky
fashion, stripes or checks for business meetings. Nowadays,
Indians are more prone than western consumers to buy apparel for
special occasions.
Increasingly, Indian consumers are taking on the concept of

fashions for self-expression. Television, advertising and the
Internet bombard Indian consumer with innovative ideas about
fashions and style too.
Large branded retail outlets where merchandises are

systematically shelved and displayed will speed the change of
consumer buying pattern. Over the past ten years there has been
rapid acceleration of new shopping malls and hypermarkets across
major cities of India.
216
Innovators and early majority are main agents of diffusion of
fashion. The Friday dressing idea by some of the retailers
encourages gen next to buy dresses for Fridays.
Fridays
Table 5.12
What
hat prospects do you perceive in apparel retailing?
District Excellent Good Average Poor Total

Lucknow 34 49 17 00 100
Hardoi 14 25 11 00 50
Lakhimpur 13 17 16 04 50
Raebareli 12 28 10 00 50
Sitapur 09 25 10 06 50
Unnao 12 32 06 00 50
Total 94 176 70 10 350
350
300
250
Excellent
200
Good
150
Average
100
Poor
50
Total
0
217
Excellent Good
Lucknow 14% Lucknow
13% 18%
9% Hardoi Hardoi
36% 28%
Lakhimpur Lakhimpur
Raebareli Raebareli
13% 14%
Sitapur 16% Sitapur
14% 15% 10%
Unnao Unnao
Average Poor
Lucknow Lucknow
9% 0% 0% 0%
14% Hardoi Hardoi
24% 40%
Lakhimpur Lakhimpur
23% 60%
Raebareli Raebareli
14% 16%
Sitapur 0% Sitapur
Unnao Unnao
Figure 5.11
Apparel retailing is growing rapidly. There is bright future is this

sector.94 respondents see excellent prospects. Largest numbers agree
that being the apparel retailer they
they have good fortune now and in
future. 70 said that future is average. Only 10 responses are for poor.
Organized retail is booming. New formats have been becoming

popular. New occasions are also fueling of clothing retail. Clothing
has become the means of self-expression.
expression. Government policies on
foreign capital are also responsible for growth of apparel industry in
India.
218
5.2.12 Is high consuming class helping retailing growth?
There are certain trends in consumption behavior that have a direct

and significant impact on the business strategy and profitability of
retail business. These trends relate to the changing demography
increasing individualization, computerization, mobility, and demand
in terms of sustainability and dematerialization.
Demographically, there is an increase in the number of consumers

with greater purchasing power and more migrant consumers. In the
west there is a fall in the number of young consumers and increase in
the number of senior consumers. In India, there are more young
consumers than their senior counterparts. The composition of
households is also changing with an increase in smaller and newer
forms of family units.
Observation1. A good number of respondents agree that consuming

class is helping is retailing growth. They are 308 against 42 who said
no.
Observation2. Apparel retailing is growing phenomenally in recent

years. People who have high income and willing to spend are mainly
behind this.
There is also an increase in consumer power both on an individual

and on a collective basis. It is reflected in demand-led production and
focus on narrow riches. There has also been perceptible focus shift in
consumption from merely acquiring a product or service to
219
experiencing it. The retail industry has tried to respond to these
th trends
with greater focus on customer service and retail atmospherics.
Table 5.13
Is high consuming class helping retailing growth?

Lucknow 100 00 100
Hardoi 38 12 50
Lakhimpur 40 10 50
Raebareli 48 02 50
Sitapur 37 13 50
Unnao 45 05 50
Total 308 42 350
350
300
250
200
Yes
150
No
100
Total
50
0
220
Yes No
Lucknow Lucknow
15% Hardoi 12% 0%
12% Hardoi
32% Lakhimpur 28%
31% Lakhimpur
Raebareli 24%
Raebareli
16% Sitapur
12% Sitapur
13% Unnao 5%
Unnao
Figure 5.12
Rising national income and per capita income have created new
consuming classes. Consuming class means people with high
disposable income. They want quality products and same time
ti
unique shopping experience. They believe in look good and feel
good.
308 respondents said that this class is helping retail growth. Against
this, only 42 said no. India is an emerging economy and has attained a
high level of economic development.
5.2.13 If yes, who are your main customers?
Customers are classified into four categories:
Upper class
Upper middle class
Middle class
Those covering all above segments/classes.
221
Upper class customers are those customers who are very rich and elite
in the society. Upper middle class falls between upper class and
middle class. Middle class represents those who have very humble
living. They do not have much and same time they do not have less to
spend. Upper class includes people who have inherited wealth.
Upper middle class represents those who are career oriented
professionals and corporate.
Observation1. Large number responded that middle class is their

main customers. They are 132, against 123 of upper middle class and
40 of upper class.
Observation2. Middle class is the force behind apparel retailing

growth. Upper class is used to be using fine and branded apparel but
since middle class has joined them, demand for branded apparel has
increased many folds.
Managers who prefer to spend on clothes, education, books, furniture,

home appliances, etc.
Middle class people are average-pay-white-collar class of society who

prefer to spend on popular and trendy products, personal vehicles,
banded goods, good homes, college education for children,
entertainment, etc.
Under present study, customers are divided into three categories-

upper class, upper middle class, and middle class.
222
Table 5.14
If yes, who are your main customers?
District Upper Upper Middle All Total

Class Middle Class Class Segments
Luck now 23 36 40 01 100
Hardoi 03 21 14 00 38
Lakhimpur 00 10 18 12 40
Raebareli 05 20 23 00 48
Sitapur 03 13 21 00 37
Unnao 06 23 16 00 45
Total 40 123 132 13 308
350
300
250
Upper Class
200
Upper Middle Class
150
Middle Class
100
All Segments
50
Total
0
223
Upper Class Upper Middle Class
15% Luck now Luck now
11% 29%
57% Lakhimpur Lakhimpur
17%
Raebareli Raebareli
0% Sitapur 16% Sitapur
8%
13% 7%
Unnao Unnao
Middle Class All Segments

Luck now Luck now
12% 0%8% 0%
16% Hardoi Hardoi
30%
Lakhimpur Lakhimpur
17% 92%
Raebareli Raebareli
11%
14% Sitapur Sitapur
Unnao Unnao
Figure 5.13
Data reveals that 40 retailers said that upper class

clas is their main
customers, 123 for upper middle class and 132 the highest for middle
class. Only 13 respondents said that all segments shop from their
outlets.
It is observed that retailers focus on a particular segment in belief that

they can serve this segment better. Requirements and paying capacity
of different segments are different.
224
5.2.14 What age groups do often shop from your outlets?
The age factor clearly appears to have a distinct impact on fashion

lifestyles. Most consumes realize that their works change as they get
older. There are however, a range of other demographic factors that
influence consumption decisions, such as gender (boys and girls often
purchase different types of products), ethnic background and income.
India is witnessing a change in the age and income profiles of its over
1 billion population, which is likely to fuel accelerated consumption
in the years to come. The country is believed to have an average age
of 24 years for its population as against 36 years for the USA and 30
years for China. A younger population tends to have higher
aspirations and spends more as it enters the earning phase.
Observation1. A good deal of respondents said that most frequent

shoppers from their outlets are in age gap of 26-35 years. They are
272.
Observation2. Age group between 36-50 years has low

representation. They are only 70.
Observation3. Age group above 50 years has no presentation at all.

Their shopping is done by other members of the family.
Besides, the gradual disintegration of the traditional Indian joint

family system has led to nuclearization of families, which in turn has
led to enhanced demand. Add to this an increasing population of
working women and new job opportunities in emerging service
225
sectors such as IT
IT-enabled services,
vices, retail, food services,
entertainment and financial services.
Table 5.15
What age
age groups do often shop from your outlets?
District 15
15-25 yrs 26-35 yrs 36-50 yrs Above 50 Total
Luck now 08 80 12 00 100
Hardoi 00 42 08 00 50
Lakhimpur 00 31 19 00 50
Raebareli 00 44 06 00 50
Sitapur 00 36 14 00 50
Unnao 00 39 11 00 50
Total 08 272 70 00 350
350
300
250
15-25 yrs
200
26-35 yrs
150
36-50 yrs
100
Above 50
50
Total
0
226
15--25 yrs 35 yrs
26-35
Luck now
0%
0% Luck now 14%
Hardoi 13% Hardoi
Lakhimpur 30%
Lakhimpur
100% Raebareli
Raebareli
Sitapur
16% 16% Sitapur
Unnao 11%
Unnao
36-50 yrs
Luck now
16% 17% Hardoi
20% 11%
Lakhimpur
9% 27% Raebareli
Sitapur
Unnao
Figure 5.14
Age is the one of the important demographic factors taken into

account while studying the consumer behavior. Respo
Respondents are
asked about the frequent shoppers. As far as 15-25
15 25 years customers
are concerned, there are only 8 responses. 26-35
26 35 years customers are
main shoppers according to the responses of retailers. Customers
aging 36-50
50 years, there are 70 responses. Respondents said that
shopping is not done by above 50 years persons. There might be that
they accompany with younger members of their family.
227
5.2.15 What role does fashion play in appeal shopping?
Fashion has touched every sphere of modern consumers. Marketers

have realized the immense potential to yield business in this booming
segment. In present scenario irrespective of the class Indian
consumers are adopting fashionable items quickly and conveniently
with the rise in competition. Fashion marketing is utilizing recent
trends in fashion to analyze, develop and implement sales strategies.
Apparel sector in India has taken a paradigm shift. With the growth
and rising of urbanization has given rise to fashionable gen next
consumers having attitude of spending huge amount of money to look
trendy.
Observation1. Fashion plays a vital role in apparel shopping. 313

respondents agree that fashion has high role to play in apparel
retailing. Apparel is more than what basically it is.
Observation2. Only 31 respondents say that fashion plays a low role.
Retail apparel market has also gone through significant changes and
created growth opportunities. Technology has revolutionized fashion
retailing from every aspect. Internet and mobile technologies has
transformed the way retailing do the business. In the highly
competitive market scenario retailers have become technology
conscious. To sustain and attract customers and achieve global
competitiveness fashion retailers are adopting technology.
Increasingly, Indian consumers are embracing the idea of fashion for
228
its own sake, as a means of self expression, not merely as a functional
purpose.
Table 5.16
What role does fashion play in appeal shopping?
District High Low Not sure Total

Luck now 100 00 00 100
Hardoi 41 08 01 50
Sitapur 37 13 00 50
Unnao 47 02 01 50
Total 313 31 06 350
350
300
250
200 High
150 Low
100 Not sure
50 Total
229
High Low
Luck now Luck now
15% 6% 0%
12% Hardoi Hardoi
32% 26%
Lakhimpur Lakhimpur
42% 23%
Raebareli Raebareli
16% 13%
Unnao Unnao
Not sure
0%
Luck now
0%
0% 17% 16% Hardoi
Lakhimpur
Raebareli
67%
Sitapur
Unnao
Figure 5.15
Apparel industry is fashion driven. Fashion has very short life. It

plays very important role in shopping. 313 respondents said that
fashion has high role in apparel shopping. As against this, only 31
said that fashion has low role. There are 6 respondents who are not
sure about the role of fashion.
In India, mainly Bollywood invents and spreads

spreads fashion. And teens
and young generations are main followers. Adults and aged parsons
are promoted by film stars.
230
5.2.16 What do you perceive about Mall Culture?
Both for locals and for visitors from abroad, nothing seems to
mobilize Indias transformation from a stagnant third-world country
into an emerging economic super-power as much as its sparkling new
malls. Eager to cash is, Indias real estate developers are in frenzy: up
to 600 malls are likely to be up and running in India by the end of
2011 up from 250 malls is year 2009, according to KSA Technopak
2010, a New Delhi, based consulting firm.
Organized retailers use the contemporary formats by which shoppers

has the edge of a world class shopping experience. Fine examples of
these formats are Pantaloon, Shoppers stop and Trent.
Observation1. A good number of respondents said that malls are

harmful for their business. They are 188 against only 43 who said
that malls are helpful.
Observation2. 119 respondents responded as no idea about how

malls are affecting their business.
Malls are the largest form of organized retailing today. Malls are
located mainly in metro cities, in proximity to urban outskirts, this
format ranges from approximately 60,000 sq. ft. to 700000 square feet
and above. They lend an ideal shopping experience with an
amalgamation of product, service and entertainment, all under a
common roof.
As long as the youthfulness of Indians is the focus of the world eyes,

there is every possibility that mall culture shall prosper. However, the
231
burning concern is optimum management of malls while keeping the
cost low.
Table 5.17
What
hat do you perceive about Mall Culture?
Culture?
District Helpful Harmful No idea Total

Luck now 30 56 14 100
Hardoi 01 28 21 50
Lakhimur 00 18 32 50
Sitapur 02 30 18 50
Unnao 07 25 18 50
Total 43 188 119 350
350
300
250
200 Helpful
150 Harmful
100 No idea
50 Total
232
Helpful Harmful
Luck now Luck now
16% 13%
30%
7% Lakhimur Lakhimur
70% 16%
0% Raebareli Raebareli
10%
Unnao Unnao
No idea
Luck now
Hardoi
15% 12%
15% 18% Lakhimur
Raebareli
13%
27% Sitapur
Unnao
Figure 5.16
Malls have provided ideal place for retailing. Real estate developers
are focusing in developing malls in metros and big cities. 43
respondents
ndents said that they think malls as helpful for their business.
Whereas 188 said that these malls are harmful. A good number of
respondents have no idea about effect of malls. They are 119 in
numbers.
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233
Chapter-6
CONCLUSIONS AND
SUGGESTIONS
1.1 Apparel means clothing, especially outwear, garments and attire.
Apparel is a term that refers to a covering for the human body that is
worn.
1.2 Physically, clothing serves many purposes; it can serve as

protection from the elements, can enhance safety during hazardous
activities such as hiking and cooking. The primary function of
clothing is to improve the comfort of the wearer. Shelter usually
reduces the functional need for clothing.
1.3 Retailing is the final connection in the marketing channel that

brings goods from manufacturers to consumers. Retailing includes all
the activities involved in selling goods or services directly to final
consumers for their personal, non-business use.
1.4 The word retail is derived from the French word relaillier
which means to out a piece off or to break bulk
1.5 Indian retail industry is divided into two categories- organized and
unorganized. Organized retail sector refers to the sectors undertaken
by licensed retailers, that is, those who are registered for tax on
moveable commodities at times of sale under VAT system. These
include the corporate retail formats of the exclusive brand outlets,
hypermarkets, departmental stores and shopping malls.
1.6 Unorganized retailing refers to the traditional formats of low cost

retailing, for example, hand cart and pavement vendors, the local
kirana shops, owner-managed general stores, paan/beedi shops,
convenience stores, etc.
234
1.7 Consumer money drives the economy, and retail is where
consumers spend that money. When goods are put in the hands of
consumers, retailers realize revenue and so do the wholesalers,
distributors, and manufacture that made up the rest of the consumer
goods distribution chain.
1.8 Retailing can be distinguished from other businesses. There is

direct end-user interaction; platform for promotions; sales in smaller
sizes; locational importance; large numbers.
1.9 Retailers perform various business activities- arranging

assortments, breaking bulk, holding stock, and providing services.
1.10 Retail in industry is facing following problems: regulation

restricting real estate purchases, taxation which favours small
businesses, lack of trained work force, etc.
1.11 While barter would be considered to be the oldest form of retail

trade, since Independence, retail in India has evolved to support the
unique needs of our country given its size and complexity.
1.12 Numerous clothing shops are to be found in Indian cities and

towns, especially in shopping centres and markets. Small townships
and social areas of India have a large numbers of retail stores selling
clothes, basically unstitched stuff for the entire family.
1.13 For many foreign and private brands, department stores offer the
ideal retail format for apparel product category. A new focus on
apparel retail sector has attracted attention in recent days. Top
235
exporters have introduced their own brands and are aggressively
positioning themselves within segments of the domestic markets.
1.14 As apparel retail is led by fashion, a player needs to keep a close

watch on fashion amongst teenagers as they are the trend setters.
1.15 The textile manufactures were among the first to get into braded
menswear in the Indian market. This sector is perhaps the most
developed in terms of supply chain sophistication in the branded
clothing market. The apparel sector can be broadly classified into
mens apparel, womens apparel and childrens wear.
1.16 Lucknow Division is an administrative geographical unit of

Uttar Pradesh of India. Lucknow is the administrative headquarters
of the division. Division consists of following districts namely
Lucknow, Hardoi, Lakhimpur, Raebareli, Sitpaur and Unnao.
1.17 The chikan work of Lucknow is one of the most popular

embroidery works in India.
2.1 The origins of retail are as old as trade itself. Barter was the
oldest form of trade. For centuries, most merchandise was sold by
peddlers. Retailing in its initial period was witnessed at the weekly
haats or gathering in a market place where vendors put on display
their produce (goods). Mon-and-pop stores are small family-owned
businesses, which sell a small collection of goods to the customers.
They are individually run and cater to small sections of the society.
2.2 The retail business operates is a dynamic environment, the

changing customer demand, opening up of markets, technological
236
developments and ever increasing competition all- affect the retail
business. The departmental stores may be a comparatively recent
phenomenon in India, with a specially created ambience making
shopping an experimental affair.
2.3 Dynamic consumers behaviors, consumers demography, retail

attributes and retail marketing strategies affect modern retail formats.
2.4 Retailers can be classified on following bases: legal form;

operational structure; range of merchandise; degree of service, pricing
policy; location; size of outlets; based on customer contact. Another
classification is based on merchandise and pricing mechanism. These
are department stores, specialty stores, discount stores, super
markets, super stores, and hypermarkets, independent traders,
multiple or retail chain stores, co-operative societies, concessionaire,
franchising. There is non-store retailing which includes mail order,
mail order catalogues, direct mail, direct selling, door-to-door trading,
and mobile shops.
2.5 Electronic retailing has two formats, namely, television shopping

and on-line computer shopping services. Fashion has played a key
role in shaping apparel consumerism. With change in lifestyle,
fashion in India is becoming more stratified, as in the West.
3.1 Rapid growth and rising urbanization have spawned a new class
of consumers with more money to spend, and a growing passion for
fashion. In Indias high growth, fast-changing retail clothing market,
we see significant new growth opportunities for foreigner and
domestic players.
237
3.2 As the lifestyles of Indias prospering urban consumers have
evolved, their clothing needs have broadened, reflecting more varied
usage occasions.
3.3 Now women are more willing to dress differently when they
venture beyond the home- to shop, for example, or visit an office or
school.
3.4 Increasingly, Indian consumers are embracing the idea of fashion

for its own sake, as a means of self-expression, and not merely as a
functional purpose. India is a country with diversified customs and
cultures. People following various traditions live here, their way of
dressing also differ from each other.
3.5 Mall culture is slowly and steadily growing in India. Many brands
and private labels are launched in the Indian markets. The first such
retail outlet was Shoppers Stop which launched Indias first multi-
brand store in the year 1993. The market of branded garments is
growing up in India. More and more people are switching on to
branded apparel than non-branded ones as it provides quality
assurance.
3.6 Displaying clothes through fashion shows is a western concept

but now have become a common fashion event.
3.7 Impulse buying is a form of customer behavior characterized by

buying goods which are not planned purchases.
3.8 Point of sale is a place where computerizing retail business can

have its greatest advantages. Rapid and secure checkout is the first
238
priority of any retail operation. POS terminals capture the most
important data, the actual sale.
3.9 A typical retail store offers at least a few hundred units of

products to the consumer. In order to keep track of what has been
sold and to be able to re-order products, the retailer needs to know the
qualities, the types, colours, size and other characteristics of the
product sold. The Universal Product Code (UPS) or Barcode as it is
popularly known was developed for this need. Radio Frequency
Identification or RFID is fast transforming the way business is being
conducted and monitored across the supply chain.
3.10 The rise of the Internet has led to some phenomenal changes in
the way business is conducted in various industries. In retail, it has
opened up a new avenue for retailers to reach out to customer and
suppliers in markets where they do not have a physical presence.
3.11 Textile industry in India is widely comprehensive, integrating

whole range of raw material to finished product that includes fiber
manufacturing, spinning, knitting and weaving and garment
manufacture.
3.12 FDI refers to capital inflows from abroad that is invested in or to

enhance the production capacity of the economy. FDI is governed by
FDI policy announced by GOI and the provision of FEMA, 1999.
4.1 The retail industry in India is growing at a significant pace.

However, there are several problems faced by the industry. These
239
are the high cost of real estate, high stamp duties, lack of
infrastructure multiple and complex taxation system.
4.2 The retail industry is booming. The reasons include favourable

demographics, rising customer incomes, real estate developments,
especially the emergence of new shopping malls, availability of better
sourcing options both from within India and overseas and changing
lifestyle.
4.3 The last few years have seen rapid transformation in any areas
like, scalable and profitable retail models are well established for
most of the categories; Indian consumer are rapidly evolving and
accepting modern formats; India is on the radar of global retailers;
suppliers/ brads are willing to partner with retailers.
4.4 The Govt. has introduced reforms in retail sector. India will allow
foreign groups to own up to 51 per cent in multi- brand retailing.
Single brand retailers can own 100 percent of their Indian stores.
5.1 Apparel retailers are of two types: local retailer and market
retailers. Local retailers are those who are serving the local
customers. Against this, market retailers are located in market places
where customers from different parts come for shopping. They have
competition with other retailers present over there. They need to
make heavy investments.
5.2 Investment is necessary for any business activity. Small retailers

started business with small capital. A Vibrant Economy India topped
the list of emerging markets for retail investments. The apparel
240
industry is fragmented and highly competitive. There are number of
major players, but there are countless niche stores and private
complainer that cater to specific demographics.
5.3 Apparel retailers deal in menswear, womens wear and kids wear.
Some retailers specialize in particular categories. But selling for all
categories prove profitable and it helps in promoting as a complete
shop everything for everyone.
5.4 Usage of branded apparel and readymade garments has been on

rise. Big players are selling their own labels while small retailers are
selling brands of others. Apparel tags, labels and specialty trim play
an essential role todays supply chain. There is presence of almost all
kinds of global brands in the present market situation. The launches
of more and more brands into the market have increased the demand
for shelf space and hence the demand for retail outlets.
5.5 There is the co-existence of organized and unorganized retailers.

Unorganized retailers are not in position to compete with big
organized retailers. The share of organized retailing is increasing but
still the major share of the market is controlled by unorganized
players. India is a vast country with different cultures and customs.
These are manifested in our dressing. Our various needs of dressing
can only be fulfilled by unorganized retailing.
5.6 This sector is highly competitive. Organized retailers are giving

tough competition to small unorganized players. Sales of small
players have been decreasing. To sustain in the market, they have
241
reduced their profit margins. These steps have been helping them
little. These help for their survival only.
5.7 Employees play very important role in functioning of any retail

outlet. The industry is facing severe shortage of talented
professionals. Indian players are under serious pressure to deliver the
levels of quality and service that consumers are demanding.
5.8 Location is vital in retail marketing. Shopping centres began to be

established from 1995 onwards. The millennium year saw the
emergence of super markets and hypermarkets.
5.9 There are locational problems. Other area businesses in your

location can actually help or hurts your retail shop. Determine if the
types of businesses nearby are compatible you are your store.
5.10 Retailing is one of the worlds largest private industries.

Liberalization in FDI has caused a massive restructuring in retail
industry. The benefit of FDI in retail industry superimposes its cost
factor. It enables a countrys product or service to enter into the
global market.
5.11 Indian apparel business is anticipated to reach a growth rate

faster than that of the overall retail market. In Indian market, apparel
is second largest retail segment after food and groceries.
5.12 There are certain trends in consumption behaviour that have a

direct and significant impact on the business strategy and profitability
of retail business. These trends relate to the changing demography,
242
increasing individualization computerization, mobility, and demand
in terms of sustainability and dematerialization.
5.13 Customers are conveniently classified into three categories:

upper class, upper middle class and middle class. Rising of great
middle class has changed the scene of retailing.
5.14 India is witnessing a change in the age and income profiles of its
over 1 billion population, which is likely to fuel accelerated
consumption in the years to come.
5.15 Apparel sector in India has taken a paradigm shift. With the
growth and rising of urbanization has given rise to fashionable gen
next consumers having attitudes of spending huge amount of money
to look trendy.
5.16 Organized retailers use the contemporary formats by which

shoppers have the edges of a world class shopping experience. Malls
have provided ideal place for retailing. Real estate developers are
focusing in developing malls in metros and big cities.
Suggestions
Based on the observations and data collected following are the

suggestions:
Parking is becoming a complex problem of present and futures.

Before the construction of shops and malls starts, maximum
space for parking should be earmarked on lane basis so that
large number of vehicles could be arranged without problem.
243
This can be a highly difficult decision given the cost of
allocating larger space to the parking. But, here the choice is
limited one and hence the investment in space allocation or
floor construction has to be made. Else harassments and
damage to the small vehicles lead the customers to desist from
such places. This also is desired if there can be an alternative
parking space for emergency purposes.
Training to the staff that is in direct touch with customers and
visitors is essential to any business. The importance becomes
more intense in retailing. The courteous attitude makes a
difference to the customers. However, the personal attributes
and character formulation of the staff member suffer from
rigidity and hence care shall be taken in such cases. Facilitate
the growth and strengthen human resource development
institutions, including the National Institute of Fashion
Technology on innovative lines. Focus on health and life
insurance for weavers and technical skill development.
As apparel retail is led by fashion, a player needs to keep a
close watch on fashion amongst teenagers as they are the trend
setters. Role of Bollywood in spreading fashion needs to be
understood. Seasonal variation on stocking pattern and need
to clear inventory at the end of the season should be understood
by apparel retailers.
Opening up of the retail trade to FDI will pave the way for flow
of investment in new technology and marketing of farm
produce in India. Allowing foreign equity participation up to
244
100 percent through automatic route in this sector with certain
exceptions.
Technology should be upgraded in terms of logistics,
production, and distribution channels. Recognizing the vital
role of IT in a progressively IT-driven global economic
environment, as also its scope in bringing about speed,
efficiency and transparency in delivery systems, Govt.will play
a proactive role in promoting and facilitating adoption of IT in
the textile industry and trade. Using IT as the platform, a strong
commercial intelligence network will be built up and suitable
infrastructure for harnessing the potential of e-commerce will
be put in place.
Economies of scale would help lower consumer prices and
increase the purchasing power of the consumer.
Apparel retailers have to cope with higher expenses for both
costs of goods and operating costs.
Funding requirements of different segments of the textile
industry will be periodically reviewed and short-term and long-
term requirements spelled out, particularly of the handloom,
power loom, handicrafts and sericultures.Innovative measures
for tapping public and private sector findings will be worked
out.
A strong retailing sector would promote tourism.
-----:0:-----
245
Chapter-7
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Consumer
35. Lifestyles Database (2005)
36. Data Monitor Global Internet Report

248
37. Ernst & Young India
38. Ernst & Young Research
39. FDI in Multi Brand Retail, Ministry of Commerce.
40. FDI_Circular_02/2010, DIPP
41. Global Apparel, accessories and luxury goods, Data Monitor,

(2006)
42. India Brand Equity Foundation
43. India in the Global Textile Ecosystem 2007 Ernst & Young, CII
44. KPMG India
45. KSA Technopak
46. McKinsey&Company
47. Ministry of Commerce & Industry, GOI.
48. Ministry of Textile
49. Ministry of Textile 2008-09 Annual Report.
50. Notification No. FEMA 20/2000-RB dated May 3, 2000
51. Technopak Indian Textile&Apparel Compendium,2010
52. Technopak Reports.
53. Textile Intelligence Limited (U.K.)
249
Magazines
54. Business Today
55. Business World
56. India Today
57. Outlook
Newspapers
58. Business Standard
59. Financial Express
60. The Economic Times
-----:o:-----
250
Chapter-8
APPENDICES
Appendix 1
Questionnaire Used in the Survey
Lucknow Division Apparel Retailing Challenges and Prospects Survey
1. Types of Retailers?
Local Retailer Market Retailer
2. Amount invested initially?
Up to Rs.5 Lakhs Rs.6 Lakhs-Rs.10 Lakhs

Rs.11Lakhs-Rs.50 Lakhs Above Rs.50 Lakhs
3. Dou you deal in?
Menswear Womens wear Kids wear All of the above
4. Do you deal in branded apparel?
Yes No
5. Do you face competition from?
Unorganized Apparel Retailers Organized Apparel Retailers

Both
6. How do your competitors affect you?
By decreasing sales By decreasing sales
By increasing competition
251
7. What do you think about your employees?
Unskilled Training on Job Highly

skilled
8. Do you have the problems because of location of your shop?
Yes No
9. If yes, what kinds of problems?
High rent High maintenance charge
Parking problems High cost if shop is owned
10. What do you think about foreign players/companies?
Helpful Harmful No idea
11. What prospects do you perceive in apparel retailing?
Excellent Good Average Poor
12. Is high consuming class helping retailing growth?
Yes No
13. If yes, who are your main customers?
Upper Class Upper Middle Class
Middle Class All segments of society
252
14. What age groups do often shop from your outlet?
15-25 Years 26-35 Years

36-50 Years Above 50 Years
15. What role does fashion play in apparel shopping?
High Low Not sure
16. What do you perceive about Mall Culture?
Helpful Harmful No idea
Name of Retailer:
Location:
Any suggestion from the Retailer for improvement in Apparel

Retailing:
-----:O:-----
253

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APPAREL RETAILING: CHALLENGES

AND PROSPECTS IN INDIA

Under the Supervision of

Certified that Mr.Saukat Ansari has completed the thesis titled

APPAREL RETAILING: CHALLENGES AND PROSPECTS

IN INDIA-WITH SPECIAL REFERENCE TO LUCKNOW

DIVISION for the award of Ph.D. degree in Commerce at

University of Lucknow, Lucknow under my supervision. To the best

of my knowledge and belief the thesis under reference is based on

original research work done by Mr.Saukat Ansari. He fulfills the

conditions laid down in relevant ordinances.

The business of apparel retail in India has seen significant changes in

The mindset of the retailers especially those involved in organized

The study is focusing on apparel retailers perception about

In the present research, I find utter lack of words to express my

At the end, I cannot forget the blessings of my parents and assistance

Happy and thoughtful reading ahead.

Date: (SAUKAT ANSARI)

1.1 Key Menswear Brands 26

3.1 Apparel is the most profitable segment of the

Indian retail market today 86

4.1 Major textile production clusters in India 141

5.1 No. of Respondents in Districts 184

5.2 Types of Retailers 186

5.3 Amount invested initially? 189

5.4 Dou you deal in? 192

5.5 Do you deal in branded apparel? 195

5.6 Do you face competition from? 198

5.7 How do your competitors affect you? 201

5.8 What do you think about your employees? 204

5.9 Do you have the problems because of location? 207

5.10 If yes, what kinds of problems? 210

5.11 What do you think about foreign players/

5.12 What prospects do you perceive in apparel

5.13 Is high consuming class helping retailing growth? 220

5.14 If yes, who are your main customers? 223

5.16 What role does fashion play in apparel retailing? 229

5.17 What do you perceive about Mall Culture? 232

1.1 Typical Marketing Channels 4

1.2 Organized and Unorganized Retailing 5

1.3 Activities of Retailers 8

1.4 Evolution of Retail in India 14

1.5 Classification of Apparel 25

2.1 Forces Affecting Modern Retail Formats 57

2.2 Classification of Retailers based on Legal Form 58

2.3 Classification of Retailers based on Operational

2.4 Classification of Retailers based on Range of

2.5 Classification of Retailers based on Degree of

2.6 Classification of Retailers based on Pricing Policy 61

2.7 Classification of Retailers based on Size of Outlet 62

4.1 Key Segments of the Textile Industry 139

5.1 Types of Retailers 187

5.2 Amount invested initially? 190

5.4 Do you deal in branded apparel? 196

5.5 Do you face competition from? 199

5.6 How do your competitors affect you? 202

5.7 What do you think about your employees? 205

5.8 Do you have the problems because of location? 208

5.9 If yes, what kinds of problems? 211