Assignment of

Retail Management
on

Organized Retailing in
India

Submitted By:
Assigned By:

Debapriya
Prof. Dr.
Sambit Kumar
Abhishek
Kumar 18202022
Faculty Retail Sec - A
Management
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(a) Evolution of organized retailing in India.

Retailing, probably the biggest part in the worldwide economy, is experiencing a change
stage in India. For quite a while, the corner market was the main decision accessible to the
customer, particularly in the urban zones. This is gradually offering approach to worldwide
organizations of retailing. The conventional nourishment and basic food item fragment has
seen the rise of general stores/staple chains, accommodation stores and cheap food chains.

The customary food merchants, by presenting self-administration organizes just as worth

included administrations, for example, credit and home conveyance, have attempted to
reclassify themselves. Be that as it may, the blast in retailing has been kept basically to the
urban markets in the nation. Indeed, even there, huge pieces are yet to feel the effect of
sorted out retailing. There are two essential explanations behind this. In the first place, the
cutting edge retailer is yet to feel the immersion' impact in the urban market and has, along
these lines, presumably not took a gander at different markets as truly. Second, the cutting
edge retailing pattern, notwithstanding its cost-viability, has come to be related to ways of
life.

So as to speak to all classes of the general public, retail locations would need to relate to
various ways of life. As it were, this pattern is as of now noticeable with the rise of stores
with a basically 'esteem for cash' picture. The engaging quality of different stores really bids
to the current well-off class just as the individuals who seek to be a piece of this class.
Henceforth, one can expect that the retailing upset is rising along the lines of the monetary
advancement of society.

It was distinctly in the year 2000 that the financial experts put a figure to it: Rs. 400,000
crore (1 crore = 10 million) which is relied upon to create to around Rs. 800,000 crore
continuously 2005 – a yearly increment of 20 percent. Retailing in India is sloppy with poor
production network the board point of view. As per an ongoing study by a portion of the
retail counseling bodies, a mind-boggling extent of the Rs. 400,000 crore retail advertise is
Unorganized. Indeed, just a Rs. 20,000 crore portion of the market is composed. As much as
96 percent of the 5 million or more outlets are littler than 500 square feet zone. This implies
India per capita retailing space is around 2 square feet (contrasted with 16 square feet in
the United States). India's per capita retailing space is in this way the most reduced on the
planet (source: KSA Technopak (I) Pvt Ltd, the India activity of the US-based Kurt Salmon
Associates).

As of now the retail scene is loaded up with Supermarket chains with more than 1000

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outlets everywhere throughout the nation to increment to around 5000 by the 2005. The
achievement of a few Hypermart's demonstrate the advancement of hypermarkets in the
nation noticeable among them are Giant, Metro, Big Bazaar models. While the normal bill
an incentive at a grocery store is in the range of Rs.300 per charge, the normal bill sum at a
Hypermarket is in the range of Rs.750-1000, showing that the model is in line with the
worldwide models where the normal go through is expanding with the shopping experience.

The retail division in India is exceptionally divided or dispersed. Disorderly retail comprises a
critical portion of over 90%, while the sorted out retail section is simply in a beginning up
arrange and has seen a great development over most recent couple of years. Retail in India
began with the Mom and Pop Stores and Kirana Stores, which used to take into account the
prerequisites of the nearby populace. Over a period, the administration energized provincial
retail and offered help for setting up Khadi and Village ventures.

The retail division in Indian setting can be subdivided into Organized and Unorganized retail
areas. Sorted out retailing comprises authorized retailers enlisted under deals and personal
duty, engaged with completing their everyday exchanging capacities. This may incorporate
huge hypermarkets, enormous scope possessed retail adventures claimed secretly or the
retail chains also. Then again, disorderly retailing includes a sizeable extent of little retailers
working their own Kirana, paan, beedi shops, general stores, physicists, sellers, and so on. In
created economies, sorted out retail appreciates a dominating portion of around almost 75-
80% as against customary retailing, while in creating economies; sloppy division appreciates
a transcendent offer in the retail showcase.

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(b) Key drivers of organized retailing in India.

(1) CONSUMERISM –
India's center and high-salary populace has scored up a great development and the nation's
white collar class will develop from about 5% of the populace to over 40% and make the
world's fifth biggest purchaser market10.As a nation with a high level of youth (33%
underneath the period of 15)11, shopper spending has risen forcefully. Expanded
mindfulness has brought about a detectable change in conduct and they are watching out
for accommodation, speed, effectiveness and a wide scope of items, at the same time – a
one-quit shopping experience. Contrasted with the eighties, India has seen brand blast in
practically all classes of merchandise giving sufficient decision to the client. Their financial
prosperity, expanding yearnings for better expectations of living and solace.
(2) GROWTH OF NUCLEAR FAMILIES AND SATELLITE TOWNSHIPS –
With most major cities getting overcrowded new businesses and industries are being
located on the outskirts of major cities resulting in people migrating to these areas for their
livelihood. These proliferating satellite townships provide a big opportunity for retailers who
open outlets in order to target this captive consumer base. With a shift in family structure,
nuclear families have become a significant component of urban markets. Large families’
fragmenting into nuclear families translates into increased footfalls and more shopping
baskets – providing a great opportunity for the retailers.

(3) CHANGE IN CONSUMER BEHAVIOR AND THE IMPACT OF WORKING WOMEN –

Changing income levels and occupation have resulted in a change in the consumer’s buying
behaviour. More urban women are seeking employment resulting in dual income families.
This results in more disposable income that in turn spawns consumerism. Moreover, in
households with working women there is greater work pressure and increased commuting
time resulting in adjustments being made to the food habits (cooking vs. ready to eat) as
well as clothing. The focus shifts to convenience and comfort. The size and composition of
the shopping basket has changed over time. Today’s consumers are looking for shopping
convenience and want to have all their requirements under one roof, coupled with speed in
the retail store operations. Due to time constraints, families are now looking for
‘shoppertainment’ – combining shopping with entertainment. This is one of the causes of

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increased footfalls at malls with multiplexes.

(4) RISE IN THE USE OF PLASTIC MONEY –

Plastic money an acronym for credit cards is an important driver of retail businesses. Indian
consumers are increasingly using credit cards for shopping as well as dining According to
Euro monitor, India is the second fastest growing Financial Cards market in the Asia-Pacific
region. In 2008, credit cards sales are estimated to have contributed around 1.2%, which is
expected to be around 1.4% of the total retail sales in India at the end of 2010.

(5) TECHNOLOGICAL ADVANCES –

From bar code scanners to RFID, technology has been one of the most important drivers of
change in the retail industry. To leverage on the growth of internet usage, online retailing is
growing as an alternate channel. Mobile marketing is another available tool. While
Planogram software enables retailers in planning the store layout, managing shelves and
designing interiors, CRM software applications aid retailers in developing a database of
customers under different classifications. Global Positioning Systems have been adopted to
monitor the movement of merchandise.

(6) ELECTRONIC MEDIA –

As against two channels in the early 90’s there is an explosion in the number of TV channels
through which retailers have access to a larger audience. Due to creative advertisements
across channels and print media, kid’s related products have registered stupendous growth.
In fact media invasion has changed the lifestyles of consumers resulting in greater demands
on variety and assortment, value, service and convenience. Media has helped in two ways;
on the one hand, it has resulted in booming sales for the retailers and on the other, by
creating awareness, has ensured that the consumer gets ‘value for money’.

(7) LOGISTICS AND SUPPLY CHAIN –

Managing the supply chain is the core of the retailer’s business since the products have to
be moved from the point of manufacture to the point of consumption (Customer). The term
currently used is the ‘farm to fork’ concept. While India's telecommunications network has
improved dramatically, the nation's outdated road, rail and port infrastructure continues to
present logistical challenges. It is believed an inadequate logistics infrastructure knocks 1 to
2 percent off India's average annual GDP growth rate. Only 2 % of India's roads are
highways, yet those highways handle more than 40 % of freight traffic. Rail service is
constrained, and two-thirds of the nation's commercial trucks are owned by carriers with
fleets of five trucks or less. As a result, logistics costs are estimated at about 13 percent of
GDP compared with well below 10 percent in most developed economies.

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(8) UNFRIENDLY LABOR AND TAX LAWS –
The retail and wholesale sector is the second largest employer in India after agriculture
accounting for over 9% of all jobs and its share in GDP equals 14%. 20A study shows that in
India 27% of the stores find labour regulations as a problem for their business21.A World
Bank study ranks India at 112 of 175 countries on the rigidity of employment expected to
grow to $12.4 billion by 201516 .Every year we read reports of tomatoes and other
perishable food items being dumped on the roads by the farmers for want of buyers at
prices that meet production costs17.While India is the sixth largest producer of fish, about
20 – 30% is damaged for want of cold storage facility. If the above statistics do not ring the
necessary alarm bells, both for the retail businesses as well as the government, then what
else will?

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(c) Highlight the key developments and changing landscape of the Indian retail sector and
the need of hour for Indian retailers to cope up
India’s retail sector has undergone a rapid transformation over the past decade and
this process is expected to strengthen in coming years with the rise in population,
per capita income and urbanisation. According to the provisional estimate by the
Census of India 2011, the country’s total population has reached nearly 1.21 billion
compared to the 1.03 billion recorded in the previous census of 2001. This
tremendous growth in population has led to an unprecedented scale of urbanisation,
with the share of urban population increasing to 31.0 per cent in 2011 from 28.0 per
cent in 2001. According to the United Nations, India has the highest rate of change
in its urban population of all the BRIC nations and this figure is likely to remain
above 2.0 per cent annually for the next three decades.
Nearly 64 per cent of the Indian population is in the working age group of 15-64  and
35.0 per cent is relatively young, aged 15-34. As per IMF estimates, the per capita
GDP of the country was Rs 46,221 per annum at end-2011, a figure that is forecast
to rise to Rs 58,224 by end 2015. With India’s growing per capita income and a rising
middle class, the retail sector has the potential to be the real growth engine of the
country’s economy. While demand for a superior shopping experience is evident in
the metropolitan cities, the Tier II and Tier III towns are also rapidly acclimatising to
the changing landscape of the Indian retail market. Growing consumerism, changes
in consumers’ tastes and preferences, and heightened brand consciousness has been
fast replacing traditional mom and pop stores with organised retail malls that house
lifestyle and luxury brands from national and international retailers.
As part of its retail transformation, India has seen substantial increase in mall space
in recent years. Over the past decade, such cities as NCR-Delhi, Mumbai and
Bangalore have shown prominent growth in retail stock, while Hyderabad, Pune,
Chennai, Kolkata and many other Tier III towns are rapidly emerging as the retail
growth corridors of the next decade. 
FDI in Multi-Brand Retail: Key to Speed up Retail Transformation
 
In an important policy move, the Indian government gave permission for up to
51 per cent FDI in multi-brand retail in September 2012. The objective of this policy
is to boost the retail business through adoption of international  standards and
practices. The entry of international products, practices and technology is expected
to enhance the effi ciency of domestic retailers. The government has made it
mandatory for foreign multi-brand retailers to place at least 50 per cent of their
total investment in back-end infrastructure, thus giving a boost to facilities such
as logistics and warehousing.

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Delhi NCR
 
Delhi is India’s political and administrative capital, and is  also the country’s second-
largest metropolitan city. With a mixed population of the traditional wealthy and the
middle class combined with the upwardly mobile employed across various
industries, there are healthy residential catchment  areas for luxury as well as
specialty and mass retailing formats. With healthy population levels across the
Prime City sub-markets and well-settled areas in the surrounding  locations,
organised retail formats have flourished over the past decade. Suburban cities look
set to see a larger share of future retail developments as they become home to
an increasingly large population that will fuel demand for these  formats across
multiple locations in the suburbs.
 
Demand
With vacancy rates in performing malls in single digits and retailers  favouring
expansion in projects offering optimal value, leasing activity was sluggish across the
Delhi-NCR retail market in 2Q12. Retailers are also pre-committi ng to space in
upcoming retail projects that offer a good location, design, branding and business
potential. Demand originated primarily from clothing and accessories brands, food
and beverage retailers, and electronic equipment vendors. Absorption  volumes saw
a 69.0 per cent drop from the previous quarter, with net take-up  at 170,985 sq ft, of
which two-thirds was in select existing projects in the Suburbs sub-market. 
 
Overall, vacancy rates dropped to 24.7 per cent, a 60 bps drop q-o-q. With existing
stock in the Prime South sub-market constrained by low  vacancy rates, notable
leases included those by Roberto Cavalli and Van Laack, which leased 3,000 sq ft and
1,500 sq ft respectively, in Emporio; Dunkin’ Donuts, which opened its first store in
India, leasing 1,000 sq ft in DLF Courtyard in Saket; and Mamagoto, a
Japanese restaurant, which leased 3,000 sq ft in DLF Promenade in Vasant  Kunj.
Leases in the Prime Others sub-market included Haldiram’s  take-up of 6,000 sq ft in
Pacific Mall, Subhash Nagar, as well as numerous other leases. Notable leases in the
Suburbs sub-market were Reliance Digital’s lease of 25,000 sq ft in Raheja Mall,
Lemp Brew & Kitchen’s lease of 10,292 sq ft in DLF Star Mall and Fabindia’s  lease of
8,500 sq ft in MGF Plaza, all in the Gurgaon precinct. 
 
Supply
 
New supply was limited to one completion in the Prime Others submarket, with the
retail component on the Delhi Metro Airport ExpressShivaji Stadium transit point
(60,310 sq ft) becoming operational at 35-40  per cent occupancy.  

STATISTICS
Quarterly absorption is sluggish in 2Q12
Polarised demand sees retailers favouring select retail projects
Rents are stagnant across all submarkets

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Asset Performance
Overall, rents remained stagnant as retailers resisted increases  and large retailers
enjoyed having an upper hand in commercial negotiations. Capital values showed a
slight increase in the Prime South sub-market but remained stagnant in other sub-
markets. Overall, capital values showed a q-o-q increase of less than 1 per cent,
while yields compressed by 10 bps for the first time in nine quarters.  

RENTAL INFORMATION
Rental Value: Rs 242 psf pm
Stage in Cycle: Growth slowing
No. of Quarters Since Last Trough: 4
 
12 Months outlook
On-going government discussions about FDI in multi-brand retailing  may lead to
some positive developments that are expected to spur the  entry of large-format
global retailers. Malls that are forecast to become operational will see leasing
activity based selectively on location and demographic profile. The Prime South sub-
market will continue to see interest from retailers and an active churn in existing
stock may push rents up. Select upcoming developments in the Prime Others
and Suburbs sub-markets are expected to generate healthy demand based  on
current pre-commitment levels. Supply rationalisation may result in  an easing of the
downward pressure on rents, although rental growth is  forecast to remain range-
bound. 
 
Mumbai
 
Mumbai is India’s largest metropolitan city and world’s fifth most populous city. It is
also the commercial and financial capital of India. Growing highand middle-
income demographics, along with a larger working population, has  enabled
organised retail to grow rapidly in the city. Indeed,  Mumbai was home to the
country’s first organised mall, Crossroad (at Mumbai Central), which opened in
1998; today, more than 50 malls are operational in the city. Mumbai also has well
established high street locations, along with many of the country’s most successful
malls. In recent years, many international luxury brands have chosen the city as
the perfect place for business because of its large population and  strong purchasing
power
Demand
Retail demand in 2Q12 was weighted towards certain quality malls  and overall take-
up slowed as retailers were careful about expansion  plans. The city recorded total
net absorption of 152,836 sq ft in 2Q12, a significant drop compared to the 488,016
sq ft recorded in 1Q12. Demand from retailers was concentrated in malls in the
Suburbs sub-market because of their better infrastructure and vast

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residential catchment areas. Lack of new retail space in the Prime South submarket
continued to cause strong demand in existing mall space in this  area, given its high-
end demographics and offi ce catchment areas. 
Dominated by high street space and standalone retail formats, demand  for mall
space in the Prime North sub-market remained under pressure  in 2Q12 and the
vacancy rate in the area held steady at the levels seen  in 1Q12. Lack of quality mall
space in the city continued to contribute to the polarisation of retailer demand
between good and poor malls. 
Supply
No new completions were recorded in 2Q12 and the city’s total retail  stock
remained at 1Q12 levels of 17.9 million sq ft, with average  vacancy rate dropping to
22.1 per cent. 

STATISTICS
Net take-up slows in 2Q12 due to cautious expansion by retailers
Overall vacancy rates decline
Rents and capital values increase in selected submarkets
 
Asset Performance
Rents increased in the Prime South and Suburbs sub-markets in  2Q12. The Prime
South sub-market saw a rise of 0.8 per cent q-o-q, mainly due to limited options
available to retailers. A gradual increase in the  occupancy rates of select quality
malls in the Suburbs sub-market boosted average rents by 2.0 per cent q-o-q in
2Q12. The lack of demand for poorly designed malls in the Prime North sub-market
caused rents and capital values to stabilise during the quarter. Capital values
increased marginally by 1.3 per cent and 2.2 per centq-o-q, respectively, in the
Prime South and Suburbs sub-markets. Investment sentiment was sluggish in
the quarter due to a slowdown in domestic growth an uncertain global  economic
situation.

RENTAL INFORMATION
Rental Value: Rs 240 psf pm
Stage in Cycle: Rents rising
No. of Quarters Since Last Trough: 5
 
12-Month Outlook
Absorption is expected to strengthen over the remainder of 2012, with  a forecast
increase in take-up in existing malls and the completion of a few major malls in the
Suburbs sub-market. The polarisation of demand is likely to continue as it
concentrates in strategically located and well-designed malls with good
management. Vacancy rates are expected to decline gradually as supply dries up
over the coming years and developers increasingly shift their preference to
standalone and mixed-use development retail formats as alternative retail

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locales. Expected policy decisions that will determine whether FDI in multi-
brand retail entities will be permitted are predicted to boost the retail industry  by
creating a business-friendly environment for both developers and  retailers. Brand
awareness among modern consumers is growing at an increased rate, encouraging
more international retailers to enter the city’s retail market. Rents and capital
values are likely to increase steadily in all sub-markets, albeit by different degrees. 
BANGALORE  
Over the past decade, Bangalore has experienced rapid growth and international
recognition in the field of IT and software development. The city’s demographic
profile has changed significantly due to the large migration of people into Bangalore
following the IT boom in various parts of the country, cutti ng across different
income groups and cultural backgrounds. This has added to the multicultural flavour
of Bangalore, and been one of the main drivers of the latest trends and lifestyles in
this cosmopolitan city. The city also attracts people from all over the world due to
its excellent schools and universities, among them the Indian Institute of Science,
the Indian Space Research Organisation, the Indian Institute of Management and the
Indian Institute of Aerophysics.
Demand
Bangalore witnessed absorption of 121,000 sq ft in 2Q12 against  878,097 sq ft in
1Q12, with overall vacancy rates decreasing from 9.1 per cent in 1Q12 to 7.6 per
cent in 2Q12. However, leasing of space in high streets remained strong in the
quarter as international and national retail brands expanded their footprints, mostly
in Indira Nagar, Koramangala and HSR Layout in the Secondary sub-market. The
brands that leased space in Bangalore in 2Q12 included Hush  Puppies, Pavers
England, Reliance Trends, Peter England People, Max Retail, Nike, Domino’s Pizza,
Samsung, Black, Sylcon Shoes and Reliance Digital. Max Retail expanded in two high
street locations – Basaweswarnagar and Malleswaram – leasing 10,800 sq  ft and
7,500 sq ft, respectively. Other major leases included Reliance  Trends with18,000 sq
ft in Kattriguppe and Reliance Digital with 9,000 sq ft in HSR Layout.  
 
Supply
The market saw no completions in 2Q12. The Orion Mall at Rajaji  Nagar in the
Secondary sub-market was the only mall to commence operations in 1H12. The total
stock of retail space in Bangalore in 2Q12 stood at 7.6 million sq ft, with about 29
malls operational in the city, most of them in the Secondary sub-market.
 
STATISTICS
Absorption decreases significantly in 2Q12
Rents are stable across all submarkets
Capital values increase in the Prime submarket
 
Asset performance
Rents in malls in the Prime sub-market have remained stable over the  past eight
quarters. A considerable supply of malls in the pipeline is  offering retailers many
options and developers are, therefore, unable to increase rents in the Secondary

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sub-market in order to attract retailers.
 
Capital values remained unchanged in both the Secondary and  Suburbs sub-markets
in 2Q12, while the Prime sub-markets saw a nominal increase in values, mainly due
to the increase in land values in the city as a whole. Yields remained mostly stable in
the quarter, with a decrease of 10 bps seen only in the Prime sub-market. 

 
RENTAL INFORMATION
Rental Value: Rs 178 psf pm
Stage in Cycle: Decline slowing
No. of Quarters Since Last Peak: 14 
 
12-Month outlook
The retail market saw a slowdown in investment plans by major  retailers in 2Q12 as
top retailers occupying organised retail space  are expanding only slowly and
cautiously; this will have an impact on  absorption for 2012 as a whole. The city is
also expected to see supply of about 1.6 million sq ft over the next 12 months.Rents
are likely to remain stable or appreciate marginally in 2H12  given a considerable
supply in the pipeline and an expected slowdown  in demand among retailers. Capital
values are forecast to rise due to the increase in construction costs and land values. 
 
CHENNAI
Known for its popular high streets, Chennai is considered the home of many
traditional retail formats. Although high 
streets continue to attract retailers, the increased globalisation and cross-cultural
migration from within India has caused the consumption pattern of the city’s
working class to undergo a significant metamorphosis. With improved business
opportunities, Chennai’s retail landscape has also witnessed rapid changes, including
the entry of major foreign and domestic retailers and mall developers. Indeed,  a
number of malls are expected to become operational over  the next two years,
dispersed across various locations in the city. Retail activity is currently
concentrated in the CBD and SBD of Chennai, while such suburban locations as
OMR and GST are seeing flourishing residential and commercial  development that
will trigger retail activity in the future.
 
Demand
Vacancy rates dropped from 13.5 per cent in 1Q12 to 11.2 per cent in 2Q12, with
absorption in the quarter at 63,000 sq ft. Retailers remained cautious about leasing
mall space as the lack of options in existing malls is encouraging them to wait for
upcoming malls. Absorption in the quarter was restricted to a couple of malls, with
Spectrum Mall leasing some 58,000 sq ft of space to Sathyam Cinemas and Ramee
Mall leasing 5,000 sq ft to Q Play, a gaming zone. High streets of Chennai remained
the preferred destination for retailers, with home appliances, electronics, textiles
and lifestyle brands, as well as computer showrooms, opening shops in different
high street locations. The city’s retail market has always been driven significantly by

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the jewellery business. Prevailing inflation and a volatile economic situation has
reinforced demand for such safe-haven commodities as gold and silver. Indeed, in
2Q12, Gitanjali Jewels and VBJ opened showrooms on TTK Road and Anna Nagar
respectively. Meanwhile, the growing young migrant population in the city has
boosted demand for fast food and take-away outlets like Café Coffee Day, Sri Krishna
Sweets, Grand Sweets and Thalapakkatti , expanding in 2Q12
Supply
No new supply was added in 2Q12, although a significant 2 million  sq ft is expected
to come on stream in 2H12. Prestige’s Forum Mall in Vadapalani, Market City & PS
Grand Mall in Velachery, and Ten’s Square Mall in Koyembedu are expected to enter
the market in 2H12.

STATISTICS
Vacancy rates decline in the suburbs
Retailers continue to wait for quality mall space as no new supply enters the market in
2Q12
Financial indicators rise marginally after remaining 
stable for over a year
 
Asset performance 
Higher quoted rents and pre-commitments at higher rates pushed  rents up during
the quarter with average figures rising from Rs 87  per sq ft per month in 1Q12 to Rs
88 per sq ft per month in 2Q12. Capital values rose by 0.9 v to Rs 8,175 in the
quarter due to anticipation of higher rents in upcoming projects.
 
RENTAL INFORMATION
Rental Value: Rs 135 psf pm
Stage in Cycle: Growing slowing
No. of Quarters Since Last Peak: 9 

 
12 Month outlook 
With more than 2 million sq ft of mall space in advanced stages  of construction and
around 65% of space already pre-committed, vacancy rates are expected to rise in
the short term. However, we predict that rates will decline over the medium term as
retailers who are waiting for a good location to set up shop will likely take up  space
in the new malls in prime locations. A significant amount of  mall space that is
coming up in the short term will influence average  rents and capital values in the
city, with higher quoted rents in new malls continuing to drive rental and capital
value growth. However, 
this growth will be restricted to projects in prime locations as rents in  peripheral
areas will remain stable 
PUNE

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Located in western India, Pune is the country’s eighthlargest city and has a
population of 5.8 million. Pune’s economy is driven by sectors such as automobiles
& auto components, IT/ITeS, biotechnology and agro & food processing. Today, the
city is also known for its educational facilities.It is home to more than 200
educational institutes and nine universities. The resulting opportunities attract
working people and students from all over India and overseas, making Pune a city of
many communities and cultures. Growing young and high-income demographics
have spurred the growth of organised retail in Pune, with more than 16 malls now
operating in the city. A growing number of investment-grade malls have introduced
a new retail culture to Pune and its retail landscape has undergone a significant
transformation, with the completion of seven malls over the past two years.
Demand
Pune currently lacks readily available quality mall space in both  Prime City and
Secondary sub-markets, which is the primary reason  for the recent fall in demand
from retailers. Following the completion of five malls over the past 18 months,
Pune’s retail market saw no new completions in 2Q12, although Seasons Mall is
likely to become operational in 3Q12. Transaction activity was subdued in 2Q12,
with net absorption amounting to just 17,411 sq ft. Overall vacancy rate  decreased
marginally from 17.9 per centat the end of 1Q12 to 17.5 per cent in 2Q12. Vacancy
rates in Prime City remained unchanged whereas  those in the Secondary sub-market
decreased from 19.3 per cent to 18.9 per cent in 2Q12. With most prime malls in the
city, such as Magnum Mall on Moledina Road and Jewel Square in Koregaon Park,
running at more than 90 per cent occupancy, Plaza Centre commenced operations
in 1Q12 with an 83 per cent occupancy rate. The Secondary sub-market
saw heightened activity in 2011 with the opening of Pulse Mall, K Raheja  Corp’s
Inorbit Mall, Phoenix Market City, Reliance Mall and Amanora  Market City. Pune’s
retail market is likely to follow the same trend  over the remainder of 2012 as
Seasons Mall in Hadapsar and Prime Mall in Chinchwad are expected to enter the
market over the next two quarters.
Supply
With no new completions recorded in 2Q12, Pune’s organised retail  stock remained
unchanged at 5.1 million sq ft. Seasons Mall, offering approximately 0.65 million sq
ft, is currently under construction and likely to be operational by 3Q12.
Approximately 2.5 million sq ft of new supply is forecasted to become operational
from 2012-14, with major projects including Kohinoor Mall and Seasons Mall in
the Secondary sub-market, and ICC Mall in the Prime City sub-market.
 

STATISTICS
With no new completions recorded, Pune’s organised retail stock remains unchanged
in 2Q12
Occupancy rates in malls improve marginally on the back of fewer transactions in the
quarter
Rents and capital values remain stable at 1Q12 levels
 

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Asset performance 
With no new completions recorded in 2Q12 and low vacancy rates  prevailing in
existing quality malls, rents remained stable at the  previous quarter levels. At end-
2Q12, rents in malls in the Prime City sub-market were stable at an average of Rs
118 per sq ft per month. High rents in the sub-market can be attributed to
almost 100 per cent occupancy rate seen in both major malls (Magnum Mall  and
Jewel Square). In addition, transactions recorded in Plaza  Centre were relatively on
the higher side. Rents in the Secondary  sub-market are driven primarily by the
recently completed Market City, Inorbit and Pulse Mall, as well as Amanora Town
Centre Mall in eastern Pune. Most of the transactions in these malls are
being signed for Rs 70-120 per sq ft per month (for the smaller spaces).  Rents in the
Secondary sub-market remained stable at an average of Rs 72 per sq ft per month in
2Q12.
 
RENTAL INFORMATION
Rental Value: Rs 118 psf pm
Stage in Cycle: Rents rising
No. of Quarters Since Last Trough: 13 
 
12 Month outlook 
Some 2.5 million sq ft of organised retail space is expected to become operational
over the next 18-24 months; resulting in a potential for over-supply in this sector
over the coming year. This may increase vacancy rates and put downward pressure
on rents. Significantly low vacancy rates in existing quality-  malls (Magnum Mall,
Kumar Pacific and Jewel Square) and limited new developments are driving rents
up in the Prime City sub-market. 
HYDERABAD
With a population of about seven million, Hyderabad has a mix of both traditional
and contemporary retail destinations. The older parts of the city are home to local
retail outlets along major transport corridors and nodes that have evolved into
prime traditional high street retail space. These retail destinations are also tourist
attractions given that they are the trading centers for pearls and other semi-
precious gems, along with stores that sell traditional arts such as zardosi and bidri.
The new city has witnessed growth in the organised retail sector that extends up to
IT hubs including Begumpet, Banjara Hills and Jubilee Hills and; on to Hi-Tech City,
Madhapur and Kondapur. These locations now have the presence of international,
national and local brands. They are also seeing significant mall developments, as the
city enjoys strong retail potential in line with the growth in
employment opportunities and income.
Demand
Demand remained healthy in 2Q12 as retailers expanded in prime  high street
locations, with most of the leasing focussed in Banjara  Hills and Jubilee Hills. The
Manjeera Mall continued to see leasing activity during the quarter. Mom & Me,
Arvind Store, Reliance Retail, Canon, More and others leased space in the city in

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2Q12. There was no net absorption in the quarter and the vacancy rate remained
at 2.1 per cent. Pre-leasing continued in malls under construction, although  most
existing malls saw little or no major leasing activity.
 
Supply 
Hyderabad saw no new mall space in 2Q12.
 
STATISTICS
High streets continue to see good leasing activity, 
especially in the Prime Suburbs sub-market
Pre-leasing in malls under construction continues at a modest pace
Rents and capital values remain flat in malls while 
rents for high street space increase
 
Asset Performance
Rents and capital values remained stable in 2Q12. However,  improved demand and
the scarcity of mall space boosted demand for high street space, which in turn led to
a rise in rents.
 
RENTAL INFORMATION
Rental Value: Rs 127 psf pm
Stage in Cycle: Growth slowing
No. of Quarters Since Last Trough: 6
 
12 Month outlook
Improving hiring activity in the city is expected to boost consumer  confidence,
driving demand for retail space. Local and national retailers are predicted to expand
strongly in the city, especially in high street locations. A few good-quality malls in
the city, such as Manjeera Majestic, Manjeera Trinity and Prestige Forum Crystal, are
under construction and enjoy good leasing activity. Rents are forecasted to  rise
marginally given the scarcity of mall space in the city.
 
KOLKATA
 
India’s third most populous city - the business, financial  and trading hub of eastern
India - Kolkata has witnessed a surge in investment and a rapid growth in the IT/ITeS
sector in recent years. The city is made attractive by its depth of talent pool and
relatively low operating costs. Today, Kolkata  has made its way on to the radar of
international premium brands due to its growing high-income population
and optimistic business sentiment. As the retail landscape of the  city undergoes a
sea change, this City of Joy is gearing up to put its best foot forward.
 
Demand
Due to a scarcity of available retail stock in the Prime City and Prime  Others sub-
markets, the Suburban sub-market continued to attract active interest from
retailers. Net absorption in 2Q12 was 5,274 sq ft, an increase over the previous
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quarter and indicative of improving sentiment. The overall vacancy rate in 2Q12 was
10.9 per cent, a q-o-q decrease of 10 bps. Vacancy rates in the Prime City and
Prime Others sub-markets stood at 2.4 per cent and 8.5 per cent, respectively, in
2Q12. The vacancy rate in the Suburban sub-market witnessed a q-o-q decrease of
10 bps to 12.9 per cent in the quarter.
STATISTICS
Absorption levels in 2Q12 increase over 1Q12 levels due to improving market sentiment
There are no new completions in the quarter
Rents and capital values register q-o-q increases in the range of 1-2% across all sub-
markets
 
Supply
There were no new completions in the quarter and total retail stock  in the city was
about 4.4 sq ft as at the end of 2Q12, with an overall  vacancy rate of 10.9 per cent.
The Suburban sub-market is home to around 64% of the total retail stock in the city.
 
Asset performance
Overall, rents rose by a marginal INR 1 per sq ft per month, signalling  that the
market is moving towards growth. Rents in the Prime City  sub-market have risen
since 1Q12 as a result of limited new supply and low vacancy rates in operational
malls. The q-o-q rate of increase in 2Q12 was 1.6 per cent. Capital values in the
Prime City sub-market also witnessed a 1.6 per cent jump q-o-q to settle at INR
16,000 per sq ft. Subsequently, market yields remained at 10.4 per cent due to
the proportionate increase in rents and capital values. Rents in the Prime  Others and
Suburban sub-markets have also seen a q-o-q increase  in the range of 1-2 per cent
since 1Q12.
 
RENTAL INFORMATION
Rental Value: Rs 188 psf pm
Stage in Cycle: Rents rising
No. of Quarters Since Last Trough: 8
 
12 Month outlook
After making its way on to the radar of premium international brands,  Kolkata
continues to attract active retailer interest. Enquiries are  expected to remain robust
over the next 12 months as retailers, both anchor and vanilla, continue to chase
deals in projects under construction by reputed developers, which may provide a
stimulus for superior branding. Transactions are likely to follow the trend  towards
revenue-sharing rather than straightforward leasing deals. Rents are expected to be
stable in the short term if all projects under  construction are completed as
expected.

(d) Comparison of the current trends of organised retailing in India Vis-a Vis the global
scenario.  

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The Indian Retail Scene
India is a country having one of the most unorganized retail markets. Traditionally it is a
family’s livelihood, with their shop in the front and house at the back, while they run the
retail business. More than 99% retailers function in less than 500 square feet of shopping
space. The Indian retail sector is estimated at around Rs 900,000 crore, of which the
organized sector accounts for a mere 2 per cent indicating a huge potential market
opportunity that is lying in the waiting for the consumer-savvy organized retailer.
Purchasing power of Indian urban consumer is growing and branded merchandise in
categories like Apparels, Cosmetics, Shoes, Watches, Beverages, Food and even Jewellery,
are slowly becoming lifestyle products that are widely accepted by the urban Indian
consumer. Indian retailers need to take advantage of this growth and aim to grow, diversify
and introduce new formats and have to pay more attention to the brand building process.
The emphasis here is on retail as a brand rather than retailers selling brands. The focus
should be on branding the retail business itself. In their preparation to face fierce
competitive pressure, Indian retailers must come to recognize the value of building their
own stores as brands to reinforce their marketing positioning, to communicate quality as
well as value for money. Sustainable competitive advantage will be dependent on
translating core values combining products, image and reputation into a coherent retail
brand strategy. There is no doubt that the Indian retail scene is booming. A number of large
corporate houses — Tata’s, Raheja’s, Piramals’s, Goenka’s — have already made their foray
into this arena, with beauty and health stores, supermarkets, self-service music stores, new
age book stores, every-day-low-price stores, computers and peripherals stores, office
equipment stores and home/building construction stores. Every retail category has been
attacked, by the organized players today. The Indian retail scene has witnessed too many
players in too short a time, crowding several categories without looking at their core
competencies, or having a well thought out branding strategy.

The Global Retail Scenario

Retail has played a major role world over in increasing productivity across a wide range of
consumer goods and services .The impact can be best seen in countries like U.S.A., U.K.,
Mexico, Thailand and more recently China. Economies of countries like Singapore,
Malaysia, Hong Kong, Sri Lanka and Dubai are also heavily assisted by the retail sector.
Retail is the second-largest industry in the United States both in number of establishments
and number of employees. It is also one of the largest world-wide. The retail industry
employs more than 22 million Americans and generates more than $3 trillion in retail sale
annually. Retailing is a U.S. $7 trillion sector. Wal-Mart is the world’s largest retailer.
Already the world’s largest employer with over 1million associates, Wal-Mart displaced oil
giant ExxonMobil as the world’s largest
Company when it posted $219 billion in sales for fiscal 2001. Wal-Mart has become the
most successful retail brand in the world due its ability to leverage size, market clout, and
efficiency to create market dominance. Wal-Mart heads Fortune magazine list of top 500
companies in the world. Forbes Annual List of Billionaires has the largest number (45/497)
from the retail business.

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 Global Retail V/s Indian Retail
Large format retail businesses dominate the retail landscape in the United States and
across Europe, in terms of retail space, categories, range, brands, and volumes. Indian
retail industry cannot hope to learn much by merely looking at the Western success stories
in retail. Their scales of operations are very huge, the profit margins that they earn are also
much higher and they operate in multiple formats like discount stores, warehouses,
supermarkets, departmental stores, hyper-markets, convenience stores and specialty
stores. The economy and lifestyle of the West is not in line with that of India and hence the
retailing scene in India has not evolved in the same format as the West nor can we learn
valuable lessons from their style of operations. In retailing, the conventional wisdom used
to be, that, the critical success factor was location. But precise location no longer matters
and geo-demographics are increasingly becoming irrelevant. The leading multiple chain
retailers, superstores and malls create their own centers of gravity, attracting customers
by car, bus, train or even by plane to wherever they are located. The following factors still
pose a challenge for the Indian retailers:-

Geographic saturation-the end of the nineties has signified a turning tide of retailer
power. The limit to retail ambition is geographic saturation. Many retailers have started
postponing their store expansion plans. The track record of some of their international
store expansions is also not promising.

Category killer competition-the threat of saturation is accompanied by a new competition

from the low cost category killers. Specialist competition is eating away at the market
share and forcing down the prices and gross margins of the multiple chains.

Alternative shopping channels-the newest retail format that is showing growth and is
more frightening for retailers than for consumers, is the internet. The potential for on-line
shopping which is growing questions retailers’ investments in more physical sites and
stores and makes it imperative that they too explore the new agenda of ‘E-retailing’ or ‘e-
tailing’.

(e)  Summarize the project report by illustrating the opportunities and bottlenecks of

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organised retailing in India. 
Retail in India is most dynamic industry and represents a large opportunity for domestic and
international retailers. Modern retailing is not a problem to traditional stores as most of the
consumers said that they never stopped visiting Kirana stores. They strongly agree that the
existence of both the sector is required .The retailers have to redesign the retail format
strategies on the basis of customized regional approach. The analytical mass of the research
makes it sufficiently evident exclusive showrooms and branded companies are not feasible
in the Indian scenario and they have to reframe their strategies.
The main reason for this is that the western pattern of retail format in India does not suit
the people and culture. It must be kept in mind that Indian buyers are extremely price
sensitive (than quality). Ease to buy and credit facilities provided by un-organised retail is
still a major consideration while shopping. In nutshell we can say that there is vast scope for
the growth of organized sector in India due to change in time, technology, customer
requirement, customer taste, preferences. But it is also true that Kirana store are big
challenges in front of them. In India no doubt that due to lack of time and increase of service
class organized sector is developing but still people in Rural, semi urban are still prefer to
buy from Karyana store due to reliability, and boundless.
Challenges to organized retail development in India
Since Retailing is not very old concept in India so the rate of growth is still slow in India.
Various reasons for slow rate of growth of organized retailing in India can be summarized as
under:
1. Existence of small shops (The kirayanas): Competition from unorganized sector is the
major challenge against organized retailing .The small shops are mostly owner operated, it
requires very little investment and has very little taxes to pay all of which collectively pose
challenge for organized retailing because organized retailing has big cost structure and yet
they have to keep prices low so as to meet competition.
2. No recognition to Retailing: Retailing in India is not recognized as an industry which
hinders the growth of retailing as no finances are available for its development & growth.
3. Highly priced Real Estate: The real estate prices are very high in India. The rent or lease
of property is so expensive that it reduces the profitability of a project and makes it difficult
to find suitable properties in central locations for retail.
4. Stamp Duties: There is a very high stamp duty on transfer of properties which also
hinders the process of growth. Stamp duty varies from state to state.
5. Lack of Infrastructure: poor roads and the lack of a cold chain infrastructure hamper the
development of food and grocery retail in India.
6. Price War: There is a price war between different retail organizations. Every one is saying
to provide goods at low cost and offers various promotional schemes. In such a case it is
difficult to keep one’s customers with oneself.

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7. Lack of Skilled Manpower: Since in India there are very few courses specific to retailing in
India. Graduates/ post undergraduates from other fields are recruited so there is lack of
skilled manpower.
8. Policy Barriers: Since organized retail in India is managed by both the Ministries of
Commerce & Consumer Affairs. While the Ministry of Commerce takes care of the retail
policy, the Ministry of Consumer Affairs regulates retailing in terms of licenses and
legislation. There is a need to govern retail operations through a single apex body. A single
agency can take care of retail operations more effectively.
9. Channel Conflicts: Globally, retailers maintain a direct relationship with their suppliers.
Due to the complex taxation structure and geographical spread of the country, most FMCG
companies have developed regional distribution and re-distribution network. Cutting out
the distribution network will hurt the operating structure of distributors.
Growth and Opportunities of Retailing in India:
The Indian retail trading has received Foreign Direct Investment (FDI) equity inflows totalling
US$ 537.61 million during April 2000–March 2016, according to the Department of
Industrial Policies and Promotion (DIPP).
With the rising need for consumer goods in different sectors including consumer electronics
and home appliances, many companies have invested in the Indian retail space in the past
few months.
• International Finance Corporation (IFC), the investment arm of The World Bank, plans to
invest up to Rs 134 crore (US$ 19.86 million) in Kishore Biyani’s Future Consumer
Enterprises Ltd, which is expected to aid the company in driving its growth plans.
• Amazon India has opened six new fulfilment centres across Chennai, Coimbatore, Delhi,
Jaipur and Mumbai, which will open up 5.5 million square feet of storage space for sellers
on the marketplace who use the ‘Fulfilled by Amazon ‘service.
• IKEA, the world’s largest furniture retailer, plans to invest Rs 10,500 crore (US$ 1.56
billion) to set up 25 stores across India and hire over 15,000 permanent employees and
37,500 temporary employees to assist in running its stores.
• Amazon Inc. has announced that the company would invest an additional US$ 3 billion in
India operations, thereby taking its committed investment in the country to over US$ 5
billion.
• Aditya Birla Fashion and Retail Limited (ABFRL) has announced that it will acquire Biz and
Bytes an American fast fashion brand, in the Indian market.

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