Executive Summary

Retailing is emerging as a sunrise industry in India and is presently the largestemployer after agriculture. In the year 2004, the size of Indian organized retailindustry was Rs 28,000 Crores, which was only 3% of the total retailing market.Retailing in its present form started in the latter half of 20 th Century in USA andEurope and today constitutes 20% of US GDP. It is the 3 rd largest employer segmentin USA. Organized retailing in India is projected to grow at the rate of 25%30% p.a.and is estimated to reach an astounding Rs 1,00,000 Crores by 2010. The contributionof organized retail is expected to rise from 3% to 9% by the end of the decade. The projection for the current year ie 2005 is Rs 35,000 Crores. In India, it has been foundout that the top 6 cities contribute for 66% of total organized retailing. With themetros already been exploited, the focus has now been shifted towards the tier-IIcities**. The 'retail boom', 85% of which has so far been concentrated in the metros is beginning to percolate down to these smaller cities and towns. The contribution of these tier-II cities to total organized retailing sales is expected to grow to 20-25%. Inthe year 2004, Rs 28,000 Crores organized retail industry had Clothing, Textiles &fashion accessories as the highest contributor (39%), where as health & beauty had acontribution of 2%. Food & Grocery contributed to 18% whereas Pharma Retail had acontribution of 2%. Pantaloon Retail (India) Limited, is Indias leading retailer thatoperates multiple retail formats, the company operates over 5 million square feet of retail space, has over 450 stores across 40 cities in India and employs over 18,000 people. INDIAN RETAIL SCENARIO

OVERALL INDIA VIEW Area(`000 sq km) =3,300Population(million) =1,095Medium Age =25 yearsGovernment Type =Federal Republic Economic Overview : Indian is currently undergoing an economic revolution which isgenerating fast-paced changes and development.There is stable 8 % annual growth, Rising foreign exchange reserves of close to USD 140 billion, Consistent and flowing Foreign Direct Investment(FDI) of close to UDS 8 billion,

Export surge in excess of 20%.This altogether enable the Indian economy to expand in coming years. Investment eccentric : With a rapidly expanding consumer base (private consumptioncurrently account for 61% of Indias GDP) and stabilized consumer price index rate4.2%. India is now preferred investment destination and has surpassed the U.S to becomethe second most favourable destination for FDI, in the world after China.GDP and CPI2002200320042005GDPGrowth(%)3.68.38.58.5CPI(%)4.33.83.84.2 Source : EIU, July 2006 6 FOREIGN DIRECT INVESTMENTS: Foreign direct investment is opened to single brand retailers.Steady increase in FDI2002200320042005FDI (INR m)273530.2201379.6248062.4295293.4FDI (FDI bn)5.64.35.56.7 Source : EIU, July 2006 DEMOGRAPHICS AND CONSUMER BEHAVIOUR A growing population, a youthful workforce and soaring consumer confidence are solidargument for long term growth. A growing population, a youthful workforce and soaring consumer confidence aresolid argument for long term growth. Indias population in 2005, is estimated to 1095mn. By 2016, India will havesecond highest population in world after China.2002200320042005Population(mn)1049.71065.11080.31095.2 More than 50% of the Indias Population is less than 25 years of age compared to othersdeveloped countries. Age profile

% of total population199920042009Trend0-14 years34.031.729.615-64 years61.463.565.2Over 65 years4.64.85.2 Source : EIU, July 2006 7

MAJOR RETAIL PLAYERS Comprised of organized and traditional retail formats,Indian Retail market isestimated to be worth USD 350 billions. o Organised Retail is estimated at USD 8 billions.Organised Retail isgrowing at over 30% annually.

o Of indias 12 millions retail outlets,more than 80% are operated by smallfamily business using household loabour. o The retail industry represents 13% of GDP and accounts for 6% of indiaswork force.Burgeoing growth rate in the retail industry are attributed togrowth in India economy,rising income and changing consumption andexpenditure patterns. TOP MAJOR RETAIL PLAYERS RetailerExistingformatsBrand Names No.of StoresTotal RetailSpace(000sq ft)TotalSales200405(USDmn)ExpansionsPlansPantaloonRetailIndian LtdDepartmentstorePantaloon131,948241Invest aroundUSD125 mn betweenFY06-FY08.Open 80-100more storesacrossformats.HypermarketBig Bazaar18N/AN/ATriple totalRetail area byFY08 to 6.5mn Sq. ft.SupermarketsFoodBazaar 9N/AN/AEnter intoFurniture andhomeretailing.SeamlessMallsCentral3N/AN/A8 RPGRetailHyper marketsSpencers348096Open 21hypermarketsandsupermarketsMusic StoresMusicworld225N/AN/AOpen another 100 MusicStores inFY08.Super marketsSpencers49N/AN/AShoppersStop Ltd.DepartmentstoresShoppersStop20100096Add 2 mn Sq.Ft. of RetailSpace in FY08Books &Music StoresCrosswords33N/AN/AEnteringHypermarketformat, 18Stores planned by FY08HomefurnishingHome StopN/AN/AN/ASetting upSpecialityStores for HomeSolutions.Landmark Group(Based inDubai)DepartmentStoresLifestyle837067Set up 25 NewDepartmentalstores byFY08. InvestUSD 65mnover next 5years.TrentIndia LtdDepartmentStoresWest side1935052Add 640,000sq.ft. of RetailSpace.HypermarketsStar IndiaBazaar 1N/AN/AOpen 17Stores under thedepartmentalandHypermarketformats byFY08.Books &Music StoresLand Mark4N/AN/A9 Upcoming Malls in India (till 2007) Metropolitan CitiesNo. of Malls National Capital Region60Mumbai28Hyderabad15Bangalore9Kolkata9Chennai4Sub Total125 Mini Metropolitan CitiesNo. of MallsPune9Ahmedabad5Tier II Cities81Total 220 Let us look at the evolution process Detailing reasons why Indian organized retail is at the brink of revolution, the IMAGES-KSA report says that the last few years have seen rapid transformation in many areas andthe setting of scalable and profitable retail models across categories. Indian consumersare rapidly evolving and accepting modern formats overwhelmingly. Retail Space is no10more a constraint for growth. India is on the radar of Global Retailers and suppliers / brands worldwide are willing to partner with retailers here. Further, large Indiancorporate groups like Tata, Reliance, Raheja, ITC, Bombay Dyeing, Murugappa &Piramal Groups etc and also foreign investors and private equity players are firming up plans to identify investment opportunities in the Indian retail sector. The quantum of investments is likely to skyrocket as the inherent attractiveness of the segment lures moreand more investors to earn large

profits. Investments into the sector are estimated atINR 2000 - 2500 Crore in the next 2-3 years, and over INR 20,000 Crore by end of 2011. Company Profile:Pantaloon Retail (India) Limited, is Indias leading retailer that operates multipleretail formats in both the value and lifestyle segment of the Indian consumer marker.Headquartered in Mumbai (Bombay), the company operates over 5 million square feetof retail space, has over 450 stores across 40 cities in India and employs over 18,000 people.The companys leading formats include Pantaloons, a chain of fashion outlets, BigBazaar, a uniquely Indian hypermarket chain, Food Bazaar, a supermarket chain, blends the look, touch and feel of Indian bazaars with aspects of modern retail likechoice, convenience and quality and Central, a chain of seamless destination malls.Some of its other formats include, Depot, Shoe Factory, Brand Factory, Blue Sky,Fashion Station, aLL, Top 10, mBazaar and Star and Sitara. The company alsooperates an online portal, futurebazaar.com.A subsidiary company, Home Solutions Retail (India) Limited, operates Home Town,a large-format home solutions store, Collection i, selling home furniture products andEZone focused on catering to the consumer electronics segment.Pantaloon Retail was recently awarded the International Retailer of the Year 2007 by theUS-based National Retail Federation (NRF) and the Emerging Market Retailer of theYear 2007 at the World Retail Congress held in Barcelona.Pantaloon Retail is the flagship company of Future Group, a business group catering tothe entire Indian consumption space.12

Future Group Manifesto Future the word which signifies optimism, growth, achievement, strength, beauty,rewards and perfection. Future encourages us to explore areas yet unexplored, writerules yet unwritten; create new opportunities and new successes. To strive for aglorious future brings to us our strength, our ability to learn, unlearn and re-learn, our ability to evolve.We, in Future Group, will not wait for the Future to unfold itself but create futurescenarios in the consumer space and facilitate consumption because consumption isdevelopment. Thereby, we will effect socioeconomic development for our customers,employees, shareholders, associates and partners.Our customers will not just get what they need

,but also get them where,

how and when they need.We will not just post satisfactory results, we will write successstories .We will not just operate efficiently in the Indian economy, we will evolve it.We will not just spot trends, we will set trends by marrying our understandingof the Indian consumer to their needs of tomorrow.It is this understanding that has helped us succeed. And it is this that will help ussucceed in the Future. We shall keep relearning. And in this process, do just onething. Rewrite Rules. Retain Values. Group Vision Future Group shall deliver Everything, Everywhere, Everytime for EveryIndian Consumer in the most profitable manner. Group Mission We share the vision and belief that our customers and stakeholders shall be served only by creating and executing future scenarios in theconsumption space leading to economic development.We will be the trendsetters in evolving delivery formats, creating retail realty,making consumption affordable for all customer segments for classes andfor masses.13 We shall infuse Indian brands with confidence and renewed ambition.We shall be efficient, costconscious and committed to quality in whatever wedo.We shall ensure that our positive attitude, sincerity, humility and uniteddetermination shall be the driving force to make us successful. Core Values Indian ness : confidence in ourselves. Leadership: to be a leader, both in thought and business. Respect & Humility: to respect every individual and be humble in our conduct.

Introspection: leading to purposeful thinking. Openness: to be open and receptive to new ideas, knowledge and information.Valuing and Nurturing Relationships: to build long term relationships. Simplicity & Positivity: Simplicity and positivity in our thought, business andaction. Adaptability: to be flexible and adaptable, to meet challenges.Flow: to respect and understand the universal laws of nature.14 Hierarchy of Pantaloon (Future Group) Mr. Kishore Biyani, Managing DirectorMr. Gopikishan Biyani, Wholetime DirectorMr. Rakesh Biyani, Wholetime DirectorMr. Ved Prakash Arya, DirectorMr. Shailesh Haribhakti, Independent DirectorMr. S Doreswamy, Independent DirectorDr. D O Koshy, Independent DirectorMs. Anju Poddar, Independent DirectorMs. Bala Deshpande, Independent DirectorMr. Anil Harish, Independent Director

Rakesh BiyaniCEO - RetailAnshumanSinghCEO - Value FashionDamodar MallCEO - Incubation & InnovationHans UdeshiCEO - General MerchandisingHemchandraJaveriCEO - Home Solutions Retail (India) Ltd.Kailash Bhatia CEO - Integrated Merchandising GroupMadhumatiLeleCEO ServicesRajanMalhotraCEO - Big Bazaar Sadashiv Nayak CEO - Food Bazaar SanjeevAggarwalCEO Pantaloons Vishnu PrasadCEO - Central & Brand Factory KrubenMoodliar President- Operations (Value Retailing)Mayur ToshniwalHead - Operations (North Zone)Rajesh JoshiHead - Operations (West Zone)Rohit MalhotraHead - Operations (South Zone)SandeepMarwahaHead - Operations (East Zone)Sanjay JogHead - Human ResourcesUshir BhattExecutive Board Member Atul TakleHead - Corporate CommunicationsPrashant DesaiHead Group IR & New Ventures (PE)Vinay Shroff Head - Supply Chain Management Big Bazaar-A paradigm shift to the Modern Retail Bazaar Big Bazaar PRILs Hypermarket format that truly heighten up the expectation of valueconcisious Indian customer to a new level ever before. It has changed the customers perception to that extent that they have already started to realize that Big Bazaar can provide real value for their money. The first store opened in Kolkata in 2001 atVIP and was followed by stores in Hyderabad and Bangalore in short span of 22 days.These stores contributed over Rs.43 crores to the companys business and over Rs.2.89 crores to the PBDIT in first year it self. Sabse Sasta 3 din Science, 2006 Republic days mega sale of Big Bazaar has been generating aunprecedented response from customer. Its now been extended for three days .In the2007

customer had spent Rs. 125 cores and in 2008 it has made a sale of whoppingRs.300 coresDuring our project period, we had specifically studied those three days of Mega saleat Big Bazaar. We noticed several scope of improvement in the Big Bazaar store(Lee Road, Kolkata) like customer handling, stock replenishments and customer satisfactionWe have found that few areas need some attention from the management side. Werealized that customer is somewhat willing to forgive a bit despite their inconvenience because of the understanding of difficulties of store personals and management people. But, if we will take care of those areas and fix them as soon as possible thenoverall profitability of the store and customers shopping experience would bedefinitely better then before. Findings We have studied each scope of improvement and tried our best to make a proposition,which have drawn our attention.1.While we were juggling customer on the shop floor at various departments, wewere noticing that stocks were disappearing very quickly but replenishmentswere not done at timely manner and because of this a lot of customers weregoing back without making any purchase.Our proposition to fix this situation that respective Category managers as well asDepartment managers need to be careful about the backup stock .Forecasting is todone in well advance .In case if its a relatively new store then past sales data of other stores of same retail chain can be used to anticipate the sales volume.2.During Big sale days we have noticed that hundreds of customers werewaiting on queues .The line never stop to buy a product, pay the bill, enter thestore .These queues deter many customers to make a purchase, even worseenter into the store. After selecting products, many customers were leavingtheir baskets within the store.So to improve the overall sales volume and profitability of the store managementhas to take necessary steps .To reducing the customer wait time we can implement Queue Buster A handheld device ,its a mobile handheld it sported a barcode, reader ,printer ,computer, swipe card reader .In this way customers can check out process will be faster in two waysa) Customers can get their bills printout paid off bill amounts either in cash or credits to store personals who are using the handheld devices. b) If any thing goes wrong, if the payment is not accepected by the handheldmachine, then also customers reached the POS counter with mobile POS receiptscould make the check out process faster by checking out the receipts they have gotfrom the mobile printers and keep their cash ready when they arrived at cashiers.Big Bazaar can thinks over another interesting technology to deploy tomake better shopping experience for its customers especially on the extremeoccasions. I-Scan (Symbol Technologies-New York) its a generation in precisionreplenishment. That allows the customer to scan the merchandise as they pick the products off-the-shelf, thus saving them significant amount of shopping time. Oncethe shopping is completed, they can handover the device to the customer servicedesk and can cash-out quickly.Initial investment for implementation of these technologies might be high but theydefinitely improve the overall store profitability, which will offset the initialinvestments. Visual Merchandising What is VM?

VM is art and science of displaying merchandise within store, it is about implementingeffective design, ideas to educate customer, create desire and finally increase store trafficand sales volume. Findings We noticed few section of stores trading area wherein some scope of improvement lies,if visual merchandising of those area can be taken care of, then possibility of increase inthe some particular categorys sales is quite highThe visibility of certain categories, especially apparel is very important if retailer wantsto increase the sales volume of those categories. Because researchs shown that customer 19 People generally search for the product on offer so the high margin product should be up fronted that means those item should be in the eye height so that its easilycatches customers attention and generate impulse purchase We have also noticed improper, inadequate some time no signage which creatinginconvenience for the customer & ultimately hampering the sale Demographics of Catchments For the frontline employee its easier to judge the customer profile & behavior, becausethey are the one who come in direct contact with the customer. So in that way the job of afrontline staff is also quit important and the same time challenging. As we have workedthere for three days we also find some interesting fact about the customers.Customer ware mostly non-Bengali & form Gujrati, Sindhi, Marwari community andage approx 20-70 but mostly between 30-60. People generally came from vicinity of thestore, although a few ware come form outside of the Kolkata also.I found a high conversion rate in the customer at least in croaky and they all want toavail the offer. One thing was always in the back of their mind is the word SASTA.Although there was a lot of impulse purchase also. Nevertheless offers ware the maincrowd puller.We found customers ware not so happy with the verity and the rang we have. They wantmore verity to choose form. Many of them ware not too happy with the level of servicealso.