Entry strategy for an international larger format store in India

Abstract

Introduction The study will look into the entry strategy of Circuit City, a large format electronic retail store, in India and the format for setting shop in the city of Bangalore. The strategy would include whether entering the Indian market would be a correct decision for the company and if so, then what would be the format, the product line offering, possible alternatives for location and other strategies the store would have to adopt based on the Indian market and the local market for electronic goods. Retail Industry in India In India retail is the second largest sector after agriculture. The industry provides employment to 8% of the total work force of the country. This segment is highly fragmented and is dominated by the presence of a large number of traditional formats. The total retail business is estimated to be $180 billion, of which only 2% is contributed by the organized sector. India has the largest retail density in the world with 12 million retail outlets for a population of over 1 billion though as much as 96% of these are smaller than 500 sq. ft. The Indian economy is growing at the rate of 7-8% for the last few consecutive years and there has been a considerable increase in international brands and a substantial increase in the income level of the consumers. The vast middle class and the increase in their purchasing power are going to fuel the retail industry. South East Asian countries have harnessed the benefit of allowing retail FDI in these countries and it is expected that the India government will open the doors for these international retailers. However the very entry and even sustaining over a short period of time is going to be difficult and it is going to be a very different ball game as most of the strategies applied in US and Europe will render ineffective. To succeed in the Indian market is going to be difficult nevertheless there is a huge market lying untapped.