The Indian retail market, which is the fifth largest retail destination globally, according to industry estimates is estimated to grow from the US 330 billion in 2007 to US 427 billion by 2010 and 637 billion by 2015. Simultaneously, modern retail which presently accounts for 4 per cent of the total market is likely to increase Inevitably, modernization of the Indian retail sector will be reflected in rapid growth in sales of supermarkets, department stores and hypermarkets. This is because of the growing preference of the affluent and upper middle classes for shopping at these types of retail stores, given the conveniences they offer such as shopping ambience, variety and a single-point source for purchases.Department stores are usually part of a retail chain. The reasons behind the increase of Department stores are improved shopping standards, convenient stocking display, shopping blend with entertainment. These are increasing with rapid pace in the Kurnool district. There is opposition to their plans, it has argued that livelihood of the traditional formats of low-cost retailing such as the local grocery shops, owner-manned general stores, paanbeedi shops, convenience stores, and handcart, pavement vendors, small scale and rural vendors would be threatened. The study concentrates to which extent it is going to create economic impact of Department stores on small vendors particularly with respect to Kurnool District in the state of Andhra Pradesh.