Arvind Singhal
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Transcript of Arvind Singhal
Organized RetailingOrganized Retailing
Challenges & Opportunities Challenges & Opportunities !!
Arvind SinghalArvind SinghalChairman – KSA TechnopakChairman – KSA Technopak
TIEcon 2003TIEcon 2003New Delhi 18New Delhi 18thth December 2003 December 2003
2TiEcon 2003 – New Delhi
Structure of the presentationStructure of the presentation
Changing India & Change DriversChanging India & Change Drivers
Opportunities in Retail (in India)Opportunities in Retail (in India)
Emerging Trends : RetailingEmerging Trends : Retailing
Winnable Practices:Winnable Practices:
Retailer - Consumer InterfaceRetailer - Consumer Interface Retail OperationsRetail Operations Retailer – Supplier RelationshipRetailer – Supplier Relationship
Changing IndiaChanging India
&&
Key Drivers of ChangeKey Drivers of Change
4TiEcon 2003 – New Delhi
Many DriversMany Drivers
DemographicsDemographics
Increased Global ExposureIncreased Global Exposure
Increased Discretionary Incomes across Increased Discretionary Incomes across wider spectrum of population, across wider wider spectrum of population, across wider geographygeography
Changes in LifestyleChanges in Lifestyle
5TiEcon 2003 – New Delhi
Many DriversMany Drivers
DemographicsDemographics
Increased Global ExposureIncreased Global Exposure
Increased Discretionary Incomes across Increased Discretionary Incomes across wider spectrum of population, across wider wider spectrum of population, across wider geographygeography
Changes in LifestyleChanges in Lifestyle
6TiEcon 2003 – New Delhi
DemographicsDemographics
Youngest Population in the worldYoungest Population in the world
Over 65% of population below 35 Years oldOver 65% of population below 35 Years old Over 50% of population below 20 Years oldOver 50% of population below 20 Years old
Contrast with:Contrast with:
Europe : Declining in many countries (Russia, Italy)Europe : Declining in many countries (Russia, Italy) USA : Immigration helping in holding up the growthUSA : Immigration helping in holding up the growth Japan: Aging and soon to declineJapan: Aging and soon to decline China: Currently young but sharp aging to set in next 20 China: Currently young but sharp aging to set in next 20
yearsyears
7TiEcon 2003 – New Delhi
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
10 – 19 20 – 49 50 – 69
2010
Working population is growing unlike other Working population is growing unlike other countriescountries
Rise in the middle would expand opportunities as 20-49 is the best Rise in the middle would expand opportunities as 20-49 is the best segment for most retailers and consumer good marketerssegment for most retailers and consumer good marketers
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
10 – 19 20 – 49 50 – 69
2000
8TiEcon 2003 – New Delhi
Both ability to pay and the willingness to pay constitute “Demand”Both ability to pay and the willingness to pay constitute “Demand”
0 10 20 30 40 50 60
< 19 Yrs
20-49 Yrs
> 49 Yrs
1996 2001 2006 2010
Figures in %Source: Statistical Outline of India
Ability to pay
Willingness to pay
Working population driving Working population driving consumerismconsumerism
9TiEcon 2003 – New Delhi
DemographicsDemographics
Young Population has no :Young Population has no :
Baggage of the pastBaggage of the past
Nehru, Gandhi, Partition etc. are “Nehru, Gandhi, Partition etc. are “things you things you read in history booksread in history books” much the same way you ” much the same way you read read
Born in an era of more open consumerismBorn in an era of more open consumerism
New Generation icons are modern achievers New Generation icons are modern achievers (Bill Gates, Narayan Murthy, Sachin Tendulkar, (Bill Gates, Narayan Murthy, Sachin Tendulkar, Shahrukh Khan, Aishwarya Rai etc.)Shahrukh Khan, Aishwarya Rai etc.)
10TiEcon 2003 – New Delhi
DemographicsDemographics
Young Population :Young Population :
Is Confident and Optimistic about their FutureIs Confident and Optimistic about their Future
Is Willing to experimentIs Willing to experiment
Has “transient” loyalties to BrandsHas “transient” loyalties to Brands
Admires & Appreciates “Youth” and Admires & Appreciates “Youth” and “Modernity”“Modernity”
11TiEcon 2003 – New Delhi
Many DriversMany Drivers
DemographicsDemographics
Increased Global ExposureIncreased Global Exposure
Increased Discretionary Incomes across Increased Discretionary Incomes across wider spectrum of population, across wider wider spectrum of population, across wider geographygeography
Changes in LifestyleChanges in Lifestyle
12TiEcon 2003 – New Delhi
Increased Global ExposureIncreased Global Exposure
The young Indian population has an unparalleled The young Indian population has an unparalleled exposure to the outside world on account of various exposure to the outside world on account of various factors:factors:
75% or more have access to Color TV75% or more have access to Color TV
More than 250,000 Young IT and Other Professionals have More than 250,000 Young IT and Other Professionals have worked “On-Site” in any given year in North America, Europe worked “On-Site” in any given year in North America, Europe and Japanand Japan
Over 80,000 Indian students are currently studying in the US, Over 80,000 Indian students are currently studying in the US, UK, Australia and other CountriesUK, Australia and other Countries
Over 150,000 Indian’s currently working in BPO / ITES area, Over 150,000 Indian’s currently working in BPO / ITES area, vicariously getting some exposure to “life” outside Indiavicariously getting some exposure to “life” outside India
13TiEcon 2003 – New Delhi
Increased Global ExposureIncreased Global Exposure
Multiplier effect of this exposure – due to the close Multiplier effect of this exposure – due to the close knit nature of Indian society – is far in excess of knit nature of Indian society – is far in excess of what these absolute numbers may showwhat these absolute numbers may show
Real Impact is already being seen in a number of Real Impact is already being seen in a number of ways: Majority of new entrepreneurial business ways: Majority of new entrepreneurial business start-ups are now from first generation, very young start-ups are now from first generation, very young entrepreneursentrepreneurs
Likewise, average age of the successful fast track Likewise, average age of the successful fast track senior managers in successful companies already senior managers in successful companies already down to late 20’s / early 30’s since the young are down to late 20’s / early 30’s since the young are perceived as more “global” and “dynamic”perceived as more “global” and “dynamic”
14TiEcon 2003 – New Delhi
Increased Global ExposureIncreased Global Exposure
Far quicker adoption to “global” trends and Far quicker adoption to “global” trends and lifestyles and products / serviceslifestyles and products / services
Substantially higher expectations on delivery of Substantially higher expectations on delivery of “value” from the products and services“value” from the products and services
Far more assertive consumers!Far more assertive consumers!
15TiEcon 2003 – New Delhi
Many DriversMany Drivers
DemographicsDemographics
Increased Global ExposureIncreased Global Exposure
Increased Discretionary Incomes Increased Discretionary Incomes across wider spectrum of population, across wider spectrum of population, across wider geographyacross wider geography
Changes in LifestyleChanges in Lifestyle
16TiEcon 2003 – New Delhi
Increased Discretionary Incomes..Increased Discretionary Incomes..
Interesting phenomenon of not only “Double Interesting phenomenon of not only “Double Income” families but “multiple income” families:Income” families but “multiple income” families:
Young professionals in new generation services e.g. IT, Young professionals in new generation services e.g. IT, Retail, Food Services, Finance and Insurance Services etc. Retail, Food Services, Finance and Insurance Services etc. are in age profile of 20 – 28 and are typically still staying are in age profile of 20 – 28 and are typically still staying with the Parents (who may have their own parents still with the Parents (who may have their own parents still staying with them)staying with them)
Only one House Rent Cheque to be made, and only One Only one House Rent Cheque to be made, and only One kitchen to runkitchen to run
Substantially more spending power available than Substantially more spending power available than reflected by mere “per capita” income indicatorsreflected by mere “per capita” income indicators
17TiEcon 2003 – New Delhi
Increased Discretionary Incomes..Increased Discretionary Incomes..
Spending further enhanced by increased risk-appetite for Spending further enhanced by increased risk-appetite for credit (in turn, reflected in the confidence of the “youth”)credit (in turn, reflected in the confidence of the “youth”)
Personal Credit off take has increased from about Rs 50,000 Personal Credit off take has increased from about Rs 50,000 Crores in 2000 to about Rs 160,000 Crores in 2003 giving an Crores in 2000 to about Rs 160,000 Crores in 2003 giving an unprecedented boom to high ticket item purchases e.g. unprecedented boom to high ticket item purchases e.g. durables, automobiles and housingdurables, automobiles and housing
Increased “Globalization” of high end employment (to Increased “Globalization” of high end employment (to augment the low end employment in the Gulf) further augment the low end employment in the Gulf) further spreading availability of spending power to beyond the main spreading availability of spending power to beyond the main Metro’s and Mini Metro’sMetro’s and Mini Metro’s
Next round of ITES shall take employment to hinterland of Next round of ITES shall take employment to hinterland of India e.g. Dehradun, Chandigarh, Jaipur, Goa : locations having India e.g. Dehradun, Chandigarh, Jaipur, Goa : locations having availability of graduate, English speaking young adults at low availability of graduate, English speaking young adults at low costcost
18TiEcon 2003 – New Delhi
Many DriversMany Drivers
DemographicsDemographics
Increased Global ExposureIncreased Global Exposure
Increased Discretionary Incomes across Increased Discretionary Incomes across wider spectrum of population, across wider wider spectrum of population, across wider geographygeography
Changes in LifestyleChanges in Lifestyle
19TiEcon 2003 – New Delhi
Changes In Lifestyle..Changes In Lifestyle..
With the advantage of Youth, More Globalization, and With the advantage of Youth, More Globalization, and Better Discretionary Spending incomes, lifestyle Better Discretionary Spending incomes, lifestyle changes provide multiple new opportunities in terms changes provide multiple new opportunities in terms of:of:
New Products and Services (e.g. Ready to Eat Food, New Products and Services (e.g. Ready to Eat Food, Entertainment Centers, Time / Labor Saving devices and Entertainment Centers, Time / Labor Saving devices and services e.g. Washing Machines etc.)services e.g. Washing Machines etc.)
New Channels of Distribution (e.g. Malls, Multiplexes, Home New Channels of Distribution (e.g. Malls, Multiplexes, Home Delivery and Multi-Level Marketing etc.)Delivery and Multi-Level Marketing etc.)
New Value Propositions in terms of Fashion, Convenience, New Value Propositions in terms of Fashion, Convenience, Reliability, Quality etc. rather than merely “Price”Reliability, Quality etc. rather than merely “Price”
Opportunities in RetailOpportunities in Retail
Increasing by the day !Increasing by the day !
21TiEcon 2003 – New Delhi
Many Missing / Under Served Many Missing / Under Served CategoriesCategories
Food & Grocery / Food ServicesFood & Grocery / Food Services
Furniture & FurnishingsFurniture & Furnishings
Consumer DurablesConsumer Durables
Specialty e.g.Specialty e.g.
Children’s Wear / Accessories / ToysChildren’s Wear / Accessories / Toys FootwearFootwear Health, Beauty & Well-BeingHealth, Beauty & Well-Being Lingerie & Intimate ApparelLingerie & Intimate Apparel Sports / Outdoor Goods / Leisure HardwareSports / Outdoor Goods / Leisure Hardware
22TiEcon 2003 – New Delhi
Many Missing / Under Served Many Missing / Under Served FormatsFormats
Discounters / Mass MerchantsDiscounters / Mass Merchants
Specialty : Category KillersSpecialty : Category Killers
CatalogCatalog
Factory Outlets / Malls Factory Outlets / Malls
Etc.Etc.
Emerging Trends in RetailEmerging Trends in Retail
(In Indian Context)(In Indian Context)
24TiEcon 2003 – New Delhi
Implications for Indian RetailersImplications for Indian Retailers
Size Matters!Size Matters!
Competition shall be on Global levelCompetition shall be on Global level
Flexibility in Format Development & Product Flexibility in Format Development & Product Category Selection shall be a Key Success FactorCategory Selection shall be a Key Success Factor
Global Supply Chain Development shall also be a Global Supply Chain Development shall also be a Key Success FactorKey Success Factor
25TiEcon 2003 – New Delhi
Winning Retail Propositions of Winning Retail Propositions of Tomorrow….Tomorrow….
Product
Price Value
Service/ Experience
Dif
fere
nti
atio
n o
pp
ort
un
ity
Time
Price
Product Service
• Lower Cost• Perceived Value for Money
• Quality• Uniqueness• Range
• Availability• Ambiance• Convenience• Privileges • Location
Retail Strategies revolve around these basic factors
Many Opportunities ……
26TiEcon 2003 – New Delhi
…….But Will Change Over Time.But Will Change Over Time
While While ProductProduct differentiation would play a significant role, the differentiation would play a significant role, the gap will diminish due to ease in global sourcing for all gap will diminish due to ease in global sourcing for all competitorscompetitors
Experience Experience in terms of the Look and Feel of the Store would be in terms of the Look and Feel of the Store would be important, but again, the gap will diminish over timeimportant, but again, the gap will diminish over time
Superior Superior Price - ValuePrice - Value offerings would continue to be a major offerings would continue to be a major differentiator differentiator
Additionally, Additionally, Convenience of “Proximity” & “Appropriate Convenience of “Proximity” & “Appropriate Assortment”Assortment” would emerge soon as a differentiator and initiate would emerge soon as a differentiator and initiate opening of small footprint stores (as chains) as well as Catalog / opening of small footprint stores (as chains) as well as Catalog / Internet shall make a major Impact even in IndiaInternet shall make a major Impact even in India
27TiEcon 2003 – New Delhi
Organized Retail Poised To Boom …Organized Retail Poised To Boom …
Many enablers:Many enablers:
Frenetic development of high quality retail space Frenetic development of high quality retail space across Indiaacross India
Increased interest of Investors in funding Retail Increased interest of Investors in funding Retail projectsprojects
Increased interest of International Brands & Increased interest of International Brands & Retailers to enter IndiaRetailers to enter India
Exceptional response of Indian consumers to Exceptional response of Indian consumers to “modern” retail options“modern” retail options
Best Practices Best Practices ??
29TiEcon 2003 – New Delhi
Best Practices …..Best Practices …..
Changes far too recent to allow emergence of true Changes far too recent to allow emergence of true “best practice” examples in India“best practice” examples in India
Adapting “global” best practices in the Indian Adapting “global” best practices in the Indian business environment a bit premature at this business environment a bit premature at this juncture (juncture (either the consumer is not ready with either the consumer is not ready with spending power or the business does not yet have spending power or the business does not yet have the management and financial resourcethe management and financial resource))
Hence, at this stage, look at “Hence, at this stage, look at “winnablewinnable” practices ” practices in the Indian contextin the Indian context
Winnable Practices (In Indian Winnable Practices (In Indian Context)Context)
Retailer – Consumer InterfaceRetailer – Consumer Interface
31TiEcon 2003 – New Delhi
Retail – Consumer InterfaceRetail – Consumer Interface
LocationLocation
As close to home as feasible for most product categoriesAs close to home as feasible for most product categories
AmbienceAmbience
Cleanliness, Climate ControlCleanliness, Climate Control Self ServiceSelf Service
AssortmentAssortment
Focused for specific consumer segmentsFocused for specific consumer segments
32TiEcon 2003 – New Delhi
Retail – Consumer InterfaceRetail – Consumer Interface
AvailabilityAvailability
Right ProductRight Product Right Size / Style / ColorRight Size / Style / Color
InformationInformation
SignageSignage
Speed of ServiceSpeed of Service
InformationInformation Check-OutCheck-Out
Return & Exchange PolicyReturn & Exchange Policy
Winnable Practices (In Indian Winnable Practices (In Indian Context)Context)
Retail OperationsRetail Operations
34TiEcon 2003 – New Delhi
Retail OperationsRetail Operations
IT EnabledIT Enabled
Demand ForecastingDemand Forecasting Merchandise Planning & ManagementMerchandise Planning & Management ReplenishmentReplenishment Price OptimizationPrice Optimization
Efficiencies at POSEfficiencies at POS
Dynamic Category / Brand ManagementDynamic Category / Brand Management
Private Label Strategy & EfficienciesPrivate Label Strategy & Efficiencies
Winnable Practices (In Indian Winnable Practices (In Indian Context)Context)
Retailer – Supplier InterfaceRetailer – Supplier Interface
36TiEcon 2003 – New Delhi
Technology allows supply chain members to collaborate in:Technology allows supply chain members to collaborate in:
Collaborating With BuyersCollaborating With Buyers
Degree of business impactDegree of business impact
Imp
lem
en
tati
on
Im
ple
me
nta
tio
n
(sta
nd
ard
s an
d v
ola
tilit
y)(s
tan
dar
ds
and
vo
lati
lity)
LOWLOW HIGHHIGH
EASYEASY
DIFFICULTDIFFICULT
Product Product trackingtracking
POSPOS
Fashion / Fashion / Lifestyle Lifestyle trendstrends
Planning Planning forecastingforecasting
Product Product designdesign
Product Product specsspecs
TiEcon 2003 KSA analysis
To Conclude …..To Conclude …..
38TiEcon 2003 – New Delhi
Key MessagesKey Messages
India & Indians are changing rapidlyIndia & Indians are changing rapidly
Understanding Consumer critical in spotting new Understanding Consumer critical in spotting new opportunities in Retailopportunities in Retail
Conditions conducive for rapid growth of Conditions conducive for rapid growth of organized retailorganized retail
Many opportunities – categories and formats!Many opportunities – categories and formats!
Thank You Thank You !!
Arvind SinghalArvind SinghalChairmanChairmanKSA Technopak India Pvt Ltd.KSA Technopak India Pvt Ltd.A-5 Pamposh EnclaveA-5 Pamposh EnclaveNew Delhi 110 048New Delhi 110 048
Phone Phone : +91-11- 2629 1111: +91-11- 2629 1111Fax Fax : +91-11- 2629 1112: +91-11- 2629 1112Email Email : [email protected]: [email protected]
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