indian retail industry

1 Presented by - Pravin JadhavPresented by - Pravin Jadhav

IntroductionIntroduction ToToIndian RetailIndian Retail

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Metropolis-Hiland Park, KolkataMetropolis-Hiland Park, Kolkata175,000 Sq.ft175,000 Sq.ft

Shopping Malls In IndiaShopping Malls In India

City Centre, KolkataCity Centre, Kolkata400,000 Sq.ft400,000 Sq.ft

Forum Mall, KolkataForum Mall, Kolkata200,000 Sq.ft200,000 Sq.ft

Sigma Mall, BangaloreSigma Mall, Bangalore150,000 Sq.ft150,000 Sq.ft

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Agenda…….Agenda…….• What is retailing• Retailing: An overview• Evolution of Indian retail• Recent Trends• Categories of Indian retail• Classifying Indian retail• Retail formats• Indian retailers• Organization Structure• Functions & Process Flow• Indian consumer• Challenges in the Industry• Opportunities• FDI in Indian retailing

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What is retailing ?What is retailing ?

• Definition: Retail is the sale of goods to end users, not for resale, but for use and consumption by the purchaser.

• The retail transaction is at the end of the supply chain.

• Manufacturers sell large quantities of products to retailers, and retailers sell small quantities of those products to consumers.

http://retailindustry.about.com/od/glossary/g/enduser.htm

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Retailing World’s largest private industry US$ 6.6 trillion sales annually

Indian retailing Largest employer after agriculture -

8%* of population Highest outlet density in world Around 12 mn outlets Still evolving as an industry Long way to go

An overview

Retailing: An overviewRetailing: An overview

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Wal-Mart Topmost global Fortune 500

company(3 Consecutive Years) Annual Sales of over US$ 250 bn India’s two largest retail player

turnover around US$ 158 mn (Bata) and US$ 102 mn (Shoppers Stop)

Fortune 100 9 Retailers Carrefour, Ahold, Home Depot,

Kroger, Metro, Kmart-Sears, Target, Albertsons’

An overview

Retailing: An overviewRetailing: An overview

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Weekly MarketsVillage FairsMelas

Convenience StoresMom and Pop/ Kiranas

Khadi StoresCooperatives

Exclusive Brand OutletsHyper/Super MarketsDepartment StoresShopping Malls

Traditional Reach

Government Supported

Historic/Rural Reach

Modern Formats/ International

Evolution of Indian retailEvolution of Indian retail

Source of Entertainmen

t

Neighborhood Stores/Convenie

nce

Availability/ Low Costs / Distribution

Shopping Experience/Efficie

ncy

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Unorganized: Father & son businessFragmented: Individually owned businesses, average size= 50 sq. ftRural bias: Nearly 2/3rd of stores are in rural areas (two forms: "Haats" & “Melas“)

Unorganized: Father & son businessFragmented: Individually owned businesses, average size= 50 sq. ftRural bias: Nearly 2/3rd of stores are in rural areas (two forms: "Haats" & “Melas“)

Traditionally retail industry:Traditionally retail industry:

Format Experimentation : Retail EvolvingStore design: To create a “customer-pull” to increases impulse shoppingEmergence of discount store: Wal -mart modelUnorganized retailing getting organized: Organized malls ..??

Format Experimentation : Retail EvolvingStore design: To create a “customer-pull” to increases impulse shoppingEmergence of discount store: Wal -mart modelUnorganized retailing getting organized: Organized malls ..??

New Retail Industry:New Retail Industry:

Recent Trends..Recent Trends..

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Corporate Houses Tatas: Tata Trent RPG group: Food World, Health and Glow, etc ITC: Wills Life Style Rahejas (Shoppers Stop)

Dedicated brand outlets Nike, Reebok, Zodiac etc

Multi-brand outlets Vijay Sales, Viveks etc

Manufacturers/ Exporters Pantaloons, Bata, Weekender

Indian retail

Categories of Indian retailCategories of Indian retail

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Modern Format retailers Supermarkets (Food

world) Hypermarkets (Big

Bazaar) Department Stores (S Stop) Specialty Chains (Ikea) Company Owned Company Operated

Traditional Format Retailers Kiranas: Traditional Mom and Pop

Stores Kiosks Street Markets Exclusive /Multiple Brand Outlets

Indian retail

Classifying Indian retailClassifying Indian retail

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Retail formats-the variablesRetail formats-the variables

Retail formats-Differ on

Types of merchandise Services-degree to which their offerings

emphasize service vs. merchandise Target customers • Nature of retail mixes-merchandise assortment,

place, pricing , promotions, store design and display, customer service, people

• Ownership of firm

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Types Of FormatsTypes Of Formats

• Family store- In apparel retailing ,when needs of the whole family are met

• Specialty store- narrow product line but with good width and depth in that product e.g. The Mobile Store

• Departmental store- large format, usually greater than 10000 sqftHas different depts like men’s wear, cosmetics, home etc

e.g. Shopper’s StopThese retailers are general merchandisers offering mid-to-high quality products and strong level of services

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Cont……Cont……

• Supermarket-Basically specialized in foodstuff ,grocery and rationsAlso carries limited non-food categories. e.g. FoodworldUsually around 3000 sqft.

• Hypermarket-Spread over 2 lakh sqft and more, retailing groceries and general merchandise ,with pharmacy, flower shop ,photo shop etcIt has huge qtities and sells huge volumes at low margins. e.g. Hypercity

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Hypermarket Big Bazaar Giants Shoprite Star Bazaar

Department store Lifestyle Pantaloons Pyramids Shoppers Stop Trent

Entertainment Fame Adlabs Fun Republic Inox PVR

Indian retailers

Large Indian retailersLarge Indian retailers

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Retail OrganisationRetail Organisation: Typical Organization Structure: Typical Organization Structure

Organization

Front End OperationBuying &

MerchandisingSCM Retail Sales

Zonal HeadArea Manger

Store ManagerAss.Store Manager

Dept. MangerTeam LeaderSales boy/girl

HeadChief

GM/DGMSr. Mgr/Mgr

Dy.Mgr/Ass.MgrSr .Exc /ExcCoordinator

HeadChief

GM/DGMSr. Mgr/Mgr


HeadChief

GM/DGMSr. Mgr/Mgr


Functions & Process FlowFunctions & Process Flow

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Designing Forecasting

Merchandising Strategy

Fabric Sourcing

Warehouse

Garment Vendor

Distribution Centre

Store


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Merchandiser Indent/Requisition

Fabric Sourcing

P.O

Supplier Delivery Challan

Warehouse G.R.N. Inward Inspection

Supplier

Reject

Work order

Accept

Merchandiser

Warehouse D. C. Store


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Operation Retail Sales Merchandising

ABP PlanningAssortment PlanningRange Planning

Sales TargetsSales Tracking

Offers

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Greater per capita income Increase in disposable income of

middle class households 20.9%* growth in real disposable

income in Growing high and middle income

population Growing at a pace of over 10%* per

annum over last decade Affordability growth

Falling interest rates Easier consumer credit Greater variety and quality at all

price points

Indian consumer

The changing Indian consumerThe changing Indian consumer

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The urban consumer Getting exposed to international

lifestyles Inclined to acquiring asset More discerning and demanding

than ever

No longer need-based shopping Shopping is a family experience

Changing Mindset Increasing tendency to spend Post Liberalization children coming

of age 100 mn 17-21 year olds*. Tend to

spend freely. Greater levels of education

Indian consumer

The changing Indian consumerThe changing Indian consumer

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Low domestic competition Because of fragmented nature of

industry

Lack of exposure to global best practices

Low entry barriers for unorganized retailing

Moderate entry barriers for organized retailing

IndustryChallenges

Challenges in the IndustryChallenges in the Industry

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Real Estate Costs

Supply Chain Inconsistency

Poor Infrastructure

Lack of Skilled Manpower

issues

Challenges……Challenges……

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Market size Current market size is roughly US$

286 bn* 96% of the 12 Million stores are less

than 500 Sq. ft. Forecast Growth rate for the retailing

industry is roughly 8.3% for 2008-2009

Sales from large format stores would rise by 24-49%**

Formal and modern format retailing would enjoy rapid growth

Anticipated growth

OpportunitiesOpportunities

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Growth determining factors

Government Policy Infrastructure development GDP growth Employment generation and job

creationIn several new sunrise industriesImplies greater purchasing power

Growth factors

Growth factorsGrowth factors

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India ranked 1st in the Global A.T Kearney Retail Development Index

India

Russia

China

Advantage India

The Indian advantageThe Indian advantage

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THE SIZE OF THE OPPORTUNITYTHE SIZE OF THE OPPORTUNITY

Products

Total Retail Organised Organised

Rs. Billion Retail Retail as %

Rs. Billion of Total

Food & Grocery 6422 50 1

Textiles & Apparel 980 185 19

Jewelry & Watches 554 30 5

Consumer durables 415 43 10

Pharmaceuticals 364 10 3

Home Solutions 351 32 9

Books, Music & Gifts 115 15 13

Others 1159 111 10

Total 10360 476 5

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Current Indian FDI Regime

100 % FDI not permitted in retail trade sector

FDI up to 51 % in single brand is allowed

FDI in Retail not

permitted

FDI in Indian retailingFDI in Indian retailing

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Franchise International company gives name

and technology to local partner. Gets royalty in return

In case master franchise is appointed for region or country, he has right to appoint local franchisees

Nike, Pizza Hut, Tommy Hilfiger, Marks and Spencer, Mango

Manufacturing Company sets up Indian arm for

production Bata India. It also has right to retail

in India

How they are present

International retailers in India: International retailers in India: StrategiesStrategies

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Distribution

International company sets up local distribution office

Supply products to Indian retailers to sell

Also set up franchised outlets for brand

Wholesale trading

Cash and Carry operations 100% FDI permitted Metro Cash n Carry

How they are present

International retailers in India: International retailers in India: StrategiesStrategies

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Improve competition Develop the market Greater level of exports due to

increased sourcing by major players Sourcing by Wal-Mart from China

improved multifold after FDI permitted in China

Similar increase in sourcing observed for Metro in India

Provides access to global markets for Indian producers

Benefits of FDI

Why FDI?Why FDI?

indian retail industry

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