Retail Ppt
-
Upload
jayesh78149062 -
Category
Documents
-
view
30 -
download
1
description
Transcript of Retail Ppt
Challenges & Opportunities in Indian Retail Industry
AgendaRetailing : An overview
Indian retail
The change factor
FDI in Indian retailing
Why FDI ?
How FDI ?
FDI in Indian retailing
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 overview
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 overview
Weekly MarketsVillage FairsMelas
Convenience StoresMom and Pop/Kiranas
PDS OutletsKhadi StoresCooperatives
Exclusive Brand OutletsHyper/Super MarketsDepartment StoresShopping Malls
Traditional/Pervasive Reach
Government Supported
Historic/Rural Reach
Modern Formats/ International
Evolution of Indian retail
Source of Entertainmen
t
Neighborhood Stores/Convenie
nce
Availability/ Low Costs / Distribution
Shopping Experience/Efficie
ncy
Informal retailing Sector Typically small retailers. Evasion of taxes
Difficulty in enforcing tax collection mechanisms
No monitoring of labor laws
Formal Retailing Sector Typically large retailers Greater enforcement of taxation
mechanisms High level of labor usage monitoring
Indian retail
Evolution of Indian retail
Corporate Houses Tatas: Tata Trent RPG group: Food World, Health and Glow, etc ITC: Wills Life Style Rahejas(ShoppersStop), Hiranandani(Haiko), DLF(DT cinemas) etc.
Dedicated brand outlets Nike, Reebok, Zodiac etc
Multi-brand outlets Vijay Sales, Viveks etc
Manufacturers/ Exporters Pantaloons, Bata, Weekender
Indian retail
Categories of Indian retail
Modern Format retailers Supermarkets
(Foodworld) 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 retail
Hypermarket Big Bazaar Giants Shoprite Star
Department store Lifestyle Pantaloons Pyramids Shoppers Stop Trent
Entertainment Fame Adlabs Fun Republic Inox PVR
Indian retailers
Large Indian retailers
Greater per capita income Increase in disposable income of
middle class households 20.9%* growth in real disposable
income in ’99-’03. 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 consumer
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 age100 mn 17-21 year olds*. Tend to spend freely.
Greater levels of education
Indian consumer
The changing Indian consumer
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
Wholesale system under-invested leading to 20-40% wastage
Non level playing field issues Wide differences in treatment of
small and large retailers
IndustryChallenges
Challenges in the Industry
Real Estate Costs
Supply Chain Inconsistency
Poor Infrastructure
Lack of Skilled Manpower
issues
Challenges……
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 2003-2008
Sales from large format stores would rise by 24-49%**
Formal and modern format retailing would enjoy rapid growth
Anticipated growth
Opportunities
Growth determining factors Government Policy Infrastructure development GDP growth Employment generation and job
creationIn several new sunrise industriesImplies greater purchasing power
Growth factors
Growth factors
India ranked 1st in the Global A.T Kearney Retail Development Index
India
Russia
China
Advantage India
The Indian advantage
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
Current Indian FDI Regime FDI not permitted in retail trade
sector, except in: Private labels Hi-Tech items / items requiring specialized after sales service Medical and diagnostic items Items sourced from the Indian small sector (manufactured with technology provided by the foreign collaborator) For 2 year test marketing (simultaneous commencement of investment in manufacturing facility required)
FDI in Retail not
permitted
FDI in Indian retailing
Metro Group of Germany Cash-and-carry wholesale trading Proposal faced strong opposition
Entities established prior to 1997 Allowed to continue with their
existing foreign equity components. No FDI restrictions in the retail
sector pre-1997 Foodworld
51:49 JV between RPG and Dairy Farm International, Leading food retailer in India now
Mc Donalds
Current FDI
FDI in Indian retailing
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: Strategies
Distribution International company sets up local
distribution office Supply products to Indian retailers
to sell Also set up franchised outlets for
brandSwarovski, Hugo Boss
Wholesale trading Cash and Carry operations 100% FDI permitted
Metro Cash n Carry
How they are present
International retailers in India: Strategies
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?
Investment in technology Cold storage chains solve the perennial
problem of wastage Greater investment in the food
processing sector technology Better operations in production cycle and
distribution Better lifestyle
Greater level of wages paid by international players usually
More product variety Newer product categories Economies of scale to help lower
consumer price Increased purchasing capacity of
consumers
Benefits of FDI
Why FDI?
FDI should be allowed in stages Initial stages: 26% FDI
Establishment Phase: 49% FDI
Mature Phase: 100% FDI
FDI policy No incentives needed to attract FDI Market size and potential are
sufficient inducers No need for costly tax breaks, import
duty exemptions, land and power subsidies, and other enticements
How FDI ?
How FDI ?
2 yrs
2 yrs
2 yrs
Thank you