retailing in India lec 3,4.ppt

7/29/2019 retailing in India lec 3,4.ppt

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Retailing in India. The global Retail development

Index has ranked India first,

among the top 30 emergingmarkets in the world.

It is believed that India has thepotential to deliver the fastestgrowth over the next 50 years.


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Some Statistics...

Second largest sector after

Agriculture. Contributes 10 11 % of the GDP

Indian Retail trade increased fromRs. 2200 billion in 2000 to Rs 3300billion by the year 2005

India's first true shopping mallwas inaugurated as lately as in 1999in Mumbai. (this mall is called" "


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The Evolution of Retail

in India Retail in India has evolved to support

the unique needs of our country, givenits size and complexity Haats, Mandisand Melashave always been a part of

the Indian landscape. They still continueto be present in most parts of thecountry and form an essential part of life

and trade in Various areas.


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The Evolution of Retail

in India The PDS (Public DistributionSystem) would easily be called as thesingle largest retail chain existing in thecountry. the evolution of the PDS of Grainsin India has its origin in the rationingsystemintroduced by the British duringworld war II


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The system was started in 1939 in Bombay and

subsequently extended to other cities andtowns. the system was abolished post war buthowever attaining independence India was

forced to reintroduce it in 1950. The Canteen Stores Department and the

Post Offices in India are also among the

largest network of outlets in the countryreaching population across the country.


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In the past decade, the Indian marketplace hastransformed dramatically. However from the1950,s to the 80,s, investment in variousindustries was limited due to low purchasingpower in the hands of the consumer and thegovernments policiesfavoring the small scale sector.

The first attempts at organized retailing werenoticed in the textiles sector. One of the

pioneers in this field was Raymonds whichset up stores to retail fabric.


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Raymonds distribution network

today comprises 20,000 retailers and

over 256 exclusive showrooms in over120 cities of the country

Other textile manufacturing who set uptheir own retail chains wee Reliance-which set upVimal showrooms and

Garden Silk Mills, which set upGarden Vareli showrooms.


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The Evolution of Retail in India

Traditional FormatsHaats Mesas Mandis etc.

Emerging Formats- Exclusive retail outletsHypermarkets, Internal retail Malls /

Specialty Malls Multiplexes Fast food outlets

Service galleries

Established formats Kirana shops departmentStores PDS/ fair price shops Pan/ Beedi shops

D i f R t il h i


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Drivers of Retail change inIndia

major drivers :

Changing Income Profiles: Steadyeconomic growth fuelled the increase indisposable income in India. The averagemiddle class family's disposable income

rose by more than 20% between 1999-2003.

Diminishing difference between

Rural and urban India: Rural India


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Changes in Consumption patterns:Occupational changes and expansion of mediahave caused a significant change in the way the

consumer lives and spends his money.The changes in income brought about changes inthe aspirations and the spending patterns of the

consumers. the buying basket of the consumerchanged



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The emergence of a young EarningIndia :Nearly 70% of the Indianpopulation is below the age of 34. taking

advantages of employment opportunity inthe booming service sector these youngIndians are redefining service and

consumption patterns


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rom nen sec or nIndian retail

Clothing, textiles and fashionAccessories:

Food & food Services:

Consumer Durables:

Books & Music:

Jewellery retail Footwear retail

Fuel Retail/ petro retail


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Challenges to retailDevelopment in India

Retail not being recognized as anindustry in India.

The high costs of real estate.

Lack of Adequate infrastructure.

Multiple and complex taxationsystem.

Si f th i d t il


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Size of the organized retailmarket (Rs Cr)

2001-02 2007

CAGR (%)(compoundAnnual

growth rate)

TOTAL 16,000 37,216 18

Food 1,800 7,473 33

Clothing 4,950 10,423 16

Cons.Durables 1,650 3,787 18

Books & Music 450 1,426 26


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Preapred By Dr.Pooja Sharma 16

Share of organized & unorganized retailwith comparison

source: Ernst &Young, The Great Indian Retail Story, 2006

85 15

81 19

55 45

40 60

36 64

30 70

20 80

3 97

1 99

0% 20% 40% 60% 80% 100%

USA

TAIWAN

MALASIA

THAILAND

BRAZIL

INDONESIA

CHINA

INDIA

PAKISTAN

ORGANISED

UNORGANISED


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Preapred By Dr.Pooja Sharma 17

Trade ($ bn)Employment

(%)

Shops

(million)

Organized Sector

share (%)

India 180-394 7 12 2 to 3 %

China 360 12 2.7 20

US 3800 12/06/16 15.3 80


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Retailing formats in India

Specialty Stores:

Chains such as the Bangalore based

Kids Kemp, the Mumbai booksretailer Crossword, RPG's Music

World and the Times Group's music

chain Planet M, are focusing on

specific market segments and have

established themselves


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Discount Stores:

As the name suggests, discount stores

or factory outlets, offer discounts onthe MRP through selling in bulk

reaching economies of scale or excess

stock left over at the season. Theproduct category can range from a

variety of perishable/ non perishable


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Department Stores: Large stores ranging from 20000-50000 sq. ft,

catering to a variety of consumer needs.

Further classified into localized departmentssuch as clothing, toys, home, groceries, etc.


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Departmental Stores are expected to take over the apparel

business from exclusive brandshowrooms. Among these, the biggest

success is K Raheja's Shoppers Stop,

which started in Mumbai and now has

more than seven large stores (over

30,000 sq. ft) across India and even has Retailing formats in India


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Retailing formats in India Super/ Hypermarkets

Large self service outlets, catering to varied shopperneeds are termed as Supermarkets. These are

located in or near residential high streets. These

stores today contribute to 30% of all food & grocery

organized retail sales. Super Markets can further beclassified in to mini supermarkets typically 1,000 sq

ft to 2,000 sq ft and large supermarkets ranging from

of 3,500 sq ft to 5,000 sq ft. having a strong focus onfood & grocery and personal sales.


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Convenience Stores these are relatively small stores 400-

2,000 sq. feet located near residential

areas. They stock a limited range of

high-turnover convenience products and

are usually open for extended periodsduring the day, seven days a week.

Prices are slightly higher due to the

convenience remium.


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Multi Brand outlets- alsoknown as Category Killers,

offer several brands across asingle product category. These

usually do well in busy marketplaces and Metros.

eta n ustry n n a s


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eta n ustry n n a s Unorganized: Vast majority of the twelve million

stores are small "father and son" outlets

Fragmented: Mostly small individually ownedbusinesses, average size of outlet equals 50 s.q.

ft India has the highest number of retail outlets

per capita in the world, the retail space per capitaat 2 s.q. ft per person is amongst the lowest.

rural bias: Nearly two thirds of the stores are

located in rural areas. Rural retail industry hastypically two forms: "Haats" and Melas". Haats

are the weekly markets : serve groups of 10-50

villages and sell day-to-day necessities. Melas


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Retail Industry in India is

Experimentation with formats: Retailing

in India is still evolving and the

sector is witnessing a series ofexperiments across the country

with new formats being tested out.

Ex. Quasi-mall, sub-urbandiscount stores, Cash and carry

etc.



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Retail Industry in India is Store design : Biggest challenge for organised

retailing to create a customer-pullenvironment that increases the amount of

impulse shopping. Research shows that the

chances of senses dictating sales are upto 10-

15%. Retail chains like MusicWorld, andGlobus are laying major emphasis & investing

heavily in store design.

Emergence of discount stores: They areexpected to spearhead the organised retailing

revolution. Stores trying to emulate the model o

Wal-Mart. Ex. Big Bazaar, Bombay Bazaar D


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Unorganized retailing is getting organized:To meet the challenges of organized retailingsuch as large cineplexes, and malls, which are

backed by the corporate house such as 'Ansals'

and 'PVR the unorganized sector is getting

organized. 25 stores in Delhi under the banner

of Provision mart are joining hands to combine

monthly buying. Bombay Bazaar and Efoodmartformed which are aggregations of Kiranas.


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Major Retailers

Leading Retailers


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Some of the Key Players in


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Some of the Key Players in

Organised Retail


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Retail Industry employs 17-20% Workforce

that drives the Economy.

Retail trends often mirror trends in a

nations overall economy.Retailers add value by Providing theRight Product at The Right Placeat the Right Time.


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9.0%

6.8%6.0%

6.0%5.6%

5.2%

6.4%

6.6%

5.4%

9.4%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Projections of 8% sustainable real GDP growth rate till 2020 promise high growthpotential for Indian Retail

HIGH GDP GROWTH

Radical Transformation Anticipated In


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Radical Transformation Anticipated In

Indian Retail

China 20% 10

Poland 20% 8

Brazil 36% 15

Thailand 40% 18

US 85% 50

India17% (estimated)

27% (estimated)

5

10

India looking at rapid GROWTH compared to other countries


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Growth Of Indian Retail

Indian Retail expected to grow close to 12% p.a. in the next 10 years

*Projected

Source: Technopak Analysis, CSO & Other Sources

Analysis of Growth


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Analysis of GrowthIt is expected that retail in India could be worth US$ 175-200 billion by 2016.

2007-08 Total retails contribution to GDP is between 8%which would further jump up to nearly 12% in next fewyears. By 2010, retails contribution to national GDP intotality is likely to be 22%.

2007Retail Growth rate25-28%, Unorganized andorganized retail size300 billion US$

Opening 10 to 15 outlets by 2015, it plans to employ about

5,000 people selling groceries, consumer goods, fruits andvegetables. India's retail industry is worth $300bn (148bn)

Eg: Bharti is expected to invest 60 Billion with the largestretail Walmart

Government Policies


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The retail industry in India is growing at a significantpace. However, there are several problems faced by the

industry. The major challenges for the organized sectorinclude:Taxation laws that favor small retailers.Multi-point octroi collection.

According to analysts, for this industry to thrive,Indian retailers need to emulate worldwide retailpractices such as accuracy in financial reporting,increased levels of corporate governance and

greater accountability among employees.Foreign Equity does not go beyond 51 percent.Additions to the product categories to be soldunder single brand require fresh govt. approval.

I t ti l R t il At Gl


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International Retail: At a Glance

38%

27%

13%

8%3% 2% 9%

USA EU Japan China

India Russia Others

S


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Share of Organized Retail

Key Players


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Key Players

Highly evolved US market has WalMart taking only8% market share

UK market has Tesco with only 13.4% market share

China market still does not have a clear leader

USA = US$ 2,350 Bn UK = US$ 406 Bn China = US$ 313 Bn


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SWOT Analysis

Strength


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Strength

Increasing demand driven by the countrysyoung working population

Increase in per capita income which in

turn increases the household consumption value chain ( suppliers, producers, retailers

and customers).

Improvement in the standard of living.

Technology intensive industry

Weakness


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Weakness Lack of expertise in Supply Chain

Management

Inadequate Infrastructure

Stringent Labour Laws

Lack of specialized professionals in

Industry

Lack of industry status.

Government Restrictions on FDI

Opportunities


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Change in consumer behavior pattern and

increase in disposable income.

It is estimated that 15 million people wouldbe engaged in Retail and Retail support

activities by 2010

Indian rural markets offer a sea of anopportunity for the retail sector.

Upcoming international Players

Healthy prospect for the fashion industry.

Threats


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Threats

Indian taxation system favors small retail

business.

Competition from unorganized Sector to

the organized Sector.Middle class Psychology.

Increasing Real Estate prices

Conclusion


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Conclusion

Huge Scope for Development

Competitive Market

Organized retail is fast growing at a rate of 30%

YOY

Greater opportunity for employment


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Entry Point:

August 2006

Entry Point:

2002 -2003

Stores :

857 across India

Stores:

20 Stores in Maharashtra and Gujarat

Products:

FMCG, Vegetables

Products:

FMCG , Medicines and Vegetables

Consumer Segmentation:

Targeting 2 tire and 3tire Market

Consumer Segmentation:

Targeting 2 tire and 3 tire market

Marketing Strategy:

News Papers, TV etc.

Marketing Strategy:

Believe in mouth publicity

Marginal Profitability:

The average ticket size is 30 0 RS

Marginal Profitability:

The average ticket size is 550 Rs.

\


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retailing in India lec 3,4.ppt

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