Term4 Retail Intro

8/8/2019 Term4 Retail Intro

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An Outlook for Retailing in IndiaAn Outlook for Retailing in India


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Definition of RetailingDefinition of Retailing

Retailing is the process of selling goods in smallRetailing is the process of selling goods in smallquantities to the public and is not meant for resale.quantities to the public and is not meant for resale.Retail is derived from the French wordRetail is derived from the French word retaillierretaillier,,meaning to cut a piece off or to break bulk.meaning to cut a piece off or to break bulk.

Retailing thus makes the products and servicesRetailing thus makes the products and servicesavailable to the endavailable to the end--consumer.consumer.

It is the last point in the distribution system.It is the last point in the distribution system.


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MaturityMaturity

SophisticationSophistication

CompetitionCompetition

Retail OrganisationRetail Organisation

UrbanisationUrbanisation

IndustrialisationIndustrialisation

AgrarianismAgrarianism

North AmericaNorth America

EuropeEurope

Asia PacificAsia Pacific

18501850 19001900 19501950 20002000

Progressive Stages of RetailingProgressive Stages of Retailing


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Retailing in India todayRetailing in India today

Retailing in India is a USD 300 billion industry.Retailing in India is a USD 300 billion industry.

i.e. Rs. 15 lakh crores. This includes all forms of retailing.i.e. Rs. 15 lakh crores. This includes all forms of retailing.

Of the above, more than Rs.60,000 crores comes from organised retailingOf the above, more than Rs.60,000 crores comes from organised retailing

Retailing is the largest employer in the country after agriculture.Retailing is the largest employer in the country after agriculture.

It contributes 30% of the country's GDP compared to 9% in US, 8%It contributes 30% of the country's GDP compared to 9% in US, 8%in China and 11% in Polandin China and 11% in Poland

Around 96% of the total number of retail outlets have an area lessAround 96% of the total number of retail outlets have an area lessthan 500sq ftthan 500sq ft

Per capita retail space in India is 2 sqft while that of USA is 16 sqftPer capita retail space in India is 2 sqft while that of USA is 16 sqft

The organised retailing sector is expected to generate additionalThe organised retailing sector is expected to generate additionalemployment for 2 million people by 2015employment for 2 million people by 2015


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Did you know?Did you know? India is the hottest Retail destination. It was ranked as the mostIndia is the hottest Retail destination. It was ranked as the most

attractive retail destination among 30 emerging markets by theattractive retail destination among 30 emerging markets by theAnnual Global Retail Development Index (GRDI) for two yearsAnnual Global Retail Development Index (GRDI) for two years

consecutively ( AT Kearney )consecutively ( AT Kearney )

According to a study by the McKinsey Global Institute (MGI),According to a study by the McKinsey Global Institute (MGI),released in May 2007, India's middle class will swell by more than tenreleased in May 2007, India's middle class will swell by more than tentimestimesfrom 50 million in 2007 to 583 million people by 2025. Byfrom 50 million in 2007 to 583 million people by 2025. By2025, India will also become the 5th largest consumer market,2025, India will also become the 5th largest consumer market,moving up from the 12th position it occupied in 2007.moving up from the 12th position it occupied in 2007.

According to a McKinsey report published in September 2008, calledAccording to a McKinsey report published in September 2008, called'The Great Indian Bazaar: Organised Retail Comes of Age in India','The Great Indian Bazaar: Organised Retail Comes of Age in India',organised retail in India is expected to increase from 5 per cent of theorganised retail in India is expected to increase from 5 per cent of the

total market in 2008 to 14total market in 2008 to 14--18 per cent of the total retail market and18 per cent of the total retail market andreach US$ 450reach US$ 450--billion by 2015.billion by 2015.


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Few upcoming retail venturesFew upcoming retail ventures

Carrefour, the secondCarrefour, the second--largest retail chain in the world after Walmart, plans tolargest retail chain in the world after Walmart, plans toopen its first wholesale cashopen its first wholesale cash--andand--carry store in the country at Seelampur incarry store in the country at Seelampur inDelhi in the next two to three months. With the store sprawling over 55,000Delhi in the next two to three months. With the store sprawling over 55,000--square feet of area, the store will source 90 per cent of its products within thesquare feet of area, the store will source 90 per cent of its products within thecountry.country.

Aditya Birla Retail will invest up to US$ 44.3 million in 2010Aditya Birla Retail will invest up to US$ 44.3 million in 2010--11 to expand its11 to expand its'More' brand. The group will open 100 new supermarkets of 'More', and 8'More' brand. The group will open 100 new supermarkets of 'More', and 8--10 new10 newhypermarkets under the 'More Megastore' brand.hypermarkets under the 'More Megastore' brand.

WalWal--Mart Stores Inc, the world's biggest retailer, will accelerate its rollMart Stores Inc, the world's biggest retailer, will accelerate its roll--out ofout ofwholesale stores in India. Raj Jain, chief of Indian operations for Arkansaswholesale stores in India. Raj Jain, chief of Indian operations for Arkansas--based Walbased Wal--Mart, said the firm now expects to open 10Mart, said the firm now expects to open 10--12 wholesale centres in12 wholesale centres inIndia over twoIndia over two--toto--three years, from an earlier target of five years, as real estatethree years, from an earlier target of five years, as real estateprices have become more attractive.prices have become more attractive.

K Raheja Group promoted Shopper's Stop has linedK Raheja Group promoted Shopper's Stop has lined--up a capital expenditure ofup a capital expenditure ofnearly US$ 27.6 million to open about 12 stores in 2010nearly US$ 27.6 million to open about 12 stores in 2010--11. The new stores will11. The new stores willcome up in Bangalore, Delhi, Pune, Bhopal, Aurangabad, Vijaywada andcome up in Bangalore, Delhi, Pune, Bhopal, Aurangabad, Vijaywada and

Durgapur.Durgapur. British retail giant Tesco, expects to open its first cashBritish retail giant Tesco, expects to open its first cash--andand--carry store in Indiacarry store in India

by the end of 2010.by the end of 2010. Middle East retail chain Max is expanding its footprints across India. Max has 16Middle East retail chain Max is expanding its footprints across India. Max has 16

outlets operating in the metros while the rest are located in the tier II towns. Itoutlets operating in the metros while the rest are located in the tier II towns. Itplans to take its total store count to 53 by March 2011, targetting a turnover ofplans to take its total store count to 53 by March 2011, targetting a turnover ofUS$ 96.8 million.US$ 96.8 million.


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Did you know?Did you know?Of the total expenditure by Indian consumer, aroundOf the total expenditure by Indian consumer, around

53% is on Food, Beverages and tobacco,53% is on Food, Beverages and tobacco,

12% is on transport,12% is on transport,11% on clothing and footwear,11% on clothing and footwear,9% on rent,9% on rent,4% on furniture,4% on furniture,

4% on recreation,4% on recreation,2% on medical care and rest on misc. items.2% on medical care and rest on misc. items.

The potential for growth in foods segment is thus very high.The potential for growth in foods segment is thus very high.

720 million Indians to join consuming age by 2010720 million Indians to join consuming age by 2010

55% of the Indian population will be under 20 years of age by 201555% of the Indian population will be under 20 years of age by 2015

10% annual growth in Retail market since 200010% annual growth in Retail market since 2000

5.5 retail outlets per 1000 population, highest in the world5.5 retail outlets per 1000 population, highest in the world

2525--30% annual growth in retail loans and credit cards30% annual growth in retail loans and credit cards


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Percentage share of retail segments inPercentage share of retail segments in

organised sectororganised sector


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RuralRural Urban share in retail marketUrban share in retail market


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Share in Retail MarketShare in Retail Market Urban vs. RuralUrban vs. Rural


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Number of retail outletsNumber of retail outlets

in various countriesin various countries

No. of retail outlets

( in Million)

Country

12.0 India

1.18 Mexico

1.07 Brazil

0.91 United States

0.32 Argentina

0.19 Malaysia

0.04 Hong Kong


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Reasons for growth of organisedReasons for growth of organised

retailing in India :retailing in India :

Factors that would lead to growth in retailing sector are:Factors that would lead to growth in retailing sector are: Increasing growth in disposable incomeIncreasing growth in disposable income

Increasing demand of products by consumersIncreasing demand of products by consumers

population, quality demandpopulation, quality demand

Changing life stylesChanging life styles more working women , increased awareness,more working women , increased awareness,growth of mass media, more people travelling abroadgrowth of mass media, more people travelling abroad

Better product range and shopping options for consumersBetter product range and shopping options for consumers

Relaxation of a number of regulations by governmentRelaxation of a number of regulations by government

Gradual growth in infrastructureGradual growth in infrastructure

Restructuring in Tax regime( like uniform sales tax for all states)Restructuring in Tax regime( like uniform sales tax for all states)

Entry by big corporatesEntry by big corporates


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Few retail stores & chains in India :Few retail stores & chains in India :

Apparelretailing

Fast-foodretailing

Books,Music& relatedproducts

Life-style(DS) retailing

Foodproducts and

grocery

Benetton Pizza Hut, PizzaCorner

CrossWord West Side Food World

Weekender Nirula's Planet M Shopper's Stop Spencers

Arrow Domino's Groove Lifestyle Monday to

Sunday

Lee Archies GlobusMore

Van Huesen McDonald's Vintage's

Hallmark Gallery

Pantaloon Fabmall

Louis Phillippe KFC Landmark ITC's Will Sports Nilgiri's

Raymond's Musicworld

Note : Above brands listed at random & not in order of importance, market share etc


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Key Success Factors for OrganisedKey Success Factors for Organised

Retailing in IndiaRetailing in IndiaSome key factors essential for running a successful organized retail stores are:Some key factors essential for running a successful organized retail stores are:

Location of the storeLocation of the store

Sourcing the right merchandiseSourcing the right merchandise right quality, right price, right sourceright quality, right price, right source

Developing a promotional planDeveloping a promotional plan

Area for moving around and browsing in the storeArea for moving around and browsing in the store

Ambience of the store (designing, building, and fixturing the stores)Ambience of the store (designing, building, and fixturing the stores)

Type of staff and its trainingType of staff and its training

Varieties and choices available to the consumerVarieties and choices available to the consumer

Leveraging and gaining economic synergies across the locations( operationalLeveraging and gaining economic synergies across the locations( operationaleconomies of scale)economies of scale)


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Where are we headed?Where are we headed?

How big will organised retailing be?How big will organised retailing be?

Where will the growth take place?Where will the growth take place?

What formats will grow?What formats will grow?


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Growth ofGrowth of

Organised RetailingOrganised Retailing

Population

onthly

ouseholdIncome( umbai

Calcutta

Delhi

Chennai

yderabad

Bangalore

Ahmedabad

Pune

Kanpur

Surat

Lucknow

agpur

Jaipur

Coimbatore

Baroda

Ludhiana

PatnaI n d o r e

Indore

Food and Grocery


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Growth ofGrowth of

Organised RetailingOrganised Retailing

Population

onthly

ouseholdIncome( umbai

Calcutta

Delhi

Chennai

yderabad

Bangalore

Ahmedabad

Pune

Kanpur

Surat

Lucknow

agpur

Jaipur

Coimbatore

Baroda

Ludhiana

PatnaI n d o r e

Indore

Non-Food


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The Spread of Organised RetailingThe Spread of Organised Retailing

in Indiain India

Mall ManiaMall Mania

Speciality ScoresSpeciality Scores

Department DriveDepartment Drive Supermarket SuperstarsSupermarket Superstars

Nascent NonNascent Non--StoreStore

Other formats such as hypermarkets, supercentresOther formats such as hypermarkets, supercentres


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Nascent NonNascent Non--StoreStore

Evolving models:Evolving models: Mixed formats as well as pure nonMixed formats as well as pure non--storestore

MultiMulti--format retailers get most effective payformat retailers get most effective pay--off from nonoff from non--store initiativesstore initiatives

Direct Selling and EDirect Selling and E--tailing grow rapidlytailing grow rapidly

Fulfilment and customer service infrastructure are the KeyFulfilment and customer service infrastructure are the KeySuccess FactorsSuccess Factors


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Mall ManiaMall Mania

Factors Affecting Choice of a Shopping Destination

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Evolution in Developed MarketsEvolution in Developed Markets

1930 1940 1950 1960 1970 1980 2000 2020

Town Centre Malls

(Enclosedshopping

precinct)

Out of Town Malls

(socialepicentres)

TownCentre


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Term4 Retail Intro

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