retail industry of india (mic)

8/9/2019 Retail Industry of India (Mic)

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RETAIL INDUSTRY OFINDIA

BY:-

BIJENDAR KR SHARMASAYAN BHATTACHARJYA

RAHUL PANWAR

AMIT KR VERMA

A PRESENTATION ON


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INTRODUCTION

y India retail industry is the largest industry in India, with anemployment of around 8% and contributing to over 10% of thecountry's GDP.

y The Indian retail market, which is the fifth largest retail destinationglobally, has been ranked as the most attractive emerging market forinvestment in the retail sector by AT Kearney's eighth annual GlobalRetail Development Index (GRDI), in 2009.

y The share of retail trade in the country's gross domestic product(GDP) was between 810 per cent in 2007. It is currently around 12per cent, and is likely to reach 22 per cent by 2010.


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Meaning Of Retail :

The word retail has its origin in French word retailer and means to cuta piece or to break bulk.

Retail Philosophy By The People, For The People and Of ThePeople

RETAILING Business activities involve Selling Goods and Servicesto Consumers for their Personal, Family or Household use.

Every sale of Goods and Services to final consumer

E.g Food products, apparel, movie tickets; services from haircutting to e-ticketing.


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Traditional Retail Industry

Traditionally retailing in India can be traced to

The emergence of the neighbourhood Kirana stores catering tothe convenience of the consumers

Era of government support for rural retail: Indigenous franchisemodel of store chains run by Khadi & Village IndustriesCommission

The retail stores in India are essentially dominated by the

unorganized sector or traditional stores.

Infact the traditional stores have taken up 98 percent of theIndian retail market.


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Formatsin Indian Organized Retail Sector

y Malls:Thelargest form oforganized retailingtoday. Located mainlyin metrocities,inproximitytourbanoutskirts. Ranges from 60,000 sq ftto 7,00,000 sq ftandabove. Theylendanidealshoppingexperience with anamalgamationofproduct,serviceandentertainment,allunder acommon roof.Examples includeShoppers Stop, Piramyd, Pantaloon.

Department Stores:Departmental Storesareexpectedtotakeover theapparel business fromexclusive brandshowrooms. Amongthese,the biggestsuccessis K Raheja'sShoppers Stop, which startedinMumbaiandnow has morethansevenlargestores (over 30,000 sq. ft)across Indiaandeven hasitsowninstore brand forclothescalled Stop!.

Specialty Stores:

Chainssuch asthe Bangalore based Kids Kemp,theMumbai books retailerCrossword, RPG'sMusic Worldandthe Times Group's musicchain PlanetM,are focusingonspecific marketsegmentsand haveestablishedthemselvesstronglyintheir sectors.


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Hypermarts/Supermarkets:Large self service outlets, catering to varied shopper needs aretermed as Supermarkets. These are located in or near residentialhigh 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 on food & grocery and personal sales.

Discount Stores:

As the name suggests, discount stores or factory outlets, offerdiscounts on the MRP through selling in bulk reaching economies of

scale or excess stock left over at the season. The product categorycan range from a variety of perishable/ non perishable goods


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Convenience Stores:These are relatively small stores 400-2,000 sq. feet located nearresidential areas. They stock a limited range of high-turnoverconvenience products and are usually open for extended periodsduring the day, seven days a week. Prices are slightly higher due tothe convenience

Department Stores:Large stores ranging from 20000-50000 sq. ft, catering to a varietyof consumer needs. Further classified into localized departmentssuch as clothing, toys, home, groceries, etc.

MBOs :Multi Brand outlets, also known as Category Killers, offer severalbrands across a single product category. These usually do well inbusy market places and Metros.


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India RetailMarket Statistics

y 720 million Indians to join consuming age by 2010

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

y 32% rise in urbanization by 2008

y 10% annual growth in Retail market since 2000

y

7% of the population is engaged in retailingy A booming US$ 300 billion retail market in India

y 5.5 retail outlets per 1000 population, highest in the world

y 25-30% annual growth in retail loans and credit cards

y The organized retail sector currently accounts for around 5 per centof the Indian retailmarket.

y Organized Retail is predicted to capture 15 20% market share by2010.

y Over 100 malls of over 30 million sq feet of new shopping centrespace are projected to open in India between 2009 and end-2010.


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Reasons behind retailgrowth:

y 1. Consumer spending has risen sharply at 75% as the youthpopulation (more than 33 percent of the country is below the age of15) has seen a significant increase in its disposable income.

y 2. Retail industry in India is expected to rise 25% yearly being drivenby strong income growth, changing lifestyles, and favourabledemographic patterns.

y 3.India s retail still unexploited and under penetrated.

y 4. Ever-expanding middle- and upper-class consumer base, there willalso be opportunities in Indias tier II and tier III cities.

y 5. The greater availability of personal credit


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y 6. India has had one of the consistently highest GDP growth rates ofthe last few years.

y 7. Newer opportunities such as airport real estate are emerging withthe upgrade of the major and secondary airports, as well as a changein government policy allowing expansion of retail activity at airports


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Profile of the Major Players

1.Pantaloon RetailIt is headquartered in Mumbai with 450 stores across thecountry employing more than 18,000 people. It can boastof launching the first hypermarket Big Bazaar in India in

2001. An all-India retail space of 5 million sq. ft. which isexpected to reach 30 mn by 2010. It is not only the largestretailer in India with a turnover of over Rs. 20 billion but ispresent across most retail segments - Food & grocery (Bigbazaar, Food bazaar), Home solutions (Hometown,furniture bazaar, collection-i), consumer electronics (e-

zone), shoes (shoe factory), Books: music & gifts (Depot),Health & Beauty care services (Star, Sitara and Healthvillage in the pipeline), e-tailing (Futurbazaar.com),entertainment (Bowling co.)


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2. K Raheja GroupThey forayed into retail with Shoppers Stop, Indias firstdepartmental store in 2001. It is the only retailer from India tobecome a member of the prestigious Intercontinental Group of

Departmental Stores (IGDS). They have signed a 50:50 joint venturewith the Nuance Group for Airport Retailing. Shoppers Stop has 7,52, 00 sq ft of retail space with a turnover of Rs 6.75 billion.

3. Tata group:Established in 1998, Trent - one of the subsidiaries of Tata Group -

operates Westside, a lifestyle retail chain and Star India Bazaar - ahypermarket with a large assortment of products at the lowestprices. In 2005, it acquired Landmark, India's largest book and musicretailer. Trent has more than 4 lakh sq. ft. space across the country.Westside registered a turnover of Rs 3.58 mn in 2006


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4. RPG group:

One of the first entrants into organised food & grocery retail with

Food world stores in 1996 and then formed an alliance with Dairyfarm International and launched health & glow (pharmacy & beauty

care) outlets. Now the alliance has dissolved and RPG has SpencersHyper, Super, Daily and Express formats and Music World storesacross the country.

5. Landmark group:were launched in 1998 in India. Lifestyle is spread across six

cities, covering 4.6 lakh sq. ft. with a turnover of Rs 3.5 billion in2005. A new division named Lifestyle International has emergedfor their international brands business comprising Bossino, Kappaand Springfield in their portfolio.


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y 6.Piramal Group

In September 1999, Piramal Enterprises announced their arrival intoretail with the launch of three retail concepts: India's first trueshopping mall of international standards, called Crossroads; a

lifestyle department store named Piramyd Megastore; and a familyentertainment centre known as Jammin. They have around 18TruMart stores covering 1.90 lakh sq. ft. registering a turnover of Rs37.6 mn in 2005

y 7. SubhikshaSubhiksha is a Chennai-based, decade old, no frills, food, grocery,

pharma and telecom, discount retail chain. ICICI Venture Capitalholds 24% in the equity capital of Subhiksha. It has more than500 stores across the country covering a retail space of morethan 1 million sq ft with a registered turnover of Rs 3.34 bn in2006. It has a planned investment of Rs.300 crores to ramp upits operations to 1200 stores by 2008.


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8. Bharti-Walmart

Their plans include US$ 7 bn investment in creating retail network inthe country including 100 hypermarkets and several hundred smallstores. They have signed a 50:50 percent joint venture agreementwith Walmart. Wal-Mart will do the cash & carry while Bharti will do

the front-end.9. Reliance

Indias most ambitious retail plans are by reliance, with investmentsto the tune of Rs. 30,000 cr ($ 6.67 bn) to set up multiple formatswith expected sales of Rs 90,000 crores ($20 bn) by 2009-10.

10.AV Birla Group

They have a strong presence in apparel retailing through Maduragarments which is subsidiary of Aditya Birla Nuvo Ltd. They ownbrands like Louis Phillipe, Van Heusen, Allen Solly, Peter England,Trouser town.


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Changing phase


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Drivers of Retail change in India

Major drivers :

1. Changing Income Profiles

2. Diminishing difference between Rural andurban India

3. Changes in Consumption patterns

4. The emergence of a young Earning India


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Indias retailjourneyin recession:

y With the Q3 growth numbers of FY2008-09 at 10-12 percent asagainst 35 percent of the previous year, the happy grins are fastturning into nervous smiles While the sector is still registeringdecent growth, the Heavy investments made during the boom periodmay weigh the retailers down


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Strategiesto help retailerscope with theslowdown

yConsumers are currently sitting on the fence andthe challenge for retailers will be to offer the rightbaits to get them back to stores. Retailers have tofocus on growing profits through sales growth and

not mere cost-cutting strategies. There will be asharp cut in overall sales growth this year, but amarked improvement in bottomlines with playersfocusing on efficiencies"-Kishore Biyani, ChiefExecutive Officer, Future Group.


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SWOT analysis

y Strengths :- Technology : successful organized retailer today work

closely with their vendors to predict consumerdemand, shorten lead time reduce inventory holdingand ultimately save cost

y Weakness :-

1. Less Conversion level 2. Customer Loyalty


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y Opportunities :- Rural Retailing :India huge rural population has caught

the eye of retailer looking for new areas of growth

Percolating down: expected to enter into tiers-II cities

Organized retail :expected to grow by 20-25% p.a

y Threats :- unorganized retailers :they are parallel to large

supermarket with high degree of flexibility inmerchandise, prices and turnover

Shopping Culture


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FDIin Retailing

y Foreign Direct Investment in the retailing sectorcan have immense benefits It can generate huge employment for the semi-skilled

as well as illiterate population which otherwise can't be

employed in the already confined rural and organizedsector

it can facilitate the improvement of the standard ofliving of farmers by purchasing commodities at areasonable cost

It also stems out an indirect employment generationchannel by training and employing people in thetransportation and distribution sectors such as drivers,mechanics etc


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y E.g.. Bharti Retail- a wholly owned subsidiary ofBharti Enterprises. has announced two jointventures (JV)with the international retailingbehemoth, Wal-Mart.

y The first JV ensures cash and carry business, inwhich 100 percent FDI is permitted and it can sellonly to retailers and distributors. The second JVconcerns the franchise arrangement. Sunil Mittal,

Chairman of the Bharti Group assured that theventures will use low prices every day and bestpractices for the satisfaction of the customer.


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Challenges to retail Development in India

The tax structure in India favours small retail business

Lack of adequate infrastructure facilities

High cost of real estate

Dissimilarity in consumer groups

Restrictions in Foreign Direct Investment

Shortage of retail study options and trained manpower

Low retail management skill


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Bright future

India rises at the top as the global economic stormsubsides.

Foreign direct investment (FDI) of up to 100% iscurrently allowed in cash and wholesale trading.

Domestic Retailers continue with expansion plans.

The retail industry in India is expected to go up toUS$ 833 billion by the year 2013. It is furtherexpected to reach US$ 1.3 trillion by the year 2018.


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Bibliography

AT Kearny

Forrester Research 2006

KPMG-FICCI Report

http://www.indiainbusiness.nic.in/


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