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Indian Retail Mar09

Indian Retail Mar09

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Published by Gaurav Kumar

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Published by: Gaurav Kumar on Nov 17, 2009
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09/28/2010

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IndianRetail:
Timetochangelanes
KPMG IN INDIACONSUMER MARKETS
 
TheadventofNewYear2009heraldedinterestingyetchallengingtimesfortheGlobalRetailindustry.TheIndianretailindustry—oneofthefastestgrowingindustriesinthecountryoverthepastcoupleofyears—isnoexception.While2008showedgrowthfortheindustryonthewhole,thelastquarterof2008wasimpactedbytheeconomicslowdownandliquiditycrunch,andthisisexpectedtocontinueinthecurrentyear.TheyeargonebywaspackedwithseveralsignificantdevelopmentsfortheIndianretailindustry,includingtheentryofmanyglobalplayers,growingacceptanceofthemodernformats,thesuccessofmanyspecialityretailformats,andtherisingcompetitionintheregionalmarketsbeyondthemetrosandTier1cities.Ontheotherhand,theaftereffectsoftheglobaleconomicturmoilarebeingfeltinIndiaaswell,andtheeconomyisexpectedtogrowatasignificantlylowerrateoverthenext2years(between5to7percentaccordingtovariousestimates
*
).Consequently,overallconsumptionlevels,particularlydiscretionaryspendandimpulsepurchaseshavebeenaffected,which,inturn,hasresultedinalowergrowthratefortheindustryforthecurrentyear.Moreover,thistrendisexpectedtocontinuein2009.Giventheindustry’schanginglandscapeandemergingchallenges,thefocusofindustryplayerstooischanging;withastrongemphasisonprofitablegrowthinthecurrentscenario.Hence,retailcompaniesareincreasinglyconcentratingonstrengtheningexistingoperationsandassessingoptionsforgrowththroughconsolidation,whilecontinuingtoinnovate.Lookingatthechangingcontoursoftheindustry,therearecertaindriverswhicharelikelytohaveanimpactacrossretailcategories,andwehaveexaminedthesedriversindetailinthisreport.Factorslikerenegotiatingrentals,storerationalization,workingcapitalmanagement,regionalization,costoptimizationandmanpowerresizingaresomeofthekeyTopofMind(TOM)issuesforretailersinthecurrentcontextofthedownturn.Wehavefocusedonhowthesedriversareaffectingvariousplayersacrosstheretailvaluechainandtheirstrategiestohelpcopewiththeslowdown.Theanalysesandpointofviewpresentedinthereporthavebeenvalidatedthroughextensivediscussionswithindustryplayers.Wetakethisopportunitytothanktheindustryplayersformakingthisendeavorpossible.
©2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
Foreword
*IMF,CushmanandWakefieldReport,2009
 
©2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
 
Table of Contents
ExecutiveSummary 01IndiasRetailJourney-Fromgearfivetogear04Livinginuncertaintimes 06
DisappointingFootfalls 07Margincontraction-Interestburdenadverselyimpactsprofits 08Rolloutdelaystocompoundproblems 09Besidestheweakeconomyandthefeebleconsumersentiments,thedisappointingretailgrowthisalsoattributedto10Mistakesbyretailershavealsoaddedtoexternaltroubles 11
Strategiestohelpretailerscopewiththeslowdown 12
Tougheninternalefficiencies 13Decodeconsumerbehavior 21Enteringintoalliancesandleveragingexpertise 23Buildacompetentsupplychainmanagementsystem 27Ventureintounderpenetratedmarkets:RuralRetailing 28Innovate:categories,services,businessmodels31
FutureOutlook 33

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