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NATIONAL DISTRIBUTION

-An Indian perspective

By ,

Group One
AN OVERVIEW OF INDIAN RETAIL SECTOR
•India is 4th largest economy in the
world in purchasing power parity
(PPP) after US, China and Japan.

•Around 12 million shops around the


country

•INDIA - Most attractive retail
destination
•$ 320 billion now -- $637 billion
by 2015
•Compound Annual Growth
Rate  (CAGR) – 5%
•Highly Fragmented – “A nation of
shopkeepers”
•14% to India’s national GDP
•Jobs for 7% of workforce
The emergence of the neighborhood
‘Kirana’ stores catering to the
convenience of the consumers.

1980s experienced slow change as


India began to open up economy.

Textiles sector with companies like


Bombay Dyeing, Raymond's, S Kumar's
and Grasim first saw the emergence
of retail chains
Later Titan successfully created an
organized retailing concept and
established a series of showrooms
for its premium watches

The latter half of the 1990s saw a


fresh wave of entrants with a shift
from Manufactures to Pure Retailers.
Mono / exclusiv Exclusive Complete
e branded showrooms range
retail shops either owned or available
franchised out for given
by manufacturer brand
certified
product

RETAIL FORMATS Multi - branded Focus on Consumers


retail shops particular get to
IN INDIA product have more
categories and choices
carry most of
the brand
available

Usually have on
display
Convergenc convergence and
One shop
stop for
e retail consumer consumers ..
electronics .
store !
Organized Vs Unorganized Retail
Sector
Organized retail sector Unorganized retail sector
Organized Vs
Unorganized Retail Sector
Major Retailers
ØIndia’s top retailers are
largely lifestyle, clothing
and apparel stores.
Ø
ØThis is followed by grocery
stores,
Ø
ØFollowing the past trends and
business models in the west
retail giants such as
Pantaloons, Shoppers’ Stop
and Lifestyle are likely to
target metros and small
cities almost doubling their
current number of stores
Ø
ØThese Wal-Mart wannabes have
the economy of scale to be
low –medium cost retailers
pocketing narrow margin
Organized Retail Market in
India ( Rs . Cr .)
Market presence of retailers
geographically …
Unorganized Retail Business ( current
status …)
Facing stiff competition from corporate retail outlets, hawkers and small
shopkeepers are not only witnessing decline in business but also increased
harassment and eviction drives.

Of the 400 hawkers and 100 shopkeepers surveyed across five cities by
India FDI Watch and Action Aid, about 85% of them said their business was
on a slide.

Incidents of extortion and eviction have also increased because of the


entry of big retailers.

Shopkeepers have increased their work hours to compete with big retailers,
it said. About 60% of hawkers and 64% of shopkeepers are working 10-12
hours per day, while 24% worked for 13 hours or more.
The Bharti - Wal - Mart Retail Joint Venture

On November 27, 2006, Wal-Mart Stores, Inc (Wal-Mart), the world's largest
retailer, and Bharti Enterprises Ltd. (Bharti), a leading business group in India,
signed a Memorandum of Understanding (MoU) to explore business opportunities in
the Indian retail industry.

This joint venture marked the entry of Wal-Mart into the Indian retailing
industry.

According to Sunil B . Mittal ( Mittal ), chairman and managing director ,


Bharti,

"The joint venture with equal stakes will operate in areas where the government
allows foreign investment in retail like cash-and-carry and logistics. The retail
shops will be owned by Bharti Enterprises under the Wal-Mart franchise. The idea
is to give Indians the lowest price everyday.“

First Wal-Mart store was launched in Amritsar, Punjab.

 Bharti-Walmart has tied up with seven villages and about 130 farmers to pickup


fresh produce daily and directly. Transactions are recorded in the passport
given to every farmer and about 30 tons of vegetables picked up every day.
Wal - Mart Bharti Joint
Venture

Why Bharti ?
•Market leader in Indian telecom market
•Thorough understanding of distribution in Indian
markets
•Fully aware and capable to succeed in complex
environment of Indian market
•Capability to attract FDI

Joint Venture
2 different formats :
•franchised retail company &
•wholesale cash and carry joint venture
Pantaloons - Staples joint
venture

Staples Offices Products aims to be the largest office products


company in India across Retail, Delivery and Online channel.

The Staples ‘Delivery’ business is aimed at large Indian businesses,


spanning multiple locations, requiring seamless ordering & fulfillment
and savings through consolidated buying & improved consumption
information.

Pantaloons' Retail ( India ) Limited, the flagship company of the


Future Group, is a leading retailer with a turnover of over Rs. 20.00
billion (USD 450 Million) for the financial year 2005-06.

The company has stores in over 30 cities across the country,


constituting close to 5 million square feet of retail space.
Carrefour Sees Hopeful Signs In
India Market

The French retailer will soon announce its Indian franchise partner and
will open its first cash-and-carry store in the next few months..(11th may
2010-businessweek.com)

Carrefour, the No. 2 retailer behind US group Wal-Mart, is close to


signing a deal with Future Group, India's largest retailer, to open
stores under the French retailer's name.

Global retail chains have long been frustrated in their efforts to set
up shop in the world's second-fastest growing major economy, where
organized retail accounts for just 6 per cent of industry sales and
incomes are rising quickly.

Foreign firms are prohibited from owning multi-brand retail chains in


India, a rule that protects small operators and local chains and is not
expected to be relaxed in the near term given political opposition.

Carrefour exports textiles and fresh produce worth $170 million from
India, and Bironneau expected this to rise quickly after the launch of
its operations in India.
 SPAR Hyper - market in JV with Max
Hypermarket India Pvt Ltd

The global food retail chain SPAR has started its India operation opening
the chains first store ‘SPAR Supermarket’ at Hyderabad(OCT 2008)

SPAR International has entered into a strategic partnership with Max


Hypermarket India Pvt Ltd, which will carry forward the Supermarket
project across India.

Spread over 20,000 square feet of retail space, the store retails a wide
range of products across segments that include FMCG, fish, meat, home
textiles, personal care, kitchenware's, travel and IT accessories
Challenges
1.Protests by small & medium local
businesses
2.
3.Dealing with India’s unique cultural
factors
4.
5.Supply Chain Management challenges
6.
7.Underdeveloped physical
infrastructure
8.
9.Poor quality of roads, trucking,
reluctance to adopt modern
technology
10.
11.Cutting out middleman would create
more opposition
12.
13.More flexible FDI policies
Conclusion
Emergence of organized retail sector
Wal-Mart’s joint venture with Bharti
aimed at capitalizing growing middle
class
Bharti ideal partner for Wal-Mart
Many unique challenges in India to
overcome
If challenges tackled , this
partnership could transform Indian
retail

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