Retail in India

The India Story- Flow

Evolution of the industry Retail in India Present scenario in retail

Key determinants of growth Opportunities. Policy and regulatory framework.

IndiaOngoing Evolution
Yesterday
Socialist policies minimal private sector role Bureaucratic Protected market Small consumer markets Underdeveloped infrastructure

Today
One of the fastest growing economies ; 9%+ growth rate for 5 years prior to recent crisis Resilient Economy 5-6% growth at the peak of the global crisis Opening up sectors for investment Promising consumer markets Significant investment in infrastructure development

An Enabling Environment
Largest democracy; Stable government. Dominant private sector; Increasing withdrawal of government from business Robust banking sector; Capital markets World class IT & telecom infrastructure A connected economy; Economic efficiency & quality of governance

India- The Landscape

India: Key Facts GDP per capita $2800 Population 1028 mn 2nd largest urban population: 32% of the total. Projected to reach 37.8% by 2025. Enormous consumption force: Large youth population Largest working age population worldwide by 2050.
50
40
Population Median Age

44

34 25

37

38

30 20
10

China

Russia

India

US

Japan

India- The Landscape

Retail- 2nd largest employment generator Key Corporate groups already have a stake in the industry. Retail contributes about 39% to the India GDP.
Organized Retail penetration in India is just round 6%. Indian Organized Retail Sector is of US$28bn in 2010. Penetration of Organized Retail is expected to reach 12% and 21% by 2015 and 2020. The size of Organized Retail reaching US$ 85bn and US$ 262bn by 2015 and 2020

39%

Organized Retail
90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 81% 55% 40% 30% 20% 3% 6% 85%

India Retail
Retail Performance- Categories. Food and groceries biggest category in total retail. Clothing and footwear category has the highest penetration in organized retail.

India Retail

India Retail

The India Story- Flow

Evolution of the industry Retail in India Present scenario in retail

Key determinants of growth Opportunities. Policy and regulatory framework.

Opportunities
Global retail development index Asses how lucrative a country is for entering. Ranks 30 developed countries on a 100 point scale Country Risk 35 or more in euromoney country risk score Population 2 mn or more GDP per capita.

Global retail development index

Market attractiveness Retail sales per capita(40%) Population size(20%) Urban Population(20%) Business efficiency(20%) Country Risk Country risk (80%) Business risk (20%) Market saturation Share of modern retailing(30%) No. of Global retailers(30%) Modern retail sales area/urban inhabitant(20%) Market shares of leading retailers Time factor Calculates the time rate by which the sector is growing.

Opportunities
Infrastructure Development. Emergence of Malls and shopping plazas. Growing Middle class. Indias consumer class estimated to grow (from 50 million at present)to 583 million by 2025. Sharp Increase in Per capita Income US$ 348 (200001) US$ 849 (20092010)

Easy and quick finance by the banking industry. Financing options by retail brands Youth constitutes 60 per cent of Indias population driving brand consciousness. Sustained marketing efforts by brands

The mindset of the Indian consumer is changing Convenience, High value and Superior shopping experience.

Opportunities
Rural Markets of India. Rural Economy constitutes 45% of Indias GDP. Two fifths of countries total consumption. 70% of Indian Households. 50% increase in per capita income in last 10 Years.
Company
Hindustan Unilever Dabur India Dish TV

Category
Household products Personal products Media

Rural markets sales

45 40 33

Opportunities
India as a sourcing base India is a price-competitive sourcing base for large retail players. Global retailers, such as Wal-Mart, GAP, Tesco and JC Penney, are sourcing from India Moving from third-party buying offices to wholly-owned sourcing and buying offices. Can offer competitive advantage

Opportunities
Growth expected across product categories. Over the next 10 years: The home improvement expected to grow at a CAGR of more than 20%. Consumer durables expected to grow at a CAGR of more than 20 Apparel and eating out segments are expected to grow at a CAGR of more than 13 per cent

FDI Norms in India

India allows FDI (Foreign Direct Investment) both in single brand and multi brand retailing in different formats
B2C
Allowed with a cap of 51% stake with Foreign Retailer. E.g. Zara (Tata Trent), Gucci and Tommy Hilfiger (Murjani Group)

B2B

Single Brand Retailing

NA

Multi Brand Retailing

Not Allowed in any limit. Indian Government has planned to table the Retail FDI bill in Monsoon season in 2011

100% stake allowed with Foreign Retailer. E.g. WalMart (Bharti), Tesco (Tata)

In Multi brand B2B Retailing, the foreign partner cant sell more than 25% of its total sales to a single company

Challenges

We need greater competition and therefore, we need to take a firm view on opening up of the retail trade.
-Dr. Manmohan Singh, Prime Minister of India

References and sources

CII and AT Kearney- Retail in India: Getting organized to drive growth. Deloitte -Indian retail market: Changing with changing times. Retail sector report by prabhudas Liladher. Retail sector report by CRISIL(Nov 2009). Technopak report- Overview of consumer and retail sectors(Feb 2010) The 2011 AT Kearney GRDI Report. www.indiainbusiness.nic.in www.censusindia.net