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INTRODUCTION
Definition
Retail is the sale of goods to end users, not for resale, but for use and consumption by the purchaser . The retail transaction is at the end of the supply chain. Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses.
In commerce, a "retailer" buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user.
Indian Retail Sector today is worth of US$ 590 Billion Indian retail sector accounts for 22% of the country's GDP and contributes to 8% of total employment Retail sector is the fastest growing sector in Indian Economy. Indian Retail sector is the fifth largest global retail destination. Indian retail sector is largely closed to outsiders to safeguard the livelihood of nearly 15 million small store owners. The organized retail market is growing at 35 percent annually while growth of unorganized retail sector is pegged at 6 percent. Demographic dividend with over 50% of country populace under 25 years of age is a prime driving factor for modern retail sector
Retail Sector
Organized Sector(4%)
Unorganized Sector(96%)
Manufacture rs
Whole seller
Organized Sector
Distributor
Retailer
SKILLED WORKERS
INFLATION COMPETITION
TAXATION POLICIES
MARKET POWER
Taxation laws in India favors only small retail businesses. Implementation of non-uniform VAT across states. Octroi and entry tax in some states.
SWOT ANALYSIS
STRENGTH
Increasing demand driven by the countrys young working
population
Increase in per capita income which in turn increases the
household consumption
Create win-win situation for all links in value chain (
WEAKNESS
Lack of expertise in Supply Chain Management Inadequate Infrastructure Stringent Labor Laws
OPPORTUNITIES
THREATS
Displacement of Unorganised Retailers Unfair Competition The small retailers do not have the competency to sustain against big retailers
Creation of jobs in the educated middle class Investment into warehouse and cold storage chain will result in significant efficiency on supply chain. Farmers benefited through direct marketing and contract farming programme. Elimination of layers of middlemen More investments in retail supply chain and storage
Indias current policy does not allow FDI in retail trade except for Single Brand Retail
FDI up to 51% is allowed in Single Brand Retail with prior government approval 100% FDI is allowed in wholesale cash-and-carry format which operate in direct business to business segment
Recent Measures have been proposed by Committee of Secretaries to open up Multi Brand Retail Conditions stipulated for Multi Brand Retail include a minimum investment of US$100 million Would only be allowed to operate in cities with at least 1 million people
One hypermarket is permitted for a population of 350000 and no new hypermarket is allowed within 35 km of city centres
THAILAND
Large retail stores have to located 15 km from commercial centres of provincial towns
GLOBAL
INDIAN
Lifestyle plans to have more than 50 stores across India by 2012 13.
Shoppers Stop has plans to invest Rs250 Crore to open 15 new supermarkets in the coming three years.
Pantaloon Retail India (PRIL) plans to invest US$ 77.88 million to add up to existing 2.4 million sq ft retail space by 2012
Timex India will open another 52 stores by December2011 taking its total store count to 120
Expected Growth
1.4 1.2 1 0.83 0.59 0.6 0.4 0.2 0.35
CAGR 10%
1.3
0.8
0
2008 2011 2013 2018
In the last four year, the consumer spending in India climbed up to 75%. By the year 2013, the organized sector is also expected to grow at a CAGR of 40%. The total number of shopping malls is expected to expand at a CAGR of over 18.9 per cent by 2015.
Source:AT Kearney Report, Indian Retail
The initial cap on investment could be pegged at 49%. FDI should be leveraged to create back-end infrastructure. Restrict the number of stores that can be operated in a city. Allow access to the small retailers to the stores through special windows.