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Presentation by -Gurdeep Singh -Pushpak Pandey -Shaleen Agarwal -Rohan Tandon -Richa Kohli
Agenda
Retailing : An overview Indian retail The change factor FDI in Indian retailing Why FDI ? How FDI ? Big Bazaar- Company Profile - Customer Segment - Vision and Mission - Swot analysis - BCG Matrix - Porter 5 Forces Model
Retailing: An overview
Retailing Worlds largest private industry US$ 6.6 trillion sales annually Fortune 100 9 Retailers Carrefour, Ahold, Home Depot, Kroger, Metro, Kmart-Sears, Target, Albertsons Indian Retailing Largest employer after agriculture - 8%* of population Highest outlet density in world Around 12 mn outlets Still evolving as an industry Long way to go
An overview
Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls Khadi Stores Cooperatives Convenience Stores Mom and Pop/Kiranas Weekly Markets Village Fairs Melas
Source of Entertainment Neighborhood Stores/Convenience Availability/ Low Costs / Distribution Shopping Experience/Efficiency
Informal retailing Sector Typically small retailers. Evasion of taxes Difficulty in enforcing tax collection mechanisms No monitoring of labor laws
Indian retail
Formal Retailing Sector Typically large retailers Greater enforcement of taxation mechanisms High level of labor usage monitoring
Indian retail
Corporate Houses Tatas: Tata Trent RPG group: Food World, Health and Glow, etc ITC: Wills Life Style Rahejas(ShoppersStop), Hiranandani(Haiko), DLF(DT cinemas) etc. Dedicated brand outlets Nike, Reebok, Zodiac etc Multi-brand outlets Vijay Sales, Viveks etc Manufacturers/ Exporters Pantaloons, Bata, Weekender
Indian retail
Modern Format retailers Supermarkets (Foodworld) Hypermarkets (Big Bazaar) Department Stores (S Stop) Specialty Chains (Ikea) Company Owned Company Operated Traditional Format Retailers Kiranas: Traditional Mom and Pop Stores Kiosks Street Markets Exclusive /Multiple Brand Outlets
Hypermarket
Big Bazaar Giants Shoprite Star Lifestyle Pantaloons Piramyds Shoppers Stop Trent Fame Adlabs Fun Republic Inox PVR
Department store
Indian retailers
Entertainment
Indian consumer
Greater per capita income Increase in disposable income of middle class households 20.9%* growth in real disposable income in 99-03. Growing high and middle income population Growing at a pace of over 10%* per annum over last decade Affordability growth Falling interest rates Easier consumer credit Greater variety and quality at all price points
The urban consumer Getting exposed to international lifestyles Inclined to acquiring asset More discerning and demanding than ever No longer need-based shopping Shopping is a family experience Changing Mindset Increasing tendency to spend Post Liberalization children coming of age 100 mn 17-21 year olds*. Tend to spend freely. Greater levels of education
Indian consumer
Anticipated growth
Market size Current market size is roughly US$ 286 bn* 96% of the 12 Million stores are less than 500 Sq. ft. Forecast Growth rate for the retailing industry is roughly 8.3% for 2003-2008 Sales from large format stores would rise by 24-49%** Formal and modern format retailing would enjoy rapid growth
Anticipated growth
Industry dynamics
Low domestic competition Because of fragmented nature of industry Lack of exposure to global best practices Low entry barriers for unorganized retailing Moderate entry barriers for organized retailing Wholesale system under-invested leading to 20-40% wastage Non level playing field issues Wide differences in treatment of small and large retailers
Industry dynamics
Industry dynamics
Real Estate Costs Supply Chain Inconsistency Poor Infrastructure Lack of Skilled Manpower
issues
Growth factors
Growth factors
Growth determining factors Government Policy Infrastructure development GDP growth Employment generation and job creation In several new sunrise industries Implies greater purchasing power
India ranked 1st in the Global A.T Kearney Retail Development Index
Advantage India
Current Indian FDI Regime FDI not permitted in retail trade sector, except in: Private labels Hi-Tech items / items requiring specialized after sales service Medical and diagnostic items Items sourced from the Indian small sector (manufactured with technology provided by the foreign collaborator) For 2 year test marketing (simultaneous commencement of investment in manufacturing facility required)
Metro Group of Germany Cash-and-carry wholesale trading Proposal faced strong opposition Entities established prior to 1997 Allowed to continue with their existing foreign equity components. No FDI restrictions in the retail sector pre1997 Foodworld 51:49 JV between RPG and Dairy Farm International, Leading food retailer in India now Mc Donalds
Current FDI
Hypermarket The chain of retail stores of the Pantaloon Retail (India) Ltd. 89 outlets in India Headquarter in Mumbai Focusing on Value of Money
COMPANY PROFILE
Future Group, led by its founder and Group CEO, Mr. Kishore Biyani, is one of Indias leading business houses with multiple businesses spanning across the consumption space. While retail forms the core business activity of Future Group, group subsidiaries are present in consumer finance, capital, insurance, leisure and entertainment, brand development, retail real estate development, retail media and logistics.
Led by its flagship enterprise, Pantaloon Retail, the group operates over 12 million square feet of retail space in 71 cities and towns and 65 rural locations across India. Headquartered in Mumbai (Bombay), Pantaloon Retail employs around 30,000 people and is listed on the Indian stock exchanges. The company follows a multi-format retail strategy that captures almost the entire consumption basket of Indian customers. In the lifestyle segment, the group operates Pantaloons, a fashion retail chain and Central, a chain of seamless malls. In the value segment, its marquee brand, Big Bazaar is a hypermarket format that combines the look, touch and feel of Indian bazaars with the choice and convenience of modern retail.
In 2008, Big Bazaar opened its 100th store, marking the fastest ever organic expansion of a hypermarket. The first set of Big Bazaar stores opened in 2001 in Kolkata, Hyderabad and Bangalore. The groups speciality retail formats include, books and music chain, Depot, sportswear retailer, Planet Sports, electronics retailer, eZone, home improvement chain, Home Town and rural retail chain, Aadhaar, among others. It also operates popular shopping portal. Future Capital Holdings, the groups financial arm provides investment advisory to assets worth over $1 billion that are being invested in consumer brands and companies, real estate, hotels and logistics. It also operates a consumer finance arm with branches in 150 locations.
Customer Segment
Big Bazaar target to upper middle class and higher customers. The large and growing young working population is a preferred customer segment. Big Bazaar specially target working women and home maker who are the primary decision maker.
SWOT ANALYSIS
STRENGTHS
EVERY DAY LOW PRICING GOOD INFRASTRUCTURE CONSUMER PREFERENCES DIVERSE MARKET COVERAGE AWRENESS ABOUT THE BRAND HIGH AMONG MASSES SUB URBAN UNTAPPED MARKET ONE STOP CONCEPT UNKNOWN YET EVOLVING CONSUMER ORIENTATION CO BRANDING AND FRANCHISING FOR FASTER GROWTH
OPPORTUNITIES
SWOT ANALYSIS
WEAKNESS
LOW PERCEPTION AMONG CONSUMERS LESS AVAILABILITY OF STORES SUPPLY CHAIN BOTTLENECKS(FRAGMENTED MARKETS)
THREATS
NEW ENTRANTS AND FOREIGN PLAYERS UNORGANISED RETAIL MARKET
NEW ENTRANTS
WALMART,CARREFOUR,METRO,IKEA FOREIGN PLAYERS ALLOWED TO SOME EXTENT
Contd
BARGAINING POWER OF CONSUMERS
PRICE SENSITIVE CONSUMERS MORE AVAILABLE CHOICES
THREAT OF SUBSITUTES
UNORGANIZED RETAIL
BCG MATRIX
MARKETING
7 Ps ANALYSIS
PRICING
iValue Pricing (EDLP) i Promotional Pricing Low Interest Pricing Psychological Pricing Special Event Pricing (Republic Day) i Differentiated Pricing Time Pricing i Bundling
PRICING COMPARISION
TIME PRICING
PSYCHOLOGICAL PRICING
PROMOTION
SAAL KE SABSE SASTE 3 DIN FUTURE CARD (Discount Upto 3%) SHAKTI CARD JUNK SWAP OFFER BRAND AMBASSADOR: M.S. DHONI ADVERTISMENT (Print Ads, T.V., Radio) POINT OF PURCHASE PROMOTION GIFT TO EVEY 100th CUSTOMER (Seaso
PEOPLE
People Are The Customers Which Are The Biggest Asset Of A Company. Well Trained Staff. Appearance. Presently Around 10000 Workers Are Working And Around 500 Workers Are Recruited Every Month. High Security For Safety Of Customers.
Problems ahead
Reduction in consumer spending Slow construction of malls Difficulty in raising working capital High rentals Lowering margins New emerging competitors
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