Retail Scenario in India

Unlimited Opportunity
Prepared by : Raj Kumar Mishra
Guide : Dr. Susheel Pande

CONTENTS
What is Retail? The Global Retail Industry Over view of Indian Retail Sector Retail Scenario in India : Touching Meteoric Scales Evolution of Indian Retail Different Formats available in India Forms of Retailing Traditional Distribution Channel Types of Retailers Share of Organized Retail Prominent Players in Indian Retail Retail Revolution Reasons of Growth Retail as an Employment Generator Challenges of Retailing in India Conclusion

The word Retail is derived from a French word meaning to cut into small pieces. Retailing is a business that sells products

and/or services directly to consumers for

personal or family use.

Retail is the last link between consumer & wholesalers in distribution channel.

The Global Retail Industry

Retail has played a major role world over in increasing

productivity across a wide range of consumer goods and services. The impact can be seen in countries like

USA, UK, Mexico, Thailand and more recently China.

Economies of countries like Singapore, Malaysia, Hongkong, Srilanka and Dubai are also heavily assisted by the retail sector.

Retail is the second largest industry in the US both in number of establishments and number of employees.

Highest shop density in the world Around 12 million shops in the country Just 0.9 million in the US catering to more than 13 times of the Indian retail market size

Around 11 shop for every 1000 people

Indian Retail : Rural / Urban Split
Market Urban Rural 45 55 % Split

Sales through super markets and departmental stores are small compared with overall retail sales. Indian Retail - dominated by unorganized sector

Approximately 2 million Mom and Pop Shops

Share of organized retail sector is only 4.6% FDI in the retail sector not permitted to protect local retailers (excepting for single brand & cash and carry formats. In this FDI is 51%.) Indian retail sector is one of the least concentrated in the world. The top five companies hold a combined market share of less than 2%

India is third largest market in Asia and Oceania, behind Japan and China.

Unorganized retailing refers to the individuals stand alone retail units in traditional formats, which receive their supplies through multiple intermediaries. Organized retail on the other hand refer to the systematically structure retail trading activities undertaken by comparatively larger business entities,

which more often operate a chain of stores in multiple

geographic locations, under a brand name appropriate for the merchandise handle

Manufacturer

Wholesalers

Retailer

Customer

Percentage of Organized Retail

100 80 60 40 20 0 55 40 36 30 20 20 4.6 85 81

USA

Malaysia

Taiwan

Brazil

Indonesia

Thailand

Poland

China

India

Future Group Big Bazaar, Pantaloon, e-zone Reliance Reliance Fresh Tata Croma Electronic Retail Videocon Next Electronic Retail

Mobile Phone Retail

Restaurants McDonalds RPG Group Foot world, Health and Glow

Rahejas Shoppers Stop

Cinema Chains PVR, DT by DLF, Cine Max, Reliance Big Entertainment.

India

is

fast

becoming

the

retail

destination of the world. The retail market in India is anticipated to grow 427 billion USD by the year 2012.

Reasons
Indias booming Economy

Growing Middle Class

Increasing disposable income

Inspite of global slowdown, there are several reasons for expecting growth of the organized retail sector in future in India. Among these the following reasons stand out quite strongly.
Paradigm shift in consumer life style. Enormous potential for rural retail.

Scope for increased FDI in retail.

Entry of big players Increased service orientation, quality & convenience

Technology trend (RFID, Tunnel scanning, ERP & GRM

system, Advt. planning & scheduling system (APS) modern payment methods.

Increased Female Workforce

The no. of female heads of household grew by 16% from 2000 to 2003. In type A cities 72% of teenaged girls want to work after marriage working women from 15% of the total urban female population & this is expected to rise to over 20% by 2010.

Increase in ratio of working women

Apparel : Rs. 2209 Cr., Stationary : Rs. 621 Cr. Toys : Rs. 389 Cr., Products : Rs. 1978 Cr. Health & Beauty (not including cosmetic or services) Rs. 415 Cr. Indian Kid spend nearly Rs. 291 Cr. As pocket money as per estimate account to an international survey, brand loyalty starts by 04 yrs. of age.

The retail sector can generate huge employment opportunities

and lead to job-led economic growth.

The retail sector employs nearly 21 million people accounting for roughly 6.7% of total employment in India.

The share of organized retailing in India is comparatively low

than USA, Thailand, China, thus leaving a huge market potential largely untapped.

The modern retail service sector has potential of creating over

2 million new jobs in few years in our Country.

Retailing as an industry has still long way to go, to become truly flourishing industry, retailing needs to cross the following hurdles:
Automatic approval is not allowed for foreign investment in retail Regulations restricting real estate purchases and cumbersome local laws. Taxation, which favours small retail businesses Absence of developed supply chain and integrated IT management. Lack of trained workforce Low skill level for retailing management

Intrinsic complexity of retailing viz : low price changes, constant

threat of product, obsolescence and low margins

In India the retail sector is the second largest employer after agriculture, although it is highly fragmented and predominantly consists of small independent, owner managed shops.

The country is witnessing a period of boom in retail trade, mainly on account of a gradual increase in the disposable incomes of the middle and uppermiddle class household.

More and more corporate houses including form of mall and shopping center

builders and managers. New formats like super market and large discount
and department store have started influencing traditional looks.

For retail sector to achieve further growth, the spread of organized retailing has to become a national phenomenon.