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RETAIL IN INDIA:

STRATEGIC ISSUES & I.T. IN RETAIL


A PRESENTATION BY JAYANT K. OKE

RETAILING : GENESIS
THE ACTUAL TERM RETAILING IS THOUGHT TO BE DERIVED FROM THE OLD FRENCH WORD RETAILLER WHICH MEANS : A PIECE OF OR TO CUP UP ( SOURCE : BROWN, 1992)

WHAT IS RETAILING?

ANY BUSINESS THAT DIRECTS ITS MARKETING EFFORTS TOWARDS SATISFYING THE FINAL CONSUMER BASED UPON THE ORGANISATION OF SELLING GOODS & SERVICES AS A MEANS OF DISTRIBUTION

RETAIL : A GLOBAL OVERVIEW


RETAILING HAS BECOME AN INTRINSIC PART OF OUR LIFE THE ECONOMIES / NATIONS THAT HAVE ENJOYED GREATEST ECONOMIC & SOCIAL PROGRESS HAVE BEEN THOSE WITH A STRONG RETAIL SECTOR

RETAIL : A GLOBAL OVERVIEW

THE GLOBAL RETAILING INDUSTRY , AS UNDERSTOOD UNDER THE GLOBAL INDUSTRY CLASSIFICATION STANDARD (GICS) GREW BY 5.5% IN 2004 TO TOUCH $ 9500 BILLION (APPROX) THE GLOBAL RETAIL INDUSTRYS COMPOUNDED ANNUAL GROWTH RATE (CAGR) WAS AROUND 4% DURING 2000-2004

RETAIL : A GLOBAL OVERVIEW


YEAR $ BILLION %GROWTH
2000 8144 2001 8366 2.70% 2002 8620 3.00% 2003 9005 4.5O% 2004 9498 5.50% 2005 (EXP) 9981 5.10% 2006 (EXP) 10496 5.20% 2007 (EXP) 11029 5.10% 2008 (EXP) 11561 4.80% 2009 (EXP) 12104 4.70% (APPROX. RS 4,84,16,000 CRORES AS AT 2009)

RETAIL : A GLOBAL OVERVIEW


GLOBALLY, THE U.S.A. DOMINATES THE WORLD RETAIL MARKET SPACE & ACCOUNTS FOR 32.3% EUROPE GENERATES A FURTHER 30.8% ASIA-PACIFIC ACCOUNTS FOR 25.6% THE REST OF THE WORLD FOR THE REMAINING 11.3%

RETAIL : A GLOBAL OVERVIEW

IT IS ALSO INTERESTING TO KNOW THAT THE LARGEST CORPORATION IN THE WORLD IS A RETAILER

Wal-Mart

WHICH REACHED THIS POSITION IN THE YEAR 2002, AND, HAS HELD IT SINCE

RETAIL : A GLOBAL OVERVIEW


THE FORTUNE 500 LIST FOR THE YEAR 2005 FEATURED 34 RETAILERS FROM AROUND THE WORLD RETAIL CORPORATIONS LIKE WAL-MART, McDONALDS, CAREFOUR, TARGET, KROGER, HOME DEPOT, SEARS ROEBUCK, TESCO, METRO & ALBERTSONS ARE ALSO AMONG THE WORLDS BIGGEST EMPLOYERS

RETAIL : A GLOBAL OVERVIEW


THESE FACTS ONLY HIGH-LIGHT THE TREMENDOUS SIGNIFICANCE & CONTRIBUTION OF THE RETAIL INDUSTRY

RETAIL IN INDIA
RETAIL IS THE NEW BUZZWORD IN INDIA THE TRADITIONAL, AGE-OLD, HUMBLE, NEXT-DOOR DUKANDAR IS NOW THE FOCUS OF ATTENTION WHILE RETAILING HAS ALWAYS BEEN THERE IN INDIA, WHAT IS NEW IS THE EMERGENCE OF THE ORGANISED RETAIL, IN RECENT YEARS

RETAILIN INDIA

RETAIL IN INDIA CAN NOW BE SEEN IN THREE DIFFERENT WAYS

FORMAT BEING THE IN TERM THE THREE FORMATS ARE: TRADITIONAL FORMATS ESTABLISHED FORMATS EMERGING FORMATS

EVOLUTION OF RETAIL IN INDIA


WHILE BARTER EXCHANGE CAN BE CONSIDERED TO BE THE OLDEST FORM OF RETAILING IN INDIA, RETAIL IN INDIA HAS EVOLVED, SINCE INDEPENDENCE, TO SUPPORT THE UNIQUE NEEDS OF THE COUNTRY, GIVEN THE SIZE , DIVERSITY & THE RESULTANT COMPLEXITY

EVOLUTION OF RETAIL IN INDIA TRADITIONAL FORMATS


THE RETAIL IN INDIA HAS BEEN MOSTLY OCCUPIED BY TRADITIONAL UN-ORGANISED ENTITIES LIKE ITENARANT SALESMAN HAATS, MANDIS, MELAS

EVOLUTION OF RETAIL IN INDIA ESTABLISHED FORMATS


INDIA ALSO HAD ITS OWN ORGANISED / ESTABLISHED RETAIL NETWORK OF: CONVENIENCE / DEPARTMENTAL STORES (AKBARALLYS, RAYMONDS, NALLIS & THE LIKE) KIRANA SHOPS PDS RATION SHOPS, PAAN / BEEDI SHOPS POST OFFICES & KVIC STORES

EVOLUTION OF RETAIL IN INDIA


SINCE THE LATE 1980s & EARLY 1990s, THE INDIAN MARKETPLACE HAS TRANSFORMED DRAMATICALLY SHOPPING HAS CEASED TO BE ONLY PURCHASING OF GOODS/SERVICES IT HAS NOW BECOME A MIX OF : LIFE-STYLE EXPRESSION EXPERIENCE & ENTERTAINMENT

EVOLUTION OF RETAIL IN INDIA EMERGING FORMATS

EXCLUSIVE RETAIL OUTLETS INTERNAL RETAIL HYPERMARKETS MALLS / SPECIALITY MALLS MULTIPLEXES RURAL-ORIENTED FORMATS (e-choupals) FAST FOOD OUTLETS SERVICE GALLERIES

RETAIL IN INDIA : THE EMERGING SCENARIO


THE GLOBAL RETAIL DEVELOPMENT INDEX DEVELOPED BY A.T. KEARNEY HAS RANKED INDIA FIRST, AMONG THE TOP 30 EMERGING MARKETS IN THE WORLD THIS CHANGE IS A REFLECTION OF THE CHANGES IN THE INDIAN CONSUMER, HIS LIFE-STYLE & HIS HABITS

DRIVERS OF RETAIL IN INDIA


LARGE & INCREASING CONTRIBUTION TO GDP ECONOMIC IMPORTANCE OF RETAIL IS NOW MORE VISIBLE ONE OF THE MAJOR EMPLOYER RETAILERS AS GATE-KEEPERS RETAILERS DIVERSIFYING THEIR ACTIVITIES

DRIVERS OF RETAIL IN INDIA


ORGANISATIONS GROWING ON AN INTERNATIONAL SCALE SIZE OF OPERATIONS NECESSITATING SUPPLY CHAIN MANAGEMENT & CONTROL BLURRING OF AREAS OF RETAIL TO INCLUDE WIDER AREAS OF BUSINESS ACTIVITIES

DRIVERS OF RETAIL IN INDIA


INCREASE IN CONSUMER INCOME WORKING WOMEN / TWO INCOME FAMILIES HIGHER DIAPOSABLE INCOME HIGH ASPIRATIONS & RESULTANT CHANGES IN CONSUMPTION PATTERNS,LIFE-STYLES (DEMAND FOR GLOBAL TRENDS / PRODUCTS)

DRIVERS OF RETAIL IN INDIA


DIMINISHING DIFFERENCES BETWEEN RURAL & URBAN INDIA REAL ESTATE REFORMS MAJOR RESTRUCTURING OF THE MFG. SECTOR EASING PRODUCT SUPPLY CONSTRAINTS FOR EFFICIENT RETAILING

DRIVERS OF RETAIL IN INDIA


REDUCTION IN IMPORT DUTIES FACILITATING GLOBAL SOURCING EXPANDING COMPUTER TECHNOLOGY EMPHASIS ON CONVENIENCE & SERVICE

SIZE OF THE ORGANISED RETAIL MARKET IN INDIA


TYPE FOOD CLOTHING CONSUMER DURABLES
BOOKS / MUSIC TOTAL

2001-02 1,800 4,950

(RS. IN CRORES) 2007 CAGR 7,473 18% 10,423 33%

1,650

3,787

18%

450 16,000

1,426 37,216

26% 18%

( SOURCE: ET KNOWLEDGE SERIES / ET INTELLIGENCE GROUP)

SIZE OF THE ORGANISED RETAIL MARKET IN INDIA

ACCORDING TO CONSULTANTS KSA Technopak, BY 2010, THE ORGANISED RETAILING IS


EXPECTED TO BE WORTH A WHOPPING

RS.1,80,000 2,00,000 CRORES IT MEANS THAT THE ORGANISED RETAIL PIE WILL MOVE FROM THE CURRENT 2% (RS.22,000 CR.) TO 10-12% BY 2010
(SOURCE : BUSINESS TODAY, OCT 24, 2004, VOL.13, NO.21,)

CATEGORY-WISE SIZE OF THE


ORGANISED RETAIL MARKET IN INDIA
FOOD

& GROCERY

OPPORTUNITY:
RS. 6,00,000 CRORES

BIG PLAYERS:
RPG, NILGIRIS FOOD BAZAAR SUBHIKSHA FOODWORLD/ SPENCERS

(BUSINESS TODAY, OCT.24, 2004)

CATEGORY-WISE SIZE OF THE


ORGANISED RETAIL MARKET IN INDIA
LIFESTYLE OPPORTUNITY:
RS. 1,50,000 CRORES

RETAILING

BIG

PLAYERS:

(BUSINESS TODAY, OCT.24, 2004)

SHOPPERS STOP PIRAMYD WESTSIDE LIFESTYLE WILLS SPORT LEE / LEVIS WEEKENDER

CATEGORY-WISE SIZE OF THE


ORGANISED RETAIL MARKET IN INDIA
CONSUMER OPPORTUNITY: RS. 50,000 CRORES BIG PLAYERS VIVEK LTD. VIJAY SALES

DURABLES

(BUSINESS TODAY, OCT.24, 2004)

CATEGORY-WISE SIZE OF THE


ORGANISED RETAIL MARKET IN INDIA

RURAL RETAIL

OPPORTUNITY:
RS. 3,00,000 CRORES

LIKELY / BIG PLAYERS


ITC (EXISTING) M&M DCM SHRIRAM

(BUSINESS TODAY, OCT.24, 2004)

CATEGORY-WISE SIZE OF THE


ORGANISED RETAIL MARKET IN INDIA
BROAD-BAND OPPORTUNITY: NOT AVAILABLE BIG PLAYERS: RELIANCE BHARTI (LIKELY)

DRIVEN RETAILING

(BUSINESS TODAY, OCT.24, 2004)

CATEGORY-WISE SIZE OF THE


ORGANISED RETAIL MARKET IN INDIA
FUEL-

PUMP DRIVEN RETAILING

OPPORTUNITY: RS. 10,000 CRORES BIG PLAYERS: IOC HP BP RELIANCE (LIKELY)

(BUSINESS TODAY, OCT.24, 2004)

LIKELY BIG PLAYERS IN


INDIAS ORGANISED RETAIL MARKET

AJAY PIRAMAL BHARTI GODREJ HERO GROUP HUL ITC RELIANCE RPG GROUP SINGHANIAS TATAS WADIAS

STRATEGIC CHALLENGES / ISSUES FACING RETAIL

COMPETITION FROM THE UNORGANISED SECTOR POLITICAL / SOCIAL CLOUT OF THE UN-ORGANISED SECTOR

SWADESHI SENTIMENTS / PERCEPTIONS

STRATEGIC CHALLENGES / ISSUES FACING RETAIL


TRAINED / QUALIFIED & PROFESSIONAL HUMAN RESOURCES SPACE : AVAILABLITY OF REAL ESTATE AT PROPER LOCATIONS AT AFFORDABLE PRICES INFRASTRUCTURE (ROADS, COLD STORAGE, SUPPLY CHAIN LOGISTICS) LABOUR LAWS

STRATEGIC CHALLENGES / ISSUES FACING RETAIL


DEMANDING CONSUMERS & NEED FOR STP (DEVELOPING PRIVATE BRANDS & BRAND BUILDING) UNWARRANTED NEGATIVE PERCEPTIONS ABOUT TIERII / III CITIES (BELLARY / KOLHAPUR / JALANDAR) ABILITY TO CATER TO LIFE-STYLE & VALUE FOR MONEY PROPOSITIONS

STRATEGIC CHALLENGES / ISSUES FACING RETAIL


CONTROLLING COSTS & PRICES CONTROLLING & ENSURING PRODUCTIVITY & SERVICE QUALITY RE-INVENTING ITSELF THROUGH EXPERIMENTATION & INNOVATION KEEPING ABREAST WITH THE DYNAMICS OF INFORMATION TECHNOLOGY

I.T. IN RETAIL
TODAY, THE BUSINESS ENVIRONMENT IS A COMPETITIVE BATTLE-FIELD AN ORGANISATION, HENCE, HAS TO BE COMPETITIVE AS REGARDS: TECHNOLOGY QUALITY COST PRICE

I.T. IN RETAIL

THERE ARE TWO METHODS AVAILABLE TO AN ORGANISATION TO BE COMPETITIVE: IMPACT ON MARKET PLACE

ONE: IMPROVE ORGANISATIONS TWO:FOCUS ON IMPROVING THE

INTERNAL OPERATIONS, THEREBY LOWERING COSTS OR IMPROVING SERVICES

I.T. IN RETAIL
IN RETAIL, THERE EXISTS A SIGNIFICANT OPPORTUNITY TO USE / LEVERAGE TECHNOLOGY TO DELIVER REVOLUTIONARY NEW PROCESSES AND, IN EFFECT, RE-DEFINE THE INDUSTRY OR TO CHANGE THE APPROACH TOWARDS BUSINESS

I.T. IN RETAIL
RETAILERS LIKE WALMART, ZARA, AMAZON.COM, METRO CONTINUE LEVERAGE I.T. TO STAY CONTINUALLY RELEVANT TO THE EVER-CHANGING CONSUMER IN INDIA, ASIAN PAINTS, HUL, McDONALDS, GCMMF (AMUL) HAVE EFFECTIVELY HARNESSED THE POWER OF I.T. TO STAY COMPETITIVE

WHY I.T. IN RETAIL


CONTROL COSTS, ENHANCE SUPPLY CHAIN EFFICIENCIES ACHIEVE DIFFERENTIATION IN THE MARKET-PLACE AS REGARDS PRODUCT & SERVICE MONITOR VENDOR PERFORMANCE

WHY I.T. IN RETAIL


MANAGE INVENTORY, KEEPING IN VIEW THE SHORTENING PLC TRACK CUSTOMERS TO ENSURE CRM & CUSTOMER RETENTION TRACK COMPETITION TO STAY EQUAL / AHEAD CAPTURE DATA & ENSURE REAL-TIME, ON -LINE AVAILABILITY

I.T. IN RETAIL
NO WONDER THEN THAT RETAIL HAS BEEN ONE OF THE EARLY ADAPTER OF INFORMATION TECHNOLOGY

I.T. APPLICATIONS IN RETAIL


PRODUCT IDENTIFICATION QUICK BILLING QUICK SETTLEMENTS OF BILLS SUPPLY CHAIN & LOGISTICS APPLICATIONS TRACKING OF CONSIGNMENTS & STOCK / ITEMS TRACKING FAST / SLOW-MOVING ITEMS

I.T. APPLICATIONS IN RETAIL


MANAGING RECEIVABLES / PAYABLES CASH FLOW / FUNDS FLOW MERCHANDISE MANAGEMENT EVALUATE NEW CAMPAIGNS SALES PROMOTION / SPOT OFFERS EVALUATION M-COMMERCE / e-COMMERCE

I.T. APPLICATIONS IN RETAIL


UNIVERSAL PRODUCT CODE / BAR CODE FOR AUTOMATIC DATA CAPTURE DATA WAREHOUSING DATA MINING CRM PACKAGES CUSTOMER CARE / CALL CENTRE SERVICES

I.T. APPLICATIONS IN RETAIL


ELECTRONIC DATA INTERCHANGE (EDI) TO FACILITATE EXCHANGE OF BUSINESS INFORMATION BETWEEN ORGANISATIONS EDI HELPS SAVE TIME REDUCES ERRORS & COSTS IN MANUAL PROCESSING / HANDLING HELPS STRENGHTEN RELATIONSHIP BETWEEN RETAILER & VENDOR

I.T. APPLICATIONS IN RETAIL

DATABASE MANAGEMENT: HELPS TO COLLECT, COLLATE, PROCESS, RETRIEVE & DISSEMINATE HUGE DATA TO MAKE THE ORGANISATION DATA RICH AS WELL AS INFORMATION RICH THE DATA CAN BE PERTAINING TO PRODUCTS, CUSTOMERS, VENDORS OR A COMBINATION OF THE VARIOUS FACTORS

I.T. APPLICATIONS IN RETAIL

DATA WAREHOUSING ENABLES THE RETAILER TO GATHER, MANAGE & UTILISE THE INFORMATION NEEDED TO REMAIN COMPETITIVE DATA MINING CAN HELP EXTRACT INFORMATION FROM A DATABASE THAT THE USER DID NOT KNOW EXISTED & HELP FIND PATTERN BETWEEN CONSUMER BEHAVIOUR & CERTAIN VARIABLES

I.T. APPLICATIONS IN RETAIL


THE OUTPUTS FROM DATA MINING CAN HELP IN CRM, IN IDENTIFYING CUSTOMER SEGMENT, DEVELOPING CAMPAIGNS FOR PROMOTION / EXCHANGE

I.T. APPLICATIONS IN RETAIL


RFID PROVIDES WIRELESS

COMMUNICATION BETWEEN OBJECTS & READERS, HELPS TRACKING MOVEMENT OF INVENTORY ITEMS
RFID ALSO HELPS IN TRACKING

CUSTOMER PROFILES & TASKS PERFORMED BY THE EMPLOYEES & ENABLES THEM TO BE MORE PRODUCTIVE

I.T. APPLICATIONS IN RETAIL

E-COMMERCE OR E-TAILING , USING INTERNET / WEB-BASED TECHNOLOGIES TO FACILITATE ONLINE-OFFLINE TRADING OF GOODS & SERVICES THROUGH VIRTUAL ESTABLISHMENTS

I.T. APPLICATIONS IN RETAIL TO SUMARISE


I.T. WOULD CONTINUE TO BE VITAL FOR RETAIL AS ONLY IT CAN ENSURE RIGHT DATA / INFORMATION TO THE RIGHT PERSON AT THE RIGHT TIME AT THE RIGHT PLACE IN THE RIGHT FORM AT THE RIGHT COST

THE EPILOGUE
THE ORGANISED RETAIL SECTOR & THE FORMATS ARE NOT FOR OR AGAINST ANYBODY, CERTAINLY NOT AGAINST THE AGRICULTURISTS, THE RURAL PEOPLE, OR THE EXISTING UN-ORGANISED PLAYERS

THE EPILOGUE

TO ME, IT IS ALL ABOUT MODERNISING RETAIL INSTEAD OF SEGREGATING THE INDUSTRY INTO ORGANISED OR UN-ORGANISED LABELS IF IT IS NOT MODERNISED, CHANCES ARE THAT THE SECOND GENERATION OF THE UNORGANISED SECTOR MAY NOT REALLY BE INTERESTED IN TAKING THE BUSINESS FORWARD, WHICH COULD BE REALLY DANGEROUS FOR THE RETAIL INDUSTRY

THE EPILOGUE

THE PRESENT INITIATIVES TOWARDS ORGANISED RETAIL WOULD ONLY LEAD TO CORPORATISATION & PROFESSIONALISATION OF THE SECTOR ENSURING EFFICIENT & EFFECTIVE OPTIMUMSOURCING, ALLOCATION & UTILISATION OF THE RESOURCES

THE EPILOGUE
NOTWITHSTANDING THE OPPOSITION & VANDALISATION FACED BY CORPORATE RETAILERS IN SOME PARTS OF THE COUNTRY, LET US NOW REALISE THAT MODERN RETAIL IS NOT ABOUT DISPLACING ANYONE FROM THEIR BUSINESS / INCOME

THE EPILOGUE
ON THE CONTRARY, IT IS A SUN-RISE SECTOR THAT CAN & WILL BOOST THE INDIAN ECONOMY, IN THE PROCESS CREATING HUGE EMPLOYMENT OPPORTUNITIES FOR PRACTICALLY EVERYONE, INCLUDING MBAs ( IN AREAS LIKE )

THE EPILOGUE
MOST CRUCIALLY, THE ORGANISED RETAIL MAY FINALLY DO WHAT THE SUCCESSIVE GOVERNMENTS OF THIS COUNTRY HAVE FAILED TO DO : DISPERSE ECONOMIC PROSPERITY TO THE MILLIONS OF INDIANS WHO DESERVE IT MOST

THE EPILOGUE
THIS, OF COURSE, CAN HAPPEN PROVIDED WE LOOK AT IT PROFESSIONALY, LEAVING POLITICS OUT OF IT

REMEMBER:

PROFESSIONALS ARE THOSE WHO PROMISE TO DELIVER AND DELIVER WHAT THEY PROMISE!

THANK YOU
JAYANT K. OKE