Retail - A Booming Industry

Members
Aashish Gupta Nirav Gada Praveen Kushwaha Ketan Chauhan Rahul Shankar

Glimpse: Retail industry

Indian retail industry is the fifth largest in the world.

Retail sector is contributing10-14% to GDP employing over 7-8% of

total work force. Organized retailing- 4%, unorganized retailing-96%

the industry is expected to grow at a pace of 25-30% annually.

Indian retailing is expected to reach at US$637 billions by 2015. India is fifth preferred destination globally.

Retail Formats
Hypermarkets/ Supermarkets Mom- and- Pop Stores Departmental Stores Convenience Stores Shopping Malls E-trailers Discount Stores Vending Category Killers Specialty Stores

Major Indian retailers

Popular buisness model

High volume-low margin business model. 38% of the respondent companies operate in the high volumelow margin business model.

Key drivers
Economic Growth Urbanisation Consumerism

Brand Profusion

Availability Of Real State

Changing Consumer Needs And Preferences

FDI

Increased investment in Retail

A large unorganized sector

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Economic Growth

Source : http://www.indexmundi.com/india/gdp_real_growth_rate.html

Economic Growth contd.

Contribution of Various Sectors in GDP

Contribution for 1990-1991 Agriculture 32 %

Contribution for 2007-2008 Agriculture 17% Industry 29%

Industry 27% Service 41%

Service sector 54%

Contribution for 2005-2006

Contribution for 2009

Agriculture 20% Industry 26%

Service sector 54%

Agriculture 15.8%
Industry 25.8% Service sector 58.4%

Source: www.indexmundi.com/india/gdp_composition_by_sector.html

Urbanization
Demands of consumer durables figures in 000

Consumerism
The increasing influence of the western media has led to a considerable change in the life style of the Indian consumer. The economic well being of Indian Middle class and their growing aspirations for material comforts has also been responsible for consumerism slowly gaining momentum in India.

Brand Profusion
Consumerism and increased brand conscientiousness has led to increased number of brands today. There is presence of al most all kinds of global brands in the present market situation. The launches of more and more brands into the market increased the demand of shelf space and hence demand for retail outlets.

Changing Customer need and preferences

Various reason for changing customer needs and preferences: 1. Single family concepts 2. Dual Income Concepts 3. Limited to One children concepts 4. Willing to spend concepts 5. Brand Preference concepts 6. Personal and Health Care concepts

FDI
Global players have shown greater interest in this sector. 100% FDI in cash and carry through automatic route and 51% in single brand outlets through approval is permitted. Franchise route is available for big operators. The Ministry of Finance has recently announced new FDI norms for enhancing the investment in this sector.

Increased Investments in Retail

An investment of $35bn is expected in next five to seven years. Modern retailers in India are working on number formats from supermarket to hypermarket to discount to convenience stores. The share of Investment slated for Hypermarket,supermarket, speciality stores and cash and carry is 40%,28%,18% and 14% respectively. According to AT Kearney, India is ranked at 5th preferred destination for investors among 30 most attractive retail markets in world

Large unorganized retail

India retail market is dominated by the unorganized sector. Traditionally the retail market in India was largely unorganized; however with changing consumer preferences, organized retail is gradually becoming popular. Unorganized retailing consists of small and medium grocery store, medicine stores, subzi mandi, kirana stores, paan shops etc. More than 90% of retailing in India fall into the unorganized sector, the organized sector is largely concentrated in big cities.

Penetration of organized retail

Consumer durables in India

LCD TVs sales grew 93% to 10 Lac Units Washing Machines sales grew 14% to 24 Lac units Refrigerators sales grew 16.5% to 50 Lac units.
(Jan to November 2009)

70% sales of consumer electronics came from large cities. Leading players have shown handsome growth Samsung at 25% and LG at 30%.

Source:retailmantras.blogspot.com

Consumer durable market

product Urban rural

TVs

76%

36%

refrigera tors Air conditio ners

32%

5%

About 25%

Less than 1 %

Washing machine only 1 % Rural penetration

Target Market
Indias working population (in the 15-49 years age group) constituted around 53% of the population The organized retailing is expected to receive a boost because of the young population by 2020.

Employment Generator
The retail segment has churned out employment opportunities in India. Modern retailing has the potential for generating employment of 2.5millions. 10millions in indirect retail activities including contract production and processing, supply chain and logistics Job prospects for the younger generation. The retail sector employs a high number of under-graduates.

Mumbai emerges as the preferred location for retailing

amongst 24 popular locations for organized retail in India, Mumbai was found to be the most preferred location. 7% of the respondent companies reported to have retail stores/ outlets in Mumbai

challenges
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.

Cont.
Lack of trained work force. Low skill level for retailing management. Lack of Retailing Courses and study options

Intrinsic complexity of retailing rapid price changes,

constant threat of product obsolescence and low margins.

Growth & Future

The retail industry in India is currently growing at a great pace. Expected to go up to US$ 833 billion by the year 2013. Expanding middle & Upper class consumer base. In the last four year, the consumer spending has increased by 75% India has been ranked as the most attractive nation for retail investment.

From Salesman to king of sales

" WINNING DOESEN'T ALWAYS MEAN BEING FIRST, WINNING MEANS YOU'RE DOING BETTER THAN YOU'VE DONE BEFORE

Emergence of Vijay sales

Came to mumbai in 1966. Started working as a salesman in an electronics store. Opened first electronics shop in mahim in 1967.

Initial capital invested 10,000.

Named the first shop after his younger brother Vijay. It sold sewing machines, fans and black-and-white TV sets.

Four best things

Best products- thrill customers with technology Best price- Price drives customers and sales Best service- service is what makes the customer come again

& again.
Honesty

Risk is everything- biggest showroom in Goregoan in 1996

Vijay sales-2010
one of Mumbai's leading chain of electronic superstores

9000 products across eleven categories.

four decades of successful operation. 25 branches in Mumbai, 5 branches in Gujarat, 5 branches in Pune and 2 branches in Delhi. Employed staff- more than 1500. technology-based solutions to improve management efficiencies

Software
Wings software The company chose Wings Retail Solution consisting of Wings Retail Appliances Wings Accounting Wings Asset and Wings Payroll The implementation was completed by April 1, 2008 and all systems are live on Wings.

Purchase

Deliveries

Cheques Management

Payroll

Inter branch transaction

Competitors

Branch Discription
Branch Manager Chandan Kharat Branches 35 No of employee 60(Goregaon hub branch) Employee entry & exit timings: 11:15 am & 9:45 pm Turnover 7 cr or above(Goregaon Hub Branch)

3PS

Products
TV Washing Machine Laptops Mobiles Kitchen electronic items Freeze Dvd players Music Systems etc

Ordering Process
Branch manager pass the order to the head office Order according to the availability of the products

Bring products directly from warehouse

Twice in a weak Bring products through contractor

Supply Chain

Company

Ware house

Branches- Vijay sales

Warehouse
Location: Shivnari Vanduk Bhiwandi Reason for choosing these location: Because of octroi Because of low cost of land

Warehouse Location

Merchandising
Arrange the products segment wise Same category products on the same self

Arrange according to the size also

Keeps new products at the front Design keeps on changing

HOME APPLIANCE SECTION

ENTR ANCE ENT RA NCE

CONSUMER DURABLES- ELECTRONICS

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TV Self

LED

TV Self Mobile & Cameras

Cash

Count er

Baggage counter

Freez Entr anc e Other Electronics

Washing Machine

Cooker

Chimney

Water Purifier

Cash Dryers Refrigera tor Small Appliances Fan Counter

Oven

Mixer

Microwave

Entr ance

Baggage Counter

Customers
Volume of customers: 300 for window shopping 200 confirmed customer Most customers belongs to age of 18-35 More sales of laptop, lcd & mobile

HR Process
Most of them are: Graduate & Undergraduate These are sales executive Training Work is being allotted according to the knowledge of employee HR person select the best person according to their skill

Porters - 5 forces
Potential entrants
(FDI)

Suppliers power
(brands: Nike, Nikon)

Existing competitors:
(Croma, next, ezone)

Buyers bargaining power

(various options)

Substitutes
(Local retailers)

3 Generic Strategies
UNIQUENESS PERCEIVED BY CUSTOMERS Existing market LOW COST LEADERSHIP

differentiation

Overall cost

leadership
New market

focus

Future Plans
Planning to open more outlets Planning to open more braches outside Mumbai Also planning to increase the capacity of warehouse These all shows their sales is increasing

Thank You