PAST, PRESENT & FUTURE

EMERGING RETAIL
FORMATS IN INDIA
LBSIM, DELHI
1
st
Year
Rinky Sachdeva
Rohit Jain
Atul Mathur
Munish Mittal
Aditya Goel
Satyam K. Saxena
Introduction
Evolution of Indian retail
Emerging Trends
Research
Future Retail
Shoppers Stop
FDI in Retail- Present & Future Scope
Conclusion


FLOW OF PRESENTATION
Retailing includes all the activities involved in
selling goods or services directly to final
consumers for personal, non-business use
- Philip Kotler

Indian retail industry is worth 500bn $

Indian retail sector accounts for 22% of Indias GDP

Contributes 8% to total employment

Source: Report named Retail Sector in India by Research And Markets
INTRODUCTION
Organized : Trade activities undertaken by licensed retailers
Current retail penetration: 8%
Expected coverage by 2020: 20%
Expanding at 20% per annum
Rapid urbanization with increasing purchasing power, easy credit availability,
policy support by government, increasing investments.
Unorganized: Outlets run locally by the owner or a care taker of the
shop- unlicensed.
Current retail penetration: 92%
Low technical and accounting skills required

Source: Technopak Aranca Research- 2012
TYPES OF RETAIL
Manufacturers
opened their
own outlets
Pure play retailers
realised the potential
of the market
Most of them in
apparel segment
Entry in food and
general
merchandise
category
Repositioning by
existing players
Initiation
Conceptualisation
Consolidation

Expansion
Pre 1990s
199005
200510
2010 onward
FDI in single-brand retail
up to 100 per cent from
51 per cent
Approval of FDI limit in
multi-brand retail up to
51 per cent
Rise in private label
brands by retail players
Increasing investments
in retail infrastructure
EVOLUTION OF INDIAN RETAIL
Source: Technopak Advisors Pvt Ltd, Aranca Research
India has 3
rd
highest number of internet users
Growing @40% per year
Present contribution of online retail: 0.5%

EMERGENCE OF ONLINE
RETAIL
Source: Report by COMSCORE for ASSOCHAM- 2013
Young population aided by easier access to credit and
payment options; increasing internet penetration and speed,
24-hour accessibility, convenient and secured transactions
Computer peripherals, camera and mobiles, and lifestyle
segments account for a majority of total purchases
Projected to increase from 0.6bn US$ in 2011 to 70bn US$ in
2020

ONLINE RETAIL
Source: MasterCard worldwide insights- 2011
SPECIALTY STORES
A typical specialty store gives attention to a particular category and
provides high level of service to the customers
For example if a customer visits a Reebok or Gap store then they find just
Reebok and Gap products in the respective stores.
DEPARTMENT STORES
A retailer of such store carries variety of categories and has broad
assortment at average price & offer considerable customer service
For example: Food World in Bangalore
EMERGING RETAIL FORMATS
DISCOUNT STORES
Offers extensive assortment of merchandise at affordable and cut-rate
prices
Normally retailers sell less fashion-oriented brands
The service is inadequate
For example: The Loot
CONVENIENCE STORES
Is essentially found in residential areas
Provide limited amount of merchandise at more than average prices with
a speedy checkout
Store is ideal for emergency and immediate purchases
For Example: Reliance Fresh
HYPERMARKETS: Approx 21% of retail space by 2014
Provides variety and huge volumes of exclusive merchandise at low
margins
Operating cost is comparatively less than other retail formats
For Example: Dmart , Big Bazaar, Trent, Landmark, Star Bazaar
SUPERMARKETS
a self-service store consisting mainly of grocery and limited products on
non food items
may adopt a Hi-Lo or an EDLP strategy for pricing
supermarkets can be anywhere between 20,000-40,000 square feet
For Example: SPAR supermarket
MALLS
Has a range of retail shops at a single outlet
Endow with products, food and entertainment under a roof
For Example: Inorbit Mall, Ambience Mall.
E-TAILERS
Customer can shop and order through internet and the merchandise are
dropped at the customer's doorstep
Format is ideal for customers who do not want to travel to retail stores
and are interested in home shopping
For Example: Amazon and Ebay
FUTURE GROUP: The Walmart of
India
Future Retail Ltd (FY12)
Revenue: USD2.7 billion
Operational
retail
space:16.3 msf
Over 1000 stores in
121 cities
Employees: 36,000

Its a flagship company of Future Group
Multiple retail formats: hypermarkets & supermarkets
A network of more than 315 stores encompassing an area
of over 11 million square feet.
Under Future Fashion, the company owns a portfolio of 24
leading brands and covers more than 121 cities
Revenues expanded at a robust CAGR of 22.7 per cent
during FY08-12

Contd
Shoppers Stop Ltd., a pioneer in modern retailing in India, has been
promoted by K Raheja Corp. Group, one of the leading groups in the
business of real estate development and hotels in the country.
Shoppers Stop and its associate companies are involved in retailing
through department stores, specialty stores, entertainment zones and
large hypermarkets.
The company owns 172 stores in 25 cities with 4.81 million sq ft space
across eight store formats
Over 2.5 million customers are a part of the First Citizen Loyalty
Programme
Centralized buying for all products except cosmetics and perfumes to
avoid sales tax


SHOPPERS STOP: A case at hand
INDIAN RETAIL TO BENEFIT FROM
FDI
In 1991, India shifted to New Economic Policy and allowed for
international trade and investment, deregulation, initiation of
privatization, etc
FDI upto 51% allowed under automatic route in selected sectors.
India in 1997 allowed foreign direct investment (FDI) in cash and
carry wholesale.
FDI upto 51% allowed in single brand retail with prior govt.
Approval.
In 2008-09, FDI stood at $27.3 billion.
In 2012-13, FDI dropped to $22.4 billion
FDI POLICY DETAILS ON INDIAN
RETAIL SECTOR
Until 2011, Indian central govt. denied FDI in multi-brand
Indian retail
On 24 November 2011, India allowed foreign groups to
own up to 51 % in multi-brand retailers
own 100 % for single brand retailers, from the previous cap of 51%
More recently, there have been relaxations in some norms so
that a company can invest in cities having population of less
than 10 lakhs
The cap for 30 % sourcing regulation from local market has
been increased from 1mn to 2mn USD
Joint Ventures
Franchising
Cash & carry operations
Non-store formats
Sourcing of supplies from small scale sector
FORMS OF FDI IN INDIAN RETAIL

India is the fifth largest preferred retail destination globally
The sector is experiencing exponential growth, with retail development taking
place not just in major cities and metros, but also in Tier-II and Tier-III cities
Large number of retail
outlets
FMCG players are focusing on rural market as it constitutes over 33 per cent of
FMCG consumer base in India
With increasing investment in infrastructure, retailers will be able to increase their
access to high-growth potential rural market
Rural markets offer
significant growth
potential
The organised Indian retail industry has begun experiencing an increased level of
activity in the private label space
Private label strategy is likely to play a dominant role as its share in the US and the
UK markets is 19 per cent and 39 per cent, respectively while its share in India is
just 6 per cent
Private label
opportunities
GROWTH OPPORTUNITIES IN INDIAN
RETAIL INDUSTRY
ATTRACTIVE INVESTMENT SEGMENTS
Retail component of real estate is an
attractive opportunity which is currently
attracting 29 per cent of total investment in
real estate
26 per cent of the overall investors
are interested in investing in Tier II and III
cities
Training and warehouse spacing are
the other viable options for investments

CONCLUSION
Emerging retail formats offer an ideal shopping experience
with an amalgamation of product, entertainment and service
The hypermarkets, malls, supermarkets are the preferred
kind of stores by consumers
The dynamics of the demographics, double income,
urbanization and internet revolution are the factors
contributing to retail growth in India
Younger generation prefer to visit malls and hypermarkets
more for stress relieving purpose