Global Retail Industry

1999 2002 2005 2006

Total Retail (US$ Billion) 150 180 225 260

Organized Retail (US$ Billion) 1.1 3.3 7 9.1

% share of Organized retail 0.7 1.8 3.2 3.5

 Top 10 Retailers World Wide
Retailer Home Country
Wal-Mart Stores USA
Carrefour Group France
The Home Depot, Inc USA
The Kroger Co. USA
Royal Ahold Netherlands
Metro AG Germany
Target Corporation USA
Albertson’s,Inc. USA
Sears, Roebuck and Co. USA
Kmart Corporation USA
 Evolution of Retailing
The emergence of retailing in India now has
more to do with the increasing purchasing
power of buyers, especially post-liberalization,
increase in product variety, and the increasing
economies of scale, with the aid of modern
supply and distribution management solutions.
Activity:
Name a few existing retailers in India who you
feel, are quite successful.
 Evolution of Retailing
Important Stores opened in the Q4 FY 06

Store Particulars City Month

Lifestyle 7500 sq.ft Chennai March
Raymond Fashion outlet Kunnur March
Raymond Fashion outlet Chennai March
Landmark 22000 sq.ft Chennai March
Spinach (From Retail food & Mumbai March
WFRL) grocery store
Allukas Jewellery store Hyderabad March
Indian Retail Scenario At A Glance
• The contribution of retail industry to India’s GDP is more
than 13%.
• Indian retail industry (organized as well as unorganized)
spreads over more than 6 million outlets (2.4 million urban
and 3.6 million in rural).
• Even though India has well over 6 million retail outlets of
all sizes and styles, the country sorely lacks anything that
can resemble a retailing industry in the modern sense of
the term. This presents organized retailing with a great
opportunity.
• It was only in the year 2000 that the global management
consultancy AT Kearney put a figure to Indian retail
Industry – Rs. 400,000.
• Retailing in India is still thoroughly unorganized. There is
no supply chain management perspective.
Indian Retail Scenario At A Glance
• As much as 96 per cent of the 6 million-plus outlets are
smaller than 500 square feet in area. This means that India
per capita retailing space is about 2 square feet (compared
to 16 square feet in the United States). India’s per capita
retailing space is thus the lowest in the world.
• Just over 8 per cent of India’s population is engaged in retail
(compared to 20 per cent in the United States). India’s per
capita retailing space is thus the lowest in the world.
• Given the size, and the geographical, cultural and socio-
economic diversity of India, there is no role model for Indian
suppliers and retails to adapt or expand in the Indian
context. Hence Indian retailers have to find a suitable model
and adopt it to the Indian context.
Indian Retail Scenario At A Glance
• India’s first true shopping mall – complete with
food courts, recreation facilities and large car
parking space – was inaugurated as lately as in
1999 in Mumbai. (This mall is called
“Crossroads”).
• An FDI Confidence Index survey done by AT
Kearney, showed that the retail industry is one of
the most attractive sectors for FDI (foreign direct
investment) in India and if allowed, foreign retail
chains would make a great impact on Indian
retailing.
• In India still, more than 60% sales in retail
comes from food items only.
 A Few Indian Retailers:
Pantaloons – The different formats of Pantaloons are
1. Big Bazaar – The Discount Hypermarket
2. Pantaloons - The Family Store
3. Central Mall – One point shopping
4. Food Bazaar – Food & Grocery Super Market
5. God Bazaar – specialty store
RPG – The different retail formats of RPG group are:
1. Spencer’s (earlier known as Food World) – Super Market
2. Spencer’s Hypermarket
3. Health and Glow
4. Music World
 Share of Organized Retailing in
Countries
Country/Region Share of Organized Retailing
USA 80%
Western Europe 70%
Malaysia 50%
Thailand 50%
Brazil 40%
Argentina 40%
Phillippines 35%
Indonesia 25%
South Korea 15%
China 10%
 Organized Retailing in India (2006)
Organized retail INR 28,000 crore
Clothing, Textiles &Fashion 39%
accessories
Footwear 9%
Jewellery & Watches 7%
Mobile handsets & accessories 3%
Health & Beauty (including services) 2%
Food & Grocery 18%
Durables 13%
Books, Music & Gifts 3%
Home 3%
Forces Governing Indian Retailing
1. Consumer Pull: Rising income and greater purchasing
power of the Indian customer and the tremendous growth
of the middle class in the post-liberalization era.
2. Growing urbanization leading to a variety of customer
needs.
3. Significant increase in the number of brands in the Indian
market leading to a larger option set for the Indian
customer.
4. Media boom leading to an increased level of awareness
levels and exposure to the international trends and
concepts.
5. Changing demographics propelling the growth of retail
industry.
6. Psychographic changes in the Indian consumer behaviour
7. Shopping is becoming an outing or a way of family
entertainment that means that families now spend greater
time in shops.
 Retailing : The Road Ahead
India is a nation of shopkeepers and it has more outlets
than any other country in the world. But retail outlets still
exist in all shapes and sizes –Panwalla to Shoppers’
Stop. However most of these retail outlets are kirana
shops that are smaller than 500 sq.ft. in area, provide
very basic offerings and hardly use any technology.
According to Mr. Nedungadi, President, Madura Coats,
“Retailing is becoming all about great ambience, more
choice and convenient location. An emerging trend is
also that of the value consciousness of the consumer.”
So Indian retail industry has a long way to go. With
corporate investments coming to organized retailing, the
scope and growth of organized retailing is looking bright
for Indian retail Industry.
Opening the door partly – 51% FDI
permitted to Single Brand Retail
The most significant development in regulatory
aspects influencing the Indian retail industry is the
government’s decision to allow foreign direct
investment (FDI) up to 51% in retail outlets meant
exclusively for ‘single brands’. Previously single
brands had to enter India only through joint
ventures or the franchisee route. Now brands can
enter with a majority stake of 51% along with a
local partner. This definitely gives the international
brands more space to play ground.
 Some of the other regulatory
aspects in India presently are:
• Foreign-owned Indian companies cannot own
and operate retail outlets except some specific
areas
• Variable stamp duties on transfer of property
from state to state.
• City urban planning prohibiting bigger
commercial plots, rigid building and zoning laws
for procurement of retail space.
• Strong pro-tenancy laws
• Urban Land Ceiling Act and Rent Control Acts.
 Foreign Direct Investment in Retail
“Foreign direct investment reflects the objective of obtaining
a lasting interest by a resident entity in one economy
(“direct investor”) in an entity resident in an economy other
than that of the investor (“direct investment enterprise”).
The lasting interest implies the existence of a long-term
relationship between the direct investor and the enterprise
and a significant degree of influence on the management of
the enterprise. Direct investment involves both the initial
transaction between the two entities and all subsequent
capital transactions between them and among affiliated
enterprises, both incorporated and unincorporated”.